According to the International Exhibition of Iranian Stone, Vahid Shaghaghi Shahri about why after 40 years of the Islamic Revolution we still could not solve the problem of inflation in our country? He stated: Inflation of Iran's economy has started from the 50s; In the 1940s, average inflation was 1.6 percent, but suddenly inflation rose to 13.5 percent in the 1950s.

Emphasizing the high growth of inflation in the 50s, he described the average inflation in the decades after the revolution and specified: In the 60s, the average inflation was 18.1%, in the 70s equal to 24.4%, in the 80s equal to 14.7% and in the 90s equal to 24% Is.

Inflation in the Iranian economy began in the 1950s / When did liquidity accelerate?

The economist, while pointing out that in the 90s, similar to the 70s, the highest average inflation of the Iranian economy has been recorded since the 1940s, ‌ added: The beginning of inflation in the Iranian economy has been since the 50s, according to monetary theories, one of the most important roots of inflation Is the growth of liquidity; This is in the context that a study of the roots of liquidity growth shows that the average liquidity growth in the 40s was equal to 17.2 percent, which in the 50s this figure suddenly reached 31.6 percent. While the average liquidity growth in the 60's was equal to 17.8 percent, in the 70's was equal to 27.1 percent, in the 80's was equal to 28.2 percent and in the 90's was equal to 27.8 percent.

"This statistic shows that liquidity growth has accelerated since the 1950s," Shaqaqi said. "We had the highest liquidity growth in the 1950s." At the same time, since the 1970s, the growth of liquidity has been high compared to the country's economic conditions.

He said that one of the causes of inflation is the high increasing coefficient of liquidity and said: the growth of liquidity in the economic literature is equal to the increasing coefficient of liquidity in the growth of the monetary base, which means that if a strong currency is issued, it multiplies the increasing coefficient. Leads to liquidity growth; In the 1940s, the liquidity ratio was 2.4 percent, which in the 1950s reached 2.6 percent, in the 1960s 1.7 percent, in the 1970s 2.6 percent, in the 1980s 4.1 percent, and in the 1990s 6 percent.

The head of the Faculty of Economics at Kharazmi University, stating that the increasing liquidity ratio is now 7.8 percent, said: "This means that every toman that the central bank prints in these conditions, the liquidity will increase 7.8 times;" In other words, if the central bank issues one toman and raises the monetary base, the liquidity will increase approximately 8 times.

What is the main cause of inflation in the Iranian economy?

Emphasizing the significant increase in the coefficient of growth in recent years, he pointed to the situation of the monetary base and specified: "Since the 1970s, the average growth of the monetary base has been over 20%, so statistics show that one of the causes of inflation in the Iranian economy is Liquidity growth and the growth of the monetary base have been accompanied by an increasing coefficient of liquidity.

The head of the Faculty of Economics at Kharazmi University continued: "For this reason, many economists believe that if we want to control inflation in the Iranian economy, the growth of liquidity must be targeted and reach below 20 percent; The European Union also has this goal, while many countries set and act on the goal of growing liquidity in their economies.

Shaghaghi said that for the Iranian economy with this situation, if we want to control inflation, we must target liquidity growth below 20 percent, he continued: In proportion to this targeting, the growth rate and the growth of the monetary base must also be targeted, because liquidity growth is equal. Is multiplied by an increasing factor in the growth of the monetary base; This is the theory of polio in economics. They believe that the growth of prices of goods and services in the economy is equal to the growth of liquidity minus economic growth; Of course, if we consider the speed of money circulation as constant.

According to Polyon theory, given the 27.8% liquidity growth in the 1990s minus the 0% growth, we should expect inflation of 28-27%; This theory states that the growth of liquidity minus economic growth is equal to the growth of prices of goods and services or inflation.

The economist stressed: "According to this theory, we must either reduce liquidity growth or increase economic growth in order to curb inflation; But in the 1990s, economic growth was zero percent, and for an economy whose economic growth is zero percent and the recession conditions and the supply side is in trouble, liquidity growth of 27-28 percent means a growth of 28-27 percent of commodity prices and Service (inflation). At the same time, in the 90's, the increasing coefficient has increased very much and every Rial that is published, the liquidity will increase 8 times.

 4 main factors in the formation of high inflation in the Iranian economy / Which factor is more?

Explaining the important factors in inflation of Iran's economy, he said: "Inflation due to monetary policy or monetary inflation (the cause of monetary policy inflation is the growth of liquidity and monetary base growth), imported inflation (because Iran's economy is import-oriented, rising commodity prices and Imported services can completely affect the inflation burden in the country, while currency fluctuations are also involved in this issue), inflation due to government financial indiscipline (government budget deficits created by government financial indiscipline) This will compensate the budget deficit from the central bank, banks, the National Development Fund, etc.).

In this regard, Shaghaghi referred to the recent withdrawals of the government from the National Development Fund and added: "Recently, the government went to the Development Fund and withdrew Rials from this fund, but since the foreign exchange resources of this fund were blocked, it looks like the Central Bank printed money." Is.

In response to the fact that this method of government is in fact the same as borrowing from the central bank; But with the difference that the government claims that it has not withdrawn a single rial from the central bank in these years! Said the same. The government has not withdrawn from the central bank, but has withdrawn rials from the National Development Fund, but the equivalent of this currency rial is sitting in the accounts of the central bank, and this is the same as borrowing from the central bank, and it makes no difference. Now, whenever the foreign exchange resources of the National Development Fund are released, this money stays in the assets of the Central Bank, and then we can say that it was not a rial withdrawal, but now it is a rial withdrawal because the fund resources are blocked and not available.

 The sharp increase in government debt to banks and the central bank in the last 2 years / What is the government's share in inflation?

The head of the Faculty of Economics at Kharazmi University continued: "Government financial indiscipline leads to budget deficits; In this case, it is always on the side of spending, and the government must have the resources to control spending, and eventually be forced to borrow from the central bank or withdraw from banks and the National Development Fund. Statistics show that government debt to the central bank and banks has risen sharply in the last two years.

Explaining the classification of inflation in Iran's economy into monetary inflation, import inflation, inflation of government financial indiscipline and structural inflation in Iran's economy, he pointed out: Due to the weakness of the private sector, the weakness of the productivity system in the economy, the impact on economic structures Complex and corrupt bureaucracies and rent-seeking structures increase production costs every year, which means higher prices for goods and services.

Emphasizing the increasing costs of production in the Iranian economy, Shaghaghi said: "This issue is also due to the weakness of the structural system of the Iranian economy due to the costs of complex bureaucracies, the weakness of the productivity system and technology, etc .; These factors shape the structural inflation of the Iranian economy.

 Is Iran's inflation more monetary or financial ?!

He said that the sum of the above factors go hand in hand that inflation in the Iranian economy is a high figure, about which factors contributed to the intensification of inflation in the Iranian economy more than other factors? Is the current state of Iran's economy due to monetary or financial inflation? "The shares have varied depending on the economic situation," he said. For example, in the context of sanctions and in recent years, when the price of currency rose sharply and the currency of 3 thousand tomans reached more than 30 thousand tomans, the inflation shock caused by imports entered the Iranian economy. When 70% of raw materials and consumables are imported and everyone is connected to the exchange rate, when the price of currency increases four or five times, the price of goods and services also increases sharply.

The head of the Faculty of Economics of Kharazmi University, stating that in different circumstances the share of inflationary factors is also different, said: In recent years, inflation has been mostly due to budget deficits and import-oriented. Structural inflation still manifests itself when other inflation factors are controlled; Suppose the exchange rate is stable, the situation of government revenue sources is appropriate and we are not sanctioned and do not have access to central bank resources, etc. We are just reaching the hard core of inflation; Hard core inflation is usually 8-9%.

According to him, when we reach 9% or 10% inflation, it will be very difficult to break that inflation because it needs structural reforms and technology must be strengthened, productivity and management systems must be improved, bureaucracies and rents must be eliminated, and so on. In 1995, we reached the hard core of inflation, تورinflation expectations subsided, ارزی the shock of currency fluctuations decreased, oil revenues flowed into the country, a recession had formed in Iran, and we reached the hard core of 9% inflation, which requires structural reforms to break Was.

 Good inflation, bad inflation and hyperinflation / Iran is one of the 5 countries that has not yet solved the problem of inflation!

"Good inflation is between 3 and 5 percent," he said. "Inflation below 10 percent is relatively mild, and double-digit inflation is high;" Hyperinflations are usually above 100-200% or even 500%. Our country is one of the 5-6 countries with high inflation in the world. Although we were not involved in super-inflation, we have high inflation.

Shaghaghi pointed out that there are at most 10 countries in the world that have not been able to solve the problem of inflation in their economies; He said: "Of course, the number of these countries is decreasing and maybe now Iran is one of the 5 countries that have not yet solved the problem of inflation."

The head of the Faculty of Economics of Kharazmi University, stating that we should know the roots well so as not to deal with the issue of inflation, ‌ clarified:  Now the presidential election is approaching and some people say that we make inflation zero and single digits and . These are the slogans. We need to know the issue well and see how we should go about this.

He stressed: "In structural inflation, we naturally need structural reforms, we must increase productivity, This is not done by order and requires the development of the private sector and the competitiveness of Iran's economy and the elimination of monopolies." Does not increase with the productivity order; At the same time, the management system must be upgraded, which requires meritocracy and the elimination of familiarity, and so on. These are fundamental reforms of the Iranian economy that require structural reforms. We have been chanting the slogan of improving the business environment for more than 10 years, but the situation is still dire, because behind it are rents, corruption, improper transactions, weakness of executives and management, and so on.

How to control imported inflation? / What is the cure for Iranian inflation?

He pointed to import inflation and emphasized: One of the causes of high inflation in the Iranian economy is محور import-oriented inflation, when 70% of parts, equipment, raw materials and intermediates are imported and imports are linked to foreign exchange prices and world prices. Inflation management is lost because the fluctuation of currency prices and world prices completely affects the prices of imported goods and services and, consequently, the prices of domestic goods and services.

The head of the Faculty of Economics at Kharazmi University continued: "If we seek to curb inflation from imports, we must reorganize the production system, produce strategic and basic goods and services domestically, and minimize dependence on the outside world;" Diversify business partners, because when we put all the eggs in a country's basket, we face the mischief of that country during currency fluctuations, etc., and eventually we will have a shortage of supply and an increase in the price of goods. This sector needs reforms in the production and trade system.

He pointed to inflation caused by the government's financial indiscipline and added: "This sector needs structural reforms in the budgeting system; For many years, we have been looking to implement budgeting, make expenditures transparent, diversify the revenue system, and so on. At the same time, our budgeting system is still bargaining, incremental and flawed, costs are rising and revenues are not enough, and the government is relying on the resources of the central bank, banks and the National Development Fund to run its budget deficit.

Shaghaghi added: "Repetition of this situation means inflation due to the government's financial indiscipline, like what happened this year, the budget of 1400 was closed with a budget deficit of more than 300-400 thousand billion tomans, and in this case the government has to go to different sources." Reach out, which leads to inflation.

 What is the main root of Iran's inflation? / The imbalance of thousands of billions of banks fuels inflation

He pointed to monetary inflation as the main root of inflation and said: "The growth of liquidity has several causes and one of the reasons is the budget deficit; Banks have been creating money for years, and this money creation is one of the roots of liquidity growth. The root of money creation in the banking system lies in the imbalance of banks. Banks 'balance sheets are formal and formal, a review of banks' balance sheets shows that our banks are facing high imbalances. More than one thousand thousand billion tomans of imbalance in our banking system! This inequality is the accumulation of many years.

Shaqaqi by asking the question why the imbalance of banks has been created? He said: "Banks have paid facilities and these facilities have become overdue receivables either due to corruption, or incorrect assessment and weak supervision of the central bank and banks, in order not to show the bad performance of the bank management, facilities to some of these bank debtors." Have been re-paid and removed from the arrears section. The higher the bank arrears, the weaker the bank's management, which is why banks lend to their customers to show less of their arrears.

Currently, there are more than 150,000 billion tomans of overdue receivables in the banking system, but the same amount of extended loans have been registered in banks; Therefore, in reality, the overdue receivables of banks are more than 300 thousand billion Tomans; Extended loans also suffer the same fate as overdue claims. What can a party do with a 20 billion extended loan when it is unable to repay 100 billion?

Explaining other factors influencing the imbalance of banks, he said: "In some cases, banks have made investments that have not received a response; Some banks have blocked and frozen resources (they have bought buildings, etc.). Therefore, one of the roots of liquidity growth is the creation of money in the banking system, and one of the roots of the creation of undisciplined money is the imbalances of the banking system, which need to reform the banking system.

The head of the Faculty of Economics at Kharazmi University said: "If you want to curb the growth of liquidity, you must make fundamental reforms in the banking system to make the balance sheets of banks real, while the central bank must monitor the creation of money in the banking system." This is a heavy task. We have a thousand thousand billion tomans imbalance that has made the work very difficult. One of the roots goes back to the banking system, which cannot be solved with slogans, because it requires structural reform of the banking system, reform of the law, financial resources, reform of the banking management system, and so on.

Regarding the management of the increasing liquidity ratio and its effect on inflation, he explained that the legal reserve rate and additional reserves should be reformed and the growth of the monetary base should be controlled in order to reduce the increasing liquidity ratio. Therefore, controlling the growth of liquidity requires reforming the banking system and reforming monetary policy, and it is a very heavy task that needs to be done.

 Inflation cannot be solved with slogans / Where did the 3 trillion liquidity come from?

Shaghaghi, stating that the last number of liquidity has been more than 3 thousand thousand billion Tomans; He specified: Liquidity in 1398 was about 2 thousand and 472 thousand billion Tomans, which with a growth of 30% to 3 thousand thousand billion last year. Therefore, the government's debt to the central bank, government debt to banks and the central bank, banks' debt to the central bank, etc. must be controlled. All need to reform monetary and fiscal policies and coordinate with each other.

He considered another reason for high inflation in Iran's economy in excess of demand and rising prices and said: "Here, the system of production, distribution and import must be coordinated; The same things that happened recently in the market are due to this inconsistency, one day it is not chicken and the next day it is eggs and oil and ...

He continued: "For this reason, I say that controlling inflation means a series of fundamental reforms in the economy that must be done in various areas, including reforming the financial system and budgeting, banking system, production, imports, costly structures and ....". These fundamental reforms must be made to control inflation.

The head of the Faculty of Economics of Kharazmi University, stating that inflation is not controlled by slogans, added: "In these years, the views were mainly slogans and we did not seek to solve the problem." These reforms require strong economic management, financial resources, fight against corruption and rent, courage in structural reforms, and so on.

According to Shaghaghi, the sum of these factors made it impossible for us to control inflation after 50 years, even though the main part of Iran's economic problems is inflation; When we have inflation, we can not compete with foreign competitors and therefore we can not be export-oriented; When we have inflation, the interest rate of facilities is high and production costs go up, when we have inflation, hoarding happens, when we have inflation, people's purchasing power decreases every year and we can not control the exchange rate because it is related to inflation and must be proportionate. Increase with inflation.

 Which groups benefit from inflation? / Inflation costs the poor

He answered the question about which groups benefit from inflation, saying that the pleasure of inflation in the Iranian economy is for the rich, that in the Iranian economy, 8 tenths of income pays for inflation and 2 tenths of the rich pay for inflation. They enjoy inflation, which is why the two deciles happen to infiltrate different areas and do not allow structural reform.

The head of the Faculty of Economics at Kharazmi University in response to the question of who enjoys inflation? He said: "Importers who use imported rents, people who have astronomical fortunes without paying taxes, their wealth will be multiplied by inflation; One or two rich deciles of Iranian society will benefit from inflation and eight low-income deciles will pay for inflation.

He said that low-income deciles pay more for inflation, adding: "These people do not have a home, do not have income, and ... the pressure of inflation is on the shoulders of these 8 deciles, while all over the world the pressure of inflation is on the rich, but in the country We owe the cost of inflation to the poor because our tax, banking and subsidy systems do not work. So the cost of inflation is on the poor.

Shaghaghi emphasized: In the world, when we have inflation, the rich pay taxes by increasing their wealth, but in Iran, the rich are connected to the banking system and in the conditions of 40% inflation, they take billion loans with 18% interest, considering that the real interest rate in Iran is now negative. It is 22%, because inflation is 40%, with an 18% loan, it has gained 22% at the same time. Who has access to large bank loans? People who are connected and ....

The same is true of the subsidy system, which is at least 20 times cheaper than the cheaper energy carriers, because they have many cars, factories and homes. The hidden subsidy in our country is at the disposal of the rich, while the subsidy is for the poor! Because our three key systems have failed, the cost of inflation has fallen on the poor and the poor are getting poorer every day.

What will be the inflation of 1400? / Inflation of 115% in the last 3 years!

"In the 1990s, all 24 percent inflation fell on low-income deciles," he said. "In the last three years, we have had more than 115 percent cumulative inflation, based on 38 percent inflation in 1997, 42 percent inflation in 1998 and 36.5 percent." The percentage is 99 years. This inflation puts a heavy strain on the low-income deciles that have crippled their lives. Until we can fix the roots, inflation will continue, and in this inflation, because the three redistributive systems of our wealth (banking, subsidy and tax) do not work, the costs of inflation will fall on the poor.

What about inflation in 1400? He said: "We have a high budget deficit in 1400, which is clear, but this year inflation expectations are slightly controlled, the amount of oil exports is increasing, part of the blocked foreign exchange resources will probably be released, and if Borjam succeeds, part Foreign exchange earnings will improve, which can offset part of the budget deficit so that it does not show itself in inflation.

Shaghaghi said that the year 1400 has special conditions, inflation expectations have now been curbed and now there is no expectation to see an increase in the price of the dollar and other assets; He said, of course, these are all temporary housing. Because our oil revenues will not last more than a decade; The world will switch to oil by 2030 and look for alternatives to oil; We can no longer rely on oil for more than a decade, the Biden administration and the next US administration may have responsibilities in foreign exchange openings, and we can not rely on this much.

"At 1,400, our inflation will be around 20 to 22 percent," he said. This inflation will also be due to lower inflation expectations, coverage of the budget deficit due to alternative oil and non-oil revenues, control of fluctuations and lower exchange rates.