Guess which currency has stronger fundamentals— the dollar or… ruble?

December 17, 2014 by element115
Last night, the Russian central bank announced a shock decision to hike up its key interest rate from 10.5% to 17%, effective immediately. Incredible.

On Monday alone the ruble declined more than 9% against the dollar, and almost 50% in 2014. It looks like a massacre.

If you listen to conventional financial news, they’ll all tell you that you’d have to be insane to own anything in Russia right now—stocks, bonds, currency, etc.

They’ll tell you that the ruble is in freefall, and that the dollar is the place to be.

...start off with the premise that ALL paper currencies are fundamentally flawed.

Our global monetary system is absurd — the idea of letting unelected central bankers conjure as much money as they want to out of thin air is simply insane.

...if you want to understand the health of a currency, it’s imperative to look at the ISSUER of that currency, i.e. the central bank.

...level of solvency.

The US Federal Reserve only has a basic capital ratio of 1.26%. Talk about razor thin. (This is down from 4.5% just a few years ago)

That means if the value of the Fed’s assets declines by only 1.26%, the issuer of the world’s dominant reserve currency becomes insolvent.

On the other hand, the Russian central bank’s ratio is 12.5%—literally almost TEN TIMES GREATER than the Fed.’s important to see the amount of REAL ASSETS that a central bank holds in reserve.

“The Federal Reserve does not own gold.”

How much gold backs the dollar?

Precisely zero point zero percent. Zilch. Nada.

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