Posted 4 марта 2022, 10:34
Published 4 марта 2022, 10:34
Modified 24 декабря 2022, 22:38
Updated 24 декабря 2022, 22:38
The well-known Russian expert Yevgeny Kogan answers the most pressing questions of today in his channel: “What will happen next with banks and inflation, and how to save money?”
Let's start with banks. People massively take deposits - the banks are sorely lacking money. To function normally, they have to borrow from the Central Bank at a new and very high rate - 20%.
At the same time, the population and business on old loans pays ridiculous interest to banks by today's standards, which in no way cover this huge shortage of banks' liquidity. And I am silent about massive defaults on loans with floating rates, and even with ordinary ones (since now the population and business have lost a lot of money). It undermines the banking system.
But, as Elvira Sakhipzadovna Nabiullina said, "... all banks fulfill and will fulfill all obligations to their customers".
We proceed from the premise that our Central Bank does not throw words into the wind and gives a clear signal that it will do everything for this.
What are the consequences of the current banking crisis?
▪️ Injected money may not be enough. We have not seen a crisis of this magnitude for a very long time. To be honest, I would not rule out any drastic measures to put this panic on pause.
▪️ All of the above is done at the expense of a huge injection of money (some of them were only printed, some were kept for a rainy day and they did not function in the economy). Now this money is getting into our financial system and, of course, it will significantly accelerate inflation in our country. It has already grown very much due to the fall of the ruble, and an injection of liquidity will increase it even more.
There is no right choice in the current reality. There is only action and its consequences. And bailing out the banks will have the consequence of high inflation. The savings of the population and businesses will be under attack.
Here, as they say, either-or. Or we save the financial system and…. alas, we are accelerating inflation. Or we put everything on hold, but that's even worse.
A fair question arises: if inflation is ahead, how then to save your money?
Times are very, very uncertain right now. The surest way is to invest in real physical assets.
For example, the Government supported the decision to abolish the 20% value added tax on precious metals for citizens from March 1. The State Duma is due to consider the corresponding bill on March 4. Gold bars can be a very good way to keep your savings. It is a rare metal that can be physically touched and has value.
There are plenty of other alternatives as well. Here, everyone makes their own choice. Real estate, cars or bars of gold or other metals. It all depends on your imagination and personal preferences.
Another option is to buy operating businesses. I'm practically convinced that M&A transactions will surely begin now. Many people have money.
A live and working business, not very dependent on market conditions and external circumstances, is a "trick" today.
By the way, for some reason I think that now the demand for the services of independent financial intermediaries will increase.
Everything the cache generates is a possible inflation hedge.
It is quite difficult to estimate the future level of inflation today.
But it looks like the benchmark is above 20% per annum. However, depending on how you count. And we know how to count.