How to easily and quickly ensure the recovery of the Russian economy


The year before the 1998 default, I had a casual conversation with an ordinary American financial adviser, who at that time was a dime a dozen in Russia.


The impression was that this was the only person whose soul was rooting for Russia.

- You understand that your economy greatly demonetized? - he asked.
- Understand.
- Do you understand that this will lead to a serious crisis?
- Understand.
“So why aren't you doing anything?”

The financier emotionally insisted that I answer for a government to which I had nothing to do. Apparently, he was sick.

- Tell me, American, do you write analytical reports for your leadership?
- Of course.
- And they listen to you?
- No.
“Nobody is listening to me.”

I remembered this conversation, because today you can hear about the need for economic growth from every iron, but since then, the pre-default days, in fact, nothing has changed. There are differences in quantity, but not in quality. Then the monetization of the Russian economy was approximately 15%, now 40% of GDP. For comparison, in China, about 200%, in the leading countries of Europe - 150-170%.

For breakthrough economic growth, Russia must significantly increase the level of monetization. It’s like opening a crane: water will come in and pick up all the boats. The banal monetarist counterargument - this will lead to inflation - has nothing to do with the model of rational management. I suggest not blowing up the dam, but submitting confident pressure from the crane. Inflation is a rise in prices, and a boom in the economy reduces prices by increasing the number of goods. This was precisely what was done by the Primakov government when, due to a sharp increase in ruble investments, the economy grew by more than 2% per month, and inflation fell by a factor of three.

We can easily increase monetization to 90-100% with a controlled inflation rate. This means an added 60% of GDP (109,362 trillion rubles in 2019), i.e. over 60 trillion additional issue rubles over a reasonable medium-term period. Enough for everything: the development of the economy, and the stimulation of demand, and defense, and social programs. And even on investments abroad. Extra bonus: no need to rob the poor pensioners. This is a matter of exclusively priority, and more importantly, inflation targeting due to freezing money supply or economic growth.

Why is the Russian government not doing this? And why was the Primakov government hastily fired, do not the Russian authorities need economic growth?

The correct answer is: not needed.

And that's why. There are five main reasons.

1. Economic growth jeopardizes the profitability of international financial speculations, on which the liberal economy of the Russian land has stood and stands. On the contrary, inflation targeting and a stable exchange rate for a foreseeable period of time are a guarantee of profitability for carry trade. Subsequently, the ruble exchange rate can collapse sharply in the interests of the IMF or the raw materials industry, which, of course, will lead to inflation, but all speculators must be prepared in advance for this.

2. Domestic ruble investments necessary for economic growth will prevent the transfer of ownership into the hands of non-residents. Today, more than half of the Russian economy is owned by foreign companies.

3. Economic growth and the creation of new companies will inevitably lead to a weakening of the monopoly position of existing large companies, therefore, to a loss of profits, which does not meet the interests of either the owners or management. The problem is not solvable until the property is separated from the government.

4. It is precisely in view of the latter that economic growth will also weaken political power, since there will be a class of medium and small entrepreneurs independent from officials.

5. The next wave of privatization should involve those already in power and property, and not new entrepreneurs.

We summarize the list of not exhaustive, but fundamentally necessary measures for rapid, breakthrough economic growth.

At the macro level. Bringing the monetization level to 90-100% along with the creation of institutions for the development and distribution of tens of trillions of investment rubles along with affordable bank loans and the establishment of cross-border capital control.

At the industry level. Reducing the tax burden on small and medium businesses and reducing VAT on high-tech industries.

Consumption level. The introduction of a progressive income tax with the complete exemption of the poor from the payment of personal income tax and the adoption of a reasonable single tariff scale for civil servants. This will lead to a massive increase in consumer demand from the poor.

So far, the positive measures of the government have been reduced only to strengthening fiscal discipline within the framework of a constant liberal economic policy.
Photos used: Alexey Kudenko / RIA Novosti / wikipedia.org / CC-BY-SA 3.0
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  1. 123 Offline
    123 (123) 12 March 2020 18: 37
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    How to easily and quickly ensure the recovery of the Russian economy

    That we should build a house, draw - we will live

    winked Reminiscent of a recipe from an old cookbook. winked
    Did guests come to you unexpectedly and have nothing to treat them with? It doesn’t matter, send a servant to the glacier for boiled pork and lamb leg .....
  2. steelmaker Offline
    steelmaker 12 March 2020 19: 04
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    The author has so competently and simply explained everything that there can only be (the word needs censorship) the ill-wishers of Russia. It seems that before some and until 2024 will not reach !!!
  3. Arkharov Offline
    Arkharov (Grigory Arkharov) 12 March 2020 19: 41
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    What a stupid thing. The development of a real (only modern, innovative) private economy, increasing labor productivity, and not printing money unsecured by anything. Rope is rare.
    1. boriz Offline
      boriz (boriz) 12 March 2020 20: 31
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      To increase labor productivity, a change of equipment is needed. For this we need loans at an adequate percentage. They are not here. That's what this is all about when it comes to the level of monetization of the economy.
      It’s the same as draining a person’s 3 liters of blood and shoveling the earth to dig: “Faster, faster, lazy loafers!” The expression in brackets is not my point of view, but the leaders of our economy. When they blame the collapse of the economy, and they answer: labor productivity is low (with a hint: see the expression in quotation marks), and journalists, by ignorance, cannot answer them normally, and in the end, it seems like they are right.
      And about unsecured money - just ridiculous. Just at us they are provided. And unsecured money is dollars. Here they are printed as much as you like. And we are not allowed to print. Read Katasonova. Everything is very clearly written.
      1. savage1976 Offline
        savage1976 13 March 2020 04: 01
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        That is, you propose to put a person a dropper and send it to dig the earth with it?
      2. Arkharov Offline
        Arkharov (Grigory Arkharov) 14 March 2020 07: 20
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        I better read Murzilka. After mentioning the "Orthodox economy", I think Katasonov has ceased to have any relation to the economy.
        1. 321 Offline
          321 (321) 14 March 2020 19: 00
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          In what - you read this particular source from year to year, regularly and constantly, and suddenly decided to read more - you have to. laughing bully
          1. Arkharov Offline
            Arkharov (Grigory Arkharov) 14 March 2020 19: 19
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            A much more professional and truthful source.
  4. Sapsan136 Offline
    Sapsan136 (Sapsan136) 12 March 2020 21: 04
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    And what, under Primakov, in the Russian Federation the price increase stopped and something became more accessible for the population ?! I do not remember this! The dollar is rising, prices are rising in the Russian Federation, the dollar is falling, prices are rising again and the price is worthless to all your Primakovs, who can only talk about prices in the EU, trying to justify another ugly price increase in the Russian Federation, but do not even want to talk about salaries in The EU ... and the need to bring these salaries to a civilized level in the Russian Federation ... As for loans, the interest rates on deposits in the Russian Federation are beggarly, and the interest on loans is huge ... It's time to raise taxes on huckster who earn extra profits to the detriment of the country and its population, especially since part of these skins, p While working on the territory of the Russian Federation, he has the audacity to comply with US sanctions against the Russian Federation, such generally need to be deprived of a license to work in the Russian Federation and multiplied by zero!
  5. Sergey Latyshev Offline
    Sergey Latyshev (Serge) 12 March 2020 23: 57
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    Oh, dreams, dreams ...
    Monetization is power. Who will give it into the wrong hands ???
  6. Bitter Offline
    Bitter (Gleb) 13 March 2020 01: 25
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    How to easily and quickly ensure the recovery of the Russian economy

    It is necessary (to raise it) also to make constitutional amendments.
    Well, and to issue a separate presidential decree, the BNE, it seems, "pointed out" at the time.
    1. Arkharov Offline
      Arkharov (Grigory Arkharov) 14 March 2020 07: 22
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      Let's still legally repeal the law of gravity?
      1. Bitter Offline
        Bitter (Gleb) 14 March 2020 21: 49
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        Paper - it is like that, it will endure everything. And if something is wrong, then I'm sorry, "Well, I couldn’t ...". repeat
        The basic law, it is for this and the basic, in order to set general directions and guarantee common rights and obligations. For everything else, there are legislative bodies and laws.
        More importantly, it is the executive branch. If it does not work, then the price is penniless for the whole spelling.
        The USSR also had a constitution, and everything else, but "some" little people conspired and put a bolt on both the constitution and the performance of their immediate duties, the result is known.
  7. 69 Offline
    69 13 March 2020 07: 00
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    There is no way with this Duma.
  8. Pavel Fedorov Offline
    Pavel Fedorov (Pavel Fedorov) 19 March 2020 15: 15
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    Well .... my relatives, the Zionist lobby will lay its bones to destroy Russia ..... development ..... what are you talking about?