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Comment by eps | Hacker News Reader

One of the parlament members floated the idea of seizing (*) people's savings to offset the effects of the sanctions.

Though "floated" doesn't quite capture it - he apparently "explained" that this will be necessary and "reminded" that the government will have no choice but to "arrest" the savings of Russians to deal with the crisis. To a question of whether these funds will be repaid, he said that it'll take several generations to to do so, at which point it will all be eaten by an inflation.

They are all puppets, so it doesn't matter who said it exactly and in which context. It's the message that matters. And the message is chilling.

https://news.ru/economics/v-gosdume-prokommentirovali-vozmoz...

* fixed the typo, kudos to rob74

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There were reports (hard to verify obviously) over the weekend that places like jewelry stores were busy as people were trying to change their rubles to a hard asset.

Do people who live in Russia keep a lot of money in a bank and/or as rubles, or do they keep it in something like USD/EURO and convert as needed? This drop is obviously extreme, but it's not like the Russian economy was great before.

I expect it will be like in any not-so-rich country: most people are stuck with the national currency, while middle and upper classes store their wealth in foreign currency.

This is the reason oligarchs were individually sanctioned.

Call me too cynical or jaded or whatever, but I just have zero faith that any economic sanctions cannot and will not be circumvented.

What we learned from the Panama, Pandora, and Paradise papers is that wealthy individuals and corporations will find a way.

Am I wrong?

I'm not intimately familiar with what was in the Panama/Pandora/etc. papers, but if I recall correctly it was a lot more "run of the mill" tax evasion, exploiting loop-holes, and the like. In these cases, I'd guess governments weren't always highly incentivized (or were actively disincentivized) to deal with these sorts of actions.

In the present case, where governments are highly incentivized and the sanctions are quite specifically targeted, I'd expect more of an impact. Will it be enough? I suppose we will see.

One challenge I've seen is that it isn't like all these assets are just labeled with the owners' names. As a result, it make take time to actually enforce such sanctions, possibly too much time to have an immediate impact. Perhaps the threat will be enough, but, again, we'll see.

Especially since they had a lot of time to prepare. But you can't move all your wealth at once, especially if you are not sure if a big event will happen. So it is likeky that they just diversified more outside of Russia. But they will likely still loose a lot.

You are right in that ultimately wealth will be transferred, but circumvention costs resources, especially with the extreme sanctions Russia is facing. If oligarchs now have to resort to loading gold bullion on submarines bound for South America then we did a good job

You are (mostly) wrong.

You are correct in that it's difficult to sanction some oligarch using gray markets for one-off transactions.

But it's very easy to sanction a corporation that is trying to do cross-border trade. If you're selling apples to Poland, your customers - legitimate businesses in Poland - aren't going to be making recurring payments to you through some weird Hawala scheme. They live in Poland, they aren't going to be flouting their country's sanctions laws.

While oligarchs may be fine, the Russian economy can be completely strangled, by cutting off its ability to pay for imports, or get paid for exports.

This also pisses on any remittances the Russian diaspora sends to their relatives back home.

In the long term, I fully expect a proxy banking system to be set up through either China, or one of Russia's satellites, to take care of the needs of the elite. I also expect that the West will either shut down, or keep open particular Russian exports on a case-by-case basis. It's why not every Russian bank has been cut off from SWIFT. If Europe hits a cold snap for instance, there'd still be a channel to buy natural gas...

When am I going to see Zillow flooded with Florida and Trump Tower luxury condos with tacky interior design at firesale prices?

Hard to say.

They’re theoretically going to be frozen, not seized.

More likely that it pushes south florida real estate prices even higher even faster. Just the perception and expectation should do that. Less units that could even be on the market.

I expect them to be firesaled by the oligarches themselves. Get them liquidated before they're frozen, and get that desperately needed western currency that doesn't need to flow through embargoed Russian banks; a desperation life raft.

I had to do some digging to find any details on what these individual sanctions actually entail.

It looks like we're talking about freezing assets and imposing travel bans. One would have to assume that the oligarchs in question are smart enough to have anticipated this and took preemptive measures to safeguard their assets. I would also guess that enough of their wealth has been held outside the reach of foreign entities to begin with.

What do these sanctions aim to achieve? Do we think that the oligarchs are going to turn on Putin? I am guessing that there is nothing they can do to depose him. That's an obvious source of danger for Putin and I am sure he has taken every precaution to ensure that the oligarchs cannot take him down, even with a unified front. We have to remember who we are dealing with here. Putin has proved himself to be a ruthless dictator. I bet he has agents in position to assassinate any one of these individuals at a moment's notice.

I also do not believe that economic sanctions are enough to stop a determined Russian government from waging war. Once again, sanctions would have been anticipated. One has to assume that Russia has taken measures to mitigate the potential impact ahead of the invasion. Even without preemptive stockpiling, I am guessing that Russia is not going to run out of resources needed to wage war anytime soon and even in the long term.

I have analyzed Russia's imports and exports and it looks to me that they are capable of surviving permanent economic isolation from the west, at least in terms running a war economy. Russia seems to be quite economically self-sufficient on that front. Its common imports with strategic value consist of industrial equipment and electronics. China, its biggest trading partner, will not stop providing these goods to Russia. I am not knowledgeable enough about the chip market or related goods like neon gas that was discussed here a few days ago. But once again, I would assume that Russia has plans for how to procure or manufacture military related hardware.

As for exports, yes, losing income from energy exports to the west will certainly hurt. But once again, there is no reason why more of those exports won't be shifted to China. With global demand slashed for Russian gas and oil, China should be able to buy these from Russia at very attractive prices. It would take a complex analysis to estimate how much Russian trade can be shifted to non-western partners but my gut tells me it would be a substantial amount.

There is no question that Russia's economy will contract without Western trading partners. But ultimately, who will this really hurt? I've been making the case that this will not materially impact Russia's ability to wage war in any way. If this was a serious weakness then Russia would not have invaded Ukraine to begin with. Logic would dictate that Russia has spent years preparing for this.

As for the day to day economy, I am not sure how much of a trickle-down effect this will have on your average citizen. Jobs will be lost but the energy sector is probably not doing much to enrich your average citizen beyond a source of income. Oligarchs will take a hit on personal wealth but I have already talked about how I do not believe they will be doing anything to overthrow Putin. My guess is that the loss of energy revenues will impact citizens most directly in terms of a potential contraction to social safety net payments.

My overall point is that I believe Russia can handle being plunged into a second Cold War from an economic perspective. Putin's actions indicate the desire and willingness to do so. It seems that Putin is hell-bent on restoring the Soviet Empire with him at the helm as Stalin 2.0. The Soviet Union collapsed because of the economic and bureaucratic failures of Communism. In Putin's view, both of these problems have been resolved. As an autocrat, he can pursue a consistent agenda for years to come. He is economically unhampered by the baggage of central planning and can rely on consistent future trade with what is soon to be the world's largest economy.

I was born in Ukraine and started school right after it gained it's independence. I still remember being taught propaganda about Lenin and the glory of the Bolshevik revolution in kindergarten. I feel terrible for the Russian people and hope that my countrymen will persevere for everyone's sake.

> If this was a serious weakness then Russia would not have invaded Ukraine to begin with.

Your analysis on whether your opponent has made a mistake cannot assume that they are so smart they'd never make a mistake.

For one, many people in Russia barely can afford food, and many medicines are imported. Prices on basic food were increasing over the past year, and not with sanctins further rise is inevitable.

There could be food riots.

Its like a stock trader looking at the market, saying to himself 'if the stock was undervalued, it's future gainst would already be priced in by the efficient market, therefore no stock is ever worth buying"

> analysis on whether your opponent has made a mistake cannot assume that they are so smart they'd never make a mistake.

why not? You assume they are perfect logical agents, capable of making any true deductions from known information. After all, this is what you'd do in chess.

The errors they could make are things like forced errors or deliberate misinformtion from the west.

USD savings accounts are accessible to everybody with a bank account and pretty popular. Although recently less so, because interest rates dropped to almost zero.

A dollar account at an Russian bank doesn't help if the Russian government seizes accounts so. And witg Russian banks being partially cut of from SWIFT, those accounts might be harder to come by.

Indeed. Though I think this is the measure of last resort for them. Right now they announced a very steep base rate hike and ordered exporters to sell 80% of inbound currency and these measures seem to be working - ruble rebounded from the high of 110 per USD early in the morning and is now trading at around 95-100.

There were pictures going around of huge lines at ATMs, as Russians tried to withdraw the maximum allowed.

Which was capped at… $20

Well, yeah. In a run on the bank situation the ability to withdraw money is going to be limited. But I was talking about widespread intent.

Also interesting that average age of people in the line was about ~30, I have the feeling that a large part of the population (older people) have no idea what is going on.

The older population knows exactly what's going on and already keep their savings stuffed in the mattress. The younger generations are now having to learn the hard way.

Yesterday I was at a local branch of my bank. There was a queue (~5 people), but the ATMs worked and the cash was plentiful, no unusual withdrawal limits. Photos are probably not fake, because the demand for cash is obviously there and some banks may have logistical problems with resupplying ATMs.

> There were reports (hard to verify obviously) over the weekend that places like jewelry stores were busy as people were trying to change their rubles to a hard asset.

This is business as usual in a currency crunch. Already happened twice in my memory (2008, 2014) - some people would panic-buy expensive items like plasma tvs. This is not indicative of some systemic collapse.

Why would jewelry stores even do the sale. I’d they do the sale then they too end up with rubles that are worthless.

I guess Id they have loans they could close them? But wouldn’t it be better to wait to sell.

Maybe, maybe not.. shops are probably not engaged in currency speculation.

And it's certainly possible that fest drives some people to buy crap jewelry at high prices..

History is full of examples for how letting a dictator run a country for a prolonged period of time will come back to bite the people in the behind.

Putin has used violent oppression to maintain his rule. The victims do not deserve your contempt.

Maybe the comment is about european leaders or even the russian oligarchs, not the russian people.

The comment is primarily about other countries governments and their wide lenience toward Putin, not about the Russian people. Without such leniency and appeasement (usually in the name of the oh-so-important "good economic relations"), no autocratic system can exist for long in todays world.

The US has a long, rich history of calling a foreign leader "dictator" then installing a new government. We kind of got tired of it because it's actually extremely unethical.

That's not quite true though is it. I suggest you read some Viktor Frankl and Scholznitsen. The type of leader a country has always has something to do with its citizens. It's not a one way street. If enough citizens stand up to dictators, you get a better system.

After all, almost all countries had kings and dictators at some point, and eventually some got rid of them.

There's room for nuance here, though -- while "democracy via revolution" is a good backstop[1], it's self-evidently a higher-friction method of regime change than electoral democracy. People in the USA or EU are more responsible for their government than Russians.

[1] Interestingly the French Declaration of the Rights of Man from 1789 includes the right of "resistance to oppression"

Looking at the chart of USD RUB this is going to have massive consequences.

IMO we have probably just got rid of Putin and brought back Russian Communism.

Then you will have a Communist block with China that instantly has nuclear parity with the West.

Anyone with savings in rubles just had their savings turned to dust. I think we underestimate the power of financial weapons in the 21st century.

Why would Russia go back to communism without Putin? He didn't cause the downfall of Communism. Their default could be many things, but reinstating the USSR is not one of them.

I feel like this is the time for NATO to move, at least into Belarus, and not after they have nukes.

Seems like Russia feels it can get away with anything by threatening thermonuclear war. At some point, a line should be drawn.

~95-99% of humanity across recorded history was ruled by dictators and autocrats of various stripes and colors.

Liberal democracy is the weird historical aberration, I'm not sure that claims made from its perspective are as normative as you think. Given some political trends we're observing, and its poor overall track record in dealing with relatively simple crises (COVID), it's still too early to tell whether or not it can survive in the long term.

Would a smart and well-connected Russian keep their savings as a Ruble deposit in a russian bank? It’s too late now, but I’d like to imagine that some individuals kept their stock market savings with international broners.

That's why a lot of sanctions go against oligarchs in a person. It is more discriminate and does not matter what kind of property they have.

For example, oligarchs Italian villas

https://www.icij.org/investigations/pandora-papers/uk-target...

The rationale is that you cannot do both support a dictator and plunder your own people, and then enjoy the benefits of European lifestyle without European rule of law based justice.

> rule of law based justice

What other kinds of justice are there? In Russia they do not have law based justice?

"(Rule of law)-based justice" not "rule of (law-based) justice"

I agree it's a tad hard to parse

https://en.m.wikipedia.org/wiki/Rule_of_law

They have Putin’s justice. Disagree with Putin and you go to jail.

Rule of law is the name of the principles that make sure everyone gets fair, just and equal treatment.

A businessperson probably not, but let's say, a software developer with a relatively good salary? Not sure if they would have any other options than Russian banks (or banks that would be affected by such a confiscation, even if they're not based in Russia)...

There's always an option to invest the money using foreign brokers like Interactive Brokers (they even have russian UI and support) who did not boot russians previously. Or buy a property and rent it, which is a popular option too. Or cash out the foreign currency and keep it under the mattress.

AFAIK, Interactive Brokers told all Russia-based accounts to move after sanctions were announced.

Maybe the cryptocurrency sceptics on HN who live in stable western countries without any fear of their savings disappearing overnight can now understand why it is a valuable invention.

I would say the exact opposite. So much pressure can be applied against an oppressive fascist regime thanks to the fact that the world is still using fiat. Russia cannot be trusted as a trade partner when Putin, just one guy alone, decides to put at risk more than 25% of worldwide wheat export just to satisfy his personal dream of a lost past glory. He is using nuclear threats to satisfy his own ego. That type of insane behaviour should be completely inacceptable in a global economy and has to be exponentially expensive to do if we want stable peace.

Trust between trade partners is one of the most important element of an economy but for ideological reasons crypto-currencies enthusiasts believe that should instead be delegated to a protocol. I think it's a fundamental mistake.

This. Sure, in the micro, maybe crypto helps Russian citizens protect assets during a difficult period, but so can gold. And, in the macro, these fiat levers are much more punitive to the regime and the elites that support it.

Not to mention crypto can help the wealthy targets skirt sanctions.

On balance, given that we are dealing with a war of aggression and loss of life, I'm grateful for these tools. And, even to the extent it causes some pain for the Russian people, that further erodes support for the regime's unjust campaign and turns up the heat on them.

I just read that Russia is the 5th largest gold holder in the world.

Yes, they spent the past ~10 years preparing for Western sanctions by buying gold and foreign currencies. They were warned by western countries before 2014 and took the time to adjust their strategy.

IMHO the most interesting change they did is to become self-sufficient regarding their food production, and even net exporter of wheat, corn, and other cereals. They correctly identified that was a risk and made necessary changes to reduce it to the point where they can leverage their position against other actors.

True, but I would argue that oppressive facist regimes pretty much exists because they can print their money to rip off common and working people. I am sure that if you ask russians if they are willing to give away their hard earned money to buy tanks in order to support a crazy dictator they probably will answer no.

> He is using nuclear threats to satisfy his own ego.

I think its more likely Putin is having to deal with a complex internal financial crisis which could affect Russian national stability. Putin may have something personal to gain from this, but there are bigger problems afoot if Russia descends into chaos. Something, mostly likely financial in nature, has happened to trigger the invasion into Ukraine. Raw access to resources?

So, whether a small portion of economic value is locked up on chain (or not) is unlikely to be relevant at this point.

> Trust between trade partners is one of the most important element of an economy but for ideological reasons crypto-currencies enthusiasts believe that should instead be delegated to a protocol.

Trust (assets) shared between trade partners which is not on-chain can be more easily manipulated as needed in a perceived crisis. We can see the US backed sanctions against Russia's interest are not being applied to Russian fuel exports, but instead target the wealth holder's stored assets. That implies a desire for control over the decision making process itself.

Cryptocurrency based assets would be more resistant to being influenced in this way and would limit the ability to manipulate the wealth holders, but only if their assets were on-chain.

I don't see how cryptocurrency changes this much, given the trust in raw assets relies on physical control of the asset, not a protocol that defines (or limits) how the asset is controlled.

It is in everyone's best interest this crisis in Russia and adjacent regions is addressed. How it is addressed, philosophically, is the real debate here.

> Something, mostly likely financial in nature, has happened to trigger the invasion into Ukraine.

I think he believe parts of his rhetoric. Of course the majority of what he communicates is posturing and lies but we can see recurrent themes in his speeches and articles. My understanding is that he really sees Ukraine as part of the Great Russia empire he wants to build and saw an opportunity to take action following events in the Western world from the past decade or so: instability in the US before and during Trump, Brexit and other fragmentation of Europe, NATO seen as weak and useless, US switching its focus to Asia instead of Europe, the way US left Afghanistan, rise of US and European isolationism, etc.

Regarding the ideology driving the Kremlin you can see those two Wikipedia articles: - the book "Foundations of Geopolitics ": https://en.wikipedia.org/wiki/Foundations_of_Geopolitics

- its author and "philosopher" Aleksandr Dugin: https://en.wikipedia.org/wiki/Aleksandr_Dugin

Those people aren't just cynical crony capitalists who want to make money for themselves. They have a clear fascist view of the world, with an ideal based on a "natural order" of the strong dominating the weak and dreams of a lost glory of the past. They developed a historical, spiritual, and political view of the world that defines their culture as the one that should dominate.

Yes, hand over your crypto keys or you may fall out a window.

That would not be unusual for Russia, and they'd first threat to throw out your immediate family.

In the soviet era, there was a period of political persecution focused on people suspect of having gold or hard currencies. People would be held indefinitely, and subject to harsh torture, until they let go of their assets. Good if you have some, worse if you actually don't. See Aleksander Solzhenitzyn, somewhere near the end of the first volume. And of course, the people torturing were part of the same organization that brought up Vladimir Vladimirovich Putler.

>Vladimir Vladimirovich

Using the middle name (unlike finger) is a high praise in Russia, though.

I’m not so sure. The volatility of crypto makes it really unattractive to me as a place to keep most of my money. Sure that volatility seems pretty tolerable if my national currency plunges 30% overnight but that’s a pretty unusual thing to happen. So I really wonder how crypto is supposed to help regular people who just a few weeks ago thought this war wasn’t going to happen.

Would you really argue the Ruble is more stable than Bitcoin?

>Sure that volatility seems pretty tolerable if my national currency plunges 30% overnight

I feel like that addresses the Ruble.

>but that’s a pretty unusual thing to happen.

Is the larger point. If you can magic 8 ball your country's future with all certainty, then yes, it is a good idea. Otherwise it's just speculative investment with your actual savings?

Yes? Just look at a chart of conversion rates between the two to USD over the past 5 years.

Yup, for Bitcoin it's pretty normal and expected to see double-digit changes in either direction.

Easy, use an stablecoin like DAI or MIM you can get also as much as 12% APY.

Edit: previously I used the example USDC which you can argue can be controlled by Coinbase.

Earning interest like that requires leaving your money with a custodian, which negates any protection against confiscation.

No, checkout decentralized finances (DeFi). You are leaving your money with an smart contract, which is an inmutable piece of software.

https://en.m.wikipedia.org/wiki/Decentralized_finance

So they must have solved the problem of writing completely bug-free software then? Otherwise leaving your money with an unpatchable service seems like a really bad idea.

I can see you didn't click the link otherwise you will have read the section about that.

"They" didn't solve that problem, it is not the solution to all problems in finances. So, whats your point? Vaccines does not prevent 100% of infections, does that means that they are worthless?

Nirvana fallacy: https://en.wikipedia.org/wiki/Nirvana_fallacy

Which section are you referring to? The one that says "Coding errors and hacks are common in DeFi"?

You said that the contract, i.e. the software, is immutable. This means that it can't be patched. If it can be patched it's not immutable, excepting semantic trickery like each version of the contract being immutable while what "the contract" points to can be changed in order to patch it.

And if you buy Turkish bonds you may get as much as 53%. Your point is?

Fair point, I shouldn't have mention that you can put your stable coins into a DeFi protocol because even if that's interesting is not the point of the answer.

I wanted to address that in the world of crypto there are stable assets pegged to some other FIAT if you want that.

Sorry if this becomes long but I need to explain my point of view. I live in a country that is not as authoritarian as Russia but is not a free economy like the US, people don't trust on FIAT and on banks because it had happened before that they took all our savings [1]. Even if this might seem like an isolated event, it happens every day. For example, if you work remote for a company abroad, the gov will exchange your USD on a wire transfer for the local currency and then not allow you to buy back USD. Our currency had a 60% of inflation last year.

I don't like the speculative aspect of crypto currencies, its volatility creeps me out. I wouldn't want to put my life saving on this. But I can see its value to circumvent corrupt governments and to make a free world. I do believe in humanity, the Putins are an exception and when you give people the opportunity to collaborate, most of them will choose to have a peaceful living.

Now, going back to your Turkish bonds vs DeFi. The difference is you can't buy those anonymously and at any point the gov. or exchange. They actually pay that much because no one wants to buy them, primarly because they don't trust they are going to pay that much. In a way, you can think of DeFi protocols are immutable math functions [2].

[1]: https://en.wikipedia.org/wiki/Corralito [2]: https://en.wikipedia.org/wiki/Decentralized_finance

It's true. Crypto-currencies operate in a black market and therefore enable people to circumvent financial regulations. But circumventing regulations put up by incompetent governments doesn't address the root of the problem which is the fact that you have an incompetent government, and this has a whole range of consequences that go beyond mere currency issues, and that you won't be able to "circumvent" with or without crypto-currencies. So, in my opinion, you really need to address the problem and abandon the illusion that crypto-currencies will fix anything.

My point is exactly the opposite, incompetent gov are a byproduct of having too much power to control the money supply. Do you think Putin will still be in power if he couldn’t control the economy, ie if he had no money? In that case, what’s the point of the sanctions?

The cicle which I am most familiar with, goes by like this: gov destroys private enterprise and free economy thru regulations and expropriations, unemployment goes up and people gets dependent on hand outs, the remaining jobs bears all the costs. Unemployed sees gov are they gods, they will kept voting for them forever, even if they live in complete missery, it is all they have.

They become a “cyst”, it is very hard to go back.

Well, this theory is easily refuted by the fact that there are governments that have the same degree of power and control over the economy and don't wreck the economy. Some governments cause hyperinflation, but most don't, even though all are in control of the money supply. The fact that a government can mismanage the economy doesn't mean that it will mismanage the economy. In fact incompetent governments such as the Argentinian government are not that common. In many parts of the world the rule is for governments to be competent, or at least to be competent enough to not cause an economic catastrophe.

Unfortunately data is not in your side. Most countries do not have economic freedom, moreover the less the economic freedom the worse the living conditions [1].

You might think that any country controls their money supply, that’s a fact. But can Biden for example, double the monetary base with his sole signature?

People in those countries could have great aspirations, to have a fair system, a working democracy, a better government and all that… but don’t forget they also need to live in the meanwhile, while fixing all those problems.

I’m not a user of crypto currently, but I see it as a way of shifting power. Similar to what the internet did for information.

[1]: https://www.heritage.org/index/ranking

All I'm saying is crypto is not going to make the institutions of your country work any better. Don't create the illusion that crypto solves a problem that it doesn't solve.

it is interesting that you referred to “black market”. If you come from a working democracy where what is “just” is close to what is “fair”, then “black market” can make you think of drugs, weapons, or these sort of ilegal things. But I want to let you know that in some countries we have to go to the black market to buy another FIAT with less inflation because it is illegal to exchange our currency even to protect our savings.

So, yeah we can call it black market but I like the term “free market”.

https://en.m.wikipedia.org/wiki/Argentine_currency_controls_...

They call it black market because a black market is not the same thing as a free market, otherwise they would just call it free market.

Say the central bank of XYZ set a fixed rate of 100 $xyz per USD but it becomes illegal to buy USD and no any bank is willing to sell you USD. In a country like the United States you might hedge against inflation by buying some treasuries.. but in other places they just make it illegal to do anything else.

This automatically creates a “black market” of USD where the price is whatever the people are willing to pay, in the end the free market finds its way.

Again, a black market is not a free market. A free market exists within a legal framework in which rules are enforced. In contrast, a black market is a clandestine market, where illegal transactions take place. This means, for example, that participants in the black market don't have legal recourse in the event of fraud.

“ In economics, a free market is a system in which the prices for goods and services are self-regulated by buyers and sellers negotiating in an open market without market coercions. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority other than those interventions which are made to prohibit market coercions.”

https://en.m.wikipedia.org/wiki/Free_market

And...?

The definition doesn’t say anything about legal, illegal or regulated. So, you have a different definition to most economists.

It is a market where prices are self regulated by supply and demand, without coercion. It perfectly suits for the exchange of of FIATs (or crypto) between parties.

You can call it whatever you want, anyways.

I recommend “Free to Choose” from Friedman as starting point.

You're mistaken. Most economists understand the difference between a free market and a black market in the same way that I do (I am an economist myself). The very definition of free market that you quoted implies the existence of a legal framework and of an authority with coercive power, since some behaviours are prohibited:

"In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority other than those interventions which are made to prohibit market coercions. Examples of such prohibited market coercions include: economic privilege, monopolies, and artificial scarcities."

Further, a market in which fraudsters can commit fraud with impunity is also not a free market but a dysfunctional market.

At any rate, the notion of free market is only vaguely defined, as it's not an important theoretical construct in economics.

As far as crypto-currency markets are concerned, these are not a single market, but many different markets, some of which are heavily regulated, so it's hard to argue that it's a free market.

what happens when the telecomms infrastructure is hit and shuts down? or when there is no power?

Traditional currencies are already 99% digital, I don't see a considerable downside to using crypto with regards to this.

Genuinely curious, what happens if the country instead firewalls/cuts off their internet from the outside world, how does Crypto handle that?

Because that is essentially what has happened now with the SWIFT sanctions.

SWIFT is not the only way for banks to communicate.

Cutting off internet from outside world is much more drastic measure, highly unlikely to happen for a prolonged period of time.

Even if it does happen, you can still use telephone lines to connect. [1] [2]

[1] https://www.dw.com/en/european-activists-offer-dial-up-inter...

[2] https://www.france24.com/en/20110201-speak-to-tweet-egypt-tw...

The 1% analog is redundancy in traditional currencies. Outside the developed economies a huge chuck of transactions is still done with physical cash.

I imagine it would be a lot more convenient to have some hard currency at hand when fleeing a conflict zone. One might need to bribe border guards at some remote location with unreliable (or non-existent) internet connection, to get to safety.

Sure, holding crypto doesn't prevent anyone from also holding physical cash.

Both are quite valuable tools to defend oneself. They have different balances between risk, convenience, liquidity, anonymity.

If you want to propose a non-state currency which can rival state-backed ones, solves problems, etc. please go ahead.

crypto ain't it

I don't follow. Do you see crypto as state-backed or allied to state-backed currencies?

Neither. Just trash.

OP is in favor of:

A) "non-state currency"

B) currency that "rival state-backed ones"

C) "solves problems"

One could argue cryptocurrencies don't solve any problem (good luck convincing Russians and Argentinians, but anyway). But they are "non-state" and they "rival state-backed" currencies.

Cryptocurrencies are absolutely a "non-state" and "rival state-backed" asset class, but I'd say it's mostly arguable, given the instability, illiquidity, and general inability (in most places) to exchange crypto for goods and services, whether they are "currencies".

We also have to consider they don't need to keep everything in crypto. Just use it to get out of the Ruble and later figure out what to do.

Whilst hoping that their savings don't get further devalued by extreme price volatility.

In the last month I have watched my crypto holdings fluctuate by something like 50%. There is no way in hell I would use crypto as a store of value for anything I cared about under those conditions.

If you want to peg your wealth to the USD, use a stable coin pegged to it. That's what Russians seem to be doing right now.

What you are saying would be similar to: there's no way I would use the financial system, look how the futures exchange is volatile!

Just keep it in cash, then, but you don't have to ditch the entire system because parts of it are volatile.

Does the futures market swing 50%?

Sure the smart ones use a stablecoin. But what about everyone else?

Seems to me like putting my money in to metal and burying it in my yar... an undisclosed location... would still be better than crypto.

Not if you needed to flee.

if such a fantasy situation were true, it would mean world governments would have vastly less leverage to pressure Russia to end their attack, greatly increasing the chance of a longer and possibly more widely-involved war, and in the more general sense making such countries much more comfortable for war mongering despots to flourish (for some awful definition of "flourish"). The Russian financial situation is a feature, not a bug, of a regulated financial system.

The financial system is controlled by the US, so it's just another weapon for the US to wield. Countries that want to remain sovereign (independent of the US) like China and Russia would do well to avoid it, and create an alternative system.

Yeah how's that working out for El Salvador?

The US & EU are attacking the ruble now. We have yet to see them attack crypto.

There's no reason to believe that it can handle the kind of pressure the ruble is facing.

While they may be all puppets attribution to specific comments ALWAYS matters and context is equally important. Otherwise you are just spreading FUD.

That is shocking, and seems enough to create a run on the bank on its own.

I assume you mean "seizing people's savings"? And although they're (probably) all puppets, it's still significant that this opinion came from "deputy from the Communist Party Nikolai Arefiev", and not from a member of Putin's own "United Russia" party, which is significantly more capital- (and oligarch-) friendly...

I think you should remove the word "probably". Even if you put it in parentheses, you give the small possibility that they are not puppets, which is untrue. Every single person in the Duma is specifically pro-Putin. Maybe there a some sleepers around Putin who appear to be pro-Putin in public, but in reality wait for the right conditions to assassinate him, but that's just speculation.

> seizing

aka stealing, war profiteering

>war profiteering

I doubt very much that it would make any profit.

if you just take things that belong to other people, of course it isn't called a "profit", but that's hardly the point.

I'm beginning to wonder if financially crippling the entire nation (and all of its innocent civilians) was the correct alternative to fighting. Possibly just as bad. Gonna have a lot of people starving, homeless, and in poor health. Putin will re-align the remaining pieces of the economy to focus on the war effort, and the Russian elites.

> Possibly just as bad.

No, it's much worse. Collective Punishment is a globally-recognized war crime:

https://ihl-databases.icrc.org/customary-ihl/eng/docindex/v2...

The US and the EU are flagrantly violating the Geneva Convention and everyone I know is cheering it on. Absolutely sickening.

This is a ridiculous comment. Putin started an unprovoked war against a country of 40 million. He's using the full power of the Russian state in this war and has access to nuclear weapons. He's currently engaged in indiscriminate shelling of civilians[1] (how's that for collective punishment).

What's your alternative to sanctions? Do nothing? Move NATO troops into Ukraine and start WWIII?

[1] https://www.axios.com/kharkiv-russia-ukraine-invasion-civili...

"on account of the acts of individuals for which it cannot be regarded as collectively responsible"

which is up for debate in this instance. I don't agree with you.

I do think the literal bombing of residences and hospitals, false flag operations, wearing the enemy's uniform, etc. etc. all constitute provable warcrimes which should be investigated. Not that I want to devolve into whataboutism, which I realize I'm skirting close to.

> which is up for debate in this instance

It's not up for debate. The Russian army acts on behalf of Russia. Therefore the whole of Russia is collectively responsible for the actions of the Russian army.

That's an interesting perspective. So you would say any economic disincentive used against a country is a violation because the population is impacted by the economic pains? Are reparations a violation of the same in your mind?

It seems any/many actions taken against an adversary will have knock-on effects of the population of the adversary, whether financial/economic or militaristic.

Does the focused nature of the sanctions thus far not change your calculus? Or is it SWIFT only that you're referring to? What about: banning private Russian flights from air space throughout Europe; FedEx refusing to make deliveries to Russia; Arming Ukraine to enable a quagmire, costing the Russian government several billions per day to sustain their effort, and harming their economic position; even broad and impactful tariffs could be seen as a Collective Punishment?

I'm having a hard time determining what actions are not a violation of the Collective Punishment ban under your generous interpretation, short of direct military conflict. I don't think incentivizing hot war was the intention of those rules. My understanding was that they are meant to apply to POWs and noncombatants under rule of a warring party.

Fighting might have meant nuclear war. How is that preferable?

Oh come on. MAD is a well-understood notion, and has been since the cold war. If the various Soviet leaders weren't insane enough to initiate it, why would Putin? Nobody wants nuclear war. It's a bluff.

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