Following Putin’s announcement about selling gas for Rubles only to hostile nations, I decided to reach out to Michael Hudson and ask him (my level, primitive) questions. Here is our full email exchange:
Andrei: Russia has declared that she will only sell gas to “hostile countries” for Rubles. Which means that to non-hostile countries she will continue to sell in Dollars/Euros. Can these hostile countries still purchase gas from Russia but via third countries?
Michael Hudson: There seem to be two ways for hostile countries to buy Russian gas. One seems to be to use Russian banks that are not banned from SWIFT. The other way would indeed seem to be to go through what looks to develop as a formal or informal third-country bank or exchange. India and China would seem to be the best positioned for this role. U.S. diplomats will be pressing India to impose its own sanctions on Russia, and there is a strong pro-U.S. constituency there. But even Modi sees the obvious superior benefits of benefiting from India’s geopolitical position with Russia and China’s Belt and Road Initiative relative to whatever the U.S. has to
Back in the 1960s the West dealt with the Soviet Union using barter deals. Arranging this barter became a big banking business. Barter is the typical “final stage” of the deterioration of a credit economy into a money economy that breaks down. Over the medium term, a new international financial organization needs to be created as an alternative to the dollarized IMF to handle such intra-bloc transactions in today’s new multipolarizing world.
Andrei: These hostile nations would pay extra for that service, but they would not have to get Rubles. Is that even possible?
Michael Hudson: Presumably Russia would not absorb the added bank costs of avoiding U.S. sanctions. It would simply add them on to the price, after setting the price at which it hopes to end up with – preferably at the original “old” ruble/euro or ruble/dollar exchange rate, not the post-attack depreciated rate.
Andrei: Question: Do you believe that the EU will agree to pay Roubles or will they take the total loss of 40% of their energy?
Michael Hudson: They will pay – or be voted out of office. If they WERE to cut their energy imports from Russia, the distress-price of gas would soar and there would be drastic shortages disrupting the economy. Energy is productivity and GDP. For Russia, of course, this is an opportunity to make the break now instead of later – and leave NATO to take the blame for the interruption of supply. So if I were Russia, I would not be in a hurry to help solve the foreign-payment problem. The same goes for non-oil raw materials, from neon to palladium to titanium, nickel and aluminum.
Andrei: So far, this applies only to natural gas. Do you believe that Russia will extend this to petroleum, wheat and fertilizers and, if yes, what will the effect from this be for the world economy?
Michael Hudson: All Russian exports are affected by these currency controls, because all bank transfers are sanctioned in the way discussed above. Russia has no use for dollars or euros, because these can be grabbed. It needs to have complete control over whatever monetary assets it receives, now that past norms of international law and financial policy no longer apply.
Andrei: Russia has A LOT of natural resources and a lot of technologies/commodities. If she is successful in her efforts to become paid in Rubles, could it be that the Ruble, which would then be a natural resources/ commodities backed currency, could become a major “refuge” currency.
Michael Hudson: I’m not sure what a “refuge” currency is, but the ruble will become a self-standing currency. If its balance of trade and payment improves, the problem may be to keep it from rising. If that happens, the question will be whether a rising ruble would oblige buyers of Russian exports to pay more in their own currency. A new multilateral financial system is in the process of being structured as we’re having this discussion. Will there be speculation? Forward selling? Short squeezes and Soros-type raids? Who will be the participants and under what rules …?
Andrei: How hard a hit would this Russian decision potentially have on the dollar? And MBS negotiating with the PRC for oil sales in Renminbi. Do you think that China and Russia will bring down the Petrodollar and will we see a commodities-backed Ruble and a commodities-backed Yuan replacing the Dollar?
Michael Hudson: The petrodollar will remain between the United States and its allies. But alongside it, there will be the Saudi-yuan and India-yuan arrangements for trade in oil, minerals, industrial products and probably international investment. Trade in these products will be able to occur in a number of currencies, probably on a number of exchanges. It is not clear whether some formal or informal arbitrage may develop between these areas. That is part of what is to be designed. To oversee and regulate the resulting financial and trade arrangements, an alternative to the IMF is needed. The U.S. will not join any organization in which it does not have veto power, so we will see a division of the world into different trading and monetary areas. The result is not so much a conflict as two quite different operating philosophies as the non-U.S. world develops its alternative to financialized neoliberalism.
Andrei: The US has basically stolen Russian gold and foreign currency. The Russians claim that the US has shot itself in the foot and that this will ruin the reputation of the dollar, do you agree with that?
Michael Hudson: Absolutely: Iran after the Shah was overthrown, Afghanistan’s foreign reserves earlier this year, Venezuela’s gold held in the Bank of England, and now Russia. Even timid Germany has asked that airplanes begin flying its gold held in the New York Fed back to Germany!
Andrei: do you think that Russia will retaliate against the US/UK/EU and nationalize/seize their assets in Russia or even in countries friendly to Russia (China?)?
Michael Hudson: Russia is very careful to do everything according to international law – which, of course, has a wide variety of precedents and excuses, and whose courts tend to be dominated by U.S. judges backing U.S. versions of what is legal under whatever it announces to be the “rules-based order of the day” instead of the “rule of law” along UN lines. To the extent that NATO investors abandon their assets in Russia, these may be sold – perhaps at a distress discount – to buyers who promise to maintain the business. Russia might impose severe fines for abandonment, as when landlords abandon buildings causing local expenditures on cleanup costs. Abandonment causes a “public nuisance.”
This would be a cause for immediate confiscation of current taxes, rent payments and salaries or payments for current supplies (including electricity and fuel) are not paid. Think what would happen if the gas bill were not paid and pipes froze and flooded a property. There is an entire world of penalties that could be applied.
International law provides for some recovery of assets wrongly confiscated – as the U.S. confiscations of Russian-owned reserves and personal property would seem to be. At this point Russia really has nothing to lose. It looks like there is not going to be much Russian-European cross investment for quite some time. Russia finally has given up on its hopes to “turn West” after 1991. It was a dream that turned into a nightmare, and President Putin and Lavrov have expressed their disgust with Europe acting in so uncivilized a matter. So for Russia – and increasingly other countries – NATO Europe and North America are the new barbarians at the gate. Russia is turning
That of course is precisely the aim of U.S. policy – to lock Europe into its own dollarized neoliberal order, blocking any mutual prosperity achieved by trade and investment with Russia or, behind it, with China. It looks like today’s sanctions are permanent for the next few years. So of course Russia needs to keep formerly NATO-owned enterprises operating. Let the NATO investors recover compensation from what the United States has grabbed. (Hint: the U.S. may simply begin to grab China’s or Latin American or near Eastern reserves to pay NATO investors who have lost in Russia. That is the model of using Afghan money to pay victims of Saudi Arabia’s 9/11 attack two decades ago.)
Andrei: finally, what question, if any, did I forget to ask and what would you reply to it?
Michael Hudson: Your questions are about specific problems and solutions. But the overall resolution needs to be system-wide, not patchwork. These specific problems cannot really be solved without a far-reaching institutional restructuring of the international financial system, world trade, a world court, and a UN without US veto power. And such an institutional reformation requires an economic doctrine to provide its basic principles. A New International Economic Order will be constructed on non-neoliberal principles – along the lines of what used to be called socialism, when that was what people expected industrial capitalism to be evolving into.
Andrei: thank you so much for your time and expertise!!
This interview with Simon Schuster gives some inside info on Zelensky and Viktor Medvedchuk.
You have posted this under the wrong article. Mod.
I don’t buy it one iota, so far his leadership has lacked courage, just by arming people, putting civilians in harms way, conscripting, lying non stop, begging for help to anyone, then demanding compliance as in throwing tantrums and not standing against the US for the good of his country, you can determine, Zelenesky is not courageous, on the contrary, he is a coward, that does not care if he has his civilians killed, he rather they die at the hands of Russian forces so he and his masters can blame Russia for atrocities.
Your recommendation is clearly biased, which makes me think that you have an agenda and it is not to inform.
The MoD of the Russian Federation just gave all the numbers, those numbers show several things, for one that it is a message to the US, the Russians clearly know with complete certainty and specificity the number of stinger missiles given to Ukraine, you do not publish those numbers unless you weee completely certain and you want your enemies to know that your information is on the dot, that you know what is all about, just to give them something to think about. The ministry could have been less specific, but they weren’t and Inknow from experience that when they do this is to communicate something very important and one thing they are communicating is certainty, you see Russians choose every word and number very carefully and they never bluff with something like this because then they would send the wrong message.
The Mod also published specific numbers regarding the foreign volunteers that left Ukraine, foreign volunteers that arrived in Ukraine, artillery guns given by the west, all the equipment Ukraine had when the special operation started, equipment they have destroyed, targets they have hit, combined dpr lpr and Russian losses. In contrast the MoD were not that specific in regard to the personnel losses of Ukraine, the number of foreign volunteers killed in both strikes, the amount of MANPADS except Javelines, the equipment that is in Poland, and some other minor stuff. Why weren’t they so specific regarding the last? Because they did not know.
Ukraine has already lost, there is no doubt about this, only an ignorant or stupid person doesn’t know this, the ones that aren’t one of the two, know they are spitting propaganda.your recommendation does have a few valid points, it is true that Russia has been planning this for a long time, they have baited the US, knowing how they would react, they were waiting for justification because they knew they were going to get it, I don’t buy Lavrovs act regarding Russias foreign reserves, after all they brought all of atusarías gold and have seen other example where the West has stolen other countries reserves, the latest, Afghanistan. By having its reserves seized, Russia can demand payment in rubles, and hurt the dollars primacy regarding reserve currency, now the EU and Japan are going to be forced to backtrack their sanctions to pay in rubles which will hurt them dearly, showing how much of a paper tiger they all are.
I do not believe you have good intentions, i think you are a shill, well you came to the wrong site, because here people are very free and very anti western and pro Russian, they can see through all that nonsensical propaganda of the article you recommended. You are just wasting your time and NEDs money
Your recommendation is clearly biased, which makes me think that you have an agenda and it is not to inform.
I agreed with this statement Michael is not relinquishing the most basic info, I have to say he is hiding something and not being honest about the whole scenario.
I tend to trust 100% what the Russian Federation and some other venues said, in fact the rouble will become stronger than the dollar in the near future.
I have purchased a few thousand rubbles when it was 1×118 now it is 92X1? By the end of the year the rubble will be about 20×1 if not less.
I am not an expert in world financials but my predictions about currencies always come through!
Completely non sensical. A supposed leader that sacrifices civilians is a coward
“victims of Saudi Arabia’s 9/11 attack”
Apartheid Israel did 9/11, in cahoots with Bush, Cheney and Rumsfeld.
So Michael has got that wrong.
Saudi money was involved. This is a proven fact.
The CIA hired the alleged Saudi hijackers. There were no planes, all you saw were fake videos on TV.
Fifty times normal background levels of Tritium, an isotope of hydrogen with extra two neutrons in its atomic nucleus were found in the twin towers bathtub water are indicative of nuclear fusion. The towers did not collapse, they were vaporized to condense into micron sized dust that covered lower Manhattan and blew away in the wind. The twin memorial reflecting pools are actually waste water treatment plants to carry off residual waste heat into the River Hudson.
Hmm, the first comment and it’s about an entirely different topic complete with a link to an Empire propaganda outlet.
Thank you for your effort but I’m afraid you’ve wasted your time. The Commentariat here is of a slightly different calibre. So why don’t you just move along.
Hudson points out the big picture
“..But the overall resolution needs to be system-wide, not patchwork. These specific problems cannot really be solved without a far-reaching institutional restructuring of the international financial system, world trade, a world court, and a UN without US veto power. And such an institutional reformation requires an economic doctrine to provide its basic principles. A New International Economic Order will be constructed on non-neoliberal principles – along the lines of what used to be called socialism, when that was what people expected industrial capitalism to be evolving into.”
China’s role as initiator is required here, only China can initiate a paradigm shift as a “neutral” initiator, towards a new world financial system and world trade, while I don’t see China initiating a new world court and new edition of the UN, even if it considers both of them as indispensable.
Or, who else do you think would be capable?
This is one of the organisations that is part of the “system”
Why do you post such links here ….to distract or troll?
Nobody with a brain think about Zelenski as nothing more that a puppet clown.
Promoting the abuses of Nazis against the eastern Ukraine civilians?
Saying that Bandera is very cool.
Working actively to promote a World War III that would erase humankind?
Zelenski is in my opinion the biggest rubbish in the world. He is even worst than his masters
If Zelensky is handpicked by Washington DC or alike … the war is against US or alike.
Which will be a very different war.
What kind of war that will be we can learn from Syria
NPR? You’d have to be “high” to buy into their lopsided partisanship and lies.
Are you kidding? That zNPR article/podcast you posted is a complete propaganda piece.
It covers every 5-eyes/NATO/FUKUS talking point as the gospel truth. In other words Shuster is lying thru his teeth.
Now regarding Micheal Hudson’s comments regarding India, it’s clear he’s not upto speed on the developments there:
1)The pro US lobby in the government is a lot less pro US now: I’ve seen pro US policy experts tell their American counterparts to go “eff” themselves live on air when the Americans demand India should condemn Russia. Consistently across the board these people bring up Serbia, Iraq, Vietnam, etc And say why should we condemn Russia when you’ve done far worse; that’s “pro American lobby” saying it. In others words there is no pro American lobby, there’s simply a pragmatic lobby that wants to trade benefits with the west, although not at the cost of sovereignty. India cancelled a $3Billion global Hawk/ predator drone contract with the United States.
2)India will not use the Yuan, that’s the most absurd statement Hudson made, they already have Ruble-Rupee exchange mechanism; for example the are now purchasing 25 more su-30mki using this Ruble-Rupee exchange facility, something that driving American policy makers hysterical. They’ll use the same mechanism to purchase Russian oil.
2) Yesterday India cancelled a visit to India by that fool Boris Johnson of the UK because of his insistence that India condemn Russia
3) India refused a request by Wang Yi, Chinese foreign minister, to get an audience with there PM Narendra Modi, Wang Yi was in India to attempt to normalize trade ties, he failed. The Indians will not normalize until the PLA accepts the status quo of ante 2019 of boundary between the 2 counties.
4) India has started to initiate repatriating the 450 tonnes of their gold reserves held in UK and Switzerland (the remaining 300 tonnes of their 750 tonnes are in India). Seeing Russia’s foreign exchange and gold stolen outright has woken some people up.
This demand by Putin to be paid in rubles is completely appropriate, and he ought put a further stipulation that they have to return whatever Russian gold that are holding.
Excellent discussion Andrei,
As Michael explains ……
It is what you ” save in ” and what your ” debt” is in that matters.
If Russia runs a trade deficit then the Russian government ” deficit” is the private sector “surplus.”
Russia national debt will be that ” surplus” that has been moved into Russian bonds. Which are just rubles with a term coupon attached.
Which is why Russia is looking to transact and save in rubles.
Transact because they can never run out of rubles and save in rubles so that they can set the interest rate to anything they want on the Russian bonds. With no bond vigilantes unlike the EU. Or $ backed currencies.
As Michael points out the exchange rate is important because a strong ruble can kill your exports.
It is a fantastic opportunity for Russia to build a more balanced approach and move away from tying to reach a trade surplus and move away from.an export your way to growth model.
Which they’ll probably be forced to do anyway if the West stops buying Russia exports over the next few years.
Focus on more important substitution and concentrate on improving productivity and wealth and added value within its own borders.
Like China has been doing as it tries to move away from trade surpluses to trade deficits. To move away from the $.
It needs allies to set up arrangements to do that. Which it has in Asia.
What Michael and MMT’rs were doing in Italy to show Italy how to leave the Euro.
When you think in skills and real resources terms The stuff you can run out of and not rubles.
The real wealth of Russia is.
Think of it as your pile of stuff. That’s your real wealth. Goods and services. Everything from potato chips to healthcare. Goods and services. That’s your real wealth. So your real wealth is everything you can produce when everybody’s working. That’s how you get the most real wealth.
Plus whatever you import adds to your pile of stuff.
Whatever you export subtracts from your pile of real stuff. Now I did not say that exports don’t help the exporters. Yeah, it helps those people. But it is a subtraction of real wealth from the entire economy. The exports are your cost of imports.
Back in the old days we called that ‘real terms of trade’. So to optimize your prosperity, you make everything you can with everybody working, and then you add to that with imports, what people export to you. Then whatever you must export, you try and get as many imports as you can.
If you can export one load of Spelt, common wheat and meslin , and get 100 computers , that’s good. If you can export one load Spelt, common wheat and meslin and get 110 computers, that’s better.
Real terms of trade, that’s the important thing.
If Russia introduces a job guarentee and offers every Russian a job at a living wage with a decent pension and childcare etc.
Create full employment within its own borders most things take care of itself after that. Countries will be Q ing round the block to sell Russia The imports it needs to try and get their hands on that aggregate demand created by full employment.
Billy: “If you can export one load of Spelt, common wheat and meslin , and get 100 computers , that’s good. If you can export one load Spelt, common wheat and meslin and get 110 computers, that’s better.”
Sounds like the barter system!
No. He is is saying, the tangible, consumer-impacting end result of trade is that. It is still mediated by financial transactions, it is not exchanging containers over the shipping dock.
Billy’s comment is excellent. If there are people in Russia who understand this and can implement it — a true MMT – this would be the best thing that ever happened to them.
The US has had the capability to do broad prosperity oriented MMT for many decades – and they didn’t. Not a chance as things stand currently.
Will Russia have their chance at MMT, and they do, what will they do with it?
The current MMT being pushed by Stephanie Kelton et al is still created as interest bearing debt and offers no advantage to the current system of money creation ex nihilo by private banks. The Federal Reserve, however, even though a privately owned bank, could create true fiat currency free of debt. This would create more consumer demand to ultimately benefit corporations both large and small, instead of the trickle down economics presently in use.
China’s central bank is government owned and creates the yuan debt free to provide all the funds necessary for infrastructure development and economic growth. By contrast the US economy is hampered by bank interest on all money created, where no debts = no money.
You can either just issue granny bonds to citizens of issue 3 month securities.
You need to dive deeper Stephanie proposals The in with Warren’s.
Bill Mitchell says just don’t issue debt period. Just use Overt monetary financing instead.
The job guarentee gets rid of carpet bombing approach of interest rate targeting.
Stay away from all forms of Keynesian economics and MMT, it is garbage, fiat currency is being destroyed.
The Petrodollar will be destroyed including I the West, it is the consequence of the biggest commodity being quoted in another currency, and all the of the commodities follow suit, the US dollar is not going to be depreciated only by inflation, but now by devaluation as well.
I’d prefer a guaranteed interest free credit line to each citizen at a subsistence+ rate to a job guarantee, the idea of bureaucrats creating make-work schemes make me shudder. I’ve met hardly anyone who doesn’t want to improve their situation and creating extra demand through interest free credit, that is money creation on demand by the citizenry, would enable growth in an entirely different way. It would not be a substitute for real jobs but would create demand for goods and services that would lead to real jobs. Then according to it’s own lights Russia should follow the USA model of academic development of goods which are spun off into the private sector, in this way the economy would be built from the bottom up and also guided from the top.
Basic income can’t control inflation.
The IRS could easily control the rate of inflation of the currency by deleting a fraction of it back out of existence from income tax receipts. This is exactly what private banks do as the principal of loans are repaid.
That’s what they do now Kapricorn 4
Why taxes match spending it is nothing new.
The Basic Income idea has some great marketing behind it and superficially appears to solve problems. Unfortunately the tricks used to promote it come straight out of the propaganda textbooks — attributing miracles to the policy when they are not justified.
The main trick is to compare an income guarantee to the broken system we have at the moment. The result is a miraculous increase in output. But that has nothing to do with the merits of Basic Income. It is just what would happen with any system of increased spending activity that knocks our monetary production systems out of the persistent slumps they always find themselves in under ‘laissez faire’ conditions.
It’s only when you compare Basic Income with other managed economy schemes that the issues with it come to light.
A basic income scheme that is monetarily equivalent to a Job Guarantee. In UK terms that is a payment of £375 per week representing a £10 per hour living wage along the lines calculated by the Living Wage Foundation.
The rest of the economy will respond to the monetary stimulus and increase its output to its structural maximum, which for the purposes of this we will assume is identical for both schemes. Whatever distributional outcome is required can be created in the Rest of the Economy via redistributive taxation, and the amount of stuff (goods and services) delivered to Participants is the same.
The difference is that the basic income scheme represents an extraction of goods and services from the Rest of the Economy, whereas the Job Guarantee represents an exchange of 37.5 Labour Hours per week for goods and services from the Rest of the Economy.
In other words the Basic Income participant gets paid twice in real terms . Once in terms of output from some part of the labour hours of the Rest of the Economy and once from their own 37.5 labour hours per week — which are self consumed.
Basic Income injects money into the Rest of the Economy, but without any increase in output available to others.
So the total amount of money in the Rest of the Economy naturally chases fewer goods and services. If you are in the Rest of the Economy, you will end up getting less for your money. And we usually call that inflation, but perhaps it is really just a form of theft.
But, But, But
The argument then continues. Of course people are not going to self consume all their hours, but are going to go out into the world and do ‘good works’. But this is a fallacy of composition. There is no more likelihood of enough volunteer opportunities springing up than there are job openings — both due to the matching problem. Instead of hearing those in charge berating people to ‘start their own business’, we will hear them imploring people to ‘start their own charity’.
Since there is no active mechanism to create things to do that are of service to others, the amount available will converge at the usual suboptimal point and a section of the population will be left high and dry — regardless of their intent. Laissez faire works no better with activity than it does with money.
The Job Guarantee solves this by creating things to do. It takes activity to the people where they are and creates roles for the people as they are. If there is to be enough useful service available for everybody, it has to be produced with a managed process.
The essential weakness of the Basic Income system is known, but hidden in platitudes. Many an article on basic income will highlight the ‘experiments’ that allegedly show wondrous benefits to the participating area.
But they avoid mentioning the hidden issues with these ‘experiments’.
The first is that they are local schemes within a fixed exchange area, and are therefore linked to production areas that have no income guarantee scheme. So the shortfall in output is actually provided by an external group locked into a fixed exchange rate and with no income guarantee. The income guarantee area exports inflation to the non-guaranteed area and steals output to replace its own shortfall, much as the Germans are able to export their unemployment to the rest of the Eurozone and make it look like there is some saving miracle going on in Germany and laziness everywhere else. Look at the overall currency area and the results are less miraculous.
You find this in every experiment. There is either an external group that transfers goods and services into the income guarantee area under a fixed exchange rate system and thereby suffers a real loss themselves, or there is a sub group within the area that is not eligible for the payment and acts as a servant class. It is no co-incidence that those who believe in Basic Income are also advocates for Open Borders and Fixed Exchange rate systems. Those are required to keep the process going.
The second issue is that all the experimental income schemes end, or wither away to an amount that is insufficient to provide an existence. The schemes end because the politics changes and ends them. This is an obvious outcome once the theft of output comes to light. People vote to stop the theft. You will rarely if ever see any discussion of why schemes are ended or run down.
Once a scheme is reduced below the amount of the living wage, it becomes a form of tax credits and those are systemically a subsidy to private businesses. Tax credits induce ‘bullshit’ activities in the private sector — using labour when automation or elimination would be the better options. Only when the public sector provides enough activity for all at the living wage is the private sector required to compete for labour at all levels. Only then is the race to the bottom in wages ended. And all that requires a Job Guarantee — the active process of creating enough to do.
Tying the income to the work prevents the private sector ursuping the scheme and changing it into a subsidy structure for their own benefit.
The fundamental weakness at the core of Basic Income — a focus on rights without an equivalent focus on duties — sows the seeds for its own destruction. The number of failed income guarantee experiments ought to be the first sign of problems, as should the constant run down in unemployment benefit, the end of universality of Family Allowance and the aversion to generous state pensions.
The failure of the UK student maintenance grant scheme is an excellent example of why income schemes are doomed from the start. Introduced in the mid 1960s, it was chipped away and ended by the turn of the millennium. Although the majority of grant supported students were very hard working, a small minority skipped lectures, avoided the library and took up resident in the ubiquitous Mandela Bars of the era. The media took these self-important individuals — full of talk about their rights, but little about their balancing duties to others — created a stereotype out of them and those opposed to grant funding were then able to find their mark. The death of the scheme was then inevitable.
Any reintroducing of student support should come in the form of a job — more akin to an apprenticeship than anything else. You turn up, you do the lectures, tutorials and reading you are required to do, somebody signs off your timesheet and you get paid the living wage for doing the job of educating yourself. Just in the same way as a day release apprentice. That would maintain support in a nation, because you have done something demonstrably of value before you receive anything from anybody else. You have put others in your debt.
You often read about how basic income will free people to take up education opportunities, learn new skills or pursue other activities.
It’s an astonishing claim. The basic income is basic. It covers just enough to live — in many proposals not even that. What are these people going to use for money to buy all these marvellous services?
The living wage covers transport costs, but a Job Guarantee position provides the on-the-job training. On-the-job training contributes to upgrading skills that are particularly important for specific jobs or specific work environments, emphasizing a learning-by-doing approach.
Leisure is work you pay to do. Work is leisure you get paid to do.
Basic Income attempts to pay people under what should probably be called the L’oreal Principle (“because you’re worth it”). They want to be paid first and then perhaps do something later if they feel like it. That is a complete reversal of the principle of contribution. Everywhere else you have to be of service to others and put them in your debt first, before you receive anything of real value in return.
Yet there is no need to overturn the entire structure of the current economy. If those people who really believe in the L’oreal Principle want to put it in place under a Job Guarantee system then they can do so. Just endow a charity to give money to people. If the recipients then decide to work for others (perhaps working for the charity) they will receive the Job Guarantee wage which will then, in effect, end up being the advance payment for the following period rather than an arrears payment for the previous one.
So there only needs to be one initial payment per person from the charity, which can easily be funded by believers in the principle — and tax deductible too. Any costs of excess extraction or free riding are then borne by those who believe in the concept rather than being imposed upon society in general. Those who desire to get paid twice are supported by those who believe they should have that right — in financial and real terms.
All the arguments for a basic income scheme are better supported by a Job Guarantee.
Hi, I haven’t posted before since I don’t have much to offer on the military/technical side. But I am familiar with political economy, especially in the US context. As the economic components become a larger part of the conversation, I’m fascinated at this pushing of MMT for two reasons and so putting this out there for the wisdom of the group to ponder:
1. MMT (in terms of net deficit spending / emitting more currency units in aggregate) describes the current power structure. It’s how the national security state (armaments companies, intel agencies, banking conglomerates, media companies, universities, etc.) has been funded for 4+ decades now. MMT remains conveniently disinterested in the most obvious of policy alternatives – taxing the rich – because that would put the various predatory oligarchs in competition with each other rather than expropriating the productive wealth of the ordinary worker.
2. MMT (in terms of a job guarantee) further entrenches inequality, which is the root cause of the rot in the US. The financiers and academic economists pushing JG conveniently fail to ponder why they propose JG wage rates substantially lower than said financiers and academic economists have earned over the years. That’s how MMT curbs inflation – on the backs of the reserve army of the employed.
While it’s tempting to desire a magical solution to empire within the monetary plumbing itself, there isn’t one. The question of how to distribute resources in large, complex systems is fundamentally political.
That’s why on the social policy side direct cash payment policies are generally more popular and more efficient to administer (such as unemployment insurance, social security, basic income guarantees, etc.) than centralized programs like a JG (which would require a mind-bogglingly large bureaucracy to administer). The US government is much larger today than the New Deal era. Even at the height of WPA/CCC/etc., they were tiny compared to the scale needed to accomplish anything meaningful today. Plus, it still wouldn’t do anything to the empire side of the budget.
You’ve fallen for the banks propaganda
Mis characterize MMT.
You need to learn it first and find out for yourself. That what banking TV say about it is true or not.
Billy, what is factually inaccurate? Why do you oppose taxing the rich?
Over the past 6 decades, and especially over the past 3 – 4 decades, the US has become structurally dependent upon deficit spending. Meanwhile, the Social Security Administration is far more efficient at sending cash to ordinary people than the technocrats are at managing meaningful work.
There’s a significant difference between a basic income guarantee [handout] and citizens having access to interest free credit, which has to be repaid. There are already endless numbers of make-work jobs acting as a burden on actual productive activity, I can’t see bureaucrats/academics whose sole purpose in life is to avoid any responsibility for anything being the best people to create useful goods or services. I’m suggesting that those goods and services are created by actual demand from real people. The details of repayment may vary according to locally decided rules but would be along the lines of the 2.5% ‘transaction tax’ imposed by credit cards which of itself amounts to a near 35% ‘interest’ charge on every purchase.
In a crisis when an economic war iis in progress why worry about inflation?
Saker, you say the following: “The US has basically stolen Russian gold and foreign currency…..”
In regard to Russia’s gold – it is in Russia – both Andrei Martyanov has been stating this at his site and the RCB has also had to come out today to confirm this fact too:
“Moscow dismisses talk of gold reserves trapped abroad.
Russia says all of its reserves are held in the country’s central bank vaults
The Russian central bank on Friday dismissed media speculation that gold reserves have been taken out of the country and are being held abroad. Western media began reporting the rumor after the US and EU authorities hinted of possible sanctions targeting Russian gold.
“All the gold from our gold and foreign exchange reserves is in the vaults of the Bank of Russia on the territory of our country,” the regulator stated on its website.
The central bank explained that gold and foreign exchange reserves are a tool with which the regulator can protect the country’s economy from external threats. In particular, they can become a source of funds to cover the cost of foreign exchange debt, stabilize the foreign exchange market and help pay for critical imports.
Earlier this month, the US and its allies froze roughly half of Russia’s reserves, worth $300 billion, as part of sanctions over Moscow’s military operation in Ukraine. However, the remainder of the country’s reserves, which includes physical gold, is secure, according to the Bank of Russia.”
So that is one item they couldn’t steal…..
Gold probably wasn’t
But $’s would have been definitely held at the FED
Euros definitely held at the ECB
That is how they froze them.
When Russia exports to the US they get paid in $’s. Export to the EU paid in Euro’s.
So they have a number of options
1. Buy imports sold in $’s or Euros – American or European goods and services.
2. Leave the funds in their current account at the FED and ECB as a reserve balance.
3. Swap their reserve balances for US Treasuries or Euro bonds to get more interest.
Unless they wanted to swap their $’s and Euros for rubles or into another currency.
With a floating exchange rate you need a buyer and a seller or the exchange won’t happen.
So if Russia wanted to swap $’s for rubles
$ —————–> rubles
Then somebody else would have to want to exchange
$ <—————— rubles
Rubles for dollars.
Russia gets the Rubles
The $'s held at the FED as a reserve balance ends up with somebody else's name on the account.
The commercial banks step in and do that so that the seller always gets the currency it was invoiced in. The buyer used their currency to buy things.
As described with diagrams here
Trade and external finance mysteries – Part 1
Trade and finance mysteries – Part 2
There is no explanation how much gold is in physical form and how much was payed but not yet physically delivered. (in the form of “gold futures”). My guess is that Russia add-up both when talk about its gold reserves.
It is almost certain that West won’t honor deals on gold futures, and that is “gold” they confiscated.
It’s my layman’s two cents, it would be nice that Mr. Hudson clarify this.
I doubt very much if Russia is spending anything on ‘gold futures’ or any other form of tradeable gold certificates. It is holding all its gold reserves as physical gold in its 3 gold vaults (Moscow, St. Petersburg and Yekaterinburg) and has posted a video to show this. It currently has 2,300 metric tonnes of gold, and is mining and refining more. The refining process was shown on the video, and so were the various types of gold ingot and bars (for example, some ingots stamped in English ” 1 kilo”, and gold bars of the type that James Bond dropped on to the grass at golf with Aureus Goldfinger in the famous scene from the movie). The only Russian gold that the West recently got its hands on was the 600 tonnes that were sold to London by the Russian Central Bank (RCB). While in my view this was a a reprehensible decision, it was entirely legal. Nothing was stolen.
I regret that the Russian government did not take seriously my hint in 2017 that it should move out of holding Euros owing to the growing financial imbalances among the central banks within the Eurozone. [These imbalances are a result of what are called TARGET2 flows which settle daily debts between various EU Member States’ central banks and which should be more or less equal over time, but in fact seem to have become a vehicle for a slow bank run from southern EU central banks to northern EU ones.] Now that Russia is demanding Rubles in payment, I expect it to run down its holdings of Euros, which are now in far greater danger of losing value as the EU enters a financial crisis of its own making, by refusing to buy Russian gas.
Russia does not need to import gold, since it is the world’s second largest producer at 331 tons per year.
China is the biggest :-)
Yes, my understanding is that the West confiscated Rusdian assets pertaining to non-physical gold futures.
Yesterday a feckless unelected bunch of EU bureaucrats has sold any residual EU prosperity down the river by begging the US to sell them overpriced US LNG.
The hegemon graciously consented, thereby cementing and deepening EU’s subservient status.
Europe just downgraded itself to a protectorate, just out of spite, and condemned its own people to a future of sustained inflation, crippling taxation, expensive energy, fading prosperity, betrayed democracy, pervasive censorship… as far as the eye can see.
I feel betrayed by EU would-be “policymakers”.
“Europe just downgraded itself to a protectorate, just out of spite, and condemned its own people to a future of sustained inflation, crippling taxation, expensive energy, fading prosperity, betrayed democracy, pervasive censorship… as far as the eye can see.”
So just like the UK then.
“These specific problems cannot really be solved without a far-reaching institutional restructuring of the international financial system, world trade, a world court, and a UN without US veto power. And such an institutional reformation requires an economic doctrine to provide its basic principles. A New International Economic Order will be constructed on non-neoliberal principles ”
I can’t really see that happening.
Unless Asia and Russia can convince everyone to join them.
But it doesn’t really need to be the end game. Russia just needs like China and the rest of Asia to be able to develop their own economies and trade policies without any interference from the west.
Now that Colnel muster and his horse NATO have ripped up the international laws and treaties. China and Russia could consider getting nukes placed in other countries. Supply nukes to their allies.
Give Russia and China the launch codes like the US has done throughout the west. The US hold their launch codes.
Western interference will stop and will not be as quick to invade if a country has nukes.
Once the West realise they can no longer take any country by force. Things will change. Syria and Serbia would never happen again.
It would encourage other countries to join up with Russia and China. Be protected under their umbrella.
The US won’t stop so time to play hard ball and beat them at their own game. Until they are forced to stop.
Then the world might get the institutional restructuring of the international financial system, world trade, a world court, and a UN without US veto power. And such an institutional reformation of an economic doctrine to provide its basic principles. A New International Economic Order will be constructed on non-neoliberal principles that Michael dreams of.
It seems the last comment made by Michael Hudson in this interview is most profound. That is all major economies primarily Eastern, Africa, Asia, Mideast, Latin America should begin discussing the formations an alternative to the United Nations now.
Perhaps, Mr. Hudson may be employed as one drafting the Foundational Documents among others.
Plus, not all of the Europeans will not follow the US global policies as they wake to become American subjugated Vassal states. The FDR vision will have to be revisited. See article written by Matthew Ehret titled, “FDR’s Anti-Colonial Vision for the Post-War World: ‘As he saw it’ Revisited”.
“They will pay – or be voted out of office.” Isn’t that the point though – they, (the EU) cannot be voted out of office. They sit, in their glorious ‘mediocratic’ isolation, untouched and unfussed by the problems they are bringing down the heads of the paysans. The people currently in positions of leadership (sic, there are no bona fide leaders) are playing their mad games for free, it’s everyone else who has to pay the price.
Excellent point Ross, I assume you refer to the European Commission, and not to National Finance Ministers.
And huge thanks to Michael Hudson to lead into this topic.
I suspect Putin saw this coming and chose his moment carefully to leave the EU exposed. Dammed if they do and really dammed if they don’t pay for Russian gas.
I do not see the USA riding to the rescue of the EU. Not with Victoria Nuland in the mix. If the EU relies on the USA to fix this, well, thatis likely to be really really expensive and patchy on delivery.
Meanwhile some parts of the EU will pay in Rubles, because they have no choice. There will be stresses and fractures somewhere.
I had hoped that Prof Hudson would have touched on China’s motivations here. I’d see their priority to be the Belt and Road project, with the EU as a major endpoint. For that to work, there has to be a settlement mechanism. A few weeks ago the Euro was the prime candidate, but now there is a question mark in the equation.
Similarly, I’d see China seeking to promote the Yuan in its dealing with Russia. Again, a question mark.
Very astute dialogue. Thank you Andrei and Michael.
There was a music video posted by Mr. Martyanov today. Worth re-posting I think…
It embodied – at least for myself – the spirit of Russia today.
Russians and others that understand what is at stake are getting behind the “Push-tin” in alignment with God, Freedom, and Soul choice.
One other piece of music that seems relevant – American – Crosby Stills and Nash – What’s that Sound? Everybody look what’s goin down https://www.youtube.com/watch?v=owdsTrxq83A
A beautiful world is in the making. It may be a while but it’s worth the wait.
IT’s like the highest stakes poker match of our time with the stakes being the survival of the human race!
IF SA agrees to sell oil for Yuan won’t that basically kill the petrodollar system , the dam has broken so to speak, and if so wouldn’t the US do everything in it’s power to prevent that?
As I understand the petrodollar system is based on the US providing security to SA and OPEC countries in exchange for only selling their oil in dollars,and if the petrodollar system were to collapse would cause the dollar to lose significent value probably even cause a depression in the Western ecconomies,so wouldn’t the US do everything possible to prevent that happening?
Which would mean they have to prove they are still the dominant military power an able to protect SA an OPEC , which means they have to defeat Russia at all costs I am assuming
” the petrodollar system were to collapse would cause the dollar to lose significent value probably even cause a depression in the Western ecconomies”
As Michael stated it wouldn’t it is a myth.
It just means America gets less of a free ride. Loses some power.
Oil sales are just held as either reserve balances or US Treasuries at the FED.
What are oil selling countries going to do with those $’s and $’s with a term coupon attached ?
America got the oil and all Russia got in return was $’s in 2 different forms. From which they could buy US goods and services or save them.
All it will mean is 2 things
1. Oil sellers will hold less $’s as reserves and US Treasuries.
2. But less US goods and services.
Take India as an exanple if they buy oil priced in Rubles.
1. India will hold less $’s as reserves and US Treasuries at the FED.
Now hold More rubble reserves and Russian bonds at the Russian central bank.
2. But less goods and services from the US and buy more goods and services from Russia.
But India will still buy goods and services from the US that Russia can’t provide.
Any loss the US loses via exports to India. Can easily be replaced by increasing domestic consumption.
The US are sovereign. The US government Can’t run out of $’s and can buy anything that is for sale in $’s that include s unemployed American labour. Bring that into productive use.
Losing export output can easily be replaced domestically.
The $ will still be there and won’t be destroyed as Michael says.
The US just loses a little bit of power abroad.
But the gains Russia and China makes will help both immensely.
Billy, I’ve been following your various postings but this one takes the cake.
Russia can buy goods and services from the US. India can buy goods and services from the US. US lost export output can easily be replaced domestically.
OK; what does Russia want to buy? What does India want to buy? Where is the value of the internal dollar to easily replace lost export output at the cost? Have you checked prices in your local supermaket lately?
China plays no role? These days we buy from China.
And you forget about the use of the Dollar as a hard coercive factor. Lets just think about this a moment .. because easy peasy it is not!
US can keep its dollar to trade in. But nobody outside really wants it. Go take a look at the latest stats.
Yes, but in addition what does USA have to sell. Well it is military equipment, but what else? Well we here that you lead in micro-chips, but Taiwan\south Korea\ Japan lead the way. Question: why would America bully Taiwan to set up companies in USA, if they were leading in that industry ?
Yes America does have oil an lNG that they want to sell to Europe at a ridiculous price? Yes, and depression coming to Europe for being the fools they are.
Now America’s number 1 instrument has been the dollar which everyone has been forced to use. You sell your commodities and are paid in US dollars, which goes into US Bank, which they have stolen many times before. Those banks use it as collateral to print ” Fiat” money, not attached to any physical commodity.
China has 1.5 trillion of your debt, which you will never repay, and never meant to. Over recent years they reduced their US debt holdings to the amount listed above. China makes a lot of money still playing the Zionist financial scam, and trading with the west. They know that this easy money is coming to and end in the west, but look at how much more they make from trade Asia, and all the rest of this world.
P.S. ask the great Michael Hudson if what I say is not true, then ask the great Scott Ritter if Russia does not have the greatest military firepower bar none.
China has say $1.3 trillion of US Treasury Bills in its foreign exchange reserves, that it can easily convert to digital US Federal Reserve Notes. The snag for the Chinese is that these dollars can only be ultimately spent in the US, since they are not legal tender in any other country except Ecuador, El Salvador, Zimbabwe, British Virgin Islands,Turks and Caicos, Timor and Leste, Bonaire, Micronesia, Palau, Marshall Islands, and Panama.
Essentially the US pays for its imports in company scrip, since the US dollar is a privatized currency, not issued by the US government.
President Abraham Lincoln had the temerity to issue debt free Greenbacks to fund the civil war, and then he was assassinated.
Farley Grubb is excellent on the subject
Abba P. Lerner was a Russian-born American-British economist. Introduced the ideas into his work.
The foundation of MMT. Abba was a massive influence on MMT econimists.
Thank you. I’ve been spending some time in your site trying to wrap my head around the concepts appropriately. If I read your reply correctly, the question becomes whether the US will adjust to the new reality or attempt to continue down its current economic path. Your description sounds like it would be much better for the majority of Americans, which makes me think it won’t happen until us Americans deal with our oligarch problem.
That is very kind of you.
You get it 100%
Just so you know It is not my site.
I’m Billy from London
Bill Mitchell is from Australia a founder of MMT. Michael knows him really well.
We just have the same first name.
You are a very quick learner. I’ve studied central bank, government and commercial bank balance sheets for over a decade.
But summarised it perfectly.
“The US just loses a little bit of power abroad”
Billy, by losing power abroad US will lose everything. Look it this way:
1.US gets resources for free. In exchange for loans, which cost them nothing. Other countries do not have that privilege.
2.US gets experts via “brain-drain”. Others are brain-drained.
3. US can sabotage competition via sanctions. No one ever sanctioned US.
In spite all benefits, US is in deep trouble on multiple levels. WHY?
It must be something systemic. It should be obvious, because that astronomical amount of value must pile up somewhere. It is definitely not in infrastructure. So something, or somebody drains US like parasite.
Judging by how much value it gobbled, it must be big bug.
Here is problem for you and your countrymen: with losing power abroad, that is, detaching tentacles from ex colonies, parasite became hungry. It already started to cannibalize allies (EU). After them, it will start to eat its own.
That means YOU. Pessimists would say it already started.
Not everything blackring,
Certainly power and influence but not everything.
Judging by how much value it gobbled, it must be big bug.
US Govt is gobbling up $1trillion per year beyond its income
The ultimate financiers of the USA are the worlds savers whose deposits are converted to treasury bonds.
The govt debt grows seemingly infinitely but it must pay interest on those bonds.
Once the market decides the USA can’t afford to repay the loans, it will stop and the privilege it enjoys will end.
There are 2 ways in which affordability can flip to its opposite, higher interest and or lower income.
A lower dollar would lead to higher (CPI) inflation which will produce fewer savings and higher interest rates.
Mr Putin has initiated this virtuous cycle (or vicious cycle from a western point of view) by making the $US less sought after, so lower in value.
Conversely, Russia will benefit as its currency rises in demand.
The parasites you are worried about are we the people, at least those with savings, who do not understand that they are financing the empire and its evil doings.
The best thing we could do I imagine is to withdraw those savings from our western bank accounts and put them in a Russian or Chinese bank and give Mr Putin a hand. Make your profit honourably!
The next best is to buy gold and silver and get wealthy as the battles grow.
We privileged few, who can see farther into the future than the brainwashed many, owe it to the future to preserve if not grow what we have for the time when the west disintegrates.
But it should be done harmlessly at worst and honourably at best.
The battle ultimately is between the banker and the banked, not the east and the west.
I agree, and while there are other factors, being “backed by aircraft carriers” was the last stage (after being backed by gold and then oil).
Exactly untreated waters !
Couldn’t have put it better myself.
Ah aircraft carriers indeed were ultimate power on the high seas but are no longer! thanks to a little thing called hypersonic missles otherwise known as carrier killers as they have no defense agains’t them.
At the conclusion, Dr. Michael Hudson notes that:
“the overall resolution needs to be system-wide, not patchwork. These specific problems cannot really be solved without a far-reaching institutional restructuring of the international financial system, world trade, a world court, and a UN without US veto power. And such an institutional reformation requires an economic doctrine to provide its basic principles. A New International Economic Order will be constructed on non-neoliberal principles.”
Being a common citizens that does keep up with geo-politics, it seems that this apparatus will take a good deal of time before it becomes operational. Perhaps Dr. Hudson purposely generalizes this approach, considering The All-Seeing EYE forever seeking out anyone daring to stray from its hegemony.
All this talk of a currency backed by a commodity like gold is a non starter.
It doesn’t work and why it failed.
Why Michael dismissed it when asked the Question by Andrei.
Talked about forming a free floating exchange rate block that can set the terms how they trade with each other and help each other out.
A commodity backed currency is too restrictive and ultimately leads to austerity led economic policies.
As shown in this gold standard economic model with diagrams.
The gold standard worked in the USA until the Vietnam war when American started spending to much money and was forced to go off the gold standard. It works as long as you spend within your means. Money is not supposed to be fiat. Fiat money is why the west is in the current shitshow.
You also mentioned that foreign countries will rotate out of US treasures. That is huge. Foreign countries won’t fund the deficit anymore and the fed will have to buy up treasures.all the dollars come back to USA which is very bad news.
Everyone needs to understand that there is a new financial system outside of the doll being developed. It’s just going to take some time to put everything that Michael talked about in place.
That’s exactly why it does work. Unless there’s an actual free market in money (meaning that the market determines the money not the state), then a commodity-backed money necessarily limits the spending by the state and thus inflation (expansion of the money supply) and so forth. There are no problems with a commodity money. Prices can always adjust accordingly.
Sid Farkus and Wesley,
Austerity economic policies never work.
Private sector debt soars as families and business have to take on too many bank loans. See 2008 for details.
The state had to step to save the whole economy. Gold standard type thinking never works why Austrian thinking is bogus. It just pushes families and businesses into more and more debt.
Expansion of money = inflation is a myth and lazy thinking.
It is the inflation that causes the expansion of money.
The “assumptions” they use in their models are complete fairy tales as explained in fantastic detail here:
“Living within ones means”
Just means make sure you have enough skills and real resources available to absorb the spending.
Bank lending can cause inflation if there are not enough skills and real resources to absorb the extra demand.
Tax cuts can cause inflation if there are not enough skills and real resources to absorb the extra demand.
If countries set tax rates to zero you would soon see hyperinflation.
You should see what Mr. Interest can do that Mr. Inflation cant, predict the future.
China is proposing a ‘currency’ that is in fact based on a basket of currencies that will be backed by various tradeable commodities. The Eurasian Economic Union has very recently signed up to this. This basket will have variable exchange rates among those currencies involved. This means that the weighting of any constituent currency within the basket will vary over time to reflect that individual country’s economic performance. That gets round the problems that would be associated with going back to an international gold standard.
This is the beginning of the institutional change that Michael Hudson is talking about/advocating.
Yes! As projected in their Joint Declaration on 4 February, China, Russia and its friends will construct a new order partially based on the old order that sets humanity on a course for a shared, prosperous future. The key is “A New International Economic Order … constructed on non-neoliberal principles.” And that must be constructed atop a framework of law.
One question Saker didn’t ask was about the fallout for us unfortunates living within the Outlaw US Empire.
I see no reason why Russia could not do ‘gold swaps’ with other countries, who hold reasonable-sized gold holdings.
The bullion does not have to be moved around, it is simply a shared medium of exchange, similar to the banks at the end of each day, tallying their shared credits/debits with each other, and settling their differences, often amounting to only small sums.
In the example of Russia-China, the Russian government then issues Rubles to Russian accounts, and the Chinese issue Yuan/Renminbi to Chinese accounts.
This system seems to be impossible to defeat with sanctions?
I’ve been thinking that this new world order needs a place for its institutions. I nominate Afghanistan. A historical crossroads of Eurasia that has suffered mightily from the machinations of the US. Building new international institutions there would replace the US aid economy and if anything were to allow the afghans to retain/rediscover their pre-Wahhabist culture it might be that?
Andrei!!!!! XXXX Beautiful!!!!
There’s a bit of a catch in the talk about economics.
#1 If you know how to do it better, why not do it?
#2 If it is not known, since it is spontaneous (there are too many factors of varying magnitude and direction that cannot be analyzed), why not acknowledge it?
Which option is correct?
Are economists like weather forecasters?
After all, there’s a joke: “An economist is a man who talks about things he doesn’t understand in a way that makes you feel ignorant.
Excellent discussion on economic issues. BUT without military power there is no economics. Its a higher level of truth, and scientific fact.
I remember an interview on the BBC with Nixon and a very eminent British historian (I forgot his name) Nixon said: “you write about history, I make history”.
Putin just made history.
Remembered Hugh Trevor Roper was the historian. Eminent, yes, but he was trying to be supercilious. It didn’t work.
Hugh (“Hitler’s Diaries”) Trevor-Roper
Yes Putin will go down in the history books as one of the greats.
Doing what Stalin should have done in some way in 1940.
Excellent interview. Thanks.
Yesterday Germany said it will not pay with Ruble for gas imports from Russia and if Moscow asks for one it’s breaking the contract and could be sued. What Russia can do to make the globalist puppets in Germany understand that there’s at present a new world order? Also those extremist Zionazis might bomb and damage the gas pipeline crossing the Ukraine which would halt Germany’s gas imports exactly like what happened with the Houthies precision strike at Saudi Aramco facilities the other day. Being an industrial society, it’s hard to imagine if Berlin can afford to behave just like a servant of the US anymore. Look forward to see trades in Ruble take hold.
Kremlin spokesman Dmitry Peskov commenting on Bulgaria’s refusal to pay for gas in Roubles: ‘Bulgaria will pay with roubles whether they like it or not.’
Same thing with Germany — no roubles, no gas. Fullstop. Find roubles, otherwise there’ll be very severe disruption of normal life in Germany and life as they know it will slowly grind to a halt. People can’t heat homes, can’t store fresh food, can’t cook, can’t get supply of clean water, can’t watch TV, can’t go to work, the whole nine yards. Germans will experience life similar to — less the horrifying shelling — that the Donbass folk have been experiencing for the past 8 years. It’ll be an even greater shock because they are accustomed to a very high standard of living and security all these while.
It may look improbable now but when that happens, I’m betting Germans themselves will be out on the streets, with echoes of Maidan, and bring the globalist puppets running their country to their senses. These puppets better hope that some of the Javelins, Panzerfausts and Manpads generously supplied by the West to the Ukraine have not found their way to Germany because the unrest is going to be that violent.
and England invested over a trillion dollars to bring their own oil in the North Sea online? they knew being dependant upon another nation for its energy needs was a no go!!!!
Will rationing under some type of a Chinese social credit system be the replacement fircwhat Dr.Hudson mentions in his last comment?
I wonder how come people in Germany haven’t been yet able to realize most of the troubles in their history were caused by that faraway island called the UK followed by the US. In fact Germany’s natural ally is the resource rich huge landmass of Russia. Also, they would need to just forget about ever conquering it to access its resources. By having closer friendly relations with Russia, W. Asia and E. Asia Germany could have a far better long term economic, political, cultural prospect than just being the little guy for the Anglo.
Finland proved to be the wisest European country. It took 20 years to build a fantastic Nuclear Power infrastructure that reaches every household because of the EU sabotaging it during its construction. It only uses gas for its industry. It has just announced that will not join NATO because it wants to avoid crazy cyberattacks. A small country with great politicians that genuinely care about its people, not only the interests of multinational companies.
A lesson to the German youth that voted massively in the green party.
Check his system for waste disposal:
My question to Billy and others:
What should a private investor in Dollars and Euros buy to avoid the catastrophic currency devaluation? Platinum? Other commodities? It seems to me that Gold is to manipulate and doesn’t reflect its value.
Much of Dr Hudson’s interesting discussion is apparently based on the premise that for Russia selling hydrocarbons for Rubles to “Unfriendly Countries” [what a beautiful Lavrovian expression!] is a euphemism for cutting off sales to such countries altogether, but I see the real beauty in this response as an opportunity to totally rebalance the economic order from a dollar-biased economy – one which unfairly favours “dollar-friendlies” and unfairly assaults “dollar-unfriendlies” – to one which fairly favours “Friendly Countries” [read: the Global South] and fairly disfavours “Unfriendly Countries” – totally turning the tables on the Hegemon. Both the “dollar-friendlies” and the “Unfriendly Countries” I would see as overwhelmingly the extractative/rent-seeking/exploitative/parasitic countries, while both the “dollar-unfriendlies” and the “Friendly Countries” I would equate much more, on the whole, with real producers and holders of natural wealth. (Aside: historically it was always the East that was vastly wealthy and the West were paupers, until the West temporarily managed to distort the appearance of reality in their favour through unfair leverage).
I would love to hear Dr Hudson’s view on my thesis below, if I am lucky enough that he reads this [this is not my field, I announce in advance!].
After President Putin’s announcement on the sale of hydrocarbons in Rubles, the Ruble fully recovered its recently lost value since the announcement of sanctions. Unfriendly Countries need hydrocarbons, and therefore they need Rubles. With limited supply of Rubles, Rubles go up.
For Friendly Countries, however, the world is a different place. India, for example, as a Friendly Country can buy oil in Rupees. This gives India a major competitive edge over all Unfriendly Countries. Likewise other Friendly Countries can use their own currency or some other Friendly currency to purchase oil, and thereby gain a competitive advantage. This is going to very quickly be reflected in a massive shift and rebalancing of global inter-currency exchange rates along brand new fault lines to reflect these new financial conditions.
Where previously global exchange rates were grossly distorted by the unnatural favour given to “dollar-friendlies”, natural market forces will respond to the differing ease of access to scarce Rubles and complementarily differing need for scarce Rubles by heavily discounting “Unfriendly” currencies and favouring instead “Friendly” currencies.
How do “Unfriendly Countries” gain access to scarce Rubles to buy essential hydrocarbons [and wheat, fertilisers, titanium, neon, palladium etc]? Most “Friendly Countries” of the Global South have toxic debts denominated in dollars, Euros and Yen, which have to be serviced. Instead of servicing these debts in dollars, Euros and Yen, they can offer – as value-added service – the scarce Rubles to which they have privileged access – and because these Global South countries have leverage from their competitive Ruble-Advantage – and the “Unfriendly Countries” are desperately disadvantaged – they can demand a premium in the form of heavily discounted dollar-payments.
Russia and China recently announced that they will construct a new financial system based on production, commodity assets, synergy and win-win relations instead of the current one based on extraction, rent-seeking, exploitation, discrimination, and steal-lose relationships. Whilst the announcement came out of the blue, my assumption is that they have been working on the groundwork for this new financial system for many years already. The Russians and Chinese are Master Planners. If they already have the basic foundations at a sufficiently developed level that they can initiate crucial elements of the new system sufficiently quickly, that would facilitate and enhance the natural market processes I sketched above.
How will the new economic order interface with the old economic order? The West’s suicidal sanctions are rapidly dividing the world into two trade blocks: a resource-rich producer block with ready access to Rubles, cheap hydrocarbons and cheap fertilisers, and favouring win-win relations; and a self-bankrupted financialised block with difficult access to expensive hydrocarbons and fertilisers, and difficult access to scarce Rubles. It would make sense that the primary mechanism for the interface between the two systems would instrumentalise the servicing and elimination of toxic debt to the Global South (including the asset-stripping dollar extraction from the Global South through toxic “privatisation” of resources and infrastructure to dollar corporations). If the mechanism for making hydrocarbons, fertilisers and Rubles available to “Unfriendly Countries” is linked to the discounted servicing and elimination of toxic debt (and/or the pricing structures are linked), this would counterbalance the disbalance caused by the extreme desperation of the “Unfriendly Countries”.
The new World Order should be a natural World Order, not an unnatural World Order. Just as in the old World Order the rent-seeking Elites used unnatural and unjustly acquired leverage to force extraction of rent at the most exploitative rates from the most desperate communities (most of whom were desperate because they are so resource-rich and hence targetted), thereby creating unnatural and untenable levels of toxic debt; so then, in instantiating the link between the new and old financial systems, the central role of the servicing and elimination of toxic debt must be inseparable from the availability and pricing of hydrocarbons, fertilisers and Rubles.
As natural fall-out from the division into two trading blocks, the “Friendly Countries” and the “Unfriendly Countries”, global inter-currency exchange rates will settle along brand new fault-lines which reflect the differing access to and cost of hydrocarbons, fertilisers and Rubles. These exchange rates will heavily benefit “Friendly Countries” and disadvantage “Unfriendly Countries”. Thereby hydrocarbons which are very expensive to “Unfriendly Countries” will be intrinsically much cheaper to “Friendly Countries”, reducing their operating costs and the costs of living, and even further preferencing their local economies. Win-win all the way!
Perhaps Russia should even create separate “Friendly Rubles” and “Unfirendly Rubles” (the former being unavailable to “Unfriendly Countries” and disqualified as payment medium by “Unfriendly Countries” for resources, and convertible only through the mechanism of servicing or elimination of toxic debt).
For years there has been talk of a “Petroyuan” to replace the Petrodollar; the Russians are masters of strategy and surprise – the Petroruble has turned the global financial system upside down overnight, and turned the tables on Empire!
It is clear as daylight now isn’t it , all empires die cecause of excessive greed,hubris,pride corruption from within ,
We are witnesses to the biggest historic shift in global terms.
“the Petroruble has turned the global financial system upside down overnight, and turned the tables on Empire”
All Hail VVP
but it is just the begginning
Oh how the mighty winds of Chaos are blowing through our world
To what our end maybe we shall all soon see.
BM, do not sell yourself short, for you are obviously a really well learned person. It matters not that you are not an economists and it matters not if “Billy” is. What matters is that you have a sense of Justice, and when we depart this life; we leave with a clear conscience.
You can put 6 economists in a room and all of them will disagree, even though all will bring stats\charts to prove their point. Reason: Everyone of them has racist, predjudices, bias and tribal instincts, coupled with”who pays my salary”.
It is the same with history, for the winners write it based on the above-mentioned. Born and bred with reading war history, and then reading “the siege of Lennigrad”, the Russians lost 27 million, and defeated the Germans. They also broke Napoleon, but No! It was the Great West, and every rememberence day we have to listen to how great the west was.
Well it was Mother Russia that this world has to thank for that, and it is Russia that we will thank for this. China must know that all their money invested in America will be stolen, but soon we will see . China does not let down friends, let alone a brother. That was clearly demonistrated when Putin met Xi-jing Ping, and India who are “wannabe whites”will always deal with Russia to full fill needs of their population.
East & South Asia, Africa and South America is all that matters for the global South: On the other hand, we are going to hell.
@ Saker “Which means that to non-hostile countries she will continue to sell in Dollars/Euros.”
I don’t see any reason why that should be true, necessarily. For those friendly countries that for some reason are unable to use another currency, Russia will accommodate them; but I imagine she will strongly encourage all friendly countries to negotiate any other mutually agreeable currency, which I think would be advantageous to both parties (including financial incentives if required).
We also must remember the US stole its own citizens gold in 1934 when it outlawed private gold holdings.
This was so the bankers in EU & UK could get their hands on it via their creation & puppet, the FED. And this FED was and is linked integrally to the robber barons who owned the MIC. That law ended in 1971 only after the EU UK bankers had stolen the US gold reserves.
So nothing has changed.
Expect the target is foreign countries.
And in recent times according to reports they have resorted to faking the gold bars by making them made of tungsten with outer gold coating.
I re-post here again comments I made the other day in another article as they are relevant :-
I do not know why there is much concern over the USD & Euro because any currency has backing value if there is production capacity relating to it, irrespective of raw materials (oil gas metals food etc..)
Japan, for example, has little raw materials to back its currency but the Yen is strong and always will be because of its industrial production capacity* & value adding. *Same as US and EU UK. Germany similar to Japan.
Too much printing of money in US EU therefore shouldnt therefore be serious problem for the medium & long term. Same might be said of bank lending but as I said in another post there needs to bank reserve ratios reimposed to curve the money supply expansion. Its also a function of the money circulation rate too.
This US$ obsession which seem to have been more prominent since year 2000 is more about its value relative to other currencies/nations, and the US’s ability to control the mkts and prices of commodities and political influence. Also those other banks and countries who are holding US$ also is involved in this equation too.
So in the end the USD & EURO GBP etc will always have value.
Given this the geo-political events in the past 20-30yrs appear to be about other issues.
When Iraq in 2000 decided to price its oil in Euros rather than US$ freaked out the power obsessed elites in Washington – result = 911/WTC op then 2003 Iraq invasion.
It would appear its more about the ability to control the price of oil and money flows into the US.
And the end profits of oil companies, profits banks in the US facilitating those money flows.
I would ask anyone else to comment on this.
I therefore see all this is as not a real US$ currency crisis at all.
So why worry about oil and gas sold for Rubles ?
But based on the interview above and comments in this article, this US currency obsession appears to be about control of other countries – friend or foe, and various money and commodity markets.
No, I disagree with you for the following reason. Japan and Germany only have power because of what the US allows them. High – end Production only occurs if you have the resources ie technology, skilled labour force ,stable and specific laws and cheap inputs.
Now that Germany will NOT have cheap inputs ,it will molder , and other countries will take over, be it the USA again if it wins this war , or China (even more so as technology transfer has been achieved) or Russia (if it wins the war). If Russia wins this showdown , the US dollar will die, either in a year or five years , but it will be dead like the British Pound and Swiss Franc is today.
Why? Even if the US invades the Gulf Arabs states to control petrodollars, Russia ,Iran and Venezuela will still have enough oil, foodstuffs etc to control their own currencies from now on. The US can push the EU around and beggar their economies, but it will be over; the growth and commodities are in Asia, Latin America and Africa which are China and Russia friendly.
I find it a bit surprising how little has changed. By 1940 Germany and Japan were the industrial powerhouses. 2022 Germany and Japan are the industrial powerhouses.
The source of the problem is I think the very existence of the IMF and World Bank.
One based in EU and the other in US.
Not a fair situation given they were controlled by corrupt interests.
They have to go and be replaced by a better system.
Especially as they went and just gave the Ukraine a loan when the laws specifically go against such. No doubt that they will say it is an exception. I have no problem with exceptions, but when they consistently only favour one side then it is not an exception but malice. Noone can trust an institution or people like that ever.
I can see a situation in which gas payments (and later other commodities payments too) are settled in physical gold.
Russia’s confiscated reserves are roughly equal to the net dollar/Euro liabilities of the state and Russian companies, so presumably Moscow will invite creditors to apply to Washington for repayment out of those confiscated reserves. Washington will also treat Ukraine as a valid creditor to reconstruct damaged assets in whatever part of Ukraine remains under Lviv’s control after the war.
Net result, a global cleaving between West (US, UK, Europe, Aus, NZ, Canada, Japan, Israel and a handful of minor states), and East (Russia, China, Iran, Pakistan, Iraq, Syria, Venezuela and some minor states). The non-aligned or partially aligned states (SEATO, India, Brazil, Turkey, Egypt, many African and LA states) will swither one way or the other.
The Gulf Swingers (Saudi, UAE, Kuwait, Qatar) will pick a neutral path between
The transactions could be made in paper clips or stamps Gav Don,
It is what you ” save in ” and what your ” debt” is in that matters.
Why do currency-issuing governments issue debt? – Part 1
Why do currency-issuing governments issue debt? – Part 2
I’m afraid I dont understand your point.
Here is a very interesting article by the French intellectual Thierry Meyssan on the Ukraine situation. Perhaps it might serve to be used as another post here at the Saker.
The Globalists’ Insidious Strategy For Russia and Ukraine
By Vasko Kohlmayer
The truth is slowly emerging in America. That’s how it works here in the US. We’re gaslighted 24/7 for weeks on end with nothing but government propaganda from their controlled mainstream media but inevitably their lies become exposed. Hopefully articles like these can help reverse government-formed public opinion in the West.
Yet another good article, this time from David Stockman, which questions the US government’s position in the Ukraine situation.
Let’s not forget the British economic study suggesting that India’s GDP-PPP will in early 2040’s be bigger than that of USA. Now India has over 2 times bigger and almost 2 times bigger GDP-PPP that those of Germany and Japan. And even in GDP-PPP there are lots of fake virtual economy (very Anglo/Anglo-American reality).
Chinese study some half decade ago found that only 27% of US GDP was real economy. Hitting very viciously to that fake virtual economy (making money with money) is exponential economic Kinzhal. American real economy per capita has not grown much since Nixon’s Shock (August 1971). That’s the reason why former “from working class to wealthy middle class” – process has almost died out. The same happening now all over the Europe.
Escobar: Make Nazism Great Again?
Russia should cut in longer run all cultural and economic ties to Europe. Even if European nations (for tactical reason) would calm down. I recommend Russia being nasty, vicious and ruthless. For instance Finland should be now punished with hard hand. And yes, i’m a Finn.
“Nasty, vicious and ruthless” sounds more like the American way than the Russian IMO. Putin and co. have the moral higher ground over Biden* and the other Western elites, so I find your proposal hard to swallow.
(*or the USA in general considering all they have done to set Europe and Russia against one another)
MMT applies when the currency itself is not constrained by any external obligations to change it into anything. The government controls what it
a) Saves in
b) Issues debt in
That’s what matters.
The gold standard would be an example of the most restrictive currency (limited to amount of gold). What happens when the gold runs out? We know what happens that is why it was abandoned.
Plenty of countries have a fiat currency, but issue debt they have to repay in a different currency. A currency peg or band would be another example and, if a country chooses to peg its currency to something else…
These countries have effectively ceded their economic policies to someone else and normally a big bully.
A country tied to gold could become insolvent under the restrictions it adopted for itself by not being able to redeem gold. In practice, when countries approached the limit of gold they had, they had to raise interest rates to attract gold (throttling their own economy and usually causing unemployment) or they would hop off the gold standard usually causing a panic that resulted in inflation.
Much of an economics textbook you read will have examples and theory that implicitly assume a fixed amount of currency and MMT says
“let’s stop acting like these gold standard dynamics still apply”
As most nations pretend they are on a gold standard and use fixed exchange rates as they never updated their textbooks after they came off gold. Why they still peruse austerity economics that always fail.
Those that scream for a return of the gold standard should look no further than the EU.
That is how it has been set up. A gold standard model.
Countries have given away their mental and economic sovereignty and are now run by Brussels.
Can’t run deficits greater than 3% of GDP
Can’t issue debt greater than 60% of GDP
The stability and growth pact and excessive debt procedure , 2 pack and 6 pack and EU convergence programs are gold standard austerity policies.
Just look at the mess it has caused . The countries within in the EU have been enslaved by the big banks via private sector debt.
The ECB’s power is disturbing in the sense that its decision makers are unelected and largely unaccountable. It does have to provide reports to the European Parliament but it mostly does what it likes.
Deliberately created bond vigilantes to control elected governments.
It matters how the European Central Bank (ECB) makes its decisions, and it matters who it considers its experts and advisors. Especially if those advisors bear all the traits of lobbyists for the financial sector, and not least when the ECB is becoming a more and more powerful institution …
Yet an incredible two thirds of the banks and financial entities under ECB supervision hold 346 seats in its own advisory groups, and this is just the tip of the iceberg when it comes to conflicts of interest between the role of the ECB and those whom it chooses to advise it.
The 22 “advisory groups” that the ECB maintains. They have “517 representatives from 144 different entities: either corporations, companies or associations, mainly trade associations.”
According the ECB, these groups help it to “discharge its mandate” and “explain its policy decisions to citizens”.
The ECB claims they access these ‘indepedendent specialists” in order “to maintain the necessary dialogue with representative associations and civil society”.
All groups but one are completely dominated by financial corporations, and the number of seats taken by the private financial sector is an astonishing 98 per cent (508 out of 517). Seats.
That’s what happens when you run gold standard austerity policies and give up your sovereignty.
ECB independence is a sham they have been captured. Everybody who visits Anderi’s blog knows what that means.
Michael Hudson has spent his whole career highlighting this.
After watching this power up close for a month. Now we really know why the EU was set up this way. To attack Russia and China.
The countries have been Depoliticised with censorship and made into one party nation states. Ran by technocratic talking heads. So no matter who you vote for nothing changes.
Here is a brilliant article about what has been going on in Italy and all over Europe.
How the EU destroyed Italian democracy
Why did the power brokers ( big banks and financial sector with 508 out of the 517 seats) set the EU up the way they did using the gold standard model ?
Because as Michael explains in his wonderful article
“Large government deficits hurt banking profits”
Why countries that have been enslaved by
c) EU expansion
d) NATO Expansion
Still pretend they use the gold standard and fixed exchange rates.
Call the the IMF in to burden their slaves with foreign debt. Currency they can’t issue.
The ECB with their excessive debt procedure plays the role of the IMF. The role the IMF plays on the world stage. As EU countries sang ode to joy and waved flags as they have up their dog to the banks.
Globalism, Neoliberalism, EU expansion, NATO Expansion are all linked to the same economic paradigm that was cooked up in a cupboard in the Pentagon. Enforced by the CIA.
Personally, I call this collective ‘The Four Extremely Ugly Sisters” or the ‘4Ns’…
Of late AKA Mr Global, this collective has used blatant financial racketeering to thieve and extort from Mainstreet for generations. They got away with it until just recently when a critical mass of the world’s grassroots finally realised that they now not only thieve from us, but they also fully intend to use this wealth to genocide ~90% of humanity… just to add further insult to injury.
Mr Global weaponises everything he can lay his claws on. When he chose to weaponise his greatest asset [ US Reserve Currency status] that was the beginning of the end of the financial hegemon.
So when the U$ threatened to stop borrowing from the rest of the world many countries said “go on then, bring it on” LOL! Even just 3 countries combined… Russia, China, and India… amount to about half of the world’s economy and they already have their new payments system up and running. When a sizeable chunk of the rest of Asia, Africa and South America joins the fray the Hegemon will be absolute toast.
This is the dawn of completely new trade, currency and currency reserve paradigms. The Titanic just hit the iceberg and the lifeboats are few and far between for passengers. Zone B never even boarded this ill-fated ship.
Just me, but I’m already breaking out the beers and popcorn
They have certainly overplayed their hand Col.
Dear Andrei and Michael, thanks for this interview. Seems the mechanism and fallout of ruble payments are not so straightforward, at least to this simple engineer. “Russia has nothing to loose” sounds good though. Visiting my old Scottish homeland right now and am gobsmacked at the level of russophobic propaganda in the media. I am wondering now how it is going to feel being the loser in a war.
Well, Russia can lose everything if she loses the war, can lose the very existence of the country.
If America and her vassals lose the war, it will not much affect them. They can manage quite well even if Russia materializes her goals in Ukraine.
If is a draw, we got a multipolar world. Russia with those who don’t want to join the US will live her life and Amerika with her satellites her life.
“America” is an elite of oligarchs, Media and intelligence apparatus. They have a hard time not losing elections and be put on trial.
A fair trial about Fauci will take down the elite?
Excellent point! The SNP has fully endorsed the UK government’s policy and lies on Russia when it should have been thinking about how it could trade with Russia, should it manage to become an independent country. The problem is that the leadership has abandoned any attempt at independence, preferring instead the personal benefits and privileges of occupying subordinate political office.
I am not advocating Scottish independence. I am simply pointing out the hypocrisy of abandoning the founding objectives of the SNP while continuing to engage in the rhetoric. No preparations have been made for another referendum, nor has there been any discussion about how to run an independent country, except a vague decision to have a Scottish currency, even though they wish to rejoin the EU which requires accession to the Euro as a condition of entry these days.
Scotland lost her political independence ca 300 years ago due to the greed and incompetence of the Scottish elite, manifested in those feudal times by the spectacular failure and economic fallout of the Darien venture.
It was the fate of my grandfather to fight in world wars I and II. On both occasions his side won, but he was a coal miner before and after both conflicts, an industry which was deliberately destroyed by the government towards the end of his life. I sometimes wonder about the risk/benefit of his loyalty.
An interesting intyerview (2 hrs) between prof v Wolveren mrs Austin Fitts:
I am no economist, but I have done some research on the matter. It seems like these will function like “indexes” on a spectrum of currencies and the worth or value of a currency against another is due in terms of that countries overall stability, economic output, and political stability. In other words, no special alliances, no preferential status, you either have a stable country or not and thus a stable representation of your currency value or not. Of course I assume it will be the EAEU. SCO, ASEAN nations providing the credit worthy rating of such SDR indexes (Special Drawing Rights). I have read that they have already tested these in economic zones already.
Yesterday I posted in a different thread how a narrative appears to be developing in the MSM that Russia is losing or stalemated and will thus become desperate and make use of chemical or bio weapons.
I posted the main headline from Reuters: Ukrainian forces advance east of Kyiv as Russians fall back
This morning I visited what is referred to as “The bible of the Deep State”, Foreign Affairs magazine.
Their current lead article and main headline makes it even clearer:
The first paragraph of the article is this:
The second paragraph of the article is a study in hyper-biased historical revisionism, if you care to read it.
(for example, only Germany deployed chemical weapons in WWI)
It is about creating a false flagg operation where Russia is presented as guilty of biological warfare
I’ve always viewed the main conflict to be between the existing world financial order and the possibility of a new world financial order that does not finance the ‘West’s’ domination over the rest of the planet via the use and reserve status of the $US. A possibility that could lead to a balanced multi-polar world order, both financial and otherwise.
It seems this conflict is really hotting up now that Russia has decided ( long overdue in my opinion ) to sell it’s natural gas in Rubles. The first step in many.
Now we have the second step. Equally shattering to the existing financial order.
The Central Bank of Russia has introduced a gold standard. 1000 rubles = 1 carat of gold
My guess is the third step will be the announcement of the alternative independent international monetary and financial system at the beginning of April.
If other non aligned countries all jump on board this new system when launched – fireworks will really start exploding in the existing order of things.
I got a question which for many days I cannot find an answer anywhere.
Where or in which way will somebody get Rubble?
Let’s say with something you have to buy Rubble, if you pay it with Euro then we are on the very beginning of the problem
I think only the way is to buy Rubble with some machinery, chips, or airplane parts…
Please, if anybody can help me to understand this problem I am in advance thankful.
I guess this is how it will work. Country A deposits X amount of dollar – euro – yen …at suppose a Chinese bank. The bank transfers the equivalent exchange into the Russian government/company/exporter account in Ruble, which then can be used to buy imported equipment, goods and services.
Brexit was an IQ test…..
Remainers voters support Biden.
Leavers voters support Putin.
Never think the whole of the West is against Putin.
Back in the 1960s the West dealt with the Soviet Union using barter deals. Arranging this barter became a big banking business.
google Merban Corporation
Gas payments in rubles would backfire on EU sanctions – experts
“Putin is indirectly forcing us to bypass our own sanctions,” Südekum told the publication. Another expert, Klaus-Jürgen Gern of the Institute for World Economics in Kiel, added that, due to the importance of Russian gas to EU nations (40% of the bloc’s gas needs are covered by Russian imports), the proposed measure “will exert massive pressure on the Western world” and effectively “make their sanctions absurd.”
Furthermore, if the change comes to pass, it will result in the rapid strengthening of Russia’s national currency, the ruble, currencies expert Peter Bofinger told the publication.
“If Western gas consumers are now forced to buy rubles for dollars or euros, the demand for the Russian currency and hence its exchange rate will rise,” he explained.”
More detailed explanation here:
What buying gas in rubles means for Russia and the West
“Russian President Vladimir Putin on Wednesday gave the country’s central bank and government one week to come up with a way to switch payments for Russian gas exports to the national currency, the ruble. The prospect raised many eyebrows among Russia’s gas buyers, who started to speculate how exactly this could be done and whether Russia would go through with the measure. Here are some ideas.”
A false-flag this time will be different.
The aftermath of previous false-flags was fought in the media
and through diplomatic venting. This time the aftermath will be fought
with tactical nukes.
The Kremlin will know that they are not responsible for the false-flag
and, most importantly, that the false-flag is to be used as a pretext for an
imminent attack upon Russian forces.
zelensky’s net worth in the us is to be estimated at usd 600 million , peanuts for a zio-nazi I guess .
Soon he can enjoy his wealth in the us along with other zio criminals
greatest spy ever at NATO headquarters: US chokehold of germany+EU just became stronger than ever. At 5min 0 seconds https://www.youtube.com/watch?v=ZA1g3ze5okI
E.g., merkel refused the F-35 but now germany announced it will earmark ~10 billion for buying… F-35s. Force-fed US weapons, together with the sales of ultra-expensive US LNG to the UE, is just the beginning.
US will force, if necessary manu militari, all non-eurasian producers of gas, oil, and raw materials to sell their stuff in dollars.
To this end the USA will soon fully subjugate the entirety of latin america and southern africa.
And fascistic euro-supremacists that now control the EU unopposed will prey for Lebensraum in the mediterranean and northern africa (with US permission).
RUS&CN cannot (yet?) oppose the militaries/navies of US&EU in either region.
The US is about to receive trillions of captured non-RUS-CN cash again…
– but now germany announced it will earmark ~10 billion for buying… F-35s.
Meaning is Germany has discovered they need airforce.
UK discovered they did not have tanks
Their armies were converted to fighting beduins
Thx Andrei for this interview with Dr Hudson.
We need to see how Gazprom is going to implement this pricing mecanism in their contracts. Novatec would not be subject to these rules, as it is a private company. There was clarification on this by Peskov yesterday.
I conclude that all entreprises owned by the Russian government will be subject to these rules, as Gazprom will only be the first to do it.
This is a very good thing what Russia is doing. They are leading by exemple, and other countries will follow them.
Now that this system will be in place in the near future, Russia need to think about its security garantees vis-a-vis NATO/US and the network of labs in Ukraine and elsewhere that is targeting Russia.
Excellent interview Saker and Michael Hudson.
I disagree with the answer on the first question. Michael is right of course about the trade ie the financial transaction: anybody/ trader / intermediary bank etc can buy gas from the Russians in rubles and then sell it to the Germans in USD but what about the physical side?
Germany’s gas infrastructure is NS1 &2 so once the trade is made, how do you physically get the gas delivered from Russia, esp if NS and other pipes are closed? There are currently no alternative trade routes.
It would take years to build up alternative gas infrastructure.
There seems to be a groupthink in Europe, that they can just snap their fingers and get gas from somewhere else. How will it be delivered? They don’t have enough liquefied natural gas terminals…
A few commentators say Russia can’t print productivity
As Michael would say that is complete hogwash. Not only is it hogwash printing productivity helps the private sector immensely.
Since Michael is American I will use an American example. As Russia is sovereign there is nothing stopping Russia from doing the same.
Between 1935 and 1943, the WPA literally built the infrastructure of modern America, including 572,000 miles of rural roads, 67,000 miles of urban streets, 122,000 bridges, 1,000 tunnels, 1,050 fifty airfields, and 4,000 airport buildings. It also constructed 500 water treatment plants, 1,800 pumping stations, 19,700 miles of water mains, 1,500 sewage treatment plants, 24,000 miles of sewers and storm drains, 36,900 schools, 2,552 hospitals, 2,700 firehouses, and nearly 20,000 county, state, and local government buildings with unskilled workers. They
Unskilled workers built modern day America infrastructure.
So what to you compare that productivity against ?
Well they would have been sitting at home doing nothing producing zero productivity. As the private sector wouldn’t hire them.
1. Not only were they more productive
2. They learned new skills on the job and moved into private sector jobs more easily.
3. Many became entrepreneurs and using the money they earned set up their own businesses.
So don’t let anyone tell you, you can’t print productivity.
Very good analysis from David Goldman. This complement the interview with Dr Hudson.
Beat me to it!
the nature of monoculture farming might have to change….for example one third of Italian farms have negative income and could go bankrupt Costs of fertiliser if available…animal food stuffs if available….costs of fuel on the farm and deliveries and going to markets …profit levels are just so low too.
Productivity levels could be seriously reduced and return to more traditional general farm methods….grow your own foodstuffs crop rotation…feed your livestock….save the excrement let it mature and put it on the fallow field to grow the feedstuff next year…………costs of fuel to heat animals being hatched chickens turkeys and raise them in buildings and refrigeration and processing of carcases plus cold storage awaiting delivery.
A lot of high quality white fish is supplied to UK by Russian trawlers and processors….affecting traditional fish and chips plus costs of delivery palm oil etc….tens of thousands shutting down….so get used to cheap fish less nutritious….if available…….
not just oil and gas and coal folks…..
All this talk of a a new world ” economic order ” led by Russia and China is nice, however, several questions need to be posed.
1) Will all countries of the world be able to print their own ” debt- free ” money ?
2) Will the world still base its economic systems on usury and the inevitable ” debt trap ” ?
3) Will corporate ” person-hood ” be retained which allows Corporations to manipulate a nation’s internal politics ?
4) Will the odious Rothschild empire be brought down ?
5) Will the oligarchs of the world be forced to return their mostly stolen riches ?
6) Will the price of gold of stop being manipulated ?
and so forth ………………..
If not, then whats the point of the ” new ” system ?
Physical economy, instead of monetarism magic or MMT.
It does keep the people talking about it for a rather long time, rather than freaking out about the current system and its unsustainability.
Dollar reserve system frays with India-Russia currency deals
Goldman says in plain English :
By seizing several hundred billion dollars of Russia’s central bank reserves, Washington has put a question mark over the rationale for the existing financial system, and encouraged the rest of the world to “rethink currency reserve holdings,” as the IMF put it.
But in plain English, that means to rethink the trillion dollars a year that the rest of the world lends to the United States.
Looks like a Ruble/Renminbi/Rupee system is on the way…
This is a good thing – since 1974 the world has had a fiat currency, Petrodollar, after Nixon broke the Bretton Woods gold-reserve system in 1971. Now we can move to a real currency based on commodities and productivity. This Germany and the USA fully appreciate! Thank you Glazyev!
Sheikh Imran Hosein gives his first reaction to the Russian intervention in Ukraine.
I heard that this man has accuratelhy predicted many world events for decades.
He is very much behind Russia here. His comments include some comparative eschatology about the meaning of these events.
Energy: Gas and diesel could soon be rationed
Specifically for german companies. It will cause relocation of production abroad.
Thank you so much host and Dr. Hudson; I am a big fan.
I suggest all readers consider: the Empire of Lies (EoL) has been incredibly predictable, since… well… since the fall of the Soviet, certainly, at least. Starting with the raiding, pillaging, and general plan to balkanize Russia; too bad (for EoL psychopathic elites) all of that raiding and pillaging became the over-riding direction of the Rainbow-Alphabetistan agents, they seem to have come up a bit short on the breaking-up of the Russia.
But … good for the rest of us, even we living under the auspices of the Rainbow-Alphabetistan – Empire of Lies
Humanity still seems to have a chance, slim though it may be.
Why relevant (all the prattle?)
Because it has given the smart people, those not sucked into the handy world-view indoctrination of R-A-EoL, plenty of time to get ready for the predictable, and not all that clever (after all), actions of the socio-pathic directors (in love with their own obsessive-narcissistic image).
Look at how the leaders of Europe choke themselves (specifically, the 99%) in the snare, set up in steady, undisguised work, by demands of the…handlers, as the handlers order them to struggle against it, thus accelerating the collapse of their societies.
All the while, an approximate majority proclaim (as their zombie-masters have taught them), “it’s worth what ever it takes to fight those evil Russkies!!!”
… and the rest of us wonder how anyone could be so blind and stupid. In our horror and incomprehension, it is difficult to know what to do, caught, as we are, amongst the herd (lemming-like) righteously hurrying to the cliff’s edge…. and not showing any signs of slowing down?!
It was just a matter of time before the socio-pathic directors of the Empire of Lies were going to get so detached from any reality outside of their own obsessive self-worship, and divine power of exceptionalism, they would push their big grift too far.
The judo/aikido analogy is a good one.
The highly predictable posture of the bully and the vast momentum behind… they are really trapped within the doubled-down defect in their plan (if you could call it that).
All these things that the coalition of the Rainbow-Alphabet cultists are doing now, Russia is well-ready for, regardless of how it looks at the micro, day-to-day level of discretion.
Of course, there is an adjustment period happening now, and after the worst stresses of not coming into nuclear conflict are over (if they indeed can be avoided), I’d bet the blue prints for building new infrastructures for global governance are ready to roll, likely 90%+ useable, regardless of the details of the outcomes unfolding now.
One telling sign, amongst many, was the determined acquisition of gold reserves, and you can survey countries of the world to identify who the smarter ones are by looking at that, and when they started doing it.
For us in Zone A, things are gloomy.
Even though the good doctor suggests policy will be made according to democratic mechanisms, i.e. the Euro-Rainbow Alphabetistan province will vote out leaders who pursue economic-suicide policies, the same perception-management systems used to sustain the … health mandate imposition/democratic rights abolition has already likely been used to …. manage election outcomes; I believe the latest American and Canadian general elections to be …. worthy of pragmatic skepticism, at the very least, just like the entire narrative of the so-called health emergency warranted it.
Eventually policy will have to be changed to disable the current data-mining and AI-enabled quazi-mind-control capability.
Ironically, with approximately 50% of the population internet social media addicts it will extremely difficult to achieve internet social media freedom using so-called democratic methods.
In the meantime, enjoy every breath you.
Can Russia demand to be paid in roubles for her exports? By way of what mechanism? Will it affect its exchange rate and its economy? In this interview, the Saker asks a series of good questions, crystal clear, to the point, and in the right order. However, after carefully examining the answers to these questions, and after reading a few other articles on the same topic, I’m still not sure I really understand how this whole thing is supposed to work, and if it will be beneficial for Russia. Therefore, I shall go back to the basic principles of external trade and currency markets (which are two aspects of the same phenomenon).
Let me use a simple analogy to explain the direct relation between external trade and foreign exchange. Suppose that a resident of Narva (Estonia), who is driving to visit some friends across the border, decides to fill his tank at a (“small”) Russian service station. Normally, this car driver should pay in roubles, which he would have bought in advance from his Estonian bank in exchange of euros (if he pays by credit card, he will automatically be buying the same euros on the spot). But the Russian service station owner might also do his foreign customer a favor and accept to be paid in euros (which he would later sell himself to his own bank in exchange of roubles). This simple transaction (the purchase of Russian gasoline by a resident of Estonia) is also an export for Russia and an import for Estonia.
Either way, this international transaction has the same result on the foreign exchange market and on the exchange rate: it generates a demand for the rouble (the rouble is bought) and a supply for the euro (the euro is sold). Each time a country (Russia, here) exports goods or services, there is a demand for its currency, and, thence, an appreciation of its exchange rate. Similarly, when a country imports, its currency is sold on the exchange market (it is supplied, and its exchange rate goes down). In the long run, when exports and imports are equal, supply and demand of the national currency are also equal, and the exchange rate remains stable. (Of course, other variables might also play a part, such as speculation in the short term, inflation in the long term, and capital inbound and outbound flows all the time.)
We can conclude that, whether the gas is paid in euros or in roubles, it makes no difference for the foreign exchange market and the external value of the rouble.
Now back to our main question: Can Russia demand to be paid in roubles for her exports? Let’s just suppose that, due to EU sanctions, Russian can no more use euros. The Russian station service owner will, of course, tell the Estonian that he no more accepts euros (or Moldovan lei or Somali shillings), and wants to be paid in roubles. No roubles no gas! No money no candy! It’s that simple! And it would be foolish to do otherwise.
From now on, Estonians, and other residents of such “unfriendly” countries, will have to possess roubles in order to buy Russian goods. And in order to get roubles, they will have to export goods to Russia. That’s how international trade works: you export part of your production to earn foreign currencies (stored in your official reserves in the corresponding countries), and you use those foreign currencies to pay your imports. Of course, like you and me, any sane country will only accept foreign currencies that it can freely use and trust. In consequence, the Eurozone countries cannot simultaneously decide to freeze Russian assets in euros and wish to continue importing goods from Russia.
When Germany wants to buy liquefied gas from the United States, it has to pay in US dollars; and to earn US dollars, Germany has to export its own products to the US or to a country which possesses reserves in US dollars. Seems normal, plain and simple! Now the same thing will apply to German imports of Russian natural gas: Germany will have to export its products to Russia or to find roubles in other countries. Technically, the scheme proposed by President Putin won’t affect the exchange rate of the rouble, but it will force Germany to violate its own (illegal) sanctions.
However there was a comment from Hudson that the Western currencies can, quote: “be grabbed”, without further explanation.
Could anyone explain how this works?
Same way Trudeau seizes bank accounts.
Once you deposit money in a bank it is no longer yours. It belongs to the bank as an ASSET. Bank gives you an IOU as an entry in a Ledger which to YOU is an ASSET and to the Bank is a LIABILITY.
Bank Balance Sheets are inverted to make the system of debits and credits balance across the economy.
If YOU want your ASSET and the Bank does not recognise its LIABILITY to pay you then you are stuffed. That is how Bank Runs work and why Deposit Insurance is a confidence trick
BIG NEWS. In real numbers, Iran has broken US sanctions. If true, this suggests that there might not be much more oil they would produce to balance demand.
“Russia has no use for dollars or euros, because these can be grabbed”
Could anyone explain how this works?
Guilty ;) I will not be upset if mod decides not to let a duplicate post through.
But the question is almost important enough to be repeated.
it seems the answer is that Western currencies risk being seized just as the foreign reserves,
but not so with rubles, and there are other advantages.
Post-Cold War world order is over, former Russian president says (FULL INTERVIEW)
This is a very, very good interview with the man. Highly recommend it.
Aside, regarding israeloamerican censorship of Russian news sources. The israelioamerican maryland banana republic is either blocking or greatly slowing down access to RT. Using the Psyphon tool restores normal operation. Sputnik works normally without Psyphon, not being censored. But when I use Psyphon, Sputnik becomes inaccessible. Weird. I’m guessing Psyphon and the Sputnik software have an incompatability problem.
Over at Moon of Alabama, commentator karlof1 made a good point which supports Hudson’s analysis:
“The reason Nabiullina still has her job IMO confirms that Russia’s foreign reserves were used as bait that the voraciously greedy Outlaw US Empire couldn’t resist as the result conforms to the Putin Doctrine of destroying old useless, decaying structures/institutions so something new can take its place that’s not controlled by the Empire, which IMO is the biggest most far-reaching outcome – the institution of an entirely new international financial order and eventually a completely revamped UN.
We’ve reached the turning point, a time when the paradigm will change. The plans were openly declared for all to see and to join. IMO, this will end up overshadowing 1989-1991, provided the Outlaw US Empire doesn’t do something extremely outrageous in its rage over its loss of primacy.”
In one sense, what Russia is militarily-doing in the Ukraine is the small stuff. The really big war going-on right now is on the financial side. I believe Russia and China knew that the big ‘financial guns’ would be pulled-out over any Russian involvement, and prepared judo-move-style to take advantage of such arrogant financial movements…
Dollar will not lose value. BUT! West will use it’s leverage to pressure other countries to do what they were told to do. There will be other options available so the only way for west will be to topple or attack other countries to put them back in line. BUT! If west thinks that Russia and China will just sit and watch they are mistaken. They will openly help those countries, just like west did with Ukraine.
Rumour has it that Russia and China are going to make a ‘religious announcement’ for the markets, sometime around Monday 28-3, to the 1st of April.
This link to a ruble/gold/oil based currency system may explain why the Saudis, etc, have been so detached from the US of late, not taking phone calls, etc.
There is huge panic going on in the West, at the moment, this cannot be denied.
Portuguese version at
Thank you for the translation link.
The Great Bifurcation is happening.
So far, it looks like China, Russia, Iran,North Korea on one side.
Looks like India may join them- how exactly they will do so will be interesting. If India unequivocally joins we can expect many more to follow.
New World Order taking shape.
here in Brazil, Mr Bolsonaro’s government did not adhere to US sanctions; on the contrary, he participated in the BRICs meeting, which surprised me. Bolsonaro was one of the few leaders to say that zelenski is a comedian, a puppet.
Sparking so much useful discussion; thank you again Messieurs Ravesky et Hudson, and all of the goodfaith contributors.
On March 25, 2022 · at 7:04 pm EST/EDT V wrote:
Russia says all of its reserves are held in the country’s central bank vaults
I think Russia does have nearly all of its remaining gold in its own vaults.
But how much gold does Russia have left? I have heard that Bank of Russia head Elvira Nabiullina advised all Russians to sell their gold for “honest money”, and that Russia’s largest bank (Sberbank) accordingly dumped nearly all its gold for Western currency. Well, that foreign currency has now been confiscated, which means a lot of Russia’s gold has effectively been stolen.
So I ask honestly, how much gold does Russia have left? I don’t know.
Why stop at ruble for oil and gas…If and when the proverbial dust settles, why not insist on using the ruble for coal, palladium, wheat etc etc purchases. Russia has what the world needs….If the usd tanks..so does its ability to finance the military security complex. You think the Pentagon pays large for toilet seats now…..regards