As I watched this, it struck me that what was being said to a greater or lesser degree was applicable to western economies.
We are in the throes of a global financial crisis whose roots, in my opinion, are in the debt/fiat money system. The system is in runaway mode. This is akin to the marginal productivity of debt problem. As long as accumulation of debt can produce more prosperity than the cost of servicing the debt requires, the system chugs along. But when we trend into the situation where the accumulation of debt doesn’t produce enough prosperity to offset the carrying costs, then we rapidly accelerate into a destructive spiral. The positive compounding situation works in reverse. And it is not linear, it is parabolic.
We have a situation, where the backbone of our economic system has moved from a relatively hard money system (gold, silver and variants of the Real Bills doctrine) to a fiat system where debt never gets extinguished and furthermore grows with compounding. As long as the debt/fiat was producing positive results, the economic system could ignore the negative side of the arrangement.
However, when this turns down we got down very quickly because of the vast unextinquished debt. And since all the powers that be have strong vested interests, they kick the can down the road (part of this involves adding even more debt and fiat). This skews normal economic waves into Seneca waves. The economies are composed of infinite economic waves and normally the correlation amongst these waves have a tendency to balance out to some degree. But when vested interests skew individual waves into Seneca waves, they don’t do this evenly. This causes Seneca waves to cluster. Then previously low correlation waves that had minor impacts start to interact with unpredictable results.
There are economic, financial, political, societal waves, etc. This financial/economic “problem” is driving the political situation toward confrontations that likely mean war. It’s not going to pretty for ANYONE.
The only winning move is not to play. But that is not realistic when you have a lunatic on the other side who is desperate (Anglo-Zionist financial system). It doesn’t help when you have a tainted financial system within your own house, either.
JohnM, Can you give a reference or explanation of what precisely a ‘Seneca Wave’ is?
I know what a standing wave, an S wave and a P wave are, also a ‘good-bye’ wave but I have no idea what a ‘Seneca wave’ is. I know very little about the Seneca nation but I am aware the name derives from something like ‘big hill’ so I assume it has some reference to that. I tried a Google search and WIki on your clustered waves and came up with nothing with the word Seneca.
JohnM, you said “We are in the throes of a global financial crisis whose roots, in my opinion, are in the debt/fiat money system. The system is in runaway mode.”
Delve a little deeper. It’s not fiat/debt, but the runaway that’s near the root, and the root is capitalism — making money by having money and speculation, rather than producing, and the need for infinite growth to build the pyramid scheme higher to cover the usury — the debt with interest beyond realistic expectation of use of it for increase in production, and producing transfer of wealth from the working class to the wealthy.
Marx understood this, and more has been learned and understood bout it in 150 years since then.
Fiat money is based on currency being regulated by the government, which should be an instrument of the people — not of the elite.
What else regulate money? The ‘invisible hand”? The very wealthy and oligarchs? The accidental amount of gold or other single commodity which is supposed to accidentally coincide with the needs of development of production or social needs? Should the creation of currency be up to the so-called ‘free market’, which is constantly rigged, or the banks which depend on newly created money for it’s own profits and increase in wealth?
The problem is capitalism, with it’s sole interest in profits for the capitalists regardless of any needs of the working people or the nation or world.
Well, I see that I’m not the only one wondering what Chubais is doing there and why he is not paying his previous misdeeds …. and I feel a little less alone …. As I understood from my “friend senior strategist”, he was serving some purpose … but I also could misunderstand him … because he is not very clear to me… to say …. gives information with dropper …. What I see really schizophrenic is all that about Nabiullina, gives me even a little shame, but …. this girl, …. can sleep? She receives orders from Washington … and also from this… Silovnik? ….. But what is this? It seems that in Russia is in the public domain, but not for us. Please someone could explain? For example, friend senior estrategist ….. Come on, friend, be good, be mercy…it is Christmas!
Saker, guys, I do not understand macroeconomics ( only homeeconomics ) but I wonder what we could do to help. It will seem a bit childish, (I am sometimes ..) but I was wondering last week, when I was seeing the news on the ruble, if we could buy bonds of the Russian Federation or leave en masse, all we can, on vacation beyond starting next year. Here we are hundreds of thousands, as I have understood. A kind of crowdfunding … whatever as long as they do not achieve their objective!
When this endless crisis began in the EU and they, Troika, started crunching the Greeks, even though I usually like to visit and learn about other cultures while I’m young, I decided to spend the euros available for my vacation in Greece. I managed to take a friend with me …. But then I do not know you all….. why not do the same this year with Russia? (Transiberian! …. Vladivostock! St. Petersburg!, L’Hermitage! Stroll around! …… Moscow!, Lenin mausoleum!, Red Square!, Metro! Stroll around!, ….. Take kvass! jeje….)
Delving deeper brings us to very complex issues. I am trying to keep this discussion to what I view as a more basic issue. Whether the road is capitalism, socialism, communism or whatever is a separate issue from how the road is measured.
Having an elastic measuring stick that is at the constant mercy of government or entities with political (as well as other) agendas is detrimental to economic activity and the economic well being of the citizenry. There is more to life that economics and finance but some integrity in how we measure the value of our labours and goods and how we exchange them is important.
Originally the professed idea (I’m being charitable about the integrity of the original constructors) of central bankers to provide a certain set of rules and structures to facilitate financial commerce was “perhaps” laudable. But they have either become more stupid, more deluded, more corrupt as time has passed. You speak of the elite……… but the elite runs the government, then they issue themselves more fiat and then they use this fiat to buy more power within the government. Now if they issued fiat equally to all under some type of system at the same time, then what? Who decides? Who judges the judges? Who or what decides on who gets what, when and for what reason? And do you trust this who or what to maintain integrity as time goes by?
I’m left with the point that fiat, at the very least, must circulate in parallel with gold, silver and perhaps a Real Bills doctrine. Let the people have a choice in what they use. If they err, they will either learn or they won’t
Hi Saker ! I have just finished reading the Q & A that you provided for us a couple of weeks ago with Khazin…I printed it so I could read it better than just trying to get through it on the computer screen..
I really liked it. I have not yet watched this video, but I really like the Q & A and wonder if it would be profitable for us to have these regularly…
I wish there was a way to broadcast the document more widely…
Dear Saker (I hope you read this): The Khazin interview is depressing as it paints a picture of a state divided internally, with its economic wing under the direction of badly schooled economists and policy-makers. Adherence to lofty liberal principles is no excuse for the Russian Govt. You know as well I do how a western state would act if faced with such a problem (think Britain circa 1970 when it imposed capital controls, think how the US will act – and how quickly and how strongly). But enough of laments, May I suggest an action plan? Would you consider an Economic Policy Paper, authored by some recognized experts, prescribing both short-term and longer-term measures for the health of the Russian economy? If so, here are some initial thoughts: 1) Approach recognized economic experts from all over the world to collaborate on producing this paper. The initial list of experts can be suggested by readers of this site, and the experts approached then in turn should be asked to suggest more names. The experts should be pragmatic, have had an actual executive background in policy setting in Finance Ministries, Central banks, Economic Councils etc. and not just university backgrounds. A mix of academic and real-world experience would be ideal. Their political-economic philosophy should not rule out state intervention, nationalization of core industries, and so forth. But neither should they be strongly anti-capitalist. In short, pragmatic scholars of action, with no axe to grind, no ideology to sell. 2) Their mandate should be to define immediate fire-fighting policy for the Russian state, perhaps a 10-point action plan or some such action-oriented document. Think of Keynes’ “How to Pay for the War” pamphlet. 3) Their next mandate should be a more detailed document aimed at suggesting an Economic Policy for Russia for the next 4-7 years. The documents will have to be publicised by you using all your sources and contacts, and of course translated into Russian because the audience is primarily the Russian policymakers and intellectuals. The more I read of Russian economic policies, actions, and acts of inaction, the more convinced I become that Russia, although a world leader in science and technology, is badly in need of economic expertise. Your and readers’ thoughts??
IMO the problem is NOT capitalism. There is NO more capitalism but only cronyism. The biggest provlem is the ,revolving door’ between the private FED, Wall Street and US multinational companies. Think about it. The central banks interventions have eliminated the market, prices but especially prices of any risk one can imagine. Rhey have turned markets into casinos formthe benefit of banks. They are printing and distributing huge sums to corrupt banks just for playing around and rake in ,profits’ with the help of repo and derivatives. When bets fo wrong, they ,socialize’ the losses. These things have nothing to do with capitalism but with huge corruption only. Capitalism functions normally pretty well if evil central banks and revolving door schemes do not disturb or intervene.
Well, as I think of you will have noticed, I burn in curiosity, and I have been researching a bit since my last post. For all those as ignorant as I am, I think, I’m not sure, that these are the “Siloviki”, namely the right column:
..”pragmatic scholars of action, with no axe to grind, no ideology to sell”.
Look, I have to go to sleep, tomorrow I work very early, but…do you think the people you describe in paragraph above exist? You mean what in EU are known as technocrats and have been placed in some governments illegitimately by “The markets”? People like Draghi, Monti, Guindos, Rato, Papademos, former employees of Goldman Sachs and the IMF, who have broken multiple banks and economies in their wanderings? These are the ones who have organized unprecedented large-scale theft to European working class!
That the Russians were caught confessed, better would do my grandmother, if she was alive, mostly because it was good, honest people …..
I hope M. Khazin reads Larchmonter 445’s paper on the Russia China strategic partnership. Khazin makes an error when he asserts Nabiulina takes orders from Washington. She is bound by certain agreements with the IMF + BIS, as are all other central bankers, including the central bank of China. These agreements pertain to the international monetary responsibilities of each nation, but each central bank has latitude in doing what is best for the domestic economy. That being said, the IMF in particular stacked-the-deck in creating the IMF, which the BRICS are attempting to reform. They insist its governance reflect the changing economic weight of world economies and the IMF + BIS agree much to the anger of the USD Empire.
It is my opinion…mistakes were made and corruption occurred in the chaotic Yeltsin era, but these mistakes should be forgiven in most cases given the circumstances and let individuals have an opportunity to go on and contribute to a new Russia, rather than being punished. I wonder about M. Khazin’s motives. Whose agenda is he pushing? It seems to me if his advises were followed it would benefit the flailing AZ Empire. I begin to study the divisive finger pointing and doom saying of this man. He bares careful watching casting doubt on Putin in a storm!
If you base your opinion on the statements of M. Khazin, you have the-sky-is-falling version of economics and politics in Russia. I think Russia and China have had enough of Western Economic advice which is mostly based on ideology, rather than realism. Deng Xiaping said who cares if the cat is black or white as long as it catches mice! I think the Russia China strategic partnership is perfectly capable of handling their own economic and political affairs without advises from outsiders.
I thought readers would have some positive comments, not dismissals based on presumptions. I did not have in mind IMF and world bank types; I do have in mind some eminent names from India, Malaysia, China, and the US. The three first-mentioned countries have successfully staved off attacks on their currency and know how to run their economies, and the persons I had in mind are those who are not in with the current lot of neo-liberals. In any case, producing and disseminating an expert paper from recognized names can only spread better thinking. Unless, of course, you are a know-all and “need no advice from no one” -in which case God help you!
John M, If I understand you correctly you are likening debt to fiat money– as if debt money occurs as a result of fiat money. And also that it is desirable to extinguish the debt. May I tell you my understanding from Michael Hudson & Ellen Brown (Modern Monetary Theory)? It’s as follows:
It is the norm and in no way pathological for money to represent debt; even if your currency were gold-backed, the currrency wd be an IOU for the gold lying in the vault. Nor wd you wish to extinguish the debt, for that wd eliminate all of your currency.
Rather, one needs to get rid of all interest which doesn’t represent a contribution to production. Nonproductive interest is a toll on the economy.
When the result of govt borrowing is productive goods or services it should be interest-free. Our current central-bank system says that this wd be inflationary. But this add’l currency linked to production is NOT inflationary, MMT maintains and the printing of currency by the central bank in many instances is– for example for speculation.
The sharpest increase in our economic woes I believe is the direct result of the abandonment of Glass-Steagle in Bill Cinton’s time, which allowed every variant of speculation to be brought under govt guarantee against loss– thus vastly indebting the American people. Also the entire banking/financial system has become a species of gangsterism which controls the govt.
Fiat non-gold-based money is not a problem in itself as there are many historical examples that were very successful.
I am sorry I’m not able to summarize here a great many of the axioms of MMT. Michael Hudson is on the web in lots of videos, but I wd really recommend that you buy his book ‘The Bubble and Beyond’ or the new one.
Today the only economic theory presented as viable is the neo-liberal model, but MMT picks up all the objections to this model for 2 centuries and applies all of this economic experience to derive MMT, which is quite understandable & not technical as M Hudson presents it.
BTW, I don’t think it’s a matter of not knowing what should be done, but of getting it done in a Russia which is still under the sway of those who came into power in the 90s when Russia was a semi-colony of US.
It appears that Khazin, Glazyev & Starikov & others are all in agreement, but the bad guys are in power.
For example, here in the US there is a terribly corrupt system. If we elected a President who wanted to reform the financial, political & military systems this wd be difficult to do– especially if the President wanted to remain alive. There is so much corruption in the CIA, so many rogue political elements committing false flags, so much corrupt media, so many vested interests in the status quo. It wd be difficult to bring the banksters to justice; much of the judiciary is now corrupt, virtually the whole Congress has been bought, etc.
Khazin sounds a little petulant or just frustrated. His objection that you couldn’t put Glayev into the Central Bank because the 5th column wd put lies about him in the media seems too readily defeated.
From Khazin’s comments I understand better what Putin is up against. It appears the whole govt apparatus was corrupted under Yeltsin & now has a vested interest in resisting change: When your power & wealth are illegitimate you are not going to permit a legitimate govt/financial system.
but, nevermind, will put in my 2cnts anyway, because I think Khazin talks sense…maybe I can watch video later…
BTW
I was curious as to who would be collecting these experts’ opinions ?
I should have thought there’s enough books out there, in Russia too. Khazin actually has written a book. Why do you think Russia’s going to listen to your paper, if its you that’s planning to write it ?
As I see it, fiat money as it has morphed into is a representation of debt. The Real Bills Doctrine is a variant of this, but the idea here is that real value is exchanged between parties and then the obligations are cleared. There is the inception of an obligation, the passage of the obligation through a period of time and the extinguishment of the obligation. These are aspects of a currency. Currency is traded. But when the need to capture the aspects of the obligation (this is the savings aspect of money) by an entity (individual or otherwise), gold and silver fulfilled this role. It is not necessary for the capture (savings) to be gold or silver. It can be a Real Bill or contract but to be fully trusted to maintain the integrity of its value the counter parties need persistence through time since this saving may be open ended through a long period of time and may be transfered to other entities. This differs from a bond as this savings does not generate revenue. It is a fixed obligation. If you wish to invest this obligation (put your ownership of it at risk), then you normally will require interest or dividends from the investment that you have now entered into.
So money is not in its basic form a interest bearing concept. The nuance here that I would like to deal with is that in the concept of money as I see it, the value is already in it and not a potential promise. This is different from currency (though under the Real Bills idea the note is for a fixed period of time, usually quite short and often discounted). The heart of what I am trying to say is that there is a difference between a money where I have already provided the value and a money where I promise to provide the value. And here we come to the core of my problem with fiat currency as it is now commonly viewed. Governments, central banks, etc. create a money with no value preloaded into it. This means that they have no restraint on the amount they create. You could argue I suppose that they create a money commensurate with the value of the state’s economic output. But then, why is it being distributed to where it is now going (my view, it is the elites and the banks)? And how is the entity creating this money entitled to a portion of the said economic output?
There is a great depth to this discussion and I’m trying to focus on the essence of money without going deeply in how you use money. Then we do get into interest, financial regulations, etc. that we could be debating for the rest of our lives. :)
If I understand Khazin correctly he sees the current efforts of the Russian Government as schizophrenic because they want to revive a “shadow of the Soviet Union” and at the same time want to stick to some market principles – and this leads to Khazin’s idea of a “split personality”. Stated differently he believes that a collectivist principles and a market principles cannot live together.
The only collective system that we all know is the theory of the “bearded schizoid” Karl Marx (see Political Ponerology by Lobaczewski) which is IMO a very uncomfortable theory because it postulates an eternal civil war called “class struggle”. But humanity has known other collectivists theories f. ex: – the Incas apparently had a collectivist system that was part of their culture: I know that because of a trip to Peru where our Cuzco guide was a close friend of the archeological director who knew a lot about this subject – I also remember reading that China had a collectist theory which disappeared because of the burning of books of the first Chinese Emperor Shi Huang 213 BC ( I couldn’t find a reference to that collectivist theory, sorry)
But maybe Marxism is just a first – too divisive – collectivist theory, and maybe the current very surprising atmosphere in Russia where Christians, socialists, monarchists and others are all working side by side could lead to a new and better version of a theory of government for the 99%.
Friend, I hope you have not felt annoyed or disappointed, at least for my answer, but yesterday night, so late, that came to the soul. You transduce good intentions, as are the majority here to bring something, it’s just that, at least, yes I am disappointed with economics. Some years ago, and fully immersed in this megacrisis to that nobody sees the final I told on another forum that if there is a profession that has been discredited with all this that is that of economist. As also noted on one occasion Professor Monedero(Political Science), which can no longer is teaching the same in the faculties of economics, not with the same books nor the same theories. Simply, economic science has been unable to solve the problems of people, however much grip the curves and the capacity for self-regulation of a market that, as flawed, irresponsible, spoiled, brash, and victim of an endless greed, is unable to do so. Could anyone with these characteristics? We would trust someone with this behavior was capable of regulating itself? And, what is hopeless is the economic system, capitalism.
So if you believe that there is someone in the world (other than in US or EU) who have some good ideas to change this from its roots, proceed with the project, we are hoping that someone can think of something. In other fields where we work some, we are advancing, innovating, testing hypotheses and discarding those that do not work, and this has been achieved that people live longer and in better conditions, some jobs are less painful, communicate to people all over the world and give them access to an infinite world of knowledge … what the hell’s been doing economics? I tell you, watching how a handful can live in luxury and excess at the expense of others. Do not think, I’d love to change my mind, would be a good sign.
Why a director of a company or a bank must earn a salary of 6 or 7 figures? (And in this I do not agree with V.V.Putin). Perhaps contributes more to society than a doctor or a teacher? If these can live and do their job well with a salary of 3 digits, why those not? Enough of privileges, and to exploit the labor of others, moral change starts there, not going to churches ( eachone to do what he wants or prey wherever ) or returning to make women the weaker sex, over there have already passed and we do not want to return. The moral change means accepting that all human beings deserve a decent and dignified life and, for have that all for everyone, some will have to prescind their mega yachts, mansions, and its investments abroad (that not serve them rather than for their opponents tighten their nuts) will be done. The future will be socialist or not be, people are not stupid and has realized that this only works for a few, the elite. I said once that hurts me and I am ashamed how someone speak of Lenin and Stalin, but wonder how these men died? Not between the luxury. However, you can assert that they led the population of a huge country, directly, in a few decades, from the Middle Ages to Modernity. People were given access to education and culture, and the latter is the least to make them suspected, at least in my eyes. People know very well who are worshiped and who to erect monuments. People is not stupid.
Yes, Elsi, a lot of economics is a fraud as you rightly perceive. However, an economy, any economy whether socialist or capitalist or mixed, has to be managed and regulated. That is where a critical and deep knowledge of economics (I prefer the classical term “Political Economy”) comes in. Neoliberal economics is today ruling the world. It is an extreme version of capitalist thought. Unfortunately, I sense that a whole lot of Russian decision-makers have swallowed this extreme creed without understanding the overall context of capitalism and the different strands of economic thought that make up capitalism. Neoliberal economics is the propaganda of capitalism. It is not always how the western countries actually deal with their own economic problems. I somehow want the Russian intellectuals to come to a more critical awareness of capitalist economic theory so that they may use this knowledge to better their country and win economic wars. I have degrees in Economics but my knowledge is very limited and I am not a practising economist, so there is not much I can do. But I do know enough to be able to tell economic sense from nonsense.
JohnM, Thank you for your response. I will reflect upon it and also look up Real Bills Doctrine.
I will try to find a good reference which explains Modern Monetary Theory. I am always referring people to Michael Hudson’s book The Bubble and Beyond, but I need to find a shorter reference. Regards.
Philosophers to date have merely described the world, the purpose however is to change it.
He could have usefully added – generally “philosophers (intellectuals)” roughly describe a world changed by others at a time when others are engaged in lateral change – although the “division of labour” was not quite so apparent when Marx wrote the theses.
Therefore the “world” roughly described by “philosophers (intellectuals)” no longer exists as it has been subject to lateral change.
“I somehow want the Russian intellectuals”
Perhaps your want is unwarranted and the actors capable of facilitating your want ill chosen.
elsi’s observation of hypothesis testing i.e. the lateral interaction of theory and practice is the way out of an “apparent” conundrum.
Anatoly Chubais had/has utility as well as Mr. Khazin, although such utility may not necessarily conform to that which they perceive for themselves.
The weak points of both of these gentlemen include the notion of “I”, which is a norm in some cultural zones including the “Anglo-Saxon”, illustrated on ocassion within this blog.
As Engels was reported to remark – the proof of the pudding is in the eating – some courses recently being brought to table.
As I watched this, it struck me that what was being said to a greater or lesser degree was applicable to western economies.
We are in the throes of a global financial crisis whose roots, in my opinion, are in the debt/fiat money system. The system is in runaway mode. This is akin to the marginal productivity of debt problem. As long as accumulation of debt can produce more prosperity than the cost of servicing the debt requires, the system chugs along. But when we trend into the situation where the accumulation of debt doesn’t produce enough prosperity to offset the carrying costs, then we rapidly accelerate into a destructive spiral. The positive compounding situation works in reverse. And it is not linear, it is parabolic.
We have a situation, where the backbone of our economic system has moved from a relatively hard money system (gold, silver and variants of the Real Bills doctrine) to a fiat system where debt never gets extinguished and furthermore grows with compounding. As long as the debt/fiat was producing positive results, the economic system could ignore the negative side of the arrangement.
However, when this turns down we got down very quickly because of the vast unextinquished debt. And since all the powers that be have strong vested interests, they kick the can down the road (part of this involves adding even more debt and fiat). This skews normal economic waves into Seneca waves. The economies are composed of infinite economic waves and normally the correlation amongst these waves have a tendency to balance out to some degree. But when vested interests skew individual waves into Seneca waves, they don’t do this evenly. This causes Seneca waves to cluster. Then previously low correlation waves that had minor impacts start to interact with unpredictable results.
There are economic, financial, political, societal waves, etc. This financial/economic “problem” is driving the political situation toward confrontations that likely mean war. It’s not going to pretty for ANYONE.
The only winning move is not to play. But that is not realistic when you have a lunatic on the other side who is desperate (Anglo-Zionist financial system). It doesn’t help when you have a tainted financial system within your own house, either.
JohnM,
Can you give a reference or explanation of what precisely a ‘Seneca Wave’ is?
I know what a standing wave, an S wave and a P wave are, also a ‘good-bye’ wave but I have no idea what a ‘Seneca wave’ is. I know very little about the Seneca nation but I am aware the name derives from something like ‘big hill’ so I assume it has some reference to that.
I tried a Google search and WIki on your clustered waves and came up with nothing with the word Seneca.
[from Blue]
JohnM, you said
“We are in the throes of a global financial crisis whose roots, in my opinion, are in the debt/fiat money system. The system is in runaway mode.”
Delve a little deeper. It’s not fiat/debt, but the runaway that’s near the root, and the root is capitalism — making money by having money and speculation, rather than producing, and the need for infinite growth to build the pyramid scheme higher to cover the usury — the debt with interest beyond realistic expectation of use of it for increase in production, and producing transfer of wealth from the working class to the wealthy.
Marx understood this, and more has been learned and understood bout it in 150 years since then.
Fiat money is based on currency being regulated by the government, which should be an instrument of the people — not of the elite.
What else regulate money? The ‘invisible hand”? The very wealthy and oligarchs? The accidental amount of gold or other single commodity which is supposed to accidentally coincide with the needs of development of production or social needs? Should the creation of currency be up to the so-called ‘free market’, which is constantly rigged, or the banks which depend on newly created money for it’s own profits and increase in wealth?
The problem is capitalism, with it’s sole interest in profits for the capitalists regardless of any needs of the working people or the nation or world.
__Blue
Sorry SanctuaryOne,
I should have provided some background for my thoughts and also mentioned Seneca Cliffs (Seneca refers to Lucius Anneaus Seneca of ancient Rome),
Here is a link that provides some info: http://cassandralegacy.blogspot.ca/2011/08/seneca-effect-origins-of-collapse.html
Well, I see that I’m not the only one wondering what Chubais is doing there and why he is not paying his previous misdeeds …. and I feel a little less alone ….
As I understood from my “friend senior strategist”, he was serving some purpose … but I also could misunderstand him … because he is not very clear to me… to say …. gives information with dropper ….
What I see really schizophrenic is all that about Nabiullina, gives me even a little shame, but …. this girl, …. can sleep? She receives orders from Washington … and also from this… Silovnik? ….. But what is this? It seems that in Russia is in the public domain, but not for us. Please someone could explain? For example, friend senior estrategist ….. Come on, friend, be good, be mercy…it is Christmas!
Saker, guys, I do not understand macroeconomics ( only homeeconomics ) but I wonder what we could do to help.
It will seem a bit childish, (I am sometimes ..) but I was wondering last week, when I was seeing the news on the ruble, if we could buy bonds of the Russian Federation or leave en masse, all we can, on vacation beyond starting next year. Here we are hundreds of thousands, as I have understood. A kind of crowdfunding … whatever as long as they do not achieve their objective!
When this endless crisis began in the EU and they, Troika, started crunching the Greeks, even though I usually like to visit and learn about other cultures while I’m young, I decided to spend the euros available for my vacation in Greece. I managed to take a friend with me ….
But then I do not know you all….. why not do the same this year with Russia?
(Transiberian! …. Vladivostock! St. Petersburg!, L’Hermitage! Stroll around! …… Moscow!, Lenin mausoleum!, Red Square!, Metro! Stroll around!, ….. Take kvass! jeje….)
@_Blue
Delving deeper brings us to very complex issues. I am trying to keep this discussion to what I view as a more basic issue. Whether the road is capitalism, socialism, communism or whatever is a separate issue from how the road is measured.
Having an elastic measuring stick that is at the constant mercy of government or entities with political (as well as other) agendas is detrimental to economic activity and the economic well being of the citizenry. There is more to life that economics and finance but some integrity in how we measure the value of our labours and goods and how we exchange them is important.
Originally the professed idea (I’m being charitable about the integrity of the original constructors) of central bankers to provide a certain set of rules and structures to facilitate financial commerce was “perhaps” laudable. But they have either become more stupid, more deluded, more corrupt as time has passed. You speak of the elite……… but the elite runs the government, then they issue themselves more fiat and then they use this fiat to buy more power within the government. Now if they issued fiat equally to all under some type of system at the same time, then what? Who decides? Who judges the judges? Who or what decides on who gets what, when and for what reason? And do you trust this who or what to maintain integrity as time goes by?
I’m left with the point that fiat, at the very least, must circulate in parallel with gold, silver and perhaps a Real Bills doctrine. Let the people have a choice in what they use. If they err, they will either learn or they won’t
Hi Saker ! I have just finished reading the Q & A that you provided for us a couple of weeks ago with Khazin…I printed it so I could read it better than just trying to get through it on the computer screen..
I really liked it. I have not yet watched this video, but I really like the Q & A and wonder if it would be profitable for us to have these regularly…
I wish there was a way to broadcast the document more widely…
Its so sane…not complicated…
Dear Saker (I hope you read this):
The Khazin interview is depressing as it paints a picture of a state divided internally, with its economic wing under the direction of badly schooled economists and policy-makers. Adherence to lofty liberal principles is no excuse for the Russian Govt. You know as well I do how a western state would act if faced with such a problem (think Britain circa 1970 when it imposed capital controls, think how the US will act – and how quickly and how strongly).
But enough of laments, May I suggest an action plan? Would you consider an Economic Policy Paper, authored by some recognized experts, prescribing both short-term and longer-term measures for the health of the Russian economy? If so, here are some initial thoughts:
1) Approach recognized economic experts from all over the world to collaborate on producing this paper. The initial list of experts can be suggested by readers of this site, and the experts approached then in turn should be asked to suggest more names. The experts should be pragmatic, have had an actual executive background in policy setting in Finance Ministries, Central banks, Economic Councils etc. and not just university backgrounds. A mix of academic and real-world experience would be ideal. Their political-economic philosophy should not rule out state intervention, nationalization of core industries, and so forth. But neither should they be strongly anti-capitalist. In short, pragmatic scholars of action, with no axe to grind, no ideology to sell.
2) Their mandate should be to define immediate fire-fighting policy for the Russian state, perhaps a 10-point action plan or some such action-oriented document. Think of Keynes’ “How to Pay for the War” pamphlet.
3) Their next mandate should be a more detailed document aimed at suggesting an Economic Policy for Russia for the next 4-7 years.
The documents will have to be publicised by you using all your sources and contacts, and of course translated into Russian because the audience is primarily the Russian policymakers and intellectuals.
The more I read of Russian economic policies, actions, and acts of inaction, the more convinced I become that Russia, although a world leader in science and technology, is badly in need of economic expertise.
Your and readers’ thoughts??
@ Blue
IMO the problem is NOT capitalism.
There is NO more capitalism but only cronyism.
The biggest provlem is the ,revolving door’ between the private FED, Wall Street and US multinational companies.
Think about it. The central banks interventions have eliminated the market, prices but especially prices of any risk one can imagine. Rhey have turned markets into casinos formthe benefit of banks.
They are printing and distributing huge sums to corrupt banks just for playing around and rake in ,profits’ with the help of repo and derivatives.
When bets fo wrong, they ,socialize’ the losses.
These things have nothing to do with capitalism but with huge corruption only.
Capitalism functions normally pretty well if evil central banks and revolving door schemes do not disturb or intervene.
Well, as I think of you will have noticed, I burn in curiosity, and I have been researching a bit since my last post.
For all those as ignorant as I am, I think, I’m not sure, that these are the “Siloviki”, namely the right column:
http://3.bp.blogspot.com/-wjM0yWBPyfI/TcA28Og3IWI/AAAAAAAACVE/sMMvb3EjEfo/s1600/821cdbb7c3d45fa36df8148836cd3575b398300b.jpg
@BTW,
..”pragmatic scholars of action, with no axe to grind, no ideology to sell”.
Look, I have to go to sleep, tomorrow I work very early, but…do you think the people you describe in paragraph above exist?
You mean what in EU are known as technocrats and have been placed in some governments illegitimately by “The markets”? People like Draghi, Monti, Guindos, Rato, Papademos, former employees of Goldman Sachs and the IMF, who have broken multiple banks and economies in their wanderings? These are the ones who have organized unprecedented large-scale theft to European working class!
That the Russians were caught confessed, better would do my grandmother, if she was alive, mostly because it was good, honest people …..
I hope M. Khazin reads Larchmonter 445’s paper on the Russia China strategic partnership. Khazin makes an error when he asserts Nabiulina takes orders from Washington. She is bound by certain agreements with the IMF + BIS, as are all other central bankers, including the central bank of China. These agreements pertain to the international monetary responsibilities of each nation, but each central bank has latitude in doing what is best for the domestic economy. That being said, the IMF in particular stacked-the-deck in creating the IMF, which the BRICS are attempting to reform. They insist its governance reflect the changing economic weight of world economies and the IMF + BIS agree much to the anger of the USD Empire.
It is my opinion…mistakes were made and corruption occurred in the chaotic Yeltsin era, but these mistakes should be forgiven in most cases given the circumstances and let individuals have an opportunity to go on and contribute to a new Russia, rather than being punished. I wonder about M. Khazin’s motives. Whose agenda is he pushing? It seems to me if his advises were followed it would benefit the flailing AZ Empire. I begin to study the divisive finger pointing and doom saying of this man. He bares careful watching casting doubt on Putin in a storm!
BTW said, “Your and readers’ thoughts??
If you base your opinion on the statements of M. Khazin, you have the-sky-is-falling version of economics and politics in Russia. I think Russia and China have had enough of Western Economic advice which is mostly based on ideology, rather than realism. Deng Xiaping said who cares if the cat is black or white as long as it catches mice! I think the Russia China strategic partnership is perfectly capable of handling their own economic and political affairs without advises from outsiders.
I thought readers would have some positive comments, not dismissals based on presumptions. I did not have in mind IMF and world bank types; I do have in mind some eminent names from India, Malaysia, China, and the US. The three first-mentioned countries have successfully staved off attacks on their currency and know how to run their economies, and the persons I had in mind are those who are not in with the current lot of neo-liberals. In any case, producing and disseminating an expert paper from recognized names can only spread better thinking. Unless, of course, you are a know-all and “need no advice from no one” -in which case God help you!
Priceless ,Saker ,Your Blog and all the comments that goes along with it is simply priceless…..
CRNOGORAC
John M, If I understand you correctly you are likening debt to fiat money– as if debt money occurs as a result of fiat money. And also that it is desirable to extinguish the debt.
May I tell you my understanding from Michael Hudson & Ellen Brown (Modern Monetary Theory)? It’s as follows:
It is the norm and in no way pathological for money to represent debt; even if your currency were gold-backed, the currrency wd be an IOU for the gold lying in the vault. Nor wd you wish to extinguish the debt, for that wd eliminate all of your currency.
Rather, one needs to get rid of all interest which doesn’t represent a contribution to production. Nonproductive interest is a toll on the economy.
When the result of govt borrowing is productive goods or services it should be interest-free. Our current central-bank system says that this wd be inflationary. But this add’l currency linked to production is NOT inflationary, MMT maintains and the printing of currency by the central bank in many instances is– for example for speculation.
The sharpest increase in our economic woes I believe is the direct result of the abandonment of Glass-Steagle in Bill Cinton’s time, which allowed every variant of speculation to be brought under govt guarantee against loss– thus vastly indebting the American people. Also the entire banking/financial system has become a species of gangsterism which controls the govt.
Fiat non-gold-based money is not a problem in itself as there are many historical examples that were very successful.
I am sorry I’m not able to summarize here a great many of the axioms of MMT. Michael Hudson is on the web in lots of videos, but I wd really recommend that you buy his book ‘The Bubble and Beyond’ or the new one.
Today the only economic theory presented as viable is the neo-liberal model, but MMT picks up all the objections to this model for 2 centuries and applies all of this economic experience to derive MMT, which is quite understandable & not technical as M Hudson presents it.
BTW, I don’t think it’s a matter of not knowing what should be done, but of getting it done in a Russia which is still under the sway of those who came into power in the 90s when Russia was a semi-colony of US.
It appears that Khazin, Glazyev & Starikov & others are all in agreement, but the bad guys are in power.
For example, here in the US there is a terribly corrupt system. If we elected a President who wanted to reform the financial, political & military systems this wd be difficult to do– especially if the President wanted to remain alive.
There is so much corruption in the CIA, so many rogue political elements committing false flags, so much corrupt media, so many vested interests in the status quo. It wd be difficult to bring the banksters to justice; much of the judiciary is now corrupt, virtually the whole Congress has been bought, etc.
Khazin sounds a little petulant or just frustrated. His objection that you couldn’t put Glayev into the Central Bank because the 5th column wd put lies about him in the media seems too readily defeated.
From Khazin’s comments I understand better what Putin is up against. It appears the whole govt apparatus was corrupted under Yeltsin & now has a vested interest in resisting change: When your power & wealth are illegitimate you are not going to permit a legitimate govt/financial system.
Hmmm I couldn’t get the English.
but, nevermind, will put in my 2cnts anyway, because I think Khazin talks sense…maybe I can watch video later…
BTW
I was curious as to who would be collecting these experts’ opinions ?
I should have thought there’s enough books out there, in Russia too. Khazin actually has written a book. Why do you think Russia’s going to listen to your paper, if its you that’s planning to write it ?
anyway, nice idea.
Yeah, for some reason I can’t get the english subtitles to appear.
“individualism” under Capitalism is the attempt to escape the results of Capitalism.
[from Petter Kropotkin’s writings]
@Penelope
As I see it, fiat money as it has morphed into is a representation of debt. The Real Bills Doctrine is a variant of this, but the idea here is that real value is exchanged between parties and then the obligations are cleared. There is the inception of an obligation, the passage of the obligation through a period of time and the extinguishment of the obligation. These are aspects of a currency. Currency is traded. But when the need to capture the aspects of the obligation (this is the savings aspect of money) by an entity (individual or otherwise), gold and silver fulfilled this role. It is not necessary for the capture (savings) to be gold or silver. It can be a Real Bill or contract but to be fully trusted to maintain the integrity of its value the counter parties need persistence through time since this saving may be open ended through a long period of time and may be transfered to other entities. This differs from a bond as this savings does not generate revenue. It is a fixed obligation. If you wish to invest this obligation (put your ownership of it at risk), then you normally will require interest or dividends from the investment that you have now entered into.
So money is not in its basic form a interest bearing concept. The nuance here that I would like to deal with is that in the concept of money as I see it, the value is already in it and not a potential promise. This is different from currency (though under the Real Bills idea the note is for a fixed period of time, usually quite short and often discounted). The heart of what I am trying to say is that there is a difference between a money where I have already provided the value and a money where I promise to provide the value. And here we come to the core of my problem with fiat currency as it is now commonly viewed. Governments, central banks, etc. create a money with no value preloaded into it. This means that they have no restraint on the amount they create. You could argue I suppose that they create a money commensurate with the value of the state’s economic output. But then, why is it being distributed to where it is now going (my view, it is the elites and the banks)? And how is the entity creating this money entitled to a portion of the said economic output?
There is a great depth to this discussion and I’m trying to focus on the essence of money without going deeply in how you use money. Then we do get into interest, financial regulations, etc. that we could be debating for the rest of our lives. :)
re: Schizophrenic government policies.
If I understand Khazin correctly he sees the current efforts of the Russian Government as schizophrenic because they want to revive a “shadow of the Soviet Union” and at the same time want to stick to some market principles – and this leads to Khazin’s idea of a “split personality”. Stated differently he believes that a collectivist principles and a market principles cannot live together.
The only collective system that we all know is the theory of the “bearded schizoid” Karl Marx
(see Political Ponerology by Lobaczewski) which is IMO a very uncomfortable theory because it postulates an eternal civil war called “class struggle”. But humanity has known other collectivists theories f. ex:
– the Incas apparently had a collectivist system that was part of their culture: I know that because of a trip to Peru where our Cuzco guide was a close friend of the archeological director who knew a lot about this subject
– I also remember reading that China had a collectist theory which disappeared because of the burning of books of the first Chinese Emperor Shi Huang 213 BC ( I couldn’t find a reference to that collectivist theory, sorry)
But maybe Marxism is just a first – too divisive – collectivist theory, and maybe the current very surprising atmosphere in Russia where Christians, socialists, monarchists and others are all working side by side could lead to a new and better version of a theory of government for the 99%.
Just a thought.
@BTW,
Friend, I hope you have not felt annoyed or disappointed, at least for my answer, but yesterday night, so late, that came to the soul.
You transduce good intentions, as are the majority here to bring something, it’s just that, at least, yes I am disappointed with economics.
Some years ago, and fully immersed in this megacrisis to that nobody sees the final I told on another forum that if there is a profession that has been discredited with all this that is that of economist.
As also noted on one occasion Professor Monedero(Political Science), which can no longer is teaching the same in the faculties of economics, not with the same books nor the same theories.
Simply, economic science has been unable to solve the problems of people, however much grip the curves and the capacity for self-regulation of a market that, as flawed, irresponsible, spoiled, brash, and victim of an endless greed, is unable to do so. Could anyone with these characteristics? We would trust someone with this behavior was capable of regulating itself?
And, what is hopeless is the economic system, capitalism.
So if you believe that there is someone in the world (other than in US or EU) who have some good ideas to change this from its roots, proceed with the project, we are hoping that someone can think of something.
In other fields where we work some, we are advancing, innovating, testing hypotheses and discarding those that do not work, and this has been achieved that people live longer and in better conditions, some jobs are less painful, communicate to people all over the world and give them access to an infinite world of knowledge … what the hell’s been doing economics?
I tell you, watching how a handful can live in luxury and excess at the expense of others.
Do not think, I’d love to change my mind, would be a good sign.
Why a director of a company or a bank must earn a salary of 6 or 7 figures? (And in this I do not agree with V.V.Putin). Perhaps contributes more to society than a doctor or a teacher? If these can live and do their job well with a salary of 3 digits, why those not?
Enough of privileges, and to exploit the labor of others, moral change starts there, not going to churches ( eachone to do what he wants or prey wherever ) or returning to make women the weaker sex, over there have already passed and we do not want to return.
The moral change means accepting that all human beings deserve a decent and dignified life and, for have that all for everyone, some will have to prescind their mega yachts, mansions, and its investments abroad (that not serve them rather than for their opponents tighten their nuts) will be done.
The future will be socialist or not be, people are not stupid and has realized that this only works for a few, the elite.
I said once that hurts me and I am ashamed how someone speak of Lenin and Stalin, but wonder how these men died? Not between the luxury. However, you can assert that they led the population of a huge country, directly, in a few decades, from the Middle Ages to Modernity. People were given access to education and culture, and the latter is the least to make them suspected, at least in my eyes. People know very well who are worshiped and who to erect monuments. People is not stupid.
@ Ann
Try a different browser. I could not get the subtitles with Chrome, but got them with the Firefox.
@elsi:
Yes, Elsi, a lot of economics is a fraud as you rightly perceive. However, an economy, any economy whether socialist or capitalist or mixed, has to be managed and regulated. That is where a critical and deep knowledge of economics (I prefer the classical term “Political Economy”) comes in. Neoliberal economics is today ruling the world. It is an extreme version of capitalist thought. Unfortunately, I sense that a whole lot of Russian decision-makers have swallowed this extreme creed without understanding the overall context of capitalism and the different strands of economic thought that make up capitalism. Neoliberal economics is the propaganda of capitalism. It is not always how the western countries actually deal with their own economic problems. I somehow want the Russian intellectuals to come to a more critical awareness of capitalist economic theory so that they may use this knowledge to better their country and win economic wars. I have degrees in Economics but my knowledge is very limited and I am not a practising economist, so there is not much I can do. But I do know enough to be able to tell economic sense from nonsense.
JohnM, Thank you for your response. I will reflect upon it and also look up Real Bills Doctrine.
I will try to find a good reference which explains Modern Monetary Theory. I am always referring people to Michael Hudson’s book The Bubble and
Beyond, but I need to find a shorter reference.
Regards.
BTW said…
@elsi:
24 December, 2014 02:42
To paraphrase one of Marx’s theses on Feurbach.
Philosophers to date have merely described the world, the purpose however is to change it.
He could have usefully added – generally “philosophers (intellectuals)” roughly describe a world changed by others at a time when others are engaged in lateral change – although the “division of labour” was not quite so apparent when Marx wrote the theses.
Therefore the “world” roughly described by “philosophers (intellectuals)” no longer exists as it has been subject to lateral change.
“I somehow want the Russian intellectuals”
Perhaps your want is unwarranted and the actors capable of facilitating your want ill chosen.
elsi’s observation of hypothesis testing i.e. the lateral interaction of theory and practice is the way out of an “apparent” conundrum.
Anatoly Chubais had/has utility as well as Mr. Khazin, although such utility may not necessarily conform to that which they perceive for themselves.
The weak points of both of these gentlemen include the notion of “I”, which is a norm in some cultural zones including the “Anglo-Saxon”, illustrated on ocassion within this blog.
As Engels was reported to remark – the proof of the pudding is in the eating – some courses recently being brought to table.