Central bankers suppressing Russian Economy

Inerview with Evgeny Fedorov, Deputy, Russian Parliament 7 November 2014

Q: I would like to understand what influences the exchange rate of the ruble, and how.

On the web-site of the Central Bank, they post their accounts. On year ago our currency reserves amounted to US$522 billion. Currently we US$454 billion, which means we have reduced them by around US$70 billion. It's not a huge difference.

Evgeny Fedorov:

We haved spent 10% of our foreign exchange (FX) reserves. Before that we spent 2 years increasing them by 10%. What does that change? It's a normal 'respiration'. It's an overflow mechanism. It's a dreadful colonial system, but it does at least protect stability.

How to develop the country?

What's needed is that the Central Bank switch to the operating principles of the central banks of the so-called 'developed countries'. It doesn't mean changing the people, but the principles.

The key principle is low interest rates.

Look at the English central bank, or the Japanese, or all the European ones - French, German, Portugese, Polish, at the European Central Bank (ECB), the American Fed - they all operate on the principle of low interest rates. They tie the currency to their own national wealth and their economy, and release it into their economy, and into ours, too, in the form of invesments made at 0% interest financing.

Our Central Bank, in their own words, operates on the principle of “developing countries and emerging markets”. It means they maintain high interest rates, while not releasing national currency within the country. Consequently, domestic investment is forbidden, only foreign investment (coming into Russia) is permitted. This is indicative of what they call a “developing nation”.

We call it a sign of colonial status, i.e. this is how it is done in colonies, where investment flows from the metropole. This is how a colonialist economic system is set up.

Q: The web-site of the Central Bank shows the interest rates for their operation. It's all documented, including the changes in the various interest rates.

What is interesting is that I looked at the long-term-financing. For some reason, all forms of credit are given either for one day, or - here we have three months. But anything longer than that, say for two years, is a credit secured with gold, i.e. if I have gold, then they will give me money for two years. Or else credit secured with financial assets or by a guarantor, and so on ...

Evgeny Fedorov:

That means there is no credit.

If you have gold, then that already is money. In other words, you have money, and they have allowed you to take out credit, and pay interest on this credit for the money you gave your creditor. Well, that's not credit. That's just exchanging securities. In exchange for your gold, you got credit, as they call it, which you have to pay back, moreover with interest. You could just sell your gold, and receive the same - without any credit. You can't call this credit.

And why is it for one day? Very simple : our Central Bank has organized the operation of banks only for cash-flow, i.e. to facilitate daily operations.

Let's say you are a retailer. You want to sell some refrigerators. First, you have to buy the refrigerators. So you took out credit, bought the refrigerators, sold them a week later, then re-paid the credit. But that's not investment.

Investment means construction, And that takes 3-5 years. If you want to build something, you have to go to a German bank, or a Polish or Czech or Portugese one. They would - before the sanctions - give you credit at 4-6% interest. They issued credits for Russia at 4%.

But a Russian bank cannot do that.

So we allow Portugese banks to invest in Russia at 4% interest, which they do. We have US$700 billion of foreign borrowing in this country, including for the purpose of investment. But Russian banks are not allowed to do so - it's institutionalized.

In effect, the Central Bank forbids Russia from investing in herself. Let that be clear. It (the Russian Banking system) only exists for cash-flow not for investment.

In order to launch investment domestically, one very simple thing has to be done - lower the interest rates to zero - i.e. align the Russian banking system with, say, the Czech or Portugese or Greek one, or whatever - what would be the most pejorative in terms of credit systems, say - Romanian. It's the same in all Eastern European countries. Align us with the Romanian economy, by allowing Russian banks to invest money in the country.

Lower the interest rates to zero, scrap Basel III [1], reduce the yield to 2-3%, as they have done. This is nothing new. There will come a stream of money into the country. We have already worked out that this stream of money would be a minimum of 25 trillion rubles. Now, with the ruble falling, it's 30 trillion. Why 25-30 trillion - and that's only the first year? Because that is the current volume of foreign credit, i.e. 25-30 trillion rubles is the equivalent of the US$700 billion of foreign credits that we have now.

This amount could, of course, be emitted by the Central Bank - not additional money into the economy, but substitution for foreign credits. It means that in place of dollars, credit will be issued in rubles - in the same amounts, under the same conditions. That will mean zero inflation, and the start of economic growth.

It means that whereas yesterday Volkswagen in Kaluga was owned by the German bank, which issued it credit, today it will be owned by one of 300 Russian banks. That's all. The owner is switched. Whoever issued the credit is the owner of production. It means that nationalization takes place, which will automatically bring down inflation to zero, and start a process of investment within the country. As happens in other countries.

However, unlike the impoverished Japan, where this happens, or impoverished England, or other countries, Russia has one third of the world's wealth. The ruble will be in demand because it is backed by enormous growth potential. People put their confidence in the potential for growth, not in the economy as such. This potential is backed by one third of the world's wealth, which didn't appear out of nowhere but was created by our ancestors, thanks to the huge territory [of the Russian Federation]. It will mean demand for the ruble not only within Russia but around the whole world, as a reliable currency, which is not tied to the dollar like now, but tied to the national economy and natural resources.

We are talking 25-30 trillion rubles in the first year alone. and in the second year another 25 trillion - easily, because it will fire up national production, bringing rapid growth. Imagine pumping into the economy, in place of dollars, 25-30 trillion rubles - that would be all at once starting to build tens of thousands of factories, where, of course, there would be jobs and people doing them - first the construction workers, then the factory workers. You can start buying technologies. People start getting wages. Moreover, in order to attract workers, the pay would have to increase. Wages is how they attrract people.

So that means not only economic growth, but also growth in the social sphere in the very first year. In the first year - in the areas of investment and manufacturing. In the second year - across the whole economy. There's nothing clever about it. It's an automatic template that works in dozens of countries around the world.

This template is called the printing machine - but for oneself - not for some uncle, like England prints for us. Impoverished England prints money for Russia. Consider that! England, poor as a church mouse, having nothing but a printing press, prints money for Russia, and builds factories in Russia for that money. WTF? For wealthy Russia - which has one third of the world's wealth. The whole system needs to be turned on its head.

However, in order to change the system for you, the political issue first has to be addressed : the fifth column, the Central Bank. And the political issue is tied to the military issue of 1991 : Russia, Soviet Union, lost the war, pays the tribute, and is administered externally - this is written into the Constitution [2].

Next you have to choose : whether to go down the path of the legitimacy of a national leader.

Why do I get annoyed by peoples' disloyalty? Putin is the 'President', but that's a foreign word. Any 'president' has two functions.

One function is guarantor of the constitution, which means a notary. What is this function? Decisions are made by a certain system, by certin powers, or clans if you like. The president's job is to ensure that those decisions were mde in accordance with protocol, i.e. that there was no violation of the constitution. Norminally speaking, it means ensuring that a law was voted for by a majority, issuing an order to obtain the signatures.

He's just a guarantor of the procedural aspect. He doesen't have the right to exercise governance. You can't name a single case where the president said, “do this” and someone did it. If you think about that, it's never happened.

Q: Why not? Everyone knows that he gives orders.

Evgeny Fedorov:

When was that? Dozens of times he has ordered the Central Bank to lower the interest rates. The Central Bank couldn't give a hoot for his orders from the church tower on high.

Moreover, they do so openly, in a misconstrued way. The President gave them the order at the State Council, after convening the governors. Two weeks later the Central Bank was holding the forum “Russia Calling”, where they publicly stated (I watched the interview with the CB's leadership) :

“As Russia has a developing economy and market, we have decided that the base rates are suitable for us.”

Translation : they don't give a hoot for the President.

But a month later they say,

“Oh, now we're not happy with the interest rates, they're too low.”

The President says, “Lower the interest rates.”

The CB says, “We're going to raise them.”

And they did. So who's in charge here?

By the way, they raised rates absolutely legally.

Because the Central Bank is subordinated to Americans, not to the President of Russia. The Americans gave the command - the CB raised rates.

Likewise they have given the command to impose sanctions and to weaken the Russian economy. That's it. They called in the advisory firm Oliver Wyman [3] to consult with the CB, after which they later raised rates and sent the Ruble crashing.

That, and all the other stuff, is the action of an enemy. They're acting just as an enemy would. How do I know they will keep raising to 50 or 60? Because they are the enemy. [4]

And I know what the enemy will do to strike us harder. Like in Ukraine, the enemy will go all out to burn down towns with their “Grad.” Here the Central Bank will go all out to burn down the Russian economy. Whatever they can burn down they will. Then, when people start rebelling, the CB leadership will just gather their things and emigrate. That's it - that's their plan.

Q: All right. Regarding the Central Bank credit at the key interest rate: the term of these credits is from 1 to 6 days, so just a week. What is the point of raising this key interest rate if the term is one week, which is nothing?

Evgeny Fedorov:

The role of the Central Bank is not to provide money into the national economy. Or, if they do provide money, then just a little to relieve cash-flow. That's their function.

Lending money at a high interest rate is not the objective of the high key interest rate. The objective is to create a barrier, a fence, between the currency market, where dollars, euros, and rubles circulate, and the Russian economy. The objective is not to allow more rubles to enter the Russian economy. Why [not]? In order to reserve that space for the dollar. The Central Bank doesn't issue rubles, so that that space can be occupied by dollars. What is this US$700 billion of foreign credits in Russia? It's now the equivalent of 30 trillion rubles.

And how much cash is in circulation? Just 7 trillion rubles. Currently, the volume of dollars in Russia is 4 times the value of ruble notes. Then the question is:

“What currency is used in Russia?”

If the ruble volume is one fourth of the foreign currency volume, then whose territory is this, exactly?

Q: Back in the 1990s everyone was setting payments in dollars.

Evgeny Fedorov:

And so it is today. But now the dollars have gone into investments. Who owns this territory then?

It's occupied territory. They used the ruble, just as Hitler in his day issued the occupier's Reichsmark. My father was a boy during the occupation. He left me those marks, which I have at home somewhere. The occupier's Reichsmark was a derivative of the German mark, issued specifically for the occupied territory.

Likewise, the ruble has been issued for the occupied territory, in small quantities - one fourth. If you compare with cash, it's about half.

Q: So why raise the key interest rate? What will that achieve?.

Evgeny Fedorov:

It will achieve the reinforcement of the barrrier. Let's say you're walking along a fence. Behind the fence there is some raging [mob], namely the people of Russia, who want to live. Then you observe,

“It's a bit on the low side. People could jump across, if hunger is severely affecting them. We need to preemptively raise it by 1-2 meters.”

That's what it is. In the 1990s the interest rate was 250%, because hungry people were making a big fuss - so they had to erect a huge fence.

Now it's lower. Then they check if it needs to be raised again, which they did.

Q: What does it mean - that the banks will borrow less from the Central Bank? Only for one week?

Evgeny Fedorov:

They are not borrowing money at all. The one-week term is another limiting factor. They are only borrowing from the Central Bank at high rates for one week in order to cover the cash flow a bit, that's all.

They opened the fence a little ... or, rather, threw a little over the top, but saying,

“Chuck it back across tomorrow - adding the interest.”

It's only small quantities to cover the banks' cash-flow, that's all.

Q: So you're saying that our Central Bank is not lending any money into our economy whatsoever?

Evgeny Fedorov:

Of course [not], that's how it's meant to operate.

Q: Even by their own data it's clear they cannot be lending with these interest rates.

Evgeny Fedorov:

At last - you actually started reading the documents. We have been talking about this for 20 years.

This is not our Central Bank. It's a foreign Central Bank on Russia's territory. Wake up! I'm actually quoting the law on the CB, where it says, let me repeat again: The Central Bank has nothing to do with the Russian Economy. Not one word, not one line of the law says that [it does].

What it does say is that the CB is subordinated to the United States of America, because it complies with international agreements.

As if that wasn't enough, it says that the CB is a subsidiary of the IMF, because it is a depository.

All kinds of stuff is written into this law. It wasn't made by us. The Central Bank on Neglinnaya street is a foreign bank in Russia. Once you see that, then the whole picture comes into view. It's behavior is entirely logical.

Along with the US government, it is participating in the strangling of the Russian economy and state, in preparation for a rebellion against Putin - that's its role. This is the fifth column.

The Maidans and the tires on the street - that's the completion of the process.

Preparation of the process requires that the agents of the US, the fifth column, lower the standard of living. Here arises the question, why are they not stabilizing the ruble?

Look, the US Ambassador has his plan, which has worked successfully for him in Geogia, Ukraine, and so on. His plan contains the instructions to his agents and [to] the fifth column. Here's what it says:

“Central Bank - bring down the ruble. Raise the interest rates. Prevent money from flowing into the economy.”

What's that for? In order to freeze the construction that is taking place.

“US Fed and their orgnizations - stop the flow of funds into Russia on the basis of sanctions.”

i.e. foreign loans. In other words, ensure that the Russian economy cannot obtain money, neither from the CB, nor from abroad, nor from anywhere, so that it dies, i.e. there is nothing to eat and it simply ceases to exist.

That is all done point by point.

“Livanov has his tasks wih regard to the Ministry of Education.”

“Moscow's Mayor's Office (the fifth column there) - arrange for the White-Ribbon protestors to have access to the streets in order to prepare a Maidan, while denying access for the national liberation movement or patriotic groups.”

That's what it says. Next point:

“Moscow's Mayor's Office - arrange for the mass lay-off of categories of citizens, for example doctors, in order to make discontented people out of them.”

Then the civil servants of the Mayor's Office report to the US Ambassador:

“We've completed this part - dismissed several tens of thousands of people.”

Moreover, this is intentionally done in a vulgar way, and at this time, not a week ago or half a year ago, when things were calm. This is to create discontent among them.

Then they prevent patriots from taking to the streets, but bring out the White-Ribbon protestors and the indignados onto the streets. For exmple: those very doctors, who obviously could not have assembled without the efforts of the City. Moreover, they were invited onto the street by organizations which no-one had ever heard of, which were set up literally just prior (to the demonstration), i.e. it was obviously prepared by officials of the city. It is so obvious.

This is the plan unfolding for a Maidan in Russia. Literally point by point: 1, 2, 3, 4, 5. On the other side Putin leads a protest on Tverskaya. Among the organizers - the National Liberation Movement (NLM). We have 160,000 people. Our mobilization system works by SMS broadcast, via the Portal and on the Internet. Think about this: on the basis that we called out NLM members to attend a protest organized by the President of Russia, our web-site was cut off by the Ministry of Communications and the Communications Regulator - on those very days. Not only our web-site, but other organizations' too. Why? In order to prevent Putin from bringing out people into Tversaka Square.

This is how the fifth column works. Everyone has their role. So after they did that, the US Ambassador gave them a check-mark. Now Mr Volin (Ministry of Communications) and Mr Seslavinsky (Federal Agency on Press and Mass Communications) have been told by the US Ambassador that they are guaranteed asylum in the US, once the bloodbath begins. That's it - each decides their own fate.

This is how the fifth column works. I know that over 3,000 of our NLM people attended, and across the country there were 10,000 of them out. In total the turnout was 75,000 people. But if it weren't for the actions of the fifth column, it could have been not 75,000 but 100,000.

That's not too many either, but the battle continues. On all fronts. A system is in operation here, preparing a coup in Russia.

Next: the US State Department, the lowering of the oil price.

They can do this for a maximum of half a year.

How do we know they will attempt a coup d'etat in the Spring? Because they cannot keep the oil price down for more than half a year.

Why not? Because that would boost China and create problems for their allies - Saudi Arabia, and so on, who have explained:

“OK, Obama, we will carryout your instruction, but only for half a year, maximum.”

They are hurrying, because they have only half a year. Therefore the CB didn't lower the ruble's value over a longer period, like they did for a year before, they started hammering it every day. Because of the urgency to prepare a Maidan in Moscow. They only have until Spring.

By the Spring they need to:

  • organize wokers' protests, stir up rebellions;
  • create lots of hungry people with empty pans;
  • get people banging helmets on Gorbaty bridge.

They need to get this done in the next 3-4 months, otherwise they'll be out of time, out of options. That's why everyone is making maximum effort.

Obviously the Central Bank will get burned for its role in this campaign - by hook or by crook.

Clearly, Putin at some point will send in the OMON [5] elite police to remove the fifth column, once the situation is miserable.

That's what I think will happen. But they're running out of time, and not even looking after their agents, like Simonovsky and others.

Q: The CB chief, Nabiulina, hasn't been heard or seen lately.

Evgeny Fedorov:

They've started kicking her.

Q: Locked her away somewhere.

Evgeny Fedorov:

What's ineresting is that the CB's Legal Director, Sergei Golubyev, the one who was busy signing all those documents, has quit. Because he realized which way the winds are blowing, that there will be criminal proceedings, and best to get out early.

reposter's notes


The Constitution of Russia, first section, chapter 3,

Article 75

  1. The monetary unit in the Russian Federation shall be the rouble. Money emission shall be carried out exclusively by the Central Bank of the Russian Federation. The introduction and emission of other currencies in Russia shall not be permitted.
  2. Protecting and ensuring the stability of the rouble shall be the principal function of the Central Bank of the Russian Federation, which it shall fulfil independently of other State governmental bodies.
  3. The system of taxes paid to the federal budget and the general principles of taxation and levies in the Russian Federation shall be determined by federal law.
  4. State loans shall be issued in accordance with the procedure specified by federal law and shall be floated on a voluntary basis.
On the Central Bank of the Russian Federation (Bank of Russia)

Article 22

The Bank of Russia shall not be entitled to extend loans to the Russian Federation Government to finance the federal budget deficit and buy securities at their primary placement, except for those cases stipulated by the federal budget law.

The Bank of Russia shall not be entitled to extend loans to finance deficits in the budgets of the government extra-budgetary funds, budgets of the constituent entities of the Russian Federation and local budgets.

[4]15 December 2014, 1.00 USD = 58.2113 RUB