Saturday, December 11, 2010

Rising Inflation, Why?

In today’s issue of Donya-e Eghtesad (“World of Economy”), Iran’s leading business journal, Mehran Dabir Sepehri examines the reason behind the rising inflation in the recent months and takes issue with the explanations offered by the director of the central bank and the minister of economy. Click here to read the article in Farsi. Following are Sepehri’s main points:

  • The director of the Central Bank of Iran (CBI) has blamed psychological factors for the rise in prices, presumably the public expectation of the impending removal of government subsidies of the energy sector. The minister of economy blames the rise in oil prices and the start of the academic year for the inflation.
  • Sepehri believes the culprit is CBI’s own policy of dramatically increasing the money supply in the past two years, whose effects are now being felt. Sepehri points out that two years ago the total amount of currency in circulation in the country was $170 billion. The figure reached $235 billion last year (in Iranian calendar). No figures have been published for the current year, but the circulation volume is expected to be even higher this year. Sepehri predicts continued rise in prices because of the rise in money supply.


Anonymous said...

"Rising Inflation, Why?"

The zionist pig and american dog have caused this inflation
We must attack them there is nothing they can do to stop us
soon we will rule over the US and its pig Israel

Anonymous said...

Thats a usual thing (inflation) that happens every winter and every xmass

Stop insulting the pigs and stop doing as if you are an Iranian (you dog)

Dariush London

Anonymous said...

Equating pigs to Zionists is a great insult to all pigs indeed.

Anyway, on a nore serious note, the problem with inflation is partly caused by rising incomes in Iran and increased purchasing power of the growing middle-classes and slow abolition of subsidies. Even the Zionist institutions like the "world bank" and IMF (International Monetary Fraud) now place Iran's per-capita income over $14,000 and rising. It is a case of too much money chasing few goods. Happens in all growing and prosperous economies. A look at Iran's M1 and M2 money supply gives a clear indication of rising incomes and growing money in circulation. With oil prices headed for over $100 a barrel again,inflation will remain high as government coffers overflow. A lot of new industrial projects and infrastructure development are also coming on line, many with Asian partners, and perhaps a Meglev train to Mashad.