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Russia: A Depression Draweth Nigh

Written by Gary North on December 16, 2014

The idiots who run the central bank of Russia just raised the interest rate to 17%. They are trying to save the international value of the ruble.

If Putin were really in charge, he would shut down the central bank. But he is not in charge.

Central bankers should not be allowed to “save the currency.” They are the source of the currency’s need for “salvation.”

The free market should set interest rates, not central bankers.

What will a 17% interest rate do? Create a depression. The fall in the price of oil, when coupled with a 17% interest rate, will turn Russia’s recession into a depression.

The Russian economy is a mish-mash of central planning, government corruption, Mafia-like power-brokers, assassination of critics, central bank financing, and black marketeering (entrepreneurship). It is a full-time basket case in good times. The good times are about to end.

Think of Russia’s economy as the canary in the coal mine. The world’s central banks are seeking to control the world’s interest rates. They seek control over currency valuations.  They stand ready to “save” their currencies.  Save them from what? The free market. They hate currency speculators, who expose central bank policies as government by committee.

The universal faith today is faith in central banking. That faith will soon be tested in Russia.

Continue Reading on www.nytimes.com

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