Hard currency?

The ex-Soviet auto history podcaster often mentions that trade between the US side of the world and the Soviet side was difficult because the ruble wasn’t a ‘hard currency’.

I used to hear that phrase in the news and didn’t question it at the time. The news told us Soviet money wasn’t hard, so it must be useless.

In the last 10 years, spurred by the bitcoin hoax, I’ve been trying to understand the meaning of money. From this somewhat more informed viewpoint, the standard description of Soviet money is sheer nonsense.

What did hard mean?

If hard meant inflation-proof, Soviet money was harder than ours. Our currency is constantly moving up and down relative to internal products and relative to other currencies. Soviet money was more insulated from both types of movement.

If hard meant backed by gold, Soviet money was no better or worse than ours. Per wikipedia, there was hyperinflation just after the 1917 Revolution. Lenin got things under control in 1922 after we stopped invading Russia, and tied the ruble to gold. The tie wasn’t firm, but ours wasn’t either.

Most importantly, Gosbank tried to keep the amount of currency proportional to the amount of real value. In the 60s and 70s the government mainly ran on VAT, which is a direct measurement of the accumulation of real value. When the total increased, the amount of currency in circulation was increased to match.

In recent decades Russia is less strict, but still tries to function with less debt and speculation than our system. Our currency moves around to suit the greed of the stock traders and speculators, with no connection to gold or value.

So what did the media and government mean? I think they meant exactly the qualities I just listed. Soviet currency was “inconvertible” BECAUSE it was grounded in real value and insulated from our speculators. It was “soft” BECAUSE it was truly hard.