In the year 1997, the Soviet Union witnessed a series of achievements. The inflation was controlled, the monetary position was strengthened and the balance of payments was on a surplus. The sudden downfall in the Russian stock market on the 17th of August, 1998 saw the entire Russian economy in a dilapidated condition. Jacques Sapir a professor of Economics has endorsed this Russian crisis in his book. The purpose of his book is twofold. Firstly, it is a step back in time to understand how Russia, was freed from communism, and its revival from thereon.
[...] Transformation of the Russian society and the inevitable crisis: In the second part of the book, Jacques Sapir describes how the most catastrophic event (the crash of 1998) was ultimately inevitable in light of all the symptoms of the Russian society which was the increased poverty (which grew at an alarming rate of over loss of the state fiscal crisis, financial empires reaching a stage of complete cessation of activity A biased democracy biased served as a breeding ground for economic turmoil: Despite the ambitions of Russia, it was on the eve of the crash that not a semblance of democracy was visible. [...]
[...] A plummeting stock market was further depreciating, and had reached its lowest level. The central bank sought to counter the attacks against the ruble and raised its interest rates by 60% on June 5 after a 150% peak that had reached a few weeks earlier. On June 18th, Russia launched a loan on the European market of 2.5 billion. While seeking support from the IMF, Russia was establishing the standard plan the IMF's crisis: fiscal measures, thereby reducing spending .At the same time, the crisis became a social hazard and was penetrating into the country further, while the state announced that it would provide for the payment of the debt in violation of the treatment of employees arbitrarily. [...]
[...] This was the result of the downturn in the stock market crash in Russia in 1998. For Jacques Sapir, the neo-liberal entirely forgets this component of inflation (cost). Finally, imposing zero inflation in an economy in transition is like giving all power to the former owners of wealth to the detriment of entrepreneurs, because inflation makes the debt: by lowering the real interest rate and the debt burden is further lightened. The decline of the banking system Overall the banking system suffered from an accumulation of "bad debts" which the back found difficult to refund to its customers. [...]
[...] This was mainly because the system could not be rebalanced due to inadequacies in the Russian banking system, (i.e. its lack of unity and organization). For Jacques Sapir, the balance to fight against inflation was simple and eloquent. The willingness to look at any price and its monetary stability in Russia has had calamitous consequences. International organizations had been wrong in reducing complex issues of financial stability and inflation which resulted the nation in reaching a state of economic tsunami. [...]
[...] The restructuring of the Russian economy operated on the basis of perennial difficulty A decline in inflation and a soaring barter system: Barter was still a marginal phenomenon until the years of 1993-1994, when the then tight monetary policy was set up and it grew rapidly. In effect, businesses refused to surrender their cash and diverting activities with their trading partners in parallel networks, outside the market regulation was existing. The resort to barter allowed the buyers and sellers to keep their money balances to limit the impact of higher borrowing costs on prices, and ensure the continuity of their productive activities. [...]
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