12% interest rates? god damn…
how is their economy even functioning?
Easy, it’s not.
It seems like their economy is reliant on a series of short term fixes, and as each one winds down another bigger one needs to take its place.
12% interest is another example of this, it will improve things in the short term but has no effect on the underlying problems, meaning that in a couple of months or so something even more drastic will be needed.
This is what happens to all fiat money. It will happen to the United States eventually too as the fed has printed into existance far to many dollars. The currency has to be destroyed in order to get back to a state of value.
This is the best summary I could come up with:
Russia’s central bank hiked its main interest rate by 3.5 percentage points to 12% Tuesday after the ruble hit a 17-month low the previous day.
“Steady growth in domestic demand surpassing the capacity to expand output amplifies the underlying inflationary pressure and has [an] impact on the ruble’s exchange rate dynamics,” the central bank said in a statement released by its press service.
So far this year, the ruble has shed 35% of its value, as Moscow’s war in Ukraine takes a heavy toll — though President Vladimir Putin has insisted that Western sanctions are having a limited effect.
Speaking to CNN’s Erin Burnett late Monday, US Treasury Secretary Janet Yellen said the ruble’s decline reflected the fact that sanctions, as well as the war, were “causing a drain on the Russian economy.”
Analysts were skeptical Tuesday’s emergency action by the Russian central bank would provide a lasting solution to the currency’s problems.
The ruble’s depreciation is a consequence of many factors moving against Russia all at once,” Liam Peach, senior emerging markets economist at Capital Economics, wrote in a note.
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