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Sunday, November 09, 2014

Russian rubles are nearly worthless and tanking

Undoubtedly, the Russian ruble's (RUB) only growth is in how the value has become increasingly worthless. 

My best math adviser about how to calculate the dollar to ruble ratio says the real value of the RUB currency is 2.1 cents on the US dollar. 
  
This is the ratio on the international money exchange:

$1 US = 46.70 RUB (rubles), so therefore, the division of 1/46.70 = $0.02 (cents!)

Regardless of how the math works, the ratio of dollar to ruble is growing, meaning in $US value, the RUB is junk currency.  

In fact, if a person is brave enough to bring $10 US into Russia today, it's likely to be stolen because the RUB can't be sold on many international money exchanges. 

On the other hand, chances are pretty good a $10 US bill in Russia can be sold for a profit.  

Of course, this type of profit driven currency exchange is supposed to be illegal. Nevertheless, I'm pretty sure the US dollar is likely the hottest commodity on the Russian black market.   

With junk currency as Russia's national currency, it's difficult to understand how President Putin can keep his nation's economy going. I doubt he can do so, because the nation's bills are being paid with Monopoly money.  
 
Eventually, ordinary Russians will figure out Putin's smoke and mirrors economy and demand to see their money. Russian people will have to figure out how their valueless currency is the result of Putin's mismanagement of their nation's foreign policy, combined with visions of grandeur, left over from the 1990s Cold War.  

It's a scary scenario, but Putin could be heading into another revolution whereby ordinary people will finally take their future into their own hands. There's precedence for this possibility and the 100th anniversary of the Russian Revolution is 2017.  

Very scary.

Meanwhile, the devastating dollar to ruble ratio is likely impacted by economic sanctions against Russia, an economic response to Putin's expansionism, led by the USA. 

Of course, President Obama and the Democrats haven't taken any credit for the success of the sanctions to punish  Putin. Too bad, because the policy seems to be successful. So far, it's working. (Democrats forgot to remind Americans about most of the party's successes and it showed up in the skewed GOP election results.)

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