/ world today news/ The Russian leadership is aware of the tectonic changes in the world order and is already defining its new contours
On January 8, 2022, RUSSTRAT’s article “Global Trends and Challenges for Russia in 2022” stated that Russia’s demands for US and NATO security guarantees are a statement about the collapse of the old world order. On January 23, 2022, the article “Russia Passes the Point of No Return” concluded that Russia is setting new rules for the world game.
This conclusion was confirmed on February 24, 2022, from the beginning of the SVO in Ukraine. But a change in the world order cannot happen without a change in the financial system, and the time has come when Russia is formulating its new contours.
On June 16, Alexei Miller, chairman of Gazprom’s board of directors, during his speech at the St. Petersburg Economic Forum, made a number of significant statements that were not accidentally ignored by the Western media, and, in my opinion, by the local media, they did not pay the necessary attention to them.
„We are witnessing a rupture of two systems, on the one hand – the system of commodity markets, the system of resources, and on the other hand – let’s call it a nominal system – the system of central banks, the system of reservesMiller said.
Miller went on to explain that the world’s central banks regulate the nominal value of money through interest rates and exchange rates. Through these nominal instruments, they manage and control demand. However, they do not control the supply of commodity markets, the supply of raw materials and the volume of this supply.
“We see the dominance of the dollar disappear, settlements in national currencies appear, and ultimately the paradigm shifts. And if you and I remember the classic scheme “money – commodity – money prim” – this is actually the Bretton-Wood paradigm, now a completely different formula comes to the fore – “goods – money – goods”: first they sold gas, then they produced it, the goods are ours – the rules are ours. But we don’t play games whose rules are not invented by us. Someone says, “The law is the Atlantic,” and someone else, “The law is the taiga,” Miller said.
Here it is necessary to specify that the world is in “perfect storm”, the crisis is seen not only in the financial sector, due to the accelerating dollar inflation, there is an energy crisis, a food crisis, a leadership crisis in the world as a whole.
Under these conditions, the Bretton Woods system, which fixed the role of the dollar as the main reserve currency, and the following years later the Jamaica Conference, which fixed the separation of the dollar from gold, lose all adequacy to the current situation.
The real value of money, and in particular the dollar, which is not backed by physical assets, has been undermined, and the accepted valuation of countries’ gold and foreign reserves has always been very tentative. How much gold there really is in the American Fort Knox is not known for sure. The value of the dollar since 1971 has been supported by consensus backed by the power of US aircraft carrier strike groups.
To clarify the situation, Miller gave another example: “You cannot describe the state of your energy system or economic system without knowing the rules of a particular commodity market or without knowing the volume of supply in that market. And in this situation it turns out that the institutions of the Bretton Woods system, the global international institutions, lose their relevance. They don’t work and quietly die.”
„The Bretton Woods system of nominal price regulation, apart from possible controls on the supply of raw materials, gives a powerful inflationary impulse” – these words of Miller are now clearly reflected in the skyrocketing prices of oil and gas.
According to the head of Gazprom, in such conditions, the demand for raw materials will replace the demand for foreign exchange reserves, which in itself represents a very serious, tectonic change. “The contours of a new type of socio-economic structure will, of course, be determined to a very large extent by the Russian Federation, and there is no doubt about that.”Miller summarized.
All these statements by the head of Gazprom could be ignored and ignored, as they did in the West, but the conclusion reached by Miller was reflected in a speech the next day by Russian President Vladimir Putin. During his speech, he emphasized that now truly revolutionary, tectonic changes are taking place in geopolitics, the global economy, in the technological sphere, in the entire system of international relations.
„However, it seems that the ruling elites of some Western countries continue to live only in an illusory world. They do not want to notice obvious things, but stubbornly cling to the shadows of the past. For example, they believe that the dominance of the West in global politics and economics is an immutable, eternal value. Nothing happens forever.” Putin said.
Speaking about the massive rate of “money printing” by Western countries and the rampant inflation that is eating away at countries’ gold and foreign reserves, Putin said:
„According to the opinions of experts, in the coming years (this is an objective analysis) the process of conversion of global reserves will begin – they simply have nowhere to deal with such deficits – from currencies that lose their value – into real resources, – such as food, energy, other raw materials. It is clear that this process will further stimulate global dollar inflation.”
Everything is exactly as Miller summarizes – the demand for raw materials will replace the demand for foreign exchange reserves, and the Bretton Woods system, in the rupture of the possible control over the supply of goods, gives a powerful inflationary impulse. Accordingly, this logic of process development is also shared by the country’s top political leadership. Many may say that words are one thing and reality is another. However, this means that they do not notice what it’s already happening.
The government made a decision and Gazprom is now selling gas for rubles. Yes, this is largely a consequence of the West’s misguided “green agenda” and its ill-conceived sanctions policy. Yes, all transactions are transferred to Russian jurisdiction, but the very fact that the ruble is now officially backed by Russian gas takes it out of the Bretton Woods paradigm.
In the face of skyrocketing dollar inflation, many countries will wonder how their currency is propped up to withstand the threat of hyperinflation.
In this way, Russia has already challenged the entire financial system of Bretton Woods, and the “gas for rubles” scheme made it possible to maintain the value of the local currency and even increase it against the dollar, although an important role in this matter was also played by the significant drop in imports in our country .
But if we step back and go back to the old paradigm, the Russian economy will be broken. Maybe not right away, but “the gentlemen who write the rules” sooner or later they will definitely make new changes in their favor and the 200 rubles to the dollar declared by Joe Biden may become a reality.
Let’s hope those who want to go back to the old way heard the president’s words: “And it is a mistake to believe that in the time of violent changes, one can, as they say, sit back, wait, that supposedly everything will return to normal, everything will be as it was before. There is no”.
The importance of all these statements can hardly be overestimated, since Russia is the first to formulate the concept of the future of the global financial system, where the role of the usual financial institutions will be leveled to the level of only a transmission link.
What the new financial system will actually look like, what place swaps, barter and regional currencies will occupy there, we still don’t know. The Russian president has already announced that the issue of creating an international reserve currency based on the basket of currencies of the BRICS countries (Brazil, Russia, India, China, South Africa) is being developed and invited other BRICS countries to join the Transfer System of financial messages of the Central Bank of Russia, as an alternative to SWIFT.
In this way, Russia is not making a request to change the global financial system, and “stakeholders” in the form of BRICS and other countries that are not burdened with a huge debt burden can also contribute to the process.
Of course, the collapse of the world’s reserve currency will not happen overnight, too many assets are denominated in dollars and no one wants them to suddenly lose their value. However, in connection with the prospect of a collapse of world trade, in connection with sanctions and elements of protectionism, the issue of regional currencies will become increasingly acute.
The fact that Russia is already asking all these questions gives confidence that our country will really define the contours of the new world order.
Translation: ES
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