Over the course of this past November, three countries were expected to see a wave of right wing success in their upcoming elections. Denmark, Brazil, and the United States, were embroiled in elections of great importance – not so much due to the next four years of government, but for the long term cultural trends they represent.

All three countries saw significant right wing success around 2016, followed by what is now a surprisingly successful pushback from their left wing status quo.

In America, this has been in the form of the disastrous last two years of the Biden administration as well as mediocre results for the right in the Midterms. Mediocre enough that Donald Trump’s future as the GOP’s main presidential candidate has been openly questioned.

In Brazil, a hostile state apparatus sought to quell the flames of support for Bolsonaro and the left has now successfully ousted him during this past election.

And in my home country of Denmark, our left-wing government had successfully taken on the mantle of populism to win the elections back in 2019, only to impose lockdowns and egregious breaches of the Constitution under the pandemic.

During the elections of this past November they not only managed to maintain an almost unchanged number of votes compared to 2019, the social liberal party that forced them to call an election over their continued breaches of the constitution and peoples trust have seen their voter base cut in half.

As a morbidly ironic cherry on top, several of the small villages of northern Jutland that relied heavily on mink farming voted overwhelmingly for the political party that destroyed their way of life.

Despite the large differences in the cultures of these three countries as well as how the reassertions have played out, the right-wingers in all three countries had developed very similar, but equally dangerous narratives on what should have happened;

These narratives all revolve around some form of revolution, wherein the capital P People have realized the tyrannical nature of the left and rise up, and through the Democratic Process push the country back towards Truth, Justice, and Liberty, and render us from corruption and progressive tyranny. It just so happens that it didn’t pan out that way.

The cause of this dissonance between right wing mythology and left wing reality however, is not to be found in some unknown source of leftist competence, or a successful propagandizing of the voters, but in the Right itself.
Specifically the populist savior mythos that the right has capitalized on since the campaign of Donald Trump in 2016.

Here, it is important to make a distinction between populist policies and populist savior mythos. Populist policies are merely whatever form of policies are written with the intent of appealing to the working man. Things like lowering immigration, or removing CRT propaganda from schools are contemporary forms of populist policies from the Right, while raising the minimum wage or giving more power to worker unions are examples of Leftist populist policies.

It should be noted that these policies do not need to actually be beneficial to the working classes, nor that being populist inherently means they’re harmful either. It is simply a label for any policy, good or bad that aims to appeal to the lower classes. The issue here, however is the mythos.

As it has resulted in the cult-like mentality that as long as the correct person is voted into power (Donald Trump being the best known example of this) victory is assured, as well as a distorted view of democracy.

The populist mythology was effective at the time, but was also simplistic and overly black and white. This is nothing new, it is in fact a historical norm for any successful narrative; the problem is that this time around there were no checks and balances within the Right that could mitigate the negative effects of the current party narrative.

This is usually done by having a well established elite that understands the shortcomings of the narrative, and knows which of the newer recruits to select for or filter out of the upper parts of the party hierarchy.
The checks and balances were not present this time around, however, and now the Right has a lot of people believing their own propaganda way too far up in the party.

The results of believing too much in the populist narrative in question have been overly naïve views on not just democracy but a genuine belief that there is a right side of history, that there will be a permanent victory over the forces of evil (the left), and that democracy unhindered and without interference will always move towards the side of the party that is on to the right side of history. At its core this is a surprisingly leftist and revolutionary way of thinking. Combined with a characteristically Protestant Christian form of moral prudence.

Since all actions are filtered through the lens of right vs wrong side of history, even the most benign attempt to persuade public opinion towards the right must be stomped out, with much more extreme prejudice than they’d display to even the most sadistically violent Antifa member, as long as it in any way is perceived as ”rude” or ”indecent” or a ”danger to Our Democracy”

What’s more, the criteria for what is ”immoral” is barely even dictated by anyone on their own side, but more often whatever far left propaganda manages to bubble up through the legacy media. In practice this means the Left can declare any rules of engagement they feel like, and no matter how ludicrous they are, no matter how obvious it is they themselves don’t take said rules seriously, the Right will enforce them upon their own and solely their own with unparalleled religious zeal.

It doesn’t matter that the Right themselves are aware that said propagandists are merely trying to manipulate them, nor does it matter what consequences following said propaganda will bring. As long as it touches their ideological blind spot of recoiling from anything and everything that is not pristine and principled, they will instinctively jump on the opportunity to throw as many spanners in the works of what any sane man would call their party fellows, until they have returned the Right to its state of ”principled conservatism on the side of democracy”. Which almost always is identical to a state of stagnant ineptitude.

Much of the Right’s current miserable situation is as a direct result of this segment. And as much as I hope dearly that at least some of these people will realize how wrong they were in following the ”will of the people”, now that the populace is kissing the hand of what they perceive as totalitarians on the wrong side of history, I honestly fear they’re too emotionally invested in their ideological framing for anything to convince them.

While it is impossible to have a political party without these people – just as it is impossible to be without any other form of narrative in an organization, too many of them have moved far too near the core of the organized right in far too many western countries. If the Right wants to regain its footing, it is to push it’s populist tendencies back out into the peripheries and ensure it’s core is more in tune with reality.

If the right instead chooses to preserve its delusional aspirations of sainthood it will experience the same filtering out and discarding at the hands of cruel nature as any other entities that proved unfit for their environment throughout life’s evolution on this earth.

One of the recurring themes thrown around by those questioning the efficacy of sanctions against the Russian Federation is the postulate that the Russian Rouble is at its all time high. The slightly more informed ones nuance things and say that the Rouble is at its 5-year high (which is also closer to the truth). Tucker Carlson claimed yesterday that the Rouble hit a 7-year high (timestamped link) but even that is also a debatable claim.

7 years ago $1 would buy 50 roubles. Today it buys 60 roubles. So on a 7 year trend, the rouble is in fact worth 20% less.

The evolution of the Rouble, their argument goes, shows not only the inefficacy of sanctions, but it also allegedly proves that it’s making Russia stronger. But is that true?

Now, there is a lot to discuss about the sanctions regime – and certainly some of the sanctions are outright useless or ill-conceived – but the point about the exchange rate is a non-sequitur. The answer to the point “the RUB is at an all-time/5-years/whatever-lengh-of-time high” is “So what?”. The nominal value of the exchange rate is only a minuscule part of the story and is rarely a relevant one.

Some comparisons

If the argument had been true – that a higher exchange rate means a stronger economy for that country – then that would necessarily imply for everyone to believe that Somalia is at its best economically over the last 17 years.

But is that the case? Well, not really. Somalia’s economy is mostly stagnating – and has been mostly stagnating for most of the last 20 years with a brief exception in 2014-15.

Of course, there are multiple explanations for this. The locust infestation, the floods, the inevitable imports of inflation and a few other local and regional crises that have hit Somalia over the last 5 years explain this phenomenon really well (in addition to the historical baggage that the country is carrying).

But if the exchange rate had been an important part of the story, then the economic situation in Somalia should’ve improved instead of worsening. But it didn’t because the exchange rate is a poor proxy for measuring the economic strength of a country – be it Russia or Somalia.

My argument stands even when looking at more developed and wealthier countries.

The Israeli New Shekel, for instance, has a higher exchange rate against the dollar today than it had in 2016. Yet the economic growth (and the corresponding level of prosperity) of Israel has, at best, a light correlation with the exchange rate. Heck, Israel had over the last 15 years some years in which it recorded economic growth yet a negative annual change for the same year.

If the story Tucker Carlson and others are telling had been true, and a good exchange rate and GDP growth meant increase in prosperity and economic strength of the country, then that would’ve been easily noticeable in most countries throughout the data at least over the last 20 years. But it’s not.

On capital controls

Capital control represents any measure taken by a government, central bank, or other regulatory body to limit the flow of foreign capital in and/or out of the domestic economy. These controls include taxes, tariffs, legislation, volume restrictions and a whole plethora of other measures.

Ever since the start of the war in Ukraine, the Russian Central Bank imposed quite a few capital control measures: it banned Russian companies from sending their funds overseas (measure somewhat softened in June), introduced a mandatory rule for export-oriented companies to sell as much as 80% of their forex revenues at home (later the threshold was lowered to 50% but the measure overall still stands) and made it very difficult for regular Russians to buy physical US dollars or Euros even at a loss (which led to the street exchange rate to skyrocket – something unseen since the old Soviet days). Most of these were adopted even before any Western-led economic sanctions had been adopted.

In practice, this means that a Russian citizen or resident cannot take advantage of this “good exchange rate” in any meaningful way. In other words: the Russian Rouble may be at its “best moment in X years”, as the story goes, but nobody can meaningfully confirm that in practice because it’s illegal and nearly impossible to do so.

Russia is not the first (nor the last) to find itself in such situation. Iceland for instance introduced similar capital control measures in 2008 to prevent capital flight and a total meltdown of its economy. Those measures were only lifted in 2017 with mixed results. Just like Russia, Iceland stayed out of the international financial markets for years as investors (rightfully) regarded the Icelandic banking sector and the krona as untrustworthy.

When the capital control measures were lifted, the krona had the highest exchange rate in years (just like the rouble has now), yet the country got much wealthier in the years that followed the lifting of capital controls even though that also led to a negative trend in the exchange rate.

This also makes sense intuitively. For most people in any country (except for some exporters) it is preferable for hard foreign currency (USD, EUR, etc.) to be cheaper rather than more expensive. This is even more important for people in countries where so many of the necessary goods are denominated in a foreign currency (usually USD or EUR) – which is a situation in which most of the world (Russia included) finds itself in.

Convertible currencies and other factors

To an extent, all currencies are subjected to capital controls and other restrictions. But some (a lot) less so than others.

Currencies subjected to the least amount of controls and restrictions are called convertible currencies because they can be easily bought or sold on the foreign exchange market with little to no restrictions. A convertible currency is a highly liquid instrument (and thus more desirable) than a currency that is tightly controlled by a central bank.

That’s why people allover the world hoard $100 bills a lot more than €500 notes (which the EU is trying to abolish) or the 1000 Emirati dirham bill. The US dollar, for all its faults, is convertible. Of course, this is a matter of trust and historic precedent. But people around the world trust the US dollar so much that the $100 bill routinely tops the charts as one of the best American exports.

World currencies are divided between convertible, partially convertible and non-convertible. The Swiss Franc, the Euro, the US Dollar, the British Pund Sterling, Norwegian, Swedish and Danish kroner, the Canadian dollar, Emirati Dirham and the Australian dollar are the most well-known convertible currencies. But on this small list there are a few lesser-known members such as the Kenyan Shilling, the Singaporean dollar, the Saudi Arabian Riyal or the South African Rand. In fact, in some countries of Africa (that are not South Africa) you may end up in a bit of a shock when the ATM may cough up South African Rands instead of the local currency. That is possible because the local banks and the people trust the Rand to be interchangeable and liquid all the time including and especially against the local currency (e.g. Namibian dollar).

The partially convertible currencies are those that are liquid enough to be changed in some places but not easily on the foreign exchange market. The Kyrgyz Som, the Polish Złoty, the Romanian Leu or the Turkish Lira are some examples of currencies in this category.

The non-convertible currencies are, really, the majority of the currencies in the world. Russian Rouble, Kazakh Tenge, Tunisian Dinar, Uzbek Sumy, the Ukrainian Hrivnya and so many others are in the category of currencies that if you’re caught holding, you’ll be in a very difficult position should you will try to exchange them into something else without physically going into the place/country where they are in circulation (and sometimes not even then – as it’s the case with Tunisia or Russia).

That’s why my 160,000 Uzbek so’m/sumy leftover from my visit there are nearly impossible to change outside Uzbekistan – because the so’m, in addition to being inflationary in ways the US dollar isn’t, is not even partially convertible. Not even banks in the neighboring countries accept them. People traveling from Uzbekistan to neighboring Kazakhstan or Kyrgyzstan carry US dollar $20 and $100 notes with them.

Of course, there are degrees here too. The non-convertible Kazakh Tenge is a bit “more convertible” than the Tunisian Dinar and they are both more convertible than the North Korean won. But the point is that non-convertible currencies are not only less liquid, but they’re also less reliable (since their regulation regime is more likely to change overnight or with little notice than convertible ones) and, most importantly, information about them is routinely less relevant.

The Russian Rouble, being non-convertible, coupled with the “temporary” capital controls is one of the currencies whose nominal exchange rate is even less corroborated with the real world.

This has happened to Russia in the past too. In the 1980s, the official rate was 1 Soviet rouble (SUR) for 1.35 US Dollars (or 74 копейки/kopeks for $1). The capital control regime was even tighter than now. Once those controls were lifted, in 1988, the exchange rate moved from 0.74SUR for a dollar to 100SUR in under four years. And that was the official rate. On the streets (the only free market) the Soviet Rouble would trade for as much as 500 roubles for a US Dollar.

The lesson here is this: The exchange rate’s importance in the story of the economy of a country varies by the status of the currency. The more convertible a currency is, the more important its exchange rate is. And the less convertible a currency is (as it’s the case with the Russian Rouble), the less important its exchange rate is.

We can (and indeed should) discuss the role of sanctions in the West’s response to Russia’s aggression in Ukraine – but the value of the Russian Rouble as communicated by the Russian Central Bank is simply not an argument in this discussion.

We can (and indeed should) discuss the effect of sanctions (both on Russia and on the West itself) but touting the exchange rate of the Rouble does nothing to advance the argument in any direction. It merely distracts attention from more relevant aspects and, in the end, wastes everyone’s time.