Post Soviet countries are held artificially poor by the Federal Reserve
Levan Vasadze from Georgia, Chairman of the Georgian Demographic Society XXI, was one of the speakers at the anti-globalist conference in Chisinau, Moldova, December 15th, 2017. He spoke about the power of the Federal Reserve over national banks and why the post Soviet republics descended into poverty, although – or because – they blindly followed the advice of western advisors. The speech is published with the author’s consent. It is transcribed from the spoken version, and may differ slightly from the printed versions published elsewhere.
We gather here today, to talk about one of the most boring subjects in the world, which are economics and finance. I too join this unfortunate crowd of ours, but I think it is necessary. We prefer to talk about theology, philosophy, ideology, and we tend to lay the way to what needs to be done. Because we are by now a quarter of a century into the monopoly of liberalism and I think by today, we have already said what we do not like, what we do not want, and the time has come to try to articulate what we do want.
This cannot be done without paying special attention to what the alternative economic model to the liberal paradigm is. Clearly, this is better done by the professional economists and scientists, who by now realize that the liberal economic science is largely false. Of course. that is still a rare breed of economists, although I expect that with the growing evidence of an artificial global crisis, more and more such scientists will be joining our discourse. In the meantime, though, all of us should participate.
Not being an economist, but being a professional businessman in corporate finance and strategy, with a master’s degree from the US and almost a quarter of a century of practical business experience, perhaps I can contribute today from the doer’s point of view. As I try to do so, I beg your forgiveness, for my non-scientific vocabulary and ammunition.
Perhaps the most intriguing question, when beginning our quest, that we should ask ourselves is when and where did each one of us realize that something was fundamentally false in the proposed liberal economic paradigm. Coming from the era of failed economic Marxism and shining economic liberalism, this was not the easiest of the revelations to achieve.
For me personally, the last bell – the most convincing bell – started to ring somewhere in the middle of 2000’s when I realized that there was just too much evidence that our poverty and slow economic development of the countries of former Soviet Union were artificial.
The traditional school of thought presented this to us as a natural process of transformation from Marxism into capitalism. However, China’s example suggests the opposite: you do not have to surrender completely to the liberal paradigm and still have a tremendously successful economic model with an economy which has grown ten times over the past 30 years.
Another component of the suggested propaganda of why we remain poor is corruption. However, corruption is rampant everywhere. Washington’s multibillion-dollar official lobbying industry and Brussels’ beaurocratic machine being perhaps its greatest manifestations. The aforementioned China publicly executes thousands of corrupt people every year, hence admitting the problem of corruption, but it still does not fail to be tremendously successful economically.
A third, albeit less commonly used, argument of why we remain poor in Russia, Moldova, Georgia, Ukraine and everywhere, is the notorious human rights issue. However, I believe cats and dogs enjoy more human rights in the countries of former Soviet Union than humans do in some of the countries that are the west’s allies worldwide, but this does not prevent them from being wealthy and economically supported by the west.
Hence, as a result of these observations I came to the conclusion of a harsh reality: being the territories of the defeated geopolitical camp, we were made poor intentionally by the victors. This school of thought of mine is regarded as the derogatory “conspiracy theory” and is ridiculed. We are told that nobody wants us to be poor. The richer we are, the more goods and services can be sold to us. True, if the task of geopolitical dominance and submission was completed. But I believe that up until – God forbid – Russia is destroyed, or Russia itself is dissolved, this task remains largely unachieved, and therefore our artificial poverty is a great instrument for our submission and manipulation.
How is this artificial poverty achieved?
Let us start with the constitutions, written by the western advisors for all of the former Soviet countries.
The most stunning feature of our constitutions – and this is true for at least Russia, Ukraine, Georgia, Moldova and the Baltic States – is the fact that their respective central banks are not accountable to their governments or any other state structures of these countries.
We know in fact that all of them are indeed informal satellites of the US Federal Reserve Bank, which in turn is not accountable to the American state, but rather to its private owners and has a monopoly over printing of the dollar.
These national central banks, although being proclaimed to be different, despite the declared animosity among some of these states, conduct twin strategies, which can be briefly described in two features:
- sky-high lending rates
- abysmally low monetary masses
Both of these dogmas are proclaimed to be based on monetary theories and the works of Milton Friedman. However, even this is a lie because if we take a closer look at Friedman’s work, we see that he admits the dependency between the level of central bank’s lending rate and the inflation rate. But this dependency is much smaller than we are told. Friedman believes that in developed economies, this correlation may manifest in four to five months. And he writes that this time lag is even longer in countries such as ours.
Now let us look at our reality. Some of our western friends may have noticed, that while you have enjoyed for the past ten or 15 years record low lending rates, unprecedented in the world – most lending rates have been 0-1 percent – we have to suffer sky high lending rates of 7-10 percent, killing our business and killing the purchasing power of our population.
When the inflation myth is insufficient, the liberal propaganda takes refuge in another argument: they tell us the central bank rates need to be sky-high to attract foreign investment to our countries. Also a lie. If you look at the dynamics of capital flight, capital export, for example from a country like Russia, you will see astronomic figures of around two trillion dollars, which has been shifted away from Russia since the collapse of USSR, multitudes more than has been attracted to Russia. So this argument is also a lie.
Now let us – to be really boring – look at the monetary mass, measured by boring economic coefficients, such as M1, M2, or M3. It doesn’t matter. Depending on the parameter and on the country, you will see a shocking difference. In the developed countries these coefficients have ranged between 100 percent to 200 percent of GDP, whereas in the countries of former Soviet Union, they have very low numbers, the mass is in the 20-40 percent range.
So not only is the money in our cardio vascular system extremely expensive, but it is also very scarce. Leaving our economy without blood. Also an artificial situation masked by the pseudo-concerns over inflation.
Not to mention the fact that, even despite these measures, inflation in the countries of former Soviet Union has by far exceeded its western peers all along.
Nobody denies the theoretical correlation between these factors, but the lie is in the details.
Looking back at our post-Soviet history all of our countries – Russia, Georgia, Moldova, Ukraine – went through terrible shocking periods of hyper inflation. This was done to us when the Soviet Union had already collapsed and was under the management of western advisors. I believe this was the first act of the two-stage manipulation, to scare us to death in the 90s with inflation, to prepare public opinion to be against inflation at all costs. To withstand the following harmful tight monetary policy which artificially holds back the development of our economy.
So every time someone wants to increase the monetary mass, we are scared and we remember the 90s and we say: don’t touch it, let’s continue being poor.
Note: The text is a transcript of Levan Vasadzes’s speech and my differ from the printed version published elsewhere.
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