Who caused the fall in the value of the national currency?
Amirreza Abdoli
Year 60, five hundred
Year 70, 3 thousand
Year 80, 32 thousand
Year 90, 350 thousand
1997, probably 1800k
Write one thousand billion tomans next to each of these. These are the money balance of the Iranian economy in the last 34 years, approximately.
If you and I print a hundred-toman bill and get caught, one of these two fates awaits us: if we can prove that we are not combatants, 5 to 20 years in prison, and if we cannot prove that we are not combatants, execution. Counterfeiting money is a very serious crime for citizens. But if you and I sit at the table of the head of the central bank or banks and credit institutions, the situation is a little different. So that we can create (forge) 800 billion tomans of money a day and at the end of our tenure, we will receive a certificate of appreciation with dignity and respect, and no one will ask for an explanation from us.
It occurred to me that if arbitrary creation of money is so permissible and does not cause any problems for the economy, then all citizens can be given a printer to print money whenever they need. But if it creates a problem, it can be explained to the citizens that the creation of money in the central bank and the banking network is not arbitrary and has logic and scientific criteria. But which criterion? In these forty years, nothing in this country has increased by 3600, of course, except perhaps the suffering of the people. No measure justifies such a staggering increase in money.
Or at least you can tell the truth. It can be said that it was the arbitrary creation of money that caused the fall in the value of the national currency; Both against goods and services (inflation) and against foreign currencies (rising exchange rates). It can be said that it was due to the arbitrary creation of money that the acquaintances who borrowed the new money before others became constantly richer and the strangers (the rest of the people) constantly poorer. It can be said that the cause of the decline in the value of the national currency is neither the billionaire sitting in the White House nor these brokers and desperate people who are standing at the crossroads of Istanbul. It can be said that the cause of this situation is the signatures that were signed behind two desks in these forty years: a luxurious desk in the Central Bank and a much more luxurious desk in the presidential palace.
I am not an economist. But whenever I asked any economist what is the source and determinant of the value of money, he said the credibility of the government, and the government’s assessment of the economy’s need for money. In these forty years, except for a handful of cases, no one spoke of the need for legislation to limit the government’s monetary power. Every book and article we visited was only about asking for money. No one said anything about the money supply and still doesn’t. But instead, as you wish, everywhere is full of failures that the pundits discover in the freedom of the market and they cleverly wrap government or non-government prescriptions for it.
When a person is not an economist, he can say that give people the right to choose money so that they are not defenseless against the burning of their savings in the greedy fire of statesmen, but economists are very unlikely to be able to live such a fantasy. Basically, they are taught to be allergic to people’s freedom and right to choose, and consider the government’s authority, especially in the monopoly of money circulation, to be an indisputable red line.
Today, even if we are economists, instead of devising conspiracy theories and emphasizing the role of enemies and brokers, we should say as soon as possible to pass the laws of central bank independence and inflation targeting so that the market calms down and money growth is curbed. But of course, if we take off the glasses of macroeconomics, we will see a much more efficient solution: [remove the monopoly of money circulation] give people the right to choose money and see how easily the market will open the knot that the government has blinded.
https://t.me/sepehr_exchange_ir
This post is written by mkarimia46