World economic crisis. Economist Mikhail Khazin predicted a change in Russia's elites this year Mechanisms for the development of the crisis
Six months before the August default of 1998, a report on the economic situation of the country landed on the desk of Russian President Boris Yeltsin. It stated: if economic policy is not urgently changed, the country will default by the end of summer - beginning of autumn. One of the authors of the report was Mikhail Khazin, Deputy Head of the Economic Department of the President of the Russian Federation. Then no one listened to his recommendations, and he was forced to leave his job.
But now, when the world economy is sinking deeper into the abyss of crisis, interest in Mikhail Khazin’s theory is growing rapidly. Back in 2003, he published the book “The Decline of the Dollar Empire and the End of the Pax Americana.” In it, the economist predicted the main features of the crisis that was inevitably going to grip the economy of the United States and then the whole world. Five years ago such predictions seemed fantastic, but now the forecasts of that time seem, on the contrary, to be overly optimistic.
-Those who predict that the crisis will end in 2009 simply do not want to answer to their people for their own incredible incompetence, stupidity and corruption. The crisis is just beginning. Remember the early 90s – it won’t be any better. Russia and Ukraine will face a sharp drop in living standards and even collapse: a more stable country will calmly digest them. For example, China can digest Siberia. This is an extremely unpleasant scenario, but we must be aware that it is the most likely.
March to the West. According to Mikhail Khazin’s forecasts, China is quite capable of surviving the current crisis. And even “bite off” part of Russia
Wasted work
Mikhail Khazin does not build his forecasts from scratch. The crisis theory he developed is based on two principles.
–The first of these was carefully developed by the political economy of the 19th century as part of the development of the labor theory of value. The fact is that the product of labor is distributed unevenly between labor and capital. Capital considers the product of labor as its private property, and, as a result, employees do not receive the necessary compensation for it. As a result, under capitalism demand grows slower than capital. This depreciates capital and reduces its efficiency
The second position of the theory is the role of the global division of labor. After all, scientific and technological progress is inevitably accompanied by a deepening of the processes of division of labor, and they, in turn, require an increase in the volume of sales markets.
The movement of any country along the path of scientific and technological development in the last 250 years required the expansion of markets for its products, that is, markets that it controlled. The number of technologically independent states has been constantly decreasing over the past two centuries. In Europe, back in the middle of the 19th century, there were a dozen truly independent states; by the beginning of the 20th century, there were only five left. In the middle of the last century, not only in Europe, but throughout the world there were only two truly independent states - the USSR and the USA. But as the processes of development of science and technology continued, these two world leaders had to face the problems of financing the next stage of scientific and technological progress by the last quarter of the previous century.
Star Wars
In parallel with the competition for sales markets, the struggle for markets for the export of capital also intensified. Having found no use for their money in their homeland, the capitalists exported it to still undeveloped territories - this policy was called “imperialism” at the end of the 19th century. According to Khazin’s theory, it was the struggle for markets that caused the First, and soon the Second, World War. But after the emergence of the USSR, and then the world system of socialism, the problem of “utilization” of excess capital became aggravated again. After all, the regions for the export of capital have been exhausted, and allowing a crisis of overproduction and, even more so, a third world war for the Western world would be suicide. Therefore, the efficiency of capital began to decline, and in the 70s, Western countries were hit by a deep crisis.
A way out of it was found by stimulating demand, both public and private. The most ambitious project was the Star Wars program, designed to protect the United States from attack by the USSR from space. Many considered it a bluff, but, nevertheless, new capacities for the production of goods and services were created to meet this artificial demand. Nowadays, the system created in the 80s is usually called “Reaganomics”, named after President Ronald Reagan. It was during this period that the total debt of American households began to grow rapidly, significantly faster than the growth of the economy as a whole. Periodic “bubbles” in financial markets played an important role in Reaganomics.
-The printing press worked non-stop, but inflation did not go beyond normal limits - it was delayed in the financial sector of the economy. “Bubbles” are precisely the form of manifestation of this inflation. For some time they managed to keep them under control, but in August last year, when the US authorities began to “deflate” the bubble in the real estate sector, something terrible happened - inflation broke through into the consumer and industrial sectors. And that's where it all started. Demand cannot constantly exceed the real income of the population, that is, received as wages. In the end, the reckoning came - it became impossible to maintain demand, and it began to fall and return to its natural state. And along with it, the American GDP.
The decline of consumption
Nevertheless, Mikhail Khazin believes that the cause of the current crisis is not the private mistakes of the American authorities or business, but the very nature of capitalism. According to Khazin, all this confirms the political economic analysis of the author of Capital, Karl Marx, who argued that crises of overproduction and the shocks they cause are an integral feature of the capitalist mode of production. True, if the ruling elites of the United States had correctly used the resources of the collapsed Soviet Union and its satellites, the crisis could have been delayed.
–They could, for example, pay off debts incurred in the 80s using resources received from the “capitalization” of the former socialist system. But greed got in the way. And now we need to change the basic development model, and how to do this is not yet clear.
–Does the crisis mean that consumer civilization has come to the end of its existence?
–If by “consumer civilization” we mean the constant pumping of demand through the issuance of money, then yes, it fits. But we must understand that this pumping was a response to the very fact of the existence of the USSR - if it had not existed, the USSR would most likely have won the Cold War. And now there is no USSR - why spend extra money on the people?
–You wrote that to maintain the stability of the current model of the American economy, living on debt, $200–250 billion per month is needed.
-This was the case in 2001-2002. Now significantly more is needed, since over the past ten years the global financial system has been greatly “inflated” and all its elements need to be supported. In a normal situation, participants in the financial system must “transfer” money to each other. But since trust has been lost, all participants in the former credit chains have to give money separately. As a result, much more of them are needed - we described the situation for a normally functioning financial system. And such an influx can only be ensured by continuing emission, which, in turn, causes inflation and depreciates the value of invested funds. By the way, you need to understand that the United States raised aggregate demand for the entire world economy and, as a result, it will all fall into crisis. Its scale is approximately known - at least a 30% drop in US GDP and a 20% drop in the global economy. But in reality there will be more - this is the minimum estimate.
The path of the catch-up
The collapse of the American economy and the fall of the dollar as a world currency could have the most tragic consequences for Ukraine and Russia, the economist believes. And the IMF loan in the amount of 16 billion, which Ukraine should receive, will not help it get out of the crisis.
–The Fund provides funds exclusively in the interests of international capital to those groups that they have introduced into the leadership of certain countries. We had the same thing, and the consequences will be the same - destruction of the remnants of the economy and a drop in the standard of living of the population.
Mikhail Khazin says that the existence of the current system deprives the so-called developing countries of the future, which are doomed to remain poor.
–Resources are needed by the rich countries of the “golden billion”. They also need markets, so they are interested in preserving the backwardness and dependence of developing countries. In the entire history of success, only two countries have achieved success on the path of catching-up development: the Soviet Union and China. The USSR was destroyed, largely due to the weakness of its later elite, and China can now jump out of the crisis.
As for Ukraine and Russia, Mikhail Khazin sees two scenarios for the near future for them. The first option is “wild” capitalism in the style of the post-Soviet 90s, the second is the Swedish-German option, only much more “socialist”.
“However, if you nationalize half of the country’s financial system, then this wealth needs to be managed. Managing nationalized enterprises using capitalist methods means running into total theft and corruption. This means that we either need to sell everything again, or change management methods to socialist ones, which are precisely intended for such cases. What do you like best? Especially when you consider that there will be virtually no private investment in the coming decades - only state and semi-state ones. Moreover, current elites will fiercely resist such reforms around the world. I do not rule out that we will face very acute internal political conflicts in a variety of countries.
Mikhail KHAZIN: “In three years, most of our oligarchs will go bankrupt”
About five years ago I was in charge of culture at Komsomolskaya Pravda. Publishers sent new products in the hope of a newspaper review. While sorting through another batch of waste paper, I discovered the book “The Decline of the Dollar Empire and the End of the Pax Americana.” Out of surprise, I remember I even rubbed my eyes. This is pure madness to encroach on the foundations of the world order, the free market, at the beginning of the 21st century! Maybe, by mistake, old stuff from Brezhnev's times was mixed in? Soviet Americanist propagandists loved to bury this very Americana. No, it’s recent, published in 2003. And the authors are not Zyuganov and Anpilov, but a certain Khazin. Out of curiosity, I leafed through the sedition. The arguments seemed convincing. I gave it to our economic observer Zhenya Anisimov. Zhenya then wrote a review, and did a long interview with the author in Komsomolskaya Pravda (the first, by the way, in the mass press). Since then, I remembered that there is such a smart economist Mikhail Khazin. I have been following his performances all these years. Khazin was true to himself: screw America! Now that his fantastic forecast began to come true, I asked for an interview.
For forecasting a default they were fired from the Kremlin!
Mikhail Leonidovich, admit it, with what high-voltage current you were shocked and enlightened about the global financial crisis?
There was no insight. I came to the forecast gradually. In the spring of 1997, the Economic Directorate of the President of the Russian Federation was created in the Kremlin. I was appointed deputy chief. The first task is a report to Yeltsin on the economic situation in Russia. While working on the report, we realized: by the end of the summer, beginning of the fall of 1998, the country would default. Unless, of course, we urgently change economic policy.
Have you reported upstairs? How did they react there?
Yes, in general, no way. No one, except the deputy head of the administration Livshits and President Yeltsin himself, read this text. But Yeltsin himself treated us quite constructively, so I think he took this quite seriously then.
By the summer of 1998, we were finally expelled from the presidential administration. For attempts to stop a business project called “GKO - Currency Corridor.” This was the largest financial scam in all post-Soviet times. One and a half to two billion dollars a month flowed to the West. For years! In August, as we warned, a default occurred. But by that time we were already unemployed. No one hired us as enemies of the people. Liberal. And we got serious about science.
Who are we?
Your humble servant and Oleg Vadimovich Grigoriev, former head of the Economic Department. We continued to investigate the reasons for the default. All traces led to the USA. Having become seriously interested in the structure of the American market, we discovered an amazing coincidence. Just as our GKO market sucked all the juice out of Russia, so their stock market is sucking out the resources of the entire planet. And the ending loomed the same.
In the summer of 2000, our article “Will the United States Achieve the Apocalypse” appeared in Expert magazine. Her conclusion: if by the spring of 1998 it was impossible to avoid a default in Russia, it would also be impossible to stop the problems of the American economy in 2000. The economist Kobyakov and I described the situation in more detail in the book “The Decline of the Dollar Empire and the End of the Pax Americana,” already known to you.
How America has played the fool
This means that the States did not listen to the popular song of the Lyube group from the perestroika era. Young Kolya Rastorguev warned: “Don’t be a fool, America!” But seriously, Mikhail Leonidovich, what is the reason for the beginning collapse? Now so many versions have been voiced - the devil himself can’t figure it out! Just let's talk without fancy terms like derivative. By God, many of our readers, like me, did not graduate from economic academies. But I want to figure it out.
I'll try. The economic model, because of which everything is now falling apart, arose as a response to the terrible crisis of the 70s. It was a crisis of excess capital. Even the classics of political economy of the 19th century wrote: capital grows faster than labor receives its compensation. The result is a problem with lack of demand. In classical capitalism, this is solved through crises of overproduction. Under imperialism - through the export of capital. By the 70s, both methods had exhausted themselves. It was impossible to create a crisis of overproduction due to the presence of the socialist system - it was scary. And there is nowhere to export capital. You won't be taken to the socialist camp! And India and China were not yet capital markets. The global situation, however, required the United States to move forward with scientific and technological progress. Otherwise, the West would have lost the war with the USSR. (There is reason to believe that he lost it in 73-74. But the USSR, alas, refused to force victory. Let’s not get distracted by this topic now. If interested, we can talk another time.)
The Carter administration and Fed Chairman Paul Volcker (Alan Greenspan's predecessor) developed a clever concept. For the first time in the history of capitalism, they began not to help capitalists alone, but to stimulate aggregate demand.
At whose expense was the banquet planned?
Through the issue of money.
Have you decided to start a printing press?
Absolutely right.
Now it finally dawned on me, Mikhail Leonidovich, why it was in those years that the Americans stopped backing the dollar with gold! All the reserves of yellow metal in Fort Knox would not be enough for a banquet. On green banknotes.
Almost so. More precisely, there was not enough gold even earlier; the default on the dollar was announced in 1971. But since there was no connection to gold, God himself ordered it to be used.
Let us, however, continue our educational program. In the early 80s, demand was mainly stimulated by the state - the Star Wars program. Since 1983, the emphasis has been on households.
Translated into colloquial Russian - for the layman-consumer, the ordinary citizen?
Yes. For a whole quarter of a century, households were given money through emission. More and more.
Credits?
Naturally. Due to excess demand, the States made the next round of scientific and technological progress. The USSR collapsed. Achieved many other good results.
But... This takeoff occurred at the expense of resources that were supposed to ensure growth in the future. The country has consumed its resources for two generations ahead. States accumulated debt. This is clearly visible if we compare the growth graphs of household debts and the total total US debt and US GDP. The economy grew at a rate of 2 - 3, maximum 4 percent per year. Sometimes it dropped into minus. Debts are constantly growing at a rate of 8 - 10 percent.
And let them grow. The Americans lived until now, did not grieve... Better than ours, by the way.
Indeed, by stimulating consumer demand, the Americans created a state with an extremely high standard of living. Generations of people have grown up who are not accustomed to living in poverty. Because they had an additional source of resources - loans. But you can’t live on borrowed money forever. The volume of debt has become too large, household debts have exceeded the size of the country's economy - more than $14 trillion. It's time to pay the bills. By the way, the GKO pyramid in Russia collapsed in exactly the same way in 1998. The scale of the country's budget has become insufficient to pay off the debts of state short-term bonds. It all ended in default.
Of course, Wall Street was frantically trying to push back its collapse. I won’t go into detail about derivatives and other fictitious financial assets that you don’t like. Many people are now writing about this in detail, blaming them for the crisis. But this was just an attempt to breathe before death. Understand the main thing, Evgeniy: fictitious means there is no real final demand for them. They can be exchanged as much as you like between two financial institutions. But you can’t sell it to a specific person. And the engine of the economy is final demand. Represented by the consumer or the state. This is a fundamental thing.
What to do? There are two options. The first is to stop emission, that is, turn off the printing press. And improve the economy. But in this case, all financial assets - trillions and trillions of dollars - will instantly depreciate. The entire financial system will collapse. This is a version of 1929, the Great American Depression. But already on a planetary scale. For the dollar is still the main world currency.
Option two is to create hyperinflation. So that debts are burned. The idea is wonderful. In fact, this is what they are doing now. Roughly speaking, you owe someone 100 rubles, and inflation in the country is 100 percent. After a year, your debt turns into 50 rubles at fixed prices, after two - into 25. And after a few more years, you can completely forget about this debt.
Here is a concrete example from life. There was Gorbachev’s decision to allocate 12 acres of land to the people and a loan from Sberbank to build a house. My friends, husband and wife, took out two shares of land, loans, and bought building materials. We built the house ourselves. And in 1993 they calmly returned the loan to the bank. In nominal terms it remained the same, but in fact at that time it was less than a month’s salary. But an hour's drive from Moscow they have a nice house and a large plot.
The problem in America, however, is that since 1981, capacity has been built to meet the growing demand provoked. Producing both goods and services. And no matter what option Wall Street chooses now, hyperinflation or turning off the printing press, demand will inevitably fall. What to do with these capacities?
In 2000, we calculated how much of the American economy would disappear. At that time - a quarter. Today is the third. If not more.
This is not just a lot, it is an incredible amount! What does it mean to destroy at least a quarter of the economy? This is a furious increase in unemployment, a terrible depression, a sharp increase in the social burden on the budget and social tension in society. Etc. During the Great Depression, US production fell by a third and consumption by 50 percent. Now consumption may decline even further.
That is why the United States is now jumping out of its pants, doing everything to prevent this part of the economy from disappearing. They stimulate banks, production... And still, in 2-3 years, or even earlier, America will receive a crisis on the scale of the Great Depression.
So now we see more flowers?
Of course, this is the very beginning. Of course, they can’t talk about this out loud. They will now pretend that everything is fine. And it will be even better. They will begin to look for reasons why this happened. Look for the extreme. This is why there is fear of major terrorist attacks. Similar to what they organized in 2001.
Come on, Mikhail Leonidovich!
In troubled times, it is necessary to change the psychology of society, to unite it. The best way is a threat. This is not the first time for the USA. In 1898, to start a war with Spain, which resulted in them taking the Philippines and Cuba from it, the Americans blew up their own battleship Maine in the Panama roadstead. In 1941 there was Pearl Harbor.
What, they also bombed this base themselves?
Bombed by the Japanese. But the US leadership knew about the upcoming raid. However, it allowed an attack. There was a desperate need to change the mood of society from isolationism (America is far away, the enemy won’t reach you!) to a policy of expansion. Only all aircraft carriers were withdrawn from Pearl Harbor in advance. I don’t feel sorry for the soldiers! The tragedy of Pearl Harbor really plowed America...
In the early 60s - the famous incident in the Gulf of Tonkin. To get into Vietnam, the Americans blew up their own cruiser. This is the norm for them, that’s the way they are built.
On September 10, 2001, on the forum on the Expert magazine website, I warned that the Americans would soon organize major terrorist attacks against themselves and blame everything on Osama bin Laden. There are still links to this message on the Internet, although about two years ago “Expert” reorganized its website and the message itself can no longer be found there.
Cool! The next day the Twin Towers were blown up. Where does this foresight come from?
- They had no time left. Economic indicators for August in the US were very bad. I would have to explain myself. Remember, after the terrorist attack they closed the exchange for several days. Distracted attention. And most importantly, under these terrorist attacks they finally abandoned liberal methods of economic management and began the transition to pure dirigisme. That is, to direct control of the economy by the state and the Federal Reserve System.
So, it was not for nothing that the World Trade Center was targeted?
Well, of course it was a symbol.
But isn’t it all too simple, Mikhail Leonidovich? They failed August and staged a terrorist attack in September? Provocation on a global scale requires long preparation.
So she went on for a long time. A crisis was brewing. “Black August” only pushed the deadline forward. Crisis phenomena began in the 90s. As a matter of fact, a careful study of economic processes, which we will not go into because it will not be interesting to the reader, shows that the “point of no return” was most likely passed at the border between Clinton’s first and second terms.
SAY A WORD FOR POOR BUSH!
But they say Bush Jr. is to blame for everything. Not in the explosion, of course, but in the fact that it brought the richest country to the brink. Our fashionable economic analyst Yulia Latynina even called the outgoing US President Leonid Ilyich Bush.
Nonsense. Of course, Bush should be criticized; he has done a lot of bad things. For example, in 8 years I still haven’t understood what’s going on. However, the crisis could have broken out back in the 80s. They miraculously held on in '87. Then they jumped out due to the collapse of the USSR and the seizure of the markets that we controlled. They had great happiness. But at the end of the 90s there was a storm again. Even before Bush came.
If in the early 90s the United States had directed the resources seized from the territory of the former socialist countries to pay off its debts incurred in the 80s, it would have been possible to stretch out the happiness for 30 years. But instead, they incurred new debts! That is, they accelerated the process. In this sense, I repeat once again, the real culprit of the current crisis, the last person who could avoid it, or rather, push it back, was Clinton. Bush came to a ready-made crisis. He was trying to do something. I changed the remaining monetary methods to direct control, tightened regulation, etc. But it was too late. The locomotive was rushing at full speed. So Clinton and his kleptomaniac administration in the person of Rubin, Summers and other figures are to blame.
The crisis began in America. Over the ocean. But why did the whole world tremble?
The dollar is not just the world's reserve and trade (now about 70% of international transactions in dollars) currency, but also, after 1971, a single measure of value.
Consider one more important thing. The modern economic model, built on the dollar as the main world currency, has led to America playing a unique role in the world economy. It produces about 20 percent of global GDP. (The total is about 60 trillion dollars. The real share of the United States is 12 trillion, that is, a fifth. Although the United States itself writes that it is 14, this figure should not be trusted.) And it consumes about 40 percent of world GDP. Almost twice as much. Based on purchasing power parity, of course. Because they buy cheap and sell at their own prices at high prices. As a result, they suck resources from all over the world like a vacuum cleaner.
Negro Obama will answer for everything!
The destruction of this system will lead to the fact that the standard of living in the United States will fall. At least twice. There has never been a case in history where a drop in living standards on such a scale did not lead to the destruction of the socio-political system of the state. It is clear that the current US political elite is doing everything to avoid losing power. That's what we see.
Personally, I don’t see it, to be honest. A normal election campaign is underway.
Don’t you think it’s suspicious the appearance of such a strange character for the entire previous history of the United States as Obama? It's not even strange that he's a black man. Negro, well, thank God...
African American, do you want to say, Mikhail Leonidovich?
No, sorry! Afro is purely American, politically correct. And in Russian - Negro. In Russian, the word “negro” is not emotionally charged and is not a curse word. I've explained this many times. Including on the streets of Washington. Because he spoke Russian. And now I’m giving an interview to a Russian newspaper.
The strange thing about Obama is that he is not at all rooted in the American establishment. He has a strange mother, a strange father... Obama is, in a sense, a made character. Someone pulled it out and is moving it.
If i knew! Although it would be very interesting to know. Obama's rival McCain is also a specific character, although he represents the highest American establishment in the fourth generation. McCain is many years old, first of all. Secondly, he is severely broken mentally. Captivity in Vietnam is not in vain. Fierce hatred could not help but remain in him. But in politics there is fierce hatred and emotions get in the way. A politician must be cold and cynical.
Rice. Valentina DRUZHININA.
What are you getting at, Mikhail Leonidovich?
The American elite understands perfectly well that the next administration will most likely not survive until the end of its term. After all, she will have to make very tough, unpopular decisions in the economy. It makes no sense to put an intelligent president from one’s own circle in the White House. I feel sorry for the man, and besides, he won’t be able to really do anything anyway. You need a character whom you don’t feel sorry for, so that you can then blame everything on him.
What about democratic elections?
Democracy is a mechanism for selling any major decision to the people. The elite will have to sell extremely unpopular solutions in a crisis. The only way is to pull out the charismatic. In America, the president, for your information, is not elected by the people. Charismatic Obama will do some terrible things for the elite. Then he will be swept away by the indignant masses. And politicians will blame everything on him. In short, this is a political suicide bomber who must close the embrasure.
Or a scapegoat.
One could say so.
Does Obama himself understand his role?
These are his personal problems. We would like to loosen things up with our people in the near future.
But political scientists are making predictions about an “October surprise” from the same bin Laden at the final stage of the race, which, they say, will change the balance of power and help the Republicans stay in power. This fits into your concept of provocation.
If the gap between Obama and McCain had been small, the Republicans could have taken drastic steps on the eve of the elections like...
-...war in Iran?
No, Iran is definitely cancelled. And, relatively speaking, an explosion of a nuclear power plant a la Chernobyl in France. But it is already absolutely clear that Obama will win and explosions will not change anything.
Now the curiosity with the McCain headquarters asking for money for the elections from the Russian embassy is clear. Conscious setup. McCain is simply being dumped. The Republicans seem to be closing up shop and getting out of the game. It was not by chance that the former Secretary of State of the Bush Cabinet, the authoritative Colin Powell, stuck a knife in the back of the Republicans, recently declaring that he would vote for Obama. And he called him an important transitional figure.
That's what I've been talking about for a long time - a transitional figure. One good thing is that there will be no more provocations before the elections.
And what will happen after, Mikhail Leonidovich? How will the global crisis develop?
The acute stage of the global crisis, I repeat, has already begun. If the United States stops issuing, stops printing dollars altogether, everything will collapse within 2-3 months. We will get the 1929 version. They will print money, but at a minimum - the fall will take 2.5 - 3 years. They will create hyperinflation, turn on the machine at full power - everything will be completed in a year and a half.
In your opinion, which of the three options will the States choose? Or have you already chosen?
The third is hyperinflation. But after the elections on November 4 (more precisely, after the change of president), policy changes are possible.
However, no matter which option they choose, the US economy will shrink by at least a third as a result. The world will fall by 20 percent. After this, the planet will face 10-12 years of severe depression. In the USA and Europe, I think many will live from hand to mouth. And the car will become a luxury item.
Gloomy picture...
THE GHOST RETURNED TO RUSSIA. THE GHOST OF SOCIALISM.
In Russia she could have been more optimistic, I won’t hide it. We have cheap raw materials, our own oil, gas, etc. But, unfortunately, the idiotic policy of our financial authorities, which did not allow domestic enterprises to receive cheap loans, led to the fact that our production largely died out. In 1998, we were able to very quickly jump out of default due to what? Capacities that had been mothballed since Soviet times were put into operation. Plus, the foreign economic situation has improved sharply. Oil prices soared. Now there will be no foreign economic situation - there is a crisis. And there are no relatives’ capacities. It is impossible to build them. There will be little demand. And they will try to overwhelm us with cheap imported goods. We will have to close the border and completely worsen the consumption structure. Or get money somewhere. Import costs money, but citizens will not have it. In Moscow alone, unemployment will amount to 2.5 - 3 million people. Some of them are low-paid workers, primarily guest workers. This will increase crime and cause a lot of other troubles. Imagine a million, well, even half a million Tajiks and Uzbeks who do not have permanent housing and have lost a permanent source of income. They will run around the capital and grab everything that is bad. Specific tough measures will be required. At least for deportation. But we know that our authorities are not capable of doing this. Gangs will be formed from the most frostbitten ones. They will deliberately rob and pay off any police with bribes. Plus two million unemployed so-called “office plankton”. This is generally a difficult case. Young people accustomed to receiving thousands of dollars simply for the fact of their existence. And now they will be kicked out. Everyone has mortgage debts, loans for cars, and other goods. How will they repay their debts? Banks will have problems. Taking away apartments for debts? Yes, they will destroy all of Moscow! And layoffs have already begun.
Well, don’t scare me like that, Mikhail Leonidovich! The country's leadership is taking serious measures to minimize the consequences of the global crisis. It allocates billions. We hear about this every day on TV.
If all the money arrives as intended, we will last until spring. And there you can plant potatoes. But if everything is stolen, as is, alas, customary here, then problems will begin in the winter. And serious. As for the authorities... Apparently, in recent weeks there has been a radical change in the psychology of the country's leaders. For many years they were under the illusion that there would be enough money for everything. The petrodollars alone are worth it! And suddenly it turned out that not only was there not enough money, there was incredibly little of it! And it’s not even clear how to plug the holes that already exist. Everyone comes to power with an outstretched hand. Pay attention to official messages. Retailers - large retail chains - are asking for 50 billion. Otherwise they won't survive. Oil workers also want 50 billion. Banks 50 billion before the new year. And there we need more. Agriculture is already asking for 100 billion. Otherwise, they say, we won’t sow. The auto industry, however, is asking for a mere trifle - a billion. But he also asks. Citizens, they say, do not buy our cars due to lack of money, warehouses are overcrowded, the conveyor cannot be stopped, people will not understand... And the oligarchs are in a panic. And the worst thing is that their accounts in the West are also beginning to disappear. The oligarchs have already realized that only the state can protect them. And they also whine about billions.
I was recently told how a group of oligarchs came to the government to ask for money as collateral for their enterprises. Those enterprises that in the dashing 90s they themselves took from the state for next to nothing at loans-for-shares auctions. Wonderful are your works, Lord!
Everything is clear with the oligarchs. I'm not sure that the vast majority of them will remain in 3 - 4 years.
Will they go to prison?
They'll go broke.
True, some of our analysts see in state assistance the upcoming nationalization of the same enterprises and banks. The specter of socialism looms.
I'm imagining that I need to be baptized! Socialism is not primarily nationalization, but a socialist method of managing the national economy. In our country they are trying to nationalize under capitalist methods of management. Nothing but total theft will come of this.
Since you, as I see it, are a supporter of conspiracy theories, comment on the hints of TV star Vladimir Solovyov, as if the current crisis was specially organized to teach Russia, which has risen from its knees, a lesson. That’s why oil prices dropped, like in 1989.
I am a principled opponent of conspiracy theories. I’m just trying to understand a little how everything works here. As for Solovyov, this is just nonsense. If only because the causes of the current crisis have been discussed many years ago. Only the authorities ignored these discussions.
ICELAND - BIG "MMM"
Explain the incident with Iceland. Until recently, it was considered one of the richest countries in the world, convenient for living. And suddenly she walked through the world with her hand outstretched. Here, they say, how bad it turned out. The hardworking country of geysers became the first victim of the global crisis. But I found an interesting message. It turns out that the German Schiller Institute, which closely monitors the spread of the crisis around the world, recorded a very important, or rather alarming, indicator back in the summer - “the laundering machine Iceland has closed its shop.”
As the global financial system collapses, its fundamental mechanisms gradually cease to function. First, the US investment banking system. The system of rating (that is, assessing) financial risks does not work. The insurance system is on the verge of collapse. It’s the turn of offshore companies, i.e. the capital laundering system. Iceland is not a country with a conventional economy. It's just a bank with the name of the country. The volume of banking assets here was 10 times greater than GDP. Sorry, this was not an ordinary bank. Remember, in the 90s, some of our banks promised 20 - 30 percent per annum. Where are they now? Iceland had the highest discount rate in the world. 15 percent. Pure pyramid. Everyone brought money there. Sooner or later, financial pyramids collapse. Consider Iceland to be "MMM".
Is Iceland the first sign in the system of global offshores, so beloved by Russian nouveau riche? Or will it all be limited to that?
I think that problems will begin for all offshore companies.
Then why is Russia going to help the collapsed Icelandic pyramid with a loan of 4 billion dollars? Don't the chickens peck at money itself? For prestige, they say, we stand firmly on our feet? To wipe the nose of the West? Or, in the hope that Iceland will give us a former NATO military base, vote against Georgia and Ukraine joining NATO?
Can I answer off the record?
For print only, Mikhail Leonidovich.
Then let's say this. There is a suspicion that we are helping for a reason. Some of our big people decided to earn money there and play a repo operation. And he didn’t take into account that a crisis had begun. Now he needs to be rescued. In order not to lose a blocking stake in a large Russian state company. Don’t ask for names or appearances, draw your own conclusions. And even if this version is not true, the very fact of its appearance and widespread distribution speaks for itself.
CHINA IS LIKE CHAPAI. DOESN'T KNOW LANGUAGES.
Soros recently said that China will emerge victorious from the global financial crisis.
I wouldn't say that. And that's why. The West, like the USSR, in the past was the bearer of a global project. There is a concept for managing the global economy.
World domination, in short?
Yes. China does not have such a concept. This is a purely national project. For this reason, the Chinese are actually shirking attempts to take responsibility for the world situation into their own hands. Exactly because they do not have a model for governing the world. Philosophical model. They can control China, increase its power and sphere of influence. That's all. This is the difference between the psychology of the Chinese and the Russians, representatives of the West. This is a fundamental thing. Do you remember Petka asking Vasily Ivanovich if he could command on a global scale?
No, Petka, I don’t know any languages.
So China, figuratively speaking, does not know languages. He can command a regiment, a division, an army... Nothing more.
And at the end, allow me a personal question. What measures are you taking yourself to, in official terms, minimize the consequences of the crisis you predicted?
I don't have such problems. My salary is only growing because I am a recognized expert on the crisis. But I don’t have and never have had large capital that needs to be saved. I can give only one general piece of advice to Komsomolskaya Pravda readers: realize that bad times are here to stay. And live further based on this understanding.
P.S. I understand that to many readers Khazin’s thoughts will seem like pure fantasy, conspiracy theories, or even nonsense. I really want to not believe him. Especially about bad times that are serious and long lasting. I confess, too. But... I actually held his book about the financial collapse of America in my hands 5 years ago. Now that fantasy is really coming true. And in the West, books have been written and films have been made about the American provocation of September 11, 2001. True, after the explosions. And the explanations are primitive - a terrorist attack was required to capture Iraq.
During our two-hour conversation, I noted the main thing. Despite the gloomy forecasts about long bad times, Khazin himself is an optimist. Smiles a lot and jokes. Let us also be optimists! This helps you survive at any time. And forewarned means forearmed.
Those who want to learn more about Khazin’s opinions and forecasts about the situation are welcome to his website
Well, with my naive questions about the crisis I go to another authoritative economist, academician Sergei GLAZYEV. Read the interview tomorrow in Komsomolskaya Pravda.
20.11.2008 12:47 26745
The electronic publication Utro.ru talks about what the world and Russia should expect in the context of the growing global economic crisis with the famous economist who accurately predicted the 1998 default, former economic adviser to Boris Yeltsin, president of the expert consulting company Neokon, Mikhail KHAZIN .
Do you agree that the main culprit of the economic crisis is the United States?
To be precise, the United States is not the only one to blame. There is a global financial system. In the 1980s, when the foundations of the current crisis were laid, this system occupied a third of the world. And she is to blame for the crisis. Of course, the basis of this system is the United States, the base currency is the American dollar, and the main institutions are American investment banks, American insurance companies, etc. That is, this formulation makes sense, although it must be used carefully. It should be taken into account that the very first crisis, the response to which was the development of policies that led to the current state of affairs, was all the 70s. If you look at the average salary of an American worker, (in relative terms) it peaked in 1968-1971. After that, wages only fell. And the response to the crisis of the 70s, let me remind you, was a whole series of events. 1971 - default in the USA, refusal of gold backing of the dollar; 1973 - oil crisis, 1975-76 - wild decline with stagflation. The response to this crisis was the policy of Paul Walker (Alan Greenspan's predecessor as head of the Fed - “Y”) and the administration of President Carter. There is reason to believe that this policy was prepared for Carter's second term. However, Carter lost, Reagan became president, which is why this policy was called “Reaganomics.”
More political economists of the 19th century. have deduced the global law of capitalism: it lies in the fact that the efficiency of capital is falling all the time. Why? Because the capitalist's job is to underpay the worker. As a result, the rate of capital accumulation always exceeds the rate of replacement of labor power, that is, compensation for labor. And labor is the main source of demand, as a result, demand lags behind the supply of goods.
Does the system itself generate a decrease in demand?
Yes, regarding the proposal. Absolutely it can grow, but relatively it falls. And this problem was solved in different ways. They solved it in classical capitalism through a crisis of overproduction, destroying excess goods. Then, due to the export of capital to yet undeveloped territories, the corresponding policy was called “imperialism”. And the third way is war. The First World War was a war for markets for the export of capital. Since all the problems posed were not solved during the First World War, it repeated itself in the form of the Second World War. And after that it became clear that it was no longer possible for capitalism to continue periodically crises of overproduction, because socialism was winning. They desperately needed to create a production system in which there would be no more crises, like in 1929. For this purpose, the Bretton Woods system was created, which in fact was a tool for institutionalizing the export of capital. It included an international bank, otherwise known as the IMF, and a development agency, for some reason called the World Bank. At the same time, a system was invented that was called GATT, and from the early 90s - WTO. Its task was not to allow small countries to close their markets so that they could not compete with the world system of capitalism through their development. And all this had to happen in dollars, for a completely trivial reason: because by the end of World War II, more than 50% of the world economy was the US economy. And this system existed successfully until the early 1970s. When it became clear that there was nowhere else to export capital, the system of socialism was closed. India and China at that time were countries with subsistence economies.
They simply could not consume it all...
Yes, that's absolutely right. Accordingly, an acute crisis of falling capital efficiency began. That is, the crisis of the 70s was a crisis of falling capital efficiency. Let us note that an absolutely similar situation existed in the USSR. The USSR, having sharply expanded its markets after World War II, made a technological breakthrough. This happened sometime before the mid-1960s. And there was simply nowhere to expand further.
So the idea that Paul Walker came up with was this. Since the United States can no longer export capital with the same efficiency and cannot stop issuing because it needs to stimulate development in the military-industrial complex, it was decided not to reduce emissions, but to increase them. At the same time, it was aimed not only at banks and the development of the military-industrial complex, but also at supporting aggregate demand. So, if 1981-1983 This is, first of all, a program for the development of government demand (the “star wars” program), then since 1984 it has been supporting the aggregate demand of households. As a result, since 1984, the United States has seen a rapid increase in total household debt.
That is, the build-up of that huge debt began precisely in the household sector?
Absolutely right. But at the first stage, the growth of debts was compensated by new loans, and in the end we came to what we came to. In recent years, the growth rate of household debt has reached 8-10% per year, while the economy has never risen above 4%. And in the end, we came to a situation that can roughly be called an acute structural crisis. What it is? There is the concept of “real disposable income of the population” - this is what the population receives as wages and income from previously placed savings. There is aggregate demand, which theoretically, at long-term averages, should be equal to actual disposable income. If for many years your expenses exceed the actual disposable income of the population, then additional capacity is created to cover these expenses. But, since these are all loans, you are actually eating up your future expenses. As a result, a situation has arisen in which there is a piece of the US economy that exists only due to emissions. We calculated this piece in 2001 by estimating the US inter-industry balance, according to the 1998 balance sheet, that is, already quite old. And the resulting figure is that in America 10-12% of the economy exists only due to net emissions. Taking into account the multiplier, which is usually 2-2.5, this figure already reaches 25%, i.e., a quarter of the American economy at the beginning of the 2000s. could exist only under emission demand.
But then there would have been crazy inflation.
She was. But! The Americans managed their economy very well and very competently channeled this inflation into economic sectors. This inflation did not occur either in the consumer or industrial sectors (well, almost not), but it did occur in the financial sector. This is the so-called financial bubbles. The first financial bubble burst in 1987 in the stock market. Then there was the recession of 1991, then, accordingly, already 2000.
The summer of 2007 was a critical moment for the United States. The real estate bubble was so inflated that it became clear that it was about to burst. This could not be allowed, since the discrepancies between the actual disposable income of the population and the volume of consumption were so great that it was possible to get a new Great Depression. For this reason, the United States began restructuring it in August 2007, in a dead market (since everyone was on vacation). The restructuring was, dare I say it, brilliant - they did not lower the real estate market by more than 4% per month. They acted very slowly.
Are you saying that the American real estate market was driven down by influence “from above”?
They just supported him so much that he didn’t go down too quickly. But the consequence of their holding down the real estate market was that inflation seeped into both the industrial and consumer sectors. As a result, its growth rate has increased significantly. Official statistics hide the true numbers. If we calculate inflation taking into account all prices, we will get somewhere around 15%; if we take into account all kinds of economic indices and other influencing parameters, it will be 17 percent.
And when inflation began, it became clear that the worst thing was happening - because of inflation, the very aggregate demand that they were subsidizing began to fall. Which was the basis of all this growth. If you have consumer inflation at 12-13% by the end of the year, this means that US GDP will fall by 5-7%. This is already severe depression. To understand what the total drop will be, you need to look at subsidized consumption. This works out to about $2.5 trillion a year in direct subsidies. Taking into account the multiplier of 2, we get about $5 trillion - this, even according to the most optimistic estimates, is more than a third of the entire American economy. That is, the share of that part of the American economy that will absolutely disappear as a result of the crisis is about a third. This is a severe crisis comparable to the Great Depression. During the Great Depression, consumption in the United States fell by almost half, and real GDP fell by 30 percent. Here, as I already said, real GDP will fall by at least 30%, and the standard of living will definitely fall by half, and maybe more. That is, this is a total catastrophe for the entire socio-political system of the United States.
Where it leads?
The USA is a state that produces a total of 20% of world GDP, and consumes significantly more - up to 40% at purchasing power parity. Just imagine that global consumption will fall by 20 percent in three years. This will be a total crisis, a Great Depression on a global scale. Oil prices will fall greatly. I think $20-25 per barrel would be considered very good. Prices for metals and other raw materials will also fall. And all this could have been safely predicted back in the early 2000s.
How long will the current acute phase last and what will happen next?
There are two extreme options. Option one: the emission will be stopped with an iron hand, for example, Obama will do this as soon as he takes office. He will nationalize the Federal Reserve System with its emission function, etc. Of course, after such games they will kill him. And he wouldn't be the first US president to be assassinated for trying to eliminate a private central bank in the US. For this they killed McKinley, Lincoln and some other presidents. If emissions stop, the decline of this very third of the economy that I spoke about will occur within 2-3 months.
What about the second scenario?
I don’t think that the American president will take such a desperate step. And then it remains to stimulate and compensate for the declining demand through emissions. Then the collapse of a third of the American economy will take not 2-3 months, but 2.5-3 years.
At the same time, by varying the emission, the situation can theoretically be brought to intermediate temporary states. For example, if you purposefully accelerate inflation by adopting some next “Paulson plan” to support the household. In this case, it will be possible to reduce the economy by a third, for example, in a year and a half. True, one must understand that no normal economy can calmly survive the loss of a third.
That is, it should shrink?
It should shrink, plus it should take some more time to rebuild it. The structure of the US economy needs to change dramatically. And this will also take time, and all this time we will observe a decline, the classic example of which is the Great Depression. This is the picture we have in the USA.
What awaits other regions of the world?
Let's start with Latin America. In the XIX - early XX centuries. this region played a role for the United States that China plays today. Production with a high share of low-paid labor, primarily agriculture, was transferred there. As a result, the structure of Latin American society turned out to be quite specific. There was a fairly large number of poor people, as well as a number of oligarchs - those who had a percentage of the business of “selling” cheap labor to the United States. And since they had enormous incomes, a huge layer arose in these countries to serve the oligarchs. Not only servants in the most literal sense, but also cultural figures, architects, artists, army officers, etc. It all ended in the 1980s, when the United States found China for itself and stopped investing in Latin America. As a result, local Latin American oligarchs found themselves in a difficult situation. Since the huge American demand has disappeared, the standard of living of a large part of the population has fallen significantly below the subsistence level. There was a real danger of communist uprisings. And that same middle level, those same officers and professors, began to take power into their own hands and nationalize oligarchic enterprises in order to better redistribute their income. But it was not quite a socialist revolution. Its goal was to redistribute the excess income of the oligarchs while maintaining the existing structure of society. However, it is unlikely that it will be possible to restore it in the form in which they wanted it in the 80s, and the new leaders of Latin America will have to go much further than they initially thought.
Next, Europe. Until recently, Europe thought a lot about itself. But we must understand that the European Union, with all its bureaucracy, with all its social programs, exists through contributions to the EU budget from four main countries: Germany, France, Italy, and Great Britain. Question: where do they get the money? Why, for example, do not Bulgaria or Poland have them? Answer: for a very simple reason - these are the four countries that export goods with a high share of added value to the United States. In a situation where demand for their goods is falling in the United States, Americans are gradually beginning to turn off the tap. And Europe began to understand its dependence on the United States. Why are Germany or France categorically against the creation of a single pool of support for the financial system? Yes, because if such a single pool is created, then Malta, Romania and Bulgaria will have more votes. They understand perfectly well: whoever pays calls the tune. And Germany, England, Italy and France pay. And now, in difficult times, they do not want to drag others down. In a sense, this is the first signal for the collapse of the European Union. Whether they will fall apart or not – we won’t guess from the tea leaves, but in economic terms the prospects for the European Union are very, very gloomy.
What awaits China, India and Russia?
The agrarian-industrial transition has not yet been completed in China and India. A certain number of people are recruited there, they are trained and immediately transferred to a standard of living that meets European standards. Of course, it is not the same as in Europe or the USA, but the standards of consumption are almost the same. And when demand from the United States suddenly disappears, the question arises: what to do with these people who worked to provide it? In India there are approximately 200 million, in China - three hundred. They have already felt a taste of normal life, many have a car, an apartment with separate rooms, and so on. And then they are told: as we refocus on domestic demand, your lifestyle must change. That is, if before you had a margin of one hundred dollars, now it will be three, and for this reason the three of you will live in one room, and in the village. I don’t know what will happen in India as a result of this, but in China, fortunately for this country, they know how to solve such problems. For China, eliminating 15% of its own population as a social force is a standard task that they have already solved many times in history. It will be explained, for example, that due to falling demand, half of the industrial workers must move to the villages. Pay for the first or second, the first stays, the second goes to the village. Dot. By the way, I do not rule out that they will begin to “export” these people outside of China. They will say: guys, go to California, Australia, Russia, settle there, and then, in a few years, we will call you and ask how you are doing there and how you can help China.
That leaves Russia.
In Russia everything is very bad, but for a completely different reason. The whole world has lived on excess money all this time. It was possible to get a loan for any project that could someday make a profit. There was a lot of money, but the efficiency of capital was falling, so if someone came up with something interesting, they immediately gave him money. In our country the situation was exactly the opposite. Since the 1990s The policy of the Ministry of Finance led to the fact that Russian enterprises could not receive a cheap loan. As a result, the share of credit in relation to GDP in our country by 1998 fell to 5-8 percent. Then, while Gerashchenko was in the Central Bank (from late 1998 to 2003), the share of credit in relation to GDP increased to 40 percent. Due to this, we had rapid economic growth. After Ignatiev’s arrival, since 2004, the share of the loan-to-GDP ratio did not grow, but continued to remain at the same 40 percent. Only about half of these loans, or even more, were issued by foreign banks. At the same time, foreign loans were not used to support Russian production, but mainly to support the purchase of imported products by Russian citizens and enterprises. As a result, the share of imports in the economy grew rapidly, and this was all compensated by the redistribution of oil money. As a result, the economy became increasingly dependent on oil. And now our current foreign trade deficit is negative.
In general, since oil prices will fall, this means that we will have a very difficult time in the spring.
How do you assess the results of the G20 meeting in Washington? Is it possible to talk about at least some step towards overcoming the crisis together?
Let's make a medical analogy. The summit was a consultation with a sick person - the global economy. What is the main task of the council? Make the correct diagnosis. Is there a diagnosis in the final document of the summit? He's gone. This means that all observations and proposed (tactical) measures can, in fact, be harmful, and not at all beneficial. In terms of content, the summit was a complete failure. But it has two important consequences. One is tactical. The United States ensured that the declaration spoke of its commitment to free trade and open markets. Which means that for at least a year they will receive world markets as a source of export of their issued dollars to improve the standard of living of their population and support their economy. The second is political. The very fact of holding such a summit shows that the United States is no longer able to monopolize the rules of the game for the world. And if not today, then tomorrow new players will appear on the world economic arena. And it would be desirable for Russia to be among them.
Interviewed by Maxim LEGUENKO
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The fact is that the rules of today's economy took shape during the introduction of money in the form of round pieces made of gold alloy, which happened somewhere in the 6th century BC in the kingdom of Lydia. Then a certain amount of gold was placed in each, which predetermined lifespan the entire economic model based on which humanity began to consider gold.
If there is no supply of new gold, then there is nothing to make new ones from. As we see, the collapse of the existing economic model was inherent in it from the very beginning, since today all the rich deposits of gold have already been developed.
After all, from a certain volume of gold it was possible to mint only strictly limited quantity coins, since the gold content of the first coin set a standard that has become a tradition. That's why people began to think: you have exactly as much money as you get by dividing the available gold by the nominal weight of gold contained in the first coin. After all, so many full-fledged coins can be made from this volume of gold.
Since the volume of mined gold is still limited, there is no way to produce enough money (in the sense of gold coins) to service the trade turnover, which has increased many times over. Paper has long been used as a material for carrying money, and by the middle of the 20th century, gold coins were withdrawn from circulation, as state banks of all countries switched to paper banknotes. Replacing gold with paper, in addition to making the production of monetary units cheaper, finally made it possible to print as much money as the economy needed. But the gold that now lies in bank vaults has again become what it always was - a rare yellow metal.
It took several “world crises”, 2 world wars for everyone to understand that it was necessary to abandon the gold standard, which began with the creation of the Bretton Woods system, when gold was replaced by the dollar, and in 1971 there was a complete abandonment of gold as money .
However, even today many live in the illusion that they can mint as many gold coins as they want with the same gold content as in the first coin - and start the game anew, although even the abandonment of gold and the transition of states to paper money, which can be printed without restrictions - showed that today it is no longer about money, but the whole model needs to be changed.
It turned out that you can only escape once, but you cannot break the patterns. Those rules of the game of money that developed during the invention of gold coins are now returning humanity to the level of development that it should have been without the “era of growth” that was capitalism. And judging by everything, where the regression may stop for a while will be the level of the first half of the 20th century. GLOBAL FINANCIAL AND ECONOMIC CRISISAttention!, as well as online, have been transferred to the page. This page is a summary for the category World crisis. to go to sections and to the theme of the crisis you will find after a short introduction. For further growth, we need to abandon the old rules of the game and change the entire economic model, and not look for new types of money. There is no longer an opportunity to spur the old model, since the negative consequences of stimulating economic growth outweigh all the benefits. For the emergence of new demand and, accordingly, a new round of scientific and technological progress - somewhere you need to create a system of division of labor that exceeds the current level, but neither the elites (politicians) nor the people living in old ideas about nation states are ready for THIS.
CAUSES OF THE WORLD ECONOMIC CRISISA shortage of money paralyzes production, which is not designed to decrease. Manufacturers, in the fight for impoverished customers, are forced to reduce the cost of goods, which, coupled with a shortage of money, generates deflation in the form of an increase in the price of consumer money. In the end, a series of bankruptcies of enterprises begins as excess production capacity. Bankruptcies immediately cause difficulties in the banking sector, dragging the world economy and the financial sector into a contraction spiral. Well-established economic ties are collapsing, causing a shortage of goods in the domestic markets of countries, which states are trying to compensate for by creating import-substituting industries.
The narrowing of the entire global system of division of labor will inevitably lead to the elimination of individual countries, which will try to leave their own borders in order to create a system from a group of countries. Most likely, there will be no time for economic gain - the state will simply solve security issues of providing its citizens with vital products. The world will enter a period of economic wars, the main instrument of which will be the reduction in the value of national currencies, but the result of which will be a catastrophic decline in the standard of living - and primarily in developing countries. It is obvious that people (in the sense of the elites of countries) will somehow fight the complete destruction of the system - at least through the creation of blocs or economic unions of countries, uniting economies into a single economic complex. However, using the example of the European Union, we see how difficult it is to regulate a common shared economy, since it affects the interests of national elites. On the one hand, the EU creates conditions for the growth of the common European economy, but on the other hand, globalization presupposes the loss of sovereignty by the governments of individual countries. The contours of the future society are only outlined, but the way out of the crisis lies in the creation of a new formation. A new one is needed - probably uniting billions of people together, so that it is in it that a division of labor can be created, higher than today. How much more time will pass - maybe centuries, when they will begin to understand that the form of management of society - in the form - only holds back progress. The success of the United Europe showed the right direction - the creation of a United Earth, but the impulse given by capitalism was not enough to complete the experiment.
The existing economic model initially assumed non-stop growth of the system to include people and territories, but the impetus came with the invention of a special form of division of labor that combined the usual deepening division of labor into technological operations with the division of labor in management, known today as “the firm.” This happened in Europe only thanks to the unique circumstances associated with the unformed territorial empire, since, by inheritance from the Roman Empire, two verticals of power were formed in Europe - the dominant Catholic one, and the other secular, subordinate to the first church. The struggle of these power verticals contributed to the liberation of money from connections with power, and in the era of rebellion against the tenets of Catholicism, Protestant ethics appeared in Northern Europe, allowing interest on loans.
Over the course of several decades of constant growth in the world economy, the elites of most countries adopted liberal ideas, and replaced serious economic science with a cloud of contradictory theories called Economics, theories of micro and macroeconomics that are in no way related to each other. This mix from the tangled heterogeneous economic theories he explained to liberals why everything is so good in the rich countries of capitalism. However, the rich only became richer, and the poor did not become rich, and only a general rise smoothed out the inconsistencies. Today everything is changing in the world, because life without regard to Likho ended. Humanity has no chance to overcome the crisis, and to mitigate the consequences of the compression of the division of labor system, decisive action is needed, but liberal politicians unable to take responsibility on themselves, since the slogan “Freedom from all responsibility” is written on their flags.
Even the collapse of the financial sector in many countries will not be able to correct the situation in the real sector of the economy, where maintaining the standard of living requires all efforts to maintain the existing global division of labor. The more people in the system, the greater the volume of production and consumption that can be maintained, since goods will be affordable. While the national elites are poorly aware of this, an example is the increase in interest rates by the US Federal Reserve, which, according to the authors, should contribute to the return of dollars to their homeland, which at the same time bleeds all world trade.
The trouble is that the financial authorities of the leading capitalist countries continue to adhere to the recipes of bourgeois political economy (economics), which can cause a sharp collapse of the entire system. Most likely, hopes for a more or less uniform contraction of the system will not come true, since the national elites do not understand the nature of the real crisis, which, combined with their selfishness, will lead to a sharp acceleration of the destruction of the world economy. In a single system, we must act together. If Russia and other oil producing countries did not receive a certain amount of dollars due to a sharp drop in oil prices, then they reduced demand for products, primarily from China, which in China itself forces a reduction in the production of goods, which leads to a decrease in the need for oil, causing a further decrease in oil prices. Actually, this happens not only with oil, but with all types of raw materials. Thus, the actions of Saudi Arabia, which collapsed the oil market, obviously with the consent of the United States, accelerated the spiral of contraction of the world economy, but the “sinking” economies of developing raw material countries will soon drag the entire world economy with them to the bottom. The question of the possibility of starting wars is often raised, recalling previous experience in overcoming crises. Then it is not clear who the US elite, if it wants to start a world war, will consider as the next world leaders? since today the USA is the undisputed center of the system. What kind of peak is the United States still going to climb? if they are the “top” of the current world economy. It is quite crazy to oppose the center to the rest of the system, unless there is a desire to return the world to the Middle Ages.
Whether someone likes it or not, today - THE WORLD IS ONE in economic terms, at the same time, we see a lack of political agreement among national elites. The idea of creating a global supranational currency is becoming more and more visible, but it was rejected by the US elite. Actually, the search for a new economic model will begin only after the fall in living standards affects the elite itself, when popular discontent raises the question of not just changing elites, but changing the principle of their formation. Revolutions are possible, but they cannot solve the problem until the elites and anti-elites themselves understand that only by changing their essence can they somehow survive as a privileged part of society. And replacing one elite with another will change little. Great Economic CrisisToday came the one that no bourgeois economist can even name. The liberal elites have already forgotten about its existence and “blowed into the ears” of the whole world that under their control there would never be a crisis. However, the longer people who trust economic authorities are deceived, the more destructive the storm that gathers strength in financial bubbles will be. The world economy managed to survive the wave of the 2008 crisis, but since then the protective mechanisms have become so tense that they can break through anywhere.
The end of political economy
The fact is that economics was created to counter Marxist political economy, which studied the laws of capitalism to prove its finitude. Economicism was accepted in leading Western countries as mainstream economic theory of capitalism only because of his adherence to the postulate of the “eternity of capitalism.” believer in the eternity of capitalism- cannot not only talk about his death, but even think about it. However, no one canceled the idea that THERE IS NOTHING MORE PRACTICAL THAN A GOOD THEORY...
Liberal economists simply cannot say out loud that systemic economic crisis not over. Then they will simply be driven away from everywhere as healers deceiving the people with words about the absence of a crisis. Therefore, both the Russian government and the financial authorities, which consist of economists, constantly pronounce like a spell: financial crisis has ended, the economic recovery is steeper than before, everything is fine with us, etc. However, the solidarity of the Russian elite with the world elite will not allow it to move away from the postulates of liberalism, so a way out of the crisis will be sought in the bosom of outdated political economic theories, perhaps even in Marxism. Therefore, which for many reasons could only appear in Russia, there will still be not in demand for a long time power elite.NEOCONOMICS has long exhausted itself - it no longer provides answers to the problems of the modern economy, but Economics has no structure at all, since it is a collection - a mix - of contradictory hypotheses. However, today we can safely say that orthodox theories have been replaced by the basic economic theory of our time. FOR NEW TIMES - NEW THEORY! The page is a summary for the category World economic crisis and has a permalink: http://site/page/ekonomicheskij-krizis Below you will find the headlines of the main articles. | Neoeconomics forecast for Russia Oddly enough, real global crisis provides Russia with an opportunity hold place as the leading country in the world. The global system of economic relations will inevitably collapse due to the crisis. Individual countries, like penguins, will scatter to their own corners. Only a country offering global peace can bring them back together. above national idea, around which like around cursor focus other nations will gather. Russia has experience in building socialism, which we can transfer to other countries, since we “tried it on” in the USSR. However, these are just wishes, since the modern elite of Russia is hardly capable even realize the opportunity and begin the changes of social reconstruction. At the same time it is necessary debunk the successes of Tsarist Russia, which, unlike the USSR, had no basis for becoming a strong economic power. |
Today's Russia falls into the category of middle-income countries only thanks to industrialization in the USSR carried out by the Bolsheviks under the leadership of Stalin. The USSR probably made the last possible breakthrough in history in creating its own technological zone. It is the technological groundwork in the nuclear industry and space sector, coupled with advanced developments in military technology, that makes it possible not to consider our country exclusively a raw material appendage of developed economies.
In which he briefly outlines his Crisis Theory. The report was the result of the development in 1997-2001 of a new theories of structural crisis modern financial system by a group of Russian economists, the main of whom were: O.V. Grigoriev, A.B. Kobyakov and M.L. Khazin.
The report contains only basic provisions of crisis theory in a somewhat simplified presentation, “more or less briefly, without dwelling on details and references, describe this theory for the normal reader.”
To download the text of the report in Word document format, click on the link: Download Khazin's Theory of Crisis
To master a more scientific presentation theories of economic crises you can read a book The decline of the dollar empire and the end of Pax Americana, which A. Kobyakov and M. Khazin released in 2003.
Page Theory of financial crises is part of a section and subsection. At the end of the page I have posted links to others that the author posts in the section Educational program Online World crisis .
To be honest, today all three concepts are, theory of global projects And crisis theory- did not enter science. These concepts are an early version called - neoconomics Khazin, which he still uses in his journalism today. However, even in the form of a working theory, it allows us to give evidence-based forecasts for events in the economy and politics of countries affected by the crisis.
Crisis theory1. IntroductionToday, only the lazy do not talk about the global economic crisis, but as soon as it comes to a clear explanation of its causes, forecasts of its course and, especially, its results, significant confusion begins. At the same time, a fairly complete theory of this crisis was developed by Russian economists O.V. Grigoriev, A.B. Kobyakov and M.L. Khazin back in 1997-2001. It is more or less fully set out in the book: A. Kobyakov, M. Khazin “The Decline of the Dollar Empire and the End of the Pax Americana”, but this book was published in 2003, it is quite large, and requires some, albeit minor, special knowledge. For this reason, in this report I decided to correct this shortcoming and more or less briefly, without dwelling on details and references, describe this theory for the normal listener (reader) and, accordingly, give a more or less accurate analysis of crisis development paths and its main consequences. The statistical graphs attached to this report were taken by the author from weekly reviews of world markets belonging to IT-Invest analyst Sergei Albertovich Yegishyants, to whom the author expresses sincere gratitude for useful discussions in the process of preparing this report. 2. Foundations of the theory2.1. Labor and CapitalCrisis theory is based on two main provisions. The first of them was carefully developed by the political economy of the 19th century as part of the development of the labor theory of value and consists in the fact that the product of labor is distributed unevenly between two factors of production - labor and capital. Capital, in accordance with the basic principles of capitalism, considers the product of labor as its private property, and, as a result, the owners of labor do not receive the necessary compensation for it. Thus, the immanent, inseparable problem of capitalism is the constant accelerated increase in capital. |
The problem, in particular, is that capital exists not so much in the form of money as in the form of assets. And the value of an asset is determined by the market’s desire to purchase it, which, if you follow the purchase chain, sooner or later comes up against final demand, that is, the demand of either the state or consumers. But the latter directly act within the framework of production relations on the part of labor, and the state’s demand also significantly depends on the capabilities of consumers. Thus, the growth of demand under capitalism inevitably lags behind the growth of capital, which, unless special measures are taken, depreciates the latter, both directly, in the form of goods, and indirectly, due to a decrease in its efficiency. The latter is due to the fact that a decrease in the volume of increase in demand in relation to the increase in capital leads to a decrease in the volume of profit for each unit of new capital. An illustration of this thesis (precisely an illustration, the proof was given back in the 19th century) can be seen in Fig. 1
Fig.1. Relative dynamics of GDP, corporate profits and wages in the United States in 1947-1997 in nominal prices.
The solution to this problem for capital is fundamentally important and has been carried out throughout the history of mankind in three main ways. The first arose during the period of classical capitalism, in which crises of overproduction regularly occurred, ensuring the redistribution of assets and the “burning” of excess capital. This method worked effectively, but as the world economy developed, the crises became stronger and stronger, so it was necessary to look for something new.
The second way was export of capital to still undeveloped territories - the corresponding policy received the name imperialism at the end of the 19th century. This method inevitably caused intense competition not only for markets for goods, but also for markets for the export of capital and ended first with World War I and then World War II. Since after the emergence of first the USSR, and then the world socialist system, a systemic threat to the very existence of the capitalist system appeared, it required a much more coordinated policy. As a result, in 1944, the export of capital was institutionalized within the framework of the Bretton Woods agreements, which created both the institutions - GATT, now the WTO, the IMF, the World Bank - that regulate this process, and a system for regulating world finance based on the American dollar pegged to gold and, respectively, controlled by the US Federal Reserve System.
2.2 World division of labor
The second basic element of our theory was the role of the global division of labor, which plays a fundamental role within the framework of the model (paradigm) of scientific and technological progress (STP), which was formed in the late 18th – early 19th centuries and today has spread throughout the world. The fundamental feature of this model is that the next round of scientific and technical progress is inevitably accompanied by a deepening of the processes of division of labor, and they, in turn, require an increase in the volume of sales markets. As a result, the movement of any country on the path of scientific and technological development in the last 250 years required expansion of sales markets its products, that is, as we understand, the markets that it would control.
Accordingly, the number of technologically independent states in the world has been constantly decreasing over the past two centuries. In Europe, back in the middle of the 19th century, we were talking about a dozen truly independent (that is, having the ability to independently develop the full range of technological, including military production) states; by the beginning of the 20th century, there were only 5 of them left (the Russian Empire, the German Empire, the Austro- Hungary, France and Great Britain), in the middle of the twentieth century, not only in Europe, but in the whole world there were only two truly independent states - the USSR and the USA.
Let us note that although the political and social models of the state in the USSR and the USA were fundamentally different, the processes of scientific and technical progress there proceeded almost in parallel, which further confirms that their models of development, scientific and technological progress were the same. Both countries relied on the need to pay off the next round of scientific and technological progress by expanding sales markets, although the technology for using markets (that is, payback) was different for them. But the essence of the process, the financing of scientific and technical progress, due to the burden on consumers (in the USA) or the centralized redistribution of public funds (in the USSR), did not change.
But as the processes of development of science and technology continued, these two world leaders had to face the problems of financing the next stage of scientific and technological progress by the last quarter of the previous century.
3. The crisis of the 70s and “Reaganomics”
The crisis of capitalism in the 70s of the last century was caused, from the point of view of the above considerations, by two reasons at once. Firstly, by this time the problem of recycling excess capital had arisen again due to the exhaustion of regions for the export of capital. Secondly, the cessation of growth of sales markets has sharply complicated the processes of development of scientific and technical progress. It was categorically impossible to allow acute crises of overproduction or war in the conditions of the existence of the world socialist system, and the efficiency of capital began to decline. This immediately affected consumers, as can be clearly seen in Fig. 2, which shows the average wage in the United States since 1950. Note that the data of the last 10 years must be assessed quite critically, taking into account the fact that official inflation figures in the United States have become increasingly underestimated compared to reality.
Fig.2. Average US wages in comparable units.
As a result, a serious crisis began, which was not local, but system-wide in nature. In 1971, the United States defaulted on the dollar, decoupling it from gold, and in 1973 the oil crisis began. Let us note that in the USSR processes similar in content took place (which later received the name “stagnation”), and both sides had to look for a way out of the situation precisely within the framework of solving the problem of increasing the efficiency of capital, ensuring the next round of scientific and technical progress. Let us note that in the USSR the corresponding problem was never solved, which led to the well-known results.
The most important feature of this crisis within the framework of capitalism was the simultaneous presence of depression (that is, a drop in production) and high inflation (the so-called stagflation), a combination that could not exist within the framework of a classical capitalist economy, see Fig. 3. This was due to the fact that the United States was obliged to continue the race of scientific and technical progress with the socialist system and to finance innovative processes at any cost.
Fig.3. Changes in GDP and industrial inflation in the United States.
The solution to the problem was found in the late 70s and is associated with the names of the then head of the Federal Reserve, Paul Walker, and a group of advisers to US President George Carter. It consisted of a paradoxical conclusion: not to reduce the monetary pumping at the expense of emission dollars, but, on the contrary, to increase it! Just direct it not to support capital (for which, in fact, a private central bank, the Federal Reserve System, was created in the United States in 1913), but to directly stimulate final demand, both public and private. From the point of view of the mechanisms of division of labor described above, this decision can be described as follows: if it is impossible to expand sales markets, then it is necessary to increase the efficiency of consumption of each participant in the available markets.
The implementation of this plan, of course, would provide resources for the next “round” of scientific and technical progress, but at the same time it was necessary to solve several related problems. Firstly, to significantly reduce inflation in the consumption sector, since otherwise there would simply not have been much growth in comparable amounts: the growth in consumer spending through credit resources would have been offset by rising prices.
Secondly, it was necessary to ensure that consumer spending was directed towards high-tech industries, since it was their development that was necessary to fight the USSR.
Thirdly, since excess liquidity would still end up in the markets (even if not in consumer markets), it was necessary to provide a mechanism for stimulating the investment process, understanding here by this word its original meaning, that is, an increase in fixed assets of production companies. In other words, so that consumer money, at least in a significant part of it, goes, after all, to development, and not to financial speculation.
And these three problems were solved. Inflation was overcome due to a unique increase in the cost of credit in history. The discount rate was raised to almost 20% (see Figure 4), which fundamentally changed the economic situation in the country, and at the same time strengthened the position of the dollar on the world stage, which was greatly weakened after the default of 1971. At the same time, excess liquidity began to be “utilized” by inflating financial bubbles, that is, a sharp increase in the share of financial assets in their total volume. For this reason, the share of profits of American corporations received from the financial sector began to grow sharply since the 80s of the last century, see Fig. 5.
Fig.4. Discount rate and 30-year mortgage rate in the United States.
Fig.5 Share of the financial sector in total corporate profits in the United States
It is for this reason that “Reaganomics” led to a significant transformation of the world system of capitalism, its transition to the third stage after the classical period and imperialism - the stage of financial capitalism. But, as is clear, an increase in the share of financial assets inevitably required an increase in the credit multiplier, that is, the ratio of the broad money supply, for the USA - M3, to the narrow money supply, cash, the M1 aggregate. The corresponding process is clearly visible in Fig. 6. We draw attention to the decline in the graph in the 90s, associated with the “development” of resources coming mainly from the territory of the former USSR.
Fig.6 Money multiplier in the USA
Note that the corresponding “bubbles” regularly burst (the stock market in 1987, the dot-com market in 2000), but until some point this process was under control, in particular, inflation in the commodity part of the consumer sector grew relatively weakly.
The direction of consumer spending was provided with massive propaganda, ensuring an unprecedented rise in those sectors of the economy that were associated with information technology since the early 80s. In addition, additional resources for the purchase of domestically produced high-tech goods were obtained by exporting the production of consumer goods to third world countries, primarily China and other Southeast Asian countries.
As for the third problem, it was solved precisely because in the early 90s the discount rate was driven to an unattainable height. As can be clearly seen in Fig. 4, from the beginning of the 80s, the rate gradually dropped, monetary policy softened, which stimulated the supply of credit. Note that this also facilitated the increase in the money multiplier, which ensured the use of the financial sector of the economy as a “sponge” that accumulated excess liquidity, preventing it from entering the consumer sector.
Thus, in the medium term, the necessary tasks were solved. Of course, in the long term, the problems of hypertrophied growth of the financial sector should have affected (which is what we see today), but at that time the problems facing capitalism were solved and even the destruction of the world socialist system occurred. Let us note that if the resources that were “pumped out” from its territory were used to pay off the debts created within the framework of Reaganomics, then it is possible that its negative consequences would be compensated. But the very system of receiving income from the issue by the largest banks was so attractive to them, and their role in public policy was so great (remember that traditionally the positions of the Secretary of the Treasury, that is, the Secretary of the Treasury and the chief advisers of the White House in the United States are occupied by representatives of the banking community, not to mention the leadership of the Federal Reserve System) that they did not have the strength to abandon it.
4. Consequences of “financial” capitalism.
The main consequence of the introduction of this system was that for several decades the American economy existed in conditions of constant inflated demand. Which could not help but create an appropriate system for the production of goods requested by the consumer, both material and services. In 2001, the author of this report carried out a calculation of the American economy using input-output balance data for 1998, the purpose of which was to find sectors of the American economy that receive an “additional” source, that is, one that does not have a source within the inter-industry circulation of resources. It was found that the “new” economy sector, which included industries related to the information economy, as well as wholesale and retail trade, while occupying approximately 25% of the US economy in terms of resources consumed, “produces” back into the economy only about 15%, see . Fig. 7.
Fig.7. Share of the “new” economy in investment, GDP and gross output (in percent).
It is clear that the structure of the US economy could not help but change since then, but the general problem of “distortion” remains: a significant part of the US economy exists only insofar as there is non-economic, emission stimulation of demand. You can see it in many indicators, for example, in Fig. 8.
Fig.8. The ratio of Americans' private debt to their real disposable income and the savings rate.
As can be clearly seen, the situation in the American economy began to change dramatically in the early 80s of the last century. But the main indicator of the structural crisis of the US economy is the following graph, see Fig. 9.
Fig.9. Dynamics of the main financial indicators of the US economy in 1959-2006, logarithmic scale, excluding the influence of hedonic indices.
In any normal economy, financial indicators should grow at the same rate - which is what was observed in the US economy until the early 80s. And then the indices split into two groups, which began to separate from each other at a linear rate on a graph with a logarithmic scale, that is, at an exponential rate in practice. An economy with such parameters cannot exist for a long time - since it requires constant additional resources to “cover” the gap.
Note that after 2000, when, apparently, the positive effect of the expansion of markets into the territory of the former socialist Commonwealth ended and a crisis occurred in the stock markets, one of the two clusters on the graph split again. Apparently, this is due to the fact that the United States began non-market support for certain sectors of the economy, directly, bypassing the consumer sector.
It is quite easy to assess the scale of such support. If we take the situation in 1998, then the gap, as we have seen, was at least 10% of US GDP, that is, at that time, about 800 billion dollars a year. If we add to this the increase in government spending, and also take into account all other effects, then we need to multiply this figure by somewhere around 1.5-2. Thus, the monthly resource thrown into the American economy should have been 1.3-1.6 trillion dollars per year or 110-140 billion per month for this period. Since this injection occurs in the United States through the debt mechanism, it should be clearly visible on the graphs of the total debt of subjects of the American economy, the debts of households and the US federal government, Fig. 10:
Fig. 10. Debts of the federal government, households, and total debt of the US economy.
Fig. 11. Debt growth averaged over 5 years.
We see that the order of growth of the debt burden approximately corresponds to the indicated figures obtained from the inter-industry balance sheet, while we have received additional evidence of a structural crisis in the United States - the rate of debt growth consistently exceeds the rate of growth of the American economy. Of course, when analyzing the picture, it is necessary to take into account that at the first stage, the effect of reducing the cost of credit turned out to be more important than the growth of total debt.
Note that since then the US economy has grown by at least 1.5 times, so today approximately $200-250 billion per month is needed to maintain the system in a (relatively) stable state.
5. Mechanisms of crisis development
What consequences could there be from the fact that at least 10% of the country’s economy exists only due to emissions? In the event of its termination, purposeful or objective, this part of the economy must cease to exist. But not only this, since within the framework of the intersectoral balance this part redistributes excess resources to other sectors, which should also die in such a situation. Their scale can be assessed using a coefficient that varies depending on the type of economy, but for our case it can be approximately estimated at 2.5. Thus, a significant part of the American economy, at least 25% according to optimistic estimates and about 35% according to pessimistic estimates, exists only insofar as there is a flow of money of emission origin to support it.
Over the 30 years of the existence of this system, the share of the financial economy increased sharply, and the scale of financial bubbles and structural imbalances reached such proportions that the economy could no longer withstand them. This is expressed in many effects, for example, in the fact that the economy, in particular the market lending rate, has recently stopped responding to changes in the discount rate (see Fig. 4). There are serious reasons to believe that the American economy has long ago begun a decline, which is not entirely correct to call a recession, since this term is usually used to describe cyclical processes in the economy, and the modern depression is of a pronounced structural nature.
But the main thing was that inflation began to rise sharply, including in the consumer sector. The official figures here are not entirely indicative, since the United States is actively underestimating inflation, both through manipulations with the base and through financial “innovations” (hedonic indices), which is clearly visible in Fig. 12.. Its real figures at the end of the year will be as follows: minimum 15%.
Fig. 12. Industrial inflation in the USA.
This situation automatically reduces real consumption in the US by at least the same 15%, which corresponds to a 10% drop in GDP (taking into account that approximately 70% of US GDP is generated by consumer demand). And this decline will continue as long as the rate of emissions exceeds the rate of economic growth, that is, at least until the “excess” part of the American economy is leveled out. At the same time, it is also impossible to stop emissions, which is the cause of inflation, since this is tantamount to the instant death of the corresponding part of the economy.
Attempts to fight inflation in the style of Paul Walker, that is, by raising the discount rate, are also doomed to disaster, since in the context of an overheated financial part of the economy and a debt crisis, this will almost immediately lead to a repeat of the 1929 scenario. Let us note that this crisis will be much stronger than then, since in the middle of the twentieth century there were no structural distortions in the US economy, and now a depression similar in scale (see Fig. 13) will be preceded by the rapid death of the structural “growth”, the scale which, we repeat, ranges from 25 according to optimistic to 35% according to pessimistic estimates.
Fig. 13. US GDP during the Great Depression.
Let us note that the study of consumer demand allows us to give an independent assessment of the decline in US GDP following the results of the first, acute part of the crisis. To do this, it is necessary to estimate the annual growth in total household debt (10% of 14 trillion, that is, about 1.5 trillion dollars) and add to it the part of the drop in demand that will occur due to increased savings. Today their level is around 0, and the historical average is about 10% (in fact, in a crisis this figure will be even higher), see Fig. 8, that is, at least another 0.8-0.9 trillion per year (a tenth 70% of real US GDP of approximately $12 trillion). Thus, even without taking into account the fall in real demand from budgets at all levels, which are also subject to inflationary pressure, the cumulative reduction in annual demand should be at least $2.1-2.3 trillion, or approximately 15% of US GDP. If we apply the same multiplier of 2.5 to this value, we get a figure on the scale of the upper limit of the range determined above from the calculation of the input-output balance. Since our calculations used the balance sheet for 1998, we can assume that this growth was caused by the deepening of the structural crisis over the past 10 years.
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