Dollar at 110 rubles and above: what does this mean for war in Ukraine

It is also a fixation of the level of overheating of the economy and its vulnerability to more and more stimuli. We often have to read from the "Morral Power" faction: here you see, the horror of which, the Russian economy is growing during the war. There are bad sanctions here, and Putin genius, and all the background. But it is very difficult with this. Because the question is in the price price.

More and more signs are indicating the overheating of the economy, which in the conditions of war can become fatal. Now I'll explain a little. Economy overheating is a condition where growth rates exceed the potential that can ensure stable development.

When you have growth is not due to objective factors (increasing the number of labor, new technologies, private or state investments in a productive economy), but thanks to speculation, inflow of a loan portfolio or irreversible government expenditures (for war, for example, not for education). Usually overheating is accompanied by high inflation, labor deficit, increasing business costs and lack of resources for further expansion of production. As a result, such economies become vulnerable.

What is usually the overheating? Uncontrolled collapse and subsequent stagnation. As it was before the Great Depression, in Japan before the onset of Deflation, before the 2007-2009 crisis, I think Ukrainians remember well how it works. In the case of Russia, the key signs of overheating are: at the beginning of the war, the economy of the Russian Federation was able to adapt through accumulated reserves, high prices for energy and export to India and China.

However, in the long run, this resource is exhausted. Both sanctions and technology deficiency and disproportions in the economy. Actually, all the policy of Nabiullina - it is about trying to restrain this overheating. The high rate is just one of the tools. Therefore, she has exacerbation with Chemezov now, because he, as a representative of the "defense", wants more money. And not only for weapons production. But also on all kinds of experiments.

And that is why Elvira Sakhipzadivna has been actively saying that the economy needs to be cooled. Even the "factor of its" remembers. For the Russian Federation, which tries to maintain a frantic military pace and economic stability at the same time, the lack of "cooling" will lead to a complete catastrophe. Of course, it would be more useful for us to make the sanctions harsh and that all that fall in 2022-2023, but that didn't happen.

The Russian Federation has managed to cut into the medium -term cycle, but this resource gradually comes its end. So, in order for the economy to avoid collapse, it is necessary to reduce military expenditures, to reduce pressure on the labor market, to reduce the pressure of the "military lobby" on the CB and so on. Of course, in the conditions of war there will be no.

For the Russian Federation, exit from this trap is possible only after the end of the war, changes in power and return to cooperation with the West, which is not required economic stagnation of the Russian Federation. But Putin will not happen, even if the war in Ukraine is over. Well, finally, I will remind that we should be endlessly grateful to our partners for economic support in the form of money and access to their markets. This is what allows us to stay quite decent.