Yaser Jabrayili and Seven False Claims Part 2

Yaser Jabrayili and seven false claims – Part 2

Yaser Jabrayili and seven false claims

Yaser Jabrayili and seven false claims, according to Iran Gate’s report, have sparked a strong reaction from the country’s economic experts. He, who claims not to discuss economic issues, has actually delved into the scientific foundations in the field of economics and tried to manipulate the concepts.

In the first part of the report on the examination of Jabrayili’s unscientific claims, three of his strange claims were investigated. In the second part of this report, the testing of Jabrayili’s claims regarding topics such as the roots of inflation and the impact of energy markets on the economies of developing countries has been addressed.

The fourth claim: Unraveling inflation with Yaseri’s glasses

In a program aired on Ofogh TV, Jabrayili claims that the source of inflation is what is known as cost-push inflation. He claims that the increase in production costs has caused an increase in the prices of consumer goods. He provides an example to support his claim.

If the price of chicken feed increases in the market, the price per kilogram of chicken also increases in the same proportion, and sometimes even more than that proportion. Therefore, there is an obvious contradiction in this example, as it does not explain why the cost of production inputs, specifically poultry feed, has increased.

In simpler terms, Yaser Jabrayili tries to divert public opinion from the proposition that monetary growth is the cause of inflation and ultimately price increases. He claims that this increase in production costs leads to the high prices of consumer goods in the market. As mentioned before, such a cost increase in production inputs did not occur out of nowhere; rather, the increase in the cost of poultry feed has a clear origin, which is the inflationary surge caused by the growth in monetary supply. This growth is driven by the government’s desire to meet current needs and pay the salaries and benefits of government employees, with the help of the so-called independent central bank lever.

Therefore, this claim by Yaser Jabrayili is also questionable, and one can ask him the purpose of presenting arguments that have been unanimously recognized by economists for decades in a distorted manner.

The claim is that the fifth reason for inflation is the increase in oil prices.

The head of the Strategic Policy Evaluation and Monitoring Center claims that the increase in oil prices is another factor exacerbating inflation in the world, including Iran. This claim, which has been repeatedly raised by government officials, is a kind of forward escape and evading responsibility for economic management of the country. However, to test the truth of this statement, it is not a bad idea to delve into the root causes of inflation, which have also posed social and political challenges for developed countries.

According to Jabrayili’s claim, inflationary jumps in the West have followed the growth of energy prices worldwide. But again, we need to revisit the points raised a few paragraphs earlier. Inflation is a financial phenomenon and is not caused by anything other than the expansion of the monetary base. Anything referred to as price hikes or increases are all effects of inflationary jumps that lead to a decrease in the value of the national currency.

In fact, it is not the prices of goods that increase, but rather the national currency that loses its value in a flawed cycle. In other words, it is not the consumer goods that have become more expensive, but it is the citizens who have lost value in their money and are forced to get rid of it in order to preserve the value of their assets by converting it into stable assets such as gold, coins, stocks, or global currencies.

However, attention should be drawn to the supportive policies of the United States government after the decline of the global COVID-19 pandemic. The Biden administration immediately introduced a bill to Congress, which required the government to provide extensive financial assistance to the affected sectors in order to compensate for the damages caused by the pandemic. Similar bills were passed in European countries by their respective governments, and the simultaneity of these actions had significant inflationary consequences for the global economies.

As mentioned before, when governments expand their monetary base to meet their needs and current expenses, unbacked liquidity grows and inflation intensifies. This exact scenario occurred in the case of financial aid provided by developed countries to those affected by the COVID-19 pandemic. The growth rate of liquidity relative to gross domestic product (GDP) decreased due to prolonged closures and quarantines, and the economic growth process came to a halt. Therefore, any release of unbacked money was considered to increase the velocity of money circulation in parallel markets. Naturally, under such circumstances, the result would be nothing but intensified inflation, which would adversely affect any society.

In simpler terms, monetary policy in developed countries that had recently escaped the grip of the COVID-19 pandemic became the catalyst for inflation. The increase in prices of energy carriers, including oil, was also a result of this policy. Additionally, Russia’s invasion of Ukraine in February 2022 further contributed to this cause and created the grounds for an unprecedented rise in energy prices in the market. Therefore, it can be said that Yaser Jabrayili’s fifth claim is also invalid.

Communist Muslims are smoothing the path for inflation – Part 1.