News U.S. Cracks Down on Russian Crypto Miners

[Admin]

The U.S. has added Russian-bound cryptoccurency mining company BitRiver to its list of sanctioned entities, and has promised to keep cracking down on any ways the country could decrease the impact of international sanctions against its economy.

U.S. Cracks Down on Russian Crypto Miners : Read more

 

[InvalidError]

We may finally find out how far the world is willing to go to stop Russia and other autocrats from laundering assets through crypto.

 

[digitalgriffin]

I was wondering how long that will take...

And another brick goes in the wall.

 

[digitalgriffin]

The Russian ruble closed yesterday at 79.25, slightly higher than it was just before the invasion. And China, India, and Pakistan -- 3 of the 5 largest nations on Earth -- are all buying record levels of Russia's primary exports. China just last week inked a deal that will double their imports of Russian natural gas. The sanctions don't appear to be working as well as some people believe.

The rubles value is being artificially propped up through a series of actions by the Russian central bank. It will collapse on itself. See "economics explained" sanctions on youtube

 

[digitalgriffin]

It is impossible to sanction Russia. Russia is one of the largest commodity exporter in the world. Russia exports more than just oil and gas, wheat, oil, iron ore, nickel and other metals etc, not unusual since Russia is the largest nation by land size.

This world is finite and resources are finite. For commodity, its not like you can simply go shop elsewhere. Its not like the rest of the world has all the commodities sitting there waiting for pple to buy (like in a supermarket). It takes alot of time and effort to locate and mine. You cannot simply increase production.

Russia's economy based on GDP is tiny. They quite simply never modernized. And while you are quite correct that it takes years to build out infrastructure to support new fuel sources, the damage has been done. Within 3 years Russia will be mostly shut out. India and China sees this as an opportunity to do business. Europe will buy LNG from USA until they transition. China will get wheat and fuel from Russia. Russia will still suffer.

Binkovs battlegrounds analyzed this very well along with economics explained. And I mostly agree with their assessment. Europe will suffer. Russia will suffer a lot more.

 

[InvalidError]

Where do you think that natural gas is going to come from? The Biden Administration has blocked gas pipelines, offshore production of gas, fracking for gas on federal lands, and blocked new LNG production facilities and transport of LNG by rail.

Biden did none of those things. Though he did promise a ban, he didn't actually do it. All he did is ban the issuance of new leases since oil&gas companies are already sitting on 6000+ unused licenses. Blame oil&gas sitting on a hoard of unused leases (and using inflation as cover to jack up their profit margins) for rising prices.

If inflation was real, the consumer price hikes would yield little to no increases in corporations' net profit since most of the retail hikes would go to cover operating costs. Most corporations however are posting massive profit gains, which means a large chunk of "inflation" is just corporations fleecing their customers because they can.

 

[InvalidError]

Eh? You have it entirely backwards. Higher energy prices are driving inflation, not the result of it.

My point is that if inflation was truly due to production costs (ex.: energy) then corporations passing those costs down to consumer would mean little to no net increase in their profit. Their profits are increasing far in excess of consumer prices, which means they are price-gouging.

As far as "supply and demand" goes, higher retail prices in the face of stagnant wages means people's effective buying power is going down., especially for non-essential stuff. There was no shortage of margarine back when the regular price was $1.50 per tub that now goes for $3+ "regular" price and still goes "on sale" for $1.50 every few weeks. However, most publicly traded grocery store chains are posting massive profit increases. Most of the retail price increases there are going straight to the executives and shareholders, nothing to do with their increasing wages or energy costs.

 

[digitalgriffin]

That doesn't pass the sniff test, sorry. Currency exchange rates are determined by a nation's balance of payments. With the world price of oil and gas nearing all-time highs, and Russian exports at record levels, their currency certainly will not "collapse".

BTW, the ruble has risen two more pips since I posted my first comment.

Look at the video I referenced you and you'll see what has happened to inflate the ruble. 20% interest rate was used encourage Russians to hold the ruble. They are also forbidden for exchanging it for foreign currency. Other actions keep the value artificially high. However it can't be sustained, as the economics explained video alludes

 

[digitalgriffin]

Biden did none of those things. Though he did promise a ban, he didn't actually do it. All he did is ban the issuance of new leases since oil&gas companies are already sitting on 6000+ unused licenses. Blame oil&gas sitting on a hoard of unused leases (and using inflation as cover to jack up their profit margins) for rising prices.

If inflation was real, the consumer price hikes would yield little to no increases in corporations' net profit since most of the retail hikes would go to cover operating costs. Most corporations however are posting massive profit gains, which means a large chunk of "inflation" is just corporations fleecing their customers because they can.

The truth is in the middle ground
6000 leases isn't high or low. The problem is OPEC and other oil producing nations (Russia included) didn't want USA to become a controlling influence on the Petro Market. Thus they sold at or below cost. This caused a lot of fracking and oil drilling to stop in the USA as it was no longer profitable. Right now prices are high causing Petro companies to start using those leases. But they have limited concurrent exploring capability. So they are limited by qualified personnel to exploit said resources. It's a long lead time from lease to pumping.

Part of the problem is refineries. No new ones have been built, so there's not enough refining taking place. While current plants are expanding to their limits, there is a serious lack of new plants exacerbating the problem. The last was in the 80's

 

[InvalidError]

I'm sorry, but this is far afield. Oil and gas prices aren't up because of "production costs".

Energy costs are only one part of the input costs of everything else practically every company is posting record profits despite allegedly rising costs. There was no margarine shortage at my local supermarkets before the typical tub price went from $1.50 to $3 and if "energy cost" was the real reason for the coordinated price hikes, that would only explain 30% of it at best.

 

[digitalgriffin]

The interest rate is correct. Your second statement is false -- there is no ban on exchanging rubles for foreign currency. And you're still missing the point. Russian exports are up both in volume and in price. Those exports must be paid for. Either they're paid for in rubles, or in foreign currency ultimately exchanged for rubles. Either way -- the ruble stays high.

Moscow Limits Foreign-Currency Trading to Shore Up Struggling Ruble (wsj.com)

As I said, Russia is in emergency panic mode. The Rubble WILL collapse. Their long term suffering is set.

 

[digitalgriffin]

That article doesn't state that Russian citizens are banned from exchanging rubles. In fact, it states this: "Customers withdrawing money from foreign-currency accounts at Russian banks will be given dollars, regardless of which foreign currency the account is denominated in"

They are limited to $10K in any six month period. The ONLY country buying rubles is the Russian govt to prop up it's value. Similar to how we did QE. But at the rate they are doing it, their balance sheet is insane and they can't keep it up.

 

[Endymio]

Practically every company is posting record profits despite allegedly rising costs.

You don't see the enormous logical contradiction in your argument? You're claiming that all companies have increased their prices much more than inflation -- but inflation is by definition the average amount of those price increases. You're essentially saying that "100% of people are taller than average."

In any case, you've moved the goalposts. Your original argument was that energy costs had no reason to outstrip inflation. But the US inflation rate is simply minor background noise to the supply/demand imbalance problems in the energy industry, thanks to the current administration's war on fossil fuels.

 

[Endymio]

They are limited to $10K in any six month period.

No, you've misread the article. They are limited to withdrawing $10K from any foreign-currency denominated bank account. They're not barred from exchanging rubles into foreign currency.

 

[InvalidError]

In any case, you've moved the goalposts. Your original argument was that energy costs had no reason to outstrip inflation.

No, my point was that that the rate at which retail prices are rising has limited basis in production costs. Most of it is corporate greed, even for things there are no shortages of. Companies are using the pretext of inflation as cover for price gouging.

 

[digitalgriffin]

A good review of how impacting sanctions really are in tech:

View: https://youtu.be/SV_4M9R8Ggs