Central banks and governments around the world print money. Some are good at it, others are not very good, and some countries have learned to do it so well that they began to transfer inflation from their own countries to others.
What national governments can do with printed money
First, they can introduce them into their national economy. In this case, with an increase in cash in the economy, at first the economy grows. However, inflation soon follows. A small rate of inflation is beneficial to the economy, but in this article we do not consider the benefits of the process of currency depreciation.
Secondly, the government can withdraw money from the economy, but in this case it begins to shrink, since the same quantity of goods remains, and there is less money.
And finally, thirdly, you can print money and send it abroad in the form of a public debt, in this case, the government has the opportunity to purchase products from abroad, but at the same time not to accelerate inflation within its country.
Only the most developed countries, such as the USA and Switzerland, can afford such pleasure. Since, in order to carry out this trick, it is necessary that other countries are ready to buy your currency. Few people are ready to accept rubles or tugriks. However, dollars or euros will be welcome everywhere.
How does the transfer of inflation from the dollar to the ruble take place, or how do we import inflation from the US into our country?
Russia trades with other countries for dollars, and we are net exporters. So, in 2018, the trade surplus amounted to almost $ 200 billion, or 13 trillion rubles. That is, we sell more goods and services abroad than we buy. Note, the budget of Russia for 2019 amounted to 19 trillion rubles. However, Russia cannot and does not want to pump this huge mass of money into the economy of its country, because if we start pumping it inside, we will need to sell dollars and buy rubles, which will inevitably increase the cost of products produced in Russia (along the way, increasing the welfare of the population) but this will make the economy uncompetitive.
What to do with this "extra" money?
The governments of developing countries use these funds to buy up the debts of developed countries. Thus, developed countries buy goods and services from developing countries by borrowing money. It turns out that there is a process of pumping wealth from developing countries to developed ones. In fact, countries, by lowering the rate of their currencies, maintain the purchasing power of the dollar, euro and franc.
There is a kind of race in which countries such as Russia, Turkey, Brazil and other developing countries fight for the right to sell their goods to the United States, Switzerland and Britain, and they give them their IOUs. It turns out a kind of balance: we sell them real goods and services, and they export their debts to us.
Who benefits from this?
- This is beneficial for exporting companies and governments from developing countries, as a weak national currency means cheap labor.
- This is beneficial to the population, importing companies and governments of developed countries, since without producing anything, they can buy more real products from abroad.
To whom is it not profitable?
- The population of developing countries, as in this way the impoverishment of the population of these countries occurs.
- For exporting companies in developed countries: the labor force in developed countries is too expensive.
What conclusions can be drawn?
We cannot significantly influence the processes taking place in the world economy, therefore, one solution to this problem is seen: it is necessary to diversify your savings by purchasing currencies, precious metals and other assets that do not depend on the situation in Russia. Russians already bear great risks due to the fact that they receive their salaries in rubles.
