Dominate South Asia

Bonds will shrink? What does this mean? In other words, the government issued bonds worth tens of thousands of rubles to itself, which are not worth that much money?

This won’t do! Gilnenko sat up from the sofa. Since these bonds of equivalent value do not maintain their value, they must be exchanged for rubles!

Yes, just like that, exchange for rubles! Gilnenko admired his own mind. The Soviet Union had just collapsed. In a few months, he read a lot of Western economic books, which opened his eyes and he also knew how to hype in order to increase his wealth. The West is beautiful. Even if you sit at home, you can make money from money!

When Gilnenko ran to the bank quickly, he found that there was a long queue in front of the state-owned bank, which had been deserted in recent months. Citizens were hoping to exchange their equivalent bonds for rubles!

Faced with this situation, the Russian government departments responded slowly. They neither came out to refute the rumors nor took any favorable administrative intervention measures.

The issuance of currency requires reserves. The initial issuance of currency was based on gold or silver as the principal, which could be exchanged at any time to ensure the value of the currency. Later, the gold standard system ended, and the issuance of government bonds and other methods were adopted to ensure the value of paper money. Later, without reserves, the arbitrary over-issuance of currency would lead to serious inflation and currency depreciation, which also foreshadowed the collapse of the national economy.

These equivalent bonds were originally based on state-owned enterprises and had full value. However, according to the analysis of Western experts and scholars, the assets of these state-owned enterprises were overestimated, which indicated that the equivalent bonds in hand were not worth so many rubles at all!

Panicked citizens began to exchange rubles in order to ensure that the equivalent bonds in their hands would not shrink.

State-owned banks simply could not cope with so many people, and the Russian government has not yet issued new rubles. They are all the original rubles of the former Soviet Union, and those currencies cannot support the huge exchange task of hundreds of trillions of rubles.

So, the black market transaction began. In the constant exchange, these equivalent bonds also depreciated rapidly.

Only by selling state-owned enterprises and exchanging these equivalent bonds back can this trend be stopped! Therefore, under the advice of American experts one after another, Russia had to speed up the process of privatization of state-owned enterprises.

Who has enough funds to acquire those state-owned enterprises? Of course, it is the financial institutions that hold a large number of equivalent bonds, and most of these financial institutions are opened by foreign companies!

This is a panic era. In order to prevent the depreciation of equivalent bonds, the Soviet government constantly urged state-owned enterprises to be acquired by foreign companies, and those foreign companies also lowered the acquisition price. The lowered acquisition price also shows that those equivalent bonds have indeed shrunk, which further promotes the depreciation and exchange of private equivalent bonds.

Within a month. A 100-ruble equivalent bond can only be exchanged for one ruble in cash, which is equivalent to the Soviet people's wealth, which has shrunk a hundred times in an instant.

At this time, foreign companies are smiling. They use the deposits they have absorbed before to continuously acquire various Russian enterprises and use the money borrowed from Russia to acquire Russian state-owned enterprises. This kind of trick of getting something for nothing is no longer effective in the West. In Russia, which has just started a market economy, it is simply an important means of making money.

Except for the key military industry and national pillar enterprises, most state-owned enterprises have become enterprises controlled by foreign companies. Even the famous Northern Shipyard, which is mainly used to build nuclear submarines. It almost became a shipbuilding company controlled by the Germans. Fortunately, the Ministry of Defense stepped in in time to prevent the acquisition from being completed.

Russia has finally turned state-owned enterprises into private ones, but the privatization was controlled by foreign companies. This is quite ironic.

The Russian government breathed a sigh of relief, and privatization is finally coming to an end. They don’t know that the real storm has not yet begun!

At the beginning, those foreign banks attracted a large number of depositors with high interest rates, and those equivalent bonds were concentrated in large quantities in foreign banks. They used these equivalent bonds to acquire a large number of Russian companies, completing a gorgeous transformation, leaving only a tail. How to repay the principal and interest of those depositors?

Not to mention the principal, even the interest is enough to worry these bankers. Although these equivalent bonds have shrunk significantly, they can't come up with enough rubles to pay, and the money has been spent!

This is the most critical step in the whole process. Speculators are looking at the United States, and the American experts really live up to their expectations.

Summers, the deputy secretary of the U.S. Treasury, wrote a letter to the deputy minister of the Russian Finance Ministry, which detailed how Russia should formulate and implement economic policies. Privatization has been completed, and Russia should then step into the fast lane of capitalism and take off at a high speed! Russia now faces a big problem, which is the black market transaction of rubles!

The black market trading of rubles actually started in the Soviet era. When the Soviet Union had just finished World War II and resumed production, the exchange rate of the Soviet ruble to the US dollar was about 0.65 rubles to 1 US dollar. At this time, the ruble was more valuable than the US dollar. This situation continued until the 1980s. As the Soviet Union started the Afghan War, the Western world began to encourage oil-producing countries in the Middle East to increase crude oil production and reduce crude oil prices in order to impose sanctions on the Soviet Union. The price of oil, which was tens of dollars a barrel, was reduced to a few dollars. The Soviet Union's way of developing its economy entirely by exporting oil was greatly impacted, and the ruble began to depreciate.

In 1989, the Soviet government announced the latest exchange rate, 6.26 rubles to 1 US dollar, which was nearly ten times the initial depreciation. In this way, it was no longer cost-effective to exchange rubles at the official level, and the private black market ruble exchange transactions became more and more intense.

In the free Western world, it is impossible to have black market currency transactions! If the Soviet Union's economic development is to become the pride of the free world like the United States, it is necessary to implement an open ruble policy, allowing the ruble and the US dollar to float freely, so that the underground black market ruble transactions will disappear!

If Yeltsin's senior advisers at this time are really economic experts, they should know that there are many precedents. In the 1980s, the Hong Kong dollar crisis, the British pound crisis, and the financial crisis in Southeast Asia all started with currency crises! Free floating is implemented, which requires a strong foreign exchange margin as a backing, otherwise, under the malicious sniping of international capital, Russia's economy will also be ruined!

Unfortunately, the Russians at this time obviously did not realize this. After living under the Soviet system for so many years, the hatred of the Soviet Union and the planned economy and the yearning for the free world made Russia hope that it could cross over in one step and enter the Western family.

So, after discussion, the suggestion of the US Deputy Secretary of the Treasury was passed to open the ruble exchange rate market!

The policy makers who are high above will never see what the lower classes really need. History will give them a correct evaluation. They will be nailed to the cross of history and cursed by the Russians who have come out of that dark age.

After the ruble exchange rate market was opened, citizens throughout Russia were doing one thing, exchanging their rubles for dollars!

At the beginning, the country issued equivalent bonds, but these equivalent bonds depreciated rapidly. The slowest exchanger could not exchange a hundred rubles of bonds for one ruble of currency!

Now that they can exchange freely, they naturally want to exchange their rubles for dollars! The US dollar is the currency of the entire Western world and is the most valuable. What if the rubles in your hands shrink significantly like the equivalent bonds a few months ago?

Citizens throughout Russia crowded at the door of the bank frantically, hoping to exchange their rubles for dollars. At the same time, the exchange rate of the ruble to the US dollar began to fall rapidly.

One hundred rubles for one dollar? The person at the end of the line couldn't accept the news from the people who exchanged their money in front of him. However, when he got to the window, the latest exchange rate was 300 rubles to one dollar!

The whole Russian citizen was crazy. The rubles in their hands were no longer valuable and had to be exchanged for dollars! After the bank closed, they even lined up at the door of the bank all night, waiting for the exchange the next day.

The panic of ruble devaluation was staged throughout Russia. Many people's wealth disappeared overnight. They still couldn't figure out what was going on with this alcohol?

What's going on? If you want to be a student, you have to pay tuition! You have to pay a price to learn the advanced free world model from the West!

Every pore of capitalism is sinful. People of the former Soviet Union, have you forgotten what you said in your elementary school textbooks?

In the whole of Russia, there is only one kind of people who are the happiest, those who hold high debts.

The ruble is no longer valuable. Do you still want the original deposit and interest? Of course, all for you! Now, the banks opened by those from the Western world are full of rubles that are like waste paper. You can have as much as you want!

The foreign exchange market of the ruble finally collapsed completely. Half a month later, the exchange rate between the ruble and the US dollar has become 1,300 rubles to one dollar. The winter of the Russian economy has come.

The rapid depreciation of the ruble has led to rising prices. Now, the shelves of domestic stores are still full of goods, but Russian citizens no longer have enough money to buy them. There are many zeros on the labels of those goods.

And those financial tycoons have gained a lot of wealth. They first used borrowed money to acquire a large number of Russian companies, and then used currency depreciation to escape huge debts. This game of making money out of nothing is played quite well. (To be continued ~^~)