Banking system support for production with credit management policy

According to the economic correspondent of Fars News Agency, one of the issues that has been considered by the Supreme Leader of the Revolution in recent years has been the issue of production and support for production. In recent years, supporting the producer has not been one of the priorities of previous governments due to the outward appearance of the government. But the 13th government has taken a different approach to boosting domestic production.

Mohammadi, a faculty member and an expert on Iran’s economic issues, says on the subject of supporting production: “Another expression of this year’s naming, if we want to forge it, the Supreme Leader has named it as the rule of production.” In the country’s economy, everything is important for everyone, especially the statesmen, except production. It is said that in the short run, production and inflation are in conflict with each other and, so to speak, they are in debt. So we have to abandon production and start inflation.

In the long run, these align. The banking system is to blame for the recession, unemployment and the separation of the real sector from the monetary and financial sector of the economy. Banks have been financing unregulated financing in the name of credit creation, speculation and speculation over the years. Banks do business and buy financial assets and keep that liquidity here. The liquidity that must be spent on production goes to the banks and their business and does not reach production at all.

The first part of the dialogue is entitled “The country’s financial and monetary markets do not support production.” In the following, you will read the second part of Fars’s conversation with Mehdi Mohammadi:

Fars: Did not the previous government hear the sound of the disappearance of production in this economic situation?

Mohammadi: Governments do not hear the sound of the destruction of production. No one notices a product that is both in demand and whose costs have increased due to price reforms. Many producers have left the economy due to recession and inflation, and their voices have not been heard. Interestingly, the government had previously given the economy to a housing company called Negotiations, and it was handing over everything after the negotiations.

Everyone thinks that negotiation may improve the situation, but this way the problems will shift to the future. The previous government sought to negotiate and release some of our assets; At that time, they said that we do not have production, and many brands with our history have gone bankrupt and are out of business, and the field has been opened for importers of these goods.

Then with the coming to power of a person like Trump As it kicks into negotiations, a major shock comes to the economy. In this situation, the quasi-money produced in our banking system turns into money and leaves the banking system, and this in itself causes a currency shock. In this situation, the problems of production appear one by one and it becomes clear what has happened to the country’s production. The imbalance of the banking system has exceeded the threshold and if one bank faces a problem, other banks will be thrown out of their problems in a domino effect and the banking system will be in tension.

In such circumstances, can we say that the Rial will be our national currency? The government has no other choice. Buy these toxic assets from the banking system, which will prevent those who undermine the central bank’s independence from the government, or if it does, the budget deficit and increase in liquidity will be staggering.

* Bank losses are the main cause of inflation in the country

Fars: The government has no choice but to reduce the effects of this loss on banks and must also compensate for its budget deficit. In this situation, will inflation increase again?

Mohammadi: Eliminating the inflation caused by the losses of the banking system is much more than the inflation of the monetary deficit or the expansionary fiscal policy that governments are fleeing from. That is, the amount that the government could spend both to compensate for the purchasing power of the people and to actively finance the production infrastructure, should allocate much more to the banks.

At the same time, we have maintained the banking system, which will eventually lead to the destruction of production and producers, and on the other hand, the death of the rial will be definite, and the banking system will continue to struggle with these problems. In addition to the fact that our unit of calculation has become almost non-real in some places, our exchange intermediary will also change, directly or indirectly. Non-real It becomes. In this regard, we must also consider the social debates and social resilience of the people.

* We are still implementing Western versions

Fars: In these circumstances, what are the main problems of the country’s economy?

Mohammadi: The semantic system we are looking for is the solution to this issue. Some friends raise the issue under the title that can we be Muslims and not accept Islamic economics? Some Muslims turn to infidels when they have a dispute.

If we believe in Islamic economics, why not use the versions of Islamic economics? Why do we not consider the economic discourse of Islamic economics at all? Why are you still re-running IMF structural adjustment versions? Every 4 or 5 years, we go back to the old days and re-execute the same versions and people see the damage. What is the semantic system and discourse of resistance economics? This discourse says that the main problem in the economy of the Islamic Republic is recession and unemployment. The cause of the problem is a decrease in supply and aggregate demand. No increase in demand. It is said that the demand in the Iranian economy is high and money must be collected. Who said that? Look at the per capita consumption of the bottom 6 deciles of income.

* Banks have set up a brokerage system in the name of creating credit

Fars: In a situation where the country is dealing with unemployment and recession, why are so many problems created for the producer?

Mohammadi: Our next discussion about Anti-production Is. Another expression of this year’s naming, if we want to forge it, the Supreme Leader has named it as the rule of production. In the country’s economy, everything is important for everyone, especially the statesmen, except production. It is said that in the short run, production and inflation are in conflict with each other and, so to speak, they are in debt. So we have to abandon production and start inflation. In the long run, these will also go away.

The banking system is to blame for the recession, unemployment and the separation of the real sector from the monetary and financial sector of the economy. Banks have been financing unregulated financing in the name of credit creation, speculation and speculation over the years. Banks do business and buy financial assets and keep that liquidity here. The liquidity that has to be spent on production goes to the banks and their speculation, and it does not reach production at all, to say that the producer has run into trouble because the demand pressure has risen. People are said to be demanding other assets in order to prevent their currency from depreciating against inflation.

* We have forgotten the resistance economy

Fars: What solutions should be used to get out of this situation so that we can pass this stage with the least difficulty?

Mohammadi: The main solution of the discourse of resistance economy is the discussion of integrated management of the economic system in the service of removing obstacles and supporting the leap of production. The next issue is to direct credit to production, which will be possible at this point in time with expansionary fiscal policies. The next discussion is dealing with unproductive activities. This issue is still abandoned. Why is the economic efficiency of speculative and speculative activities still higher than productive activities?

Many manufacturers have given up their jobs and moved on. If we are concerned about this issue, we must reduce the profitability of brokerage and speculation activities and guarantee the profit of production activities so that the producer himself stands against the brokers and does not become a broker. Created solutions based on these strategies فرقوه O is in charge of production. That is, the rule of production in the country must change. That single command in the camp of the resistance economy that the Supreme Leader proposed and demanded several years ago and became the chicken camp, to be set up in the true sense of the word. This institution فرقوه O, have a judicial, executive, intellectual, financial arm.

* Credit management policy to be implemented in the country

Fars: You talked about creating money by the country’s banking system. What should be done to solve this issue?

Mohammadi: A very important issue that needs to be addressed is the reform of the banking system and the restriction of money creation by commercial banks. Especially private commercial banks. The argument that needs to be made here is the increase in the legal reserve rate and the ban on bank overdrafts. This is very important.

Life, birth, continuity and social acceptance of money are due to its legal and governmental support. What the government owns is why it should beg in front of the banks to borrow from them and sell the bonds to the banks. In this way, money and liquidity are not generated. The next step is to implement a policy of directing credit through discriminatory legal reserve rates. Banks that grant production facilities should grant them discriminatory legal reserves. That means they can have less legal reserves.

* Banks pay imaginary interest

Fars: Regarding fiscal policy, how should the government act in order to properly support production?

Mohammadi: The next discussion is the imposition of a tax on activities Merchant Is. CGT or capital gains tax can be a tax on wealth as well as a tax on interest. It does not mean that the money stays in the deposit accounts, receives interest and has no return. This money must be invested in production. Such deposits not only do not reach production, but only receive a profit. A profit that is imaginary and has no real origin.

If this money enters production, it can cause a jump in national production and prosperity. Creating sustainable employment, balanced growth, attracting liquidity to the manufacturing sector and controlling inflation are the benefits of bringing money into the real sector of the economy, namely production. Sufficient goods and services are produced in the economy and liquidity can be attracted to this part of the economy, and production, like a sponge, can attract more liquidity and stabilize the country’s monetary and financial market.

* Parliament should hold the oil company accountable

Fars: There was talk about the budget for 1401. Is Can it make the budgets of state-owned companies that are difficult to oversee transparency?

Mohammadi: The budget of state-owned companies is more than 2200 thousand billion Is Tomans. Eighty percent of the budget of state-owned companies, which is not transparent at all, belongs to six companies. One of those companies is the National Oil Company. No one still knows how much the National Oil Company earns and how much it costs.

MPs ask how much is your income and expenses? They say this is a secret and cannot be said. Who said that 14.5% of the total oil revenue of the country should reach the National Oil Company without any transparency. If their output is real and equivalent to their income, they build refineries and produce products, they should be paid accordingly. This is the National Oil Company. It is governmental. Total, a multinational corporation in Iraq, accounts for 3% of oil revenues, with the remainder for the Iraqi government.

* In a full-blown economic war, we need an intelligent information system

Fars: The Parliamentary Integration Commission has opposed the removal of 4,200 Tomans. How can this be resolved?

Mohammadi: The parliament has conditioned the elimination of 4200 Tomans. Provided that the prices of basic goods remain the same. Is this possible? If there was honesty in this action, the parliament should not have approved the general budget of 1401. The government cannot comply with this condition. This condition requires 200 to 350 thousand billion tomans of resources for this condition to be implemented. In this full-blown economic war, we need an intelligent economic information system.

This intelligent economic information system can significantly contribute to the implementation of government economic plans in all areas. Let me make one last point about the stock market, based on which religious, moral reason and which justice index do you say there should be a capital market stabilization fund? We have to invest oil money that belongs to all generations so that certain people can benefit from the stock market. However, the 1401 contractionary budget will continue to make the stock index even more negative.

end of Message/