Thursday, January 3, 2019

Ronan Manly — Russia’s Central Bank Is Buying up so Much Gold Its Huge Mines Can No Longer Keep Up

This is fiscal injection using the books of the Central Bank of Russia rather than the government budget. The central bank is acquiring assets for its own liabilities denominated in the currency it issues, while if fiscal spending were used to inject currency into the economy, the fiscal balance would be show increasing government liabilities.

A declining fiscal balance would be interpreted as a negative signal, whereas the central bank acquiring gold reserves ("hard assets") is considered positive. This not only increases the domestic money stock, providing purchasing power in an economy that is suffers from lagging demand, resulting in idling of available resources, but it also makes the ruble look stronger.

Someone knows what they are doing?

Russia Insider
Russia’s Central Bank Is Buying up so Much Gold Its Huge Mines Can No Longer Keep Up
Ronan Manly


Andrew Anderson said...

Someone knows what they are doing? Tom Hickey

By wasting time, energy, and the environment digging up gold to rebury it in gold vaults? And by wasting human morale by worshiping a shiny metal rather than justice and ethics?

And when gold's real value shall decline as the world wises up to the real nature of fiat ("Render to Caesar ...") and adopts a sane, just system whereby banks have been de-privileged and citizens may use fiat instead of banks deposits?

Instead, the Russian Central Bank should allow all Russians to have inherently risk-free debit/checking accounts of their own* at the CB and abolish all other privileges for banks since these diminish the demand for its fiat in favor of bank deposits.

*FOR FREE for individual citizen accounts up to a reasonable account limit.

Andrew Anderson said...

It's ironic that Marx was a gold-bug since needlessly expensive fiat meant the fiat supply could not keep up with population growth and thus workers would normally be condemned to ever decreasing wages EXCEPT the banks, with ever increasing government privilege, filled in the fiat gap with bank deposits and along with those, the boom-bust cycle wrt employment.

So gold-bug Karl Marx was, in effect, anti-worker and pro-bank.