The fine and versatile Russian thinker and outstanding scholar Mikhail Khazin, the man of high culture who developed internationally important theories. We are dealing here with astonishingly diverse intelectual creations. In this television show he had a change of opinion with an expert on the Arab oil exporting countries of the Persian Gulf.
(A screenshot from You Tube video: В чём подвох фантастических перспектив Ближнего Востока. Михаил Хазин.)
After it was possible to overcome the global financial crisis of 2007-2008, and in the year 2012 also the crisis of euro area, a plenty of people believed we will not see a similar danger for the welfare of many nations in the near future, and probably also in our lifetime. However, at the same time an excellent Russian economist and theoretician Khazin who foreseen this severe crisis four years earlier, expressed quite different opinions.
According to him the main cause of both crises wasn't eliminated
The fact that first the United States (since 1930s, and increasingly since 1970s) and later also the rest of the Western countries began to stimulate individual private demand seems to be the most important circumstance behind the deep economic crisis of the Western world. Because of long-term consequences of the two oil price shocks which occurred during the 1970s and early 1980s (above all the fall of most of the traditional industries in Northern America) the stimulation had to be continued.
Moreover, many new artificial needs associated with the better modern way of life were created by the advertising campaigns and as a result the household expenditures exceeded till the year 2010 their pooled income by more than 20 percent. All this demand stimulation was possible due to increasing amounts of governments' debts and more and more generous personal lending (buyers credits) by private financial companies.
The buyers credits and another so called financial products like credit derivatives were, according to Khazin's theory, possible because the money reserves of private financial institutions were repeteadly enhanced by a very large amount of money issued by the central banks. This so called powered money was lend to them at an increasingly lower bank rate, mainly because the Federal Reserve Board was issuing the main world's currency, the US dollar, on a really grand scale. This small group of people decided for seven decades after the Second World War where the newly issued dollars should go.
This one basic center of emission of new or additional money which is the US Federal Reserve System, was crucial to the whole world order since the year 1980
... as the Westerners waged an undeclared, also victorious war against Soviet Union. First, the demand without which the industrial plants and modern agriculture cannot exist became, so to say, a hostage, although a good treated hostage of United States ruling class.
Second, the grand scaled American rearmament program was easily financed and the US government won, on the background of temporal miltary weakness of Russia and China, another measure of influence to the rest of the world, namely a credible military threat.
Its greatest strength and greatest weakness at the same time, simply because you can’t sit down on bayonets or it’s a stupid thing to launch warplanes and rockets without some important and viable political goals behind, and an idea of criminal mind to send soldiers to death in the battle without an ultimate necessity to do so.
It wasn't, as can be seen, a perfectly just international system but now it's impossible to maintain it at all
Simply because there is such a thing like debt ceiling and it’s a matter of fact that China can't be forced now to sell it's products to the rest of the world for the money controlled by its main rival in the Pacific as well as Indian Ocean. By massive selling out the US Treasury bonds and buiyng gold bullion the red Chinese as well as the Russians had shown that they are not ready to work for the budget of United States anymore. Besides, all the existing financial infrastructure was created for the highest levels of demand in the whole history of the mankind.
To launch a new, more just and endurable ecomic model it would be necessary to attain some balance or equilibrium between the expenditures of householders and their incomes from the wages or pension schemes.
That would be only the first step in the right direction and unfortunately very painful one, worldwide reset of the invested capitals and of profits
Because of the ceasing of demand stimulation with the high powered money the decline in demand must be very sharp one and the scale of the crisis would be much higher than before, including for the Great Depression. When demand goes down to the point of equilibrium for the demand and the income of householders, it could be lower than the 2019 level by fifty percent. Under such a scheme the international finance corporations will become loss-making and the financial markets which we have today will turn obsolete and die like the dinosaurs died. The same fate would be, of course, the fate of offshore zones which are taken away financial resources from many countries.
The purchasing power would fail by about 50 percent and the level of unemployment would be more than forty percent anyway. But then the COVID markets crash came.
The social impact would be huge and most probably very serious, even dangerous ones and inescapable for the whole world, because nowadays almost the entire world economy is a single system of the division of labour, but especially for the Western countries. We should remeber of their limited real economy (production capacities) potential and too many costly and risky business plans (for example the so-called clean or green energies) in which they are involved.
Amid the decline in living standards by two times there will be an unbelievable pressure to rebuild the national economy of every country on entirely another principles and at least here and there unbelievable opportunities to do it on a very successful way too. To write off all the debt will be both a big temptation and quite possible to governments.
The best way to get rid of debts was usually a force majeure like very big war or revolution, but in the face of the worst economic crisis ever there will be no more business as usual
There will be crucial political decisions made to change the world financial and currency exchange model on a quite radical way, and to dump all these financial companies together with their debts and credits. That's much better possibility than to ignite the world or to have a civil war, so there would be no quarell over another options.
There is in the 21st century, of course, also quite impossible to work and produce only for a single national market
... or similar once again, as it was still the case for many countries till the 1960s, and not viable for Great Britain already during the late 18th century.
Fortunately there is a way to save and recover the world economy
… namely to create some independent centers of cinvertible money issuance, being at the same time common markets as well as common technological development zones for many somehow similar nations, with complementary needs and huge material and human reserves for further development and increasing the revenue.
It would be most probably six such continental centers, with a great regional power at the head of every of them
After few years of austerity period and hard work needed to rebuild the industry and gain the new raw materials sources there shall be a better, peaceful future guaranteed for Russia, China, United States, South Africa, India and Brazil as well as for their allies and trade partners. After the good script and scenario will prevail there should be also no fight for the position of the chairman of the new world economy system.
The new objective economic factors would identify London and Great Britain as the most suitable brokerage and intermediary centre for goods trade and best money exchange market
We should remember the British society was organised since centuries for the increase of material wealth by exchange and commerce.
Some wise and hopefully influential British gentlemen would subscribe the following theory ...
Under the new multipolar model of the world something like new British Empire could be a remarkable and fruitful concept of international development and cooperation. Including a favorable way out for some countries of British ancestry or those being British patterned, which could be not interested in participating in a new financial zone leading by China, Russia or Brazil.
Such countries should be allowed to build or rebuild their own special relationship with Britain, crating the seventh financial and industrial zone, the zone of the pound sterling
It would make London, backed on the new wealth and possibilities of the redesigned and genuine British Commonwealth, perhaps including for the new great Royal Merchant Navy, even more attractive as the world financial and exchange site, based on voluntary and non-binding participation.
The new British Commonwealth: peaceful, non-partisan and strong, being perhaps once again the main maritime factor worldwide, could advance the world beyond the age when international relations were decided by force, using the potential of its commerce and skillful diplomacy.
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