What happened to Russia’s gold and foreign currency reserves? Will there be a default?

No problem then –

“If $300 billion were arrested, about $340 billion remain free, out of which $132 billion is monetary gold in the form of bullion. It is not known how much of the remaining money is cash, and how much is invested in securities.”

… meaning, no gold was outside of Russia, and if it was, it remained untouched. Which I would not believe; for the greedy, ever gold-hungry Anglos it would be too much of a temptation, cf. Venezuela and Libya.

So basically everything frozen was a credit anyway, something digital, a mere receivable and, hence, another one’s liability, no real asset in itself. We know how the West “creates” currency out of thin air. It is intrinsically worthless.

Russia is certain to retrieve such values = receivables in a deal somewhere down the road. Her gold however is safe and secure, and will form the basis for trade in the new Asian monetary order.

Essentially, what we have here is the exposure of the true source of western power, established via force of arms over hundreds of years – the international financial system. It is a system of blackmail from beginning to end, from A through to Z, if you wish to trade, if you wish to lift your country out of extreme poverty, you have to lock yourself into this system, use its currencies, bank with its banks, utilize its financial services, accept advice from its supposed experts, & so on. There will be many who criticize Russia & refer to its management of its reserves pure cretinism. The question though are what options did Russia have? Did it have any at all? I suspect not. I more or less know that to be the case – but there are many secret aspects of how the system functions at the highest levels us mere mortals are not privy to, although we can make an educated guess, & arrive at the conclusion that Russia ran its finances the way it had to, because there was no alternative. And now Russia & China seek to create an alternative, for the first time in hundreds of years, a system of trade & finance will exist that the west does not have a monopoly of control over. This is a tectonic shift.

https://edwardslavsquat.substack.com/p/russias-gold-is-being-robbed?token=eyJ1c2VyX2lkIjo3Nzc2OTE4LCJwb3N0X2lkIjo0ODAzMTE1NywiXyI6ImpmaUtTIiwiaWF0IjoxNjQ3NDQ4ODM4LCJleHAiOjE2NDc0NTI0MzgsImlzcyI6InB1Yi01MjA5NjMiLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.TsN8IiJjayh-UtBnp3f2OSUyWVouYoS-ya3vgYRAzuA

And as a result, a very strange decision was made: instead of conducting transactions with gold itself through the Central Bank, the Russian government, represented by Prime Minister Mishustin, allowed industrialists to sell gold abroad directly, bypassing the Central Bank and commercial banks. […]

And so Russian gold was sent abroad… And most importantly: now the sellers are not only able to independently sell gold abroad to anyone, but last year [in June 2021] Putin also made it so foreign exchange earnings from the sale of gold did not have to return to Russia. […]

If you carefully read a short note about Putin’s decree, then the following conclusions can be drawn from it: now it will become very easy for Russian miners of gold and diamonds to sell their products abroad. Previously, the state obliged all proceeds to be credited to accounts in Russian banks, now the currency from the sale of gold can be immediately credited to accounts in any banks convenient for the buyer and use the money at your discretion. Absolutely without any control from the state.

And yes, this money can be invested in anything. There, behind the cordon.

Well, if you look at all this from the side of a simple layman, then Mr. President simply legalized the export of capital from the country. To offshore, to foreign banks, anywhere. That is, now what they fought so hard against is legalized. […]

Now it will be easier for Russian companies to sell resources abroad. Previously, the proceeds had to first be transferred to accounts in Russia. Now they can simply transfer money to a foreign account and immediately start using it at their own discretion. […]

The gold reserve of the Russian state is administered by the Bank of Russia, which is not a Russian bank. This, let me remind you, is a legal entity about which we know nothing. No authorized capital, no property, no founders.

I always considered Putin and posse, master chess players who considered every possible scenario. It astounds me that they would allow US to stick it to them like this. They never seem to learn that America would rather see them starving or dead.

China is the industrial production capital of the world, and China has use this clout to strengthen the Yuan overtime since the 80s. China is also a Nuclear power and no one can attack it. It only make sense to control its own destiny, which is why the west hates China, because it can control its own destiny. The Yuan is going from strength to strength as a result. Its also a reserve currency now. Even the IMF couldn’t deny the Yuan entry as a reserve currency.

Russia is the Mineral resources (energy capital of the world). with vast amount of undiscovered and untapped resources. Energy is currency. Energy is the true currency of the world, it as always been the true currency, but never been truly defined as such in the true sense, because the West lacks energy in considerable quantity. If you control energy, you control the world. Russia has been Raped and plundered since the fall of the USSR after the Soviet Union collapse, and the west has continued to use their financial clout to control Russia through pricing and buying energy from Russia, using both Dollar and Euro as the purchasing currency to get Russia Drunk on their currency and give Russia a false sense of belonging in the world. This has allowed the historically low value of the Ruble, which as been suffocated for a long long time.
Russia has the potential to be the No1 country in the world controlling the energy dynamics of the world, Selling their energy (Oil and Gas) only in Ruble only, especially with the EU, Trade in with direct currency exchange with other nations, strengthening their currency the Ruble and tell the EU to go take a hike if they don’t want to buy their energy. Watch the Ruble join the reserve currency list if Russia takes control of its resources.
Gas prices are approaching £2/litre in UK, and prices are going through the roof. If Russia stick to their guns, the EU would come begging quick as the populace cry foul over rising prices.
Russia Wake up from your slumber. You are blessed, but you realise this not.

Thanks for the article, Andrei.

I could not have made a more effective argument for all nations to develop go-it-alone economies versus continually attempting, to the vast majority of their own populations’ detriment, to remain in a so-called globalized economy. The reasons for this will in the near future become more and more obvious, unavoidably obvious, as the vast majority of belts in each economy must be adjusted tighter and tighter, and the vast majority of wallets in each economy get thinner and thinner.

Profit-based systems in which a microscopic percentage (an oligarchic class) of any nation’s population “privately” owns or controls the vital necessities of life for the vast majority of the population for the former’s astronomical profit (profit which must increase perpetually), will soon come to be seen by the increasingly oppressed latter as fatally flawed. In short, the vast majority will not be able to provide enough profit for the microscopic percentage’s astronomical investments and, rather than suffer any losses on those astronomical investments, the latter will, as if guided by an invisible hand, seek profit by “investing” in other imaginative enterprises — Emergency Economic Stabilization Acts, Great Resets, Global Wars Of Terror For Profit, or WWIII, to name just a few.

It is obvious that Western finance capital wants to bring Russia to its knees, submit it to the orders of the IMF, and in this way force the sale of its profitable state-owned companies. They want to take over the Russian economy. A firm response is needed that affects the property of hostile countries.

Time to start sinking aircraft carriers if the gold is not returned.

The entire situation inside Russia comes down to this quote by a Duma member:

The logic is direct – the party in power in the Russian Federation broadcasts to Russian business: decide with whom you are – with your people, or with those who wish them harm.

United Russia, through the chairman of its General Council and the first deputy chairman of the Federation Council of the Federal Assembly of the Russian Federation, proposes to establish criminal liability for the management of companies for the implementation of Western sanctions in Russia.

This war has unleased an immense patriotic feeling inside Russia. I see countless photos of patriotic displays,and countless posts from Russians supporting the war. I’m not sure that Putin realizes what is happening there. His popularity is now close to 80%. But that is totally based on the feelings among people that he stands for Russia.And intends to really solve the issues of traitor elites,and bowing to the West. If he doesn’t really do those things. If he doesn’t curb the elites,and doesn’t conclude the war with total victory. The cheers he is getting now will quickly turn to boos. And from boos,turn to rocks. This is a watershed moment for Putin. The day’s when he could walk the tightrope between Atlanticism and Sovereignty ended on February 24th. But does he realize that,that is the question. Does he realize there is no going back now,time will tell.

thank you to Saker Translation community for something both eminently readable which also addressed the questions I had. excellent knowledge drop.

IMO no need at all to panic regarding the Rubel value or a default for Russia.

Consider following macroscopic views:

As of now Russia exports gas and oil to the EU/West in the amount of somewhat less than a billion USD in EVERY SINGLE DAY! More than enough to cover all of Russias liabilities in short and long term.

In the long run a exporting country can only be paid by goods and commodities for the stuff it exports. So if the West would not sell to Russia anything of any value for Russia (high tech, electronics, luxury items, etc.) or anything that Russia produces herself, why would Russia continue to sell them gas and oil, for just paper money and digits at foreign banks, which could be frozen at any time. Only if Russia could find this stuff in other countries, which were willing to accept these (now very risky) currencies in vast amounts (considering Russias trade surpluses). All of these countries have been already been “warned” by the west, that they should not trade with Russia and pressed join their sanctions. It is not hard to imagine that the West would freeze that billions of Euros/Dollars, when they got eg. in Chinas or Indias hands, to punish them for not being obedient.

So after Russia gets ridd off USD/Eur denominated liabilities, further trade between Russia and the west will be only in for Russia riskless currencies (Rubel/gold/Yuan/Rupies) or not at all! Russias trade with non western aligned countries will switch much sooner obviously, which will set an example for all. This most probably will be the starting of the end of the USD as the global reserve currency.

Money (except gold) has no intrinsic value, neither the dollar nor the yuan nor the Rubel. The real value is in commodities (incl energy), produced goods and real estate (in extreme situations only water, food and weapons have real value). Russia has lots of all of these and is the closest country to being a self sufficient country there is. Russia only lacks cutting edge semiconducters, luxury/fashion/entertainment goods and some fruits from warmer countries. This all is available outside the western world as well, maybe not the very latest tech or fashion goods, but more than good enough (when was the last time you updated your computer or smartphone, because the last one was honestly not fast enough? A decade ago? Two?).

– The conversion value of the Rubel to foreign currencies does not correspond to the real terms value of the Rubel inside Russia at all. It just shows that there is less demand for Rubels from abroad, i there were no exports from Russia (allowed). If the conversion rate theoretically tomorrow hit 10.000 Rubel per dollar because of the sanctions, this would not reduce the Russians wealth suddenly 100-fold. This would only be the case if ALL what Russians consume and buy were imported from aboard. The last waves of sanctions instead showed a contrary effect than was wished in the west, they increased Russian internal production and were a net benefit for Russia. Instead of being a net importer of food Russia became a major food exporter.

Also now that there are extensive sanctions in place from the west, thus they will export lessto Russia, wether Russian costumers like it or not, and since western companies are abandoning Russia,and will not continue to transfer their profits abroad (while selling the profited Rubles and buying dollars/euros), there will be a drastically reduced demand for the western currencies in Russia, thus there is no forseeable mechanism to weaken the Rubel in its outside value against USD/EUR in the long term, after a short term panic among some Russians trying to buy (only so called “hard” but in reality fiat currencies) USD/EUR.

Sure the sudden massive sanctions will send some shockwaves through the russian economy, but after some adaptation, and some growing pains in Russias import substituting industries it will turn to the better for Russia, than being lazy and just import stuff.

The only theoretical long term risk for a globally decoupled Russia could be, that because of economy of scales and a relatively small russian market, technical progress might start to increasingly lag behind the west. But this is only theoretically a risk after a superficial analysis, because Russia is not alone in Asia. It is a matter of fact, that Russia produces almost half a million engineers a year, which is almost double of what the US produces (they get mostly lawyers instead). Not to mention that India produces more than a million a year and China probably more than the rest of the world combined. Much of that non western brainpower currently is being harvested by the west. But this will only remain so, as long as the dollar stays the global reserve currency, alas not for very much longer… Future technologies will come from the east, not the west!

Stop issuing monetary sovereign government debt securities. They are unnecessary. There is no compelling reason to issue them. They confuse people. They bias macroeconomic discourse, policy making and outcomes. They are an anachronism. They belong, alongside tally sticks, the gold standard, the London discount houses, and neoclassical macroeconomics, in the history books.

There is no need to issue public debt it is a left over from the gold standard and no longer applies.

http://bilbo.economicoutlook.net/blog/?p=31715

OMF Overt Monetary Financing – paranoia for many but a solution for all including Russia

http://bilbo.economicoutlook.net/blog/?p=26300

When it comes to the UK – Sterling is an export product.

Here’s why Labour’s Keir Starmers idea won’t raise a single penny for the UK. Balance sheets included.

https://new-wayland.com/blog/bonds-wont-raise-a-single-penny/

They are bunch of lying idiots.

That the Hard of Accounting are out in force again pushing their fallacious line that Taxes Must Rise because we decided to use government to save the economy in the face of a nasty pandemic.

There must be Fire and Brimstone. The Sin must be Purged.

Clueless idiots the lot of them – particularly those at the ironically named Institute for Fiscal Studies who really ought to know better. (If they do study Fiscal they don’t do it very effectively).

Bonds pay for themselves

https://new-wayland.com/blog/bonds-pay-for-themselves/

It’s fascinating how the mainstream, and quite a few traditional Post Keynesians, struggle with “foreign”. The problem is the mental model they have been trained to analyse.

By focussing on a country, with fixed borders and a consolidated ‘Rest of World’, they appear to miss the subtleties in play that become apparent when you look at the issue from a different point of view.
The classic one is believing that foreign is quite different from domestic. It really isn’t that different at all.

Once you take the MMT view of the situation, you see that there is little difference between somebody holding, say, Sterling Savings in Birmingham, Alabama from somebody holding Sterling Savings in Birmingham, England.

Both are a drain from circulation in the Sterling currency area and free up capacity in the real economy within that area, because saving denies somebody an income further down the spending chain. Both may provide capacity to buy something in the future and, outside of cash or a basic deposit account, both are likely to provide some sort of income in Sterling.

Both can be taxed. Sterling accounts are all transitively linked to the Bank of England via chains of other Sterling accounts. That’s what makes them Sterling. (Yes that applies to Eurocurrency deposits as well — ultimately they have to clear via the Sterling banking system to be worth anything and that allows authorities to collect back taxes on a remittance basis).

Foreign entities are holding your currency as savings. Similarly, financial products denominated in your currency are held as savings. Savings are, in effect, an export product of your currency area.

Once you look at it this way, then savings are very similar to a barrel of oil in stock, or an aircraft engine. If your country relies upon oil exports and people stop wanting oil then you may have a problem. If you rely on aircraft engine exports and there are no orders for new aircraft, you may have a problem. If you rely upon people taking your savings (because they had an export-led policy — which implies a savings-import policy) and that changes (the export-led policy moves to a domestic-led policy, as we’re starting to see in China) then you may have a problem.

To mitigate, you would make sure your exports are sufficiently diversified and decoupled — including the level and global distribution of exported savings. In other words you take a portfolio approach as a matter of policy. Make sure you have your eggs in as many baskets as possible and don’t keep the baskets all in one continent.

Sovereign wealth funds rely upon your export of savings to exist. The Norwegian Wealth Fund allows Norway to supply oil (and the odd salmon) in exchange for savings products. The Wealth Fund has no policy other than to accumulate savings products over time — which gives it a huge amount on the asset side of its national balance sheet. Norges Bank can then discount this asset into Krone for its domestic money supply purposes.

And that is the first brake on the ‘what happens if they spend it all’ fear. Foreign financial assets are the balancing asset for the country’s own money supply. It makes the numbers at the national level look good. They won’t be getting rid of it in a hurry until that view changes. And that view is unlikely to change if the country is running an export-led policy since the two are part of the same ideology.

But let’s say the central bank purges its neo-liberal types and hires some people who realise central banks can’t go bust in their own denomination. They ignore the sovereign wealth fund, say it is a silly waste of time, and stop worrying about the inevitable mark up to ‘Other Assets’.

And let’s say the Norwegians elect the Hedonistic party that promises to swap their huge hoard of savings for actual stuff and blow it all on imports. What is all that spending going to do to your economy?

It is going to cause an export boom. (Which everybody is desperate for in the present, but apparently is a terrible thing in the future. Answers on a postcard…)

Will that stop or reduce domestic spending in your currency area?

Probably not, because if your investment expansion caused by the boom is insufficient to handle the load, you can always rely on that circuit breaker — more imports.

It goes something like this:

The Norwegians order stuff from your currency area backed with their hoard of savings.

Your economy ships stuff to the Norwegians in return for their savings in your currency.

Exporters have an income and pay people.

Those people then start to buy stuff, but everybody is working for exporters and there is nobody to make anything (allegedly).

Other nations on the planet — running export led policies — spot the wealth in your nation and turn up in droves to sell their wares.

You buy imports and they keep the profits as savings (possibly in their own sovereign wealth fund).

The net effect is that the Norwegians reduce their savings in your currency and other export-led economies run up savings in your currency. So you spread the Norwegian demand around the planet to the extent that you can’t satisfy it yourself.

But let’s say that, for some reason, nobody wants your savings — even though there is a boom on and everybody is making loads of money. So you can’t rely on imports, or foreign direct investment, because the rest of the world has developed ‘mainstream economics’ disease and desperately wants to preserve a dying model they fervently believe in even though it makes no rational sense whatsoever to expect multiple independent nations to behave in unison this way.

Surely now your domestic consumers are going to suffer under the relentless demands of hard partying Norwegians!

But what political party is going to favour foreigners over residents who actually vote for them? Only those no hopers who have zero chance of ever getting elected.

A party in government — having encouraged the private sector to automate, innovate and invest as much as it can — would put in place export restrictions. One such approach would be a volume restriction. You would issue Norwegian export licences to a set value in Sterling and auction them off to the highest bidder. That makes servicing export orders more expensive than servicing domestic orders and firms will start to take that into account when they decide to accept an order. There are many other approaches, including: restricting withdrawals from Sterling accounts owned by foreign entities, large fees for exports, and randomly delaying exports in customs so firms don’t know when they’ll get paid (this one may already be in place).

You’ll note that you could swap out Hedonistic Norwegian Foreigners and replace them with Wealthy Domestic Cotswolders and the results would be pretty much the same (slightly less Viking, slightly more Saxon perhaps). Rich people with lots of money might decide to spend everything as well. So should we ban pensions — just in case?

What about the currency effects, you might ask. Well if an economy is in boom time, exporting like crazy and making profit hand over fist, is the currency going to be strong or weak at that point? Exactly.

Now that the ‘bond market vigilantes myth’ has been slain, the ‘foreign debt holders’ myth has sprung up in its place. It’s just another excuse to maintain the globalist, creditor first viewpoint and to try and stop politicians being elected that put the public good of the domestic population first.

And what is really important to remember is sovereign wealth funds don’t give goverments more money to spend. It is a myth.

Removed. Please stop promoting the same site over and over – breaks site rules. Mod.