Aug 16, 2022
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Absolute money

A country with money circulation isolated from the international market is difficult for international capital to conquer

I already wrote about the pre-revolutionary economist and public figure S.F. Laces (1855-1911), his work “Paper ruble» (1895) and his doctrine of absolute money The work is extremely relevant for modern Russia.

The absolute money of S. Sharapov is domestic, national moneythat serve the Russian economy within state borders. With regard to international trade and other international payments for such transactions, the national currency should not be used. It applies exclusively gold (meaning not only physical gold, but also the currencies of those countries that had a gold standard). Rubles must remain inside the country so as not to become an object of manipulation and fraud on the part of stockbrokers.

Sharapov believes that a state that wants to pursue an active economic policy should establish monopoly on the gold trade.

Sharapov’s idea that money intended for internal circulation should not be turned into an object of international trade and internal money circulation should be isolated from the international market, is repeated in a more detailed form by a contemporary of Sergei Fedorovich, General HELL. Nechvolodov (1864-1938). In his famous workFrom ruin to wealth» Alexander Dmitrievich gives additional arguments and examples regarding the relationship of domestic and international money, which convince us of the following:

1. If money is of a commodity nature, then there inevitably arises money market. This is a kind of market, because it does not involve purchase and sale transactions, but money loan transactions.

2. Introduction everywhere of the gold standard in XIX century is a kind “monetary globalization”.

3. A country with money circulation isolated from the international market is difficult to conquer for international capital.

Let’s take a closer look at the third point. Nechvolodov writes:We now see money circulation isolated from the foreign market in China as well; in different provinces – different signs, and among them – a lot of checks of individual trading houses and individuals, which, of course, are of value only in their area; and China has not yet been conquered by Masons and has not been conquered by anyone at all, its external debts, made for the first time on the advice of Europeans in 1874, are insignificant, there is no destructive capitalist economy in it, agriculture is flourishing, and the population, despite the terrible density, lack of technical improvements and predatory the nature of the administration, extremely rich, has retained all the foundations of its thousand-year-old system, as well as all the virtues: the Chinese are honest and an excellent family man; besides, he is the first merchant in the world“.

From myself, I can offer another example of the United States. For the first hundred years of its existence, the North American United States had a monetary system similar to that which had existed in China for many centuries. Before the civil war between the North and the South, not only individual states, but even individual counties and municipalities used their own specific banknotes, which were almost not accepted in other regions of the country, and even more so did not fall into the channels of international circulation. Paper money was also used. For example, the so-called “colonial receipts” (for more details, see: Rothbard M. History of monetary circulation and banking in the United States. – Chelyabinsk: Sotsium, 2005). Only in 1863 (with the adoption of the law on the national banking system) did a single monetary system gradually take shape in the USA, and the dollar began to circulate not only within the North American United States, but also on the world market. In the future, this contributed, according to some authors, to the enslavement of America by the Rothschilds and other bankers from the “Old World” (see: Sutton, Anthony. The power of the dollar. M.: FERI-M, 2003; Sutton, Anthony. Who rules America? – M. FERI-M, 1995; Hugger, Nicholas. Syndicate. History of the coming world government. – M.: CAPITAL-PRINT, 2007).

But back to Sharapov. In fact, in his “Paper ruble” and other works, we are talking about state currency monopoly. In its most complete form, the idea of ​​such a monopoly was formulated in Sharapov’s report “Financial revival of Russia“(1908). In it, he revealed the role of the exchange in managing (manipulating) the exchange rate of money and calls for disarming the exchange by transferring control of the currency and the exchange rate of the national currency to the state: “The management of foreign exchange rates, in addition to and often contrary to the dictates of the stock exchange, is the crown of the liberation of state power from the influence of foreign capital, the liberation of the national economy from slavery to the stock exchange. This liberation is feasible, of course, only with a system of national money and with the benevolent mediation of the state in all monetary settlements of its citizens with the outside world by concentrating all foreign exchange transactions in the institutions of the State Bank. He alone in the country should be the seller and buyer of foreign currency, setting its price in national signs or, which is the same, the national sign in foreign currency, not according to stock exchange bulletins, but for reasons of the needs and benefits of the state economy.“.

So, Sharapov calls for the establishment of a state currency monopoly (GVM). His call was not heard. Before the revolution, the currency was in many private hands, and the ruble exchange rate was set on the stock exchange. The GVM was installed only in the USSR in the second half of the 1920s. It was preceded by the introduction state monopoly of foreign trade (SMWT), established by the decree of the Council of People’s Commissars of April 22, 1918 “On the nationalization of foreign trade.” According to the decree, the direct state management of foreign trade was entrusted to the People’s Commissariat for Trade and Industry, which in 1920 was renamed the People’s Commissariat for Foreign Trade. Foreign trade transactions could henceforth be carried out only by bodies specially authorized by the state.

In fact, already in the first years after the introduction of the GMWT, the vast majority of all currency and gold was in the hands of the state. Only a small part of the currency and gold remained outside the public sector, which circulated on the internal “free” market. To a large extent, the reason for maintaining such “liberties” is the creation and strengthening of the Soviet currency called “chervonets”, which was supposed to replace the depreciating Soviet paper signs (sovznaks). However, the preservation of the “free” foreign exchange market in the country created a considerable threat to the Soviet government. A well-known modern Russian specialist in finance CM. Borisov writes about the prevailing by the mid-1920s. situation: “The desire to insure against impending inflation and the growing scale of financing of smuggled imports so intensified the demand for gold and foreign currency that in order to satisfy it – while maintaining the same exchange rate proportions – a significant share of the gold and foreign exchange reserves would have to be sacrificed, which would have passed from the hands of the state into private hands. But the authorities donated not currency, but the very mechanism of “intervention”. In the spring of 1926, the State Bank of the USSR, in order to contain the outflow from reserves, suspended the purchase and sale of gold and foreign currency in order to stabilize the exchange rate of the gold coin, ceased to participate in the operations of the “free” foreign exchange market and stopped publishing market quotations“. (Borisov S.M. The ruble is the currency of Russia. – M.: Consultbankir, 2004, p. 90-91). Thus, the replenishment of the internal “free” market with currency and gold from state reserves stopped.

In the spring of 1928, the Soviet monetary system was completely disconnected from the international market, when cross-border movements of red banknotes, treasury bills, Soviet coins and payment documents that were not related to foreign trade operations were finally banned. After some time, operations with gold coins on foreign markets ceased. Accordingly, the quotations of the ruble in such markets also disappeared.

At the end of the 1920s. only the residual currency (the one that still remained in bank accounts and under mattresses) and the currency smuggled into the country could circulate on the domestic money market. The last point in the creation of the state currency monopoly was set in 1930, when operations with currency and other valuables were prohibited in the stock departments at commodity exchanges. This ended the history of the Soviet chervonets. It was replaced by the usual Soviet ruble, which was: a) paper; b) inexchangeable for gold and currency; c) an internal (closed) banknote; d) marketable (issued strictly in accordance with the mass of goods).

In other words: the Soviet ruble of the early 1930s acquired all the hallmarks of Sharapov’s absolute money.

The state currency monopoly lasted until the end of the 1980s. and effectively protected domestic money circulation from the elements of the world market and the tricks of stock speculators. It was the basis of the country’s sovereignty. The dismantling of this monopoly began in the last years of the existence of the USSR simultaneously with the dismantling of the state monopoly of foreign trade. From the very beginning of its existence, the Russian Federation abandoned the state currency monopoly, which was recorded in the Law of the Russian Federation “On currency regulation and currency control” (1992). The new state immediately abandoned the powerful shield protecting national sovereignty (no less important than the nuclear shield), which predetermined the rapid economic degradation of Russia.

The exchange rate of the Russian ruble against other currencies began to be determined on the stock exchange floor of the Moscow Exchange. Until 2014, the Bank of Russia intervened in the formation of the ruble exchange rate, conducting foreign exchange interventions if necessary. Eight years ago, the Central Bank let the Russian ruble float freely, turning it completely into a toy for currency speculators.

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