The Only Existential Threat To Russia
Is Neoliberal Economics
The Only Existential Threat To Russia
Is Neoliberal Economics
Paul Craig Roberts
This week I was interviewed on
Russian TV about the possible new anti-Russian sanctions that Washington is
considering that would prohibit anyone in the entirety of the world from
holding Russian government bonds. Think about this for a moment. Washington thinks
that Washington has the right and the power to block sovereign countries and
their citizens from investing in Russian government bonds. Here we
face arrogance that has developed into insanity.
The Russian bonds are an excellent
investment. Unlike US, EU, UK, and Japanese government bonds, the Russian bonds
pay good interest rates, and Russia has virtually no national debt, unlike the
heavily indebted governments of the US, Europe, UK, and Japan.
Moreover, the Russian ruble is
protected by immense energy resources on which Europe and China are dependent.
The only way the ruble can be driven down is by orchestrated short-selling by
Western and Japanese central banks. These central banks can print and waste all
the money that they care to. A Western central bank is even less accountable
than a Western government.
The Soviet government had more sense
than to allow the ruble to be traded on markets that the West can manipulate,
but the Russian government, brainwashed as it is by American neoliberal
economists, lacks the understanding of the Soviet government.
All of Washington’s economic threats
to Russia are designed to force the Russian government into accepting vassal
status, like all of Europe, Canada, Australia, and Japan. The threats can only
work because the Russian government and the Economics Institute of the Russian
Academy of Sciences have ignored the lessons that Michael Hudson and I taught
them. See:
Here is how Washington’s current
effort to destroy Russia’s confidence is being played. First Washington
announces that it is considering banning everyone in the world from buying a
Russian government bond. Citibank, regarded by many as a criminal organization
totally dependent on Federal Reserve subsidies, puts out a fabricated
“analysis” that, to quote from Bloomberg, would cause the ruble to “plunge by
as much as 15 percent and borrowing costs would spike to a three-year high if
the U.S. goes ahead with proposals to impose sanctions on Russian government
bonds, according to a new model developed by Citigroup Inc.” Citi analysts Ivan
Tchakarov and Artem Zaigrin said: “The additional capital outflows generated by
this event could ultimately weaken the ruble.” https://www.bloomberg.com/news/articles/2018-08-01/russia-debt-sanctions-would-send-ruble-plunging-15-citi-says
This is abject nonsense. If
Washington is able to force its vassals to dispossess themselves of a good
investment, only Russian brainwashing by neoliberal economics can permit the
scheme to work.
If, on the other hand, the Russians
would like to free themselves of their neoliberal economic brainwashing, all
the Russian central bank needs to do is to buy the Russian bonds that
Washington forces its vassals to sell. This is precisely what the US, UK, EU,
and Japanese banks have been doing for a decade—purchasing their own bonds (and
stocks)—thus driving up the price. This is how zero/negative interest rates in
the Western alliance have been achieved.
Some time ago Michael Hudson and I
pointed out to the Russian government and central bank that the utterly false
belief that rules Russia that Russia’s development is dependent on foreign
loans and selling valuable Russian assets to foreigners for foreign exchange is totally
false. The Russian government is trapped in a mindset engineered by
Washington.
Hudson and I pointed out in terms
that could not be clearer that when Russia borrows abroad for a development
plan the dollars are not spent inside the Russian economy. The borrowed dollars
(or UK pounds, EU euros, Japanese yen) go into the central banks’ foreign
reserve holdings. The central bank then prints the ruble equivalent to finance
the development project.
It is clear as day to anyone not
brainwashed by American neoliberal economists, who are agents of Washington,
that there is no point whatsoever in Russia’s foreign borrowing. The Russian
central bank can create the rubles to finance Russian development projects
independently of borrowing from abroad. All borrowing from abroad does is to
enlarge Russia’s foreign debt, thereby making Russia more susceptible to
Washington’s sanctions.
As long as Russia remains in the
neoliberal mindset, the American neoconservatives, whose goal is to destroy
Russia, can relax. Neoliberal economics will do the job for them.
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