Adviser to President Vladimir Putin, Sergei Glazyev criticized the economic measures proposed by the Center for strategic research (CSR) under the leadership of the former Finance Minister, Alexei Kudrin, says “Газета.Ru” with reference to the available Glazyev’s letter to Kudrin. According to Glazyev, the implementation of the proposed measures will lead to a deepening of the crisis and the fall in the standard of living of the population.
In the CSR report on the sources of economic growth contains not less than eight errors that will not allow the team Kudrin to cope with the task of developing effective programs to bring Russia out of economic crisis, says Glaziev.
“Dear Alex, if not to get rid of the misconceptions that are quite common among our educated experts who had studied hastily at popular textbooks and blindly trusting the recommendations of the IMF, to develop the economic growth of your group can not”, — quotes Glaziev online edition.
In particular, such errors eyes took Kudrin’s unwillingness to cover the budget deficit “printing press”. “The rejection of the use of monetary emission to Finance the budget deficit is contrary to the standard practice of the advanced countries and the misunderstanding of the nature of modern money”, — said the presidential adviser.
According to him, States the leaders of the world economy now emit the money under its debt obligations, with money issue ahead of economic growth. In countries with poorly developed financial market, a credit issue will become particularly important for economic growth, it is due to her rapid growth, to pay for investments, and are “all jump from backwardness to the leaders,” wrote Glazyev.
In Russia, according to Glazyev, the financing of investments is carried out only at the expense of own funds of enterprises, as well as reduced foreign loans and investment, which “makes it impossible to diversify the economy and its translation on the trajectory of the balanced and qualitative growth”.
“The underestimation of the importance of credit for financing of innovative and investment activity associated with a naive faith in the theory of market equilibrium. In fact, modern economy never reaches an equilibrium point and do not even strive for it,” said Glazyev, noting that the neglect of the role of monetary policy in ensuring economic growth limits its super-profitable industries like the oil industry and chemical-metallurgical complex at the stagnation of other industries.
Error Kudrin, the adviser of the President believes and the desire to reduce inflation. “In terms of falling output and investment to achieve lower inflation only by reducing income, which leads to a deepening of the crisis, the deterioration of the economy and the falling living standards of the population. It is to such consequences will result in the realization of your proposals,” the letter reads.
According to Glazyev, for each economy there is an optimal level of inflation, and the more primitive its structure”, so the level is higher. The best for Russia Glazyev believes the inflation rate significantly above the benchmark of 4%, which the Bank plans to enter in 2017. Attempts to achieve this “guideline”, according to Glazyev, will inevitably be accompanied by a decline in production and, consequently, the persistence of high inflation.
“The offer you program this level can be in principle unattainable,” says Kudrin, Putin’s adviser.
Misconception the eye also refers to the confidence in the inverse relationship between inflation and GDP growth.
The author of the letter also criticizes the proposal to reduce budget spending and offers at least twice to increase budget expenditures on education and science. In addition, Glazyev believes the team Kudrin has not learned lessons from the mistakes made during the “liberation” of the ruble, which, according to him, foreign exchange segment of the Moscow exchange became the main center of profit generation that contributed to the decline in investment activity and the retraction of the economy in the stagflation trap”.
In early 2016, Glazyev, who offered earlier to fix the exchange rate and keep it at a “reasonable level” over the next few years, lambasted the policy of the Central Bank. Moscow exchange has become a primary profit center in the country, through which in the past year with operations in two times more than the GDP in the country, five times more than the volume of exports or imports. This is despite the fact that economic activity in the country falls,” — said Glazyev, explaining that the exchange “pumped money banks, pulling them from the real sector, where the profitability of 5-7%”.
Earlier Glazyev said that the economy is “off the growth trajectory and fell into a crisis” due to “gross errors” of the Central Bank, and to launch the “economic miracle” would be sufficient to carry out the issue, ensuring the inflow of funds into the real sector of the economy. According to Glazyev in this approach, GDP of Russia objectively needs to grow by more than 7% per year, and the level of industrial production is not less than 10%.
At the end of may 2016 Alexei Kudrin said that the proposals of his opponents for the “controlled issue” and the imposition of restrictions on currency transactions do not take into account the real processes in the economy and will lead to lower economic growth.
In turn, representing the “United Russia” the head of the Duma Committee on budget and taxes Andrey Makarov criticized the proposal as Kudrin and the Glazyev. According to councilors, both of them pulled Russia in the past, only Kudrin in “yesterday”, and eyes — “the day before yesterday”.