(July 29, 2022)
Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, and All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain on Friday said the main reason for the high inflation at the global level is excessive currency printing by major economies.
Developed countries printed a lot of money during the 2008 global financial crisis and distributed trillions of dollars to large companies in the name of economic recovery, he said.
Mian Zahid Hussain said that trillions were again distributed during the pandemic, the result of which is now in front of everyone.
Talking to the business community, the veteran business leader said that it is impossible to control inflation without absorbing the excess capital circulating in the international market.
Mian Zahid Hussain said that some Western economists brought to light a modern monetary theory during the crisis according to which economically stable countries should print as much money as they want as it will improve the situation.
Many countries started implementing this theory without thinking and injected trillions of dollars into the system through lavish bailout packages and other measures.
The balance of demand and supply was compromised by the injection of more than thirty trillion dollars in the system and the whole world has become a victim of inflation.
Now inflation in the United States has reached 9.16%, which is the highest level in forty years. As long as this excess capital remains in the market, achieving economic equilibrium will be impossible, he observed.
Mian Zahid Hussain said that now the US is raising interest rates to absorb additional capital due to which the purchasing power of Americans has drastically decreased and due to the decrease in demand, the whole world is plunging in recession because eighty-eight percent of the world’s transactions are in US dollars.
The only solution to the problem is to absorb the excess capital available in the global economy to improve the situation, he said, adding that it took fourteen years of mismanagement to create this disorder and it will take at least three years to end it, after which the price of all commodities will be adjusted to their real value.
The inflationary crisis had already started, but the war between Russia and Ukraine and the failed sanctions on Russia has increased its intensity, while the causes of inflation in Pakistan include the global economic situation, losses of failed government institutions and growing political confrontations.