Monetary Policy in Iran
Inflation is spiking in Iran and the government is trying to find some one to blame. LONDON, October 6 (IranMania) - The government has reportedly asked the Majlis to give it a few more days to get to the bottom of the recent price hikes following angry reactions from some of the most senior authorities, including the Parliament Speaker Gholamali Haddad Adel, Iran Daily reported.
Iranian economists told the Iranian Government that hugh increase in cash for the Iranian economy would lead to a disaster. They were ignored. It is not like they do not understand the truth.
Kazem Delkhosh, a member of the Majlis Economic Commission, told Mehr that the commission has agreed to delay the meeting with government representatives, which was scheduled to convene, to discuss the reasons for the price hike.
“The meeting between the commissioners and the commerce minister and the minister of economic affairs and finance did not convene today (Wednesday),“ he said, adding that Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei had notified the cabinet two days ago that the people’s mounting financial woes have to be brought under control.A senior lawmaker said earlier that erroneous economic decisions are responsible for the
In other words inflation is a monetary phenomenon. Just as Milton Friedman said decades ago.
dilemma.
Abdorreza Mesri, who heads Majlis Social Commission and who has been nominated by President Ahmadinejad as a candidate for the vacant post of minister of welfare and social affairs, said some officials who seek extra popularity have made certain decisions which led to a rise in prices of goods.
“For instance, when we increase wages by 40 percent, the employers will not pay this from their pockets and will increase the prices of their products,“ he said.
The lawmaker said that when prices of certain goods increase, prices of other commodities will also rise.
He said the recent injection of liquidity into the financial market has also aggravated the price hike dilemma.
Some other articles of interest on Iran's economy:
Iran to Enter Cash Flow Jihad Zone
Iran Cash Flow Squeezed
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2 comments:
I don't understand, Simon. Did you say that the mullahs have released large amounts of cash into the economy, and that's making it fail? If so, why?
Large amounts of money in the economy cause inflation.
Inflation is a monetary phenomenon.
Prices go up when the amount of money exceeds the amount of goods. That is inflation.
Prices go down when the amount of money is less than the amount of goods. That is deflation.
Now all this gets a bit more comlicated because one must consider the previous amount of money vs goods, but you get the general idea.
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