Written by Paul Craig Roberts; Originally appeared on paulcraigroberts.org
This is the lecture I would have given if I had been able to accept the invitation to address the St. Petersburg International Economic Forum in Russia this weekend.
Executive Summary: From the standpoint of Russia’s dilemma, this is an important column. Putin’s partial impotence via-a-vis Washington is due to the grip that neoliberal economics exercises over the Russian government. Putin cannot break with the West, because he believes that Russian economic development is dependent on Russia’s integration within the Western economy. That is what neoliberal economics tells the Russian economic and financial establishment.
Everyone should understand that I am not a pro-Russian anti-American. I am anti-war, especially nuclear war. My concern is that the inability of the Russian government to put its foot down is due to its belief that Russian development, despite all the talk about the Eurasian partnership and the Silk Road, is dependent on being integrated with the West. This totally erroneous belief prevents the Russian government from any decisive break with the West. Consequently, Putin continues to accept provocations in order to avoid a decisive break that would cut Russia off from the West. In Washington and the UK this is interpreted as a lack of resolve on Putin’s part and encourages an escalation in provocations that will intensify until Russia’s only option is surrender or war.
If the Russian government did not believe that it needed the West, the government could give stronger responses to provocations that would make clear that there are limits to what Russia will tolerate. It would also make Europe aware that its existence hangs in the balance. The combination of Trump abusing Europe and Europe’s recognition of the threat to its own existence of its alignment with an aggressive Washington would break the Western alliance and NATO. But Putin cannot bring this about because he erroneously believes that Russia needs the West.
America’s Fifth Column Will Destroy Russia
If the neoconservatives had self-restraint, they would sit back and let America’s Fifth Column—Neoliberal Economics—finish off Russia for them. Russia is doomed, because the country’s economists were brainwashed during the Yeltsin years by American neoliberal economists. It was easy enough for the Americans to do. Communist economics had come to naught, the Russian economy was broken, Russians were experiencing widespread hardship, and successful America was there with a helping hand.
In reality the helping hand was a grasping hand. The hand grasped Russian resources through privatization and gave control to American-friendly oligarchs. Russian economists had no clue about how financial capitalism in its neoliberal guise strips economies of their assets while loading them up with debt.
But worse happened. Russia’s economists were brainwashed into an economic way of thinking that serves Western imperialism.
For example, neoliberal economics exposes Russia’s currency to speculation, manipulation, and destabilization. Capital inflows can be used to drive up the value of the ruble, and then at the opportune time, the capital can be pulled out, dropping the ruble’s value and driving up domestic inflation with higher import prices, delivering a hit to Russian living standards. Washington has always used these kind of manipulations to destabilize governments.
Neo-liberal economics has also brainwashed the Russian central bank with the belief that Russian economic development depends on foreign investment in Russia. This erroneous belief threatens the very sovereignty of Russia. The Russian central bank could easily finance all internal economic development by creating money, but the brainwashed central bank does not realize this. The bank thinks that if the bank finances internal development the result would be inflation and depreciation of the ruble. So the central bank is guided by American neoliberal economics to borrow abroad money it does not need in order to burden Russia with foreign debt that requires a diversion of Russian resources into interest payments to the West.
As Michael Hudson and I explained to the Russians two years ago, when Russia borrows from the West, the US for example, and in flow the dollars, what happens to the dollars? Russia cannot spend them domestically to finance development projects, so where do the dollars go? They go into Russia’s foreign exchange holdings and accrue interest for the lender. The central bank then creates the ruble equivalent of the borrowed and idle dollars and finances the project. So why borrow the dollars? The only possible reason is so the US can use the dollar debt to exercise control over Russian decision making. In other words, Russia delivers herself into the hands of her enemies.
Indeed, it is the Russian government’s mistaken belief that Russian economic development is dependent on Russia being included as part of the West that has caused Putin to accept the provocations and humiliations that the West has heaped upon Russia. The lack of response to these provocations will eventually cause the Russian government to lose the support of the nationalist elements in Russia.
Putin is struggling to have Russia integrated into the Western economic system while retaining Russia’s sovereignty (an unrealistic goal), because Putin has been convinced by the element in the Russian elite, which had rather be Western than Russian, that Russia’s economic development depends on being integrated into the Western economy. As the neoliberal economic elite control Russia’s economic and financial policy, Putin believes that he has to accept Western provocations or forfeit his hopes for Russian economic development.
Russian economists are so indoctrinated with neoliberal economics that they cannot even look to America to see how a once great economy has been completely destroyed by neoliberal economics.
The US has the largest public debt of any country in history. The US has the largest trade and budget deficits of any country in history. The US has 22 percent unemployment, which it hides by not counting among the unemployed millions of discouraged workers who, unable to find jobs, ceased looking for jobs and are arbitrarily excluded from the measure of unemployment. The US has a retired class that has been stripped of any interest payment on their savings for a decade, because it was more important to the Federal Reserve to bail out the bad loans of a handful of “banks too big to fail,” banks that became too big to fail because of the deregulation fostered by neoliberal economics. By misrepresenting “free trade” and “globalism,” neoliberal economics sent America’s manufacturing and tradeable professional skill jobs abroad where wages were lower, thus boosting the incomes of owners at the expense of the incomes of US wage-earners, leaving Americans with the lowly paid domestic service jobs of a Third World country. Real median family income in the US has been stagnant for decades. The Federal Reserve recently reported that Americans are so poor that 41 percent of the population cannot raise $400 without selling personal possessions.
Young Americans, if they have university educations, begin life as debt slaves. Currently there are 44,200,000 Americans with student loan debt totalling $1,048,000,000,000 — $1.48 trillion! https://studentloanhero.com/student-loan-debt-statistics/
In the US all 50 states have publicly supported universities where tuition is supposed to be nominal in order to encourage education. When I went to Georgia Tech, a premier engineering school, my annual tuition was less than $500. Loans were not needed and did not exist.
What happened? Financial capitalism discovered how to turn university students into indentured servants, and the university administrations cooperated. Tuitions rose and rose and were increasingly allocated to administration, the cost of which exploded. Today many university administrations absorb 75% of the annual budget, leaving little for professors’ pay and student aid. An obedient Congress created a loan program that ensnares young American men and women into huge debt in order to acquire an university education. With so many of the well-paying jobs moved offshore by neoliberal economics, the jobs available cannot service the student loan debts. A large percentage of Americans aged 24-34 live at home with parents, because their jobs do not pay enough to service their student loan debt and pay an apartment rent. Debt prevents them from living an independent existence.
In America the indebtedness of the population produced by neoliberal economics—privatize, privatize, deregulate, deregulate, indebt, indebt—prevents any economic growth as the American public has no discretionary income after debt service to drive the economy. In America the way cars, trucks, and SUVs are sold is via zero downpayment and seven years of loans. From the minute a vehicle is purchased, the loan obligation exceeds the value of the vehicle.
The Wall Street Journal reports that Mike Meru, a dentist earning $225,000 annually, has $1,060,945.42 in student loan debt. He pays $1,589.97 monthly, which is not enough to cover the interest, much less reduce the principal. Consequently, his debt from seven years at the University of Southern California grows by $130 per day. In two decades, his loan balance will be $2 million. https://www.wsj.com/articles/mike-meru-has-1-million-in-student-loans-how-did-that-happen-1527252975
If neoliberal economics does not work for America, why will it work for Russia? Neoliberal economics only works for oligarchs and their institutions, such as Goldman Sachs, who are bankrolled by the central bank to keep the economy partially afloat. Washington will agree to Russia being integrated into the Western system when Putin agrees to resurrect the Yeltsin-era practice of permitting Western financial institutions to strip Russia of her assets while loading her up with debt.
I could continue at length about the junk economics, to use Michael Hudson’s term, that is neoliberal economics. The United States is failing because of it, and so will Russia.
John Bolton and the neocons should just relax. Neoliberal economics, which has the Russian financial interests, the Russian government and apparently Putin himself in its grip, will destroy Russia without war.
the conclusion is correct…we are heading towards nuclear war….only here again the writer and others still believe that russians/Putin are stupid; germany and merkel are stupid etc…. NO…they are all not stupid…they all including Russia/Putin play out the jewish agenda of a one world government under jewish satanic leadership. Now directly to you Mr. Roberts….. did you ever have history or geography in your school?do you read history literature? I doubt it….lets take the great nation of RUSSIA.Russia was taken over by jews(I know people will say no its zionists…one more time donks…you cannot be a so called zionist if one does not believe in the Talmud.Period.Talmud states”All non jews are Gojim, all non jewish women are whores”) in 1917…..That was the so called Russian Revolution.Its in all history books…no secret…..The jews made a deal with germany at that time…..the germans will let the train(which was completly sealed off) move through the german empire all the way to Russia.In that train was Lenin and his jew companions with 20 million dollars in gold.In exchange, the jews promised to end the war in the east.The peace treaty from Brest Litowsk.The war ended in the east. Just from 1917-1922 over one million ethnic russians were executed.From 1922-1938 close to 20 million russians were executed.Nearly 1000 russians per day.All priests were executed, churches burnt down.It was a total jewish takeover of the russian nation.Thats all in history literature. Ever since Russia is 100% controlled by jews. Can anybody in his right mind seriously state that the united states of america is not controlled by jews?ofcourse not….in the us its common open knowledge….the brain washing machine hollywood is 100% jew controlled…the monetary system is 100% jew controlled….the mainstream media be it tv,radio newspapers is 100% jew controlled…..thast all no secret anymore… Just take a look which countries see Israel as a legal nation and which countries say the holocaust really took place…..all of them with the exeption of Persia,syria and NK. Mr. roberts is pointing out that putin seems to always back down when the going gets tough, because he does not want to break with the west..lolololol hes not backing down..he recieves orders,just as trump or merkel or macron….look how childish your conclusion is.Do you seriously think that, lets make it for fun; if russia was a nation conttrolled by russians and putin, they could not handle ISRAEL and its miniocore bs military? are you high? Thats an insult to all humans which are able to THINK and use their brains…….Israels military is bullshit, laughable, in compared with the russian military and nation So if thats the truth(hope nobody makes a mockery out of himself by challenging the truth), there can be only ONE CONCLUSION as to why Putin/russia is constantly backing off when it comes to israel and their FREE PASS to bomb everything they want in syria.The JEWS control him/them..
I agree with all of your comment except that President Putin is controlled by Jews. In my opinion he is pressured by Jews, particularly the Khazar fake variety .
President Putin plays a skilful game in a contest where the Jewish pressure is most often relieved by the greed and violence of that cult. The EU/US particularly regards Jews as sacred cows who can wander wherever they want as they piss and shit on others whilst stealing ‘grass’ to eat.
This Hollywood brainwashing is increasingly being questioned and in time there will be another Pogrom that even if not a final solution, will likely strip the Zio Cult of its power for a few hundred years. :)
I used to almost admire this bloke and although I didn’t agree with everything, I could at least visualise why he was saying certain things.
But recently, I am disagreeing more and more, with his analysis and in some instances I am at a total loss, as is the case after reading the above.
The US problems are highly exagerated but comparing their gap between middle class and oligarchy with Russian gap between their middle class and oligarchy makes USA look like an egalitarist society.
I think that Russians don’t understand and underestimate the danger they face in long term.
Given their history, that is absolutely impossible. You misinterpreting their actions is not their problem.
Given their history, it hight probable.
Didn’t Russians who sold Alaska, lost Poland, Ukraine, Romania, …. Now, Syria ????
If their mistionterpret their own actions and are losing, it’s not my problem.
Just don’t expect others countries to rely on Russia and wait for USA to come after you when you will be alone.
america can stick its fifth column where the sun dont shine.
and pcr should really go home.
I am in absolute agreement with Paul Craig Roberts. Also, quite certain of President Putin who should personally read that knowledgeable-good-will article twice! This is, no doubt to my minds, the best advice ever addressed to the President of Russian Federation.
– List of countries by foreign-exchange reserves –
+1.4% is very weak growth in such little economy as russian.
– Oil and natural gas sales accounted for 68% of Russia’s total export revenues –
Much more sad fact.
Your reply doesn’t make sense.
Notjhing creative. Only mining.
Your reply doesn’t make sense. –
– countries by natural gas proven reserves –
It looks to me like Russia’s economic performance is superb. With low debt, unemployment, inflation, strong long term strong economic growth, The planet’s fifth largest foreign reserves, aka cash in the bank. And the planet’s largest proven gas reserves and highest oil production.
PCR can talk economic theory all that he likes, what matters is the end result. What would Russia’s economy look like using PCR’s model? Probably not as good.
Jews are a subversive 5th column everywhere that they are. And with the planet’s 6th highest population of them, Russia is vulnerable to them. The density of Jew infestation in Russia is low compared to places like the US and Palestine. But given their history, their threat to Russia is high. And with a different administration, they could damage Russia like a cancer.
Judaism should be outlawed and the planet humanely dejudified to create a Jew free world that will be much better for humanity.
– Jewish population by country –
Moves are already being made to circumvent the Rothschild Russian central Bank, as well as setting up independent methods for credit clearing bypassing SWIFT the Russians are setting up an alternative for the entire planet to bypass the Rothschild judaic debt slave system.
I do not think that the fifth column was not that bad which could ruin something which is already established in to the top…