§3. Forms and methods of anti-inflationary policy
Inflation manifests itself in a continuous general increase in prices, the real value of personal savings, stored in cash or in accounts, decreases. The rise in prices inexorably reduces the amount of goods that the owners of such savings are able to acquire.
Under inflation, first of all, the real income of the recipients of the fixed nominal income decreases, i.e. employees of budgetary organizations, pensioners. It also reduces the savings of the population. Inflation redistributes income between creditors and debtors, among which the debtor wins.
Inflation affects the living standards of every person, all segments of the population and all areas of the market. There is private inflation (for a certain type of product) and general inflation, which is dangerous for the economy.
The main indicator of inflation is when a person's income grows more slowly than the prices of goods.
During the period of inflation, the current real income of consumers decreases. Living standards are falling as indexation and other methods of protecting the population from inflation cannot keep up with price movements.
The effect of inflationary taxation is disastrous. It manifests itself in an economy with a progressive system of income taxation, which causes social stratification, deepening of property inequality of the population. During inflation, income redistribution occurs, which is unfair.
Inflation can be fought with monetary reform or anti-inflationary policies.
Methods for conducting monetary reform include the following:
- nullification - the announcement of the cancellation of a depreciating currency and the introduction of a new one;
- devaluation - a decrease in the gold content of monetary units or a decrease in the exchange rate of the national currency against gold, silver and foreign currencies;
- denomination (the method of striking out zeros) - the enlargement of the monetary unit and the exchange according to the established ratio of old banknotes to new ones. In the same ratio, prices, tariffs, wages, cash balances on accounts, balance sheets of enterprises are recalculated.
Anti-inflationary policy is a set of measures for state regulation of the economy aimed at suppressing inflation.
Anti-inflationary policy can be implemented in two ways:
Deflationary policy - it is the regulation of money demand through a monetary and tax mechanism. It is carried out by reducing government spending, raising interest rates for loans, increasing the tax burden, restricting money supply... This type of anti-inflationary policy leads to a slowdown economic growth.
Income policy carried out as a result of parallel control over prices and wages by freezing them completely or setting a limit on their growth. Its implementation can cause social contradictions.
The main instruments for regulating Russian inflation were monetary policy, with the help of which the Government of the Russian Federation in the 90s. tried to influence the money supply. However, as a result of such measures, the following consequences occurred:
Non-payments (non-payment wages, debts to suppliers and from customers, debts to the budget, etc.). An increase in the money supply under these conditions could lead to hyperinflation.
The repayment of government spending in the event of a budget deficit requires the Government of the Russian Federation to resort to borrowing in the domestic market and to increase the tax burden on enterprises that do not have enough working capital for economic needs. Another way is external borrowing, and, accordingly, external debt and interest on it.
Anti-inflationary policy Is a set of measures for state regulation of the economy aimed at suppressing inflation.
1. Deflationary Monetary Policy (Demand Management) carried out by limiting money demand by the following methods: increasing taxation in order to increase budget income and reducing the purchasing power of the population; a reduction in government spending, an increase in the discount rate of banks, a decrease in demand for credit and an increase in savings; an increase in the required reserves ratio; the sale by the Central Bank of government securities that generate a fixed income.
2. Income policy means the establishment of parallel control over the growth of prices and wages by freezing them completely or setting limits on their growth.
3. Indexing policy means the indexation of losses of economic entities due to the depreciation of money. The government of the Russian Federation periodically indexes pensions, scholarships, allowances, and wages, but due to the lack of funds, this is carried out without the necessary linkage with price increases both in time and in the amount of compensated losses. Therefore, the indexation carried out does not always have a significant impact on the standard of living.
4. Policy of stimulating the expansion of production and growth of savings of the population.
Classic methods of fighting inflation
To overcome successfully, it is necessary to eliminate its causes.
Keynesian approach
The Keynesian approach is based on the premise of a shortage of goods in the market due to a reduced supply with incomplete capacity utilization. The solution to the problem is to stimulate investment demand, as a result of which, taking into account, will increase. The growth of national production will ultimately lead to lower prices, i.e. to reduce inflation.
Keynesian stabilization programs were widely used in the 1930s. and after the second world war. However, by the 70s. active government policy has led to rapid growth and, which has caused the need to revise the methods used.
Monetarism
The new economic trend (monetarism), which replaced Keynesianism, used the main ideas of the neoclassicists. Monetarists believed that government intervention in the economy should be minimized and limited mainly to the monetary sphere. Inflation has also been declared to be a purely monetary phenomenon associated with an increase in the economy. The method of combating inflation, according to monetarists, is limiting the money supply: the government should increase and decrease the amount of money in the hands of the population. In this case, it will decrease and inflation will decrease. Simultaneously with limiting demand, one should strive to increase. This can be done by selling part of state property (partial privatization), strengthening, and supporting small and medium-sized businesses. A feature of monetary programs is adherence to the concept of an open economy - the country should be integrated into and open to the inflow of foreign capital.
OutputThe considered methods of fighting inflation are contradictory in nature. Therefore, the choice of anti-inflationary policy depends on the specific economic situation in the country. It should be remembered that monetarist programs are tougher than Keynesian ones and have a much stronger effect on socially unprotected segments of the population; therefore, their implementation period should be much shorter.
Inflation and anti-inflationary policy in Russia
Inflationary phenomena have developed in the domestic economy even during the period of the administrative-command system - in the 80s of the XX century. The peculiarity of these processes was the prevalence of non-monetary factors of inflation, including:
- disproportionality of the structure of the economy - stable growth rates of heavy industry producing means of production amid stagnation of industries producing consumer goods and the service sector. So, in 1989, 1 rub. money supply in circulation accounted for 18 kopecks. consumer goods in retail;
- stock distribution of the means of production between the enterprises-producers through the system of state supply bodies, which artificially created their deficit;
- planned centralized pricing system based on lower prices for natural resources (“cheap resources” policy), which led to a high degree of material consumption of products manufactured by enterprises;
- the low level of domestic prices for resources, which predetermined the resource orientation of exports, since the income from the export of cheap resources in terms of cost significantly exceeded the income from the export of finished goods;
- excessive production capital investments in the defense industry - up to 50% of GDP;
- the formation of monopolies of large-scale production: a high degree of controllability of large industrial complexes, as well as the requirements for the rational use of limited resources. The result was a high level of monopoly in the form of subject specialization of enterprises - about 94% of products were produced at enterprises that own more than 50% of the market;
- intensification of inflationary processes after the economic reform of 1987, due to the excess of the growth rate of wages in comparison with the growth rate of labor productivity.
Inflation in the first half of the 1990s was formed, on the one hand, as a result of “inflationary tension” that developed during the period of the administrative-command system of the economy, and on the other, under the influence of factors of market transformation of the economy.
The primary (direct) factors were:
- liberalization of prices and economic ties;
- inclusion of the Russian economy in the world economy;
- transition to a market mechanism for the formation of the ruble exchange rate and its internal convertibility;
- introduction of new indirect taxes;
- outstripping growth of prices for fuel and energy resources and tariffs for transportation;
- export orientation of industries, leading to a high degree of interaction between domestic and world prices;
- a significant number of intermediaries in the sale of products to the end consumer;
- the understated nature of prices during the period of the command-administrative economy;
- high impact of imported inflation.
The complexity and multifactorial nature of inflation in Russia has led to the formation of a reproduction approach to the theoretical substantiation of its causes and a set of mechanisms for managing inflationary processes.
The reproductive approach to the concept of inflation as a multifactorial socio-economic process includes the following interrelated elements:
- the main reasons are imbalances in the reproduction process (including production, distribution, exchange, consumption), as well as erroneous economic policies;
- consequence - excess money in circulation compared to real needs economic turnover in money;
- essence(the main form of manifestation of inflation) - a stable general rise in prices and depreciation of money in relation to goods and foreign currencies;
- socio-economic consequences - redistribution of national income and national wealth in favor of monopoly enterprises, the state, the shadow economy by reducing the real wages, pensions and other fixed incomes of the population; strengthening of property differentiation of society; undermining the driving forces of economic development.
The reproductive approach to assessing inflation as a multifactorial process is aimed at developing a comprehensive program to reduce its rate, including the regulation of both monetary and non-monetary factors.
Regulation of monetary factors of inflation v modern Russia associated with a number of problems:
1. the predominance of the currency component in the formation of the money supply of the Bank of Russia due to the one-sided development of the Russian economy and the increase in world prices for export products of the fuel and energy complex. The main drawback of money emission in Russia is a weak connection with the formation of money supply by lending to the economy, therefore, it is important to increase the credit component of the money supply, taking into account the conditions of the reproduction process and the costs of domestic economic turnover. In Russia, the connection remains, albeit one-sided, with the money demand of the export-oriented raw material industry, which is dominant in the economy, which stimulates the development of related industries and is one of the largest investors. Thus, the money issued by the Bank of Russia through the purchase of foreign currency earnings from exporters is exchanged for a part of the country's national income;
2. the weak impact of classical instruments of monetary regulation (refinancing rates, required reserves, open market operations) on the formation and redistribution of financial resources in the economy;
3.the orientation of the monetary credit policy The Central Bank of the Russian Federation to regulate the emission of central money only. The issue of private money issued by financial institutions is essentially uncontrolled. In this regard, it is important to improve the structure of the money supply by reducing the use of monetary surrogates and foreign currencies in economic circulation. The study of the relationship between official, private money and foreign currencies used in the economic turnover of Russia is important for regulating the coefficient of monetization of the economy (the ratio of the average annual money supply to nominal GDP). This coefficient in Russia is gradually growing, but so far it is 2-3 times lower than in a number of other countries (in the USA - 53%, Japan - 125%, China - 204%). An increase in the monetization of the economy through the emission of private money can directly provoke inflation. Proposals to increase the monetization of the economy through the use of state gold and foreign exchange reserves and the stabilization fund do not take into account the inflationary consequences of such measures. To avoid these consequences, a program of using the stabilization fund for the implementation of fast-payback investment projects is required.
Comprehensive anti-inflationary measures in the medium term provide for a conservative monetary policy that regulates money supply in accordance with the real money demand of economic turnover, depending on the size of GDP. Emphasis is placed on slowing down the velocity of money circulation to 2.8-3 revolutions in 2009. The need to regulate the money supply in a qualitative aspect is substantiated - reducing the currency component of the issue and expanding the money supply through refinancing banking system... It is planned to expand the use of such refinancing instruments as rediscounting of bills, swap operations, and open market operations.
Regulation of non-monetary factors of inflation - it is primarily a rise in prices that arises regardless of monetary factors. Non-monetary factors of price growth in Russia include:
- change in the exchange rate of the ruble against the dollar and euro;
- growth in production costs and tariffs for the services of natural monopolies;
- increase in budget wages, pensions;
- flight from depreciating money to goods;
- growth in world fuel prices;
- markups of numerous resellers;
- "Deferred inflation" and inflationary expectations;
- the absence of market competition in Russia, which affects the price reduction.
In this regard, Russia needs to develop a pricing policy based on a set of principles that reduce the non-monetary price component of inflation. These principles should include:
- demonopolization of the economy;
- control over the established limits for the growth of tariffs for the services of natural monopolies;
- stimulating market competition;
- reducing the number of resellers;
- legal regulation of trade margins, taking into account the social factor and different price elasticities of demand for goods and services;
- effective regulation of customs duties on exported and imported goods.
In the set of anti-inflationary measures approved by the Government of the Russian Federation, the leading role is played by the mechanisms of influence on pricing. These include:
- limiting the growth of regulated prices for the products of natural monopolies and tariffs for housing and communal services while strengthening control over the costs of monopolists;
- reducing the growth rate of prices for fuels and lubricants by stimulating competition, developing exchange trading, reducing the tax burden and technological renewal of the oil industry;
- a slowdown in the growth of prices for food products against the background of stimulating the supply of these products and improving the regulation of their imports.
An important component of the management of non-monetary factors of inflation is the regulation of wages and incomes that exceed the growth of labor productivity. The upward trend in wages in Russia has become global due to such phenomena as higher wages of civil servants and deputies, shadow wages, and higher wages of public sector workers. In order to avoid inflationary consequences, it is important to coordinate wage increases taking into account the dynamics of labor productivity and to regulate the excessive growth of cash incomes by tax methods.
Recovery plays a significant role in reducing inflation in Russia federal budget on the basis of improving macroeconomic indicators, increasing tax revenues, turning the budget into a development budget, reforming budget process, the introduction of performance-based budgeting in the public sector of the economy.
To ensure economic growth without increasing inflation, it is necessary to modernize the banking system and reduce the inflationary component in its activities. The decisive steps in this direction should be:
- increasing the capitalization of banks, attracting medium-term and long-term resources into their turnover;
- improving the system of refinancing banks to maintain their liquidity and current activities;
- decrease in the cost of credit services;
- ensuring the stability of banking activities through the development of macro-instruments to reduce risks;
- increasing the competitiveness of the Russian banking system;
- improvement banking control and supervision.
The accession of our country to the WTO may make the problems of high inflation in Russia more acute, since this will lead to the convergence of domestic and world prices for energy resources, and may lead to a decrease in the efficiency of raw materials exports. In the context of the openness of the Russian economy and the abolition of currency restrictions (from July 1, 2006), the influence of external factors on economic growth and inflation is increasing. The state of the federal budget is highly dependent on tax and duty receipts from energy exports.
The risk of imported inflation is increasing. To limit its effect, it is advisable to pay more attention to import substitution, since about half of the consumer market is made up of foreign goods, including expensive ones. It is necessary to increase the competitiveness of domestic goods in terms of prices, and most importantly, in terms of quality. Hence the need for investment and bank loans to revive the Russian production of consumer goods based on innovations, taking into account consumer demand. The projected increase in the production of food and other consumer goods will increase the commodity supply of the ruble.
In neutralizing external factors, the role of monetary policy is important. In the "Guidelines for a single government monetary policy," it is usually limited to exchange rate policy. The Bank of Russia traditionally seeks to counteract both excessive depreciation and appreciation of the ruble, given the ratio of the positive and negative impact of exchange rate policy on economic growth and inflation. Monetary policy should also include such guidelines as regulation of the structure of the balance of payments, the foreign exchange market, the optimal level of gold and foreign exchange reserves, and ensuring the transition from formal to real free convertibility of the ruble. The priority task is to gradually expand the use of the ruble in international economic, including monetary and credit relations.
At present, the problem of inflation in Russia is being actualized in connection with the introduction of an economic development model aimed at enhancing innovative factors of economic growth. In this regard, the macroeconomic conditions for curbing inflation are:
- proportional, balanced economic growth;
- revival of national production, structural restructuring of the economy and its innovative modernization;
- increasing investment in production technologies, human capital, infrastructure development;
- concentration of investments on priority and quick-return projects in non-resource sectors;
- active opposition to the shadow economy;
- an effective government program to curb capital flight abroad;
- increasing the efficiency of Russia's integration into the world economy, taking into account the priorities of the formation of a national innovation system.
Fighting inflation and developing a special anti-inflationary program is a necessary element in stabilizing the economy. Such a program should be based on an analysis of the causes and factors that determine inflation, a set of economic policy measures that contribute to the elimination or reduction of the inflation rate to reasonable limits.
For anti-inflationary regulation, two types of economic policy are used:
1. Reduction budget deficit, limitation of money and credit emission, regulation of the growth rate of the money supply within certain limits (in accordance with the GDP growth rate).
2. Regulation of prices and incomes, linking the rise in wages with the rise in prices. This goal is served by the indexation of income, and the establishment of limits for the increase or freeze of wages.
Adaptation policy
This policy is based on the fact that all subjects of the market economy (households, firms, the state) take inflation into account in their actions, primarily through taking into account losses from a decrease in the purchasing power of money. In world practice, there are two methods of compensation for losses from a decrease in the purchasing power of money. The most common indexation of the interest rate. As a rule, this operation is reduced to an increase in the interest rate by the amount of the inflation premium. Another method of compensating for inflation is indexing the initial investment amount, which is periodically adjusted according to the movement of a certain predetermined index.
In conditions of inflation, firms are forced to change the policy of using profits. On the one hand, to stimulate economic interest in the activities of the firm, managers are forced to increase funds allocated for material incentives. On the other hand, in view of the fact that in conditions of inflation, the income stream decreases, and the flow of expenses increases, the owners of the company, if they do not want to allow their capital to wind up, are forced to direct an increasing part of the net profit to the development of production.
History knows many variants of the government's adaptation policy. In the 60s - 70s of the twentieth century. in England and in other countries the policy of "stop-forward" was introduced, i.e. extremely careful forward movement. But this policy turned out to be ineffective, since price containment was paid for by a decrease in labor productivity and living standards of the population.
A different policy is based on control over the ratio of prices and wages. This policy has a positive effect in the short term (for example, in the USA in 1951-1952, in Finland in 1967-1971), but in the long term this policy did not take root, did not become popular.
Supporters of the Keynesian interpretation of inflation, representatives of the theories of "structural inflation" and "supply economics" in their program envisage a regulatory influence of the state, including a temporary freeze of price and wage growth, tax incentives for entrepreneurship, household savings, and support for vital industries and industries.
Short-term measures designed to curb the surge in inflation should be based on the possibility of a quick effect from this measure. These measures include the implementation of a monetary reform of the confiscatory type. The rigidity of this measure is obvious. The introduction of new money into circulation to replace old money at a compulsory rate, first of all, hits the interests of consumers. This was the case, for example, in 1947 in our country, when old-style banknotes were exchanged for new proportions of 1:10. However, such a drastic measure is very effective. It approves new price ratios, removing inflationary imbalances.
Another such measure could be import intervention. If there is an acute shortage of goods, which sharply drives prices up, then this measure for a short time can help to match the supply of goods to growing demand.
Long-term anti-inflationary measures
The goal of anti-inflationary policy is to maintain reliable control over inflation, ensuring a low rate of growth in the price level. In the long term, these measures must be consistent and verified. The spearhead of anti-inflationary measures should be aimed at ensuring equilibrium in the markets. Anti-inflationary measures should only concern the actions of indirect regulators. Attempts to introduce state control over prices always lead to negative results. Therefore, minimizing government intervention in the game of market forces is an important and necessary condition for the implementation of an effective anti-inflationary strategy.
The practice of combating inflation in developed countries shows some general directions of an anti-inflationary strategy.
Measures that ensure social harmony in society are the foundation of an effective anti-inflationary policy. The existence of a government that is trusted by the majority of citizens is a good basis for anti-inflationary measures.
The strategy of damping adaptive inflation expectations should be highlighted.
The most simplified version of the theory of adaptive expectations boils down to the fact that people imagine the future like the recent past, based on which they form their plans, that is, firms expect the same inflation rate this year as last year. In more complex economic models, it is often assumed that expectations are based on some weighted average of inflation rates over the past several years.
In addition to the theory of adaptive inflationary expectations, there is the concept of rational expectations. The concept of rational expectations is one of the youngest areas of modern economic theory. As a result of the use of the methodological principles of classical economics, the theory of rational expectations has also received the name "new classical economics". Without denying the need for state participation in economic processes, supporters of the concept of rational expectations consider any economic policy, both Keynesian and monetarist, ineffective. The ineffectiveness of Keynesian policy and, to a lesser extent, monetarist policy lies in its instability, unpredictability of factors that determine decision-making by economic agents.
The theory of rational expectations is very important for economic policy. It assumes that the consequences of an expected event are significantly different from the consequences of an unexpected event. If rational expectations theory is taken as a basis, then the change in the framework of expansionary policies, which is fully expected by firms and family farms, will immediately cause a shift. aggregate supply up. Expansionary economic policy, if it has an impact on the real volume of production, it is only very insignificant; instead, it will push prices up - and very quickly.
This scenario is an extreme, the opposite pole of which is the thesis of Keynes's "General Theory" that the economic system spontaneously would never return to the natural level of real output after a contraction in demand. If the theory of rational expectations adequately describes the processes occurring in the economic system, then it leads us to the classical concept of the economic system, which is basically stable at a natural level of real output.
Another important line of the anti-inflationary strategy is the actions to tightly restrict the money supply.
In an inflationary economy, monetary policy should play a major role. The tight monetary constraint regime is one of the most powerful regulators in the economy. Therefore, these measures must be used with great care.
The third line of the anti-inflationary strategy is to reduce the budget deficit. It can be achieved both by increasing taxes and by cutting government spending. At the same time, the most promising is the reduction of government spending. The state must make it clear to the population that it is necessary to live within their means. Thus, it will gradually be freed from centralized financing of a whole range of types economic activity... Reducing government interference in the investment process will create the basis for more correct and efficient spending of budget funds.
Anti-inflationary strategy
The strategy of damping adaptive inflationary expectations presupposes a change in the psychology of consumers, ridding them of the fear of devaluation of savings, and preventing the current demand from being pumped up. It is desirable to solve the problem of adaptive inflation expectations as soon as possible and before inflation is brought under control. Judging by the practice of anti-inflationary regulation, this can be done if two conditions are met:
- - strengthening the mechanisms of the market system that can reduce prices or at least slow down their growth. Only in this case is it likely to change the psychology of consumers, to eliminate inflationary motives from it. The consumer must ensure that fluctuations in prices for a relatively small number of goods and services occur under the influence of supply and demand;
- - the existence of a government of national accord that enjoys the confidence of the majority of citizens and pursues an anti-inflationary policy.
At the same time, the government sets itself quite definite, practically feasible and easily verifiable anti-inflationary objectives, informing the population about this in advance. This refers, for example, to regular reports on the level of inflation, which it is going to keep, and the rate of growth of the money supply necessary for this. If promises are strictly fulfilled for at least several years, then the effect of the announcement is triggered: producers and consumers are gradually convinced that the government has taken the path of fighting inflation and is able to control it. The higher the confidence of the population, the more willingly it adjusts its decisions about prices, supply, demand, savings, etc. to the limit set by the government on the growth of the money supply. The economic behavior of people is changing, which contributes to lower inflation expectations.
In order for monetary policy to be truly anti-inflationary, this limit must be maintained for a long time, regardless of the state of the budget, the intensity of the investment process, the unemployment rate, etc. Then the economy will additionally feel the effect of the announcement. In an inflationary economy, monetary policy should play a dominant role. Only by being guided by the principle that in an inflationary environment there are no and cannot be reasons forcing to exceed the money supply limit, the state has a chance to stop inflation.
It is worth noting that as soon as monetary restrictions stabilize the rate of price growth at least slightly, adaptive inflation expectations begin to change. All other things being equal, the weaker the expectations, the higher the propensity to save. In turn, the inflow of savings allows to solve budget problems, in particular, to finance the deficit, resorting to less and less loans from the central bank. It becomes easier for the latter to pursue a non-inflationary monetary policy. Thus, each success of the monetary strategy serves as a condition for its further effective implementation, i.e. is a self-reinforcing process.
The hard money regime is one of the most powerful regulators of the economy and must be used with the utmost care. Since market mechanisms do not work perfectly, the implementation of anti-inflationary monetary policy necessarily turns into a sharp rise in interest rates at first.
The strategic task of reducing the budget deficit can be solved in two ways: by increasing taxes and reducing government spending. An increase in taxes that form the revenue side of the budget can bring short-term results. In the long term, such a policy turns into a decrease in investment and a slowdown in economic development.
Improving the tax system can be turned into an element of an anti-inflationary strategy. A decrease in the rates of income and value added tax or the use of other tax incentives gives an additional impetus to the investment process, and in the long term, it is necessary to expect an increase in production and employment from it, hence, the mass of incomes subject to taxation. Ultimately likely to grow government revenues and deficit reduction.
It should be admitted that, in principle, the anti-inflationary reserves of taxation are limited and do not give quick effects. Therefore, the main burden associated with reducing the budget deficit falls on the reduction of government spending.
Reducing budget allocations, and with it the deficit, is a complex process that requires quite a long time. Sharp cuts in certain budget items are unacceptable. A strategic plan is needed to rebalance the state budget. For example, state subsidies to unprofitable enterprises at the expense of the budget are unjustified in the market economy. Let's assume they are terminated. Of course, the budget deficit will decrease. At the same time, massive bankruptcies and layoffs will follow, unemployment will rise, which will deal a double blow to the budget. On the one hand, it will be necessary to increase government spending related to the social security of the additional number of unemployed, their retraining, employment, etc. On the other hand, a reduction in income will become inevitable due to a decrease in the profits of enterprises and a decrease in the amount of income tax. It is possible that in the end the government will get the opposite result - an increase in the deficit, acceleration of inflation.
The main principle of budget cuts is as follows: a gradual decrease in funding for those types of state activities that can be transferred to the market. It is on the termination of excessive state interference in the investment process and a decrease in the volume of budgetary investments, the abolition of unjustified grants and subsidies, the partial privatization of health care and education, etc.
By organizing the correct monetary policy and striving to reduce the budget deficit, the state approaches the problem of inflation from the demand side. By helping structural transformations and adjusting the conversion of military production, it attacks inflation from the side of the commodity supply. This is especially important in a domestic economy that is sensitive to supply inflation.
These are the main features of the anti-inflationary strategy, the results of which the economy will feel over a long period of time.
Anti-inflationary tactics
When an inflationary environment is intolerable, it is necessary to mobilize tactical, fast-acting anti-inflationary regulation potential. These methods are not designed to eliminate the causes of inflation, dismantle its mechanisms, they are extraordinary in nature and are aimed at weakening inflation, the reserves for short-term regulation are not unlimited and cannot replace an anti-inflationary strategy.
Anti-inflationary tactics will maximize their impact on the inflationary gap between supply and demand, if they help to increase supply without a corresponding increase in demand, or if it helps to reduce current demand without a corresponding drop in supply. Any other anti-inflationary measures will have less effect.
Short-term supply growth reserves:
- - government support for increasing the marketability of the economy. This refers to the preferential taxation of enterprises that sell by-products of production and services, banks that process and sell commercial information, etc. such activity does not require significant additional costs, including for wages, but it contributes to an increase in the supply of goods and helps to temporarily correct inflationary distortions. However, the level of marketability of the economy can be increased only up to a certain limit.
- - support for the formation of new markets, especially in those sectors of the economy where the transition from natural to commodity production is taking place. An example is the world market of information services, which is in its infancy: the international flow of information is about 30% commodity, the rest of the information passes through the internal channels of transnational corporations, staying away from the open market. Information as a commodity has unique anti-inflationary benefits. Initially, its manufacture is associated with significant costs associated with funding research and technological development. Further reproduction, replication is carried out with minimal costs, which is equivalent to an increase in the supply of goods. In addition, information differs from many other goods and services in that during its life cycle it does not disappear in the sphere of final consumption, but returns from there, again turning into an object of purchase and sale. There is a manifold increase in supply without an adequate increase in demand.
- - a reasonably organized privatization of state property carries an anti-inflationary charge. It leads to an increase in government revenues, easing tension on the expenditure side of the budget, which helps to overcome the deficit. Moreover, this form of denationalization has a direct effect: the appearance on the market of shares of privatized enterprises diverts part of inflationary demand.
- - Massive consumer imports and partial implementation of state strategic reserves can become effective means of short-term anti-inflationary policy.
Short-term reserves for decreasing current demand:
- - an increase in the interest rate on deposits, if the government intends to influence the behavior of the owners of monetary income, to induce them to increase their savings due to the current demand. The interest on deposits should not be less than the sum of the current rise in prices and the level of adaptive inflationary expectations. Otherwise, it will hardly be possible to attract savings, because depositors, transferring their money to the bank, have the right to expect that they will not suffer losses.
- - an increase in the interest on government bonds, the spread of joint-stock ownership, privatization, and the sale of land can attract significant savings. Such measures give a real anti-inflationary effect and allow to stop the destructive process of hyperinflation. - to reduce the level of liquidity of savings, the practice is to increase the rate of interest on time deposits and other techniques designed to keep deposits in the banking system longer. Sometimes a temporary freezing of demand deposits is introduced.
- - an increase in the exchange rate of the national currency can be used as a short-term anti-inflationary remedy. If the domestic markets are sufficiently competitive and there are no various types of foreign trade restrictions, this measure causes a downward trend in prices for goods and services imported from abroad, and, therefore, pushes down the general level of prices in the economy. It is impossible not to point out the considerable inconsistency of such regulation. When the exchange rate goes up, exports become more expensive, and it becomes more and more difficult for them to break through to foreign markets. Therefore, the trade is deteriorating, followed by the balance of payments. Excessively high exchange rate scares off foreign investors, negatively affects foreign investment in the national economy.
Anti-inflationary policy Is a set of measures for state regulation of the economy aimed at combating inflation. In response to the interaction of factors of demand inflation and cost inflation, two main lines of anti-inflationary policy have taken shape:
Deflationary policy or demand management and income policy.
1. Deflationary policy- these are methods of limiting money demand through the monetary and tax mechanism by reducing government spending, increasing the interest rate for loans, strengthening the tax press, limiting the money supply, etc. The essence of the deflationary policy is the slowdown in economic growth and crisis phenomena.
2. Income policy presupposes parallel control over prices and wages, by freezing them completely or setting limits for their growth.
Anti-inflationary policy options are selected depending on priorities, if the goal is to curb economic growth, then a deflationary policy is pursued: if the goal is to stimulate economic growth, then preference is given to income policy: if it is necessary to curb inflation at any cost, then both of these methods are used in parallel.
Topic (2 hours). Monetary reforms as methods of regulation and influence on inflation
Types monetary reforms
Literature
Main literature
1. Money, credit, banks: textbook / ed. prof. E.F. Zhukov. 4th ed., Rev. and add. Publishing house UNITY-DANA, 2011 - 783s. (EBS "Knigafond" - http: //knigafund.ru)
additional literature
1. Belotelova NP, Belotelova Zh.S. Money. Credit. Banks: textbook Publisher: Dashkov and K, 2011 - 448s. (EBS "Knigafond" - http: //knigafund.ru)
2. Money. Credit. Banks: textbook. manual / ed. prof. O.I. Lavrushin. M .: 5th edition, KnoRus, 2011.-320s.
3. Sokolov Yu.A., Dubova S.E., Kutuzova A.S. Organization of monetary regulation: tutorial Publisher: Flint; NOU VPO "MPSI", 2011 (EBS "Knigafond" - http: //knigafund.ru)
4. Finance and credit: textbook / ed .: R.V. Kostina. - M .: KolosS, 2008 .-- 472 p.
5.Finance, money turnover and credit: textbook / ed .: M. V. Romanovsky, O. V. Vrublevskaya. - M .: Yurayt-Izdat, 2007 .-- 543 p.
Internet resources
www.cbr.ru- official website of the Bank of Russia
www.financepress.ru - magazine "Finance and Credit"
www.mirkin.ru - financial electronic library.
The essence and significance of monetary reforms
Monetary reforms are also a form of government anti-inflationary policy. Monetary reforms are the ordering of the monetary system by changing the value or replacing the circulating currency, carried out by the state to restore the balance between the money and commodity supply. Monetary reforms make it possible to quickly stabilize the money circulation of the countries of the world after wars, revolutions and other cataclysms. The need for their implementation is due to the disorder of the monetary system, a change in the political structure or the formation of a new state, the creation or unification of national monetary units.
The effectiveness of monetary reforms is determined by the radical nature of the reforms. It is important that the monetary reform be accompanied by the creation of conditions for strengthening the economy, public finances and the monetary sphere of the country (including a change in the order of issue, the provision of banknotes, etc.) In modern developed countries, anti-inflationary stabilization programs and monetary policies are actually replacing monetary reforms ...
Types of monetary reforms
Existing monetary reforms are divided into four types:
1. Nullification - the cancellation of an impaired circulating currency and the introduction of a new currency. For example, in Germany in the 1920s. as a result of post-war hyperinflation, the significantly depreciated Reichsmark was abolished. One new stamp, introduced in 1924, was exchanged for $ 1 trillion. old Reichsmarks. After World War II, in countries that were carrying out monetary reforms (Belgium - 1944, France, Denmark, Holland, Norway - 1945, Greece - 1944-1946, Japan - 1946, Austria - 1947), old banknotes were announced invalid and in limited sizes exchanged for new ones. Argentina in the late 80s and early 90s, resorted to nullification almost every year.
2. Revaluation (restoration) - restoration of the value of the monetary unit to its previous value. Thus, the increase in the gold content of the national currency took place during the monetary reforms of 1821 and 1924 in Great Britain and in 1879 in the United States. The FRG carried out repeated revaluations within the framework of both the Bretton Woods (1961, 1969 and 1971) and the European monetary system.
3. Devaluation - a decrease in the value of the monetary unit. In 1949, there was a simultaneous devaluation37 of currencies against the US dollar by 12-30.5%. This dramatically increased the purchasing power of the dollar in Europe and at the same time increased the indebtedness of European countries to the United States. The second massive devaluation was carried out at the end of 1967 by Great Britain and 25 other countries, when the exchange rate fell to 5–25%.
4. Denomination - an increase in the value of a monetary unit by “crossing out zeros”. The denomination was carried out in the USSR in 1961, when money was exchanged at a ratio of 1: 10, and in Russia in 1998, when money was exchanged at a ratio of 1: 1000.
In 1949-1950. "Shock therapy" has been used in Japan. The transition to free pricing with land reform and the unbundling of monopolistic giants was accompanied by the use of anti-inflationary measures such as eliminating the state budget deficit, refusing subsidies to unprofitable enterprises, freezing some of the deposits, and tightening credit conditions.
The method of "shock therapy" found a new application during the transition of a part of the CMEA countries from an administrative to a market economy. The introduction of market structures into the administrative economy inevitably led to the emergence of prolonged and high inflation. In Poland, from the end of 1989, free pricing was introduced with a temporary freeze on wages. After an eightfold rise in prices, inflation slowed down and the commodity deficit was overcome. However, at the same time, the standard of living of the population fell by almost half, and unemployment in the fall of 1990 reached 10%.
№1 Types of inflation, factors causing inflation. Forms and methods of inflationary policy
Inflation is a complex socio-economic phenomenon. As an economic phenomenon, inflation has existed for a long time. It is believed that it appeared almost with the emergence of money, with the functioning of which is inextricably linked. But if earlier inflation arose, as a rule, in extraordinary circumstances, (for example, during a war, the state issued a large amount of paper money to finance their military spending), then in the last two to three decades in many countries it has become chronic.
The term itself (by the way, it comes from the Latin inflatio - bloating) was first used only in the last century. In the period 1861-1865. Anyone familiar with history knows that at this time in America there was a civil war between the North and the South. War, like any economic and social upheaval, led to a swelling of the money supply. In the 19th century, the term was also used in Great Britain and France. However, this concept became widespread in the economic literature already in our century, immediately after the First World War. The USSR, by tradition, lagged behind developed countries, and the term "inflation" in Soviet literature can be found only in the mid-1920s.
The given historical examples prove that inflation is not a product of the present, but took place in the past as well.
The most common, traditional definition of inflation- overflow of circulation channels with money supply in excess of the needs of commodity circulation, which causes depreciation of the monetary unit and, accordingly, an increase in commodity prices.
There are other definitions of inflation:
Inflation - This is the depreciation of the monetary unit, a decrease in its purchasing power.
Others believe that inflation- this is a rise in prices caused by the overflow of money, spheres of circulation of paper money in excess of their normal needs.
Inflation - This is an increase in the general level of prices in the country arising from a long-term imbalance in most markets in favor of demand.
Inflation Is a socio-economic phenomenon generated by reproduction imbalances.
Inflation Is the excess of the number of monetary units in circulation over the sum of commodity prices.
Inflation - there is a multifactorial phenomenon due to the action of a number of reasons leading to an increase in the disproportions of social production and affecting prices upward.
However, the definition of inflation as an overflow of money circulation channels with depreciating paper money cannot be considered complete. Inflation, although it manifests itself in the growth of commodity prices, cannot be reduced to a purely monetary phenomenon.
This is a complex social phenomenon generated by the imbalances in reproduction in various spheres of the market economy. Inflation is one of the most acute problems of modern economic development in many countries of the world.
Inflation - this is an increase in the general level of prices in the country, which arose in connection with a long-term imbalance in most markets in favor of demand. In other words, inflation is the imbalance between aggregate demand and aggregate prescription. Regardless of the state of the monetary sphere, commodity prices may increase due to changes in the dynamics of labor productivity, cyclical and seasonal fluctuations, structural shifts in the reproduction system, market monopolization, state regulation of the economy, the introduction of new tax rates, devaluation and revaluation of the monetary unit, changes in market conditions, impact foreign economic relations, natural disasters, etc. Consequently, the rise in prices is caused by various reasons. But not all price increases are inflation, and among the above reasons for price increases, it is important to single out really inflationary ones.
Inflation - This is an increase in the general level of prices for goods and factors of production. This, of course, does not mean that all prices will necessarily rise. Even during periods of fairly rapid inflation, some prices may remain relatively stable while others fall. One of the main pain points of inflation is that prices tend to rise very unevenly. Some jump, others rise at a more moderate rate, and still others do not rise at all.
Types of inflation.
According to the rate of price growth, inflation is divided into three types:
1. Moderate (creeping) - 10% per year.
2. Galloping from 20% to 200% per year.
3. Hyperinflation 500% to 1000% per month.
First type of inflation (Moderate) the least dangerous and accompanies the development of the economy of almost all countries. Moderate inflation rates usually do not exceed 10% per year and, according to many economists, are simply payment for the development of the country's industry. With this inflation, the value of money is preserved and there is no risk of signing contracts at nominal prices. Rising inflation changes following the economic cycle. It increases during the rise and decreases during the decline. However, an interesting regularity was revealed here: a recession reduces inflation rates by a smaller amount than increases their subsequent rise.
In addition, during a recession, the process of suppressing inflation is very slow, while an upturn restores the previous level of inflation in a rather short period of time, and then exceeds it. The situation described made many economists think about the advisability of expanding production, sacrificing some of the inflation rates, as well as the possibility of sustained inflation escalating into galloping. For these properties, moderate inflation received two more names - creeping and growing .
Second type of (galloping inflation) appears to be price increases of hundreds of percent per year. Contracts are drawn up taking into account inflation rates. The psychology of the population is undergoing significant changes. People want to protect their savings from inflation. There is an accelerated materialization of money. Usually, the process of galloping inflation occurs as a result of continued ill-considered monetary policy. The processes occurring during galloping inflation are well expressed by the Keispan theory. It shows that, when it appears, galloping inflation first moves the demand curve upward along the supply curve, leading to an increase in both prices and output. Further development of the process only moves the supply curve upward parallel to the natural output line. This is explained by the fact that the continuing rise in prices ceases to stimulate production to further growth, since resource prices have already risen, driving up costs.
At first glance, it may seem that galloping inflation does not pose a particularly strong threat, because it is a payment for the excess of the real volume of production over its natural level. But this situation cannot last long. As firms adjust for inflation expectations, the prices of manufactured goods will be given ahead of schedule. The supply curve will shift from the present point not to the next one, but after one, two, etc. This accelerating inflation, inextricably linked to the galloping
Third type of - hyperinflation... It represents a period of time during which price volatility becomes so significant that it begins to dominate Everyday life, leading to disorganization of production and the market, as well as redistributing income and wealth in society.
Hyperinflation is a situation in which the annual inflation rate exceeds the level of 1000%. It can manifest itself in various forms: in a catastrophically high rise in prices, when the economy is based on market principles, or in its suppressed form, which is characterized by a terrible shortage of goods.
Hyperinflation is an extreme phenomenon and an extraordinary event. It is often associated with chaos in the political life of society, social revolutions, as well as wars and their consequences. Similar situations arise from time to time today, but the most interesting example is the famous hyperinflation of the 1920s in Germany, which developed at an astronomical pace, which helped the Nazi government to come to power.
With the rapid rise in prices, citizens, in order to avoid the opportunity costs of hyperinflation, begin to reduce their real money balances (those amounts that were kept in conditions of low inflation). This process is called "money flight". It reduces the real demand for money, thereby further increasing the scale of inflation. Here the position of the modern quantitative theory, which connects real cash balances with the expected inflation rate, seems to be interesting. A rational explanation of this dependence is given in Keigkn's proof, according to which inflation stabilizes itself, because the future inflation rate is expected to be equal to the current inflation rate, plus the difference between the current inflation rate expected in the past period.
In turn, the real cash balances, decreasing, also finance the rise in prices, since are the reciprocal of the velocity of circulation.
Industrial developed countries are characterized by a creeping form of inflation, that is, the most moderate depreciation from year to year, which, in accordance with the monetarist doctrine, which is the dominant trend in Western economic thought, should stimulate production growth and an increase in GNP.
V developing countries ah galloping inflation and hyperinflation prevail. Moreover, the factors, forms and socio-economic consequences of inflation as well as approaches to the development and implementation of anti-inflationary measures in different countries are due to their economic development.
There is also suppressed inflation, in which the rise in prices may not be observed, and the depreciation of money can be expressed in various kinds of deficits. This is precisely the situation in the countries of the former USSR, where inflation was in a suppressed state under the conditions of the command-administrative system and manifested itself in deficits and a progressive decline in product quality.
There are also expected and unexpected inflation.
In the first case, inflation can be predicted for a certain period, or it is planned by the government of the country.
In the second case, there is a sharp jump in prices, which negatively affects money circulation and the tax system.
A sudden jump in prices in a normally functioning market economy, where the population has no inflationary expectations, will not cause serious consequences. consumers, expecting that the rise in prices is a short-term phenomenon, will save more and present less money in the market in the form of effective demand. And since the size of demand decreases, then the pressure on prices begins to decrease. This economic effect is called the Pigou effect.
Industrialized countries are characterized by creeping inflation, i.e. slight to moderate impairment from year to year. In developing countries, galloping and hyperinflation prevail. Moreover, the factors, forms and socio-economic consequences of inflation, as well as approaches to the development and implementation of anti-inflationary measures in different countries are determined by the peculiarities of their economic development.
According to economic conditions and inflation factors, developing countries can be classified as follows.
The first group includes the developing countries of Latin America - Argentina, Brazil, where there is a lack of economic equilibrium, a chronic deficit of the state budget, the use of domestic policy mechanism of the printing press and constantly indexing all funds, and in the foreign economic sphere - a systematic decrease in the rates of national currencies. These countries are characterized by hyperinflation, caused mainly by the financing of the budget deficit and the associated excessive emission of money, as a result of which there is an annual depreciation of money of several thousand percent per year.
The second group includes Colombia, Ecuador, Venezuela, Burma, Iran, Egypt, Syria, Chile. There is also a lack of economic equilibrium in them, in financial policy, there is a clear emphasis on deficit financing and credit expansion. Inflation in these countries is kept within "galloping limits" (average annual price growth is 20-40%); indexing is carried out, which is often partial. There is a high unemployment rate.
The countries of the third group - India, Indonesia, Pakistan, Nigeria, the Philippines, Thailand - are characterized by a limited economic equilibrium and a significant inflow of foreign exchange from exports. Inflation is kept within 5-20%, partial income indexation is applied. Unemployment is high, incl. and hidden.
Countries of the fourth group - Singapore, Malaysia, South Korea, UAE, Qatar, Saudi Arabia, Bahrain - have a sufficient degree of economic equilibrium. Inflation here is kept in "creeping forms" (1-5%), strict control over price increases has been introduced. The economy operates in a developed market. Exports and foreign exchange inflows play an important role in the anti-inflationary effect. Unemployment remains at a moderate level.
The fifth group includes former socialist countries equated to the developing world (China, Poland, Vietnam, etc.) The situation in these countries, including the situation with inflation, is organically linked to the transition from a command-administrative system to a market economy.
Among the factors of hyperinflation in these countries, as in the countries of the first group, are put forward:
firstly, the problem of financing based on the chronic deficit of the state budget, through which most of the monetary and non-monetary factors of inflation are manifested;
secondly, structural factors (for example, an important reason for hyperinflation in Brazil and Argentina was the extraordinary growth in investment in heavy industry, which does not bring quick returns);
third, the disproportionality between the more accelerated growth in prices for industrial products compared with prices for agricultural products.
In the presence of paper money in circulation, they also depreciated in relation to gold money, which led to the formation of "double prices" in metal and paper money. For example, the Bank of England received the right to issue irreversible banknotes, which, according to Karl Marx, “depreciated in comparison with gold bullion, but the coin price of gold also fell in comparison with the price of gold bullion. In relation to banknotes, gold became a commodity of a special kind. ”Obviously, with free competition, inflation was caused by both political
Economic forces. Moreover, economic factors lay both on the demand side (overflow of circulation channels with excess money supply) and on the supply side (price growth).
In the future, the strengthening of monopolistic trends in modern economy led to a change in the gold standard. In modern conditions, several large companies dominate in each industry sector, which, by coordinating their activities, dictate the conditions on the market. This was especially clearly manifested in pricing by establishing a system of list prices. All large companies in any industry are guided in the formation and frequency of changes in their prices are guided by the prices set by the largest company.
Disproportions between supply and demand, excess of income over consumer spending can be caused by a deficit in the state budget (government spending exceeds income); over-investment (the volume of investment exceeds the capacity of the economy); the outstripping growth of wages in comparison with the growth of production and an increase in labor productivity; arbitrary setting of state prices, causing distortions in the amount and structure of demand; other factors. The marginal demand price is skillfully revealed by A. Marshall: "The more
of any thing a person possesses, the less, other things being equal (that is, if the purchasing power of money is equal and with an equal amount of money at his disposal), there will be a price that he is willing to pay for a small additional amount of it, or, in other words, his marginal price of demand for it decreases. ”Moreover, his demand becomes effective only when the price he is willing to pay reaches a level at which sellers agree to sell. the target rate of profit leads to a constant increase in the level of prices. They are set taking into account production costs with such a cape on profit that would provide the target rate of profit for the expected utilization of production capacities, the volume of production and sales of products. The costs of the monopoly also include taxes paid, which leads to to higher prices.
Thus, the higher the degree of monopolization of the economy, the higher the rate of price growth. And this applies not only to private, but also state-owned companies. "The reasons for today's high cost," writes E.S. Varga, "should be sought not on the side of gold, but on the side of the commodity."
The existence of the gold standard hindered the possibility of obtaining super-profits by monopolies, which led to its collapse in the 30s of the XX century. It meant a loss in gold monetary functions at the national level. Paper money became the main form of money. “The use of paper money,” Riccardo writes, “instead of gold replaces the most expensive instrument of circulation with the cheapest one and enables the country, without loss for individuals, to exchange all gold ... for raw materials, tools and food. and the wealth of the country, and the comfort of its population. "
Paper money performed during the period of the gold standard and now all the functions of money - measures of value, means of circulation, means of payment, world money. But they cannot fulfill the function of a treasure. The main thing here was not the materialization of wealth, although this in itself is very important, but the role of the regulator of money circulation. Between gold in the function of a medium of circulation and gold in the function of a treasure, a mobile connection was carried out: it infused and poured into the channels of monetary circulation from the treasures. As A. Smith emphasizes, "thanks to the issuance of too much paper money, the excess of which is constantly returned to him for exchange for gold and silver, the Bank of England for many years in a row was forced to mint a gold coin in the amount of ... about 850 thousand pounds" ... The existence of an uncut gold standard in domestic money circulation limited inflationary processes within national economy... The gold exchange standard in the international monetary system allowed the development of inflation within a certain country, but at the same time served as a brake on the growth of world prices. The crisis of the Bretton Woods system of the gold-dollar standard, which, indirectly linking national monetary units and gold through the dollar, hindered the growth of world prices, led to the complete demonetization of gold, which went out of circulation and ceased to function as money.
It is obvious that inflation is a process caused by the interaction of two factors - price-forming and monetary. On the one hand, the depreciation of money is a process associated with an increase in prices, on the other hand, a fall in the purchasing power of money can also occur under the influence of a change in its quantity in circulation. The depreciation of money forms only a form of the inflationary process, while the content of this complex phenomenon is a massive and uncontrolled redistribution of national income and social wealth. For a long time, the depreciation of money served as a tool for the redistribution of wealth. This happened during periods when governments resorted to spoiling coins or issuing paper money, thus obtaining funds for war or other unproductive needs. "If the value of money remains unchanged," writes K. Marx, "a general rise in commodity prices can occur only if the value of goods increases; if the value of goods remains unchanged, if the value of money decreases. And vice versa."
The redistributive effect of the depreciation of money is based on the uneven growth of prices in different markets. This is due to the fact that the excess demand generated in the economy as a result of the excess of money demand over the supply of goods in different proportions is distributed between three aggregate markets - goods and services, capital and labor. Thus, here are the main reasons for inflation:
1) deformation of the national economic structure,
expressed in a significant backlog of industries
consumer sector;
2) inability to function
mechanism in a normal rhythm.
In addition, the interdependence and interconnection of the monetary and monetary systems becomes more complex. thus, the depreciation of money in some countries causes the same process in others. "The depreciation of money is influenced not only by circulating cash - treasury and bank money," writes V. Drozdov, "but also other banknotes - checks and bills of exchange. In addition, non-cash money has an indirect effect on the money supply ... types of money increases the elasticity of money circulation and at the same time undermines it. "
Inflation and unemployment
Unemployment and inflation are in a certain quantitative relationship. Professor of the London School of Economics A. Phillips at the end of the 50s established the following pattern: the lower the inflation rate, the higher the unemployment rate, and vice versa. And this is understandable. With an increase in unemployment, the purchasing power of the population decreases. Unemployment negatively affects wages. As a result, the inflation rate goes down. This process is clearly presented in the form crooked Phillips (fig. 1).
Rice. 1. Phillips curve
Based on this curve, two options arise for a different practical combination of interdependent quantities:
or low unemployment and high inflation (point A on the graph); or low inflation and high unemployment (point B on the graph).
Meanwhile, the Phillips curve reflects the relationship between inflation and unemployment. only in the short term. If we take long periods (5-10 years), then with a high level of unemployment, prices continue to rise.
The fact that the Phillips curve does not “work out” in the long run is due to the following circumstances. As a rule, entrepreneurs and employees enter into long-term agreements on the amount of wages. Moreover, due to inflationary expectations, entrepreneurs are increasing wages to compensate for future price increases.
As a result, there is such a phenomenon as cost inflation. Cost inflation rise in prices, which is caused by an increase in production costs (an increase in wages and a rise in the cost of raw materials, energy resources, etc.). Therefore, with cost inflation, prices rise along with an increase in unemployment.
In this case, the cost of fighting inflation by increasing the unemployment rate becomes very high. According to the calculations of foreign economists, in order for inflation to decrease by 1%, unemployment must exceed its “natural level” by 2%. But this will reduce the real gross national product by 4% in comparison with its potential value.
Economic and social consequences of inflation.
In economic practice, it is important for market entities not only to comprehensively and correctly measure inflation, but also to accordingly assess its consequences and adapt to them. From this point of view, the structural characteristics of price dynamics are of primary importance. Under the so-called balanced inflation, the prices of goods rise, while maintaining the same relationships among themselves. At the same time, the balance of their general growth with prices on the labor market is of particular importance, in this case the level of real incomes of workers does not decrease, although the previously accumulated money savings lose their value. Unbalanced inflation causes a redistribution of income, structural changes in the production of goods and services, since the prices of various goods are constantly changing in relation to each other, and in different proportions. Prices for everyday goods of inelastic demand are growing especially rapidly. As a rule, the growth rates of prices in labor markets lag behind others, which leads to a decrease in living standards and an increase in social tension.
In the context of "inflationary expectations", entrepreneurs are trying to protect themselves from risk, in particular from the expected rise in prices for imported goods (raw materials, fuel, components). To avoid losses caused by the depreciation of money, manufacturers, suppliers, intermediaries raise prices, thereby spurring inflation.
Double-digit and even more so three-digit inflation is very dangerous. In conditions of double-digit inflation, most economic agents experience difficulties in planning income (expenses, as a result of which economic activity pulls towards the most profitable and fastest-paying types of activity and an economic recession becomes very likely. Long-term three-digit inflation generally leads to a gradual curtailment of economic activity in most sectors of the economy, as a result of which almost all economic agents are losing.
But whatever the supposedly "positive" functions of inflation, getting out of control and even remaining relatively weak, regulated, it has a whole range of purely negative, negative influences on the course of economic development. Let us briefly mention only a few of them.
Inflation (and this is generally recognized) narrows the motives for labor activity, because it undermines the possibility of the normal realization of price earnings. Inflation, especially in the context of a significant increase in prices, increases social differentiation population, the gap between the "extreme" groups of income recipients.
The negative function of inflation is also that it narrows the possibilities of accumulation. Savings in liquid form are declining, partially taking in-kind form (buying up real estate). The ratio between consumed and saved parts of income is shifting towards consumption. The issue of securities often does not achieve the desired goal, because it turns out to be unable to "tie" money from the population.
Inflation weakens the positions of power structures. The desire of state bodies to obtain through the emission of additional funds for solving urgent additional benefits and subsidies. Decreasing confidence in programs and activities planned and carried out by the government. The reaction of the population to the deterioration of conditions in the consumer market and in production often takes rather acute forms.
The negative consequences of inflationary processes include:
· Decline in real incomes of the population (with uneven growth in nominal incomes);
· Depreciation of savings of the population (an increase in interest on deposits, as a rule, does not compensate for the fall in the real size of savings);
· Loss of manufacturers' interest in creating tangible goods (production of low quality goods increases, production of relatively cheap goods decreases);
· Increasing disparities between the production of industrial and agricultural products;
Limiting the sale of agricultural products due to a decrease in interest, in anticipation of an increase prices for food;
Deterioration of living conditions mainly among representatives of social groups with solid incomes (pensioners, sl dwellers, students, whose incomes are formed at the expense of the state budget).
Anti-inflationary policy.
Another option for government policy in the face of inflation is to minimize government interference in the game of market forces when using antitrust measures.
It is impossible to ignore doubts about the danger of monopoly power, which have been repeatedly expressed by various economists (for example, the Austrian economist J. Schumpeter): 1) the relatively small amount of losses found in empirical research, 2) scientific and technological progress can be faster under monopoly conditions ...
There are a number of industries in which a monopoly is necessary, and the state is faced with the task of regulating prices and production volumes in the interests of society.
The following approaches can be implemented here. Limit method costs is that the state requires (and controls) that the price set by the monopolist equals its marginal costs. Average cost method consists in the fact that all the profit of the monopolist, with the exception of the normal one, is withdrawn (that is, the price in any case is equal to the average cost). The method of establishing ceiling prices . However, these methods have their own complexities. The marginal cost approach often leads to losses and the need to subsidize the monopoly with public funds. The method of average costs, devoid of this drawback, can give a result when the marginal costs are lower than the marginal utility of the product, and, on the other hand, does not create an interest in minimizing costs: the monopolist knows in advance that his costs will be compensated. Price ceilings usually result in product shortages.
Antitrust policy is a series of laws designed to prevent firms from exercising market power through production cuts and price increases or other anti-competitive practices. The main problem in the implementation of this policy is the limitation of the monopolistic tendencies of the oligopoly. (oligopoly is a market dominated by several large firms). Among the main measures of antimonopoly policy are behavioral interventions where the government orders a firm or group of firms to change its behavior to make it more competitive, and structural policy, in the course of which the structure of the industry changes, becoming more competitive.
The anti-inflationary policy of the government, according to the Phillips curve, in the short term leads to an increase in unemployment and a decrease in output. The economy moves to the right and down along the original Phillips curve. Reducing government spending or money supply lowers the price level, while wages fixed in labor contracts remain the same. In these conditions, the profits of firms fall and they reduce their output, and hence employment. To quantify the effectiveness of the fight against inflation, the so-called. loss factor... It shows how many percent of the real annual output must be sacrificed to bring inflation down by one percentage point.
The concrete implementation of long-term anti-inflationary programs goes beyond the recommendations for reducing government spending and money supply, which correspond to the short-term model of the Phillips curve and are based on Keynesian ideas of regulating aggregate demand.
Anti-inflationary policy can be carried out by the methods of "shock therapy" (when a tight monetary policy helps to quickly bring down inflation, but is accompanied by a significant decline in production), and gradually, through multiple, but each time a slight decrease in the growth rate of the money supply, which avoids a deep recession, however does not provide an opportunity to quickly reduce inflation.
In a broader sense, "shock therapy" usually involves the use of purely monetarist anti-inflationary measures: broad liberalization of economic life, liberalization of prices, curtailment of economic activity of the state, severe restriction of money supply growth, balancing the budget mainly through cuts in social programs, etc. etc. Programs to gradually reduce inflation provide for an active regulatory influence of the state (in order to mitigate negative consequences anti-inflationary measures): support for the most important industries, tax incentives for entrepreneurship, partial regulation of the pricing process, creation of market infrastructure, etc. In this case, the anti-inflationary reduction in aggregate demand is complemented by measures that support supply and create conditions for its growth in the future, which avoids a deep recession and unemployment.
Most countries, both developed and with economies in transition, have never followed the strict monetarist recommendations of "shock therapy" in their practice of fighting inflation, since this inevitably led to a protracted recession, an increase in unemployment, and a sharp decline in the living standards of the population. The most consistent adherents of monetarist programs, in particular, Russia, have experienced the strongest negative consequences.
No. 2 Organization of settlements at enterprises. Payments by promissory note.
One of the types of securities most often used in Russian practice in recent times, is a bill of exchange.
Promissory note - an unconditional written promissory note drawn up in the form prescribed by law pecuniary obligation one party (the drawer) unconditionally pay in a certain place the amount of money indicated in the bill, the other party - the owner of the bill (the holder of the bill) - upon the due date for the fulfillment of the obligation (payment) or at his request.
A bill of exchange gives its owner the right to demand from the debtor, or the acceptor, (a third party who has undertaken to pay the bill) to pay the amount specified in the bill upon maturity. Therefore, a bill is a complex settlement and credit instrument capable of performing the functions of both a security and credit money and a means of payment. In particular, as a security, a bill of exchange itself can be the subject of various transactions. The issue and circulation of promissory notes is governed by the current Fundamentals of Civil Legislation and the Federal Law of the Russian Federation "On Bills of Exchange and Promissory Notes", adopted by the State Duma on February 21, 1997.
The main features of a bill that have developed in international and Russian practice:
1) the abstract nature of the obligation expressed by the bill (the text of the bill should not contain references to the transaction that is the basis for issuing the bill); the indisputable nature of the obligation under the bill, if it is genuine; the unconditional nature of the obligation under the bill of exchange (the bill contains a simple and unconditional offer or promise to pay a certain amount, and therefore attempts to stipulate the payment by the occurrence of any conditions have no legal force);
2) a bill of exchange is always a monetary obligation (an obligation under which the payment of a debt is made by goods or the provision of services cannot be considered a bill of exchange);
3) a bill of exchange is always a written document (the issue of bills in non-cash form is impossible);
4) a bill of exchange is a document that has strictly established mandatory details. According to the International Convention, there are eight mandatory requisites promissory notes:
Bill of exchange label - that is, the word "bill" should be contained not only in the title, but in the text content of the bill;
Bill of exchange currency - the amount of the payment, which must be indicated at least twice: once in numbers, and the other time in words with a capital letter;
Information about the payer for this bill of exchange;
Information about the person in whose favor the payment is made;
Indicating the place of payment;
An indication of the due date;
Time and place of exhibiting;
The handwritten signature of the person who issued the bill. The parties obligated by the bill are jointly and severally liable (in case of default by the main debtor, the creditor - the holder of the bill can apply for collection to any of the previous holders, who, in turn, upon redemption of the bill by him, acquires the right to claim the bill of exchange from any of the persons who passed in the bill chain ).
№3 The banking system of the Russian Federation: the Bank of Russia and commercial banks. Characteristics of the banking system.
The modern banking system in Russia is represented by two levels. In legal terms, it is based on the special laws adopted on December 2, 1990 by the Supreme Soviet of the RSFSR: the Law of the RSFSR "On Banks and Banking Activities of the RSFSR" and the Law "On the Central Bank of the RSFSR (Bank of Russia)" as well as the new version of the Law of the Russian Federation "On Banks and Banking ”, adopted in July 1995.
These Russian laws made fundamental changes in the then existing credit and banking system of the country, marking the beginning of a qualitatively new stage in the development of this system and its legal support.
According to the legislation in Russia, it became possible to create a bank on the basis of any form of ownership, which marked the beginning of the liquidation of the state monopoly on banking activities.
In the new edition of the Law of the Russian Federation "On Banks and Banking Activities", adopted in July 1995, it is noted that the banking system of Russia includes the Bank of Russia (this is the official name of the Central Bank), credit organizations, as well as branches and representative offices of foreign banks.
The Law "On Banks and Banking Activities" provides for the possibility of banks providing foreign capital to be present on the Russian credit market, determines the conditions for licensing their activities and the powers of the Bank of Russia in relation to their formation. authorized capital.
Of exceptional importance was the consolidation at the legislative level of the principle of the independence of banks from state authorities and management when making decisions related to banking operations.
In accordance with this Law, a credit institution is entity, which has the goal of making a profit, and on the basis of a license from the Bank of Russia has the right to carry out banking operations. The composition of banking operations is also provided for in the Law on Banks and Banking Activities.
Credit institutions are divided into banks and non-bank credit institutions.
Bank - a credit institution that has the exclusive right to carry out in aggregate the following banking operations:
Attraction of funds from legal entities and individuals in deposits;
Placing these funds on its own behalf and at its own expense on terms of repayment, urgency and chargeability;
Opening and maintaining bank accounts of individuals and legal entities;
Purchase from legal entities and individuals and sale to them of foreign currency (in cash and on accounts);
Attraction and placement of precious metals in deposits;
Financing of capital investments on behalf of the owners or managers of deposits.
A non-bank credit institution is a credit institution that has the right to carry out certain banking operations provided for by this Federal Law. Acceptable combination of banking operations for non-banking credit institutions established by the Bank of Russia. As a result of the adoption and enforcement of the above laws, the credit and banking system of Russia acquired the following form.
central bank RF (Bank of Russia),
Savings bank,
Commercial banks of various types, including special development banks,
Banks with mixed Russian-foreign capital;
Foreign banks, branches of resident and non-resident banks,
Unions and associations of banks,
Other credit institutions.
The new banking legislation introduced fundamental changes not only in the elemental composition of the credit and banking system, but also in the very principles of building and managing this system. The banking system of Russia is acquiring a two-tier structure. In this case, the criterion for assigning elements to one or another level is their position in the system, due to the relationship of subordination. Thus, the Central Bank is located at the top level, since it is empowered by the state to regulate and control the system as a whole, i.e. carry out the function of managing the entire system. As for commercial banks and credit institutions, then they constitute the lower level of the system.
All the variety of commercial banks can be classified as follows.
The following groups can be distinguished as part of commercial banks:
Created on the basis of previously functioning specialized banks,
- "industry banks", formed to serve mainly industry clientele.
Conditionally called "new" banks, organized on the initiative of various founders.
By types of property, state, private, cooperative, and mixed banks are distinguished.
Depending on the organizational and legal form of activity, commercial banks are joint stock companies, limited liability companies, limited companies, etc.
According to the territory of activity, banks are divided into republican and regional (or land - in Germany, for example), cantonal (in Switzerland), interregional, local, national, international, and foreign.
The Law "On Banks and Banking Activities" also presupposes the creation of municipal banks, which at the regional level are formed by the decision of local authorities, and at the federal level - by a separate law.
By the degree of independence, there are independent, subsidiary, satellites (fully dependent), authorized (agent banks), related (participating in each other's capital) banks.
By the presence of branches, with branches and without branches.
By the degree of capital diversification: single-profile (engaged only in banking operations) and multidisciplinary (participating in the capital of non-banking enterprises and organizations).
The types of operations performed differ.
Deposit banks proper, which accept deposits and issue short-term loans;
Investment banks - except deposit operations, they are engaged in the placement of their own and borrowed money in securities, act as intermediaries between entrepreneurs in need of funds for medium and long-term investments, and long-term investors;
Mortgage banks - like other banks, accumulate funds of legal entities and individuals by issuing shares and bonds, but their peculiarity is that they are provided with real estate contributed to the bank as authorized capital and collateral, which is one of the proven mechanisms of the system adopted in the world providing guarantees of loan repayment.
Savings;
Exchange,
Universal.
By the amount of capital, commercial banks are divided into large, medium and small.
At present, the extensive period in the banking system of the Russian Federation is coming to an end, i.e. purely quantitative, growth, and it is faced with the tasks of intensive, i.e. quality, development of tough competition in the market with the elimination of weak and consolidation of banking structures.
However, of the total number of commercial banks in Russia, most of them are concentrated in Moscow, in other cities of the country they are sorely lacking.
The decrease in the number of banks occurs, among other things, due to the absorption of unstable small banks by larger ones. This process can be considered a positive phenomenon, since the bank's capital increases, and small banks avoid bankruptcy. The merger of small banks of one region and the creation of branches on its basis is considered promising. But the main reason for the decrease in the number of banks is the revocation of licenses from already operating banks.
In this regard, there is an acute problem of ensuring the stability of the banking system by increasing the liquidity and solvency of banks. The solvency of commercial banks depends largely on the solvency of the bank's clients, since failure to repay the loan reduces the bank's solvency. And if the insolvency of customers becomes widespread due to the general crisis of non-payments, then the stability of the entire banking system is threatened.
One of the important tasks today is to attract banks to long-term investment lending. For the development of this process, there are objective conditions associated not only with the urgent need of the real sector of the economy, but also with the change in the situation in the financial market, which made impossible the main methods of making money by banks that have been in force until now.
In these conditions, banks have to switch from the financial sector to the manufacturing sector. Prospects for the development of the situation in this area are as follows:
a) investments in the non-production sphere - office premises, shops, land, other real estate objects;
6) the priority objects of industrial investment will most likely be escort-oriented production, primarily in the fuel and some raw materials industries, as well as investments in quickly recouped facilities, for example, those related to the life support of the population;
c) export production (especially raw materials) has already been divided between large credit institutions. The conquest by "medium" banks of their "niche" in high-tech, knowledge-intensive industries, which have good prospects in the external and internal markets, largely depends on the smoothness of the mechanism for attracting, selecting, servicing a mass customer, on interaction with government agencies, with business and financial circles in Russia and abroad,
international economic organizations, from the technical equipment of the bank itself;
d) as a result of a sharp rise in the cost of capital construction, even if large banks can independently finance the construction of facilities, then only of small and local significance. Funding for more significant investment programs is likely to be carried out by financial and industrial groups, which will unite under one roof credit and financial, industrial and trade and commercial structures;
e) the real participation of commercial banks in investment programs can also occur through the securities market (banks act as intermediaries between the owners of funds and investors).
f) banks provide real assistance to investments in production through developing project financing (project management). A credit institution independently or jointly with an enterprise selects a project for direct investment, evaluates its feasibility, efficiency, taking into account various kinds of risks, develops a general concept "feasibility study, business plan. To expand the participation of banks in investment projects, a program to stimulate investment in the Russian economy should also be legislatively defined.
The Central Bank of the Russian Federation and its functions.
1. Monetary regulation of the economy;
2. Issue of credit money - banknotes;
3. Control over the activities of credit institutions;
4. Accumulation and storage of cash reserves of other credit institutions;
5. Lending to commercial banks (refinancing);
6. Credit and settlement services to the government (for example, servicing state loan bonds, issuing and cash execution of the state budget);
7. Keeping official gold and foreign exchange reserves.
Of course, the main function of the central bank is credit regulation. In addition to administrative methods (setting direct restrictions on the activities of commercial banks, conducting inspections and audits, issuing instructions, collecting and summarizing reports, etc.), central banks also have economic instruments for regulating banking... Its main components are: policy of minimum reserves, open market and accounting policy.
Minimum reserves are deposits of commercial banks with the central bank, the amount of which is established by law in a certain relation to bank liabilities. Initially, the practice of reserve funds was intended for the insurance of commercial banks. The Central Bank assumes the function of accumulating a minimum reserve that is not subject to lending.
Another function of such a reserve is that by changing the percentage of the reserve, the Central Bank affects the amount of free funds of commercial banks. During a boom, to "cool" it, the Central Bank raises the reserve rate, and during a crisis, vice versa. Raising the reserve rate by 1 to 2 percentage points is an effective means of limiting credit expansion... As a rule, the rate of minimum reserves is differentiated.
Open market operations and motto operations. Open market operations - buying and selling government securities in order to increase or decrease the funds of commercial banks. By changing the volume of purchase and sale of securities and the level of prices at which they are sold or bought, the central bank can flexibly and quickly influence the lending activity of commercial banks. Motto operations are the purchase and sale of foreign currency in order to maintain within certain limits the exchange rate of the national currency.
Another classic instrument in the practice of central banks is the policy of the discount rate, i.e. setting the interest rate for loans that the central bank provides to commercial banks (refinancing rates). Commercial banks provide the Central Bank with payment obligations - bills. These can be either banks' own promissory notes or the obligations of third parties held by banks. The Central Bank buys, accounts for these promissory notes, while holding a certain percentage in its favor. Funds received from the Central Bank are provided to borrowers of commercial banks. The price of this loan - the interest rate - must be higher than the discount rate, otherwise commercial banks will be unprofitable. Therefore, if the Central Bank raises the discount rate, this leads to an increase in the cost of loans for clients of commercial banks. This, in turn, contributes to a decrease in borrowing and, consequently, a decrease in investment. Thus, by manipulating the discount rate, the Central Bank has the ability to influence investment in production.
Money-credit policy.
Monetary policy, the main vehicle of which is usually the Central Bank, is aimed mainly at influencing the exchange rate, interest rates and the overall liquidity of the banking system and, consequently, the economy. Achievement of these objectives pursues the goal of stable economic growth, low unemployment and inflation.
Most often, monetary policy is one of the elements of the entire economic policy and is directly determined by the priorities of the government. The relationship between the Central Bank and the government in the conduct of monetary policy is usually clearly defined. The government is limited in its actions and usually does not interfere in the daily activities of the bank, agreeing only on general macroeconomic policies. Distinguish between "narrow" and "broad" monetary policy. Narrow policy means achieving an optimal exchange rate by investing in foreign exchange market, accounting policies and other instruments affecting short-term interest rates. The broad policy is aimed at combating inflation by influencing the money supply in circulation. Using direct and indirect methods of credit control, the liquidity of the banking system and long-term interest rates are regulated. Monetary policy should be clearly linked to the budget and tax policy and, accordingly, to the financing of the state budget.
The main instruments of monetary policy:
· Official discount rate - a relatively rarely changed rate of the Central Bank, at which it is ready to take into account promissory notes or provide loans to other banks as a lender of last resort.
· Mandatory reserves - part of the banks' resources deposited at the request of the authorities to an interest-free account with the Central Bank.
· Open market operations.
· Reasonable banking supervision - various methods of control over the functioning of banks in terms of ensuring their security based on the collection of information, the requirement to comply with certain ratios.
· Capital market control - procedure for issuing shares and bonds, issue quotas, priority of issue, etc.
· Market access - regulation of opening new banks, permitting operations to foreign banking institutions.
· Special deposits - part of the increase in deposits or loans of commercial banks, withdrawn to interest-free accounts with the Central Bank.
· Quantitative restrictions - rate ceilings, direct lending restrictions, periodic “freezing” of interest rates.
· Foreign exchange intervention – purchase and sale of currency to influence the exchange rate and, consequently, the supply and demand of the monetary unit.
· Public debt management - the issue of government bonds neutralizes banks' liquidity and ties up their funds.
· Targeting - setting targets for the growth of one or more indicators of the money supply.
· Regulation of stock and futures transactions by setting the required margin.
· Compulsory investment rates into government securities for banks and investment institutions.
These instruments of monetary policy can be effective only in conditions of close connection and interaction with fiscal policy and legislation.
Commercial banks.
Commercial banks are the main link in the two-tier banking system.
Today, the group of commercial banks in different countries includes a number of institutions with different structures and different ownership relations. Their main difference from central banks is the lack of the right to issue banknotes.
Business principles of a commercial bank.
The first and the fundamental principle of a commercial bank is to work within the limits of actually available resources. This means that a commercial bank must ensure not only a quantitative correspondence between its resources and credit investments, but also seek to match the nature of banking assets to the specifics of the resources mobilized by it. First of all, this applies to the timing of both. If a bank attracts funds mainly for short periods, and invests them mainly in long-term loans, then its liquidity is under threat.
Second the principle is economic independence, which also implies the economic responsibility of the bank for the results of its activities. This presupposes the freedom to dispose of the bank's own funds and attracted resources, free choice of clients and depositors, and the disposal of the bank's income. A commercial bank is liable for its obligations with all funds and property belonging to it, which may be subject to a penalty. The commercial bank assumes the entire risk from its operations.
Third the principle is that the relationship of a commercial bank with its customers is built like normal market relations. When providing loans, a commercial bank proceeds primarily from market criteria of profitability, risk and liquidity.
Fourth the principle of a commercial bank is that the regulation of its activities can be carried out only by indirect economic (and not administrative methods). The state determines only the "rules of the game" for commercial banks, but cannot give them orders.
Functions of a commercial bank.
One of the most important functions of a commercial bank is loan mediation, which they carry out by redistributing funds temporarily released in the process of the circulation of funds of enterprises and monetary incomes of individuals. The redistribution of resources is carried out horizontally of economic ties from the lender to the borrower on the basis of payment and repayment. The fee is formed under the influence of the supply and demand of borrowed funds.
Banks by their activities reduce the degree of risk and uncertainty in the economic system.
The second most important function of commercial banks is to stimulate savings in the economy. Commercial banks, acting in the financial market with a demand for credit resources, should not only mobilize the savings available in the economy as much as possible, but also form rather effective incentives for the accumulation of funds. Incentives to accumulate and save money are formed on the basis of flexible deposit policy commercial banks. In addition to the high interest paid on deposits, the bank's creditors need guarantees of high reliability of placing resources in the bank and the availability of information on the activities of commercial banks.
The third function of banks is to mediate payments between separate independent entities.
In connection with the formation of the stock market, such a function of banks as intermediation in operations with securities is developing.
Interaction of commercial banks and the Central Bank in Russia.
The Central Bank of Russia developed Instruction No. 1 "On the Procedure for Regulating the Activities of Commercial Banks" and "Instructions on the Procedure for Forming Centralized Funds of the Banking System of the Russian Federation at the Expense of Contributions", which have been in force since 1991.
Central bank:
Scientifically organizes money circulation;
Orientates the activities of commercial banks to improve the welfare of society and the implementation of priority tasks;
Strengthens financial position commercial banks.
It should be noted that the Central Bank of the Russian Federation, like the central banks of many countries, applies in relation to commercial banks, first of all, economic methods of management and only when administrative methods are exhausted.
№4 Goals and objectives of the stock exchange.
Stock exchanges are an indispensable institution of a market economy.
The stock exchange is an organized, regularly functioning market for securities and other financial instruments.
Stock exchanges, thanks to trading in securities, can concentrate large capitals in their hands, which are subsequently attracted for the development of production. Here, the purchase and sale of shares and bonds of joint stock companies, as well as government bonds, is carried out.
The stock market game is very tempting. By buying securities at a low rate and selling at a high rate, you can get a large exchange profit. As the organizer of the securities market, the stock exchange is primarily concerned with creating necessary conditions to maintain efficient trading, but as the market develops, its task becomes not only the organization of trade, but also its service. The exchange mechanism is varied. To carry out work on the exchange, the governing body of the exchange is selected - the exchange committee, which includes large commodity producers or their proxies. Exchange members are divided into exchange intermediaries (brokers and brokers) and dealers (or dealers) who carry out transactions with securities. At stock exchanges, currency exchanges are created where foreign currency is bought and sold.
Exchange activity is considered in its evolutionary development: from cash transactions to forward transactions, through them - to futures contracts and, finally, to options trading, which can significantly reduce risks.
The essence of exchange activities.
The basis of exchange activity is exchange trading. The emergence of exchange trading is explained by the development needs of both production and trade. Trade and production are closely interconnected. Manufacturing requires that certain goods in the agreed amount were delivered by the due date. At the same time, trade determines: what products, in what volume, for which consumer, etc. Exchange trading grew out of the usual local market and fair. Exchange trading has absorbed the features of both ordinary market and fair trade; it is organized by traders to facilitate the very process of trading, to develop its more efficient mechanism, and subsequently to protect the interests of both sellers and buyers from unfavorable price changes.
Exchange activity is an independent form of commercial activity with the aim of making a profit.
In the stock markets, both the sale of securities to their first owners and their secondary resale take place. The task of the stock exchange should be considered the identification of the equilibrium exchange price. This allows exchange members and professional participants to know the most recent prices at which trades can be made and to know about the most recent trades that have been made. The stock exchange must ensure the availability of information - ensuring its publicity and openness. The guarantee of execution of transactions concluded on the exchange is closely related to such a problem as the protection of the client's money. The Exchange monitors its developed standards and code of conduct, applies penalties up to suspension of activities or revocation of a license in case of non-compliance.
Stock exchange: types of markets.
Classification of markets constituting stock exchange, can be carried out according to the following parameters:
· By degree;
· By the degree of market centralization and the quality of admitted securities;
· By types of securities;
· By types of transactions;
· By technology.
Markets are divided into: the exchange market and the over-the-counter market.
By types of securities, markets are divided into:
· Stock market;
· Bond market;
· Market for warrants, subscription rights;
· Derivatives market.
And according to the types of transactions, they are divided into the market for regular transactions, the market for cash transactions and the market for forward transactions.
By technology, the markets are divided into: the computer market and the market for traditional trading based on the "open cry".
A computer exchange is a computer trading system that allows you to enter orders to buy and sell securities, to distribute information about the entered orders among market participants, to carry out an automatic auction - a set of orders to buy and sell with matching price orders.
Stock exchange operations.
The exchange accounting center collects data on each transaction concluded on the exchange. The members of the chamber confirm the fact of the conclusion of the transaction, during the exchange day, information about it is transmitted via a computer communication system to the clearinghouse.
At the end of each exchange day, information on the final settlement rates for futures (exchange purchase and sale agreement) transactions for each contract and for each market.
In the evening and at night, all transactions are revalued at the clearinghouse at the final rates, and potential gains or losses are calculated for each participant. The next morning, the clearinghouse requires the participant to cover all losses.
If a trading participant concludes transactions on several exchanges, it is more profitable for him when their clearing (this is a set of settlement operations under the transaction) in the native clearinghouse.
Each clearinghouse provides guarantees for the fulfillment of contracts that are traded on the exchange it serves. All transactions of a participant under interchangeable contracts are concentrated in one clearinghouse.
Organization of cash payments.
Any national system monetary settlements serves the entire payment turnover of a particular country. Cash settlements on operations with securities are only part of its functions. Securities are commercial and financial bills:
· Bank acceptances;
· Short-term commercial paper issued by enterprises and corporations;
· Short-term savings and deposit certificates issued by banks of various types;
· Treasury bills.
All transactions with securities are carried out within the credit and banking system.
Investment securities include stocks, short-term and long-term bonds of the government, local governments, banks and industrial corporations, cooperatives, investment certificates.
Normal cash settlement systems are designed in such a way that they are indifferent to what kind of payment relationships they have to serve. One of the most reliable options is one in which market participants create a system that works in parallel with common system calculations. One example of the latest Russian practice is the settlement system of the Moscow Interbank Currency Exchange (MICEX), used since May 1993 for settlements with transactions with State short-term zero-coupon bonds. Dealers - participants settlement system MICEX makes mutual payments for bonds on their correspondent accounts in this system. The advantage of this model is the relatively high speed of settlements: the settlement organization can in a short time, and when using electronic technology - on a day-to-day basis - transfers are made from the payer's account to the payee's account. It makes it possible to control the ability of buyers to pay for the securities they purchase. The disadvantage of the model is that the participants in the system often cannot freely use the balances on their accounts in separate depository and clearing centers for their other operations.
No. 5 The amount of money required for circulation is directly proportional to (1), inversely proportional to (2):
- the number of goods and services sold on the market;
- product prices;
- the number of revolutions of the monetary unit.
Answer: The amount of money required for circulation is directly proportional to the prices of the commodity and inversely proportional to the number of revolutions of the monetary unit.
- sales profit;
- profit before tax.
Proceeds from product sales including VAT - 385,500 rubles.
Production cost of products sold - 256500 rubles.
Selling expenses - 10% of the production cost.
Income from renting out property - 100,000 rubles.
A fine for violation of contractual obligations was paid - 50,000 rubles.
No. 7 Problem No. 2
The commercial bank charges interest on term deposits at a complex rate of 9% per annum. Determine the amount of accrued interest if the contribution of 80,000 rubles was claimed after 3 years.
List of used literature.
1. Adrianov V.D. Inflation and methods of its regulation // ECO. - 1999. - No. 7, p. 32-42
2. Belousovs. Inflation: factors, mechanism, coping strategy.
3. The Economist. 1996 No. 4.
4. Introduction to the market economy: Textbook. guide for economics. specialist. universities / A.Ya. Livshits, I.N. Nikulina, O.A. Gruzdeva and others; Ed. AND I. Livshits, I.N. Nikulina. - M .: Higher. shk., 1995 .-- 447s.
5. L. A. Chaldaeva Economics and organization of exchange business in Russia, Moscow, Fininova OJSC, 1998, p. 64-68
6. L. Chaldaeva Risks in the securities market, Financial Business magazine, No. 1, 1998, p. 60-62
7. Law of the Russian Federation "On the Securities Market" dated 26.04.1996.
8. Federal Law of the Russian Federation "On a bill of exchange and promissory note" dated 02.21.1997.
9. Voronin D.V. Russian promissory note market: from laisses-faire to government regulation. // Banking, No. 4, 1999.
10. Zhalninsky B.A. Prospects for the development of the promissory note market in Russia. // Banking, No. 5, 1997.
11. Mirkin Ya.M. Securities and stock market... M., Perspective, 1998
Under inflation means the imbalance of supply and demand and other proportions of the national economy, manifested in an increase in prices.
The rise in prices and the emergence of excess amounts of money are only external manifestations of inflation. Its root cause is the violation of the proportions of the national economy. In the world economic literature, there are three main forces leading to an imbalance in the national economy and inflation:
1) state monopoly on the issue of paper money, on foreign trade, on non-production, primarily military, and other expenses associated with the functioning of a modern economy;
2) trade union monopoly, which sets the size and duration of one or another level of wages;
3) the monopoly of the largest firms on the determination of costs and prices.
That. the root causes of inflation are both in the sphere of circulation and in the sphere of production and are very often determined by economic and political relations in the country.
To the factors of monetary circulation relate:
1) overflow of the sphere of circulation with an excess amount of money due to the excessive emission of money used to cover the budget deficit;
2) oversaturation of the national economy with credit;
3) government methods for maintaining the national currency rate, limiting its movement, etc.
Towards non-monetary factors of inflation relate:
1) factors associated with structural imbalances in social reproduction,
2) with a costly management mechanism,
3) state economic policy, including tax policy, price policy, foreign economic activity, etc.
Types and types of inflation
In terms of manifestation distinguish?
1) "opening" inflation;
2) "suppressed" inflation.
Open inflation typical for countries with a market economy, where the interaction of supply and demand contributes to an open unlimited increase in prices. Although open inflation distorts market processes, it nevertheless retains the role of signals for prices, showing producers and buyers where capital is profitable.
Suppressed inflation or latent inflation inherent in an economy with command-and-control control over prices and incomes. Tight control over prices does not allow inflation to openly manifest itself in price increases. In such a situation, inflation becomes latent. Outwardly, prices remain stable, but as the mass of money increases, their excess causes a shortage of goods.
By rate of price growth the following types of inflation are distinguished:
1) normal inflation - the rate is growing slowly, about 3–3.5% per year; the scale of inflation is controllable;
2) moderate inflation (creeping) - rates reach up to 10% per year; such inflation is recognized as relatively harmless and quite consistent with normal economic development as a whole; its scale does not lead to unforeseen disruptions, especially in the distribution of national income between different social groups; the value of money is preserved, there is no risk of signing contracts at nominal prices. In the West, it is viewed as an element of the normal development of the economy, which does not cause much concern.
3) galloping inflation - price increases are measured in double digits or more per year, contracts are "tied" to price increases, money materializes at a faster rate. It is believed that it is dangerous for the national economy and requires anti-inflationary measures.
4) hyperinflation- prices are growing at an astronomical rate, the discrepancy between prices and wages becomes catastrophic, the well-being of even the most affluent strata of society is destroyed, the largest enterprises become unprofitable and unprofitable; it paralyzes the economic mechanism, since the effect of flight from money in order to turn it into commodities sharply increases. Economic ties are being destroyed, and a transition to barter exchange is under way.
Of all types of inflation, the most damaging to the economy is hyperinflation, accompanied by an astronomical growth of the money supply in circulation and, as a consequence, a catastrophic rise in prices for consumer goods. The role of money itself in these conditions is falling sharply, the population is switching to other, much less effective forms of payment. Parallel currencies appear, including foreign ones, as well as quasi-money (coupons, cards, etc.).
Characteristic features of the manifestation of hyperinflation:
1) destruction of normal economic relations;
2) producers and consumers get rid of money by investing in unproductive values;
3) mutual settlements take on a barter character;
4) production is curtailed and goods are accumulated counting on their rise in price;
5) speculative activity is growing;
6) the accumulations of a whole generation of people are depreciated.
By degree of balance price increases distinguish two types of inflation:
1) balanced
2) unbalanced.
At balanced inflation the prices of various commodity groups relative to each other remain unchanged, and with an unbalanced one, the prices of various commodities are constantly changing in relation to each other, and in different proportions.
Balanced inflation is not scary for business. We only have to periodically raise the prices of goods. The risk of loss of profitability is inherent only to those entrepreneurs who are the last in the chain of price increases. These are, as a rule, manufacturers of complex products based on intensive external cooperation ties. The price of their products reflects the entire amount of the increase in prices of external cooperation, and it is they who run the risk of delaying the sale of ultra-expensive products to the end consumer.
Unbalanced inflation- a big trouble for business. But even worse, when there is no forecast for the future, there is no certainty at least that commodity groups - leaders in price growth will remain leaders in the near future. It is impossible to rationally choose the areas of capital investment, calculate and compare the profitability of investment options. Industry cannot develop in such conditions; industrial development seems unrealistic. Only short speculative and intermediary operations are possible.
In terms of predictability distinguish between:
1) expected inflation
2) unexpected inflation.
Under expected inflation means inflation, which is predicted and predicted in advance, unexpected - on the contrary.
The combination of balanced and expected inflation does not do much harm to the economy, and unbalanced and unexpected inflation is especially dangerous, fraught with high costs of the adaptation plan.
Inflation development mechanism reflect its types.
There are two types of inflation:
1) demand inflation, in which the equilibrium of supply and demand is violated on the demand side;
2) cost (supply) inflation, in which the imbalance of supply and demand occurs due to an increase in production costs.
Demand inflation takes place when the monetary incomes of the population and enterprises grow faster than the real volume of goods and services. Typically, this type of inflation occurs at full employment. Moreover, demand can be increased both on behalf of the state (the growth of military and social orders) and on behalf of the entrepreneur (for example, an increase in demand for goods).
Supply inflation means a rise in prices, provoked by an increase in production costs in conditions of underutilization of production resources. The theory of inflation, due to rising costs, explains the rise in prices by factors that lead to an increase in costs per unit of output. Increasing costs per unit of production reduces profits and the volume of products that enterprises are ready to offer at the current price level. As a result, the supply of goods and services decreases and prices increase. Consequently, in this scheme, not demand, but costs inflate prices.
Impact of inflation
The socio-economic consequences of inflation are expressed in:
1) the redistribution of income between groups of the population, spheres of production, regions, economic structures, the state, firms, the population; between debtors and creditors;
2) depreciation of money savings of the population, economic entities and state budget funds;
3) constantly paid inflation tax, especially by recipients of fixed monetary income;
4) uneven growth of prices, which increases the inequality of profit rates in different industries and exacerbates the disproportions in reproduction;
5) distortion of the structure of consumer demand due to the desire to turn depreciated money into goods and currency. As a result, the turnover of funds is accelerated and the inflationary process increases;
6) consolidation of stagnation, a decrease in economic activity, an increase in unemployment;
7) reducing investment in the national economy and increasing their risk;
8) depreciation of depreciation funds, which complicates the reproduction process;
9) an increase in speculative play on prices, currency, interest;
10) active development of the shadow economy, in its "evasion" from taxation;
11) a decrease in the purchasing power of the national currency and the distortion of its real exchange rate in relation to other currencies;
12) social stratification of society and, as a result, exacerbation of social contradictions.
Manifesting itself in the depreciation of money, inflation thereby affects the most diverse aspects of the functioning national economy and international economic relations... This is manifested in the following:
2) inflationary rise in prices negatively affects the balance of the economy. The unevenness of the course of inflationary processes increases the inequality of the conditions of reproduction and income generation in various sectors and leads to deepening inter-sectoral imbalances. The intensification of inflation stimulates the flow of capital from the sphere of production to the sphere of circulation, where its turnover is higher and the rate of increase outstrips the rise in prices. The proportion between accumulation and consumption is violated, the rise in prices undermines incentives to accumulate the internal monetary resources of enterprises, since it depreciates them, and investment projects are curtailed accordingly;
3) inflation, associated with a decrease in the effective demand of the population, makes it difficult to sell goods and services, which leads to a slowdown in the turnover of production assets, to a disruption in the continuity of the reproduction process;
4) the development of the inflationary process counteracts the further intensification of reproduction, is the reason for the decrease in the rate of real economic growth. This is due to the fact that inflation usually leads to a reduction in lending to the industrial sector of the economy, there is a flow of capital from the production sector to the circulation, and the inflow of foreign investment decreases. Credit, as you know, is a factor in the intensification of reproduction, and also plays an important role in ensuring economic growth;
5) long-term inflation has a negative impact on the reproduction processes of economic entities. Externally, inflation has a positive effect on the performance indicators of enterprises: the volume of sales of products increases, and profit and profitability increase accordingly. In the short term, small inflation, increasing effective demand, can have a stimulating effect on economic growth. But a fairly long inflationary process, as it develops, increasingly complicates the normal functioning of the social economy, its individual links;
6) inflation leads to a deformation of the structure of credit investments of commercial banks: as it increases, the share of medium-term and long-term loans decreases and the share of short-term loans increases, which is due to the reduction in the terms of placing deposits and the depreciation of long-term investments. In turn, this forces enterprises to use short-term bank loans (issued, as a rule, at the expense of short-term deposits) to finance capital investments, as a result of which credit risk increases significantly. In this case, the existence of a gap between the loan term and the loan turnover period forces borrowers to resort to short-term loans on an ongoing basis, regardless of the loan conditions, which significantly impairs the solvency of these enterprises and may affect the liquidity of banks (in case of non-repayment or late return of these loans) ;
7) inflation affects the state of the state budget in two ways. On the one hand, inflation, when the rate of its growth exceeds the rate of growth of interest rates, reduces the real cost of public debt. There is a redistribution of income from holders of government securities in favor of the state. If the state uses monetary emission to cover the state budget deficit, this causes a rise in prices, on the basis of which redistribution is carried out, often called the "inflation tax". The decrease in the purchasing power of money, which occurred as a result of the emission of money directed to finance government spending, can indeed be viewed as an additional hidden tax that the entire population pays to the state. On the other hand, under inflation, the real amount of government spending decreases due to devaluation of taxes and other revenues, since there is a time lag between the receipt of funds to the budget and their spending. In addition, when inflation is high, there are difficulties with the placement of government loans;
8) the depreciation of national currency leads to a depreciation of the exchange rate, albeit with a certain delay. The increase in domestic prices causes a change in the ratio between the volumes of exports and imports (it becomes more profitable to import goods), which affects the country's balance of payments and, ultimately, causes a decrease in demand for the national currency and an increase in the need for foreign currency. This leads to a devaluation of the exchange rate. The depreciation of the exchange rate, in turn, affects the movement of export and import prices. Importers are forced to raise commodity prices in order to keep profit margins at the same level. Exporters in this case have the opportunity to reduce prices in foreign currency for their goods, thereby increasing their competitiveness in foreign markets. However, the reverse effect of the exchange rate on export and import prices is not long-term; their level is ultimately determined by the state of the national economy;
9) the development of inflation can lead to unfavorable for the country, the movement of capital in foreign economic turnover. High inflation, on the one hand, stimulates the export of national capital outside the country, as well as counteracts the inflow of foreign capital. On the other hand, with other favorable conditions, it allows you to receive inflationary surplus in the production of goods in high demand, as well as as a result of transactions in cash, financial markets etc. In addition, a lot of effective currency and credit instruments have been created recently, which are used to reduce currency risks. In this regard, inflation can lead to an inflow of foreign capital into the country, including speculative, which can serve as an additional factor in the depreciation of money.
Forms and methods of anti-inflationary policy
The main forms of stabilization of monetary circulation, depending on the state of inflationary processes, are monetary reforms and anti-inflationary policy .
Monetary reforms. They were carried out in the conditions of metallic money circulation - with a silver or gold standard, as well as after the Second World War, when the gold exchange, or gold-dollar standard was in force.
After the end of wars and revolutions, the stabilization of money circulation as one of the most important ways to restore the economy was carried out using the following methods: nullification, restoration (revaluation), devaluation and denomination.
Nullification means announcing the cancellation of the heavily discounted unit and the introduction of a new currency. Thus, in Germany, as a result of post-war hyperinflation and a significant depreciation of the Reichsmark, the mark introduced in 1924 was exchanged at a ratio of 1: 1 to a trillion old Reichsmarks. The old mark has been canceled.
Restoration- restoration of the previous gold content of the monetary unit. For example, after the First World War during the monetary reform of 1925 - 1928. in England, the pre-war gold content of the pound sterling was restored. After World War II, restoration, or revaluation, was carried out by raising the official exchange rate against the dollar, and then the International Monetary Fund recorded an increase in the gold content of the monetary unit. For example, the FRG carried out three revaluations within the Bretton Woods monetary system (in 1961, 1969 and 1971).
Devaluation- a decrease in the gold content of the monetary unit, and after the Second World War - the official exchange rate against the US dollar. Thus, the gold content of the US dollar was reduced in December 1971 by 7.89%, and in February 1973 - by 10%. After the introduction of floating exchange rates in 1973, devaluation was carried out only in the grouping with regulated exchange rates - in the European Monetary Snake, on the basis of which the European Monetary System was created.
Denomination- the "strikethrough zeros" method, i.e. enlargement of the scale of prices. Thus, in Brazil, where the rate of annual depreciation reached 933.6%, in 1988 the "Summer Plan" was adopted, according to which currency unit"nocruzado", equivalent to 1000 previous cruzados.
By methods of carrying out all monetary reforms are divided into three types:
1) exchange of paper money at a deflation rate for new money in order to drastically reduce the mass of paper money. For example, in November 1944 in Greece the exchange was made in the ratio of 1 new drachma to 1 billion old;
2) temporary (full or partial) freezing of bank deposits of the population and entrepreneurs... Similar reforms were carried out in France (June 1945 and January 1948), Belgium (October 1944), Austria (July and November 1945), etc .;
3) combination of the first and second methods of monetary reform... This method was used in West Germany in June 1948 during the transition from a military-state to a market economy and was called "shock therapy".
Anti-inflationary policy. This is a set of measures for state regulation of the economy aimed at combating inflation. In response to the interaction of factors of demand inflation and cost inflation, two main lines of anti-inflationary policy have taken shape - deflationary policy(or demand regulation) and income policy.
Deflationary policy- these are methods of limiting money demand through monetary and tax mechanisms by reducing government spending, increasing the interest rate for loans, strengthening the tax press, limiting the money supply, etc. The peculiarity of the deflationary policy is that it, as a rule, causes a slowdown in economic growth and even crisis phenomena. Therefore, most governments, when conducting it in the 60-70s. XX century showed restraint or even abandoned it.
Income policy presupposes parallel control over prices and wages by freezing them completely or setting limits for their growth. For social reasons, this type of anti-inflationary policy is rarely used. At the same time, the experience of using the income policy in the United States under President Nixon, in Great Britain under the Labor Governments, in the Scandinavian countries indicates the limited results of it:
1) the slowdown in price growth caused a deficit for some goods;
2) the rise in prices was restrained only for a certain time, and with the abolition of restrictions, it accelerated again.
Anti-inflationary policy options were selected depending on priorities. If the goal was to curb economic growth, then a deflationary policy was pursued; if the goal was to stimulate economic growth, then preference was given to income policy. In the case when the goal was to curb inflation at any cost, then both methods of anti-inflationary policy were used in parallel.
Indexing(full or partial) means compensation for impairment losses in money. First, this method was used in the late 40s - early 50s. XX century with inflation caused by the transition from a military economy to normal market conditions. Indexation began to be applied again in the 70s in connection with the development of galloping inflation.
The forms of restraining the controlled growth of prices are being manifested;
1) in the "freezing" of prices for certain goods;
2) in keeping their level within certain limits.
Such control has been preserved in all the leading developed countries. For example, in Germany it covers about half of the retail trade, including food.
This control is even more important for developing countries, where a stable level of retail prices for consumer goods is supported by government subsidies, which ensures, albeit a low, but stable standard of living of the population. The transfer of these goods to a free market basis, as a rule, is accompanied by violent social upheavals.
In the late 70s - early 80s. XX century, in the fight against galloping inflation in industrialized countries, Keynesian recipes for fighting inflation were replaced by conservative options with the use of deflationary measures:
1) stricter restrictions on government spending, especially economic and social;
2) curbing the growth of paper money supply by pursuing a policy of targeting money circulation, i.e. tight containment of the money supply within the established benchmarks.
Competitive production incentives include measures:
1) to directly stimulate entrepreneurship by significantly reducing taxes on corporations;
2) to indirectly stimulate savings for the population (reduction of taxes from the population);
3) measures that stimulate market competition and reduce its impact on prices and the price-wage spiral.