Sergei Glazyev - about those responsible for falling GDP and inflation
The economy of the country enters into stagflation. GDP is falling, inflation is rising. The ruble is devalued. Who is to blame and what to do? Our eternal questions were discussed at the “Industrial Club” of Petersburg Television by the director of the Institute of New Industrial Development. S.Y. Witte, Doctor of Economics, Professor Sergey BODRUNOV and Academician of the Russian Academy of Sciences Sergey Glazyev.Bodrunov. Now we are in a situation where both the authorities and the economic community have realized that a turn is needed to restore the country's industrial development. Industrialists talk about it already ...
Eyes. Long. With 1990's.
Bodrunov. Yes. Since 1990's. But at first they did not hear us. Not so long ago, our former Finance Minister, Alexei Kudrin, spoke at a meeting of the presidium of the Union of Industrialists of St. Petersburg, and its industrialists asked: “Where was the government when this whole policy was formed: everything — in a jug, all revenues — in funds, and the industry is doing nothing. ” And Kudrin replied that the Ministry of Finance could not answer for this, the Ministry of Finance did not form and did not influence the financial policy, the economic policy of the state, and so on.
Eyes. Well, this is slyness, of course, because practically in the management system that has developed in the country, the Ministry of Finance plays the role of such a “second government”, without the solution of which no program can be launched. This is the first. Secondly, for a long time, it was the Ministry of Finance that determined what to finance and what did not, when there is not enough money. Therefore, we have the execution of targeted programs often have 15 – 20%. That is, for the Ministry of Finance always the issues of economic development were secondary. This is a reflection of the theory that our financiers are guided by. The fact that the market itself will determine the priorities and solvent enterprises will survive, and insolvent ...
Bodrunov. Their "should not be at all"!
Eyes. Yes. They "should not be at all." This is a misunderstanding of how the modern economy is structured, a misunderstanding of how the development processes are going, and a misunderstanding of the role of a long-term loan, which, with the monetary and financial policies that we have developed over the past 20 years, is almost absent.
Bodrunov. Now enterprises literally groan: there is not enough investment. Do you know what the situation really is in the industry? On the one hand, before any funds were received, there was a loan, it was cheaper to take money from banks. Now rates have grown. Foreigners, who brought their money here, began to take them away slowly: sanctions, the economy does not allow to continue to rely on a large income, and so on. Moreover, in St. Petersburg (I won’t call you companies) there are situations when our high-tech St. Petersburg companies are removed by the whole office and move to Prague, Finland, somewhere else.
Eyes. Lot. Especially in the IT-sphere, where mobile people and the choice of technological solutions is high.
Bodrunov. And they refer to the fact that if we want to develop something here, then there is not enough money. Necessary "cheap" money, "long" loans. And the situation is different!
Eyes. You know, firstly, I must say that the crisis that we have today is absolutely man-made. It is caused by incompetent actions of the monetary authorities. The central bank, without being aware of how the real process of reproduction in the economy works, is guided by some scholarship ideas about market equilibrium models that these gentlemen read at school and think that if they raise the interest rate, they will lower inflation. But this is only possible in textbooks for the second year.
Bodrunov. In a very perfect situation.
Eyes. Ideal in the sense that there is no development there, that is, in general, investments are not needed.
Bodrunov. This is a static balance, not dynamic.
Eyes. This is, in general, scholasticism, which can be good as an element of the curriculum for students, but does not work in any way within the framework of economic policy, where a huge amount of feedback must be taken into account. Raising the interest rate, the Central Bank actually strengthens, spurs inflation, rather than struggling with it. Because making it prohibitive for the production sector - 8%, now - 9,5% - this is prohibitive for engineering.
Bodrunov. In fact, yes.
Eyes. And for the agro-industrial complex. Even for the chemical industry, too high rates, given the fact that they receive them through intermediaries - commercial banks, and there are already 15% and higher. Small business is generally cut off from credit. That is, by actually raising the interest rate, the Central Bank thereby isolates the banking system from the production sphere. The banking system begins to focus only on speculative operations.
Bodrunov. I absolutely support you. Now the situation is such that its own funds in order to develop something very serious further, probably will not be enough. Credit is required. The loan is too expensive to pay back within a reasonable time. Even under the condition that everything will be fine in the economy. But at the same time, the stakes in the market are such that it is more profitable to simply withdraw your funds from these projects and send them to the speculative market. This is all so.
Eyes. The central bank raises the interest rate and immediately says that it is not responsible more for the ruble exchange rate. Why is he not responding? He is legally responsible for the stability of the ruble. He does not respond, because - again from a school textbook - there somewhere someone read about what can be targeted, that is, to set goals, according to only one parameter: either a decrease in inflation, or a course, or employment. This is a complete ignorance, a complete misunderstanding of how the real economic system works. This scholastic orientation to schoolchildren models of market equilibrium in a situation when we are dealing with a complex object in which a huge number of feedbacks led to the fact that by raising the rate and sending the entire banking, financial system to speculation and simultaneously releasing the exchange rate of the ruble, the Central Bank gave the signal: speculate against the ruble, you will get huge money. And so it happened. The central bank cut off the financial sector from the manufacturing sector by raising interest rates and immediately gave a signal that you can make money on currency speculation because it is not responsible for the ruble exchange rate. This means that you can bring down the ruble, because no one is responsible for it, and you can get huge profits on this, which, strictly speaking, our bankers did. And they lowered the ruble in a matter of days to almost a third.
Bodrunov. And what this has led to, in addition ...
Eyes. Thereby inflation is unwound, because import rises in price, interest rate rises in price. All this is transferred to the consumer. And what is the result? The central bank sets the goal of reducing inflation to 4%, takes these measures, and the Ministry of Economics says: inflation will be 10% for the next year. This is a consequence of such a policy.
I know these people personally. And I can not say that they have no economic education at all.
Bodrunov. Then why such decisions are made?
Eyes. I have a feeling that there is some kind of shady interest in this whole thing. Here they are telling us fairy tales - about the financial market, that there are fundamental market patterns ... But in fact, 3 – 5 players are playing on the financial market, and they are spinning all this speculation. They suck money out of the state banking system, roll it over in the financial currency market, then return the money, then suck it again. On the fluctuations of the ruble exchange rate, can you imagine how much money you can earn, on the fluctuations of securities? That is, when you have a market is actually imperfect. And here we have this pseudo-market, where monopoly structures play. This is not just one corporation, it is a chain of people who have access to the state banking system, there are traders in the market. They just pump on these traders, they resell them there, and here literally several dozen people have billions of rubles on it. And this is called a "market"? This is not a market!
I would say that this is just a legalized fraud. In extreme scales. And the fact that such a policy continues with enormous damage to the country, this suggests that these people have a great influence. That is, they can influence decision making. And they do not want us to introduce currency control, because their super-profits that earn on this speculative whirlwind, they are taken abroad. They leave taxes and accumulate money there.
It surprises me when our Minister of Economy throws up his hands and says: Behold, the outflow of capital will be 120 billion dollars this year. What, can not this thing, or what, close? Half of this leakage is an illegal export of capital, from which taxes are not paid, everything is done through fraudulent schemes. The central bank sees all this, but it all continues. So, there are forces that are not interested in this model changing. But I can say that if we do not stop this model (in fact, plundering the country through the financial-speculative sector, through the export of capital), then we are not so much about external challenges, we will not cope with internal problems, because in order for us to ensure social and economic sustainability, we need at least 2% growth in GDP per year. If it is less than 2%, it means that we have a decrease in the standard of living that occurs, degradation of the infrastructure. And in order to have sustainable development, you need to have 6 – 8% per year.
Can we give such a pace? Of course we can. We have free capacity - more than one-third. And in some industries, especially in high-tech, mechanical engineering, loading 20 – 40%. That is, there is potential.
When the Central Bank tells us that the economy works at the limit of opportunities, therefore we cannot give more credit, it seems that people simply live in some other world, somewhere painted. But in reality we have the opportunity - provided that we block out the leakage of capital, introduce elementary norms of control over the movement of capital across the border and thus protect ourselves from these speculative vortices - then we will have the opportunity to dramatically increase the volume of loans to the economy. Through development institutions. Not under 8,5 – 9%, but under 2 – 3%.
Bodrunov. This is what industry needs.
Eyes. Through the refinancing of commercial banks under the demand for money from industrial enterprises, under their obligations. In general, the Central Bank has all these in the toolbox. But in order to apply all this in the necessary volumes, it is necessary to block the sieve through which the capital leaves the country.
And we have no other option, because the economic growth that was before the financial crisis was based on external sources of loans. Now the sanctions of the West, the financial war, launched against us, these external sources of loans are closed. So, we have another option, how to switch to the internal source of credit - no. But it should be a loan to the manufacturing sector first. It should be low interest rates, there should be “long” money, there should be mechanisms for issuing money under the obligations of industrial enterprises, under their programs. In general, what needs to be done is obvious.
Bodrunov. I think that all the people who are engaged in industry would subscribe to these recommendations.
Published by the online newspaper "812", St. Petersburg
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