Paul Craig Roberts: Russia Has Fallen Victim to Financial Imperialists

There is no reason for the fall of the ruble – be on the lookout for a conspiracy – writes the former U.S. deputy secretary of the treasury on his blog.

Against a backdrop of explicit malevolence on the part of most Western media outlets concerning the events of “Black” Monday and Tuesday, there can now be heard voices claiming that neither the drop in oil prices nor Western sanctions can explain the sharp and rapid fluctuations in Russian currency. “The suppression of the ruble’s value is artificial,” says major economist Paul Craig Roberts. In the U.S., he is seen as one of the main architects of the “Reagan economic miracle,” which helped to pull the country out of a prolonged period of “stagflation,” or a convergence of recession, unemployment and high inflation.

Dangerous Manipulations

He begins his article with a description of the numerous methods the Federal Reserve, U.S. Treasury and the largest too-big-to-fail banks use to manipulate financial markets, operating in collusion with each other. This is not market economics, but unfair economic manipulation, as the author concludes:

“The manipulations are dangerous. Sooner or later they will blow up our economy. Currently, however, Washington is using them as a means of driving down the ruble’s exchange rate. This is an act of war.”*

This is how he analyzes the situation as it relates to our country:

“The U.S. government, perhaps surprised at the ease at which all financial markets can be rigged, is now rigging, or permitting large hedge funds and perhaps George Soros, to drive down the exchange value of the Russian ruble by massive short-selling in the currency market. On Dec. 15 the ruble was driven down 19 percent.”

But consider this: Just as there is no economic reason for the price of gold to decline in the futures market when the demand for physical gold is rising, there is no economic reason for the ruble to suddenly lose much of its exchange value. Unlike the U.S., which has a massive trade deficit, Russia has a trade surplus. Unlike the U.S. economy, the Russian economy has not been offshored. Russia has just completed large energy and trade deals with China, Turkey and India.

If economic forces were determining outcomes, it would be the dollar that is losing exchange value, not the ruble.

“The illegal economic sanctions that Washington has decreed on Russia appear to be doing more harm to Europe and U.S. energy companies than to Russia.” The depreciation in the ruble’s value is of a clearly artificial character.

It is one thing when “foreign investors … withdraw their capital from a country, thereby causing the currency to lose value.” It is another thing entirely when your currency is under attack. “The latter can cause the former also to occur,” asserts Paul Craig Roberts.

Try Self-Financing or Look to China

A significant portion of the author’s musings focus on the dangers of following a liberal economic policy:

“No country dependent on foreign capital is sovereign. A country dependent on foreign capital, especially from enemies seeking” to undermine your economy is doubly vulnerable. It is time for Russia to self-finance. “If Russia needs foreign capital, Russia should turn to its ally China. China has a stake in Russia’s strength as part of China’s protection from U.S. aggression, whether economic or military.”

“The greatest harm that is being done to the Russian economy is not due to sanctions and the U.S. attack on the ruble. The greatest harm is being done by Russia’s neoliberal economists. Neoliberal economics is not merely incorrect. It is an ideology that fosters U.S. economic imperialism. By following neoliberal prescriptions, Russian economists are helping Washington’s attack on the Russian economy.” If Russia wants to survive, Putin must defend Russia from Western economic institutions and Western-educated economists.

“It is too risky for the U.S. to take on Russia militarily. Instead, Washington is using its unique symbiotic relationship with Western financial institutions to attack an incautious Russia that foolishly opened herself to Western financial predation,” concludes this authoritative American economist.

* Translator’s Note: When translated into Russian, some of the quotations from the English article had been significantly altered. Thus when translating back into English, rather than retaining the original English language statement, the quotes were translated to reflect the alterations that had been made in the Russian version. The original quote reads: “The manipulations are dangerous. Manipulations blow a bigger bubble economy, and manipulations are now being used by Washington as an act of war by driving down the exchange value of the Russian ruble.” See the original English article here.

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