“We Must Somehow Become Autonomous from the US and EU Finance System”
By Mikhal Remizov
Translated By Rina Hay
3 December 2012
Edited by Gillian Palmer
Russia - KM - Original Article (Russian)
The most important part of the American anti-crisis policy in the current situation has been, and still remains, the printing press. The U.S. is pursuing a policy to stimulate the economy through spending. This is what could be called a Keynesian policy, but it has been criticized as a Keynesian policy for the rich. In the era of the “New Deal,” the beneficiary was the middle class, but now the deal is primarily supporting the financial sector. It is indeed a Keynesian policy for the rich.
This policy of injecting money into the economy will not resolve the structural problems responsible for the current crisis and may even extend it. Money will not be put to full use through investment in the real sector and will contribute to the inflation of speculative, financial and commodity markets. Markets may act hysterically, that is, they might operate under the logic of signals, and one of the signals could be to reduce government spending. In other words, government spending is not only fueling the economy, but also creating a situation in which Europeans and Americans are making decisions so as not to give the market any signals to react hysterically.
On the other hand, if there is a reduction of government spending, this could really lead to a recession. The U.S. has a very powerful, qualified management of state demand, so we are not just speaking about an inflated “bubble.” The federal contract system is developed; it is a mechanism for government planning of economic development via government order. This mechanism requires finance and financial “circulation.” If it is reduced, this will have an impact on the economy in the absence of other natural incentives for growth. These other incentives are still lacking.
One conception of the crisis suggests that it is linked to a pause in technological development. That is, the potential for the growth of electro-communication technology has been exhausted; a new type of technology is in its infancy, and while this technology is still so new, the growth around it cannot yet begin. In this situation, when money cannot be fully used in the real sector, it acts on the principle of “holding on through the night to wait until the morning.”
American money is circulating on global markets, and global markets are oriented toward the decision of the American regulator as one of the key indicators that can influence their state. We have not strongly developed cooperation or direct trade with America; we may not have to worry, regardless of the economic processes in the U.S. But the U.S. is the issuer of global reserve currency, and so its impact is universal.
What should we do? If there is a pause in global technology, we should master the previous technology and create a good base for the development of new technology. For this, it is necessary to buy technology and establish joint ventures. I must note that we have not yet exhausted the possibilities related to public and private investments in infrastructure. In countries where everything is already built, zero economic growth is natural. But our problems with the sources of growth must be considered and resolved in a different manner. In order to independently create sources of growth, we must somehow become autonomous from the U.S. and EU financial system. This has not yet been taken into account.
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