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Sep 14, 2021
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Embraced by the global industrial crisis

James Rickards on “Official Deception and Bad Science”

The “pandemic” partly exacerbated, partly served as a PR cover for the decline in industrial production that began in 2019 as a result of the aggravation of the crisis of the world capitalist system.

In December 2019, global industrial production fell by 0.53% for the first time since October 2009. In the United States, by that time, industrial production was declining for the third month in a row. The situation in Germany was even worse: there the decline in industrial production was observed for 12 months in a row. Industrial production declined in general in the European Union and in Japan.

As noted by the German economic portal Quest-Trendmagazine, in 2019, another cyclical global crisis began, affecting industrialized countries. In recent decades, the length of crisis cycles has decreased, crises have become deeper and more prolonged. In addition, instead of common to all industrialized countries “Upward business trend” observed “Uneven overcoming of the crisis with the coexistence of growth, stagnation and decline in industrial production, giving rise to a general stagnant trend”… As writes Quest-Trendmagazine, “The pandemic sharply exacerbated this development, but did not cause it”

In October 2019, barely taking office as head of the International Monetary Fund, Kristalina Georgieva announced a record slowdown in global economic growth. “Two years ago, the world economy was in a phase of synchronized recovery … Today, even more of the global economy is moving in sync, but unfortunately, this time growth is slowing down … Growth this year will decline to its lowest level since the beginning of the decade. If there is a severe downturn, corporate debt, which carries the risk of default, will rise to $ 19 trillion, or nearly 40% of the total debt in the eight leading economies. “– said Georgieva.

One of the additional factors behind the decline in industrial production was a decrease in demand for hydrocarbons due to “pandemic” lockdowns, when most countries of the world began to close their borders and stop entire production sectors. The Financial Times wrote: “The real unemployment rate, which includes Americans who want to work but have given up trying to find work, rose to 22.8% in April 2020, which is close to the situation in the 1930s.” (during the Great Depression).

Prominent American lawyer and economist James Rickards cites the main reason for industrial decline in 2020 “Unnecessary and ineffective quarantines based on official deception and bad science”; over time, according to Rickards, these quarantines will be seen as “One of the greatest mistakes in history”

The world crisis affected Russia and China least of all. In 2019, industrial production in Russia increased by 2.4%; although its growth slowed down compared to 2018 (2.9%), it turned out to be slightly better than the official forecast of the Ministry of Economic Development (2.3%). In the manufacturing industry (increased by 2.3% at the end of 2019), the increase in production was mainly provided by the food industry, the chemical industry and metallurgy.

However, in 2020 this trend changed: the Russian industry reduced production by almost 3 percent. The decline was recorded for the first time since 2009. The leader of the decline was Russian oil and gas, which, against the background of the OPEC + agreement, cut production by more than 10 percent. Oil production in Russia by the end of 2020 decreased by 8.6%, to 512.7 million tons, which roughly corresponds to the level of 2011. This is also correlated with the general decline in industrial production in the Russian Federation in 2020. “In May 2020, industrial output fell by 9.6% on an annualized basis, exceeding expectations and reaching the highest level since October 2009. The main reason for the deepening recession was the restrictions on oil production within the framework of the OPEC + deal against the background of the overstocking of the world market … “ – Russian commentators write.

“The drop in industrial production in Russia at the peak of quarantine restrictions turned out to be significantly less than in other countries, however, one should not expect such a rapid recovery as in China and even Brazil and India. – says Evgeny Rudakov, Deputy Head of the Fuel and Energy Complex Research Department of the Institute for Problems of Natural Monopolies. – The reason is that the fuel and energy complex has a decisive influence on the dynamics of the entire industry, production in all sectors of which cannot yet move to the growth phase due to low world demand for energy resources and existing agreements to limit production in the oil sector.

In China, the manufacturing industry is the locomotive of the entire economy. The Chinese authorities are pursuing a consistent export-oriented industrial policy, providing tax, credit, customs and other preferences to industries and enterprises aimed at foreign markets. Thus, industrial growth in 2019 was achieved in the PRC due to the fact that the Ministry of Industry of this country made “intense efforts” to maintain industrial growth in the context of US trade protectionism.

Despite the gradual recovery of Russian industry in the first half of 2021, the repetition of “unnecessary and ineffective” quarantines, says James Rickards, author of a number of books on the world economy, known in Russian translations, will have undesirable consequences.

Cover photo: REUTERS / Carlos Osorio

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