The end of the dollar
This article is published with the positive vote of 5 members of the research group and the negative vote of 4 members in addition to the negative vote of Mohammad Hossein Adib
The root of the country’s problems is one thing: the growth of money over the past 30 years has exceeded the growth of goods, and if the growth of money exceeds the growth of goods, the difference will be neutralized by the inflation of Rial.
If the inflation in Iran is higher than the inflation in the rest of the world, the difference will be neutralized by increasing the exchange rate
Has the inflationary burden of additional money been neutralized when the dollar reaches the existing rates?
The answer is absolutely no, at least half of the available liquidity is excess
Excess liquidity must be neutralized and it will definitely be neutralized, so it can be neutralized in two ways:
The first solution is for the government to take no action. In this case, the excess liquidity maneuvers so much in the currency and housing sector to raise the price of currency and housing above the depositor’s inflationary expectations, that is, it makes the dollar and housing so expensive that The depositor also evaluates the purchase at that level as irrational and voluntarily abandons the currency and housing sector. In this scenario, if the depositor raises the dollar above 14 thousand tomans, the market will react in two ways:
Now, with 10,300 Tomans, sales (average sales) in the country is 40% of 2016, when the dollar crosses 14 Tomans, sales in the country will decrease to 20% of 2016.
By reducing the sales to 20% in 2016, 80% of those who have bank debt will not be able to pay their bank debt, when 80% of the bank debt is not paid, banks will not be able to pay interest on deposits, and with the inability of banks to pay interest on deposits The whole game is over. Banks have to pay 7% interest to depositors for ten years, but they pay 20%. Two-thirds of the deposits are illusory interest.
When the entire society evaluates two-thirds of the interest paid as illusory and wind, everything will be over, the imaginary wealth of the depositor will become clear.
The next day, the price of currency and housing will fall
Now the price of the dollar has been set to such an extent that the salaries of employees and retirees are 63% lower than the previous year
Now the exchange rate is set at a level where 70% of the shopkeepers are not able to manage their business with economic justification
That fall will solve everything, the price of the dollar and housing will adjust so much that it matches the purchasing power of the poor and middle class.
Second solution:
If the central bank does not intervene, the economy will move in the direction of the first solution, but there is a second solution, 50% of the deposits are one-year long-term deposits, if similar to Argentina, the central bank will take deposits above 2 billion tomans for one year for a period of three Freeze the year, everything will be solved, 50% of one-year deposits above 2 billion tomans will be blocked for a period of three years
Mohammad Hossein Adib’s footnote on the analysis of 5 members of the research group:
There are 800,000 surplus liquidity in the country, and this surplus liquidity cannot be diverted every once in a while and destroy a part of the country’s economy, it must run out of energy at once.
@adibmh
This post is written by FaraDanesh1