When people start pulling out their money to buy things, the government has the choice between (a) printing money (hence hyperinflation), and (b) levying huge taxes to mobilize the purchasing power to back the savings accounts. The Russian government did not have the institutional capability to do (b).
The right approach--which Sachs was lobbying for--was for a big loan/grant from the United States to fill the holes in the Russian government's balance sheet...
Brad DeLong
>----- Original Message -----
>From: "Doug Henwood" <dhenwood at panix.com>
>
>
>Chris Doss wrote:
>>BTW does/did Sachs endorse the Gaidar strategy of
>>freeing prices before breaking up the monopolies 9n
>>1992? That was pretty fucking stupid. If the ensuing
>>hyperinflation had not wiped out people's savings,
>>amiddle class might have started forming in Russia in
>>the early 1990s instead of the early 2000s.
>
>-People have claimed he privately welcomed the inflation and the
>-destruction of savings, as part of the ground-clearing; he denies
>-this furiously.
>
>People claim many things. Any evidence? The original privatization
>through vouchers may have ended up disasterously, but given the corruption
>of party appartachiks, it had intellectual appeal compared to some other
>versions of privatization.
>
>Sachs is now saying incredibly progressive things on global economic
>justice. Unless there is evidence of really bad intent, why not just
>chalk his role in Russia up to intellectual hubris and applaud his present
>progressive stands on key issues?
>
>It does seem like the characature that the left is always looking for
>heretics and the right is always looking for converts is too accurate.
>
>Nathan Newman
>
>___________________________________
>http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk
--
Yours,
Brad DeLong