Russian Ruble drops 12% in one day.

[steelhouse]

Russian Ruble over the past 100 years or so has lost 10 to the 14th power in purchasing power.  CNBC says the oil companies are issuing debt and buying dollars with it.  The only problem is our central bank is not that honest either.  This is the big plus for bitcoin.  Bitcoin is limited to 21 million coins.   All  bitcoin needs is more or the same number of users than last year.  The ruble also shows the failure of gold and silver backed currencies.  Through most of its history the ruble was gold and silver backed.  The reality is those pegs or exchange rates can be changed when the government or banks need money.  The only true gold currency is gold itself.

In June the number of rubles per dollar was 34.  Today it hit 65.6.  Thus Russia is in a period of hyperinflation, a 100% inflation rate over a year.  Hyperinflations are not something to hurt your neighbor with many Russians are losing their life savings and when that happens it can lead to evil like Adolf Hitler.

Furthermore for the U.S. to compete worldwide, they may have to cut wages which is not going to happen.  Thus, there could be problems in the U.S. especially when many are considering raising the minimum wage next year.

Any comments?

[user2]

In 1956, Phillip Cagan wrote The Monetary Dynamics of Hyperinflation, the book often regarded as the first serious study of hyperinflation and its effects. In his book, Cagan defined a hyperinflationary episode as starting in the month that the monthly inflation rate exceeds 50%.

http://en.wikipedia.org/wiki/Hyperinflation

[countryfree]

This isn't Russia versus the US. The ruble is down towards the Euro and all the world's currencies, even the Polish Zloty! I hope it could kickstart a revolution in Russia, but Russians will probably starve to death not understanding anything.

[cakir]

This is because of oil prices.
USA gets cheaper oil from arabic states who doesn't care about the prices but $$$.

Also Russia is on war all the time, they need money...

[teukon]

This is because of oil prices.

Maybe.  Oil industries make up a substantial part of the Russian GDP (13.9% in 2012).

[steelhouse]

This is because of oil prices.

Maybe.  Oil industries make up a substantial part of the Russian GDP (13.9% in 2012).

Most likely government depended on oil revenues and spent anyways without those revenues.  Typical liberal mentality.

[pawel7777]

This isn't Russia versus the US. The ruble is down towards the Euro and all the world's currencies, even the Polish Zloty! I hope it could kickstart a revolution in Russia, but Russians will probably starve to death not understanding anything.

The Ruble is going down due to the sanctions, so obviously it weakens compared with any currency.

What kind of revolution are you hoping for? You want to see their government replaced by "US approved" oligarch? How would that benefit the average Russian?

[gjgjg]

Looks like it will hit 80 against the US$ today. It's really a crazy freefall for a non digi currency. I'm surprised Russians arent buying up Bitcoin in a panic...

Looks like its triggered by the fall in oil prices (its at 55$ this morning - was at 90$ recently and likely to fall to $45 at some point in near future) compounded by RU sanctions, in addition to US$ strength due to possibly Fed policy changes and Russian overnight nearly doubling interest rates to try to stop it falling - which didnt work which smacks of desperaion (as usual in markets, fear and technical trading is driving things more than fundamental reasons)... also Europe economy is doing better than expected so its also affecting it...

Mad month in markets...

Edit: hit 79.6 or so and bounced... Lets see if it breaks 80...

[bere3kin]

Fantastic ))) I remember 1998 )) -500% But... We do not grieve 

[Q7]

Is ruble fully backed by gold??? I thought only swiss franc has that. Anyway that is the beauty of fiat issued bank notes. When the value drops and in order to counter inflation, banks can have the option to hike interest rate. 17% is not a small amount. For bitcoin to gain advantage in this area would be quite difficult and unless you can guarantee the equivalent same amount of return in a year, then it's different. And looking at the bitcoin price chart today, it's quite frustrating. Otherwise people would still hang on to fiat.

[Grinder]

Both Russia and Switzerland have some gold, but it's not backing the currency. You can't go to the central bank and demand a specific amount of gold.

[Febo]

Oil prices + economic embargo.  Of course it was expected to happen.

[teukon]

Is ruble fully backed by gold??? I thought only swiss franc has that.

Back in 1999, the Swiss voted 59% for changing their constitution, specifically to remove the 40% gold-backing from the Swiss Franc.
Recently, a referendum to at least require the central bank to hold 20% of its reserves at gold was proposed as a step towards reintroducing a gold standard.  It was defeated with 78% voting against.

[phelix]

I'm surprised Russians arent buying up Bitcoin in a panic...

this

It's dangerous to pick on a wounded bear.


edit: Looks like they are buying BTC at double peak volume:  http://bitcoincharts.com/charts/btceRUR#rg10ztgSzm1g10zm2g25zv

[cellard]

http://www.zerohedge.com/news/2014-12-15/russia-shocks-emergency-rate-hike-boosts-interest-rate-105-17

here we go, the magic of fiat money

[Bitcurex.com]

Speaking of Russia and Ruble, check out our new feature, Rouble Transfer:

https://bitcurex.com/page/rub/

Deposit RUB directly, get USD, buy BTC. Up to 3300 USD without verification. Plain and simple.

Regards!

[spazzdla]

Is ruble fully backed by gold??? I thought only swiss franc has that. Anyway that is the beauty of fiat issued bank notes. When the value drops and in order to counter inflation, banks can have the option to hike interest rate. 17% is not a small amount. For bitcoin to gain advantage in this area would be quite difficult and unless you can guarantee the equivalent same amount of return in a year, then it's different. And looking at the bitcoin price chart today, it's quite frustrating. Otherwise people would still hang on to fiat.

INNCORRECT, no one is backed by gold, no one.  The swiss left that ages ago.. almost  re-enstated it but the banksters spent billions to scare them out of it.

[spazzdla]

Is ruble fully backed by gold??? I thought only swiss franc has that.

Back in 1999, the Swiss voted 59% for changing their constitution, specifically to remove the 40% gold-backing from the Swiss Franc.
Recently, a referendum to at least require the central bank to hold 20% of its reserves at gold was proposed as a step towards reintroducing a gold standard.  It was defeated with 78% voting against.

I wonder if you had to have an IQ of atleast 110 to vote what would of happend.

[steelhouse]

http://www.zerohedge.com/news/2014-12-15/russia-shocks-emergency-rate-hike-boosts-interest-rate-105-17

here we go, the magic of fiat money

This is not high enough.  The interest rate needs to be over 100%.  If people want to lend money they can.  I am not saying this for Russia, I am saying this for the United States too.  Low interest rates ALWAYS hurts the economy.  What happens is you get people that don't work buying up assets they don't deserve.  Just look at the private equity firms, all they do is use bank debt to buy up companies and somehow they are worth $50 million or more in salary.  What to mortgage reits do?  They lever up with Federal Reserve debt.  The dumbest kid on the block has the nicest car because when he defaults it is the poor banker that did the working man harm.

[steelhouse]

I'm surprised Russians arent buying up Bitcoin in a panic...

this

It's dangerous to pick on a wounded bear.
edit: Looks like they are buying BTC at double peak volume:  http://bitcoincharts.com/charts/btceRUR#rg10ztgSzm1g10zm2g25zv

This is my prediction, what is going to happen as slowly the worst inflation countries will start to pick up some bitcoin.  Slowly a small grind will move into a larger movement.  I just wish bitcoin did not have any inflation already.  Compared to 100% inflation, they will experience 5% inflation.  People can handle losing 5% a year they won't revolt, you just get a tea party.   Relative to their own countries currency it will rise.  People in Russia that use bitcoin will be the winners, those that don't well they can pick corn.