Wait a minute, why doesn’t he just print more money, as Keynesians like Krugman suggest?

So we're both fucked, eh?

So we’re both fucked, eh?

Putin’s running out of money, forced to slash wages and pensions.

The only other time Putin had to cope with a plunge in oil prices — during the 2008-2009 financial crisis — he kept the money taps flowing, thanks to the reserves built up over nine years of budget surpluses.

That permitted higher social spending, pensions and state salaries, says Olga Sterina, an analyst at UralSib Capital in Moscow. “Now, there’s no possibility to increase spending,” she said by phone. “All they can and should do is cut it.”

The stash is evaporating fast, down by about $90 billion this year as the central bank moved to slow the ruble’s descent.

Putin may exhaust more than half of the country’s rainy-day funds within two years on the budget, indebted companies and banks as well as to keep the ruble from total collapse, according to Valery Mironov, deputy head of the Moscow-based Higher School of Economics’ Center for Development Institute.

“The reserves will be used up but even that won’t be enough,” said Dmitry Oreshkin, an independent political analyst in Moscow. “They’ll have to limit social benefits, and state salaries won’t rise in line with inflation.”


Under Putin’s rule, between 1999 and 2007, Russia went through “one of the biggest booms in the world” as average living standards rose from Indian to Polish levels, according to Roland Nash, chief investment strategist of Verno Capital in Moscow.

Putin used to promise Russians that their country would overtake Germany as the world’s fifth-largest economy by 2020. In May 2012, he signed a decree pledging to increase real wages by half by 2018. That goal is already a distant memory as real wage growth slowed to almost zero by October.

I’m sure we can get to India’s living standard by 2020, if we work at it.


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2 responses to “Wait a minute, why doesn’t he just print more money, as Keynesians like Krugman suggest?

  1. Riverside

    Its only going to get worse for the Russians with oil prices plunging far below their cost of extraction.

    Interesting how Saudi Arabia and the U.S. both seem content with oil prices at the $70 level, which is below the Russian’s cost but above the U.S. cost and far above the cost for the Saudis. I don’t think its a coincidence that immediately after John Kerry’s meeting with the Saudi King, the U.S. agreed to intercede in the Syrian/ ISIS/ Iran situation, and the Saudi’s have laid back in OPEC and kept production steady, inviting lower global oil prices.

    Russia (supporter of Iran/ invader of Ukraine) loses big time, and is under pressure to behave better in the global arena. As much as I hate to give this administration credit, this looks like a very smart foreign policy move.

  2. Publius

    If I am not mistaken, Chicago recently voted to increase the minimum wage 57% by 2018….. and the Chicago pensions are tottering on insolvency. I think the author got the 2 mixed up, no? Chicago and Russia? Rahm and Vladimir……