H. L. Mencken on the Russian central bank

 H. L. Mencken“For every problem, there’s a simple solution. And it’s wrong.”

See also here – What the Turkish central bank did a year ago the Russian central bank is doing today. Not good.

HT Josh

Leave a comment


  1. Konstantin

     /  December 16, 2014

    Lars, but where is the fine line between currency flexibility and financial stability?

    • Konstantin,

      I promise to write another blog post on exactly this topic. My short answewr is that monetary tightening than the cost of a short-term rise in inflation and distress for those institutions with foreign currency loans.

  2. Third World central banks need to worry about their currency because of original sin and/or dollarization. Because they lack a deep domestic capital market, the private sector–even the banks!–borrows in foreign currency and invests the proceeds in illiquid domestic assets. The Russian private sector has $600B in foreign debt, which is $200B more than its total reserves. Al of this is going to be defaulted on, and most of it is held by European banks.

  3. james in london

     /  December 17, 2014

    Great headlines about internal dissension amongst the governing elite inside Russia. Bring it on!

    Cheerily going off to war in the Ukraine, with almost universal backing according to fairly independent polls, is now finding its nemesis.

    But please don’t waste those US$ reserves defending the currency. Use them to help pay the US$ debts on time and in full.


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