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Why the Russian Ruble is Collapsing
As the world watches Russia’s actions on the global stage, especially its role in the invasion of Ukraine, a silent economic crisis is unfolding within its borders. Despite the Kremlin’s insistence that the economy is thriving, recent data paints a far more troubling picture. The ruble, once a symbol of Russian economic resilience, is now on the brink of collapse.
Professor Steve Hanke of John Hopkins University has sounded the alarm, calculating Russia’s real inflation rate at a staggering 27% — a far cry from the 9.1% claimed by the Russian Central Bank. This discrepancy isn’t just a matter of numbers; it’s a reflection of a deepening economic quagmire that threatens to engulf the average Russian citizen.
The warning signs are everywhere. An unnaturally low unemployment rate of 2.4% might seem positive at first glance, but economists recognize it as a red flag. According to the Phillips curve, such low unemployment often precedes runaway inflation. It’s as if the Russian economy is a pressure cooker, with inflationary steam building up beneath the surface.
Putin’s economic strategy in the face of international sanctions has been akin to applying a bandaid to a gaping wound. By artificially stimulating demand within the Russian economy, he’s created a bubble that’s on the verge of bursting. After two and a half years of…
