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    Russian Economy General News: #7

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    miketheterrible
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    Re: Russian Economy General News: #7

    Post  miketheterrible on Thu Nov 10, 2016 2:23 pm

    Austin wrote:The CBR does not appear to be working in favour of Russia but the Global Central Bank and that is Bull Shift argument that CBR is independent , All Central Bank work in co-ordination with their Government , The Fed does that , Indias RBI does that and so does EU Draggi.

    Russia cannot afford to be passive , How Russia would react to US confiscating its Forex is secondary but primary it should work to secure its asset , It has to be proactive.

    I am not saying dump the USD/Euro entirely but just reduce its % from 45/40 % to like 15/15 % that would give US/Euro less leverage over Russia . Cut deal with chinese to keep forex in Renminbi and sell it in same in return for Long Term Investement in Russian Economy , Russia does not need security gurantees from Chinese like Gulf countries need from US but Chinese Economic Investment is what it needs.

    The West are going to screw up Russia as long as it plays by its Rule Book . Gold is the Most Prefect Asset outside the power of any Central Bank in world buy it as much as one can , Russia should have Gold Reserves of atleast 5000 Tons , The Germans have around 4000 and US 8000 i.e if they even exisit in US vaults.

    Rouble will be at a qualatatively different level if the Forex has 50 % gold reserves but the CBR has to do it. CBR right now is more than happy controlling inflation by High Interest Rates choking the economy of cheap money and thinks it has done a great thing controlling inflation ! Duh

    I understand your point but you also need to understand that USD is still the main trading currency of the world, and the least volatile. It is still used as trade between Russia and various states because the other states may not want Rubles, Yuan or Euros. Even China and India has a large USD reserve. Funny you mention the other central banks but actually, CBR does actually work in tandem with Russian government and a huge part of the happenings within it are agreed upon by Putin and Co. Putin isn't dumb and understands they need USD as part of the Forex and used for trade and development. They keep it high for now specifically for business but as one may have noticed, they dropped over the years the amount of USD per the total Forex. It is due to increasing amount of businesses dealings between other states in their own respective currencies, as well as buying of Gold.  The other part of the FOREX is that of us debt. So that also accounts.

    So far, US in all intent and purpose, has not blocked Russia's USD in its Forex. If they did do that, then you would see massive shifts going on and not just Russian FOREX but other nations as well. Even if US does block it, the amount in Forex Russia has in other assets is still enough to not damage the nations banking system.  And the Russians, as you pointed out, is increasing their reserves in other currencies such as Yuan.

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    Re: Russian Economy General News: #7

    Post  Austin on Thu Nov 10, 2016 2:41 pm

    miketheterrible wrote:
    So far, US in all intent and purpose, has not blocked Russia's USD in its Forex. If they did do that, then you would see massive shifts going on and not just Russian FOREX but other nations as well. Even if US does block it, the amount in Forex Russia has in other assets is still enough to not damage the nations banking system.  And the Russians, as you pointed out, is increasing their reserves in other currencies such as Yuan.

    According to CBR USD % is 45 and Euro is 40 , So I dont see how they have reduce the USD from Forex.

    I clearly understand that part that USD remains the least volatile system  but Russia is an Export Economy it exports more than import , If some one wants to be paid in USD it is fine but Russia can convert its own excess USD reserves into Gold or Diversify partially into Renminbi.

    Intent and Purpose of US can change over night and both US and EU can work in Tandem to block which means Russia is left without 85 % of its reserves over night.

    Atleast with Gold they have it with them in their hand and China would be much less hostile to Russia even if relations go bad and they cant be pressurised by US or Euro.

    Like I said and I repeat  , Russia now cannot depend on Good Will of US and Euro ,who are hell bent on harming Russian Economy and we dont need any proof they say and do so.

    It is better for Russia to act proactively on its own interest and  stop pretending Nukes would deter such action or that what happened to Libya and Iraq cant happen to Russia  , Just because Russia Forex gets blocked other countries wont dump their reserves its naive to think that.

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    Re: Russian Economy General News: #7

    Post  miketheterrible on Thu Nov 10, 2016 2:45 pm

    They are increasing gold reserves and have used USD to purchase it.  I know you want it to be large amounts of USD converted but that would greatly affect the gold market in price fluctuations.  China also buys small amounts compared to what it can actually afford.

    Like I said, understandable your view, but reality is that when Russia imports vital tools and components, it requires USD. Maybe 10 years from now it will be different and Yuan will account for 20% of Forex. Who knows.

    And yes, others would dump the Forex of USD to minimum as they would see how volatile it is. If that wasn't the case, US would have blocked it by now. They already have near to total sanction on Russia as is.

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    Re: Russian Economy General News: #7

    Post  Austin on Fri Nov 11, 2016 10:44 am

    miketheterrible wrote:They are increasing gold reserves and have used USD to purchase it.  I know you want it to be large amounts of USD converted but that would greatly affect the gold market in price fluctuations.  China also buys small amounts compared to what it can actually afford.

    Like I said, understandable your view, but reality is that when Russia imports vital tools and components, it requires USD. Maybe 10 years from now it will be different and Yuan will account for 20% of Forex. Who knows.

    And yes, others would dump the Forex of USD to minimum as they would see how volatile it is. If that wasn't the case, US would have blocked it by now. They already have near to total sanction on Russia as is.

    Right now Russian Gold Reserves is worth around ~ $55 billion or ~ 1500 Tons , even if they double it it will be just 3000 T , Germany has 4000 T.

    Russia needs atleast 50 % of its reserves in Gold , She has nothing to worry as far as security goes.

    They can always pay their export in USD who every wishes by their current account which is net positive.

    Bottom line is you need to keep the currency with country with whome you trade most.

    So if Euro is the largest trading partner with Russia then they can keep 25 % reserves in Euro , If China is 2nd largest then they can keep 20-25 % of it , Russia-US trade is just $30 billion which is very low down the order.

    They can keep 40 % reserves in Gold and remaining 10-15 percent in USD/SDR/GBP and what not.

    Its a fair thing , This way they can always hedge their risk without overexposing them self to  over night failure like the case now

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    Re: Russian Economy General News: #7

    Post  Austin on Fri Nov 11, 2016 10:45 am

    Jim Rickards: The Road To Ruin


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    Re: Russian Economy General News: #7

    Post  miketheterrible on Fri Nov 11, 2016 5:44 pm

    Austin wrote:
    miketheterrible wrote:They are increasing gold reserves and have used USD to purchase it.  I know you want it to be large amounts of USD converted but that would greatly affect the gold market in price fluctuations.  China also buys small amounts compared to what it can actually afford.

    Like I said, understandable your view, but reality is that when Russia imports vital tools and components, it requires USD. Maybe 10 years from now it will be different and Yuan will account for 20% of Forex. Who knows.

    And yes, others would dump the Forex of USD to minimum as they would see how volatile it is. If that wasn't the case, US would have blocked it by now. They already have near to total sanction on Russia as is.

    Right now Russian Gold Reserves is worth around ~ $55 billion or ~ 1500 Tons , even if they double it it will be just 3000 T , Germany has 4000 T.

    Russia needs atleast 50 % of its reserves in Gold , She has nothing to worry as far as security goes.

    They can always pay their export in USD who every wishes by their current account which is net positive.

    Bottom line is you need to keep the currency with country with whome you trade most.

    So if Euro is the largest trading partner with Russia then they can keep 25 % reserves in Euro , If China is 2nd largest then they can keep 20-25 % of it , Russia-US trade is just $30 billion which is very low down the order.

    They can keep 40 % reserves in Gold and remaining 10-15 percent in USD/SDR/GBP and what not.

    Its a fair thing , This way they can always hedge their risk without overexposing them self to  over night failure like the case now

    They can, and they are. Hence why now with Yuan it will be a major (If not majority) of Russia's currency reserves in the future. Many companies will not take gold as payment and may not exchange it either, so there is a reason for currency reserves. Germany claims it has 4000T worth of gold in its reserves but I highly doubt it. Much to the same with America's claim to 7000T of stored gold. Never has been proven and as far as most are concerned, is gone much like Ukraine's.

    Simple fact is, world trade is done in USD, regardless if you like it or not. Until we break away from that, majority of the worlds currency reserves will be in USD. Of course with the addition of the Yuan, it becomes a much easier way to diversify the reserves and keep it away from the hands of others. Russia is obtaining gold reserves at a proper pace. Buying too much of it will cause hyper inflation in the gold price market. Something no one wants.

    Anyway, we are going in circles here. You will just have to show patience. It will take its time but who knows. Maybe one day Yen and Rupee's will be another major currency in the reserve pool for Russia.

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    Re: Russian Economy General News: #7

    Post  Austin on Sat Nov 12, 2016 5:48 am


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    Re: Russian Economy General News: #7

    Post  Austin on Sat Nov 12, 2016 5:58 am

    miketheterrible wrote:

    They can, and they are.  Hence why now with Yuan it will be a major (If not majority) of Russia's currency reserves in the future.  Many companies will not take gold as payment and may not exchange it either, so there is a reason for currency reserves.  Germany claims it has 4000T worth of gold in its reserves but I highly doubt it.  Much to the same with America's claim to 7000T of stored gold.  Never has been proven and as far as most are concerned, is gone much like Ukraine's.

    The way central bank is behaving it does not look like that , They have been buying more USD recently , just a small rise in Gold purchase. Companies pays from their own pocket and if they want USD the CBR can maintain USD/Euro ratio of say 30 % to take of trade and internal circulation. I am against the whole idea of having full capital account convertibility which lets citizen freely purchase USD/Euro , neither China or India has that.


    Simple fact is, world trade is done in USD, regardless if you like it or not.  Until we break away from that, majority of the worlds currency reserves will be in USD.  Of course with the addition of the Yuan, it becomes a much easier way to diversify the reserves and keep it away from the hands of others.  Russia is obtaining gold reserves at a proper pace.  Buying too much of it will cause hyper inflation in the gold price market.  Something no one wants.

    Let the world trade in USD but IIRC even 35 % of trade is done in Euro too , As far as Russia goes they can always trade in Euro with  EU and Renminbi with China , two major trading partner , ROW can be in USD if they wish so.

    I am not suggesting we break away from USD , I am stating keep the currency you trade most with that way the deterrent works on both sides , With USD Russia does not have much levearage as she has with Europe or China say the way China has with US and she can afford to trade in USD as US will never sanction China.

    CBR can certainly increase the buying rate to 500 T per year infact it was doing so at peak of sanction/crisis in 2014/15 but then it slowed down as crisis tapered some what and started purchasing Green Buck



    Anyway, we are going in circles here.  You will just have to show patience.  It will take its time but who knows.  Maybe one day Yen and Rupee's will be another major currency in the reserve pool for Russia.

    During SU days India and SU used to have Rupee Rouble trade that worked for them well , They can try and go back there , Should work great for both countries

    With China with Renminbi in Reserve Basket and China being the largest trading nation in world they can afford to keep Renminbi as Forex reserves.




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    Re: Russian Economy General News: #7

    Post  miketheterrible on Sat Nov 12, 2016 8:13 am

    It is said to be increase in USD but what they don't say is that they purchase into US bonds which translates to USD reserves. Doing so has returns. Small ones though (2% maybe at best). If there has been an increase, it isn't in simple of exchanging Rubles for US dollar but possible purchases in US debt of some sort. Gold prices have fluctuated uncontrollably so there is a reason why the slowdown in purchases. You may not be a fan of the decision of the CBR but you will have to deal with it because the CBR and the overall government has kept the country more stable in the years of massive sanctions and heavy attacks at Russia's financial institutions mixed with low commodity prices, vs than lets say 2008 time when GDP dropped a fair bit. More in that one year than it was for the last couple of years. So it is clearly due to someone doing their job properly.

    As for the rest, Russia is increasing agreements of trade in respective currencies. As you may have noticed with the news of China, India, Iran, etc all trading in each other currencies. But that won't change things all of a sudden.

    If the US could simply block the USD portion of Russia's FOREX, without repercussions, then they would have done it already to strong arm Russia. They have not and for various facts already pointed out. I would like them to demolish the USD as the trading currency by dumping it, as I like to see the world burn. But it isn't going to really solve anything either. Could make Russia even more vulnerable actually as US could see an opportunity to strike at Russia's FOREX that wont hurt itself, by going after the other currencies and the commodity market even more.

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    Re: Russian Economy General News: #7

    Post  Austin on Sat Nov 12, 2016 3:48 pm

    Russia’s M2 money supply rises 0.46% in July
    August 31, 2016 - Prime



    Russia’s money supply in national definition, or M2, grew 0.46% in July to 36.654 trillion rubles as of August 1, as seen by PRIME in data of the central bank on Wednesday.

    The national-definition M2 aggregate includes cash in circulation and Russian residents’ ruble accounts with Russian banks.
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    See more: http://cbonds.com/news/item/843907

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    Re: Russian Economy General News: #7

    Post  Austin on Sat Nov 12, 2016 3:50 pm

    1 trillion rouble is ~ $ 15.5 billion , 36.654 in M2  comes to  ~ $ 568.137 Billion.

    Isnt that a huge money supply in Circulation ?  Could they be more without affecting inflation

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    Re: Russian Economy General News: #7

    Post  Austin on Sat Nov 12, 2016 3:55 pm

    miketheterrible wrote:It is said to be increase in USD but what they don't say is that they purchase into US bonds which translates to USD reserves.  Doing so has returns.  Small ones though (2% maybe at best).  If there has been an increase, it isn't in simple of exchanging Rubles for US dollar but possible purchases in US debt of some sort.  Gold prices have fluctuated uncontrollably so there is a reason why the slowdown in purchases.  You may not be a fan of the decision of the CBR but you will have to deal with it because the CBR and the overall government has kept the country more stable in the years of massive sanctions and heavy attacks at Russia's financial institutions mixed with low commodity prices, vs than lets say 2008 time when GDP dropped a fair bit.  More in that one year than it was for the last couple of years.  So it is clearly due to someone doing their job properly.

    As for the rest, Russia is increasing agreements of trade in respective currencies.  As you may have noticed with the news of China, India, Iran, etc all trading in each other currencies.  But that won't change things all of a sudden.

    If the US could simply block the USD portion of Russia's FOREX, without repercussions, then they would have done it already to strong arm Russia.  They have not and for various facts already pointed out.  I would like them to demolish the USD as the trading currency by dumping it, as I like to see the world burn.  But it isn't going to really solve anything either.  Could make Russia even more vulnerable actually as US could see an opportunity to strike at Russia's FOREX that wont hurt itself, by going after the other currencies and the commodity market even more.

    I think US could block the USD if they want to , They want to use that as Nuke Option , I dont think the world will just go to dump USD just because US would block USD for Russia , Russia share in world trade is not large to affect it in singnificant way.

    China is the only Country where US would not block because it would be painful for them , With US-Russia trade volume of just $30 billion they wont even sneeze.

    Atleast with EU Russia can stop Oil and Gas flow and any blocking of Euro would be painful.

    Yes I think CBR is not taking the right decision , The stability today in Russia wont last because every decision Russia takes on geopolitical side is perceived as Anti-US/NATO by West.

    My Suggest on what CBR must do is more like reducing Russian Economy Impact should US use that Nuke option of Blocking or US/EU do it jointly .....I wont call it far fetched it is possible for them to induce that pain on RUssia and they hesitate to do so.

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    Re: Russian Economy General News: #7

    Post  Austin on Sat Nov 12, 2016 3:56 pm

    Jim Grant: "The Forgotten Depression of 1921: The Crash That Cured Itself" | Talks at Google


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    Re: Russian Economy General News: #7

    Post  franco on Sat Nov 12, 2016 5:09 pm

    Austin wrote:1 trillion rouble is ~ $ 15.5 billion , 36.654 in M2  comes to  ~ $ 568.137 Billion.

    Isnt that a huge money supply in Circulation ?  Could they be more without affecting inflation

    Why do you compare to the US$? It is only appropriate to foreign transactions, not domestic transactions. Do you convert your rupee to US$ before heading to the store or bank?

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    Re: Russian Economy General News: #7

    Post  Austin on Sat Nov 12, 2016 5:54 pm

    franco wrote:
    Austin wrote:1 trillion rouble is ~ $ 15.5 billion , 36.654 in M2  comes to  ~ $ 568.137 Billion.

    Isnt that a huge money supply in Circulation ?  Could they be more without affecting inflation

    Why do you compare to the US$? It is only appropriate to foreign transactions, not domestic transactions. Do you convert your rupee to US$ before heading to the store or bank?  

    Dollar value was jst for reference

    Out of 83 trillion GDP , 35 trillion is money supply in circulation

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    Re: Russian Economy General News: #7

    Post  franco on Sat Nov 12, 2016 7:09 pm

    Austin wrote:
    franco wrote:
    Austin wrote:1 trillion rouble is ~ $ 15.5 billion , 36.654 in M2  comes to  ~ $ 568.137 Billion.

    Isnt that a huge money supply in Circulation ?  Could they be more without affecting inflation

    Why do you compare to the US$? It is only appropriate to foreign transactions, not domestic transactions. Do you convert your rupee to US$ before heading to the store or bank?  

    Dollar value was jst for reference

    Out of 83 trillion GDP , 35 trillion is money supply in circulation

    Been a long time since I studied Economics. Here are the IMF figures for 2014. These figures do not include money held in banks. India was at 77.5% and Russia at 60.25%. There is no perfect ratio, depends on the economy and what the government is trying to do.

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    Re: Russian Economy General News: #7

    Post  AlfaT8 on Sun Nov 13, 2016 7:42 pm

    kvs, sepheronx where you at?
    9:00 to 21:20


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    Re: Russian Economy General News: #7

    Post  OminousSpudd on Mon Nov 14, 2016 2:57 am

    Good-ish effort to atleast attempt to justify Russia's position, terrible, terrible execution though. Still incredibly pleb level.
    Russia's entire economy does not depend on its raw resource export (14% was it?). International sanctions from the majority of "first-world" didn't actually do a whole lot to the economy, other than encourage import-substitution and domestic technology growth. Russia at no point burnt through their reserves, certainly a few dips yes, but the overall trend was still upward. Russia is at a point where it is fully weaning itself off the fake inflated teat that is Western economic hegemony, meaning one day these pseudo-philosophers will wake up to the fact they're no longer the center of the planet. The rest of the world is well and truly moving on, with Russia for all intents and purposes helming the future's civilizational course.

    The West is legitimately scared of Russia, for a number of reasons: (A) Russia pursues an independent foreign policy, this is its first great sin. (B) their military is extremely potent, and is only getting better, despite the comparatively small budget (C) its raw resource reserves are the largest in the world, with untold amounts still untapped (D) It's quite possibly leading technological progress, which is both hilarious and I'd guess incredibly disturbing to the West (E) Russian political elite are outwitting the US at every turn to the point it has become ridiculous, especially when considering the (again) comparatively small budget, and finally (F) the Russian economy is about as real as it gets, with a debt-to-GDP ratio of 11% or thereabouts. Multiple initaitves are in progress to absolutely ruin the US economic system, specifically the targeting of the USD's legitimacy.

    To be honest, Sargon and the like are the people you end up with when a select group of anti-establishment thinkers get good at diagnosing societal illnesses, then due to their rising popularity, suddenly think they must be an expert on events in the international field... majority of the time they fall woefully short.

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    Re: Russian Economy General News: #7

    Post  miketheterrible on Mon Nov 14, 2016 3:12 am

    franco wrote:
    Austin wrote:
    franco wrote:
    Austin wrote:1 trillion rouble is ~ $ 15.5 billion , 36.654 in M2  comes to  ~ $ 568.137 Billion.

    Isnt that a huge money supply in Circulation ?  Could they be more without affecting inflation

    Why do you compare to the US$? It is only appropriate to foreign transactions, not domestic transactions. Do you convert your rupee to US$ before heading to the store or bank?  

    Dollar value was jst for reference

    Out of 83 trillion GDP , 35 trillion is money supply in circulation

    Been a long time since I studied Economics. Here are the IMF figures for 2014. These figures do not include money held in banks. India was at 77.5% and Russia at 60.25%. There is no perfect ratio, depends on the economy and what the government is trying to do.

    In 2015 and 2016 there was a large run to deposit money into Russian banks to due high rate of interests it was giving so people deposited as much as they can in order to get significantly more back.  Some banks compound interest differently as well.

    AlfaT8 wrote:kvs, sepheronx where you at?
    9:00 to 21:20


    Word of advice: if an article pops up as simply a youtube video with no caption to the full article, mixed in using meme's, then guaranteed it isn't even worth the time clicking.

    Most people who resort to such type of reporting and being memetastic, are people who have little knowledge of the events who follow economics and how it is broken down. As the spud above me stated, oil is lower on Russia's overall economy (Oil rent accounts for 14% of the economy and dropping and oil/gas combination account for 46% and dropping, of budget revenue).

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    Re: Russian Economy General News: #7

    Post  kvs on Mon Nov 14, 2016 4:21 am

    It has been posted here several times that oil and gas account for 22% of the consolidated budget of Russia. The 50% figure
    is some NATO mass media propaganda concoction. But having oil and gas be over-represented in taxes is actually a good
    thing no matter what Russia hating idiots think. It means that the government is offloading income taxes with resource rent
    taxes. This stimulates consumer spending and domestic demand GDP growth. I have seen no evidence that the Russian
    budget deficit is serious in spite of the exogenous shocks starting in 2014 that saw the drop in oil prices and the ruble forex
    rate.

    It is clear that oil price is not going to collapse to $20 per barrel and the current price is basically a sham maintained by mass
    media misinformation. Supposedly US gasoline stocks are some sort of proxy for crude oil prices so the sheep playing the
    commodity exchanges get herded into the delusion that there is some sort of glut. Of course the fact that gasoline is a
    refined product and not the only use for oil is somehow not important. The other detail that demand is depressed due to
    actual recessionary conditions on the global scale is not realized either. So oil prices will recover and Russia can wait for
    many years without "collapsing" like haters want it to.

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    Re: Russian Economy General News: #7

    Post  Austin on Mon Nov 14, 2016 6:04 am

    Not Russian but Interesting , Fear of Stagflation says Greenspan

    Ex-Fed Chairman Greenspan sees sluggish growth ahead, with signs of inflation

    Former Federal Reserve Chairman Alan Greenspan told CNBC on Thursday the political structure has been in chaos for years, and fixing the economy will take tough political judgments.

    "I think we're in a period, because of fiscal reasons, for a sluggish economic growth rate for a while, but superimposed on that are very early signs of a pickup in inflation," Greenspan said on "Squawk Box." "My concern now is actually stagflation."

    "That pickup in inflation is going to move profit margins up temporarily. But it's a false dawn," he said.

    Greenspan's concerns were in sharp contrast to the views of billionaire investor Stanley Druckenmiller, who told "Squawk Box" in an earlier interview Thursday he's "quite, quite optimistic" about the U.S. economy following the election of Donald Trump.

    Fiscal policy, which has been gridlocked for years in Washington, needs to be "one, two, and three" on the list of reforms to jump-start the economy, said Greenspan. The emphasis on the Fed's monetary policy should be fourth on the list, he added.The soaring costs of entitlement programs, including Social Security and Medicare, must be reined in, said Greenspan. "If we don't bring that under control, everything else we're doing is irrelevant."


    Greenspan also said he'd "love to see Dodd-Frank disappear." He called the regulations that were designed to reduce banking risk in the wake of the 2008 financial crisis a "disastrous mistake."

    The 90-year-old economist led the Federal Reserve for 19 years under four presidents, from Ronald Reagan through George W. Bush.

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    Re: Russian Economy General News: #7

    Post  miketheterrible on Tue Nov 15, 2016 2:56 am

    https://www.rt.com/politics/366944-russia-economy-minister-bribe-probe/

    Liberal economic minister Ulyukayev was arrested for bribes and threats to Rosneft over sale of bashneft. And there are those that state members of Putin's party are exempt from corruption charges. This is second high ranking official.

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    Re: Russian Economy General News: #7

    Post  AlfaT8 on Tue Nov 15, 2016 3:26 am

    Yes, it's time to hunt down the 5th column.

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    Re: Russian Economy General News: #7

    Post  Austin on Tue Nov 15, 2016 11:08 am

    I always thought he was a decent guy up there , surprise he took bribe , was he set up ?

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    Re: Russian Economy General News: #7

    Post  Austin on Tue Nov 15, 2016 11:08 am

    Mike Maloney: DEFLATION FIRST! With Max Keiser


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    Re: Russian Economy General News: #7

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