Military Review

Why the Fed and the IMF have a renewed sense of debt

Why the Fed and the IMF have a renewed sense of debt

The Empire must die

Not long ago, the well-known Mikhail Zygar called his historical a study of colorful characters from old Russia at its home stretch. However, he by no means monopolized the phrase itself. Moreover, today many are confident that the last of the world empires, the dollar one, has already reached the finish line.

The dream of any financier has always been that everyone owes him, but he owes no one. However, it was the money changers and money lenders who brought the Roman Empire to collapse, and they ruthlessly dealt with empires that did not want to recognize the omnipotence of the golden calf, as happened with the short-lived French empire of Napoleon Bonaparte.

However, it is well known from literary classics how it all ended for Gobsek, the old pawnbroker and others like them. The United States and the Federal Reserve are unlikely to repeat their fate, but they are happy to replicate the IMF’s unexpectedly optimistic overall assessments regarding the reduction of debt dependence in the world.

In the report of currency traders, expanded, but very late - even for 2021, which is surprisingly lukewarmly commented on mainly not by Russian, but by global business media, it says this:

“Governments must pursue fiscal policies that help reduce inflation pressures now and debt vulnerabilities in the longer term, while continuing to support the most vulnerable.”

Who is meant by “the most vulnerable” is not specified, none other than Ukraine. It would seem that the IMF’s recommendations work to the best of their ability. America’s debts are growing, and almost everyone else’s are declining, albeit not in nominal values, but certainly in relation to GDP.

Nobody wants to know who owes whom and how much

Against this background, the regular panic that occurs in the United States at those moments when it is necessary to raise the level of national debt means only one thing - the American Federal Reserve is trying to drive others into excessive debt. How is quite clear. Through color revolutions and wars.

And it’s not for nothing that IMF specialists, after stating a decrease in world debts compared to pre-pandemic years, followed with a heavy passage that the world as a whole has never known such a colossal amount of debt, virtually everyone to everyone.

And let this be a very clear sign of widespread inflation, as well as an increasingly severe polarization of the world, when the desire to lend is addressed not to the same IMF, but to those who are closer - geographically, economically, politically and mentally.

However, there is still no talk of some kind of global deglobalization, especially since the IMF may well consider even the fact that the single, and according to their estimates, “unifying” world currency, the dollar, is not falling at all in relation to others, to be positive.

The only real exception is crypto, starting with Bitcoin and ending with some “Brixie” that is about to settle in the online spaces. But the crypt can squeeze the dollar for a very long time, almost imperceptibly for its, again, global positions.

This situation occurs simply due to the scale of emission, which is not comparable with the American currency, which during mining requires enormous energy expenditure, and the output does not even reach a tenth of a percent of the dollar emission.

In a very dangerous situation, from the point of view of liberal economic theory, the Fed continues to allow itself the luxury of keeping the key rate at an indecently low, by Russian standards, level of 5,5 percent. And this is not de jure, but de facto, taking into account the pandemic and military allowances for 2020 and 2022.

But the point is not in dubious premiums, but in the fact that, unlike the American one, the Russian key rate does not fulfill its main function at all - it does not lend to everyone, but only to a select few, and by definition it should not stimulate the real economy. Whatever they say about this in our Central Bank.

The bet is a lie, the debts are not true

Jerome Powell, head of the Federal Reserve System, never commented on the global debt data when they were announced last December, but he spoke regularly about the American data. Now he is still silent about the jump to 33 trillion.

And the point here is not in the amount itself, which is actually less than one and a half American GDP, which is quite reasonable, but in how the government is spent under President Biden. 28 trillion in less than three years - Trump would definitely be impeached for this.

Not many years ago, under Bush and Clinton, despite anti-terrorism operations and the 2008 crisis, the United States achieved a reduction in national debt to almost 50 percent of GDP. And the main thing is that they managed to return a lot of debts to their own citizens, which then made it possible to borrow from them on very lenient terms.

However, such debt grace could not last long, and today the conditions for lending to the country have become much more difficult. For Russia, a similar situation, taken to the point of complete absurdity, led directly to default. But then the amount of debt in our country did not even exceed GDP.

Now experts say that “the United States is at the beginning of a classic late-cycle debt crisis, when there is a shortage of buyers for bills and bonds.” They consider the situation with the redemption of various types of financial assets to be an illustration of this.

This has been the business of American households for decades, relying on savings as a resource. They are of little use in banks, stock exchange games are too risky, but here there is a good income both in terms of coupons and at par, which, after being bought back at a cheap price, for 90–92 percent, always grew to 100.

If savings go into investments, then America is fine. But now they are somehow reluctant. With a debt of 33 trillion, the savings that can be tapped into the market are only about 750 billion per year. This is clearly not enough for the normal operation of the asset market.

And this indicates an increasingly real threat that the dollar financial bubble, pumped up during the pandemic, could burst almost at any moment. This is where the time has come for the Democrats, who have failed everything they can and cannot do, to say a sarcastic “thank you to Trump,” on whose orders they allegedly scattered dollars from a helicopter.
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  1. Proton
    Proton 23 September 2023 06: 10
    Another passage from home-grown specialists about the collapse of the dollar and the collapse of the imperialist idea.
    We still have many people who firmly believe in the collapse of the United States, the fall of the dollar and imaginary world justice, so such articles find a warm response.
    And if you read a little and study the question, you will find out that for about 100 years eloquent pseudo-economists have been trumpeting about the collapse of the dollar: “It’s about to collapse, we just have to wait a little.”
    1. Asad
      Asad 23 September 2023 07: 22
      In the 1970s, I read in Krokodil about the collapse of the dollar, and I went straight down the mountain from the cartoons. 53 years falls.
      1. Proton
        Proton 23 September 2023 07: 58
        Read "One-Storey America" ​​by Ilf and Petrov. It was written about 100 years ago and there, too, there is a thought about the falling dollar and the collapsing economy of Tang. Although the book itself is excellent and very interesting.
    2. TermNachTer
      TermNachTer 23 September 2023 09: 37
      In 1917 in Russia, many people believed in revolution and the collapse of the country?))) this always happens completely unexpectedly))) there are no eternal empires - this is confirmed by 3 years of written history.
  2. Fangaro
    Fangaro 23 September 2023 07: 07
    The authors!
    Did you give this opinion to the intern?
    Then give the intern a failing grade.
    If they wrote it themselves... Well, they would have waited a little until the fog in everyone’s head cleared.
    Sorry, but this is a set of proposals under the guise of “and the dollar will soon die again,” and “there aren’t enough patriots in the Central Bank of the Russian Federation.”
    1. Proton
      Proton 23 September 2023 07: 15
      There is no intern there. They (these authors) have been writing here in this style for a long time.
      I have already spoken about this - it seems that they are snatching each other’s pen (pencil, keyboard, etc.) and writing like the characters in the cartoon “Prostokvashino” about a tail falling off and hair coming out. wassat
  3. rotmistr60
    rotmistr60 23 September 2023 07: 21
    With a debt of 33 trillion
    “I forgive everyone to whom I owe!”... And the Americans do not worry about their debt.
    1. geniy
      geniy 23 September 2023 08: 47
      “I forgive everyone to whom I owe!”... And the Americans do not worry about their debt.

      So in Russia, too, they didn’t worry about the growth of public debt until August 1998, and then how the default hit! and immediately the country became poorer by 3-4 times, the ruble fell. some small businessmen hanged themselves, one of my friends was buried alive in the ground for debts that suddenly increased 3 times. Personally, I also ran out of money, albeit small, and had difficulty getting rid of debt.
      so America will not perish, it will simply become poorer by about 3-5 times, and people from all over the world will stop trying to come to live in the USA, it will cease to be a shining city on a hill, and will become an ordinary poor country.
  4. Fangaro
    Fangaro 23 September 2023 07: 55
    Quote: Proton
    There is no intern there. They (these authors) have been writing here in this style for a long time.
    I have already spoken about this - it seems that they are snatching each other’s pen (pencil, keyboard, etc.) and writing like the characters in the cartoon “Prostokvashino” about a tail falling off and hair coming out. wassat

    When Podymov writes “Alleys of Moscow” it is interesting to read. I'll get better... For those who have only been in Moscow on business trips for 2-5 days, this is an interesting read.
    When I wrote about Velikiye Luki, it wasn’t so smooth. And about the economy, about Sevastopol recently... From Podymov there is only a signature under the material.
  5. parusnik
    parusnik 23 September 2023 08: 31
    Again, about the dollar financial bubble, about what will burst, about the collapse of imperialism. smile The authors, Modern Russia is in this chain of imperialism and, by the way, again, as one of the weak links. But the USSR, which was not affected by the world crisis in 1929, which began with the USA, was not the USSR, a link in this capitalist chain.
  6. Jacques sekavar
    Jacques sekavar 23 September 2023 15: 20
    They made me laugh - the Fed and the IMF have a worsened sense of duty. Debt to whom, to the founding fathers, who, according to UN chief Anton Guterres, make up 1% and own more wealth than the rest of the planet's population, with growing inequality between rich and poor states.
    The Russian Federation today is somewhere in the middle between them - in the group of “developing” with the rudiments of the greatness of the USSR.
    The Russian Federation is stepping on the same rake as during the NEP, when the main indicator was profit
    Therefore, banks preferred to lend to light industry and trade rather than to industry.
    With the advent of I.V. Stalin, state planning was introduced instead of free market relations, a state monopoly on foreign trade, the income from which was commensurate with the necessary funds for the purchase of imported equipment and technology, and was not invested in foreign banks, exposing them to the threat of theft. Unlike the Russian Federation, the USSR did not supply its enemies with its natural and other resources during the Second World War. The task of the main bank was not to target inflation, but to stimulate the economy. Excess of standard profit indicators was not appropriated, but transferred to the state budget revenue. The basis for production activities was not profit, but physical performance and reducing production costs. These and other measures protected the USSR from the influence of the market, made it possible to carry out the greatest industrialization in world history in just 10 years, and brought the economy to second place in the world.
  7. Maks1995
    Maks1995 23 September 2023 19: 28
    Yes, unfortunately, we don’t put you in prison for false information, including about “the collapse of the dollar.”
    But in fact, fraud on an especially large scale. If they started jailing and fining people for false forecasts and promises, they wouldn’t have built communism in 10 years, but they would definitely have built an advanced and fair society.

    IMHO, the dollar exchange rate is also falling. (2 times, like, in 20-30 years). Which is much slower than many other currencies. So the printing press works without much risk. Exchange of goods for dollars is safer, they do not refuse it.
    The world economy is still growing, which slows down the inflation of stable currencies.... IMHO.
  8. Tim666
    Tim666 24 September 2023 06: 23
    The other day, a pensioner of 70-75 years old told me that the dollar would collapse no later than in a year, I offered him a bet for 500 bucks, only with the official registration of the dispute under the guarantee of his pension, he sharply backed down)))
  9. sevryuk
    sevryuk 25 September 2023 01: 31
    Yes, yes, tsipsoshniks, this is exactly what will happen to your silver coins! am
  10. Dmitry Rigov
    Dmitry Rigov 25 September 2023 11: 14
    In fact, the size of the US government debt in relation to the economy is not particularly high, now it is about 130% of GDP, while Japan has twice as much, but for some reason articles about the collapse of Japan are not written here so often. In addition, it is not the size that is important, but the ability to service it, and the United States is quite fine with this, for example, if in 2010, when the public debt was much lower, 1,4% of GDP was spent on paying net interest on the public debt, then in 2022 spending increased to 1,53%, i.e. Although in ten years the absolute amount has doubled, the relative amount has increased slightly simply because of the growth of the US economy.
  11. Thomas the Unbelieving
    Thomas the Unbelieving 25 September 2023 20: 32
    It would be funny if it weren’t so sad. To begin with, it would be worth first understanding what is happening in our country. In reality, we have a dual power imposed on us: the state is removed from the regulation and management of the monetary economy. A simple question is why our elite still wants to live according to the rules of the colonialists, for whom Russia is simply a territory with rich resources. Example: The IMF is an organization governed by five permanent members: USA, England, France, Germany, Japan. And strict implementation of their recommendations in the field of economics and finance, determined by the Washington Consensus. The main one is to deregulate the economy. This should be clear to everyone who has worked in production: there is the head of the financial department and there is the head of production. Like Severstal during privatization: the general director was forgotten long ago, and the head of the financial department became one of the owners of luxury yachts. And the latest events are easy to understand by considering the chain: the proposal for a new privatization, their support at SPIEF, the demonstration of the possibility of suppressing objections. According to Chubais and Gaidar, 40 million CHIF depositors were robbed. But foreign capital acquired shares of our enterprises for 1995 billion dollars in 2020-626, and received 1384 billion in income from them. Not bad - 220% income!. And they say “the collapse of the dollar.” It can only happen if the state stops working for financial capital. For information: in the USA the money supply is not M2, like ours, but M3 - Treasury bonds are also considered money! And here the Government encourages everyone by paying some of the exorbitant interest rates to commercial banks. Bank profits are comparable to state budget revenues!