The Compound and Friends: Pulling Out

In the latest Compound and Friends podcast, the roundtable discusses a number of macroeconomic issues. The biggest issues pertain to the sanctions facing Russia right now.

The rise of NATO and its expansion Eastward since the collapse of the Soviet Union may have been a precipitating factor for Russia’s invasion. Creating a way to guarantee the safety of Eastern European countries without the formality of a NATO membership may be necessary. Why? To deter future transgressions.

Meanwhile, the economic sanctions against Russia are leading to higher energy prices globally. And energy reserves in Western European countries are dwindling. On the plus side, it is the tail end of the winter season. It will take months to adapt to the changing energy market. But those reserves will need to be rebuilt before the next winter.

The sanctions against Russia appear to pack some teeth. That’s thanks to the country’s gradual shift away from US dollar assets over the years. As a result, Russia is well prepared to deal with the consequences of being kicked out of the global financial system.

The ruble has fallen tremendously in international markets. But domestically, President Putin has seen his popularity soar. And the country is on the verge of having a currency backed by its physical resources. However, Russia is now asking for hard metals as a means of payment for its energy reserves, which puts it on solid footing going forward.

The full podcast, running about 1:26:30, can be heard here.