Currency and details forgotten

1. Is it true that the government intends to generate revenue by raising the price of currency? A policy that reduces the purchasing power of the people determines the transfer of wealth from the people to the government, the same as taxes. Because inflation reduces the purchasing power of the people in favor of the government, it is also called “inflation tax”. However, stabilizing the exchange rate is not the way to avoid inflation tax. In other words, the currency jump in recent months is not the root cause of monetary problems, but one of its side effects. 2- What is the root of monetary problems? Printing money by the government creates inflation. From the beginning of the 11th government until now, the money printed by the Central Bank and injected into the economy has increased from “80,000 billion Tomans” to “210,000 billion Tomans”. As a result of this action and the banking policy of the 11th government, the total amount of money of natural and legal persons in wallets, safes and bank deposits has increased from “half a million billion tomans” to “one and a half million billion tomans”. But in the same five-year period, the annual production of Iranian goods and services has increased slightly. In simpler terms, the money in bank cards has increased, but there are no more Iranian goods and services to buy. 3- What are the economic effects when the money in bank cards increases faster than the goods and services available in the market? Inflation! The rapid rise of money in bank cards is due to the printing of money at a rate disproportionate to economic growth, and for this reason it is called money printing. This kind of printing of money is “disrespectful” because it ultimately reduces the purchasing power of the rial, and what reduces the purchasing power actually goes into the pockets of the people and transfers their real wealth to the government. So it is fair to say that “the wasteful printing of money is in the pockets of the people.” However, the 11th government, by using a banking trick and a currency trick, delayed the feeling of emptying people’s pockets for several years. However, it is practically impossible to delay inflation for more than five to six years; So now we are approaching the time when our pockets feel empty. 4- What was the need for these two tricks by the government? Improper printing of money leads to inflation, and inflation is a mandatory tax that transfers wealth to the government from those who do not have coins, currency, or property. Those who do not have coins, currency and property are deprived of society. That is, inflation is an oppressive tax levied on the deprived. The government wanted to collect “inflation tax”, but not from the pockets of the deprived, so it used two banking and currency tricks. In practice, however, these two tricks only postponed the feeling of “emptying the pocket” into the future. 5. What was the government’s banking trick? By raising interest rates on long-term bank deposits, the government slowed the flow of money in the productive sector of the economy to neutralize the effect of printed money and prevent money printing from turning into inflation for some time. 6. What was the government’s currency trick? By stabilizing the dollar exchange rate at a level between 3,500 and 3,700 tomans, the government increased the amount of foreign goods in the market in order to compensate for the lack of increase in the production of Iranian goods during these years. In this way, the government maintained the price level of basic commodities, all of which are importable, in order to further delay the growth of inflation. However, with the stabilization of the dollar, instead of transferring the wealth of those who do not have coins, currency and property to the government, the wealth of Iranian farmers and artisans was transferred to the government. 7- What does the government do with the wealth of Iranian farmers and artisans? In practice, the government gives the wealth of Iranian farmers and artisans to foreign farmers and artisans, and in return imports food and other basic foreign goods into the country for us to consume. Of course, due to the decrease in income of Iranian farmers and artisans, most of the imported goods are bought by urban employees. That is, in fact, stabilizing the exchange rate places the cost of inflation tax on the farmer and the artisan, and the benefits are distributed among foreign producers and urban employees. 8. What has the government got to do with transferring wealth from a farmer and an artisan to an urban employee? Maintaining the price stability of basic goods, while meeting needs through money printing, is done in the name of justice and protection of the deprived, but is either due to political-electoral considerations called political economy, or due to the lack of policy-making mastery over economics. Is. 9. If the government intended to transfer the “inflation tax” from the deprived to farmers and artisans, then why, with the rise of the dollar, is everyone worried about the rise in prices of basic goods and the rising costs of all people? By stabilizing the exchange rate, the government shifts the pressure of “inflation tax”, but this policy can last for five or six years. After this period, with the jump of the exchange rate, inflation is realized so that the deprived pay all the “inflation tax” resulting from the improper printing of money at once. The administration of the country, by printing money indiscriminately, tells the story of a criminal who ate an onion, was flogged and paid a fine. In short, by printing money indiscriminately and stabilizing the currency, the government first pockets farmers and artisans, leading to the closure of farms and workshops. However, after a few years, the exchange rate rises and inflation is created so that the deprived can also pay the “inflation tax”, but the former farmer and craftsman no longer have land and a workshop to benefit from the increase in the exchange rate. Reconstruction of the country’s production capacity is simultaneous. That is why economists are unanimously opposed to running the country with printed money. But when money is printed to run the country regardless of scientific policy, economists see stabilizing the exchange rate not only as useless but also detrimental to the country’s productive capacity. The current situation in the country is the result of governments’ distrust of economics over the past three decades.

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