Actually, the Central Bank of Russia injects roubles into the domestic economy by buying up domestic gold production. This is a monetary operation conducted on the books of the central bank and it therefore does not affect the government's fiscal balance.
9 comments:
Thanks for explaining that.
All export led nations do the same trick. They inject their own money into their economy against things they consider 'hard assets' like Dollars and Euros and the various government assets denominated in those currencies. Russia uses Gold.
But in reality they are issuing fiat money the same as an import led nation - against 'Other Assets'.
Once of the reason import led nations can maintain large trade deficits is because the export led nations feel they need something on the asset side of the balance sheet. They don't. It's just a religious belief.
Or maybe they are zombies Neil....
I don't know. Do zombies go around shouting 'Venezuela' at everybody who disagrees with them?
It's also a subsidy to gold producers when they could be doing something better with the money. Foolish policy. Putin should get rid of Nabiulina. She's a pro-Western neoliberal.
When Putin is out all of this "Russia!" stuff goes away... he's the last of his type they won't find another one of him to replace him ... that's why he won't retire he knows it...
Mike,
It's a good job Putin is so backward. Seeing what he's done within the constraints of an effective Gold Standard, just imagine what he'd do if he used the full power of the Rouble to mobilise the Russian workforce.
When Putin is out all of this "Russia!" stuff goes away... he's the last of his type they won't find another one of him to replace him ... that's why he won't retire he knows it..
Matt, you need to read the stuff I post on Russia more closely. The chance of a Western liberal replacing Putin is near zero. The most likely replacements are people to the right of Putin and the next most powerful party in Russia is the Communist Party.
Putin is the best the West can expect unless Russia is defeated.
It's a good job Putin is so backward. Seeing what he's done within the constraints of an effective Gold Standard, just imagine what he'd do if he used the full power of the Rouble to mobilise the Russian workforce.
'
And if Russia is push to the brink, this is what they will do. It's what the Soviets did. They know how to do it. The reason they are not doing it is Putin want Russia integrated into the West, but on his terms not the terms of the US, which essentially surrendering Russia sovereignty and become a US colony.
Addendum: It appears to me that Russia is already using some off the books funding, e.g., cb special loans facilities. The biggest banks are also state banks like the PBOC.
I don't think that either Russia or China are going to go down for lack of funding.
This is a big mistake that Western analysts make and they are consistently surprised as Russia and China's unexpected successes in meeting challenges.
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