The Ruble Is the Most Gold-Backed Currency in the World

Social Christianity will bring about Russia’s economic breakthrough

Sergey Glazyev

The author is an advisor to Russia’s President and a member of the Russian Academy of Sciences


The economic situation is increasingly chaotic. The world economy is out of control. We target inflation, and it doubles. Talk about transitioning to a new direction results in a further degradation of the economy. ‘De-offshorization’ got us more foreign equity in our corporations and industries. Import substitution resulted in further price rises.

This growing crisis is due to two things: our increasing dependence on the America-centric financial system, and American aggression, which we must resist. There’s clearly a dissonance between our financial and economic dependence on a foreign system and the  need to pursue a sovereign foreign policy in order to survive. 

Two-thirds of our financial market are controlled by non-residents and non-resident equity, and when it comes to currency and financial speculation, it’s 90%. This is the Washington Consensus promoted in Russia by the International Monetary Fund is to  subordinate domestic systems to the interests of international financial funds, mostly American, by a non-sovereign monetary policy that pegs the currency to expanding reserves.

Two-thirds of the currency issued comes from foreign sources. At first, this dependency was subtle because there was a flow of cheap loans from abroad: Russian corporations and the government borrowed $700 billion. But only areas of interest to the West – the export of raw materials and the import of consumer goods - developed, ruining the domestic market, especially when sanctions were imposed, preventing us from refinancing our foreign loans and deflating our monetary base. 

The ruble is the most gold-backed currency in the world, and our currency reserves are excessive — twice as much as our monetary base. As the most undervalued currency in the world, the ruble is five times undervalued in terms of purchasing power parity, and it’s also the most volatile, driving us artificially into stagnation. 

Developed countries’ monetary and industrial policy floods the economy with money. In the last eight years, there has been an unprecedented issuance of dollars, euros, yen and yuan. The value of the world currency in dollars, i.e. the amount of the dollar mass, has grown fourfold since 2007.

Our financial system is shrinking while the West’s expands. The interest rate is being raised while the West innovates. According to Schumpeter, the interest rate is a tax on innovations and investments. We are killing the transition to a new technological system by our macroeconomic policy while strengthening our dependence on foreign sources. Our economy goes where the money is, and because money doesn’t come from here, the economy shrinks. 

China, Korea, Vietnam and India are growing fast, based on the new system of industrial relations. In the 1960’s, Pitirim Sorokin called this the ‘integral system’ – combining planning with the market — which was later called the ‘convergence of the two systems’. Convergence has now happened and a new system of industrial relations and institutions that differ drastically from the American liberal model is forming right before our eyes.  

The principal mover in the American-centric system is the maximization of profit dominated by financial magnates. The government would sets the rules of a new financial system that will focus on people’s well-being, harmonizing social and economic relationships, with business and the public sphere working together. The Chinese call this Chinese-specific socialism, the Japanese – ‘Japan incorporated’. We suggest a transition to domestic sources for loans, strategic planning, the use of our competitive advantages based on long-term goal-setting and a system of targeted credits at low interest rates based on a private/state partnership. 

Russia lacks an ideology, however the Orthodox tradition and the building of socialism in our country provide a new starting point that will enable us to combine our own needs and those of the wider world. All my attempts on the Internet to explain that we need to transit to a conservative synthesis based on traditional values, involving religious confessions in the creation of an ideological base, were rejected by our European partners, although they have both social-Christian and Christian-democratic traditions. They don’t want to return to indigenous values, caring more about same-sex marriage and other Satanic ideas. and that is why ultimately, Europe is doomed. 

One very important thing should be said, however. The ideology of social-Christianity corresponds perfectly to the sixth technological level, the knowledge society, where profit doesn’t play a major role, and prices correspond to demand. In this ‘new economy’ the manufacturer sells to the rich at triple the price and gives to the poor for free, combining the Orthodox and socialist doctrines.  

The western world has adopted negative interest rates. This is perfectly compatible with both Orthodoxy and socialism. But Russia’s high interest rate economic policy is archaic and makes our situation worse.

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