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Word Count: 2,498
The global economy has been brought about through innovation technology and de-regulation To the extent the government prints more Rubles than the equivalent of the hard currencies earned on exports it will lower the real exchange rate value of the Ruble In effect the government makes itself a forced partner of anyone with Rubles whenever it prints Rubles for which there was no corresponding production of goods By laws and policies it transfer this money from the poor to the rich Printing Rubles is the same thing as collecting a tax But it is a tax on possession of money not production of money and is therefore parasitical If a country runs a current account deficit it needs to finance it with a capital account surplus ie inflow If it has a current account surplus it must have a corresponding capital account deficit ie outflow Comparing 1979-81 with 1985-88 West Germanys capital balance moved from an inflow of 8 billion to an outflow of 40 billion Japans from an inflow of 5 billion to an outflow of 75 billion and Americas from an outflow of 2 billion to an inflow of 129 billion But this yardstick is hardly of any use it is inaccurate and misleading A balance of payments yardstick for capital flows gives a misleading impression because they show net rather then gross flows of capital In 1980 total world bank cross border and foreign currency lending was 324 billion By 1991 it was 75 trillion The combined GDP Gross Domestic Product of the 24 industrial countries in 1980 was 76 trillion in 1991 it was 171 trillion 1996 GDP of Russia as half a trillion So during the past ten years bank lending has risen from 4 of GDP Gross Domestic Product of these 24 nations to 44 From 1970 to 1988 the ownership of American bonds by foreigners increased from 7 to 17 and for Germany from 5 to
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