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The dimensions of imbalances collected within the financial system as we speak is gigantic, it’s a lot worse than the scenario 90 years in the past. I am referring to the New York inventory market panic in October 1929: Black Monday, Black Tuesday, Black Thursday and so forth … Then all the things goes downhill till the outbreak of the Second World Struggle, proper, the acute part till 1933, became stagnation. Even Roosevelt’s “New Deal” failed to tug the US financial system out of this gap. Then Keynesian strategies of stimulating demand started to be utilized on a big scale, however they proved inadequate.
And the one solution to break the socio-economic deadlock was World Struggle II. After all, it was a extra multi-dimensional and multi-purpose venture, however its financial part can’t be dismissed.
And as we speak, such imbalances have collected within the world financial system that such a construction should merely collapse. And the one discrepancy within the predictions issues when it would occur: tomorrow, the day after, in a month or a 12 months?
I need to say that many had been ready for the disaster to start out in 2018, and in 2019, and to start with of 2020. Most likely, many noticed how outdated homes had been demolished? A particular automobile with an iron ball strikes to the location and begins hitting the wall. The constructing, whether it is sturdy, doesn’t collapse instantly, it sways, shakes, and it’s troublesome to say after how a lot affect the construction will collapse.
That is how it’s right here. There have already been a number of hits, beginning in 2016. And by the best way, these strikes didn’t begin from America, not from Europe or Japan – they began from China, the place in the summertime of 2016 there was a really severe crash within the inventory markets. The Chinese language then in some shocking means, nearly miraculously, stopped this collapse. The blows then went on and on. Personally, I anticipated a crash in each 2018 and 2019. Why did not it occur?
Cash
It did not occur as a result of all of the pundits underestimated the diploma of madness of the monetary authorities of the fashionable world working the worldwide system of central banks: the US Federal Reserve, the ECB, Nihon Ginko, and so on. They pursued a coverage that mixed large-scale cash issuance referred to as “quantitative easing” with rate of interest cuts to zero and even decrease. Figuratively talking, this coverage could be in comparison with treating a most cancers affected person with solely painkillers. That is completely vital for ache reduction – however for brief intervals of time and together with different, cardinal remedies. And if the affected person adheres completely to opiates, then, firstly, he’ll want more and more giant doses of them, and secondly, the most cancers course of will develop till it turns into incompatible with life.
And by the best way, we’ve already heard fairly frank admissions from the leaders of the monetary authorities that they have no idea how one can cease the disaster if it begins. They are saying, “We have now no funds left.”
Most lately, on March 3, the Federal Reserve held a rare – due to the coronavirus epidemic – assembly of its Open Market Operations Committee (FOMC) and lower the lending fee by half a share level to 1-1.25% per 12 months, though often the discount is 1 / 4 of a %. And right here without delay twice as a lot! So is the scenario actually pressing? And March 18-19 is the subsequent FOMC assembly, after which the Federal Reserve is more likely to lower the important thing rate of interest once more. However how sturdy will this decline be?
Consultants say that it will possibly return to the extent of 0-0.25% per 12 months, i.e. drop without delay by 1%. For the financial system, a zero or “close to zero” rate of interest is the most important painkiller.
The coronavirus has completely nothing to do with this – at greatest it’s an excuse, a set off, however certainly not the reason for the occasions.
If it wasn’t, they might have discovered another “power majeure” issue, it is an IT factor. This isn’t a matter of an actual pandemic, however a matter of politics and finance, soiled politics and soiled cash.
Sadly, the Russian management doesn’t react adequately to this case, doesn’t take even probably the most vital and minimal measures to guard the home financial system. If we take the scenario with our nationwide foreign money for instance, then the present collapse of its alternate fee is by no means shocking – it will shock precisely the alternative … When in 2013 Elvira Nabiulina was appointed the top of our Central Financial institution, she instantly began speaking about the necessity to ship the ruble “on a free float”. However this immediately contradicts Article 75 of the Structure of the Russian Federation, which explicitly states that the safety and making certain the steadiness of the ruble is the primary operate of the Central Financial institution of the Russian Federation. In consequence, after the imposition of sanctions, we had a violent collapse of the ruble in December 2014.
Plainly some classes could possibly be discovered from this case. For instance, on the legislative degree, take measures to restrict the liberty of cross-border motion of capital, as a result of with out this, in precept, we can’t stabilize the ruble. No, after all, one thing is being completed. The strategy I name: “placing on pants over the top”. The correction of the alternate fee of the ruble is carried out with the assistance of international alternate interventions. And to make sure the opportunity of foreign money interventions, it’s essential to accumulate billions of international foreign money. Why is that this completed? Is not this to make sure demand for the merchandise of the Fed, ECB, and so on. printing press? World cash homeowners revenue from this. And all through your complete interval of existence of the Russian Federation, not one of the nation’s leaders even hinted that restrictions and prohibitions on the cross-border motion of capital had been vital. As well as, it was repeatedly stated that Russia wouldn’t impose any restrictions on the motion of capital. This is similar as saying, “Guys, don’t fret, we reside by the principles of the Washington Consensus, you may hold robbing us, you may nonetheless create crises right here,” and so on. To date, there are not any indicators that the federal government is admittedly prepared to guard nationwide pursuits. What could be the nationwide pursuits of a rustic whose management swears allegiance to the “Washington Consensus”? What could be the technique to guard them?
Petrol
The rationale for the collapse of costs on the black gold market is that Russia refused to signal a brand new settlement to additional scale back oil manufacturing with the OPEC international locations. Due to this fact, from April 1, the OPEC+ settlement will stop to be legitimate, oil might be produced far more, its provide to the market will enhance, and the worth ought to fall accordingly. However, after all, it isn’t concerning the monetary mechanics themselves. Behind it’s Saudi Arabia’s obvious need to show and punish Russia with low oil costs. And in Riyadh, they’ve already introduced that they’ll enhance the manufacturing and export of black gold – and even present clients with important premiums over the market value. Apparently the plan right here is to scale back oil and fuel revenues for Russia under the permissible minimal. It is laborious to say how possible these plans are towards the backdrop of the large greenback run famous above and falling key rates of interest. In any case, I personally don’t suppose that the worth of “black gold” will go all the way down to the vary of 10-20 {dollars} per barrel, as some specialists predict. Extra practical is $30-$40 per barrel after which not for lengthy.
The very fact is that Saudi Arabia isn’t a completely sovereign state, however a state carefully tied to the US and working with a relentless eye on Washington. Basically, one can agree with the evaluation of the OPEC + settlement as a form of “Malicious program” with which the USA solved its issues.
America wants a excessive value for “black gold” – solely then will shale oil actually be produced, and its share in world oil manufacturing – develop. Due to this fact, in Riyadh they stated that for them a value under 80 {dollars} is unacceptable, not a cent much less, in any other case there might be an unbalanced funds. If you’re not too lazy to have a look at the Saudi funds, you perceive that even at 50 {dollars} per barrel, Saudi Arabia can steadiness its funds by merely eliminating all “luxurious bills”. They merely expressed what People wanted. I’ve no illusions about that. I imagine that Saudi Arabia has all the time been and stays an American puppet. And I feel that is why there are not any actual plans to carry down the worldwide oil market, as a result of when you hold the worth of “black gold” under $50 for a very long time, all of America’s shale oil manufacturing will die.
Gold
All through the historical past of mankind, the demand for gold and, accordingly, the worth of gold will increase on the eve of crises, wars and different upheavals. In the present day, the worth of gold is set by such mechanisms, that are very removed from the market and fairly deeply hidden from, as an example, uninitiated observers. As a result of after the abolition of the gold greenback commonplace on the Jamaica convention in 1976, an attention-grabbing scenario arose. De facto, the greenback was declared the world’s sole foreign money, the only measure of worth for all items and providers. However for this to essentially be the case, for the greenback to be a monopoly on this planet of currencies, its rivals needed to be destroyed. They had been destroyed – there have been no currencies backed by gold and different actual property on this planet. However gold is an absolute actuality, a component of the periodic desk, you can’t destroy it! That’s the reason on the convention in Jamaica de jure demonetized gold was accepted to not be thought of a foreign money asset, however de facto this steel nonetheless threatens the place of the US greenback. Due to this fact, for a number of many years, so-called gold cartels operated on this planet, which performed to decrease the worth of the “royal steel”, which supported the monopoly place of the US greenback.
At first, these cartels remained within the shadows, however the final of them, the so-called Washington Consensus, which included two dozen central banks of the world’s main economies, was already official, that’s, pursuits had already diverged and a doc was wanted. The final five-year settlement in Washington expired in September 2019, and it was not prolonged, because the central banks of a number of international locations all over the world refused to undertake obligations to promote gold from their reserves and, quite the opposite, started to purchase it. This was a vital second, because it meant the tip of the mechanisms that protected the US greenback and artificially restrained the worth of gold. On the finish of March final 12 months, the Financial institution for Worldwide Settlements in Basel selected the Basel III program, in response to which banks had been allowed to report gold in fairness at 100% of their value (I asset class) as an alternative of fifty% (III asset class), because it was earlier than.
After which US President Donald Trump talked about the truth that the US doesn’t want a “sturdy” however a “weak” greenback to take care of the competitiveness of its financial system. What may this be associated to? This can be as a result of the worldwide steadiness of gold reserves has modified. In line with my estimates, China has extra gold than the US as we speak. Official Chinese language statistics considerably underestimate gold figures, whereas American statistics, quite the opposite, overestimate them. I feel that in America gold is now not 8 thousand tons, however a lot much less. And what they name gold is simply gold-plated tungsten bars which are stored at Fort Knox.
Due to this fact, the worth of gold will enhance within the close to future – and never in percentages, however in occasions. It’s not out of the query that the gold commonplace will even be restored in some kind. Though, after all, it’s troublesome to think about what it would seem like, since as we speak there can’t be 100% protection of the wants of the world financial system with cash in gold.
Basically, we are able to say {that a} disaster awaits us, a lot deeper and stronger than it was in 2007-2009 and even within the period of the Nice Despair. You might say catastrophic. For which neither the world as a complete nor Russia is prepared.
Translation: V. Sergeev
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