While we were all panicking about Ebola and the Democrats' getting schooled in the midterms, the bottom dropped out of the Russian economy.

The ruble has been nosediving for weeks, despite the fact that the Russian Central Bank has spent some $40 billion over the last two months to prop it up. In January, you would have to shell out 32.86 rubles to buy one U.S. dollar. Through October, that number edged higher and higher into the thirties, prompting nervous jokes from Russians as they watched their national currency lose value before their eyes. By November 1, a Russian would need to scrape together over 43 rubles to buy one U.S. dollar, a drop of over 30 percent.

Every day since November 1 has brought new lows for the ruble. By Wednesday, the Russian Central Bank, which had been spending billions of its reserve dollars every day to prop up the Russian currency, announced it was no longer going to do so. It was going to let the ruble float. (Technically speaking, it said that it would “only” spend $350 million a day to prop up the ruble.) 

The ruble promptly nosedived. 

By Thursday, the ruble was dropping so fast that people started taking photos of the ubiquitous exchange rate signs around Moscow. Here’s Kirit Radia, the Moscow correspondent for ABC.

That picture, and others like it, was taken on Thursday. On Friday, the exchange rate was being tracked not by the day, but by the minute. The ruble had collapsed to a historic low: nearly 49 rubles to the dollar, nearly 60 rubles to the Euro. (On January 1, one Euro cost only 45 rubles.) 

“While I was riding the trolleybus, the Euro grew by another ruble,” wrote one Russian journalist. 

And it looked like it was going to plummet further until the Russian Central Bank stepped and promised to support the ruble.

This isn’t a theoretical currency game. Much of what you see in Russia is imported, especially what the Russian middle class eats, drives, and wears. And the weaker the ruble, the fewer dollar-denominated iPhones you can buy with it. A crashing ruble makes prices do the opposite. According to the Russian government, projected inflation will hit somewhere between nine and 9.5 percent. Last year, it was 6.5 percent. In the U.S., for comparison, inflation is just 1.7 percent. As Buzzfeed reported yesterday, food prices in Russia have been skyrocketing: dairy is up 15 percent, and meat costs 18 percent more. 

Understandably, Russian officials have spent the last couple of weeks trying to calm Russians and telling them not to hoard foreign currency. And Russians are, understandably, freaking out. The chattering classes spent today trying to find which of Russia’s several economic crises over the last two decades makes for the most apt analogy. Because here's a picture of what the Russian ruble just did (and keep in mind that up is down for the ruble on this graph):

Thompson Reuters

There are several factors that have caused the ruble to disintegrate before our eyes.

One is the ongoing stagnation of the Russian economy, whose growth rate has been hovering near zero for a year. And before that, it was already in decline.

Second is the falling price of oil for reasons that have nothing to do with Russia: OPEC trying to undercut its American competition. This is a problem for Russia, which is so heavily dependent on oil that every year’s federal budget is pegged to an oil price. This year’s was $97 a barrel. Next year’s will be $96. Meanwhile, oil prices have been far lower than that, hovering in the low eighties.

Nasdaq

Third is Russia’s Ukraine adventure and Western sanctions. “Sanctions closed access to foreign capital for five or six Russian companies, but the result is that it’s now closed for everyone,” says Sergey Aleksashenko, a former Russian deputy minister of finance. The result is that, to pay off their debts, Russian companies now have to buy a large amount of dollars to fork over to their creditors. And with that comes the psychological factor: panic. “No one knows how far Putin’s going to go and how much economic pain he’s going to be willing to tolerate,” says Aleksashenko. “It’s a perfect storm.” 

Letting the ruble float free is the Kremlin’s way of opening an umbrella. For one thing, it insulates Russia from the falling price of oil: it may have dropped in dollars, but in rubles but it’s about where it was in January.

And yet, what we’re seeing is a major departure from what Putin and his financial wizards usually do in times of crisis: they spend heavily from Russia’s massive reserves to prop the ruble up. This time, the Kremlin has decided to hold its fire, and save its bullets. “It’s a huge policy shift,” says Alexander Kliment, a director of Russia research at the Eurasia Group. “Putin’s priority is now to preserve Russia’s international reserves as much as possible because he knows he’s going to need them.” Another priority is to prevent a budget deficit. “Because dependence on the outside world is a form of weakness for Putin,” Kliment says. “For all these guys, the 1990s was a period of weakness when Russia had to go hat in hand, asking for money. And they want to avoid that.”

That is, the disintegration ruble is merely a symptom of something much deeper and more worrying. This is Putin digging in; this is Putin reinforcing his foxhole and preparing for the long fight ahead. He will not let go of eastern Ukraine, and he is trying to keep the reserves full so that he can survive the long fight ahead.

The problem, though, is that the pressure inside the system is rising. Food prices are jumping and, though so far, Russians mostly blame the West for their country’s economic malaise, it’s not clear how long that will last.

Far more alarming, though, is the struggle over resources that is starting to take shape among the billionaires in Putin’s orbit. In January, I quoted Elena Panfilova, now the vice president of Transparency International, who predicted that the elites will start to cannibalize themselves as they fight over a rapidly shrinking economic pie. These men are used to a certain level of income and it is one that is hard to maintain when your economy isn’t growing. At all. And so, over the last year, we’ve seen the system eat two men who were once quite close to Putin. Earlier this year, Sergei Pugachev, the man known as the “Kremlin’s banker,” fled Russia, a warrant out for his arrest. This fall, Vladimir Yevtushenkov, one of the wealthiest businessmen in Russia, was arrested. In record time, a court said that an oil company he owned actually belonged to the government, and it was gone. 

In an interview last month with the Financial Times, Pugachev warned that all the previous rules of the game were nullified and all bets were off. “The country is in a state of war,” Pugachev said. “And therefore big business cannot live as before. It has to live under military rules.” Of Evtushenkov, he said, “There is no point in anyone looking for a mistake by Mr. Yevtushenkov,” he said. “This is just the system starting to eat itself.”

And there’s the rub. The ruble crashing won’t change anything today or tomorrow, but this is just the system starting to eat itself, this is just the system starting to crack. As I've written before, historically, economic crisis triggers political crisis in Russia. No one knows when one of those cracks brings the whole thing down, but there’s a growing sense in Moscow that it will happen sooner than we all think. Putin seems intent on it.