Trump met Putin: Even less rational than himself

But it seems something amazing is happening. Trump met someone even less rational than he is. And that's Putin. Because Trump believes Putin must understand that the war is draining his economy and should be looking for a way out. And Trump is offering him that way out. But Putin is laughing at him.

And yes, Trump might genuinely be surprised. And in this case, he’s actually more rational than Putin. Because the war really is draining the Russian economy. And all the new data coming out of there, breaking through the veil of secrecy, says exactly that.

Although, in the information space, there’s a strange notion that war is good for the economy. Honestly, I can’t stand reading articles claiming that the Russian economy is holding up because of the war, which is why Putin doesn’t want to end it.

Because an economy can't rely on war. It can rely on military spending. But if such spending is so important for your economy, you’ll keep doing it even after the war ends. You’ll build roads, bridges, houses, and invest in things you didn’t during the war. You’ll increase pensions and teachers' salaries. You’ll find a way out.

Not to mention that the spending Putin is using to finance the war creates conditions for uncontrolled price growth. The latter forces the Central Bank to fight inflation by restricting the value of money in the economy, thereby killing the healthy, non-military part of your economy. And as long as the war continues, this won’t change. Thus, only the end of the war provides a way out of the crisis. Not a guarantee to escape the crisis, but a chance to avoid it. However, where there won’t be any way out is when you run out of money. And the war will still be ongoing.

So the main issue is not the war, but the military spending. Which can easily become non-military if you want to make it so. Especially since, over the past 3 years, Putin has directed all available funds to the war, ignoring many important expenditures.

But here’s the problem. Because military spending can indeed run out. Because money can run out. Because war is expensive. And since 2022, what’s helped Putin stay afloat is everything Russia earned over the past 30 years. And they put it in a drawer. And those savings are what they’ve been using, printing the rest. But the issue is that those same savings will soon run out. They’re probably only enough to last until 2025. After that, it’s just the printing press, just hardcore.

And don’t talk about oil. Because oil dollars aren’t enough. Right now, oil and gas revenues make up a third of the budget. And they won’t pull through when the money in the drawer runs out. That’s why Putin needs to end the war from a common-sense perspective. Because then there’s a chance for an influx of money. Then there’s a chance for real economic growth, based on investment. Because military spending is a dead expense. It doesn’t generate profit. It dies on the fields of Ukraine. And it doesn’t return to the economy. That’s why the Russian economy urgently needs at least a semblance of normality. To give itself a chance to not fall deep when everything that was saved is gone. Because compensating for all this can only be done with the printing press. And that always ends badly.

War doesn’t sustain your economy. War drains it. That argument about war keeping the Russian economy afloat is not only untrue. It directly contradicts the essence. That’s why the Russian market rejoices when Trump says he will stop the war the day after tomorrow. When he promises to lift sanctions. That’s why at such moments, the ruble strengthens and Russian stocks rise. Because if it were the opposite, there should be an inverse situation. But no. And Trump, out of all the assets, has contributed the most to the rise of the Russian ruble. Which was at 110 rubles to the dollar near the New Year, and now the rate is 85 rubles.

But no matter how much Trump tries to save the Russian economy, Putin is trying to prevent him. And this should greatly surprise the President of the United States. Who is trying to rationalize such behavior with negotiation strategy. Especially since sometimes Putin throws a bone of hope to Trump by stopping Shahed attacks for one night. But what’s hardest for a narcissist to tolerate is public acknowledgment that they’re being made a fool of. And maybe this will finally force the US president to act. The main thing is, let it not be against Ukraine...

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About the author. Serhii Fursa, investment expert, blogger.

The editorial team does not always share the opinions expressed by blog or column authors.