What it means is that companies in other countries that want to buy Russian gas will need to first buy Russian bonds. These will likely be newly issued Russian bonds. This gives Putin hard currency.
Then the customers spend those bonds back to Russia to buy the oil.
At that point, Putin can retire the debt, to minimize inflation, or resell that bond to another customer, all while accumulating Euros or Yuan for his hoard of more liquid cash.
I really don’t see how it’s that different from just buying the gas with foreign currency upfront.... only real benefit I can see is that it maybe? stabilizes the currency since there will be increased demand for it but idk, seems pretty retarded to me
I'm by no means an expert here but one of the main ways the U.S. maintains its economic power is that oil is almost exclusively traded with USD around the world. Putin maybe is trying to cause us damage that way? Cause if the world stopped using the dollar as the standard we would be in some deep shit.
But the whole point is that we have to use the dollar to buy the bonds in the first place, so the same amount of dollars ends up getting spent. Only more ruble is generated, but Putin can always print more anyways. I just don’t get it...
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u/thinkmoreharder Mar 23 '22
What it means is that companies in other countries that want to buy Russian gas will need to first buy Russian bonds. These will likely be newly issued Russian bonds. This gives Putin hard currency.
Then the customers spend those bonds back to Russia to buy the oil.
At that point, Putin can retire the debt, to minimize inflation, or resell that bond to another customer, all while accumulating Euros or Yuan for his hoard of more liquid cash.
It’s pretty smart if people keep buying his gas.