A wisdom of the Orthodox Church states that God sends us our enemies for reasons, often to make us realize our mistakes, or to push us in the right direction to do that something that we are otherwise loath to do. Because of this, a true Christians, especially an Orthodox Christian, should pray for his enemies, as they are God sent instruments.
As such, the all out financial and economic attack upon Russia by the West as a whole, led by the USA, has had many economic benefits for Russia. Sanctions and counter sanctions have allowed Russian agriculture to boom and Russia who once imported 20% of its food, is now one of the world's biggest exporters of wheat, rice, pork, chicken and many more. Those, like Poland and the Baltic statelets, who howled the loudest for sanctions were hit the worst by the agricultural counter sanctions, with many thousands of farmers and fishermen loosing their livelihood. Additionally, import substitution has seen many dozens of new manufacturing plants open, from high tech cable producers to Mercedies and Nissan and Russian made goods are now on export world wide, with resource extraction only accounting for 21% of GDP, on par with the USA, and 40% of government tax earnings.
But the biggest boon that has come to Russia is the financial de-levering. This was, by far, the hardest hits by the West, causing the most panic and pain in the Russian markets, causing Russian businesses to be cut off from European lenders and faced with expensive Russian credit. The one week shut down by Visa and Master Card processing caused more panic in 2014.
All of this has had a profound effect over the past 6 years. One of the first growths that came from 2014, was the creation of the Mir Card, Russia's own credit card that is now wide spread domestically and growing internationally, albait, so far slowly, but growing. Visa and Master Card never created another artificial shutdown again and have been forced by law to process all Russian purchases in Russia, creating protection against shut downs and prying eyes of western intelligence.
After this came a far from complete reorganization on the banking sector, with many small and often corrupt banks closed down. Big banks consolidated, and while this creates its own problems, it also creates more control on the porous market with routes for money laundering out of the country.
An amnesty was given for a no questions asked repatriation of rubles from offshore bank accounts. Quite a few businessmen repatriated all or some, many more did not and when Western countries found them as soft targets for confiscation of billions of dollars, pounds, euros, they had only themselves to blame but also served as excellent lessons for others not to follow.
Additionally, the rates for loans and credits were sharply reduced, especially for such industries as agriculture and machine building. Likewise, loan rates for mortgages have also drastically come down, from 17-21% in 2014 to 6.5% in 2020, along with various other government incentives for first time buyers and for families with 3+ children.
Russia lowered taxes, made tax paying straight, transparent and easy, moved up radically in the Ease of Doing Business from the mid 120s in 2014 to 28th place in 2020, ahead of such economies as Japan, Spain, China, France, Switzerland, Netherlands, Belgium, Italy and India.
But the two key moves that Russia has taken and which are now going to pay off with vast dividends were to transfer the reserves out of dollars and to go on a huge gold buying spree that has lasted a goodly 6 years now. Dollars make up 22% of the Russian reserve, still to much and a painful future loss but not crippling and nothing that can be used to hamstring or blackmail the Russian economy.
So how has this helped? Well, first we shall speak of the gold. Gold is the ultimate value reserve. When foundationless fiat currencies, formerly just printed paper, but now generated computer bits, are in inflationary valued free fall, gold escalates in value. So as Russia has been forced to spend much more on her economy this year, due to, the dollar value of her reserve funds have actually grown. From 23 March 2020 to 23 April 2020, Russia's reserves grew 18.5$ billion to 569.7$ billion and are set to continue to grow as gold is now sighted to continue growing towards $3000/ounce from its year start in the $1300 range.
But best of all, was Russia selling off more than 70% of her US treasuries and obligations. China, has proven not so lucky and the US, backed into a corner by her immense preCorona debt of $23 trillion and looking set to expand that debt by $3-10 trillion more in this year alone and let us face it, now that the Federal Reserve has drawing rights to the Blackrock run slush fund to give out to their friends as they see fit, it will definitely be the entirety of those $10 trillion. So US debt is set to rise to 33$+ trillion.
So what has the US and its vassals in Europe started to do? That is correct, lay the quasi-legal frame work for annulling that debt, specifically a portion of that debt held by China and whom ever else gets into Washington's cross hairs. The first shots were fired by Trump at the WHO, followed by a German paper accusing China of spreading Coronavirus and thus owing Germany $164 billion in "damages".
As if on coordinated cue, various US congressman have pushed through bills that claim much higher margins than just a mere "conservative" $164 billion. Tennessee Senator Marsha Blackburn and Senator Martha McSally of Arizona are pushing the "Stop COVID Act", blaming everything on China, God forbid one takes a hard look at one's own record, but I degress, and demanding that China wave the $1 trillion debt America owes it. “We haven't talked through exactly what that way forward would be," she said. "But we do know that there are more people that agree that China should be required to make some form of restitution for this."
I wonder if the average man can do the same with the bank? Look, I am in a bad way and its your fault Mr. Bank, now wave what I owe you and of course I am not going to give back all the neat stuff I bought or look at my own sorry record, just wave what I owe you.
I think not.
So the future is obviously going to be very interesting and luckily Russia will be able to sit the US-China economic, financial and maybe military war to the side, at least as much as possible. That the US will more than likely default out on their debts to Russia is a gimmy. Once the US starts defaulting on whatever grounds it likes, with China, it will continue to creatively find other reasons to do so with other nations, to include its European vassals, whether they realize it or not. That China will retaliate and nationalize US factories and watch its own more limited American holdings nationalized, is also a no brainer.
In this, we must make sure that Russia does not become a dumping ground for Chinese products looking for markets, but that we grow trade with China in a sustainable manner. As for the US, once the euphoria of giving it to the Chinese settles, they will quickly realize that opening factories is not the same as flicking on a light switch but is an effort that takes 1-2 years, some times longer and setting up new supply chains is no easy deal either. Here to, we may find leverage, but it should be leverage that is predicated on strict political milestones and paid for in what matters, gold.
As such, the all out financial and economic attack upon Russia by the West as a whole, led by the USA, has had many economic benefits for Russia. Sanctions and counter sanctions have allowed Russian agriculture to boom and Russia who once imported 20% of its food, is now one of the world's biggest exporters of wheat, rice, pork, chicken and many more. Those, like Poland and the Baltic statelets, who howled the loudest for sanctions were hit the worst by the agricultural counter sanctions, with many thousands of farmers and fishermen loosing their livelihood. Additionally, import substitution has seen many dozens of new manufacturing plants open, from high tech cable producers to Mercedies and Nissan and Russian made goods are now on export world wide, with resource extraction only accounting for 21% of GDP, on par with the USA, and 40% of government tax earnings.
But the biggest boon that has come to Russia is the financial de-levering. This was, by far, the hardest hits by the West, causing the most panic and pain in the Russian markets, causing Russian businesses to be cut off from European lenders and faced with expensive Russian credit. The one week shut down by Visa and Master Card processing caused more panic in 2014.
All of this has had a profound effect over the past 6 years. One of the first growths that came from 2014, was the creation of the Mir Card, Russia's own credit card that is now wide spread domestically and growing internationally, albait, so far slowly, but growing. Visa and Master Card never created another artificial shutdown again and have been forced by law to process all Russian purchases in Russia, creating protection against shut downs and prying eyes of western intelligence.
After this came a far from complete reorganization on the banking sector, with many small and often corrupt banks closed down. Big banks consolidated, and while this creates its own problems, it also creates more control on the porous market with routes for money laundering out of the country.
An amnesty was given for a no questions asked repatriation of rubles from offshore bank accounts. Quite a few businessmen repatriated all or some, many more did not and when Western countries found them as soft targets for confiscation of billions of dollars, pounds, euros, they had only themselves to blame but also served as excellent lessons for others not to follow.
Additionally, the rates for loans and credits were sharply reduced, especially for such industries as agriculture and machine building. Likewise, loan rates for mortgages have also drastically come down, from 17-21% in 2014 to 6.5% in 2020, along with various other government incentives for first time buyers and for families with 3+ children.
Russia lowered taxes, made tax paying straight, transparent and easy, moved up radically in the Ease of Doing Business from the mid 120s in 2014 to 28th place in 2020, ahead of such economies as Japan, Spain, China, France, Switzerland, Netherlands, Belgium, Italy and India.
But the two key moves that Russia has taken and which are now going to pay off with vast dividends were to transfer the reserves out of dollars and to go on a huge gold buying spree that has lasted a goodly 6 years now. Dollars make up 22% of the Russian reserve, still to much and a painful future loss but not crippling and nothing that can be used to hamstring or blackmail the Russian economy.
So how has this helped? Well, first we shall speak of the gold. Gold is the ultimate value reserve. When foundationless fiat currencies, formerly just printed paper, but now generated computer bits, are in inflationary valued free fall, gold escalates in value. So as Russia has been forced to spend much more on her economy this year, due to, the dollar value of her reserve funds have actually grown. From 23 March 2020 to 23 April 2020, Russia's reserves grew 18.5$ billion to 569.7$ billion and are set to continue to grow as gold is now sighted to continue growing towards $3000/ounce from its year start in the $1300 range.
But best of all, was Russia selling off more than 70% of her US treasuries and obligations. China, has proven not so lucky and the US, backed into a corner by her immense preCorona debt of $23 trillion and looking set to expand that debt by $3-10 trillion more in this year alone and let us face it, now that the Federal Reserve has drawing rights to the Blackrock run slush fund to give out to their friends as they see fit, it will definitely be the entirety of those $10 trillion. So US debt is set to rise to 33$+ trillion.
So what has the US and its vassals in Europe started to do? That is correct, lay the quasi-legal frame work for annulling that debt, specifically a portion of that debt held by China and whom ever else gets into Washington's cross hairs. The first shots were fired by Trump at the WHO, followed by a German paper accusing China of spreading Coronavirus and thus owing Germany $164 billion in "damages".
As if on coordinated cue, various US congressman have pushed through bills that claim much higher margins than just a mere "conservative" $164 billion. Tennessee Senator Marsha Blackburn and Senator Martha McSally of Arizona are pushing the "Stop COVID Act", blaming everything on China, God forbid one takes a hard look at one's own record, but I degress, and demanding that China wave the $1 trillion debt America owes it. “We haven't talked through exactly what that way forward would be," she said. "But we do know that there are more people that agree that China should be required to make some form of restitution for this."
I wonder if the average man can do the same with the bank? Look, I am in a bad way and its your fault Mr. Bank, now wave what I owe you and of course I am not going to give back all the neat stuff I bought or look at my own sorry record, just wave what I owe you.
I think not.
So the future is obviously going to be very interesting and luckily Russia will be able to sit the US-China economic, financial and maybe military war to the side, at least as much as possible. That the US will more than likely default out on their debts to Russia is a gimmy. Once the US starts defaulting on whatever grounds it likes, with China, it will continue to creatively find other reasons to do so with other nations, to include its European vassals, whether they realize it or not. That China will retaliate and nationalize US factories and watch its own more limited American holdings nationalized, is also a no brainer.
In this, we must make sure that Russia does not become a dumping ground for Chinese products looking for markets, but that we grow trade with China in a sustainable manner. As for the US, once the euphoria of giving it to the Chinese settles, they will quickly realize that opening factories is not the same as flicking on a light switch but is an effort that takes 1-2 years, some times longer and setting up new supply chains is no easy deal either. Here to, we may find leverage, but it should be leverage that is predicated on strict political milestones and paid for in what matters, gold.
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