Why does Russia need US government bonds?

In the summer of 2016, Russia increased its investment in US government bonds and raised them to $ 91 billion, although only two years ago, in August 2014, with the first introduction of sectoral sanctions against Russia from the West, investments fell to $ 66 billion. Why does Russia need US government bonds? We will try to understand this issue.

The first reason: the maintenance of the ruble

No matter how many different "trolls" on the Internet shout and patriots on the streets who do not understand what the economy is, about supporting the "enemy", US government bonds are extremely necessary.

First, we need to dispel the main myth: money for such purposes is not coming from the state budget. Securities under US debt obligations come from the reserves of the Central Bank of the Russian Federation (the Central Bank of the Russian Federation), which are spent on maintaining the ruble exchange rate, providing the currency of importers, debtors, etc.

If someone thinks that some grandmother is not receiving a pension because the government lends "enemies", then he is very mistaken. The CBR is an independent financial institution, one of whose functions is the issue of rubles. It, in turn, depends on the state of the economy as a whole, or rather on the trade balance.

The more economically developed the country is, the more it is necessary to print the domestic currency. If the balance is not respected and the Central Bank of the Russian Federation prints a lot of money, they will turn into ordinary confetti, candy wrappers.

Let's imagine that each citizen was given a million dollars, then what will happen? The answer is obvious: the prices will simply soar up, since no one will sell the scarce goods for paper. In the economy, this is called hyperinflation.

The second reason: maintaining the liquidity of the national currency

Depending on the state of the economy, the Central Bank issues rubles to the reserve. But the main trading operations are made in euros, US dollars, Japanese yen, British pounds sterling. Also to date, they added Chinese yuan.

To ruble had liquidity (weight), it is necessary to monetize them, otherwise they will remain ordinary confetti. Previously, gold was the measure of security. It was the dollar supported by this precious metal that won domination in the world, while French President Charles de Gaulle, one day, did not bring in the US a ship with the American currency, which gold demanded. After such a blatant action, it was decided not to provide "bucks" with precious metal. Instead, the currency began to be secured by US guarantees that "everything will be fine," and this, in fact, is US government bonds.

In other words, the ruble should be provided with something to not be ordinary pieces of paper that any child from a notebook can cut. This role is played by US government bonds, which are, in a literal sense, guaranteed by the honest word of the American government.

Securities of US debt obligations are pledge that rubles at any time can be exchanged for dollars and vice versa. Given that all trading operations take place in the foreign currency of several countries, including the US, this is a guarantee of the stability of trade operations.

To make it more understandable, why buy US government bonds, we simulate the situation: there are three children playing in the room. Two of them print their own money, and the third buys. The first cuts out his own currency from the notebooks, and does not provide anything, the second - more subtle, he changes his paper "bucks" to real rubles at a certain rate, for which you can buy anything real in the store. Thus, the second child will not just give them away, unlike the first, who can print "money" in any quantity.

As for the issue of money, the situation is similar to the second child in our situation: the Central Bank issues rubles, backed by securities, which are called US government bonds. By themselves, dollars are also purchased from the Federal Reserve by the US Government for the same bonds that together form an external debt.

Reason the third: profit

In addition to the two reasons already mentioned, do not forget that investments in US government bonds bring real income. The investors can be the Central Banks, governments of the countries, commercial institutions, private investors. The yield on them fluctuates around 2-3% per year. At first glance, the figure is very small, but there is one advantage - a low percentage is compensated by the confidence in the return of both its capital and profits. No financial instrument, unlike the state bonds of the most developed countries, gives absolutely no guarantees, that is, one can not simply not receive a percentage of the expected high profit, but also lose all of its capital.

In the world of such investment tools, which give guarantees for profit, in fact, very little. As such, state bonds of the USA, with the most authoritative government in the world, act.

The fourth reason: preservation of reserves

Everyone in our country knows that keeping money in a glass jar is equivalent to burning them at the stake. Inflation over several years will reduce them significantly, despite the fact that the number of zeros on banknotes will not change.

But an ordinary citizen is easier: if he has the means that he wants to save for several years, then it is enough to come to any bank and open a deposit account, on which you can put the accumulated money at interest. Of course, you will not earn much on this, but the main goal is to save money in real terms, not in nominal terms. In other words, it does not matter how many zeros you have on the banknote, it is important - how many of them you can buy products in the store.

Naturally, banks are ruined, closed, they can revoke the license, but today the state after the 2008 crisis reliably insures all deposits within a reasonable amount.

All banks depend, in turn, on the Central Bank, which issues a license, sets a refinancing rate, etc. But what should the CBR do? Inflation directly for him, no one has canceled, which means that the reserves in rubles are tantamount to keeping savings in a glass jar of some citizen - it's stupid and pointless. The state bonds of "enemies" are a similar instrument of preserving reserves.

Why the USA?

Of course, you can talk about the greatness and power of Russia as much as you like, but today it is the debt securities of the US Government that meet three key requirements:

• reliability;
• liquidity;
• Profitability.

The USA is one of the few countries in the world where the economic policy of the state does not depend on the "master" of the White House. Whoever comes to power in this country, the situation does not change. In addition, the state does not fever from various riots, revolutions, regime changes, financial reforms, wars, etc. In this country know the main rule in the economy - money likes silence.

When will the end of the "dollar era" come?

Today you can see various films, TV shows, politicians' speeches about the imminent collapse of the "American financial pyramid". Many "gurus" in the economy say that this is about to happen, we must wait another couple of years. But real economists, even in the medium-term (the next half century), do not see such chances.

The amount of the US national debt

Of course, the amount of the US national debt is impressive - more than 19 trillion dollars, which is 109.9% of GDP. For example, the debt of Greece, Ireland and Iceland in percentage terms of GDP more than the US, and the debt of Ukraine in the coming years can also surpass these indicators. Here it is necessary to take into account not the volume of nominal debt, but the percentage of GDP and its services, which for the US Government costs only $ 250 billion. If you compare it with the budget's profitability, almost $ 3.5 trillion, the amount will be scanty. Therefore, it's too early to sound publicly about the imminent default of the US in the next 50-100 years.

Russia: US Treasury bills are the most profitable

As for the third key factor - profitability, here again the US government bonds are in the first place. Now many will be surprised, but the five leaders on three-year state bonds are those for which the income is negative. This is not a joke: Japan's securities lose about 0.2% per year, France - 0.5%, but on the American you can earn up to 1% per year.

Why then invest? The answer is simple - not to lose more from inflation.

The fourth reason: political influence

In fact, those countries that have a significant percentage of government bonds in another country can politically influence it. Having thrown out all their reserves of securities, it is possible to collapse the price for them, thereby it can not sell other bonds, which is equivalent to a financial collapse.

But we have nothing to be proud of - Russia's share is only 5% of the US national debt.

In 2014, the CBR, at the time of imposing sanctions against certain sectors of the Russian economy, threw almost 2/3 of the US government bonds on the market. One of the versions of such actions is an attempt to bring down the financial system of Americans. But Russia is not China, which has half of all overseas debt obligations. PRC enough to hint that they are going to think about dumping all US assets, as the latter begins to panic on currency exchanges.

Conclusion

It is possible to sum up, saying that, by investing in the US government bonds, Russia extracts from this various dividends:

1. Supports the exchange rate of the national currency.
2. Gives the ruble liquidity on trading floors.
3. Retrieves profit.
4. He is trying to gain the levers of political influence.