Reply-To: pkt at csf.colorado.edu Message-ID: <01J1LZ92KDME8Y5287 at hofstra.edu>
The following truncated letter will appear in Thursday's NYT.
You claim that the Russian Government's printing of Russian rubles, as proposed by Acting Prime Minister Viktor S. Chernomyrdin, would guarantee a period of hyperinflation and the turning off of foreign investment and International Monetary Fund assistance. (editorial, September 5th)
The Russian economy today resembles Franklin D. Roosevelt's economy in the 1930s, with comparable unemployment of labor and capital. Under these circumstances, the increase in tax collections to move closer to a balanced budget may poison any economic system. When Roosevelt did this in 1937, he produced a sharp decline in economic activity in the 1938 recession rather than any significant inctrease in the rate of inflation.
The hyperinflation danger is today a bogeyman, as can be seen in the experience of Belarus', where wages and pensions are paid regularly and output is growing by double-digit proportions as a result of the printing of Belarussian rubles
(SNIP)
The Lukashenka government as a result is admittedly popular with the Belarussian population, if not with the international financial community.
Western "support" for Russia in the form of portfolio investment and high windfall profits (until recently) or government bonds producing astronomically high interest is unnecessary for growth as the Belorussian experience also shows. A currency board will do little to improve the Russian underutilization problem. A better prospect would be the use of capital controls as used regularly in Chile.
T nificant --- End Forwarded Message ---
-- Rosser Jr, John Barkley rosserjb at jmu.edu