Comments by "MarcosElMalo2" (@MarcosElMalo2) on "Analyst says 'Fortress Russia is gone' in face of US sanctions • FRANCE 24 English" video.

  1. That’s the “problem” with a global trade system. You can’t hoard all your wealth internally. You have to keep a certain amount outside for trade with other nations if you want to trade with them. This is a small, but crippling part of the sanctions. The other part is far worse—closing you off from the transaction system. This largely prevents you from trading at all on the global markets. You can’t pay or get paid. You can’t get short term loans to pay your trading partners. However, you can still trade with your two best friends (China and India), right? Won’t that make up for some of the economic damage? Yes, it will, but far less than you had hoped, because both these countries rely on the global financial system to move money. You’ll have to work out a way between each country, creating or using alternate exchanges. The problem is that these trade systems won’t be able to handle the volume of trading quickly enough. There will be a backlog of trades. The trades themselves, isolated from the global market, won’t be efficient, shaving value from the trades. You’ll always be one step (or more) behind the global market. Your trading partners will also be taking more from you to make up for the greater risk they are exposed to. The end result is that even with a couple of big trading partners, your trade with them is going to be a fraction of what it was. You won’t be able to stop contraction of your economy, and what little trading you can do will not slow that contraction sufficiently to help you weather the storm you have caused for yourself. Strategically, your “friends” also have you at a disadvantage. They will set exchange rates and interest rates in their favor. You cannot shop around for better rates. They will demand concessions and your bargaining position will be weak. You’re at their mercy.
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