The West's sanctions are inflicting massive pain on the Russian economy.
will inflict massive pain on Russia's economy — the 11th largest on earth — and its people, in a shock that could reverberate throughout the global financial system.Shortly before midnight in New York the ruble was down by more than 25% against the dollar, according to data from FactSet.: A blow like this to a country's currency sits somewhere on the line between economic and psychological warfare.It will send rates of inflation — already high in Russia — sharply higher.
It drives people to withdraw their cash en masse and quickly try to convert it to more stable currencies, such as the dollar, the euro, gold or even crypto currencies. It sends interest rates skyward, as global investors pull back in horror at the idea of lending to banks or countries that use a currency that could become worthless.
High interest rates slam the brakes on the economy, throwing people out of work just as prices soar, a miserable combination of conditions known as stagflation.I feel real sympathy for Russian people having to deal with this. They're suffering for the actions of a leader over whom they have no control.An economic shock this large will shake the global markets, probably in unpredictable ways. Investors appear to be bracing by moving out of risky markets to the safety of government bonds.
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