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USD/RUB: The Russian Rouble is now worth less than one US cent. And as governments and corporations impose extreme sanctions, the Russian economy could soon return to 1998.

Karl Marx warns ‘history repeats itself, first as tragedy, second as farce.’ Hitler’s Anschluss with Austria is mirroring Russia’s annexation of Crimea, the encroachment in the Donbas with the occupation of the Sudetenland.

But as Putin assaults Kyiv, Russia is starting to resemble its own ghost of prior economic ruin.
USD/RUB: Russian Rouble collapse

On 31 December 1999, Russian President Boris Yeltsin ceded the Presidency to a 46-year-old Vladimir Putin. Yeltsin had burned through the country’s economy in the first Chechen war, despite reminding the US that ‘Russia has a full arsenal of nuclear weapons. He (Clinton) has forgotten about that.’

However, in 1998 Russia was running out of money. The IMF and World Bank lent it $22.6 billion to support financial reforms, and between October 1997 and August 1998, the Russian Central Bank spent $27 billion trying to shore up the Rouble. But on 17 August 1998, the currency became so devalued that Russia defaulted on its debt, causing economic collapse.

Russia’s Putin officially invaded Ukraine on 24 February; like Chechnya, it’s a region he deems unworthy of statehood. And like his predecessor, he has warned the west that interference could result in ‘consequences you have never seen in history.’

But a Molotov cocktail of Ukrainian defence and Western sanctions could see Russia’s economy (USD/RUB) collapse before its President can declare victory

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One Russian Rouble is now worth less than one US cent, and less than one Afghani, the currency of a failed state. It’s even worth less than a Robux, a make-believe currency bought with the pocket money of western children.

Steve Hanke at John Hopkins University has calculated Russian inflation is at 69.4%, while Estonian MEP Riho Teras believes the war effort is costing £15 billion every day. And Rabobank analysts predict there could soon be a ‘complete collapse in the Rouble.’

This leaves Russia with a stark choice: Peace, a banking collapse or hyperinflation.

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