Russia and China Should Go Their Own Way
The West is the last thing they need
Paul Craig Roberts
Yesterday Russia created a new world. The Hegemon is dead. Today Russia and China should begin their disengagement from the West, while remaining wary that the Satanic concoction is capable of striking with nuclear weapons while in its death throes. There is nothing in the West worth having. The countries have already given away their most important industries to the Chinese and renounced the civil liberties of their citizens. As the Covid mandates prove, the West no longer believes in the values that it mouths. People who exercise, or attempt to exercise, their constitutional rights to free speech and freedom of association are branded “domestic terrorists.” Their voices are suppressed, they are fired from their jobs, their medical licenses are taken away, they are arrested and imprisoned. The Western World has been transformed into a hellhole of tyranny.
Russian economists, brainwashed by American neoliberals, are, without realizing it, among Russia’s worst enemies. They have been indoctrinated to believe that Russian economic development depends on access to Western financing. This is total nonsense.
Several years ago Michael Hudson and I made it clear that to rely on foreign loans, foreign capital, to finance its development was the stupidest thing Russia could do. We asked, publicly, the Russian central bank how it was going to spend borrowed dollars or euros in Russia on development projects? The projects are, of course, paid for in rubles as that is the national currency. What magically transforms the dollars and euros into rubles? Does the central bank use the foreign currencies Russia has borrowed to buy up rubles in the currency market? Why do that when the central bank can create rubles?
We pointed out to the central bank that when it receives a loan in dollars or euros, it puts the foreign exchange in its reserves. To finance the project, the central bank creates rubles, just like a private bank does when it finances a project. All the foreign loan does is to saddle Russia with interest payments to foreign creditors. As the central bank can finance the projects, and does finance the projects, by creating rubles, there is no point in the foreign loan. All Russia does when it takes a foreign loan is to incur a liability without acquiring an asset. (The central bank makes the same kind of mistake when it advises the Kremlin to sell Russian assets to foreigners in order to acquire foreign exchange which then makes Russia subject to sanctions! As Russia doesn’t need foreign exchange, she should keep her natural gas for the development of Russia and China’s economies and not deplete her reserves by selling to her Western enemies who impose sanctions and issue threats at the drop of a hat. If Russia does sell, she should price in rubles in order to strengthen the ruble.)
In what form does Russia hold her foreign loan in its reserves? Not in currency. Reserves are generally kept in the debt of the creditor country. This means that by taking a dollar loan, the Russian central bank holds US Treasury bonds and, thereby, helps to finance Washington’s encirclement of Russia. We have just witnessed the U.S. Government, central bank and commercial banks and those of its Euro-satellites confiscate the foreign reserves of Donetsk and Lugansk, just as Afghanistan’s deposits and reserves were seized, and just as the Bank of England confiscated Venezuela’s gold stock held in London and assigned it to the U.S. designated client kleptocrat Guaidó.
For reasons inconsistent with all known economics, the Russian central bank thinks it is inflationary to create rubles unless it burdens itself with foreign debt! This crazy idea shows how American economic propaganda has deprived Russia of the value of its own central bank.
By now the Russian central bank must be prying its thinking away from the American economic brainwashing. Nevertheless, the Atlanticist Integrationists will try to hold on to their American connections and continue their betrayal of their own country.
The West suffers from the same delusion as the Russian central bank. The EU plans to sanction Russia by limiting Russia’s access to European financial markets. Washington will do the same thing. Russia has no need for its banks to have access to European or American banks. Access benefits not Russia but the European and American banks that collect interest payments from Russia. Again, why should Russia pay interest on foreign loans, the proceeds of which sit idle in her foreign reserves?
The EU, understanding that its banks are the beneficiaries, has limited the sanctions to individuals who participated in the process of recognizing the Donbass republics’ independence and those Russian banks that are financing the Russian military operations in Donetsk and Lugansk.
What total stupidity. The Russian military is financed by the Russian national budget, not by banks. Any Russian official of sufficient high rank to have participated in a decision of the Security Council who still trusts the West to have money abroad is so stupid that he deserves to be confiscated. Indeed, such fools should be cleared out of the Russian government.
Russia and China have been subjected to a psy-ops operation that they need the West. This delusion is the greatest threat that they face, indeed, that the world faces. The chances for World War III are enhanced by their contacts with the West. These contacts result in constant accusations, constant provocations, which are dangerous because they can explode into conflict. By now Russia and China should know that negotiations with the West are not only pointless but dangerous.
The first step toward the reduction of tensions is for Russia and China to stop responding to accusations. The responses serve no function but to keep the accusations alive and to encourage more. Accusations are the way the West keeps Russia and China on the defensive, always saying “no we didn’t do it.” Why do they bother to deny? The West never believes them.
To be constantly accused results in frustration and anger. It is the main cause of spousal abuse. The only way for Russia and China to stop the abuse is to cease responding to it.
Russia and China have their own goals. These goals are the development of their countries and the creation of their own trading blocs. There is no reason whatsoever to contaminate this project with Western corruption .
The Western World will not be a problem for Russia much longer. The West is collapsing in its own degeneracy, dying from self-hate. The West dishonors its founders, its heroes. The West tears down its own historical monuments, black-lists its own classic literature, teaches hatred of itself in its own universities and public schools, and now has created two powerful enemies. The West rejects its values. It has no morals, no respect for truth. The US government has trampled the Constitution into the dirt. As the US is the Constitution, the US has trampled itself into the dirt.The law schools are silent or encouraging of the destruction. As the rest of the West is American empire, all goes down with the US.
It is difficult for a country, an empire, to build up tensions that lead to war if the chosen enemy does not engage with you, does not respond to you. The best chance of avoiding nuclear war is for Russia and China to keep a wary eye on the West but otherwise ignore the West and avoid engaging with the West. Russia and China should go about their own business.