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16 December, 2014

Russia's moves to decouple economy from the neoliberal monetary monopoly

globinfo freexchange

From ZH:

Following the biggest rout to the Ruble in ages, Russia - unlike Mario Draghi - instead of talking the talk decided to walk the bazooka walk and shocked all those long the USDRUB by unleashing an emergency rate hike (at 1 am in the morning) from the recently raised interest rate of 10.50% to... hold on to your hats... 17.00%, a 650 bps increase!”


From RT:

The decision followed a 10 percent drop in the value of Russia’s ruble on Monday, the biggest intraday drop since 1999. After the hike, the ruble strengthened 11 percent settling closer to 60 per USD and 67 against the euro, bringing its total year-to-date loss to more than 50 percent.”

On Tuesday, in an effort to fortify monetary policy loans, the bank is offering to provide a floating interest rate set at the key rate level increased by 1.75 percentage points, ...”

The interest rate hike is the sharpest since the 1998 crisis, which saw rates higher than 100 percent. Russia defaulted on their debt in 1998.”

Last Thursday, Russia increased its rate from eight percent to 10.5 percent to combat inflation, which is projected to hit 10 percent in 2014. This marked the sixth time this year that the interest rate was spiked.”

The bank only sees a chance of recovery in economy activity in 2017. It has revised its 2014 growth forecast to 0.6 percent. Other forecasts show Russia slipping into recession in the first quarter of the 2015. Though the currency is tanking with the price of oil and the economy is slowing, the Russian economy still has strong fundamentals, including $416 billion in foreign currency reserves.”


Putin will seek further autonomy for the Russian economy and further state control of the banking system in order to protect it by foreign financial speculative games. It seems that BRICS increasingly gaining financial independence from the Western neoliberal bloc. This will bring further panic to the Western oligarchs as may fear that a fast growing Russian economy could become a new model for other countries even from the Western sphere of influence.



'I doubt that the Chinese or the Russians actually believe that gold is such a great investment in terms of pure returns,' Professor Aizenman said. 'But if they’re trying to suggest that they’re unhappy with the dollar or that they want to become a global player, then gold is very powerful. 'The investment is a symbol,' he explained. 'It’s made for political, not financial, gain.'”


Actually not. As BRICS are in the processes to decouple economies from the Western neoliberal monetary monopoly, they could bring back the gold standard as a base for their transactions, which is much more steady than the paper money unstable financial bubbles. They are ready, because they are emerging economies with billions of potential consumer tanks and can attract other countries too being victims of the international financial mafia, like Argentina and Greece. 

The West is saturated and the best proof is that the economic elites are using governments to impose hard austerity measures, cut salaries and pensions, or in the best case, stagnate them, because they don't really care about the Western market. Additionaly, they automate fast their bussinesses, therefore increase unemployment.

What we see now, is a cruel battle with time. On the one hand, Russia and China, together with the rest of the BRICS, are trying to get rid of the dollar and form their own currency system to gain complete independence, on the other, the neocon banking-corporate puppets in the US are in panic and seek desperately a pretext to come to war with Russia and put an end to this threat for their plans. This explains their agony to drag Russia into a warm conflict.



A month ago, it was revealed that Iran launched similar actions, probably to be able to join the new anti-neoliberal bloc:

http://failedevolution.blogspot.gr/2014/11/iran-to-prepare-for-big-currency-war.html


It happens fast:

http://www.zerohedge.com/news/2014-12-16/usdrub-pair-will-be-discontinued-due-recent-instability-russian-ruble


Further evidence:

On Tuesday, the CBR chief Elvira Nabiullina said a higher rate should put an end to investor speculation that has been hitting the ruble. 'We must learn to live in a new reality, to focus more on our own resources to finance projects and give import substitution a chance,' the bank chief said in a televised address Tuesday.”

1 comment:

  1. Forget about a return to THE gold standard. If you want to see where we are heading look at the structure of the euro. Rather than declare 'hey our gold is worth 1200 euros per ounce' they have a different approach. They say 'hey, we have 10,800 tons of gold'. That's all. The market is left to decide the value of the euro in terms of gold. The ECB gold does not 'back' the currency. It is available for Forex maneuvers. This is a new system and as long as the dollar is the reserve the importance of the ECB balance sheet structure will be hard to see. When the dollar goes away it will be very obvious. Gold will become the new CB reserve and it will be marked to market by all CBs. None would be so foolish as to declare a value in gold for their currencies. If they state it too low their gold will be bought up quickly. If they state it too high they'll face hyperinflation. Any declaration would mean they had to supply gold to the market. The ECB has no such issue. It just will use gold when it wants to do so.

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