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Rumble in the ruble, fire in the markets

By       Message Pepe Escobar       (Page 1 of 2 pages)     Permalink    (# of views)   13 comments

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Reprinted from RT

From youtube.com/watch?v=y3n40qhALCk: Russian ruble in a nosedive under pressure of Western sanctions and slumping oil prices
Russian ruble in a nosedive under pressure of Western sanctions and slumping oil prices
(Image by wochit Business, Channel: WochitBusiness)
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A case can be made that for Moscow it would be a tremendous waste of hard-earned foreign exchange -- to try to counter a rig against their currency they simply cannot beat, as the entire fiat financial power of the US is against them.

Russia's Central Bank by now should be all-out selling rubles for gold, and building Russia's gold reserves.

Well, it is happening, somewhat. Last week, Russia's Central Bank estimated gold reserves to have reached 1,415 metric tons in 2015 -- over 17 percent more than 2014, valued at almost $48.6 billion. The share of monetary gold in Russia's foreign currency reserves rose from 11.96 percent to 13.18 percent.

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That's still not good enough. Why? A harsh answer would be that the Russian Central Bank and the Ministry of Finance, as some analysts argue, are in effect run by saboteurs and vassals of the US financial elite, a.k.a. the Masters of the Universe.

Still, the Russian Central Bank did not intervene to prop up the ruble. And they should not. The best course of action would be to let the ruble go, ending almost all imports, thus forcing self-sufficiency. Or introduce capital controls, with only approved transactions involving foreign currencies. It did work for Malaysia, for instance, after the 1997 Asian financial crisis.

Andrew Higgins @AndrewHigsdrew

Russian Gold Reserves Up by 208 Tons in 2015

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https://lnkd.in/b5zvBCT
12:22 PM - 21 Jan 2016



Russian Gold Reserves Up by 208 Tons in 2015 -- Central Bank

Russia expanded its reserves of monetary gold by 208.4 metric tons to 1,415 tons in 2015, up more than 17 percent from the year before, the country's c central bank estimated Wednesday.

Forget about a China crash

A serious case can be made that Russia does not need much Western foreign investment. That was mostly encouraged by the Central Bank, who held interest rates higher in Russia than the US and EU, naturally leading Russian companies to borrow abroad in US dollars or Euros.

The responsibility of Russia's Central Bank is to create domestic credit to build the industries that have been cut off from Russia by the falling ruble. This is not inflationary; the increased production out of these investments would nullify the inflationary implications on the newly created credit.

The Russian Central bank instead went for tight money to fight inflation. It would have been much more profitable for Russia to fight inflation by creating credit at low interest rates to finance the construction of the industries necessary to replace the import of foreign products.

Now let's look at the Russia-China strategic partnership. While Russia may be on the ropes, China is not. China will grow at an estimated 6.5 percent this year -- versus 7 percent in 2015. Amid an astounding web of economic restructuring and de-leveraging, US multinationals such as Apple and GM certainly have no interest in a Chinese "crash."

A key indicator to watch is the growth in China's demand for oil. Construction has ebbed; but not car manufacturing, which is pumping out 25 million vehicles per year.

To deal with China, the Masters of the Universe deployed a different strategy; they tried to stop Chinese economic growth from fueling the rise in the oil price. Thus the offensive by the usual Wall Street suspects trying to crash China's stock market using cash settlement on A shares. It did not work.

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Pepe Escobar is an independent geopolitical analyst. He writes for RT, Sputnik and TomDispatch, and is a frequent contributor to websites and radio and TV shows ranging from the US to East Asia. He is the former roving correspondent for Asia (more...)
 

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