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The Fall of the Berlin Wall 28 years ago

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  • #16
    Im talking about the abolishment of gold standard. The Bretton Woods financial system has collapsed as US defaulted on gold repayments in 1971. This decision was a direct result of overexpenditures on Space Race and Vietnam. Subsequantly it took Americans a lot of effort to maintain USD dominance over the global trade. The 400% increase of oil prices in 1973 helped a lot as oil trade was dollar nominated. If its not the crisis then what it is?

    By the way Soviet economy didnt collapsed. It was reformed. Rather political decision.
    Last edited by m0shiach; 12-11-2017, 08:16 AM.

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    • #17
      Originally posted by m0shiach View Post
      Im talking about the abolishment of gold standart. The Bretton Woods financial system has collapsed as US defaulted on gold repayments in 1971. This decision was a direct result of overexpenditures on Space Race and Vietnam. Subsequantly it took Americans a lot of effort to maintain USD dominance over global trade. The 400% increase of oil prices in 1973
      helped a lot as oil trade was dollar nominated. If its not the crisis then then
      what it is?

      B the way. Soviet economy didnt collapsed either. It was reformed. Rather political decision.

      Yes it did.

      Despite having some of the largest farmland areas in the world, it couldn't even feed itself, and had to import grain from Amerikkka. Alcoholism was also rampant before the collapse.

      Its amazing that the hardships only started when "capitalism" was introduced. Some have a very selective memory.

       

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      • #18
        Originally posted by Kilgor View Post
        Yes it did.

        Despite having some of the largest farmland areas in the world, it couldn't even feed itself, and had to import grain from Amerikkka. Alcoholism was also rampant before the collapse.
        Couldnt feed itself? Soviet goverment actually provided economic help to half of the worlds developing nations.

        Originally posted by Kilgor View Post
        Its amazing that the hardships only started when "capitalism" was introduced. Some have a very selective memory.
        The empty shelves footage is from Transformation period - early 90s. Thoughout most of late soviet period it wasnt like that. This is according to memories of people who actually lived there who I spoke to.

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        • #19
          At that time the USSR couldn't pay its account to NZ for food the Soviets said... hey we will swap it for some fertilizer. We have plenty of that to spare.

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          • #20
            Soviet foreign trade depended on oil prices. When they were high someone in the Gosplan made a decision to increase grain imports instead of increasing domestic grain production. With the collapse of oil prices in mid 80s Soviets were forced to borrow money from the West to maintain their trade balance. Foreign credits came with the political demands attached to them. Thats why Soviets couldn't react to the events in Central Europe the way the reacted in 1956 and 1968. Couldn't or didn't really wanted - Gorbatchev might have really believed in peaceful coexistence of two blocs.

            But to claim that Soviet economy was so ineffective it couldn't produce enough food is total absurd. For over four decades they have managed to maintain the global empire with all its mighty military industrial complex and scientific potential. Plus as Khruschev's Virgin Lands Campaign showed the command economy was able to effectively solve food shortage problems as well. It was all about the allocation of resources. The "collapse" of Soviet command economy was preceded by the political crisis in Central Europe in result of which most of economic ties and supply lines with former allies were broken.

            But all of the above doesn't change the fact that USA have faced similar empire overstretch in the 70s. The only difference Brezhnev was much less politically engaged comparing with his predecessors. That's why instead of benefiting from crisis in rival bloc he supported the Nixons Détente initiative.

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            • #21
              Yes, for all its scientific "achievements" it couldn't produce decent cars or other consumer goods.

              Food shortages were common in the early 1980s.

              http://www.nytimes.com/1982/01/15/wo...pagewanted=all

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              • #22
                Originally posted by TheKiwi View Post
                They sure were.



                is that Pat, from Saturday Night Live??

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                • #23
                  Originally posted by Kilgor View Post
                  Yes, for all its scientific "achievements" it couldn't produce decent cars or other consumer goods.
                  Again its all about where you allocate the existing resources. Both economies started cold war competition being in completely different shapes. USA became industrial power in 19th century, USSR in 1930s. The material and human loses in result of two world wars were incomparable. So having smaller economy USSR was forced to allocate higher percentage of GDP to keep its military industrial complex in parity with USA. The consumer sector suffered in result.

                  Originally posted by Kilgor View Post
                  Food shortages were common in the early 1980s.

                  http://www.nytimes.com/1982/01/15/wo...pagewanted=all
                  The memories of my parents and grandparents draw much less apocalyptic picture. Of course bleak Soviet univermags never had the abundancy and diversity of western supermarkets, no question about that. Indeed some goods were in deficit sometimes but in general people didn't starve. According to my own memories the long queues and empty shelves appeared in the very last days. In 1990-1991 probably. I think it had a lot to do with centrifugal processes in the rest of Eastern Bloc.

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                  • #24
                    There is this great Documentary about the Day the D-Mark was introduced in the former GDR. Best part is them following West-cigarette employees visiting "shops" in East Germany to distribute commercial stuff.

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                    • #25
                      Originally posted by m0shiach View Post
                      Im talking about the abolishment of gold standard. The Bretton Woods financial system has collapsed as US defaulted on gold repayments in 1971. This decision was a direct result of overexpenditures on Space Race and Vietnam. Subsequantly it took Americans a lot of effort to maintain USD dominance over the global trade. The 400% increase of oil prices in 1973 helped a lot as oil trade was dollar nominated. If its not the crisis then what it is?

                      By the way Soviet economy didnt collapsed. It was reformed. Rather political decision.
                      Not even the remotest of comparisons. The only shortages of consumer goods in the US of the time was petrol (briefly) and disco pants (throughout the 1970's). The only queues (briefly) for petrol. There were no problems with paying for imports, in meeting bills as they fell due or in any other kind of economic indicators of crisis. The only major problem was being unable to control stagflation, something that needed the Chicago School adherents to take over before it was fixed.

                      Any idea that the US could have been pushed over in the 1970's as happened to the USSR in the late 1980's is fantasy.

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                      • #26
                        Originally posted by m0shiach View Post
                        The empty shelves footage is from Transformation period - early 90s. Thoughout most of late soviet period it wasnt like that. This is according to memories of people who actually lived there who I spoke to.
                        My second wife was born in Norilsk in 1966. She lived in Gomel BSSR from the age of 4 and she says they always had the basics of life. She never went without winter boots and cloths, good food and healthcare or a nice place to live. Luxuries were hard to find though. You didn't always have a wide selection of goods and some foods were seasonal. Her mom had a container of money because there was not a lot to spend it on. When she was a teenager in the 80s things started to go wrong, goods of all knids became scarce sometimes and later in the 80s and 90s things became worse. She came to America in the 90s and was astounded at the variety. She always hated a lot of the food we eat here and I have to say most of the food in Russia is of better quality than we have. or at least it was.

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                        • #27
                          Originally posted by TheKiwi View Post

                          Not even the remotest of comparisons. The only shortages of consumer goods in the US of the time was petrol (briefly) and disco pants (throughout the 1970's). The only queues (briefly) for petrol. There were no problems with paying for imports, in meeting bills as they fell due or in any other kind of economic indicators of crisis. The only major problem was being unable to control stagflation, something that needed the Chicago School adherents to take over before it was fixed.
                          Thats because Soviets didn't take any steps to further undermine USD credibility. Otherwise you would have double digit inflation. Like you did actually. After Americans defaulted on their gold obligations the USD began rapidly devalueing against all major currencies. In 1974 inflation in USA reached 12% level. And thats despite skyrocketing world oil prices and 11% fed funds rate. Being one of the worlds largest oil producers USSR could have slashed oil prices by increasing its oil exports. That would have further undermined the demand for dollars. In addition USSR and Comecon were running their own international banks - namely International Bank of Economic Cooperation and International Investment Bank. These financial institutions didnt have any problems with gold convertability and could have potentially represented an alternative to USD dominated IMF and WB. Not to mentioned USSR could have mounted more political preassure on US sphere ie to finance more peoples revolitions and liberation armies making images like the Fall of Saigon much more frequent on American TV. Nothing of these have happened in reality of course. Soviets were stupid enough to believe in Detente.

                          Originally posted by TheKiwi View Post
                          Any idea that the US could have been pushed over in the 1970's as happened to the USSR in the late 1980's is fantasy.
                          But thats fine, mate. Ive noticed long time ago that Economics is not your strongest side. So you just stick to military history and navy topics ok?

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                          • #28
                            Originally posted by m0shiach View Post
                            Thats because Soviets didn't take any steps to further undermine USD credibility. Otherwise you would have double digit inflation. Like you did actually. After Americans defaulted on their gold obligations the USD began rapidly devalueing against all major currencies. In 1974 inflation in USA reached 12% level. And thats despite skyrocketing world oil prices and 11% fed funds rate. Being one of the worlds largest oil producers USSR could have slashed oil prices by increasing its oil exports. That would have further undermined the demand for dollars. In addition USSR and Comecon were running their own international banks - namely International Bank of Economic Cooperation and International Investment Bank. These financial institutions didnt have any problems with gold convertability and could have potentially represented an alternative to USD dominated IMF and WB. Not to mentioned USSR could have mounted more political preassure on US sphere ie to finance more peoples revolitions and liberation armies making images like the Fall of Saigon much more frequent on American TV. Nothing of these have happened in reality of course. Soviets were stupid enough to believe in Detente.



                            But thats fine, mate. Ive noticed long time ago that Economics is not your strongest side. So you just stick to military history and navy topics ok?
                            I have yet to read something so theoretical that it can only have been taught by some economic school during socialism:

                            Replace the USD? And with what the world would have traded? The USA was an enormous market and supplier for most of the world. That´s why, although the decoupling of the USD from the Gold standard annoyed many western european economies (de Gaulle asked for France´s gold in Fort Knox back), there was no credible alternative as the USSR was not in position to replace either in quality, and even less in quantity the supplies and demands of the US market.

                            And that goes for oil as well: although the Soviet Union has these vast ressources, they are hard to exploit because of the extreme conditions and the USSR was never far from its top capacities.

                            The Soviet Union started losing steam at the end of the seventies.

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                            • #29
                              Originally posted by Telmar View Post
                              I have yet to read something so theoretical that it can only have been taught by some economic school during socialism:
                              I understand you are bit shocked that discussion has turned this way. I think I will have to wait until you calm down because counterarguments you have presented so far make no sense.

                              Specifically:

                              Originally posted by Telmar View Post
                              Replace the USD? And with what the world would have traded? The USA was an enormous market and supplier for most of the world. That´s why, although the decoupling of the USD from the Gold standard annoyed many western european economies (de Gaulle asked for France´s gold in Fort Knox back), there was no credible alternative as the USSR was not in position to replace either in quality, and even less in quantity the supplies and demands of the US market.
                              I know such economics expert like you probably may hear it for the first time but as I said Comecon had their own international banks and own foreign exchange reserve asset similar to SDR - Perevodnoy Rubl which had gold backing. So the reason why financial institutions that were powerful enough to supply one third of world economy (Socialist one) with liquidity couldnt expand their activities to the rest of the world is beyond me.

                              Originally posted by Telmar View Post
                              And that goes for oil as well: although the Soviet Union has these vast ressources, they are hard to exploit because of the extreme conditions and the USSR was never far from its top capacities.
                              What? I recommend you to read about Druzhba oil pipeline. Soviets were suppling whole of Eastern bloc with oil since early 60s. It could have been easily expanded to Western Germany and further.

                              Originally posted by Telmar View Post
                              The Soviet Union started losing steam at the end of the seventies.
                              If it was true Soviets would never go to Afghanistan. They were at the peak of their might at that time. Both militarily and economically.

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                              • #30
                                Those high interest rates were in the era of inflation fear. They did it again in the 80s.
                                Also the other side, if inflation is that high and businesses are coping the economy isn't really weak. Unlike the reverse we have today.
                                Those same inflation rates would destroy the western banking system on a scale no taxpayer could save.

                                Why did they loose steam in Afghanistan?

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