The bank of north dakota is a useful model for a local state bank, which with a banking licence [to print ‘money’] could be adapted to Russian conditions and geography. German landsebanks are also a model, this time of local ‘town’ banks, where locals deposit and borrow but who’s manager uses deposits and the leverage of fractional reserve banking to invest in local business and development according to his understanding of local conditions. Whilst a state of siege exists the Gov. should extend credit at subsistence++ rate to all citizens, if this causes temporary inflation then increase the rate, inflation will be cured when people start paying back their debts.
Meanwhile Russia needs to take the gloves off and, for all new contracts and sales, only accept rubles and precious metals for payments from hostile states, and by hostile I mean any that have imposed sanctions.
In all European countries people have debt, not money in the bank.
Russia will be the same.
Inflation favors those with debt.
Deflation is like giving the debtors a neck shot.
Everything must have a start, and from there everything must grow in relation to everything else in a sustainable way. In youth, we start to learn and earn, and save our wages/earnings along the way. Always seek to advance in position and earning potential. A local/regional economy should be so structured that by the time of marriage a couple can buy a starter home (for cash!) and begin to raise a family. If either or both spouses wish to start a business and become an entrepreneur instead of being workers, then savings of both spouses, perhaps combined with cash borrowed from friends and family, if needed, would capitalize a small business and provide enough profit-income to live.
Any economy is not properly structured unless it provides living wages to the worker, healthy cost-to-profit ratios for the entrepreneurs, and in all cases abundant opportunities for livelihoods. It is the responsibility of government not to employ people to ensure full employment of the economy, but to ensure that the economy is structured so that all people capable of work can work–a job or business opportunity for everyone. This takes the best capable people (intelligence and wisdom) to staff government planning positions at all levels. The goal is to have the economy function with the precision of the proverbial Swiss watch.
Money must be printed and circulated into the economy by government entities, NOT borrowed from private banks at interest. This is the means to eliminate inflation. Two kinds of inflation: 1) recklessly printing too much money, and 2) the burden of paying interest on loans. Every business recovers interest to pay on its loans to the bank by adding that amount to the goods and services it produces, over and above its costs. So in a debt money monetary system, inflation is baked into prices–automatically and inevitably. Debt money and fractional reserve banking are financial frauds to be avoided in modern economies. A country should never borrow its own money AND pay interest on it to the private bankers! That is insanity, but almost every country on earth does it. The true nature of interest as a drag on the economy is totally overlooked and underestimated.
Earnings and savings are key. It is possible to have an economy without the burdens of debt/interest, insurance payments, inflation, and taxes eating up the citizens’ income. Build a market for not only domestic goods but also foreign goods on which reasonable tariffs are placed for the privilege of selling in the motherland. Tariffs, duties, permits, etc. go to the treasuries of jurisdiction. These supplement government budgets. But the truly phenomenal prerogative of government was expressed by Abraham Lincoln:
“The Government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of Government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity.” He did it with his greenbacks during the War Between the States, but the power was revoked by agents of the international bankers. Don’t ever let them anywhere near the government!
The value of the currency is pegged to the productive powers of the economy. The quantity of money in circulation is scientifically monitored (perhaps by supercomputers and damn good software) so that only that quantity of money is introduced into the economy to meet the ongoing needs of government and the transactional needs of the people. As the economy grows, more money is in circulation. As long as productivity increases (which is actually the natural state of affairs) the quantity of money in circulation should never decrease; it should always grow. Money is not wealth. It is the reflection of wealth. Only productivity produces wealth. Wealth is a bridge, a factory, an automobile, a house, a cucumber–any good or service produced by human labor or his machines.
Untold wealth will be created once governments wrest control of their monetary systems away from the grip of the international bankers.
“Money must be printed and circulated into the economy by government entities,”
Gives politicians too much power to bring their social engineering biases in to play.
“NOT borrowed from private banks at interest.”
Gov should extend interest free credit at subsistence++ level to all citizens, if it wants to encourage population growth then include children in this. ‘Money’ as an abstract is easier to protect, store/save and exchange than real money like gold and silver. The fairest way to create it is on the individual level.
“This is the means to eliminate inflation. Two kinds of inflation: 1) recklessly printing too much money, and 2) the burden of paying interest on loans. Every business recovers interest to pay on its loans to the bank by adding that amount to the goods and services it produces, over and above its costs. So in a debt money monetary system, inflation is baked into prices–automatically and inevitably.”
True, in the west everything you buy has about 35% of upstream interest built in. To control inflation a simple transaction tax could be raised on every, yes every transaction, in the US if a rate of .025% was set that would mean every other tax could be dropped, and that’s 1% of the ‘transaction tax’ your credit card charges.
“Debt money and fractional reserve banking are financial frauds to be avoided in modern economies. A country should never borrow its own money AND pay interest on it to the private bankers! That is insanity, but almost every country on earth does it. The true nature of interest as a drag on the economy is totally overlooked and underestimated.”
Debt money could form an easy part of the social contract between society and it’s members, none of us are born ready and all need long term input from many around us before our best contribution can be passed forward, is it wrong to formalise this? Giving private bankers a licence to print money is exactly that, giving public banks, owned by their customers, the same licence is altogether different. https://ellenbrown.com/ is the best advocate of public banking I know of.
I agree with your points, johnm33. On the evolutionary path to true economic liberty and freedom there are, no doubt, many possible solutions along the way appropriate for each ‘time and place’ on the planet. If we start with achievable goals in the short and medium term, it is more likely we will reach our ‘destination’ of true economic liberty and freedom. When all individuals and families are financially sustainable (earn enough to have a roof overhead, food on the table, raise a family if desired, and save for contingencies, future retirement, and seed money for your children to get started in life), then, one’s country is economically sound–even invincible. My point was to change today’s universal mindset from “loans and debt” to “earn and save”. For instance, I know many friends whose families provided them with seed money from parental savings. With the indoctrinated financial examples passed on from the wise parents, that knowledge plus seed money usually translated to success for their children. If this process were to become the rule rather than the exception, the creation of wealth would spiral upwards.
Obviously, we are a ways from that situation; and facing that reality makes your comment about debt money being necessary because “none of us are born ready” a practicable solution for many. Public banks filing that role is one of the solutions “along the way” as I said above. But we should keep our ideals of financial independence always in sight. When ‘loans and debt’ become ingrained as NORMAL, we have unfortunately adopted a poverty mentality as NORMAL. As we take note, God gives freely all that is necessary so that our efforts may be successful. Just as he is the First Source and Center, the first Cause for all things in creation, so should the treasuries of our governments eventually be the First Source and Center of all currency (bills and coins) in circulation. When the most profoundly capable and wise people are in charge of the management of monetary systems (using supercomputers and sophisticated software and whatever other useful tools are created in the future), those who are truly dedicated, loyal and honest servants of the people, then and only then can we eliminate “politicians with too much power to bring their social engineering biases into play.” We don’t have these people to call upon because our educational systems have failed us. Families can usually provide only so much life training.
Governments can act as the beneficent overcontrollers of economies when its public officials are enlightened enough to strike step with truth, beauty and goodness. EVERY punitive tax could be dropped; even your very reasonable .025% transaction tax. In the meantime, that tax would be much better than what we have now. While we are undertaking the necessary task of re-engineering our economies, I just think it would be a good idea to keep our ideals in mind as we pursue our dreams of more perfect governments.
The entire Russian economy needs to be reformed. But also the whole culture and society must be reformed. It may be an accident, but it’s strange what happened on the Russian TV broadcast. Putin’s speech on the anniversary of the annexation of Crimea was interrupted on Russian television. Putin disappears in the middle of a televised speech. Russian President Vladimir Putin suddenly disappeared from television this Friday, as he spoke during a major concert in Moscow to celebrate the annexation of Ukrainian Crimea in 2014. The 5 liberal columns that voted for Navalny will seek to perform acts “heroic” in front of the cameras, the TV, the media. They are delusional people for the West, and Russia will need to reform, and deal with the people in the central bank, on television, and everywhere, for cohesion, unity and love for the Russian cause to happen.
If we are hearing him correctly, he’s saying that there are wealthy and powerful Russians who own industries & other assets, but they will strongly resist a move towards more productivity and keeping that money in Russia.
Something we’re now learning that Russia’s Central Bank is not doing. They sound almost as “neo-liberal” as the US, the UK, and the EU Central Banks. This is not a good set up.
Perhaps looking at China’s banking model, would help attract these wealthy Russians to move closer to that model.
We’re very sorry, this is happening in Russia.
Putin is aware of the economic problems and the need for reform. Today he attacked the liberal Atlanticist Russians. Shooting at Russians he considers “pro-Western”, he said that they should be “spit out like a fly” by the rest of the country’s citizens, urging them to “self-purify”. He said:
“I am convinced that such a natural and necessary self-purification of society will only strengthen our country, our solidarity, our cohesion and our readiness to respond to any challenges.”
“I don’t judge those with villas in Miami or the French Riviera. Or who can’t live without oysters, foie gras or so-called ‘gender liberties’, he insinuated. “The problem is that they are mentally there, not here, with our people, with Russia.”
Putin is certainly aware of the need for economic and social reform.
Get them board. I am sure they will be willing to help.
One aspect of commercial life that has always annoyed me is the habit of some project managers to refer to people as “resources”. It’s a wonderfully dehumanising phrase that lumps human beings, with their thoughts, feelings and aspirations, into the same category as steel ingots and rebar, to be shipped around as required by an unfeeling bureaucracy.
” But while you can create money from thin air , you can’t print resources”
And
” What will we think of lockdowns when we have several million unemployed, and public services are having to be slashed to stave off our creditors? ”
The usual myths, of course, all without putting two and two together and realising that the unemployed are the resources that back the money that is created.
If nobody else is using these people, they can be hired for the public good. Besides, the government is morally obliged to hire them since it is the policy of the government that has made them unemployed.
In aggregate, the only way the government can get rid of all these workers is if the private sector hires them. Otherwise we end up paying public workers to do nothing rather than paying them to do something. And that makes no sense.
We have spent the best part of a year paying a good deal of the country 80% of their wages to remain on standby. The creditors to stave off are nowhere to be seen.
How many more billions of Gilts do we have to sell at near-zero redemption yields? Surely by now, it should be clear that the old mental model is just a laughable anachronism.
Perhaps the mental blockage is the horrible realisation that an awful lot of private sector activity adds about as much real value to the economy as a government furlough payment.
The task of the private sector is to invest capital and replace drudgery with advanced machinery. As we can see this year, it’s well on its way, whThe usual lines, of course, all without putting two and two together and realising that the unemployed are the resources that back the money that is created.
If nobody else is using these people, they can be hired for the public good. Besides, the government is morally obliged to hire them since it is the policy of the government that has made them unemployed.
In aggregate, the only way the government can get rid of all these workers is if the private sector hires them. Otherwise we end up paying public workers to do nothing rather than paying them to do something. And that makes no sense.
We have spent the best part of a year paying a good deal of the country 80% of their wages to remain on standby. The creditors to stave off are nowhere to be seen. There is no shortage of stuff on the shelf. How many more billions of Gilts do we have to sell at near-zero redemption yields? Surely by now, it should be clear that the old mental model is just a laughable anachronism.
Perhaps the mental blockage is the horrible realisation that an awful lot of private sector activity adds about as much real value to the economy as a government furlough payment.
The task of the private sector is to invest capital and replace drudgery with advanced machinery. Which is something that should be celebrated and encouraged.
The government can hire the unemployed that the machinery made redundant.
Monetary policy is largely useless as a stabilisation device, and what is known as the horizontal circuit (“bank money”) should be left to operate as a market rather than being manipulated all the time. Therefore you leave the base rate at the natural rate of 0% and stop artificially trying to hold it above that, particularly stop moving it around.
What that means is that government stops paying banks “welfare on reserves” payments. No Interest on Reserves. No Bond Coupons. Any income banks earn they have to get by discounting collateral in the private economy and charging for that service (aka making loans).
System stabilisation can then be done using the vertical circuit (“central bank money”) which is added and removed as required to commercial bank’s balance sheets and forcibly creates additional bank deposits in the hands of individuals – because bank money is pegged one-to-one to central bank money.
The result is that the bank money system operates within a containment vessel defined by fixed banking policies, not ones that change month to month, and the banking system ebbs and flows within the policy boundaries, with the government’s vertical system countercyclically matching the ebb and flow.
This is where the Job Guarantee sits. The wage is paid with vertical money and matches the ebb and flow of bank money spending countercyclically. But importantly it does the same thing on the production side with labour hours – injecting and removing labour hours countercyclically with private and public sector demand keeping labour hours near constant relative to the working population.
A guaranteed alternative job replaces bank credit manipulation as the stabilisation process. The production system gets a change in output, not a dead loss. You get income in your pocket, not a debt millstone around your neck.
And that’s how you get to true full employment and price stability within an economic system where demand is satisfied.
The way to approach government procurement is as follows:
There are physical people in a nation. They all have labour hours for sale. Some are worth more than others because of skills and experience. A legislature is elected by those people to achieve an end. That legislature decides it needs some of those people to achieve that end, and it debates to set a price it is willing to pay. It sets that price relative to the labour hour of the unskilled individual.
If there are sufficient people who wish to choose public service over private fortune, then great, pay them the designated wage and off we go. They’ve crowded themselves out of the private sector and no further action is required.
If sufficient people don’t turn up, then the legislature needs to make people unemployed until the public service jobs get filled at the wage it is willing to pay. It does that by banning things and raising taxes, which crowds out the private sector in real terms.
Tax has one operational job† – releasing resources that the public sector wants to hire as part of its democratic mandate.
Government, on behalf of the legislature, then hires all those crowded out:
those who were planned to be hired, via permanent public sector jobs
those who end up unemployed, because taxes and bans are not precise instruments, via the Job Guarantee.
The private sector is similarly imprecise and is incapable of clearing the labour market on its own. The Job Guarantee handles the fallout from the imprecision of both private and public sector activity.
This approach represents a completely different way of looking at the task of constructing a national economy. The private sector is the meat in the sandwich between the required public sector, and those who would otherwise be left unemployed.
Looking at the system people-first ensures everybody who wants to be hired in the monetary economy for wages gets a wage. This allows the economy to operate at a greater level of output than any other competing way of organising one. Yet, thanks to the stabilising and anchoring effects of the Job Guarantee, all while retaining stable prices.
†Tax also has a functional task of driving the denomination across a currency area, but we’ll assume for the purposes of discussion that there is a large enough public sector here that the operational tax will do that job too.
We can think of the effect of imposing taxes as creating unemployed resources (including labour). Government spending then puts those resources to use in the public sphere. It would make no sense for government to impose taxes, causing unemployment, except to the extent that it needs to release resources from private use so that they can be employed in the public sector when they are needed.
This is in sharp contrast to the neo-liberal viewpoint which is that government is just another organisation in the system that has to compete for resources by price. Business and banks always get first choice of resources and government has to make do with the scraps. They believe the bankers and businesses should be in charge and that the population are just factors of production to be shifted around, like ingots of steel, as business requires.
There is a different more productive approach. You can determine that business and banks are servants of the people. Government can take first choice of resources for the public purpose, then allow business and banks to work with what is left, before hoovering up any left over resources with a Job Guarantee.
The public wrap of the private system provides a containment vessel around the nuclear power of capitalism. We can draw its power without the boom. We can fuel it with public investment and improve the power output.
The focus of government action shifts from money to the actual things we need to buy for the public purpose. Smart people talk about government buying, not spending.
From this, government sets the policy for spending and taxation at a level that allows the Job Guarantee and other auto-stabilisation mechanisms (such as standby investment contracts) to function.
I feel Russia as it decouples from the West will use this approach to protect Itself. Ditch financial capitalism and turn more Chinese and perfect industrial capitalism with some help from China.
Makes even more sense as their economic ties grow stronger.
Public debt in your own currency is just every one who ” saves” in that currency.
Swapping a reserve balance for a bond
A ruble with a ruble with a coupon attached.
If you are saying that at some point the interest payments as a % of GDP become so large and private sector spending is such that there is less non-inflationary room available for other discretionary spending then fine that is what taxation is for – to reduce private spending and/or the government can reduces its own spending somewhat. But before that happens the current account, tax revenue (from higher activity) and saving will be taking up a signifcant part of the adjustment.
But this is just saying that prudent government net spending is limited by the available real resources in the economy left by non-government saving desires.
There is also a certain irony that the voluntary decision to issue debt $-for-$ to match net spending then increases spending towards the inflation threshold.
If you are saying that the public and the commentators etc are so conditioned that they will invoke political consequences on a government that has a debt ratio above some “acceptable” level (read what News Limited deems in their ignorance to be acceptable!) then that is a political constraint – which doesn’t reflect any financial reality or any physical reality (real resource capacity).
Japan ran HUGE deficits.
Debt to GDP ratio above 250%
With ultra low, unemployment rates, interest rates and inflation rates.
Japan has debunked that kind of thinking for over 30 years.
In short, considering recent financial events in Russia, I was surprised at this announcement, and not pleasantly so.
Second, to me, an equally surprising article entitled
“Russian economy shouldn’t strive for autonomy – state development boss”
in which the following appears.
“However, despite the emphasis on import substitution, the Russian economy “shouldn’t strive for autonomy,” but instead remain “open,”
Shuvalov, who was Russia’s First Deputy Prime Minister between 2008 and 2018, said.
“We need to produce goods that ensure our intellectual, technological, production and food security. But the Russian economy must be absolutely integrated into international trade and open economic ties. We must provide our wealth for the development of global civilization, while also using the best technologies from other countries for the benefit of our own people.”
My first reaction to that article was very simple — WTF?! I’m willing to bet that Shuvalov is not one of those “launchers” that Mr. Khazin mentioned in his video. He sounds more like an un-needed rich parasite to me.
Anyway, I enjoyed reading the subtitles in Mr. Khazin’s video. I agreed with a lot of it, but I disagree with what I see as a fundamental flaw — the new system’s wonderful promise of a potential growth rate of 12 to 15%. Why in the increasingly stressed world is such a rate of growth desirable and, possibly-to-probably, absolutely necessary?
One question I’d ask Mr. Khazin is why exports are needed at all? There is only one world, right? Does our one world have to export or import from Mars or another planet? No our one world does not. So why do nations such as Russia (and Canada, for that matter) have to export or import anything when they have virtually unlimited natural, energy and human resources? For example, in Canada, with its population of only 36 million or so and virtually unlimited natural resources, why couldn’t warm-weather agricultural products be produced year-round in large, vertically-efficient greenhouses — greenhouses heated by natural gas, coal, nuclear, solar, etc.? Why import those things when it is possible to grow those products at home?
The reason that nations have to “trade” with each other in the Old World Order of “nations” is simple — to provide “money-profit” to the oligarchic classes that ARE the capitalist nations and to pay off the puppet governments that they installl in resource-rich places on planet earth that will oppress the people working as slaves (AKA “cheap labor”) in those places.
Russia has the golden opportunity to develop a completely new go-it-alone economy. (But Putin’s announcement does not seem to support that possibility…………. yet, anyway. IMO he will soon see that More Of The Same Just A Bit Different isn’t going to work in the upcoming post-war new world order.)
To spur some fresh ideas about what might be possible in a New World Order, I want to take a mind trip. I want to compare two worlds – the earth on which we live and another planet that is identical to ours, except that in that planet’s solar system there has been a brief solar event whose radiation has not only instantaneously killed all of the people on that planet, but, amazingly, also slowed down the physical deterioration of any of the things that the planet’s deceased inhabitants created.
Hearing about the calamity on the twin planet, millions of people from our planet, who just happen to be unemployed ex-technicians from various professions (yes, a very competent bunch), jump into spacecraft and fly to that other planet. But, before they leave, they agree that all of what is on the other planet will be “owned” equally among them and used for the good of all. (Yes, you’re right, that is exactly where I’m going.)
Just like there is on this planet, there is an internet on the other planet, so the immigrants instantly realize that a so-called representative government or a microscopic overlord class of Oligarchs will not be necessary …………. on the other planet. In that place there shall be direct democracy. People will hammer out important decisions among themselves using the internet as a means of virtually instantaneous mass communication.
There will be only one “nation” on this new world and that nation will cover the entire world. There will be no other nation to export to. There will be no other nation to import from.
Every person in the new world will be a “world citizen”. There will be only one set of rules for every person. Human beings will either sink or swim together on this new world.
After the new immigrants arrive on their new planet, using existing transportation systems, they disperse all over their planet so that they can get their new (old) machines up and running; fields plowed and planted; hospitals operating, etc. (Yes, it wasn’t easy. But with the common good in mind, people were successful. Just accept it for the moment.)
The immigrants soon realize that it takes very few people (far fewer than immigrated) to keep the machines running, food on the table, etc., and with some more design engineering and automation, even fewer people will be required as time goes on. Not only that, but the products of these machines can be made to a much better quality then they apparently were previously, so these products will last far longer. As a result, it is realized that perhaps some of the huge machines/factories can be operated far less frequently than they used to be by the previous inhabitants. For example, automobiles soon come to be made much simpler, easier to fix and much more reliable. They have a far greater useful lifespan than they once had.
The people enjoy leisure time, developing their artistic abilities, playing games and other non-productive activities.
Rather than unfairly have the same small number of people constantly toiling on the machines, the people decide to divide up, or “distribute”, the human labor that is necessary to operate the machines, plow the fields, construct buildings, roads, etc. That is, everyone has to work on the machines, etc., but for only a short period of time each year. And as the machines get improved and further automated, even less labor is required and, therefore, even more of each individual’s time is “free”.
The newly-designed machines in this new world come to do almost all of the things that must be done, and the “profit” from the machines – leisure time and the actual products of the machines – is equally divided among all people.
Some of the leisure time is used for training all people in the variety of tasks they will be undertaking – everything from brain surgery to sewage treatment. Apprenticeship and training via video (just like Youtube on planet earth!) are found to be the ideal ways of training people. It is soon discovered that most medical and dental procedures can be either performed by robots or learned in a fraction of the time once thought to be absolutely necessary.
Through apprenticeship and video schooling, the population becomes very knowledgeable, so they soon realize that by reducing their own population by slow attrition – by having only one or two children – the remaining population has even less to do (less water treatment, housing, electricity, food, everything), so their descendants have even more free time to themselves.
These people’s new-found religion is two-faceted — the Golden Rule and the continually-evolving simplicity, ease-of-use, and, most importantly, high-quality-construction and, therefore, long usable life of the products they create. Unlike the people did back on planet Earth, the people on this new world strive to manufacture things only once — things that with simple, inexpensive maintenance, last essentially forever.
Transportation systems move people to and from the machines and other places where labor is needed, as well as moving people about the planet for other less practical reasons.
Life is great in the new world.
The End
My point is that there are possible alternative ways of living (economic systems), but the only thing we are allowed to hear in our prefect Matrix of education and 24/7 propaganda is that there are NO alternatives available to the present arrangement, other than the experimental ones that are at this very moment being literally dreamed up by the present entrenched powers-that-be in order to serve only themselves.
China has built more high speed rail in 4 years than the US has built in the last 100 years.
I honestly don’t know why many people can’t see the obvious..
a tale of two nations
Welcome the nation of Importia:
So named because it believes itself to be important, had a long and illustrious history. Blessed with natural resources it had developed advanced techniques in production, PR and marketing and, largely due to the latter two rather than the former, had become the centre of turnip production worldwide.
The owners in Importia grew wealthy and, with bribes of extra turnips, were able to transform some of their more mathematical PR specialists into a priesthood they named “Economists”. These Economists praised the efforts of the owners, in particular their daily practice of trickling down on those that did the actual work.
Eventually the natural resources of Importia started to weaken, and the workers became restless — demanding more Alpha (the currency of Importia) so they could buy an extra half-turnip between them. The owners were very displeased and turned to the Economists, demanding they come up with another wheeze to pull the wool over the eyes of the proles.
So the Economists quietly withdrew and drew strange symbols on blackboards in the belief that was slightly more effective than looking for clouds that look like ducks. The operating principle was the same though.
Eventually, after remembering they were marketeers not scientists, they came up with the answer — export-led growth. They would sell more turnips to elsewhere in the world. Just one problem. Nobody else had any Alpha ( the currency of Importia) to buy the turnips.
How would they solve this problem?
At this time another nation of the world had arisen in a stunningly convenient manner. The leaders of this nation were keen to join modernity and had heard of the new fashion for export-led growth. They invited the Economists of Importia to speak to them and, like a fox entering a hen coop, they accepted with gusto.
So impressed were the leaders of the new nation with the proposals, that they named their country Exportia in honour, and thereby neatly avoided an even more contrived plot device.
The production of turnips would move to Exportia, exploiting the fresh natural resources and willing Prana fueled workforce. Exportia would then sell the turnips to Importia In return for Alpha (the currency of Importia)
To avoid the dreaded “Dutch Disease” that the Economists warned about in the most serious of tones, Exportia would maintain a sovereign wealth fund by investing in the assets of Importia with their Alpha ( the currency of Importia) they received for selling Importia turnips.
It was very fortunate that the workers of Exportia could exist on praise, pats on the head and Prana, otherwise this mildly amusing parable would rapidly become a rather dull treatise on Calculus.
Which, funnily enough, is precisely the tool the Economists used to give their wheezes an unwarranted air of gravitas.
And so the workers of Importia were dismissed, the turnip fields ploughed up and replaced with shanty towns. The once proud workforce existed on a handout of far less than one turnip, supplied as charity from the owners, when once they had aspired to one and a half.
The owners of Importia continued to have as many turnips as before, and kept the turnip ration of the Economists high so they would continue to espouse the virtues of export led growth.
And growth there was indeed. The owners of Importia, on the advice of the Economists, had securitised their holdings and split them into a 100 million shares. During the first period the price was 100 Alpha per share and the Exportia wealth fund, mindful of the warnings of the Economists to invest, spent their 10,000 Alpha earnings from turnip sales on 100 shares in Importia. Their net worth zoomed from nothing to 10,000 Alpha overnight.
The leaders of Exportia were ecstatic and they nearly gave themselves an injury patting themselves on their back.
The next year Exportia earned another 10,000 Alpha selling their turnips to the owners in Importia — from whom they had bought the shares. This year though there were fewer shares to buy and the owners in Importia were slightly more reluctant to sell. The price crept up to 100.01 per share and the Wealth fund of Exportia dutifully bought 99 more shares in Importia.
The leaders of Exportia were ecstatic again. They now had 199 shares in Importia and due to share price growth they were 4 Alpha better off already than they were when they started the new regime. Export led growth clearly led to very great riches.
And so it went on.
After 20 years Exportia had managed to amass 1783 shares in Importia and the wealth fund was up to 178,618 Alpha. The leaders were very pleased with themselves. How much wealth they had created from nothing just by following the Wise Economists sage advice.
A little boy had pointed out that the owners in Importia appeared to be just as wealthy in Alpha as they ever had been, even though they now owned fewer shares, and received all the turnips, even though they did nothing for them other than bestow the odd turnip on the ex-workers of Importia.
But nobody listened to the boy. After all, the previous week he’d said that the leaders had been walking around naked when it was patently obvious they were dressed in the finest clothes.
I can’t speak to whether the economic personnel choices are good or bad, but I’m not sure I can agree with no imports/trade. It seems that the best path for all nations is to be as self-sufficient as they can be. Not all will have the means, either because of population, geography or luck. Trade bridges those gaps. Or it can. That may be necessary in a technological world. Even if we all build our own computer chips, most nations won’t have the raw materials.
Economics is a toolbox, not a science. And trade is a tool. What matters is how a craftsperson uses a tool. If they are skilled, artistic and with intent. Trade as practiced is a tool wielded to maximize benefit to one party at the expense of another. Trade wielded for the purpose of producing mutually beneficial outcomes, equitable development and targeting maximum self-sufficiency for all nations would produce its goals just the same, would it not?
It may be corrupted by greed and avarice, but the comment above describing an economic structure would go a long way towards insulating positive trade from greed. We could also probably get away from so much greed if we stopped reading dead, Victorian economists. Dressing up a pirate / slaving / drug dealing empire with capitalist bunting and social Darwinism doesn’t change that it’s fundamentally based on pirate / slave / drug profiteering. I mean, stop listening to the English on just about every topic. But especially economics and war.
Trade could and should foster cooperation and exchange of both goods and ideas. The neo-liberal idea that trade should prevent wars would likely be true if trade was not seen as a form of competition to be won. The variety of peoples of the world is amazing. We must find ways to recognize our differences, celebrate them and learn from them. I sincerely hope that Russia and China can show us a different economic path. The one we’re on is ruinous.
There is no reason not to have a two tier economy and separate currencies for each. One internal and one external to add value.
Your internal economy and it’s currency could very well be fortified from external pressure, and your external currency can be floating with international market demand, imports and exports.
Your internal currency can only be used internally and your external currency for foreign trade, and the central bank can do the settlements between both currencies.
What absolutely minimal external trade is required can be conducted on a purely barter basis — a certain agreed-to quantity of whatever for a certain quantitity of whatever. No currency involved at all. Both trading parties are happy.
Remember, “money (currency) is the root of all evil”, because non-productive, purely parasitic, produce-nothing speculators’ very existence depends upon “money”.
I used to watch him and many other Russian academics in Vesti with English caption in some or most programs. It’s been a bit over one year since they eliminated all the captions in the middle of a propaganda war. That was a horrible mistake. I have spoken about this with many Russians but it has gotten worse with RT SPUTNIK English following Murika narratives in many important topics.
But as Mikhail explains clearly is the planning infrastructure in place to achieve it?
The neoliberal period in economic thinking is really just a hyped-up version of the pre-Great Depression thinking that John Maynard Keynes and others so categorically demolished in the 1930s to create a new orthodoxy.
The resurgence of Monetarism and its microeconomic ‘free market’ narratives (which I lump together and call ‘neoliberal’ for want of a better title) were not new ideas nor based on new evidence.
They became dominant again only because the vested interests (corporate money, conservative thinkers) found a way to usurp the broad appeal of social democratic movements that were the political vehicles for the ideas of Keynes and others to become the mainstream policy framework.
The errors in pre-Keynesian economics, that were exposed in the 1930s, were not fixed or amended by the neoliberals. They were just ‘swept under the carpet’ in an exercise in Groupthink denial.
Why it has failed miserably…
1. Never created full employment
2 Increased inequality on a MASSIVE scale
3 Handed all the power to vested interests and the banks
The neo-liberal era has also been marked by a major reduction in Departmental capacity to design and implement fiscal policy – given the obsession with monetary policy and the major outsourcing of “fiscal-type” government services to the private sector.
Many of the major government policy departments in the advanced nations are now just contract managers for outsourced service delivery.
So this diminution in the overall capacity of the government machine to implement efficiently and speedily complicated nation-wide infrastructure programs has to be addressed as a matter of urgency by progressive politicians.
As a result of what we learned during the GFC, we can no longer deny that fiscal policy is required to address serious swings in non-government spending.
Monetary policy has been proven – categorically – to be ineffective in dealing with aggregate demand failures of the sort we have witnessed in that crisis.
In that context, governments must develop forward-looking capacity to ensure that it has project implementation skills when they are required.
There is no better economic planners of industrial capitalism today than China. It is why the West has to use force and bullying to compete.
Crisis can lead to changes and leaps forward. HE CAN. But, it DEPENDS on the policy options. The golden dream of the new Russian elites of integration into the wonderful Western capitalist world has come to an end. The dominant financial elites in the globalized world of late capitalism do not want new “partners” to take a piece of the pie: they want to eliminate them, destroy them, annihilate them. But Russia will only be able to get out of the current crisis if the state expropriates the parasitic elites of finance capital and implements a national production regime to the fullest extent and at the same time improves the living conditions of the population.
In order to finance a broad national development plan, the government should, in addition to expropriating the financial surplus currently in the hands of the wealthy classes, financial elites and speculators, create a digital currency, backed by gold or a basket of relatively stable currencies, not convertible, issued on a large scale by the central bank to encourage new production projects and scientific and technological development and innovation, accessible at zero cost by entrepreneurs. It would be the state impetus for a great leap in the country’s economic and social development. A loan from the future that will return multiplied.
////Mikhail Khazin is one of the most famous Russian economists, whose forecasts regularly come true. He is the president of the expert consulting company “Neocon”. he was the deputy head of the Economic Department of the President of the Russian Federation Administration. Permanent expert of Echo-Moscow radio station, RBK channel and other business media.////
On the Sanctions Front Russia Is Brainwashed Against Her Own Interest
Putin’s speech shows no realization that the ONLY reason sanctions against Russia are effective is because the Russians bought in to globalism and, thereby, gave foreigners power over them. It seems incomprehensible that Russia would willingly place her economic life under her enemies’ control.
Putin’s inability to identify Russia’s commitment to globalism as her problem indicates that Putin is still committed to globalism. The Russians were sufficiently brainwashed during the Yeltsin years to orientate their economy to global rather than domestic markets. This served Western interests not Russian interests. The happiest economy is the self-sufficient one. In the 1950s and 1960s, Paul Samuelson, the most authoritative of American economists, emphasized that the US economy was self-sufficient and could not be harmed by external forces. We relied on our own markets. We made here and sold here and prospered as we never have since. Our debt was held by ourselves. We owed it to ourselves.
The gvt has no problem with rising prices, its liabilities are a fixed # sometimes never adjusting over 100 years.
The tax they collect is on a percentage basis, as the price rises, so does their income, but the liabilities stay the same until painfully legislated higher (w/perks naturally).
The only time you will hear the politician crow about high prices, is during the election cycle in which he makes another promise to another set of peoples to obtain their vote, and then magically can’t do anything to keep prices down.
This is a vicious cycle that this time looks catastrophic from many angles, but the political blinders are on, the gasket blown, money is gushing out like a geyser and the gay military ideological grab bag is on.
Putin has engineered a profound turnaround already, from the Soviet days. He has done it using the current global financial system. So he is used to the results it can provide. Sanctions introduce a completely different set of circumstances. He has been slow to recognize the dangers of the 5th and 6th elements in Russian society, but he has come around. Next he has to re-evaluate and reform the principles of Central Bank, foreign reserves, trade practices, etc. I think he will be successful, but time IS critical. Russia needs to increasingly separate itself from failing Western practices, and get out from under their thumb of globalist techniques.
Whimsy not design your own economic system that could be compatible with an external economic system? Why keep trying fiat Keynesian economics when it was designed to benefit the country which controls market pricing?
If the actual economic system was created less than 150 years ago and fully implemented in the late 70’s, we could say that there is no reason to try another. Debt based economy without appreciation and constant depreciation needed is a very flawed system.
Money supply expansion doesn’t have to depend for it to exist on depreciation or debt. Expansion can be based on demographics, after all an active economy is active only on its capacity of production independent of type of production, that would be a matter of value which is completely arbitrary, the main drive of an active economy is its capacity which it is based mostly on population. You can tie money supply to demographics and eliminate most reasons for depreciation and need for debt, and investment could be driven by demographics as well and not debt, your economy would continually expand unless you have a policy to lower your demographic levels. Russia is los ok’ing to expand its demography.
You could also back the value of your currency to life instead of death.
So basically technological international communism.
Complacency in society will bring its own destruction, hardship and hard work is necessary for evolution. Complacency also brings forth degeneracy, and common good would be forgotten. Look at the West, people are more worried about what Starbucks coffee they want or what to wear than with their true personal growth.
There was an experiment done with animals a few years back that showed extinction can be brought about through complacency.
Also the idea that we have to keep our population low in order to achieve sustainability and not growth due to the resources being limite is a dangerous is proposition and also not a natural one in humanity. Humans are driven by instinct to reproduce. All these ideas of human forced evolution and sustainable demographics, goes well in hand with what the WEF is proposing.
The chap Khazin, is merely stating what is glaringly obvious: Russia is engaged in an imposed present conflict with one arm tied behind its back. This is a political-ideological-military struggle which Russia was forced into after standing aside from the struggle in the DonBass for 8 years. There has been an internal struggle against the Atlantic integrationists who are acting in accordance with the globalist forces who hold sway in the west, and it is a struggle that Russia (and the civilized world) cannot afford to lose. It looks like 1941 all over again. There seems no way of avoiding the present impasse but Russia must carry out a complete internal revolution or it will lose, and so will the rest of the world.
I remember well years of inflation 1973-1980. The lesson was that inflation helped a lot the most stupid business men while decimated responsible paper money oeners. Share holders actually didn’t loss at all. Inflation lifts numeric value of real estate too. Owning house, forest, raw material, factory secure your property. It’s paper digital money holders who will be badly beaten.
The guy has a point, but he misses the forest for the trees.
The central success of the centrally planned economy was that it can produce effectively what it KNOWS it needs to produce.
The central fail of the centrally planned economy was that is CANNOT PRODUCE what is DOES NOT KNOW it needs to produce.
But what this means ?
I means that a central, hierarchical, management is desirable WITHIN a business.
At the same time is is UNDESIRABLE outside of the business – on the state level – as THE CHAOS OF THE MARKET IS ESSENTIAL to breed new ideas and new ways to do things and NEW THINGS to do.
Sure, the gov NEEDS to assist and support the businesses (be they prive ot state-owned) in times of a crisis. But taking over businesses operations is a short-term gain for a long term disaster.
The Russian economy HAS STILL NOT RECOVERED from the Soviet disaster. That is why stuff does not work. Yet. It will take another generation, maybe more to re-build the capability to not only innovate but also the instruments and the “enterpreneur” infrastrcuture and culture which is essential for economic progress.
Yes, it is painful waiting. But that is the only way. Fixing 4 generations of the centrally planned economy will take a couple generations and there is no way to make it faster. It required a complete societal change – it needs children who are BORN AND RAISED in a competitive market to grow up to their 40s and have their own businesses for this to happen.
Yes, the children which are today barely starting University will be the first generation to have a chance at changing this. The first generation which grew up in a (working) semi-open-market economy.
Of course, there are exception. Exceptional people can think like enterpreneurs even when raised in a USSR-style society. BUT those are only exceptional people. For a true mass scale change, one needs muillions of such people, from the mom&pop store to the leaders of the industries. And that requires different upbringing, if cannot be achieved by training or a good book being read.
Always good seeing Khazin, especially translated.
Could we have a link to this video file so that it can be downloaded?
I located the link on Bitchute to this video: https://seed163.bitchute.com/juSKOMUaAAMn/Vms13CbmZBPt.mp4
The bank of north dakota is a useful model for a local state bank, which with a banking licence [to print ‘money’] could be adapted to Russian conditions and geography. German landsebanks are also a model, this time of local ‘town’ banks, where locals deposit and borrow but who’s manager uses deposits and the leverage of fractional reserve banking to invest in local business and development according to his understanding of local conditions. Whilst a state of siege exists the Gov. should extend credit at subsistence++ rate to all citizens, if this causes temporary inflation then increase the rate, inflation will be cured when people start paying back their debts.
Meanwhile Russia needs to take the gloves off and, for all new contracts and sales, only accept rubles and precious metals for payments from hostile states, and by hostile I mean any that have imposed sanctions.
In all European countries people have debt, not money in the bank.
Russia will be the same.
Inflation favors those with debt.
Deflation is like giving the debtors a neck shot.
Debt is a pyramid scheme.
Fathers and mothers need a mortgage.
Entrepreneurs need a huge initial investment
Everything must have a start, and from there everything must grow in relation to everything else in a sustainable way. In youth, we start to learn and earn, and save our wages/earnings along the way. Always seek to advance in position and earning potential. A local/regional economy should be so structured that by the time of marriage a couple can buy a starter home (for cash!) and begin to raise a family. If either or both spouses wish to start a business and become an entrepreneur instead of being workers, then savings of both spouses, perhaps combined with cash borrowed from friends and family, if needed, would capitalize a small business and provide enough profit-income to live.
Any economy is not properly structured unless it provides living wages to the worker, healthy cost-to-profit ratios for the entrepreneurs, and in all cases abundant opportunities for livelihoods. It is the responsibility of government not to employ people to ensure full employment of the economy, but to ensure that the economy is structured so that all people capable of work can work–a job or business opportunity for everyone. This takes the best capable people (intelligence and wisdom) to staff government planning positions at all levels. The goal is to have the economy function with the precision of the proverbial Swiss watch.
Money must be printed and circulated into the economy by government entities, NOT borrowed from private banks at interest. This is the means to eliminate inflation. Two kinds of inflation: 1) recklessly printing too much money, and 2) the burden of paying interest on loans. Every business recovers interest to pay on its loans to the bank by adding that amount to the goods and services it produces, over and above its costs. So in a debt money monetary system, inflation is baked into prices–automatically and inevitably. Debt money and fractional reserve banking are financial frauds to be avoided in modern economies. A country should never borrow its own money AND pay interest on it to the private bankers! That is insanity, but almost every country on earth does it. The true nature of interest as a drag on the economy is totally overlooked and underestimated.
Earnings and savings are key. It is possible to have an economy without the burdens of debt/interest, insurance payments, inflation, and taxes eating up the citizens’ income. Build a market for not only domestic goods but also foreign goods on which reasonable tariffs are placed for the privilege of selling in the motherland. Tariffs, duties, permits, etc. go to the treasuries of jurisdiction. These supplement government budgets. But the truly phenomenal prerogative of government was expressed by Abraham Lincoln:
“The Government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of Government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity.” He did it with his greenbacks during the War Between the States, but the power was revoked by agents of the international bankers. Don’t ever let them anywhere near the government!
The value of the currency is pegged to the productive powers of the economy. The quantity of money in circulation is scientifically monitored (perhaps by supercomputers and damn good software) so that only that quantity of money is introduced into the economy to meet the ongoing needs of government and the transactional needs of the people. As the economy grows, more money is in circulation. As long as productivity increases (which is actually the natural state of affairs) the quantity of money in circulation should never decrease; it should always grow. Money is not wealth. It is the reflection of wealth. Only productivity produces wealth. Wealth is a bridge, a factory, an automobile, a house, a cucumber–any good or service produced by human labor or his machines.
Untold wealth will be created once governments wrest control of their monetary systems away from the grip of the international bankers.
“Money must be printed and circulated into the economy by government entities,”
Gives politicians too much power to bring their social engineering biases in to play.
“NOT borrowed from private banks at interest.”
Gov should extend interest free credit at subsistence++ level to all citizens, if it wants to encourage population growth then include children in this. ‘Money’ as an abstract is easier to protect, store/save and exchange than real money like gold and silver. The fairest way to create it is on the individual level.
“This is the means to eliminate inflation. Two kinds of inflation: 1) recklessly printing too much money, and 2) the burden of paying interest on loans. Every business recovers interest to pay on its loans to the bank by adding that amount to the goods and services it produces, over and above its costs. So in a debt money monetary system, inflation is baked into prices–automatically and inevitably.”
True, in the west everything you buy has about 35% of upstream interest built in. To control inflation a simple transaction tax could be raised on every, yes every transaction, in the US if a rate of .025% was set that would mean every other tax could be dropped, and that’s 1% of the ‘transaction tax’ your credit card charges.
“Debt money and fractional reserve banking are financial frauds to be avoided in modern economies. A country should never borrow its own money AND pay interest on it to the private bankers! That is insanity, but almost every country on earth does it. The true nature of interest as a drag on the economy is totally overlooked and underestimated.”
Debt money could form an easy part of the social contract between society and it’s members, none of us are born ready and all need long term input from many around us before our best contribution can be passed forward, is it wrong to formalise this? Giving private bankers a licence to print money is exactly that, giving public banks, owned by their customers, the same licence is altogether different.
https://ellenbrown.com/ is the best advocate of public banking I know of.
I agree with your points, johnm33. On the evolutionary path to true economic liberty and freedom there are, no doubt, many possible solutions along the way appropriate for each ‘time and place’ on the planet. If we start with achievable goals in the short and medium term, it is more likely we will reach our ‘destination’ of true economic liberty and freedom. When all individuals and families are financially sustainable (earn enough to have a roof overhead, food on the table, raise a family if desired, and save for contingencies, future retirement, and seed money for your children to get started in life), then, one’s country is economically sound–even invincible. My point was to change today’s universal mindset from “loans and debt” to “earn and save”. For instance, I know many friends whose families provided them with seed money from parental savings. With the indoctrinated financial examples passed on from the wise parents, that knowledge plus seed money usually translated to success for their children. If this process were to become the rule rather than the exception, the creation of wealth would spiral upwards.
Obviously, we are a ways from that situation; and facing that reality makes your comment about debt money being necessary because “none of us are born ready” a practicable solution for many. Public banks filing that role is one of the solutions “along the way” as I said above. But we should keep our ideals of financial independence always in sight. When ‘loans and debt’ become ingrained as NORMAL, we have unfortunately adopted a poverty mentality as NORMAL. As we take note, God gives freely all that is necessary so that our efforts may be successful. Just as he is the First Source and Center, the first Cause for all things in creation, so should the treasuries of our governments eventually be the First Source and Center of all currency (bills and coins) in circulation. When the most profoundly capable and wise people are in charge of the management of monetary systems (using supercomputers and sophisticated software and whatever other useful tools are created in the future), those who are truly dedicated, loyal and honest servants of the people, then and only then can we eliminate “politicians with too much power to bring their social engineering biases into play.” We don’t have these people to call upon because our educational systems have failed us. Families can usually provide only so much life training.
Governments can act as the beneficent overcontrollers of economies when its public officials are enlightened enough to strike step with truth, beauty and goodness. EVERY punitive tax could be dropped; even your very reasonable .025% transaction tax. In the meantime, that tax would be much better than what we have now. While we are undertaking the necessary task of re-engineering our economies, I just think it would be a good idea to keep our ideals in mind as we pursue our dreams of more perfect governments.
The entire Russian economy needs to be reformed. But also the whole culture and society must be reformed. It may be an accident, but it’s strange what happened on the Russian TV broadcast. Putin’s speech on the anniversary of the annexation of Crimea was interrupted on Russian television. Putin disappears in the middle of a televised speech. Russian President Vladimir Putin suddenly disappeared from television this Friday, as he spoke during a major concert in Moscow to celebrate the annexation of Ukrainian Crimea in 2014. The 5 liberal columns that voted for Navalny will seek to perform acts “heroic” in front of the cameras, the TV, the media. They are delusional people for the West, and Russia will need to reform, and deal with the people in the central bank, on television, and everywhere, for cohesion, unity and love for the Russian cause to happen.
If we are hearing him correctly, he’s saying that there are wealthy and powerful Russians who own industries & other assets, but they will strongly resist a move towards more productivity and keeping that money in Russia.
Something we’re now learning that Russia’s Central Bank is not doing. They sound almost as “neo-liberal” as the US, the UK, and the EU Central Banks. This is not a good set up.
Perhaps looking at China’s banking model, would help attract these wealthy Russians to move closer to that model.
We’re very sorry, this is happening in Russia.
Putin is aware of the economic problems and the need for reform. Today he attacked the liberal Atlanticist Russians. Shooting at Russians he considers “pro-Western”, he said that they should be “spit out like a fly” by the rest of the country’s citizens, urging them to “self-purify”. He said:
“I am convinced that such a natural and necessary self-purification of society will only strengthen our country, our solidarity, our cohesion and our readiness to respond to any challenges.”
“I don’t judge those with villas in Miami or the French Riviera. Or who can’t live without oysters, foie gras or so-called ‘gender liberties’, he insinuated. “The problem is that they are mentally there, not here, with our people, with Russia.”
Putin is certainly aware of the need for economic and social reform.
Very good and the right type of thinking,
China shows you how to do industrial capitalism.
Get them board. I am sure they will be willing to help.
One aspect of commercial life that has always annoyed me is the habit of some project managers to refer to people as “resources”. It’s a wonderfully dehumanising phrase that lumps human beings, with their thoughts, feelings and aspirations, into the same category as steel ingots and rebar, to be shipped around as required by an unfeeling bureaucracy.
” But while you can create money from thin air , you can’t print resources”
And
” What will we think of lockdowns when we have several million unemployed, and public services are having to be slashed to stave off our creditors? ”
The usual myths, of course, all without putting two and two together and realising that the unemployed are the resources that back the money that is created.
If nobody else is using these people, they can be hired for the public good. Besides, the government is morally obliged to hire them since it is the policy of the government that has made them unemployed.
In aggregate, the only way the government can get rid of all these workers is if the private sector hires them. Otherwise we end up paying public workers to do nothing rather than paying them to do something. And that makes no sense.
We have spent the best part of a year paying a good deal of the country 80% of their wages to remain on standby. The creditors to stave off are nowhere to be seen.
How many more billions of Gilts do we have to sell at near-zero redemption yields? Surely by now, it should be clear that the old mental model is just a laughable anachronism.
Perhaps the mental blockage is the horrible realisation that an awful lot of private sector activity adds about as much real value to the economy as a government furlough payment.
The task of the private sector is to invest capital and replace drudgery with advanced machinery. As we can see this year, it’s well on its way, whThe usual lines, of course, all without putting two and two together and realising that the unemployed are the resources that back the money that is created.
If nobody else is using these people, they can be hired for the public good. Besides, the government is morally obliged to hire them since it is the policy of the government that has made them unemployed.
In aggregate, the only way the government can get rid of all these workers is if the private sector hires them. Otherwise we end up paying public workers to do nothing rather than paying them to do something. And that makes no sense.
We have spent the best part of a year paying a good deal of the country 80% of their wages to remain on standby. The creditors to stave off are nowhere to be seen. There is no shortage of stuff on the shelf. How many more billions of Gilts do we have to sell at near-zero redemption yields? Surely by now, it should be clear that the old mental model is just a laughable anachronism.
Perhaps the mental blockage is the horrible realisation that an awful lot of private sector activity adds about as much real value to the economy as a government furlough payment.
The task of the private sector is to invest capital and replace drudgery with advanced machinery. Which is something that should be celebrated and encouraged.
The government can hire the unemployed that the machinery made redundant.
Monetary policy is largely useless as a stabilisation device, and what is known as the horizontal circuit (“bank money”) should be left to operate as a market rather than being manipulated all the time. Therefore you leave the base rate at the natural rate of 0% and stop artificially trying to hold it above that, particularly stop moving it around.
What that means is that government stops paying banks “welfare on reserves” payments. No Interest on Reserves. No Bond Coupons. Any income banks earn they have to get by discounting collateral in the private economy and charging for that service (aka making loans).
System stabilisation can then be done using the vertical circuit (“central bank money”) which is added and removed as required to commercial bank’s balance sheets and forcibly creates additional bank deposits in the hands of individuals – because bank money is pegged one-to-one to central bank money.
The result is that the bank money system operates within a containment vessel defined by fixed banking policies, not ones that change month to month, and the banking system ebbs and flows within the policy boundaries, with the government’s vertical system countercyclically matching the ebb and flow.
This is where the Job Guarantee sits. The wage is paid with vertical money and matches the ebb and flow of bank money spending countercyclically. But importantly it does the same thing on the production side with labour hours – injecting and removing labour hours countercyclically with private and public sector demand keeping labour hours near constant relative to the working population.
A guaranteed alternative job replaces bank credit manipulation as the stabilisation process. The production system gets a change in output, not a dead loss. You get income in your pocket, not a debt millstone around your neck.
And that’s how you get to true full employment and price stability within an economic system where demand is satisfied.
Running a Modern Money Economy
https://new-wayland.com/blog/running-a-modern-money-economy/
The way to approach government procurement is as follows:
There are physical people in a nation. They all have labour hours for sale. Some are worth more than others because of skills and experience. A legislature is elected by those people to achieve an end. That legislature decides it needs some of those people to achieve that end, and it debates to set a price it is willing to pay. It sets that price relative to the labour hour of the unskilled individual.
If there are sufficient people who wish to choose public service over private fortune, then great, pay them the designated wage and off we go. They’ve crowded themselves out of the private sector and no further action is required.
If sufficient people don’t turn up, then the legislature needs to make people unemployed until the public service jobs get filled at the wage it is willing to pay. It does that by banning things and raising taxes, which crowds out the private sector in real terms.
Tax has one operational job† – releasing resources that the public sector wants to hire as part of its democratic mandate.
Government, on behalf of the legislature, then hires all those crowded out:
those who were planned to be hired, via permanent public sector jobs
those who end up unemployed, because taxes and bans are not precise instruments, via the Job Guarantee.
The private sector is similarly imprecise and is incapable of clearing the labour market on its own. The Job Guarantee handles the fallout from the imprecision of both private and public sector activity.
This approach represents a completely different way of looking at the task of constructing a national economy. The private sector is the meat in the sandwich between the required public sector, and those who would otherwise be left unemployed.
Looking at the system people-first ensures everybody who wants to be hired in the monetary economy for wages gets a wage. This allows the economy to operate at a greater level of output than any other competing way of organising one. Yet, thanks to the stabilising and anchoring effects of the Job Guarantee, all while retaining stable prices.
†Tax also has a functional task of driving the denomination across a currency area, but we’ll assume for the purposes of discussion that there is a large enough public sector here that the operational tax will do that job too.
We can think of the effect of imposing taxes as creating unemployed resources (including labour). Government spending then puts those resources to use in the public sphere. It would make no sense for government to impose taxes, causing unemployment, except to the extent that it needs to release resources from private use so that they can be employed in the public sector when they are needed.
This is in sharp contrast to the neo-liberal viewpoint which is that government is just another organisation in the system that has to compete for resources by price. Business and banks always get first choice of resources and government has to make do with the scraps. They believe the bankers and businesses should be in charge and that the population are just factors of production to be shifted around, like ingots of steel, as business requires.
There is a different more productive approach. You can determine that business and banks are servants of the people. Government can take first choice of resources for the public purpose, then allow business and banks to work with what is left, before hoovering up any left over resources with a Job Guarantee.
The public wrap of the private system provides a containment vessel around the nuclear power of capitalism. We can draw its power without the boom. We can fuel it with public investment and improve the power output.
The focus of government action shifts from money to the actual things we need to buy for the public purpose. Smart people talk about government buying, not spending.
From this, government sets the policy for spending and taxation at a level that allows the Job Guarantee and other auto-stabilisation mechanisms (such as standby investment contracts) to function.
I feel Russia as it decouples from the West will use this approach to protect Itself. Ditch financial capitalism and turn more Chinese and perfect industrial capitalism with some help from China.
Makes even more sense as their economic ties grow stronger.
Chinas economy has grown as has it’s debt.
In the log run Debt will be unsustainable.
A debt based economy, no matter how productive is a very bad idea.
China has learned from the West how to do Keynesian economics very well that is why they devalue their currency at an alarming rate.
Chinas economy might be industrial for now but if it continues driving it’s debt it will become more service based.
Public debt or private sector debt ?
Public debt in your own currency is just every one who ” saves” in that currency.
Swapping a reserve balance for a bond
A ruble with a ruble with a coupon attached.
If you are saying that at some point the interest payments as a % of GDP become so large and private sector spending is such that there is less non-inflationary room available for other discretionary spending then fine that is what taxation is for – to reduce private spending and/or the government can reduces its own spending somewhat. But before that happens the current account, tax revenue (from higher activity) and saving will be taking up a signifcant part of the adjustment.
But this is just saying that prudent government net spending is limited by the available real resources in the economy left by non-government saving desires.
There is also a certain irony that the voluntary decision to issue debt $-for-$ to match net spending then increases spending towards the inflation threshold.
If you are saying that the public and the commentators etc are so conditioned that they will invoke political consequences on a government that has a debt ratio above some “acceptable” level (read what News Limited deems in their ignorance to be acceptable!) then that is a political constraint – which doesn’t reflect any financial reality or any physical reality (real resource capacity).
Japan ran HUGE deficits.
Debt to GDP ratio above 250%
With ultra low, unemployment rates, interest rates and inflation rates.
Japan has debunked that kind of thinking for over 30 years.
You cant grow without debt .
Well you can initially, but at a certain point you need credit.
Before commenting on Mr. Khazin’s video, I would like to point out two articles relevant to it that I read today.
First from Tass, an article entitled
“Putin presents Nabiullina’s candidacy for appointment as Central Bank chief”
https://tass.com/economy/1423957
In short, considering recent financial events in Russia, I was surprised at this announcement, and not pleasantly so.
Second, to me, an equally surprising article entitled
“Russian economy shouldn’t strive for autonomy – state development boss”
in which the following appears.
“However, despite the emphasis on import substitution, the Russian economy “shouldn’t strive for autonomy,” but instead remain “open,”
Shuvalov, who was Russia’s First Deputy Prime Minister between 2008 and 2018, said.
“We need to produce goods that ensure our intellectual, technological, production and food security. But the Russian economy must be absolutely integrated into international trade and open economic ties. We must provide our wealth for the development of global civilization, while also using the best technologies from other countries for the benefit of our own people.”
My first reaction to that article was very simple — WTF?! I’m willing to bet that Shuvalov is not one of those “launchers” that Mr. Khazin mentioned in his video. He sounds more like an un-needed rich parasite to me.
Anyway, I enjoyed reading the subtitles in Mr. Khazin’s video. I agreed with a lot of it, but I disagree with what I see as a fundamental flaw — the new system’s wonderful promise of a potential growth rate of 12 to 15%. Why in the increasingly stressed world is such a rate of growth desirable and, possibly-to-probably, absolutely necessary?
One question I’d ask Mr. Khazin is why exports are needed at all? There is only one world, right? Does our one world have to export or import from Mars or another planet? No our one world does not. So why do nations such as Russia (and Canada, for that matter) have to export or import anything when they have virtually unlimited natural, energy and human resources? For example, in Canada, with its population of only 36 million or so and virtually unlimited natural resources, why couldn’t warm-weather agricultural products be produced year-round in large, vertically-efficient greenhouses — greenhouses heated by natural gas, coal, nuclear, solar, etc.? Why import those things when it is possible to grow those products at home?
The reason that nations have to “trade” with each other in the Old World Order of “nations” is simple — to provide “money-profit” to the oligarchic classes that ARE the capitalist nations and to pay off the puppet governments that they installl in resource-rich places on planet earth that will oppress the people working as slaves (AKA “cheap labor”) in those places.
Russia has the golden opportunity to develop a completely new go-it-alone economy. (But Putin’s announcement does not seem to support that possibility…………. yet, anyway. IMO he will soon see that More Of The Same Just A Bit Different isn’t going to work in the upcoming post-war new world order.)
To spur some fresh ideas about what might be possible in a New World Order, I want to take a mind trip. I want to compare two worlds – the earth on which we live and another planet that is identical to ours, except that in that planet’s solar system there has been a brief solar event whose radiation has not only instantaneously killed all of the people on that planet, but, amazingly, also slowed down the physical deterioration of any of the things that the planet’s deceased inhabitants created.
Hearing about the calamity on the twin planet, millions of people from our planet, who just happen to be unemployed ex-technicians from various professions (yes, a very competent bunch), jump into spacecraft and fly to that other planet. But, before they leave, they agree that all of what is on the other planet will be “owned” equally among them and used for the good of all. (Yes, you’re right, that is exactly where I’m going.)
Just like there is on this planet, there is an internet on the other planet, so the immigrants instantly realize that a so-called representative government or a microscopic overlord class of Oligarchs will not be necessary …………. on the other planet. In that place there shall be direct democracy. People will hammer out important decisions among themselves using the internet as a means of virtually instantaneous mass communication.
There will be only one “nation” on this new world and that nation will cover the entire world. There will be no other nation to export to. There will be no other nation to import from.
Every person in the new world will be a “world citizen”. There will be only one set of rules for every person. Human beings will either sink or swim together on this new world.
After the new immigrants arrive on their new planet, using existing transportation systems, they disperse all over their planet so that they can get their new (old) machines up and running; fields plowed and planted; hospitals operating, etc. (Yes, it wasn’t easy. But with the common good in mind, people were successful. Just accept it for the moment.)
The immigrants soon realize that it takes very few people (far fewer than immigrated) to keep the machines running, food on the table, etc., and with some more design engineering and automation, even fewer people will be required as time goes on. Not only that, but the products of these machines can be made to a much better quality then they apparently were previously, so these products will last far longer. As a result, it is realized that perhaps some of the huge machines/factories can be operated far less frequently than they used to be by the previous inhabitants. For example, automobiles soon come to be made much simpler, easier to fix and much more reliable. They have a far greater useful lifespan than they once had.
The people enjoy leisure time, developing their artistic abilities, playing games and other non-productive activities.
Rather than unfairly have the same small number of people constantly toiling on the machines, the people decide to divide up, or “distribute”, the human labor that is necessary to operate the machines, plow the fields, construct buildings, roads, etc. That is, everyone has to work on the machines, etc., but for only a short period of time each year. And as the machines get improved and further automated, even less labor is required and, therefore, even more of each individual’s time is “free”.
The newly-designed machines in this new world come to do almost all of the things that must be done, and the “profit” from the machines – leisure time and the actual products of the machines – is equally divided among all people.
Some of the leisure time is used for training all people in the variety of tasks they will be undertaking – everything from brain surgery to sewage treatment. Apprenticeship and training via video (just like Youtube on planet earth!) are found to be the ideal ways of training people. It is soon discovered that most medical and dental procedures can be either performed by robots or learned in a fraction of the time once thought to be absolutely necessary.
Through apprenticeship and video schooling, the population becomes very knowledgeable, so they soon realize that by reducing their own population by slow attrition – by having only one or two children – the remaining population has even less to do (less water treatment, housing, electricity, food, everything), so their descendants have even more free time to themselves.
These people’s new-found religion is two-faceted — the Golden Rule and the continually-evolving simplicity, ease-of-use, and, most importantly, high-quality-construction and, therefore, long usable life of the products they create. Unlike the people did back on planet Earth, the people on this new world strive to manufacture things only once — things that with simple, inexpensive maintenance, last essentially forever.
Transportation systems move people to and from the machines and other places where labor is needed, as well as moving people about the planet for other less practical reasons.
Life is great in the new world.
The End
My point is that there are possible alternative ways of living (economic systems), but the only thing we are allowed to hear in our prefect Matrix of education and 24/7 propaganda is that there are NO alternatives available to the present arrangement, other than the experimental ones that are at this very moment being literally dreamed up by the present entrenched powers-that-be in order to serve only themselves.
Ishkabibble,
Brilliant !
I love your optimism.
China has built more high speed rail in 4 years than the US has built in the last 100 years.
I honestly don’t know why many people can’t see the obvious..
a tale of two nations
Welcome the nation of Importia:
So named because it believes itself to be important, had a long and illustrious history. Blessed with natural resources it had developed advanced techniques in production, PR and marketing and, largely due to the latter two rather than the former, had become the centre of turnip production worldwide.
The owners in Importia grew wealthy and, with bribes of extra turnips, were able to transform some of their more mathematical PR specialists into a priesthood they named “Economists”. These Economists praised the efforts of the owners, in particular their daily practice of trickling down on those that did the actual work.
Eventually the natural resources of Importia started to weaken, and the workers became restless — demanding more Alpha (the currency of Importia) so they could buy an extra half-turnip between them. The owners were very displeased and turned to the Economists, demanding they come up with another wheeze to pull the wool over the eyes of the proles.
So the Economists quietly withdrew and drew strange symbols on blackboards in the belief that was slightly more effective than looking for clouds that look like ducks. The operating principle was the same though.
Eventually, after remembering they were marketeers not scientists, they came up with the answer — export-led growth. They would sell more turnips to elsewhere in the world. Just one problem. Nobody else had any Alpha ( the currency of Importia) to buy the turnips.
How would they solve this problem?
At this time another nation of the world had arisen in a stunningly convenient manner. The leaders of this nation were keen to join modernity and had heard of the new fashion for export-led growth. They invited the Economists of Importia to speak to them and, like a fox entering a hen coop, they accepted with gusto.
So impressed were the leaders of the new nation with the proposals, that they named their country Exportia in honour, and thereby neatly avoided an even more contrived plot device.
The production of turnips would move to Exportia, exploiting the fresh natural resources and willing Prana fueled workforce. Exportia would then sell the turnips to Importia In return for Alpha (the currency of Importia)
To avoid the dreaded “Dutch Disease” that the Economists warned about in the most serious of tones, Exportia would maintain a sovereign wealth fund by investing in the assets of Importia with their Alpha ( the currency of Importia) they received for selling Importia turnips.
It was very fortunate that the workers of Exportia could exist on praise, pats on the head and Prana, otherwise this mildly amusing parable would rapidly become a rather dull treatise on Calculus.
Which, funnily enough, is precisely the tool the Economists used to give their wheezes an unwarranted air of gravitas.
And so the workers of Importia were dismissed, the turnip fields ploughed up and replaced with shanty towns. The once proud workforce existed on a handout of far less than one turnip, supplied as charity from the owners, when once they had aspired to one and a half.
The owners of Importia continued to have as many turnips as before, and kept the turnip ration of the Economists high so they would continue to espouse the virtues of export led growth.
And growth there was indeed. The owners of Importia, on the advice of the Economists, had securitised their holdings and split them into a 100 million shares. During the first period the price was 100 Alpha per share and the Exportia wealth fund, mindful of the warnings of the Economists to invest, spent their 10,000 Alpha earnings from turnip sales on 100 shares in Importia. Their net worth zoomed from nothing to 10,000 Alpha overnight.
The leaders of Exportia were ecstatic and they nearly gave themselves an injury patting themselves on their back.
The next year Exportia earned another 10,000 Alpha selling their turnips to the owners in Importia — from whom they had bought the shares. This year though there were fewer shares to buy and the owners in Importia were slightly more reluctant to sell. The price crept up to 100.01 per share and the Wealth fund of Exportia dutifully bought 99 more shares in Importia.
The leaders of Exportia were ecstatic again. They now had 199 shares in Importia and due to share price growth they were 4 Alpha better off already than they were when they started the new regime. Export led growth clearly led to very great riches.
And so it went on.
After 20 years Exportia had managed to amass 1783 shares in Importia and the wealth fund was up to 178,618 Alpha. The leaders were very pleased with themselves. How much wealth they had created from nothing just by following the Wise Economists sage advice.
A little boy had pointed out that the owners in Importia appeared to be just as wealthy in Alpha as they ever had been, even though they now owned fewer shares, and received all the turnips, even though they did nothing for them other than bestow the odd turnip on the ex-workers of Importia.
But nobody listened to the boy. After all, the previous week he’d said that the leaders had been walking around naked when it was patently obvious they were dressed in the finest clothes.
That story, though, is for another day.
I can’t speak to whether the economic personnel choices are good or bad, but I’m not sure I can agree with no imports/trade. It seems that the best path for all nations is to be as self-sufficient as they can be. Not all will have the means, either because of population, geography or luck. Trade bridges those gaps. Or it can. That may be necessary in a technological world. Even if we all build our own computer chips, most nations won’t have the raw materials.
Economics is a toolbox, not a science. And trade is a tool. What matters is how a craftsperson uses a tool. If they are skilled, artistic and with intent. Trade as practiced is a tool wielded to maximize benefit to one party at the expense of another. Trade wielded for the purpose of producing mutually beneficial outcomes, equitable development and targeting maximum self-sufficiency for all nations would produce its goals just the same, would it not?
It may be corrupted by greed and avarice, but the comment above describing an economic structure would go a long way towards insulating positive trade from greed. We could also probably get away from so much greed if we stopped reading dead, Victorian economists. Dressing up a pirate / slaving / drug dealing empire with capitalist bunting and social Darwinism doesn’t change that it’s fundamentally based on pirate / slave / drug profiteering. I mean, stop listening to the English on just about every topic. But especially economics and war.
Trade could and should foster cooperation and exchange of both goods and ideas. The neo-liberal idea that trade should prevent wars would likely be true if trade was not seen as a form of competition to be won. The variety of peoples of the world is amazing. We must find ways to recognize our differences, celebrate them and learn from them. I sincerely hope that Russia and China can show us a different economic path. The one we’re on is ruinous.
I also found this to be a fascinating video.
There is no reason not to have a two tier economy and separate currencies for each. One internal and one external to add value.
Your internal economy and it’s currency could very well be fortified from external pressure, and your external currency can be floating with international market demand, imports and exports.
Your internal currency can only be used internally and your external currency for foreign trade, and the central bank can do the settlements between both currencies.
What absolutely minimal external trade is required can be conducted on a purely barter basis — a certain agreed-to quantity of whatever for a certain quantitity of whatever. No currency involved at all. Both trading parties are happy.
Remember, “money (currency) is the root of all evil”, because non-productive, purely parasitic, produce-nothing speculators’ very existence depends upon “money”.
I used to watch him and many other Russian academics in Vesti with English caption in some or most programs. It’s been a bit over one year since they eliminated all the captions in the middle of a propaganda war. That was a horrible mistake. I have spoken about this with many Russians but it has gotten worse with RT SPUTNIK English following Murika narratives in many important topics.
Mike Norman in the US and many others including me.
Liked the economic sounds coming out of Putin’s speech to the regions. He knew what he was talking about.
https://mobile.twitter.com/mikenorman
But as Mikhail explains clearly is the planning infrastructure in place to achieve it?
The neoliberal period in economic thinking is really just a hyped-up version of the pre-Great Depression thinking that John Maynard Keynes and others so categorically demolished in the 1930s to create a new orthodoxy.
The resurgence of Monetarism and its microeconomic ‘free market’ narratives (which I lump together and call ‘neoliberal’ for want of a better title) were not new ideas nor based on new evidence.
They became dominant again only because the vested interests (corporate money, conservative thinkers) found a way to usurp the broad appeal of social democratic movements that were the political vehicles for the ideas of Keynes and others to become the mainstream policy framework.
The errors in pre-Keynesian economics, that were exposed in the 1930s, were not fixed or amended by the neoliberals. They were just ‘swept under the carpet’ in an exercise in Groupthink denial.
Why it has failed miserably…
1. Never created full employment
2 Increased inequality on a MASSIVE scale
3 Handed all the power to vested interests and the banks
The neo-liberal era has also been marked by a major reduction in Departmental capacity to design and implement fiscal policy – given the obsession with monetary policy and the major outsourcing of “fiscal-type” government services to the private sector.
Many of the major government policy departments in the advanced nations are now just contract managers for outsourced service delivery.
So this diminution in the overall capacity of the government machine to implement efficiently and speedily complicated nation-wide infrastructure programs has to be addressed as a matter of urgency by progressive politicians.
As a result of what we learned during the GFC, we can no longer deny that fiscal policy is required to address serious swings in non-government spending.
Monetary policy has been proven – categorically – to be ineffective in dealing with aggregate demand failures of the sort we have witnessed in that crisis.
In that context, governments must develop forward-looking capacity to ensure that it has project implementation skills when they are required.
There is no better economic planners of industrial capitalism today than China. It is why the West has to use force and bullying to compete.
History has a lot to say if we listen properly.
http://bilbo.economicoutlook.net/blog/?p=37930
Oh boy, Did China listen to the wind chimes as history blew on the breeze. The West have become tone deaf.
Crisis can lead to changes and leaps forward. HE CAN. But, it DEPENDS on the policy options. The golden dream of the new Russian elites of integration into the wonderful Western capitalist world has come to an end. The dominant financial elites in the globalized world of late capitalism do not want new “partners” to take a piece of the pie: they want to eliminate them, destroy them, annihilate them. But Russia will only be able to get out of the current crisis if the state expropriates the parasitic elites of finance capital and implements a national production regime to the fullest extent and at the same time improves the living conditions of the population.
In order to finance a broad national development plan, the government should, in addition to expropriating the financial surplus currently in the hands of the wealthy classes, financial elites and speculators, create a digital currency, backed by gold or a basket of relatively stable currencies, not convertible, issued on a large scale by the central bank to encourage new production projects and scientific and technological development and innovation, accessible at zero cost by entrepreneurs. It would be the state impetus for a great leap in the country’s economic and social development. A loan from the future that will return multiplied.
Could someone post a profile background on this person.
I am not aware of who he is. It would help to understand his view point
Thank you
////Mikhail Khazin is one of the most famous Russian economists, whose forecasts regularly come true. He is the president of the expert consulting company “Neocon”. he was the deputy head of the Economic Department of the President of the Russian Federation Administration. Permanent expert of Echo-Moscow radio station, RBK channel and other business media.////
Doesn’t sound like anyone I want to hear from
On the Sanctions Front Russia Is Brainwashed Against Her Own Interest
Putin’s speech shows no realization that the ONLY reason sanctions against Russia are effective is because the Russians bought in to globalism and, thereby, gave foreigners power over them. It seems incomprehensible that Russia would willingly place her economic life under her enemies’ control.
Putin’s inability to identify Russia’s commitment to globalism as her problem indicates that Putin is still committed to globalism. The Russians were sufficiently brainwashed during the Yeltsin years to orientate their economy to global rather than domestic markets. This served Western interests not Russian interests. The happiest economy is the self-sufficient one. In the 1950s and 1960s, Paul Samuelson, the most authoritative of American economists, emphasized that the US economy was self-sufficient and could not be harmed by external forces. We relied on our own markets. We made here and sold here and prospered as we never have since. Our debt was held by ourselves. We owed it to ourselves.
https://www.paulcraigroberts.org/2022/03/18/on-the-sanctions-front-russia-is-brainwashed-against-her-own-interest/
Breaking News: Putin Acknowledges that Washington Has Launched a War of Annihilation Against Russia
https://www.paulcraigroberts.org/2022/03/18/breaking-news-putin-acknowledges-that-washington-has-launched-a-war-of-annihilation-against-russia/
Putin Reappoints Russian Central Bank Chief Who Handed Over Russia’s Reserves to Russia’s Enemies
https://www.paulcraigroberts.org/2022/03/18/putin-reappoints-russian-central-bank-chief-who-handed-over-
russias-reserves-to-russias-enemies/
WHAT I GOT WRONG AND WHY
https://patrickarmstrong.ca/
fr https://www.chroniquesdugrandjeu.com/2022/03/cette-autre-ukraine-qui-se-prepare-en-mer-de-chine.html
fr https://odysee.com/@ERTV:1/SAPTR-19-Intervention-russe-en-Ukraine-extrait-gratuit:9
Paul Craig Roberts:
“Putin Reappoints Russian Central Bank Chief Who Handed Over Russia’s Reserves to Russia’s Enemies
Will Russia Be Defeated By Her Own Central Bank?”
Pepe Escobar calls it “mind boggling.”
Comments?
LJ,
If they think hiking interest rates fights inflation then yes.
Interest rate rises are price hikes.
The last thing you want to do is help inflation in the current environment.
The gvt has no problem with rising prices, its liabilities are a fixed # sometimes never adjusting over 100 years.
The tax they collect is on a percentage basis, as the price rises, so does their income, but the liabilities stay the same until painfully legislated higher (w/perks naturally).
The only time you will hear the politician crow about high prices, is during the election cycle in which he makes another promise to another set of peoples to obtain their vote, and then magically can’t do anything to keep prices down.
This is a vicious cycle that this time looks catastrophic from many angles, but the political blinders are on, the gasket blown, money is gushing out like a geyser and the gay military ideological grab bag is on.
So lets go for broke,
and have a smoke,
or a toke,
to stay awoke,
under the cloak.
It was put outside as bait to kill the $!
Putin has engineered a profound turnaround already, from the Soviet days. He has done it using the current global financial system. So he is used to the results it can provide. Sanctions introduce a completely different set of circumstances. He has been slow to recognize the dangers of the 5th and 6th elements in Russian society, but he has come around. Next he has to re-evaluate and reform the principles of Central Bank, foreign reserves, trade practices, etc. I think he will be successful, but time IS critical. Russia needs to increasingly separate itself from failing Western practices, and get out from under their thumb of globalist techniques.
She’s only cost Russia 40trillion rubles give her a break, quite a long one.
Food cues in America.
https://www.youtube.com/watch?v=iyLkOnCQEos
Here is a thought?
Whimsy not design your own economic system that could be compatible with an external economic system? Why keep trying fiat Keynesian economics when it was designed to benefit the country which controls market pricing?
If the actual economic system was created less than 150 years ago and fully implemented in the late 70’s, we could say that there is no reason to try another. Debt based economy without appreciation and constant depreciation needed is a very flawed system.
Money supply expansion doesn’t have to depend for it to exist on depreciation or debt. Expansion can be based on demographics, after all an active economy is active only on its capacity of production independent of type of production, that would be a matter of value which is completely arbitrary, the main drive of an active economy is its capacity which it is based mostly on population. You can tie money supply to demographics and eliminate most reasons for depreciation and need for debt, and investment could be driven by demographics as well and not debt, your economy would continually expand unless you have a policy to lower your demographic levels. Russia is los ok’ing to expand its demography.
You could also back the value of your currency to life instead of death.
So basically technological international communism.
Complacency in society will bring its own destruction, hardship and hard work is necessary for evolution. Complacency also brings forth degeneracy, and common good would be forgotten. Look at the West, people are more worried about what Starbucks coffee they want or what to wear than with their true personal growth.
There was an experiment done with animals a few years back that showed extinction can be brought about through complacency.
Also the idea that we have to keep our population low in order to achieve sustainability and not growth due to the resources being limite is a dangerous is proposition and also not a natural one in humanity. Humans are driven by instinct to reproduce. All these ideas of human forced evolution and sustainable demographics, goes well in hand with what the WEF is proposing.
The chap Khazin, is merely stating what is glaringly obvious: Russia is engaged in an imposed present conflict with one arm tied behind its back. This is a political-ideological-military struggle which Russia was forced into after standing aside from the struggle in the DonBass for 8 years. There has been an internal struggle against the Atlantic integrationists who are acting in accordance with the globalist forces who hold sway in the west, and it is a struggle that Russia (and the civilized world) cannot afford to lose. It looks like 1941 all over again. There seems no way of avoiding the present impasse but Russia must carry out a complete internal revolution or it will lose, and so will the rest of the world.
I remember well years of inflation 1973-1980. The lesson was that inflation helped a lot the most stupid business men while decimated responsible paper money oeners. Share holders actually didn’t loss at all. Inflation lifts numeric value of real estate too. Owning house, forest, raw material, factory secure your property. It’s paper digital money holders who will be badly beaten.
Weimar Republic Hyperinflation through a Modern Monetary Theory Lens
https://gimms.org.uk/2020/11/14/weimar-republic-hyperinflation-through-a-modern-monetary-theory-lens/
The Russian central bank needs people there that know what they are doing.
History explains how you deal with it.
Russia fires hypersonic missiles in Ukraine
Moscow has deployed Kinzhal missiles for the first time since the start of its military operation
It targeted “a large underground depot of missiles and aerial munitions of the Ukrainian forces”.
https://www.rt.com/russia/552284-kinzhal-hypersonic-missile-ukraine/
When it comes to “cancel Russia” I really do sometimes wonder who are the real culprits: the never-ending Russian liberals policies and their proponents or the West?
It seems Russia won’t be deterred.
https://tass.com/economy/1423957
https://www.rt.com/business/551803-siluanov-russia-reserves-frozen/
https://www.rt.com/business/552077-russia-will-respect-private-ownership/
The guy has a point, but he misses the forest for the trees.
The central success of the centrally planned economy was that it can produce effectively what it KNOWS it needs to produce.
The central fail of the centrally planned economy was that is CANNOT PRODUCE what is DOES NOT KNOW it needs to produce.
But what this means ?
I means that a central, hierarchical, management is desirable WITHIN a business.
At the same time is is UNDESIRABLE outside of the business – on the state level – as THE CHAOS OF THE MARKET IS ESSENTIAL to breed new ideas and new ways to do things and NEW THINGS to do.
Sure, the gov NEEDS to assist and support the businesses (be they prive ot state-owned) in times of a crisis. But taking over businesses operations is a short-term gain for a long term disaster.
The Russian economy HAS STILL NOT RECOVERED from the Soviet disaster. That is why stuff does not work. Yet. It will take another generation, maybe more to re-build the capability to not only innovate but also the instruments and the “enterpreneur” infrastrcuture and culture which is essential for economic progress.
Yes, it is painful waiting. But that is the only way. Fixing 4 generations of the centrally planned economy will take a couple generations and there is no way to make it faster. It required a complete societal change – it needs children who are BORN AND RAISED in a competitive market to grow up to their 40s and have their own businesses for this to happen.
Yes, the children which are today barely starting University will be the first generation to have a chance at changing this. The first generation which grew up in a (working) semi-open-market economy.
Of course, there are exception. Exceptional people can think like enterpreneurs even when raised in a USSR-style society. BUT those are only exceptional people. For a true mass scale change, one needs muillions of such people, from the mom&pop store to the leaders of the industries. And that requires different upbringing, if cannot be achieved by training or a good book being read.