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"Monetary policy makes an honest man a bankrupt"
Material posted: Publication date: 15-12-2014

In what phase of the crisis we are now and what lies ahead — great depression or great leap forward? What are the prospects of the ruble and oil prices? Notorious how economic liberalization can help a country emerge from the crisis? This and much more leading "Kommersant FM" Anatoly Kuzichev discussed with economist and politician Sergey Glazyev.

"The Central Bank wanders in three pines for the past 20 years"

Sergey Glazyev on the pace of development of the Russian economy: "If we talk about the future depression, objectively, there are no fundamental reasons for such, we have not. First, we have available production capacity. The average load is 70% on the economy. That is, our economy is running at about two-thirds of the potential capacity. Power stand for economic reasons. No credit for working capital, primarily. Their funds are not enough. There is a drop in the demand due to the fact that artificially reduces the money supply, restrain public expenditure".

About the outflow of capital from Russia: "Capital is leaving the country for a long time. We are a net donor of the global economy, we lose a year on $150 billion of General fiscal transfer, of which about half are illegal flight of capital without paying taxes. It is concerned only with law enforcement agencies. Monetary authorities somehow believe that it is not their question. Although this is primarily a question of currency regulation control, because law enforcement authorities are working on consequences. And when they brought the crime on fraud and tax evasion until the end are the months when the money has long disappeared, the perpetrators ran away, and calm myself living in the Islands and not worried about their capital, which were exported from Russia illegally. Such capital has already taken out a trillion".

On the reduction of the money supply: "the Total loss of the monetary base we are approaching the one-third of its total value. This means that the money supply is shrinking, and with it always falling investments, because money becomes more expensive, loans harder to get. And production declines because it is increasingly difficult to replenish working capital. Full coincidence of the decline and contraction of the money supply throughout our modern history. What the Central Bank pretend that no such problems and is the main danger to our national security".

On foreign experience of economic regulation: "In the imagination of the monetary authorities need to be sure the interest rate was above the rate of inflation. That does not fit into the real story of economic growth that we have all over the world especially in periods of structural crises. Almost everywhere for a long time, until the economy will come out of the structural crisis, monetary authorities in Japan and in America, and in Europe, supports the interest rate lower than inflation, because the main objective is to enable entrepreneurs of the real sector, engineers and innovators to develop new technologies. So you need money to be cheap and long available, otherwise nobody will take risks. But they believe that the economy lives in a stable environment that don't have this problem. The entire economy is a model of market speculators who worry about where to place the money in three days."

About the risks of withdrawal of capital to offshore zones: "Any person who at least once in life met with a man who takes money offshore, he has a motive, what is the interest rate at the Central Bank, does not exist. The main motive is escape from the control of law enforcement agencies generally distrust the government, tax evasion and a naive belief that the Western jurisdiction is more reliable for the protection of property rights than Russian. Naive, because after Cyprus smart people have realized that there is no reliability. And now, when there is a financial war against Russia, to take money abroad is only useful if the person himself wants to move. Because the final act of financial war, which we are steadily approaching, may be the decision of any authority in the US for one stroke of the pen all this offshore part of the Russian economy to cut off completely from us."

About the ineffectiveness of the policy of the Bank: "They raise the interest rate and I think the capital will come running back. This is a complete misunderstanding of how the modern movement of capital. The leadership of the Central Bank sees the economy as a set of disembodied economic agents who are engaged in speculation. All monetary policy is aimed at speculators".

"Tax increases in a situation of falling economy — hinge on the neck of the economy"

Sergey Glazyev about liberal Economics in Russia: "Generally speaking, liberal theory presupposes freedom of action when ill responsibility for the consequences of those actions to society, the law. Liberal economy is always an economy with strong enforcement of the law. Agree, the situation when we have 40, 50, and now $100 billion taken from the country without paying taxes is anarchy. Then pay attention to our ultraliberal — they're all on the government, those who shout about liberalism, somehow managed by state agencies. Well, if you're a liberal, go down, open the case, take care of business at your own risk, in practice, prove that you are adept of a liberal economy where everyone works for himself, ultimately, for the common good. So no, they sat in government agencies, pump government money hyping the speculative whirlwind and call themselves liberals is a pseudo-liberalism, which, actually, is the screen. Behind this screen lies a predatory grin oligarchy, the consequence of this pseudoliberalism concept and was the offshoring of our economy, complete disregard for the interests of the country".

About the state of Russian science: "today We are entering the final phase of the fight for leadership in the twenty-first century. This fight will benefit those countries that before others will be able to explore new trajectory of growth of new technological order. We have scientific and technical potential, the core of this way of life has formed and is to be predicted is a set of nanotechnology, bioengineering technology, information and communication, which form the core, which today is growing at a rate of 35% per year. It has formed a base and technological trajectories in robotics and in laser technology and materials processing, in the creation of new structural materials. We have specialists who understand how to do it, the trouble is that the current financial and banking system does not give these professionals the opportunity to earn credits, and they go abroad. In the meantime, we our the dreamers in monetary authorities say that "there are no items, so we're not going to give money into the economy, money stolen". Come to any of our science city and you will hear that we are losing 60% of graduates-graduate students in biological Sciences, they leave to implement their projects. It is known that in the same silicon valley second working language is Russian".

About European ways to combat fraud: "Take as an example the European banking system: first, try to open account in some European Bank, and secondly, try to spend some dubious operation. If you are not going to tell the clerk who is conducting this operation, it then must be punished. In the system of regulation of banks questionable fraudulent transactions are not just banned by the regulator for the conduct of these operations, there is criminal liability, including for the employees of the banking sector".

The unwillingness of States to give way to the leader:"War is the U.S. in the lead, although the competition is with China, as it usually is, in a period of structural transformation, the country-the leader trying to maintain its hegemony in the world through strengthening control over the periphery. New leader it is difficult to fight, he's already gone up, so the Americans seek to maintain their lead at the change of technological structures, changing the world centers of accumulation, when the center of the global economy shifts East. American geopolitics are struggling to preserve a lead by tightening control over its traditional allies, particularly the EU, and the establishment of control over Northern Eurasia — over us, over Central Asia and passing over Latin America, they seek to strengthen their position in competition with China".


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