This is from an editorial at Investor’s Business Daily:

As Russia’s ruble plunges, its economy is fast melting down. …

Russia’s central bank raised official interest rates to 17% from 10.5% in a bid to halt the ruble’s stunning plunge, the largest since 1998’s ruble crisis. But on Tuesday, even that desperate rate-hike move failed, as the ruble continued to dive another 4%.

Next up, in all probability, will be capital controls. Putin might even confiscate citizens’ savings by forcing them to swap dollar-based savings accounts for debased ruble ones. This kind of shabby thievery has been done before, but mostly by Latin American dictators. …

How could Russia’s economy go into meltdown mode so fast? …

The major reason for Russia’s implosion is the decline in oil prices. The country relies on selling oil to earn dollars, and the more than 30% drop in oil prices has hit the economy and the currency hard.

A recent estimate by Russia’s Finance Ministry says oil has to average about $117 a barrel for the government to balance its budget. At a current oil price under $60 a barrel, Russia is a fiscal disaster.

The U.S. fracking revolution is a big reason for this. America now puts out more than 9 million barrels of oil a day — up from 7 million barrels just two years ago.

The oil and natural gas fracking boom is happening on private and states’ lands – against the will and the policy of the Obama administration.

As crude prices have declined, oil producers from Venezuela to Saudi Arabia to Iran have felt extraordinary economic pain. Now Russia’s feeling it too, and with political turmoil growing, Russian and foreign investors are leaving the country in droves — and taking their hard currency with them. …

Capital flight is a disaster for the ruble, and is likely to set off double-digit inflation soon.

Interest rates may have to go even higher to stave off a total ruble collapse – 20%? 25%? 30%? No one knows.

But higher rates, soaring inflation, a 60% decline in the stock market and reduced oil revenues mean 2015 is likely to be a nasty year for Russia’s caving economy. …

“Putin’s consistent policy of increasing state economic control may well be leading Russia on the path to stagnation and economic decline,” according to a report issued by the Heritage Foundation in September. …

[Russia’s] reliance on oil exports, the trigger for this crisis, is an obvious one. … Russia also faces a shocking demographic decline — its population is actually shrinking, and it has the odious distinction of being the only industrialized nation in which the average life span is falling. … Russians with skills and schooling are leaving in large numbers, a brain drain. A 2013 survey found 45% of university students wanted to leave the country and live permanently outside the former USSR. What’s left to run Russia’s enfeebled economy is a shrinking, unproductive remnant.

Russia should try a free market economy. It is the only way to prosperity. And then we could have peaceful trading relations with Russia at last. But Russia is very unlikely to do that. The Russian people have never known freedom under the rule of law. They have never wanted it. They get the governments they deserve.