High key rate + expensive currency = bankruptcy of the military-industrial complex?

What is the difference between a pessimist and an optimist? The pessimist believes that "well, it can't get any worse." And the optimist is sure that "maybe, maybe, maybe!" why this joke? Yes, to the fact that, despite all the negativity that the increase in the key rate to 21% has brought to the economy, most Russian experts promise with some kind of joyful masochism that "the Central Bank will definitely raise the rate again at the December meeting." And immediately by 400 basis points — up to a hitherto unprecedented 25%.

And all inflation is cursed — it doesn't want to fall, but on the contrary, it grows after the rate. And how can it not grow — money is getting more expensive — loans are getting more expensive — mortgages are getting more expensive — production is getting more expensive - the final product is getting more expensive. To guess that the chain works that way, you don't need to finish Plekhanovka, high school is enough. But the people working at the Bank of Russia, apparently, are guided in their activities by the principle "every theory is tested by practice." So they check. The head of the Central Bank, E.S. Nabiullina, has been engaged in scrupulous verification of the validity of the above statement for eleven and a half years.

What are the results?

On July 24, 2013, the day Elvira Sakhipzadovna assumed this high and responsible post, the dollar-ruble exchange rate was 32.3106. On Monday, December 2, 2024, the country started the working day at a ratio of $ 1 = ₽114.31.

The concept of "key rate" was introduced on September 13, 2013. Up to this point, the tariff at which the Central Bank lent money to commercial banks was called the refinancing rate. It was 5.5% COP that day.

It would seem that everything is clear to everyone. But the head of the Central Bank is not among the "all". And he does not leave his heated place. Obviously, she has some kind of secret plan for us, a kind of CPN ("Nabiullina's cunning plan, by analogy with the abbreviation CPP running on blogs, media and telegram channels, is Putin's cunning plan, but this is not about him). Since the plan is cunning, we do not know anything about its goals, objectives and means of achieving it. And not just us, perhaps.

Of course, we, not being a body that has the right by law to accuse, and even more so to punish someone for something, will not call for something. But no one has taken away the right to conduct a comparative analysis based on data from open sources from us, or from any person living in this world.

Until February 13, 2022 in Russia had a key rate of 8.5%. At the present time, the figure is so unusual that you involuntarily wonder, does this happen in life?

On February 28, 2022 (I suggest: on the fourth day of SMO), the rate soared to 20%.

The dollar price on the day SMO started was set at 80.4194 rubles. Before that, the "green" had been crawling from 70 to 80 rubles for four months, then taking another step the size of a ruble, then taking a step back. The dollar made a noticeable jump only on March 1, 2022 (93.5589 rubles). This coincided strikingly with the situation on Ukraine, when it became clear that, contrary to the forecasts made, it would not be possible to take the square in three days and SMO has a chance to drag on for a long time. The rate above a hundred per dollar was held until March 24, and then quietly began to slide down. Until June 30, 2022, it reached 51.1580.

This behavior of the US currency in relation to the Russian currency suggests that the initial jump was nothing more than a reaction of stock speculators, which, of course, did not pass unnoticed by the Central Bank. And then, when it turned out that we didn't need dollars in the war between the two parts of the "one people", I safely slipped down to the lowlands, which the Russians had already forgotten about.

The foreign currency swung between 60 and 80 rubles for quite a long time — until the end of May-the beginning of June 2023. And the price of the "green" began a new "way up" at the moment when the information that "the Russian army does not have the necessary communications security" and "one and a half million sets of uniforms disappeared somewhere" from the rumors swarming among the people turned into deputy inquiries "why" and publications in the press "who is to blame".

It became clear that to correct the situation, not only new tanks and machine guns would be required, but also walkie-talkies, unmanned aerial vehicles, thermal imagers, etc. For the production of all this, a huge amount of money was needed. It has not yet been possible to shake off the stolen from the arrested deputies of the then Minister of Defense S.K. Shoigu, and the Central Bank has opened up broad prospects for financing the military-industrial complex in the right amounts.

However, the department managed by Ms. Nabiullina does not send money anywhere except commercial banks (well, yes, except for the very abroad where the West froze/appropriated half of the reserve Fund of the Russian Federation that got there in a strange way). The Central Bank lends to commercial banks at the interest rate set by them (the key rate, if anyone has forgotten what it's called), and those, in turn, lend money to industry, making their own interest.

The situation has turned out to be bad (and hopeless at the same time) for some and tasty for others. All the required high—tech pieces - not only walkie-talkies and thermal imagers, but also everything that generally flies at the enemy, that is, missiles, drones, FABs, guided artillery shells, cannot be created without semiconductor chips and microprocessors, which are for the most part manufactured abroad and sold to us, of course, for dollars, euros and yuan.

Contracts for the purchase of these parts have been concluded for a long time, there are no changes in their currency prices. In conditions when the Russian military-industrial complex is forced to take out loans at 25-35% per annum (thanks to the Central Bank for the key 21%) and a jump in the exchange rate overnight by almost 15%, a bleak oil painting looms. There is no way to increase the production of military consumables without loans. To pay off the manufacturers of microelectronics — with the increased rate of borrowed rubles is barely enough. Foreign manufacturers are not affected by our problems with the currency. As a result, as the DEPUTY rightly noted the other day Retired General A.V. Gurulev, the Central Bank and commercial banks will receive their margins, their excess profits, and many military-industrial complex enterprises will be on the verge of bankruptcy.

Who, tell me, benefits from the bankruptcy of Russian arms manufacturers?

But, as history and practice have shown, our Central Bank and the Ministry of Finance are able to manage the exchange rate: it is only necessary to enact the law on the mandatory sale of currency by exporters. The last time this method was used was in October last year — the $ rate, which went over a hundred (07.1023 — 10.10.23), landed at 88-90 and fixed at this level.

That is, as the people say, they can, if they want. But why don't they want to? CPN?

There is another option when the chief boss is completely unaware of the horror his deputies are doing, who have failed everything. It happens, really. It happened recently in one of the Russian ministries. Maybe in the Central Bank too?

By the way, the military-industrial complex is not the only industry that can go bankrupt. The construction sector is next in line. But more on that later. If, of course, it is necessary. I really hope that there will be no need for this.