Russia and economic war by the west

Anyway, Russia will be an island of prosperity amidst hell breaks loose.

ROGOZIN
Biden said that in the next decade, the Western Hemisphere has every chance of becoming the most democratic and is already ahead of "all other hemispheres" in the number of democracies.

He's the one thinking out loud about his brain.

kvs wrote:Who is Elvira Sakhipzadovna?  The head of the CBR is Elvira Nabiullina.

Otchestvo. Elvira Sakhipzadovna Nabiullina, Vladimir Vladimirovich Putin...

Nabiullina is still pushing the monetarist agenda and this faction is still a problem for Russia.   They are back at the shtick of attracting
investors who do nothing but generate capital flight through siphoning.    These magical investors only engage in negative investment
and the monetarists do not admit the existence of negative investment.   The CBR should be setting the prime rate to 2% now.   There
is no evidence of any inflationary pressure in Russia.   It has collapsed to near zero a few weeks after the biggest sanctions attack ever
for Russia.   The ruble does not need extra appreciation, so drop the rate now.  

Kind of disagree. For consumption rate shall be realistic. For capital investments low. Too low rates are not good either, will make people poor as inflation hits average person worse then millionaire. Not to mention about pensioners. As for rates they gone down form 20% till 10%. One of reasons to me is forcing exporters to sell part of currency and simply many oligarchs dont have any offshores anymore so money stays in Russia. Now it would be time to invest those funds to keep economy growing.

Kiko wrote:Anyway, Russia will be an island of prosperity amidst hell breaks loose.

and the biggest wheat exporter in whe world (Russia lands + former Ukraine)

Gazputin wrote:ROGOZIN
Biden said that in the next decade, the Western Hemisphere has every chance of becoming the most democratic and is already ahead of "all other hemispheres" in the number of democracies.

He's the one thinking out loud about his brain.

Uncle Joe is the biggest fraudster of modern times, having won the elections with fake zombie voters.
In the US nobody comes to an agreement on the exact of live voters. What a "democracy"! יונגערמאַן סאָלידאַרישקייַט (fellow solidarity in Yiddish) is ultimately what unites Zelensky, Blinken, Nuland and Yellen.

GunshipDemocracy wrote:

kvs wrote:Who is Elvira Sakhipzadovna?  The head of the CBR is Elvira Nabiullina.

Otchestvo.  Elvira Sakhipzadovna Nabiullina, Vladimir Vladimirovich Putin...

Nabiullina is still pushing the monetarist agenda and this faction is still a problem for Russia.   They are back at the shtick of attracting
investors who do nothing but generate capital flight through siphoning.    These magical investors only engage in negative investment
and the monetarists do not admit the existence of negative investment.   The CBR should be setting the prime rate to 2% now.   There
is no evidence of any inflationary pressure in Russia.   It has collapsed to near zero a few weeks after the biggest sanctions attack ever
for Russia.   The ruble does not need extra appreciation, so drop the rate now.  

Kind of disagree. For consumption rate shall be realistic. For capital investments low. Too low rates are not good either, will make people poor as inflation hits average person worse then millionaire. Not to mention about pensioners. As for rates they gone down form 20% till 10%. One of reasons to me is forcing exporters to sell part of currency and simply many oligarchs dont have any offshores anymore so money stays in Russia. Now it would be time to invest those funds to keep economy growing.

If reduced imports due to sanctions, the economy needs more and cheaper investment credit for startups & SME in import-substitution projects. That is a plus argument for negative real interest rates in the medium and long term.

The Central Bank of Russia has lowered the key rate to 9.5% per annum.

At this point the rate is already below inflation. I do not think there is much slack to cut it down further.

The government just needs to come up with a program to increase funding for import substitution.
Measures like the tax exemption for IT corporations they announced are a step in the right direction.

GunshipDemocracy wrote:

kvs wrote:Who is Elvira Sakhipzadovna?  The head of the CBR is Elvira Nabiullina.

Otchestvo.  Elvira Sakhipzadovna Nabiullina, Vladimir Vladimirovich Putin...

It is patronizing to use "otechestvo" instead of the last name. So my point stands.

Nabiullina is still pushing the monetarist agenda and this faction is still a problem for Russia.   They are back at the shtick of attracting
investors who do nothing but generate capital flight through siphoning.    These magical investors only engage in negative investment
and the monetarists do not admit the existence of negative investment.   The CBR should be setting the prime rate to 2% now.   There
is no evidence of any inflationary pressure in Russia.   It has collapsed to near zero a few weeks after the biggest sanctions attack ever
for Russia.   The ruble does not need extra appreciation, so drop the rate now.  

Kind of disagree. For consumption rate shall be realistic. For capital investments low. Too low rates are not good either, will make people poor as inflation hits average person worse then millionaire. Not to mention about pensioners. As for rates they gone down form 20% till 10%. One of reasons to me is forcing exporters to sell part of currency and simply many oligarchs dont have any offshores anymore so money stays in Russia. Now it would be time to invest those funds to keep economy growing.

You are talking about rates being too low. How is a rate over 10% from the central bank OK? Seriously, people need to get a grip.
A 10% CBR rate means a 12-13% actual bank rate. Rates over 4% are HIGH and it is idiotic to call them too low.

Scorpius wrote:The Central Bank of Russia has lowered the key rate to 9.5% per annum.

It needs to lower them to reflect the current inflation which is less than 2%. So a 2% rate
is the proper one. Russia does not have a ruble liquidity crisis. It has supply chain problems. Letting
business operate with affordable borrowing rates can help rectify such problems. For example, after
the 2014 sanctions which saw Italian cheeses leaving the Russian market, local Russian entrepreneurs
filled in the gap with world class cheese production. It was not just large Russian companies that rectified
the supply problem and generated import substitution. Small business is suppressed with 7% and higher
rates. They need 4% and lower rates now.

lancelot wrote:At this point the rate is already below inflation. I do not think there is much slack to cut it down further.

The government just needs to come up with a program to increase funding for import substitution.
Measures like the tax exemption for IT corporations they announced are a step in the right direction.

No. The inflation spike that is in the rear view mirror is not relevant for setting the prime rate. The prime
rate has to reflect current inflation conditions and they are less than 2% in annualized terms. Even if
it ends up being over 4% over the next several months, the point is clear.

kvs wrote:You are talking about rates being too low.   How is a rate over 10% from the central bank OK?   Seriously, people need to get a grip.
A 10% CBR rate means a 12-13% actual bank rate.   Rates over 4% are HIGH and it is idiotic to call them too low.  

You do not get it. If inflation is 10% and the bank rate is 10% it only means you are not losing money by keeping it in the bank.

There isn't much slack to cut the rate down without eating into people's savings. If you cut the rate more, people will erase their savings, go into debt, this will fuel inflation and shortages. i.e. stagflation. The same shit that is happening in the US. Because if your money is depreciating, the answer is to buy all the crap you can, get things which won't depreciate, to prevent losing your money. The banks won't have any deposits in them after the massive bank run and will start to collapse. Then the government will have to start printing money to paper it over.

Increasing the rates means people will save more, buy less crap, and it will decrease the supply shortage problem. Decreasing the rates will make the supply problem due to the trade sanctions and embargo worse. Not better.

If all you want is to increase production of goods this can easily be done by either cutting taxes on corporations, or stimulating investment by giving loans at preferential rates like 5% for import substitution. Not finance consumer binges. This is basically what they did with farming after 2014 by giving farmers loans with preferential rates to improve their operations.

Long-term nominal deposit rates have got to spike in order to preserve savings. They're almost on par with short-term ones.

Russia filling up rainy-day fund

The move aims to ensure economic stability in the face of sanctions.
Russia has increased its reserve fund used for emergency spending by 551.4 billion rubles ($9.5 billion), the government said on Thursday.

“The funds will be used in part to implement measures aimed at ensuring the stability of economic development in the conditions of external constraints,” the government said, referring to Western sanctions placed on Russia by the US, the EU, and other nations in response to Moscow’s military operation in Ukraine.

The government’s reserve fund can be used for unforeseen spending not provided for in the state budget. Money from the fund is allocated to solve socially significant problems. Last year, the funds were used to tackle the impact of the Covid-19 pandemic and for social payments.

The boost in reserves came from extra profits generated by oil and gas exports, which are adding hundreds of millions of dollars a day to the budget in spite of Western sanctions.

The government added 791.6 billion rubles (over $13 billion) to the fund in May.
www.rt.com/business/556884-russia-rainy-day-fund/

kvs wrote:

It is patronizing to use "otechestvo" instead of the last name.   So my point stands.

good point

Kind of disagree. For consumption rate shall be realistic. For capital investments low. Too low rates are not good either, will make people poor as inflation hits average person worse then millionaire. Not to mention about pensioners. As for rates they gone down form 20% till 10%. One of reasons to me is forcing exporters to sell part of currency and simply many oligarchs dont have any offshores anymore so money stays in Russia. Now it would be time to invest those funds to keep economy growing.

You are talking about rates being too low.   How is a rate over 10% from the central bank OK?   Seriously, people need to get a grip.
A 10% CBR rate means a 12-13% actual bank rate.   Rates over 4% are HIGH and it is idiotic to call them too low.  

I didnt say it is too low. I have just said that rate shall be adjusted to inflation, as inflation hits poorest most. pensioners or low wages families got eventfully rise but AFTER couple fo months as they struggle with food and utility bills.

Look inflation is now getting lower and rate as of today is 9,5% and soon will go down. Putin ahs too look form all Russian's perspective. So my point stays - low rates yes if they are for industrial investments. otherwise adjusted to inflation level. BTW China VB ref rate is ~6,4% what doesnt stop China form 6-8% growth of GDP.

https://www.bloomberg.com/news/articles/2022-01-20/china-sets-yuan-fixing-at-strongest-level-since-may-2018-kymajrda


There is a lot money in Russia but as long as oligarchs will try to keep for themselves not to re-invest / invest CBR rates will not change that much.


One thing that is unclear to me why CBR is not printing more Rubles as Ruble gets too strong? anyone - with monetary background can explain?