Comments by "M gronich" (@mgronich948) on "Why Russia's Economy is on the Brink of Collapse - TLDR News" video.

  1. The analysis on Russian default is totally bogus. 1st the US allowed the transfer of Russian funds in frozen accounts to be used. The reason is that if Russia defaults the only repeat ONLY people hurt will be western bond holders. It doesn't hurt Russia at all. Further Russia's borrowing needs are close to zero unlike the US. The US has 23 trillion in debt and 2.3 trillion of it comes due every year. The US also adds about 1 trillion of new debt to the old every year. So if the borrowing cost for the US goes up the US economy can collapse. But Russia only has 40 Billion of foreign denominated bonds (~4V/year), this is 500 times smaller. And this could easily be taken care of by a couple of Chinese billionaires. The US economy is at risk because of the sanctions. US inflation was already at 8%. The sanctions are expected to raise that by 4% to 12%. But the freezing of Russia's assets has brought home to the Chinese that much of their 4 Trillion of foreign reserves is not safe. One thing they might do is stop buying Treasuries. The 2nd is they might start to spend down their 4 Trillion of foreign currency reserves. More money used to buy things will increase inflation. Current US treasures have ~ 1% interest. If the US had to pay 5% interest then its interest payments would go up from 230B/yr to 1.2 trillion/year. That's 25% of the total US govt budget, the increase would be bigger than the US defense budget.
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