Tuesday, December 16, 2014
Russia’s Steep Rate Increase Fails to Stem Ruble’s Decline
In Russia, the value of the ruble, the nations currency has dropped significantly day by day reaching record lows. This has come about by western sanctions and the low oil prices. While Americans are enjoying the cheaper gas, the situation in Russia is heading for a economic crisis. The federal government has responded by printing more money, yet this will only increase the inflation as seen in Zimbabwe.
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Russia is certainly facing a large problem with this issue, but the blame can only be placed on them. Though US sanctions have contributed to the devaluation of the ruble, it is Russia's own actions that brought about the sanctions. The article also mentioned that the central bank of Russia had been printing more and more money in order to help Rosneft, the state oil company, repay its debts, which is probably a reason for the currency devaluation. Once again, this is Russia's own fault. Despite the fact that Russia has been the main cause of its own problems, it is still possible that this could negatively impact other countries, even the United States, as the article did mention other countries and their economic relations with Russia.
ReplyDeleteThe fact that the Russian central bank is printing more and more money does not make sense. Clearly government leaders were not prepared to deal with an economic crisis. As the article states, a recession in Russia will have a negative impact around the world. Although this is partially their fault for having their economy largely one dimensional. Their over reliance on oil reserves will hurt them in the years to come, so maybe if their government can find a way to fix their economy from being solely oil based, it could help the country in the long run.
ReplyDeleteThis will affect not only Russia but countries around the world. How could it not? The fact that they are printing more money is just stupid. They should know better than to print more money.Their government needs to step it up. At this point the government is just making it worse and they need find a way to fix it sooner than later. They are relying to much on oil reserves.
ReplyDeleteRussia placed too much economic trust in the oil reserves. Not everything lasts forever. I think that their government should be much more prepared for a situation like this. In an economic crisis, the answer is never to print more money, as this will lead to inflation in the end. The government should stop printing money in response to the crisis and formulate a plan that will actually help the situation. They are not only hurting themselves, but other countries as well.
ReplyDeleteI think Russian government officials should sit down and work out a plan. They obviously need to stop printing so much money and should know that just because one prints more money that it betters the economy. I also do think that they are relying to much on oil reserves. Like Haley said, nothing last forever. Russia needs to have a plan for when all there reserves run out. Not only would a crisis in Russia effect their citizens, but it will have a great impact on the rest of the world.
ReplyDeleteWhile Russia's reliance on oil reserves and inflationary policies have caused their own financial crisis, I don't know if they are likely to reverse these measures to address it. Putin cares exclusively about his own dictatorial power, which explains his aggressive, imperialistic decision to invade Crimea - the action that justified these international sanctions in the first place. Unless he faces enormous political pressure from the Russian people, he is unlikely to halt his territorial aspirations for the benefit of the country's economy. After all, why does it matter to him if his people have financial troubles, as long as he can still pursue his goal of conquering the region.
ReplyDeleteI agree with Matt. Even though Russia's economy is on the downhill, as long as Putin keeps a hold of his power and the people, there will not be any real effort to improve it. Printing more money, even though it seems ridiculous to us, is probably the only option the Russians felt was possible to change their degrading situation. I also think it's unreasonable to criticize a country for having a reliance on oil. If their tourism industry is spotty due to their government, and oil is their only natural resource that's in high demand around the world, it's completely normal, although maybe not ideal, to have a dependence on oil.
ReplyDeleteI agree with both Dan and Raman that Russia is making a huge mistake printing off more money. This will only continue to propel the issues they are facing. Rather than considering the long term effects of their solutions, Russian leaders are only solving for the immediate future. It definitely does seem that the U.S. Is attempting to somehow punish Russia; however, Russia is obviously not responding correctly
ReplyDeleteVladimir Putin is no economic genius, and not much makes me happier than watching him destroy his economy. If Putin and the Russian government want a sustainable economy, they should perhaps consider to stop taking land from other countries and inciting civil wars. The West should keep stepping up the sanctions until Russia has no choice but to cease their military provocation.
ReplyDeleteI agree with Matt. The government, especially Putin, does not care about its citizens. As all my classmates have said, they need to stop printing money but I don't think that the government will try to find any solution to this issue. They are very corrupt and only care about their own personal interests.
ReplyDelete