If the leadership of the Bank of Russia is moved to Japan, its economy will collapse

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

The demand for economic reforms is clear. Scientists, economists, entrepreneurs discuss various options for the development of events and offer their strategies. Which of the proposals proposed by the expert community will be included in the "road map", we learned from the presidential adviser on economic issues, academician of the Russian Academy of Sciences Sergei Glazyev.

Everyone feels the approaching time to choose which way the development of our economy will go further. The future depends entirely on the decisions that will be made now. We, as specialists in economic science, do not see prospects for continuing the current macroeconomic policy, they simply do not exist. Even the fact that it was possible to bring down inflation by freezing demand and by reducing the income of the population - all specialists understand that this cannot be called a success, since this does not result in either an increase in investment or an increase in demand.

We can be in a stagnant depressive state until the next shock, which will inevitably follow, because the payment for such a gross and primitive contraction of final demand and the limitation of the amount of money, sucking money out of the economy, let me remind you that the Central Bank took almost all the money that was issued by the previous the leadership of the Central Bank, 8 trillion rubles were withdrawn from the economy. And in the next three years, the Central Bank announced that it will continue to withdraw money from the economy through two instruments: deposits, where commercial banks can keep their money at a fairly high interest rate, close to the key rate, and bonds, which are also quite high-yielding.

That is, the Central Bank thus creates an artificial barrier that prevents the flow of money from the financial sector to the real one. Why take risks when you can just put free money in the Central Bank, and at the expense of the printing press it will give you interest.

The price to pay for such a primitive policy is a sharp drop in investment activity, which we have seen for four years in a row. In this situation, a growing technological lag is inevitable; we are already lagging behind technologically advanced states. Even already from neighboring countries. A technological lag entails a drop in competitiveness, a drop in competitiveness leads to a devaluation of the ruble, and the devaluation of the ruble causes a new wave of inflation. We have already stepped on this currency rake many times, destroyed most of our scientific and technical potential, a huge number of people left with ideas that are being implemented in other countries, for a trivial reason - because there is no money.

As the prime minister said, hold on. But business does not want to hold on, minds do not want to hold on without money, they leave the country. Today we see graduates of Moscow University in key faculties - in information technology, in bioengineering - practically a universal departure abroad due to the fact that our financial and economic system does not provide young specialists, engineers, scientists, entrepreneurs with access to credit resources. And without credit, there can be no economic growth, because credit is a mechanism for advancing growth in a modern economy, and interest on a loan is a tax on innovation.

In a situation where our Central Bank artificially created a credit famine and stopped the practically transmission mechanism of the banking system, including state banks today do not invest especially in the economy, the share of investments in the real sector does not exceed 5% of the assets of our commercial banks

But at the same time, they still talk about profit

This is the second problem. Within the framework of the current policy, we do not see any prospects for economic growth. And the goals set by the president, to ensure an increase in the volume of economic activity by 1.5 times within six years, within the framework of macroeconomic activities, the monetary policy that is being pursued today, cannot be realized. What, in fact, the government admits, the apologists of this economic course admit, proving that we will develop by 1-2% per year. But there are opportunities for the breakthrough that the president is talking about. They are obvious.

Can you designate them?

Of course, we propose to implement a mixed development strategy of several components. The first component is the outrunning growth of the new technological order and the modernization of the economy based on it. The basic directions of this new technological order, which is shaping the modern technological revolution, are well understood today. They grow at a rate of 20 to 80% per year, on average, this way of life is growing at a rate of 35% per year, becoming a powerful engine of economic growth. These are nano-technologies, bioengineering technologies, information and communication technologies, additive technologies.

Thanks to the introduction of these technologies, there is a sharp increase in production efficiency, costs are reduced, and opportunities for the production of new high-quality products are expanding. And if we invest in this new complex of technologies that will ensure the modernization of the entire economy, then we will automatically ensure economic growth. Moreover, in this core there are double-digit rates, from 20 to 80% in various directions of the annual increase in production and a decrease in inflation, because the introduction of these new technologies entails a reduction in costs. For example, switching to LEDs means saving on electricity tenfold, nanomaterials saving metals.

Our viewers, when they hear the word "nano", remember one joint-stock company, which this year seems to be going for the first time in 10 years to pay dividends to its sole owner - the state

Let's not talk about how decisions are made in the current management system. The main problem is that no one is responsible for the results of the work. We see comparative examples. Rusnano has invested in a polycrystalline silicon plant and in the modernization of this plant. The plant is lying today, almost a billion dollars has been spent, American partners supplied unusable equipment, with metal, according to the Accounts Chamber, but the same plant in the city of Zaporozhye in Ukraine is flourishing at the expense of private money in 5 times less volume and yields gigantic profits. Therefore, the fact that there is no responsibility mechanism in our management system does not mean that a development policy cannot be pursued.

Yes, if we want the development policy to be effective and efficient, it is necessary that people who are entrusted with state money and powers are responsible for the results of their work. If the results are failures, this does not mean that the direction is failing. Nanotechnology today is revolutionizing engineering, structural materials, and electrical engineering. And the volume of application of nanotechnology is expanding on average in advanced countries by 35% per year. And as we produced LEDs in laboratory conditions, today we continue to import them, doing only packaging.

This, of course, is ineffective management; in order to overcome this inefficiency, it is necessary to introduce mechanisms of strict personal responsibility for the results of work. And this requires strategic planning, which will also cover the target program for modernizing the economy based on a new technological paradigm. This is the first strategy.

The second strategy, we call it dynamic catch-up. It is less concentrated, it concerns those industries where we are close to the advanced technical level, where we just need money, long-term loans in order toto finance the revitalization of our scientific and technological potential, bringing the relevant sectors of the economy to the forefront of competition. For example, the aviation industry. Over the past 20 years, we have abandoned this industry, civil aircraft construction. Having the entire line of aircraft, of all standard sizes, classes, today we fly foreign ones. Why are they better?

I can say that 20 years ago they were no better. Our Tu-204, Il-96, on which government officials fly, are not inferior to foreign ones in terms of safety, efficiency, noise, in all respects. We failed to reach the correct scale of production. Why? Because the same policy of the monetary authorities did not allow the creation of long-term credit mechanisms for the purchase of an aircraft. All over the world, aircraft are bought by banks. For a bank, this is an investment. The bank buys the plane and leases it to the airline. It is very rare that we see a situation where an airline directly buys an aircraft because the airline operates on the operating costs of the aircraft. And the investors are big capital, banks.

In a rather strange way, it turns out that our banks, Russian, state banks, including, instead of buying domestic planes and organizing the leasing of these planes for Russian airlines, buy imported ones and give them to the same companies that go bankrupt, say Transaero. despite government support, we still suffer losses. In addition to this, the Eurasian Commission, at the suggestion of a Russian member of the council of this commission, makes a decision on the provision of privileges on the import of foreign aircraft, which are exempt from both VAT and import duties. And the amount of subsidies that we provide at the expense of the state for the import of aircraft has already reached $ 5 billion.

Therefore, with such a policy, when we do not give loans to our aircraft builders, and Russian state banks do not buy them, and the entire power of the state in the person of the banking sector, plus incentives for the import of imported equipment, go to the detriment of the domestic aircraft industry. That is, this is an example of a policy that is not just a failure, but a sabotage, I think. If we had focused the financial flows that the state controls to support our aircraft, I assure you, we would have flown Russian planes for a long time.

And what is aircraft construction? This is an industry with a record multiplier effect. 1 ruble that we spend in the production of aircraft is expanding tenfold along all technological chains. This is the cooperation of thousands of enterprises. These are structural materials, engines, avionics, and so on.

Dynamic catch-up is the second strategy. There may not be many such industries as aircraft manufacturing, but they are all with a huge multiplier effect, where we are close to the advanced world level. Finally, the third area that our government is trying to do is catch-up development. Let's say industrial assembly of foreign cars. It is believed that we ourselves are no longer able to produce high-quality, world-class cars, so we invite foreign corporations, which we give certain preferences, and they assemble for us with some localization aircraft that are sold in Russia.

Finally, the fourth area, which is endlessly talked about, is import substitution and increasing added value based on our raw materials. It is no secret to anyone how to sell oil, it is better to engage in petrochemistry, we will receive 10 times more revenue per ton of oil from petrochemistry than by selling crude oil. The same goes for gas, wood, and so on. For all raw materials, most of which we export, it is more profitable to produce products with high added value, the sale of which is not limited by OPEC quotas, and which, in principle, is not limited.

Why is this not being done?

Because very powerful forces have formed in our economy, in Russia and abroad, which are lobbying for the preservation of the current macroeconomic policy. This policy is primitive, it is archaic, it does not correspond to world experience. Because the world has been working on fiat money for 100 years, no one in the world is engaged in reducing the money supply in order to suppress inflation, this is considered absurd. On the contrary, in all the leading countries of the world, the task of the authorities is to expand the money supply in order to stimulate economic activity, increase investment, increase employment, and so on.

Look at the policy of the US Federal Reserve or the People's Bank of China, the methods are different, but the goals are the same. Money is a tool. But here our would-be monetarists have made a fetish out of money. What the monetary authorities do with money in our country is the fetishization of money, which becomes an end in itself. We have an end in itself for all economic policy - to raise the price of money. What is inflation reduction? This is a rise in the price of money. And the policy is very primitive in this regard. They treat money as a commodity, as a kind of analogue of gold, and believe that the less we throw this commodity on the market, the more expensive it will be. That is, the less money there is, the more their purchasing power will be and the lower inflation will be. It seems so primitively simple. But the devil is in the details. And simplicity is worse than stealing here. It is obvious.

I emphasize once again that money is a tool, not a gold bullion in the modern economy. Secondly, the main factor in reducing inflation is not a reduction in the amount of money, but an increase in production efficiency, a reduction in costs, the creation of new technological capabilities, and scientific and technological progress in the modern world is both the main factor in economic growth and the main factor in reducing inflation. Therefore, if we invest money correctly in order to achieve the introduction of new technologies, we need to make investments, we need to finance innovations, conduct research and development, and only after a while, you will get a return if you go through the valley of death, where more than 90 percent of all scientific -technical ideas.

So, all this passage through the product life cycle brings profit only at the phase of large-scale commercial production. And before that, you need to spend money. To bring the product first to prototypes, improve it depending on market requirements, create pilot production, and during this time you have to spend quite a lot of money, which together constitute the initiating impulse necessary to bring any new product to the market. All this is done through a loan. Nowhere in the modern world are new technologies created at the expense of businessmen's own money, they always take loans, share risks with banks, banks share risks with the state, therefore, in any successfully developing country in the world there is targeted cash flow management. And the issue of credit is the most important tool for advancing economic growth.

Hear these arguments?

I have already mentioned that this policy is opposed by those who are interested in maintaining the current status quo. Who is interested in this monetary fetishism, who makes super profits on expensive money? Take a look around. Profits are declining, experts say. But it is not decreasing everywhere, it is growing among speculators. The first beneficiary of this policy is speculators on the Moscow Stock Exchange. They do nothing except manipulate the ruble exchange rate and the movement of securities. The Central Bank does not deal with them, it has thrown the ruble into free float. And if something floats freely in the market, the movement of this money is controlled by those who form the flow. And the current in the money market is formed by large speculators who have access to insider information and influence the very policy of the Moscow Exchange. And plus the Central Bank in order to keep these speculators in the market so that they do not leave and collapse the ruble, provides them with ultra-high yield on Russian instruments, including bonds of the Bank of Russia itself.

It turns out that in order to appease speculators who can shake the market and crash the ruble again, we guarantee a yield of 20-40%, the so-called "carry trade". That is, we artificially keep speculators in the market due to a guaranteed super high income. What is the source of this income? The same national income of the country, which was supposed to go to investments. Instead, it goes into the pockets of speculators. The piquancy also lies in the fact that 70% of these speculators are foreigners. Basically, the same Americans who are imposing sanctions against us and continue to wage a hybrid war of destruction. Here is the first group of beneficiaries, it is visible to the naked eye.

The second group does not hide either. Look at the reports of Russian state banks. Sberbank made crazy profits. Almost a trillion rubles. By what means? This is pumping money out of the real sector of the economy. When a bank lends money to an enterprise for an interest that exceeds profitability, this means that it sucks working capital out of the enterprise. Through the interest on the loan, wages, which do not grow, also go away. To stay afloat, you have to save on everything.

Therefore, on the one hand, banks are sucking money out of the real sector of the economy, discouraging economic activity and inhibiting economic growth, making it impossible, because no sane businessman will take money from the bank for a percentage that exceeds the expected rate of return. Therefore, investments collapse first, then working capital shrinks, and enterprises run aground.

And then bankruptcy and property redistribution begins. In principle, healthy businesses fall prey to this monetary policy of ultra-high interest rates. Therefore, bankers are always interested in expensive money. Because the bank margin allows them, in essence, out of thin air, or rather, at the expense of the working capital of the production sphere, to receive super-profits. And the absurdity of the situation lies in the fact that our state-owned banks today are the absolute leaders in the world in terms of bank margins.

Banking margins in Japan, Europe and America are negative today. Japanese banks subsidize industry, also in Europe. And central banks are backing these commercial banks, which otherwise would simply have gone bust. I assure you that if the leadership of the Bank of Russia were to be moved to Japan, the Japanese economy would instantly come to a standstill. It would just collapse. It's the same in Europe.

The whole world in a situation of restructuring, the introduction of a new technological order is reducing the price of money. And the banking system works as a tool to support economic growth, acting in accordance with the basic concepts of common sense and the recommendations of science. Because the science of economic development, do not confuse it with economic equilibrium, money fetishists have economic equilibrium in their heads, they dance around money, and equilibrium occurs when, apparently, all the money will be in the hands of a small group of the financial oligarchy, which is sitting, parasitizing on the state banking system.

In other countries of the world, money is used as a tool to finance investments through long-term loans. And the purpose of monetary policy, if we recall the classics, is to create conditions and ensure investment growth. Today, whatever country you take - China, Korea, Japan, Europe - everyone is concerned about one thing - the growth of investments in fundamentally new technologies that make technological evolution and provide the very breakthrough to a new technological order for a new wave of economic growth. We see this Kondratyev wave, which is now gaining strength. The president also speaks about this. The scientific community and business understand how to achieve these goals.

I said four strategies, each of which has double-digit growth rates. The growth of the new technological order is 30% per year on average. Dynamic catch-up, say, the transition to domestic aircraft, is an increase in production output in this industry, which will pull others along with it. An increase in the degree of processing of raw materials is also a manifold increase in the volume of products. That is, today we have no restrictions in the economy either in raw materials, or in research and production potential, or in capacities, half of which is due to the fact that there is no money for working capital, no loans, or intellectual potential that leaves abroad.

The most important thing is missing - a sound policy

Because these forces, which are interested in the high cost of money, that there is no responsibility, they block all the goals set by the president. For example, in united ranks they achieved the blocking of the law on strategic planning. Indeed, in order to implement the development policy, it is necessary to introduce a mechanism of responsibility. Each subject of management should clearly understand what he should do and be responsible for achieving results.

For example, state banks, which we talked about. Is it their task to make a profit? No. Their task is to provide loans for economic development. For this, the state keeps them. What's going on? The transmission mechanism that determines the meaning of banks in the economy, which ensure the transformation of savings into investments, is simply completely disabled and blocked by the policy of the Central Bank. Banks have turned into offices for sucking money out of the real sector, pumping it into the speculative sector and exporting it abroad. Therefore, we lose $ 100 billion every year, and it is believed that this is a payment for macroeconomic stability, which will end with another attack on the rake that we talked about.

Together, they achieved that the law, which was adopted at the initiative of the president four years ago, on strategic planning was postponed to this year. But this year no one says so far that it needs to be launched, that you need to learn to live by it, you need to accept these strategic plans and be responsible for their implementation. The special investment contracts, which the president spoke about, are a very promising instrument for macroeconomic development of the same strategic planning. Because planning in modern conditions is not the directive plans that were previously formed in the State Planning Committee, it is the result of negotiations between the state and business with the participation of science, so that science helps to determine these strategic priority areas of economic development, where colossal returns with double-digit growth rates can be obtained.

The scientific community, together with business and under the leadership of the state, forms indicative plans, which are drawn up by special investment contracts, to which the president urged to switch over 4 years ago. In these special investment contracts, business undertakes obligations to introduce new technologies, create jobs, expand output, increase efficiency, and the state undertakes to provide appropriate macroeconomic and local regional conditions for this, including lending to these projects. And everyone has their share of the responsibility. The business will be required to return all benefits if plans are disrupted. And the state is obliged to compensate for losses if it does not do what it undertakes. This fabric of special investment contracts should determine the mechanism of indicative planning.

Is that also blocked?

This is practically not the case now. Moreover, the instrument for supporting these special investment contracts will be the so-called special refinancing instrument. These are concessional loans, which the Central Bank was supposed to create and through a special channel of refinancing of commercial banks under government guarantees to bring it to the real sector. According to the document of the main directions of monetary policy, this channel has been declared unnecessary, it will be liquidated, and instead there will be deposits and bonds of the Central Bank, which, as I said, will suck money out of the economy, and not pour it in.

That is, this group of such parasitic elements who do not want to do anything, do not want to take on any risks, no responsibility, but want to receive money from nothing. What does out of nothing mean? They pull them out of the real sector. They pull out the working capital of enterprises through inflated interest rates, redistribute the national income from investments into superprofits, and, ultimately, get into the pockets of all citizens, because the payment for the reduction in economic activity is a decrease in the income of the population. Revenues are falling because the business is unable to expand.

Can you explain to our viewers in an accessible language how you can neutralize this problem with a drop in income?

I believe that the very law on strategic planning, which was adopted at the initiative of the president, and for which we need to complete the development of a scientific and technological forecast with the help of the Academy of Sciences, should become the instrument for assembling the new economic policy. Again, with the help of the Academy of Sciences, form a spatial scheme for the distribution of productive forces for a long-term period, determine priority areas. And then, involving business associations and large corporations in joint work, relying on state corporations, to deploy a mechanism for implementing these priorities in targeted programs, special investment contracts, and public procurement systems.

That is, the entire toolkit of economic policy should be oriented towards the growth of investments in promising areas of scientific and technological progress. It is necessary to bring monetary policy in line with modernity, proceeding from the fact that money is a lending instrument, and not a fetish in the form of gold coins, over which Kashchei languishes. It is necessary to take away this function of monetary policy from Kashchei and subordinate monetary policy to the tasks of financing economic development, first of all, the technological breakthrough that the president spoke about.

There is one fundamental difficulty, the mechanism of responsibility. The people who in this management system will replace the current withering Kashchei must be competent, must understand the laws of modern economic development, must have experience in managerial work and must be ready to take personal responsibility for the target money, which will be aimed at financing innovations and investments, in modernization, will not be stolen, will not disappear, but will be spent in accordance with the goals and objectives that are fixed in the strategic plans and supported by special investment contracts and indicative plans.

In reality, everything is not so difficult. As for the scientific and technical forecast, consider that the Academy of Sciences has it. We have been working on it all these years. The only question is its actualization. There are legal forms for this. This is a special refinancing tool, this is the Law on Strategic Planning, special investment contracts, that is, the forms have also been worked out. The question rests on the easiest task - to organize the cash flow. Because it is difficult to grow a new enterprise, create or develop a new technology, and not every technology we can develop today, and not everyone can do it.

As Vladimir Ilyich said, we have lived to the point where any cook can manage the Central Bank. These are people who do not understand the laws of economic development, behind whose souls they do not have any scientific achievements, there is no authority in the scientific community, but there are only primitive dogmatic ideas behind which they hide from responsibility. Responsibility is the main element that we lack in the management system, and the implementation of which will be coupled with political will.

In order to fulfill the presidential directive for a breakthrough to the advanced level of economic development, people are needed who will take personal responsibility for the implementation of this breakthrough. Not just for macroeconomic indicators, what inflation will be, but for the achievement of specific goals of economic development. This requires a combination of competence, professionalism and responsibility. If we succeed in assembling such a new management team, then I assure you that we will reach economic growth rates of at least 8% per year in a year. The government of Primakov and Gerashchenko showed how this can be done. In fact, in three months they brought the economy out of a tailspin, and it was growing at a rate of 1% per month. This means 15% per year.

That is, there has already been a precedent in the history of the country

We took part in this work. The Academy of Sciences did not directly lend a shoulder to the government of Primakov and Gerashchenko, but it was in demand, and together we formed plans, we discussed mechanisms, insured if something went wrong. This is what responsibility is for.

The struggle will be tough these days, weeks before a new vector of the country's development is determined, because those you mentioned have something to lose

The war in our conditions is more, unfortunately, not a clarification of meanings. What is happening in the public consciousness today is a kind of mystification. They make a play where there are some heroes with one point of view and other heroes with a different point of view. On the one hand, they are trying to create conditions for economic growth, and we are on the other. That is, there are two points of view. Maybe three. And each of them has a right to exist.

One gets the impression that there is no such concept of "economic science", there is generally no knowledge of how to develop the economy, there is no world experience, but there are some philosophers in one camp, philosophers in another camp, they argue about how to achieve the best result for the common good, and the question rests on the choice between ideas. Not really. It is a matter of choosing interests. In whose interests the economic policy is being pursued.

If it is to be carried out, as President Putin declares in the interests of developing the economy, in order to achieve an economic breakthrough, we need knowledge. We need the Academy of Sciences, business, technology, and development management. And if everything suits us, and the status quo party wins, which says: all your reasoning about development and leap forward is some kind of wish divorced from reality, we will do what we can on the spot. And what can they do? They know how to siphon money out of the real sector and stuff it into their pockets through speculation.

If this public continues to be under the control, then there will be no control, because they do not need any control. They do not want to take responsibility, even with the tasks set by the head of state, they do not agree, they are sabotaged. That is, instead of real work, instead of finding out ways to manage economic development, creating ways to manage economic development, demagogy is going on.

That is, it is being done meaningfully?

Yes! Demagoguery, which tries to present the whole thing in such a way that there are different points of view. Two lawyers - three points of view. In economics, in fact, everything is easy to calculate. Especially if we are dealing with established trajectories of development, with international experience, and remember our own experience. The economy loves counting, and we can show by numbers that the tasks set by President Putin are absolutely real. We can achieve even higher growth rates if we rely on an understanding of the patterns of economic development and mechanisms for stimulating and supporting economic growth through the creation of an effective and responsible management system.