Russia has two biggest problems to deal with: coronavirus and US election

When talking about Russia's biggest domestic problems, one usually names two of the most inveterate ones: fools and roads. However, there are two other huge problems that can overshadow the two traditional ones - COVID-19 and the 2020 US presidential election. This is not because the Russians want to take revenge on Barack Obama, who once insulted Russia by placing it on the list of biggest threats next to Ebola fever. Prominent economists warn us against the financial troubles that may occur as a result of the relentless struggle for that chair in the Oval Office. Russian financial and economic agencies should listen to them.

The financial end of the world is not far off, economist Valentin Katasonov believes. The pandemic-induced crisis will make it impossible to return to the previous development paradigm of the capitalist world.

The old model, which is based on the US dollar with its emission center in the US Federal Reserve, has completely exhausted itself, the expert believes. The world's elites will sacrifice the US dollar to gain total domination through transition to digital money and assets, most of the population will be turned into impoverished debtors, while many companies, industries and even entire countries will go bankrupt.

Well-known Russian economist Mikhail Khazin predicts a collapse in the stock market in the near future. On all continents of the planet, a huge number of contradictions have accumulated "between the real state of affairs and the picture drawn by all sorts of speculators." The value of the largest commercial companies in the world is set a lot higher than it should be, and this bubble will inevitably burst.

According to Khazin, the presidential election in the United States will trigger another global depression. The explosion in the global economy will hit Russia very hard because of the West war of sanctions against the Russian economy.

Academician of the Russian Academy of Sciences, economist Sergei Glazyev also speaks about serious shocks that the world will see following the US presidential election in 2020. The opposition of political forces is too fierce to accept the defeat after the votes are counted.

Such cataclysms cannot but affect the American currency, Glazyev believes, especially against the background of the fact that the US budget deficit is already higher than 30 percent, which is higher than during the Second World War. The American financial system is going into a tailspin, and the only question is about the time, when hidden inflation turns into an open form and the dollar system will cease to exist.

The tragedy of the US dollar

The financial state of affairs of the world's first economy cannot but cause concern. The whirlpool created by the sinking Titanic runs the risk of pulling global partners to the bottom too.

The US national debt is growing at an alarming rate and has reached dizzying heights. As CBS television channel recently reported, as of October 1, that is, as of the beginning of this financial year in the United States, the country's national debt exceeded $27 trillion. When the bar rose to $20 trillion during Barack Obama's presidency, it seemed to be an extraordinary phenomenon. Donald Trump, during his 2016 election campaign, promised to tackle the country's huge national debt problem through economic growth that would result from reforms and the revision of trade agreements. However, we can see the reverse process so far. Having the ability to print dollars in unlimited quantities, the Americans may feel at ease.

Noteworthy, experts in the United States also start talking about the danger of the dollar decline. Thus, American lawyer, author of books on macroeconomics James Rickards drew a historical parallel with the British pound sterling, which began to play the role of the main reserve currency after the end of Napoleon's wars and the official adoption of the gold standard by Great Britain. The Bretton Woods Conference of 1944 kicked off the dollar's ascent to the throne of world finance. But as with the pound sterling, the role of the US dollar as the world's key reserve currency will diminish, slowly but surely. As for explanations of the reasons for this process, James Rickards did not say anything original - he blamed Russia and China for the imminent tragedy of the US dollar. Apparently, self-criticism is completely alien to American mindset. Russia and China - these two rival powers - have been actively buying gold and increasing their foreign exchange reserves, thereby undermining the foundations of the American world order. According to the expert, the trade war between the United States and China, as well as the growing influence of Beijing through OneBelt One Road Initiative, are playing into China's pocket.

The collapse of the dollar has already begun while the need for a new monetary order is emerging,  Rickards believes.

Perfect storm after the blue wave

As long as so many experts speak about the upcoming financial disaster, the Russian monetary authorities should think about taking protective measures before harnessing themselves to the burden of unresolved problems.

At a recent meeting, the Board of Directors of the Central Bank of Russia decided to leave the key rate at the current level of 4.25 percent for the second consecutive time. Russian economists would rather welcome a radical reduction in the key rate in order to support the population and business with cheap borrowed funds during this difficult economic period. Elvira Nabiullina , the chairwoman of the Central Bank did not rule out a reduction in the refinancing rate "in the near future" if disinflationary tendencies prevail.

Interestingly, Nabiullina appeared before the press wearing the brooch, which many took for a sign. The brooch that she wore before was shaped as the play and pause button. This time, however, the brooch that she picked was designed as a blue wave. In the USA, the term "blue wave" designates  the victory of Democrats in the upcoming presidential election. Perhaps the head of the Central Bank of Russia was alluding to geopolitical risks, since Joe Biden's victory is fraught with uncertainty and volatility in the markets.

"We do not see any risks to financial stability, - said Elvira Nabiullina. - There is enough liquidity in the markets, trading volumes are absolutely normal too."

Academician Sergei Glazyev, a longtime opponent to the Central Bank leadership, shares a completely different opinion.

Due to the actions of financiers, the money of ordinary citizens goes into the pockets of clever manipulators, while the real sector of economy is deprived of investment. The ruble is free to float, is not protected by the state, and is left to speculators. It is not only American hedge funds, but also domestic financiers that make huge profits by manipulating the ruble exchange rate, even from the highest levels of the monetary power, Glazyev says.

Sergei Glazyev, the Minister for Integration and Macroeconomics of the Eurasian Economic Commission, has repeatedly (albeit unsuccessfully) recommended introducing a tax on non-trade foreign exchange transactions to neutralize attacks by currency speculators. In addition, the minister advises to switch to trade in national currencies within the Eurasian Economic Union to bring the currency legislation of the member countries to a single standard and subsequently hold de-dollarization and de-offshorization reforms.

Unfortunately, all these sensible proposals remain unanswered.

According to Glazyev, the Russian government is daydreaming about the free market, but does not take measures to regulate it, while the Central Bank does not use its brain to think, but follows recommendations from the IMF instead.

If the worst predictions that well-known economists come true in the near future, our financial system will be in an extremely deplorable state. Indeed, don't have thy cloak to make when it begins to rain.