Chapter 401 assigns monetary policy

"Mr. Condesu, please listen to my explanation..." Although it was through the microphone, the urgency in Ahmadi's tone was ready to come out, "This decision is completely made by the government. Although our central bank strongly opposes it, It doesn’t help at all.”

   The person who talked to Ahmadi was of course the president of the International Monetary Fund, Condesuu. In November, he also praised Indonesian President Suharto in a public environment for complying with the IMF’s rescue plan for Indonesia. The Indonesian rupiah has initially stabilized.

  But who would have thought that it didn't take long for a series of scandals to break out in Indonesia, including excessive currency issuance, theft of U.S. dollars, and smuggling of gold. Any one of these rumors runs counter to "compliance with the IMF's rescue package plan for Indonesia", and the market's reaction to Indonesia is even more tragic. Now it is close to 8,000 Indonesian rupiah to 1 US dollar, which has more than doubled.

This change caused Condesu to have extreme distrust of the current Indonesian government. Although Suharto later denied all "groundless accusations" in the market through public appearances, everyone, including the IMF executives, had great distrust of Suharto. The credibility of Harto's statement has been greatly discounted. Among them, Kan Desu himself has flown to Jakarta several times to check the situation.

  After reluctantly agreeing to the work of the Indonesian government, the IMF, after more than half a month of delay, finally allocated the second part of the agreement to the Indonesian government at the end of March 1998 as support for them. But who would have thought that just one month later, they would come up with such a play again.

"What are you kidding?" Kang Desu was strangely angry. He could hear the evasion in Hamady's words, and he knew what role the other party played in it, "If you strongly object, even Suha Trust himself, it is impossible to go against this wish. Now we really have no way to save Indonesia, there is absolutely no way!"

   "No!" Hamady yelled in despair, "Mr. Condesu, is there really nothing we can do?"

   "If you stick to the fixed exchange rate system," Condesuu said on the other end of the microphone, his tone was very indifferent, without a trace of emotional fluctuations, "yes, there is nothing we can do."

"In this case, let's reach a new agreement!" Hearing the ultimatum, Ahmedi calmed down, and he stopped begging, and his tone became calm. This change made Kang Desu I was surprised. If you were just surprised to hear this, then what Hametti said next made Kandesu feel unbelievable, even as shocked as five thunderbolts, "In addition to all the agreements we have reached before, one more thing is added, that is, The IMF sent people to assist and formulate Indonesia's monetary policy!"

"What?" Kang Desu only felt his head buzzing, as if thousands of little stars were flickering in front of his eyes, and the shock brought by the information he heard had already made him hallucinate, "You Are you talking about monetary policy? Are you sure you mean 'assist and set monetary policy'? Are you serious?"

  Condeso used three rhetorical questions in a row, obviously wanting to confirm whether what he heard was true.

"Of course!" At this time, Hamady wanted to say "no", but when the words came to his lips, he was finally swallowed back abruptly, and replaced with another sentence, "I think there is really no policy other than this policy." There are other things worth trading!"

   It should be noted that the debate on government regulation, free market, and price dominance has always been the focus of economics research. And just whether government regulation is needed, the entire economics is divided into two schools, one is called the Keynesian school, and the other is the neoclassical school of economics.

  Shortly after the stock market crash after 1929, Keynes's masterpiece "The General Theory of Employment, Interest, and Money" was published. This epoch-making work represents the complete loss of the market for the neoclassical non-intervention theory among governments. The governments of various countries, perplexed by the stock market crash, seemed to see a lighthouse in the dark and boundless sea, and regarded Keynes's masterpiece as the theoretical cornerstone of policy formulation. The economic theories of the School of Economics are the theoretical basis for the formulation of economic policies in western developed countries.

  Among the Keynesians, government intervention in the market is essential. On the one hand, it is implemented through transfer payments and taxes in fiscal policy, and on the other hand, it is implemented through monetary policy.

  To put it simply, the economy is stimulated through two aspects: one is to strengthen investment, and the investment controlled by the government is naturally mostly infrastructure construction; the other is to issue banknotes.

  The money issuance here is not an endless flood of money, at least to some extent is strictly controlled. Quantitative calculation is based on a relatively rational and considerable expectation of inflation and economic growth, and then multiplied by the currency multiplier, which is the quantity of the base currency.

As for the handing over of monetary policy by others, what Ahmadi said implies that many factors, including expected inflation and economic growth, will be considered by the IMF. They have no doubts about how much the currency multiplier is, and the sincerity of this move is not insufficient.

"There's only so much we can do!" Ahmedi sighed and said helplessly, "Only if you intervene, they will restrain themselves a little bit, and this country will have hope. Yes , only in this way can Indonesia get out of the financial crisis.”

"..." Condesuu on the other end of the phone was silent for a while, and then suddenly said leisurely, "Even with monetary policy, I don't think Indonesia's debt situation will improve. As you know, the base currency quantity…"

He didn't continue to speak, but Hamadi knew what he was going to say, and after being speechless for a long time, he burst out, "You can ask the big boss to exert pressure, and I will allow you to For the sake of profit, with that old guy's IQ, he will be successful with both hard and soft tactics."

Generally speaking, the amount of a country or region's base currency is composed of foreign exchange net assets and domestic net assets. Foreign exchange net assets are determined by the balance of payments, while domestic net assets are the central bank's claims on the society. Simply put, It is the amount of loans issued by the central bank.

  The central bank's claims, except for a part of them appearing in commercial banks in the form of rediscount, most of the other debtors are the government. This means that if one wants to stimulate the economy through monetary policy, then the amount of base currency must be strictly controlled, and controlling the amount of base currency means monitoring the government's debts.

   In other words, although the Bank of Indonesia is willing to surrender the dominance of monetary policy, whether this power can be implemented smoothly depends on the cooperation of the Indonesian government. And the degree of cooperation involves another major policy—fiscal policy.

  Kandezu thought of this, so although he knew that the Indonesian side had shown enough sincerity, he still didn't dare to set the tone, because he knew very well that the Indonesian government was the real problem.

   And Hametti is well aware that, in fact, he gave up the leadership of monetary policy just to get rid of the influence of the Suharto regime. Even if Suharto and Tommy and his son wanted to do something again, would they hold guns to coerce the experts from the IMF?

  Whether they dare to do this, Hamady doesn't know. But he knew very well that he would never want to be pointed at the head with a gun.

Inside the IMF, since the United States contributed more than 60% of the fund shares, the United States has become the single largest member state. When one share occupies one voting right, the will of the United States naturally becomes the will of the IMF, so Ahmedi called them the Big Boss behind their backs.

  In all fairness, at the beginning of the spread of the Asian currency crisis, the performance of the IMF was remarkable, and it faithfully performed its duties and operations, so that the position was tight for a period of time and needed to be refinanced to supplement funds. The reason why it suffered so much criticism later was that it harmed the interests of those who had the right to speak, causing them to jump up and down and accuse the IMF of reaching out indiscriminately.

  This reason is the same as the failure of the "shock therapy" that a certain country accused the West of helping Russia to implement.

"Don't they want a more open market?" Hamady forced a smile, and said slightly bitterly, "Or, it is you, the open market you want will be realized soon. I believe you don't plan to want one Fragmented and devastated allies!"

   "I can try it for you, but it's impossible to answer you now!" Condesu didn't respond at all to Hametti's words, "Now, let's ask for your terms. How much do we need to help you raise?"

   "50 billion US dollars, at least let us tide over the current difficulties!" Hamady said for a long time, just waiting for the other party to offer conditions, and now naturally without hesitation, he directly reported the figures he had prepared long ago.

"You are joking, you must be joking!" Kant Suo laughed, and then tactfully rejected the other party's offer, "40 billion US dollars will be recorded every month according to the test situation of the base currency. This is my bottom line. If If you agree, I will go to another Mr. President for PR. If you don’t agree, I will announce to the world that we will unfortunately give up a member state!”

   "Deal!" Hamady, who had shaken off the burden, didn't bother too much, and hung up the phone directly after reaching a preliminary agreement. In fact, everything that followed basically had nothing to do with him.

  From today, even the salary of ordinary civil servants in the Indonesian government will depend on other people's opinions. If Indonesia needs the money.

   But what does it matter? Anyway, Ahmedi no longer needs to be pointed at the head with a gun!

  (end of this chapter)