Jeff Snider on how Russia is using the eurodollar system despite sanctions

[@professionalgambler74]

Thanks guys

[@joesnow8544]

Great interview! It's weird that the video is so rarely watched.

[@HuldreHammerman]

Great interview!

[@brucewayne2081]

1. the reason for commodity (trade settlement) currency is to avoid the free ride that dollar, euro are getting by issuing infinite amounts of credit and getting real goods in return from non-western countries etc. 2. Gold is completely liquid.

[@MissMyRyan]

I think you’re misinterpreting Zoltan. He didn’t say commodities themselves would be currencies. That’s obviously impractical. Instead, he said, over time, under the new paradigm, currencies of countries having a trade surplus because they’re rich in commodities and that are wisely managing their fiscal affairs, would replace fiat currencies that are backed by nothing but debt.

[@greg.ocallaghan]

And Jeff’s counterpoint is that such a system will never evolve because the world economy is hungry for money, it NEEDS more money to fuel GDP growth and it’s been starved from money since 2008. A commodities backed monetary system would be even more constrained than the one we have now (it would be very inelastic), so it’s unlikely the world as a whole will gravitate towards that.

[@Houthiandtheblowfish]

only normal people suffer on both sides

[@JVerstry]

Very interesting insights...

[@muttleyZZZ]

I have great respect for Jeff and his opinions, and I found this interview fascinating. I do struggle with the thesis that gold is useless though. Put simply, fiat (or gold!) reserves held at foreign central banks are temporarily useless if frozen temporarily, but can become permanently useless if frozen permanently. Physical gold held domestically by Russia, maybe useless temporarily in a major liquidity crisis, but that’s not the only time that gold as a reserve asset can be useful. The fact that it can never be seized by other nations is the crucial point… ie it can never become permanently useless! I would’ve liked to have seen the interviewer drill down more on this point with Jeff, to see how far he would go in admitting it.

[@reinventmoney]

Thanks for your feedback. My plan was exactly to do that. Unfortunately our Zoom session was about to be terminated so we had to wrap up. Zoom apparently stopped offering recording for free for 1-1 chats as of the beginning of May. I wasn't aware of that in advance. Definitely I will try to have Jeff on again in the future to discuss this further.

[@fractionaldebtisfraud2187]

Gold in your hand is entirely the point. Russian gold stored in London, (if any is in London?) might not be Russian gold, ownership can be a very gray area. Especially if it is rehypothecated (leased, lent, used for some bank regulatory purpose,) in the interim. A Russian Rouble backed by gold would become a very strong currency. If Russia demanded "strong" Roubles for payment of its oil on future it could be very inflationary for the West.

[@jsc3739]

As much as I concur with Jeff on the eurodollar being the real global monetary system where collateral plays the equivalent role of bank reserves, it's simply not factual that gold is useless within such arrangement, for it's long been employed as a high-tier, low hair-cut collateral too, even subjected to the same relending, repledging, rehypothecation ruses common to government securities...

[@vanclvg_3858]

JEFFY BOI LFGGGGGG

[@ronaldl9085]

Great interview. Meanwhile the Rubble is down again.

[@professorlayabout4878]

Is that John Lennon?

[@coliniveson2122]

Great interview with the highly respected Jeff Snider. With Russia finding ways around sanctions using friendly nations, I have to wonder how long before we see secondary sanctions. That would be an awful situation and split the world.

[@durrer9038]

Would love to see another interview in the future about inflation. Was Jeff wrong 6 months ago? Why do we still see such high inflation?

[@yvanpareren8968]

Hi Paul, great questions for Jeff. As he knows so much it is difficult to challange his ideas but you did an excellent job. We have definitely learned more about the geopolitical game because of it. Thanks for that!

[@reinventmoney]

Thanks! Will keep on asking Jeff back to learn more from him. Regards, Paul

[@buatakun5165]

When a neutral international medium of exchange is used as a political tool to pressure a country, other countries have the right to determine their own medium of exchange. How many countries are threatened by this abuse? Should we keep using the dollar but we are not independent? Or look for alternative currencies that cannot be used as a political tool to pressure any nation. It's up to you people of the world to decide.

[@mbankslje0nk]

Don't invade your neighbors and there are no problems.

[@buatakun5165]

@@mbankslje0nk because you are not Iran, north korea, you are not many countries pressured by arrogant CAATSA rules.

[@pt17171]

@@mbankslje0nk yes the usa never invaded or attacked another country 😂

[@mbankslje0nk]

@@buatakun5165 it's not a good idea to threaten to nuke the Americans! They have the economic and military might to make you regret it. 😁 Feel free to use the ruble or whatever currency that you want! But it could be difficult to find someone willing to take it in exchange for the goods you want. 😯

[@mbankslje0nk]

@@pt17171 ? Who made the claim that they haven't? 😉They have also came to regret invading another country...Vietnam! 😜

[@pepitogrilho]

I think CHIPS is the USD equivalent of EUR's TARGET2

[@martinan22]

Just seems that you are pretty unsure in what medium the funds accumulated end up? I find it hard to believe that Russia is again accumulating foreign reserves in euros and dollars. This was not very concrete. I mean, your guest is probably right but its still unsatisfying.

[@jons1453]

Gazprombank is not sanctioned by target 2 or swift so this is whats going on: A clearing point agent operating at the Moscow Stock Exchange would carry out the conversion into rubles within 48 hours without any involvement of the Central Bank of Russia. So Euros are converted to Rubles and are not kept at gazprombank, therefore there's no risk of euros being frozen, if they are frozen then the transaction can be claimed incomplete by Russia and the gas does not go through. That Bruegel article might not be correct.

[@PaulBuitink]

So to which entity Gazprombank is sending the euro's, to this Russian clearing point agent? That would mean that entity would also have a Target 2 account correct and not be sanctioned? In that case it would still be very inconsequential the way Europe imposes the financial sanctions.

[@jons1453]

@@PaulBuitink Yes that's how it would probably work. Pretty inconsequential. I thin they wanna do an actual oil embargo, but gas will still flow for now.

[@florintrifan935]

I agree with the following: "All war and natgas shortage already priced in, and waaay too much. It's just a commodity with a price, if it's too expensive, and if industry cannot switch fast, no problem for people however, electric heaters cost double each month with minimal initial investment, like 100Euro or so, so instead of 360Euro per winter, it can be 700E in total for the entire next winter, and you should compare with 360 not with zero. Only the difference is what matters. As a percent of GDP/capita is not even 1% and it was priced in like 40% or so. Moreover is not like Europe doesn't have gas at all, or even less than other places, but it was not worth doing even prospects due to razor blade thin profits. Bill Gates would not drill in his backyard, so further you go east in Europe there is more gas because there are less Bill Gates per square km. So yeah, they will be affected like 2-3% in total, but not 30-40-50%. Except for food (for which Eu is a net exporter) the raw materials price out of a finite product price is something btw. 1-10%, depending on amount of processing and added value. So with 50% increase in raw material price, the final product gets hit by 0.5% to 5% -and that's globally, not only EU. But speaking about competitive advantage we can only consider the differences, so if E.g.: get 20% more expensive in EU than other places, this means even less: 0.2% to 2%. I wouldn't say Germany and Europe lost their competitive advantage, the operational margins except energy, mining, etc, are well above 10%. Who says the competitive advantage of European products (think Mercedes, BMW, French perfumes, etc), stood in 0.2%-2% price difference doesn't know what he's talking about. Since the great deflation of 2008 both US and Eu started to lower interest rates to stimulate credit, but this doesn't mean people borrow if they are still scared. So it's the ECB and Fed where all borrowed money and spent appear on screen and their balance sheet. Their balance sheet don't lie. Only in 24Feb 2022 the EU inflation rose from negative of 2009 to 2%, in US & UK this happened in mid 2018. Asset prices recovered top 2007 prices even earlier in US & UK in 2017. In contrast in EU, they never reached 80%, even today, even though after a much lower initial increase. All the Central & Eastern EU growth (due to abrupt increase in productivity -from lack of previous investments, was not matched nearly by consumption & credit. You can decrease ECB rates to -10%, if people don't go borrow from banks no money gets created. Pause and think. And if in the meantime productivity increases due to lack of previous investments (from simple things like a tractor instead of physical labor -the increase can be like 100x, much more than from very modern tech, like an iPhone replacing a fixed phone) you are still in a deflationary environment -even with that -10% ECB rate."

[@Durangotek]

Is he saying that the western system is the only system and that no other system works or can work. Isnt that the reason that russia and others are moving away from the western system precisely because the west thinks like that and obviously because its their system so they benefit most from it.

[@GB-uy1tq]

The Euro currency will decrease in value as the EU slips into a much lower standard of living.(gdp crashing) Why would the Russians accept them?

[@joesnow8544]

Bitcoin is the only asset that can’t be confiscated.

[@durrer9038]

What about Bitcoin Cash?

[@Ekatianova]

Hmm...this was problematic for me. To have everyone come together again and make it work. And have the world run as it has--comfortable for those who receive the humungous benefits at the expense of the rest. There's something wrong and for same old, same old... economics and natural say there's a limit to the human being allow himself to be marginalized.

[@haroldgrey134]

If you want to learn more about CHIPS you should check out Professor Perry Mehrling's free Columbia University college course online about money & banking on youtube

[@reinventmoney]

Thanks, will check it out!

[@mathewalexander8424]

Russia by demanding payment in Rubles, the exchange is taking place in the financial market. That is the reason Rubles are strengthening. The western countries have lost this game.

[@dameongeppetto]

Wrong. They raised interest rates to 20% for savings accounts (now dropped to 12%) to get inflows into their banking system. This will eventually bleed the banks and government dry. It is a stop gap measure, nothing more, nothing less. It was an ingenious maneuver to stop the Ruble crash, but banks can not pay out double digit interest rates on savings accounts into perpetuity.

[@joostvangoidsenhoven]

I've been spending hours the last 2,5 years on understanding this stuff but with every video it gets more complicated. Paul, when are you gonna start a fund so I can pay you to do my finances? :)

[@reinventmoney]

Haha no thanks. I will just keep on confusing you.