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Mr. Milton Friedman has the most beautiful definitions of inflationary economics
Balloon example!
If we consider the inflationary economy as a *balloon*, then *printing money without support* is the same as dying inside the balloon, and the *price level* is equal to the balloon level.
What is money without support? The same money that you used to pay to Qarz al-Hasaneh institutions, which until a few years ago people were dying and protesting at their door, do you know where it was paid from? ok
Making a number in the creditor’s account, the main currencies, the dollar and gold, were taken out of the country and the like. let’s pass
Now consider the time when money printing happens! What does printing money mean?! It means increase in liquidity! Increase in the amount of money in people’s hands in banks and savings.
So, with the increase in liquidity, which causes the price level to rise, it is equivalent to dying in a balloon, which causes the balloon to become bigger (raise the level)!
Now how does it cause swelling?
Think about it, the university canteen cooks a certain amount of food for 1000 tokens and gives you a food stamp for each token, now the university will print extra tokens from tomorrow, but the university canteen doesn’t know and the food comes in the same amount, after a while what Is something happening?
The university canteen is forced to give a smaller portion of food to each person to reach everyone, or to give one meal for two tokens, which is called inflation.
Now here is the question; Expensive factor of inflation or inflation is the factor of expensiveness
The fact is that high prices do not cause inflation! On the contrary; It is the inflation or increase of tokens that is the expensive factor! how!? In this way, the price will not be created by itself unless the control room uses the money printing machine or the extra token!
Who is the control room? It’s true that Agha Balasar is the head of the central bank!
Now the story becomes problematic when the same Mr. Dolat wants to keep the price of goods or industry or production at a low level by force and rent! What does it do? It’s like if you put your finger on a part of the surface of that balloon, what happens? That part of the balloon goes in, but the opposite side inflates more
It is true, the pressure will be transferred to other sectors, such as the exchange rate, which will keep it low for a while, but on the other hand, the stock market or housing will grow strongly.
Now that this government has entered the embargoed period, it has airlessly removed its finger from the balloon to see if the petro dollar left in its pocket can pay for its self-service in this situation? that the pressure that had gone to the housing sector will return and the exchange rate will jump, and the housing market will enter a period of stagnation for a long time and the wind is so-called dormant.
The government did the same thing with the dollar for a long time and by keeping the dollar low, it took liquidity to the stock market, and until it realized that the dollar has taken its hand off the dollar enough to make the stock market fall asleep.
In short, that:
Basically, we are the ones who put money in banks or financial institutions in search of big profits, so that people get greedy and prefer to escape, and we are always used to the ups and downs of the markets in order to get temporary profits from the rise and fall of the markets, we cannot hope. that the cycle of productive economic activities should be used, because we are all trying to discover the place of giving by the finger of the government in order to create wealth.
Governments always win in this game
In the hope of awareness
Majid Fazli
@market_reviewer
This post is written by majid2020