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Comment by dralley | Hacker News Reader

The economy is growing because of massive government expenditures on defense. The same thing happened with Nazi Germany. It's not sustainable.

"Buoyant commodity prices" is also known as inflation. They have high inflation despite having a federal interest rate of 18%, which is sky high. Not great signs for their economy.

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Silicon Valley was built on defense spending.

Nobody is interested in 1970’s airliners though.

In that part of the world, if those are the only ones available...

Then it aint no Silicon Valley.

Not at the same scale. At the peak of the Vietnam War, the US spent less than 10% of GDP on the war. Most of the time it was only half of that (for comparison it’s less than 3% at the moment).

Russia currently spend about 40% of the GDP on Ukraine war ( coming off my memory, may not be 100% accurate). That can’t be sustainable and they will have long lasting impact.

The figure I've seen for Russia's spend is 40% of its budget, not its GDP. More like about 10 percent of GDP.

Still an insane amount, for a war that has been obviously insane from the very beginning. But a different number, in any case.

It's 6% which is not a dealbreaker for a country with one of the lowest GDP to Debt ratios (assuming the war does not stretch for another 5 years).

https://carnegieendowment.org/russia-eurasia/politika/2023/0...

They have low debt but little ability to borrow. Once they run out of reserves they won't be able to sustain these levels of funding.

Why would they need to borrow when they can continue to sell commodities (which the EU and US continue to buy, btw)? Besides, there's no indication that they are running out of reserves. Wasn't one of Putins first moves to get off of foreign debt?

Those commodities won't even come close to covering their spending spree. And their reserves are running dry very quickly. Likely by the end of this year.

Any source for their reserve run-down?

They’re going to have a hard time exporting oil and gas if Ukraine keeps attacking their refineries. Repairing those refineries requires equipment that Russia has a hard time getting thanks to sanctions.

Even if it was, many of the products that came out were not defense products.

Nazi Germany spent defense money to build defense products. The war was going to end eventually.

Like spending too much money on remote work products during a pandemic that will eventually end. It’s going to blow up.

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