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Finance and Management
Reference:

Inflation in Russia: revealing the causes and the path of decline (on the strategic management platform)

Golikova Ekaterina Igorevna

Candidate of Economic Sciences

115582, Russia, g. Moscow, ul. Domodedovskaya, 24, korp. 4,, kv. 98

ekt-g@mail.ru
Other publications by this author
 

 

DOI:

10.25136/2409-7802.2022.2.37406

EDN:

XMIHFN

Received:

26-01-2022


Published:

06-07-2022


Abstract: In this study, it is proposed to conduct an experimental monetary reform in one of the regions of Russia. To carry out monetary reform by introducing a fee for the use of funds in the balance at the end of the month of each of the participants in economic relations. The purpose of the new monetary reform is to achieve the reduction of inflation to zero. This study is based on observations and practical experience of European countries, China. In this paper, the author believes that monetary inflation is caused by money added during distribution in different ratios. As the root cause of inflation, interest is singled out as one of the components added during the distribution of money, which generates a social conflict regarding the redistribution of public wealth. The experimental monetary reform may be the beginning of other reforms and a component of Russia's economic development within the framework of strategic management. The advantages of monetary reform of the natural economic order in combination with other reforms are as follows: reduction of inflation (almost to zero), which is caused mainly by a significant percentage component of the distributed funds; exclusion of percentages from the cost components and, as a consequence, prices as an instrument of income redistribution in an unfair way, i.e. accumulation of most of the income from a small group of individuals, and in amounts larger than they need; prevention of social catastrophe, prevention of social unrest and social clashes, reduction of the level of aggressiveness in society and the onset of social justice; reduction of prices for goods and services up to 50%; the emergence of a stable nationally-oriented quality economy; the possibility of updating physically and morally worn out fixed assets of public infrastructure; GDP growth.


Keywords:

inflation, percent, monetary reform, redistribution of income, distribution of money, added money, economic development, tax, unemployment, strategic management

This article is automatically translated. You can find original text of the article here.

Introduction.

The relevance of this study lies in the fact that for a number of years inflation in Russia has been a socio-economic problem and a brake on Russia's economic development.The most acute inflationary issue in the current period arises after the statement of the Bank of Russia on the key rate on March 18, 2022 in connection with its increase to the level of 20% per annum on February 28, 2022. E.S. Nabiullina stated that the Russian economy is entering a phase of large-scale structural adjustment, which will be accompanied by a temporary but inevitable period of increased inflation; the monetary policy pursued by the Bank of Russia will create conditions for gradual adaptation of the economy to new conditions and the return of annual inflation to the target of 4% in 2024 (Official website. The Central Bank of the Russian Federation [1]).In addition, Russia has been under severe economic sanctions in recent months. The problems that inflation in Russia has generated and is currently generating especially acutely are seemingly unsolvable.

The purpose of this study is to show the main hidden causes of inflation, its essence and to offer an experimental experimental way for its possible reduction and (or) disappearance in the conditions of the current economic situation in our country.

The scientific novelty of this research work lies in a new approach to the consideration of inflation, inflationary money and the proposed solution to problems related to inflation, in particular, in conducting an experimental monetary reform, which will entail other reforms, within the framework of state strategic management.

The author believes that the socio-economic conflict and the slowdown in economic development in Russia is caused by interest as the main component of inflationary money and the redistribution of wealth. The author's reasoning is based on historical data, statistical data, observations and practical experience of the USSR, European countries, the USA and China, analytical studies of the problem. To reduce or completely eliminate inflation, it is necessary to understand what inflation is and what are the main hidden causes of its occurrence.

In this article, an unconventional approach to determining the causes of inflation is considered, the mechanism of the emergence and withdrawal of inflationary money and its components is revealed; an experimental way for the Russian economy to approach inflation to zero or its complete disappearance is proposed on the basis of:

successfully conducted experiments in a number of European countries at the beginning of the last century;

a systematic approach to economic development in China, which combines state strategic planning and regulation of the market economy, which gives a positive result of the Chinese economy with prospects for long-term development.

The experimental way for the disappearance of inflation involves a number of reforms and, first of all, monetary reform. At the same time, the author understands that the most effective reforms will manifest themselves if their implementation in Russia is preceded by:

introduction of a system of state strategic management, including strategic planning, management of NTP, price regulation and providing for collective and personal responsibility for the results of (non) implementation of plans, for the work and coordination of the system, for determining the conditions of strategic planning, etc.;

coordination of the work of the system of state strategic management and planning with the work of economic entities of the market economy.

The coordinated work of the system of forming the goals of economic policy at the macro level, monetary policy, fiscal policy in the framework of state strategic management is paramount.

Research results, inflation assessment and conclusions.

Russian researchers believe that "the essence of inflation is determined through the excess of nominal values over the real content of economic indicators. A social conflict over the redistribution of public wealth is singled out as the root cause of the existence of inflation" [2]. "Inflation in the Russian economy at the beginning of the XXI century is a decrease in the purchasing power of the ruble, expressed in an increase in prices for the bulk of goods and services, as well as in the excess of nominal indicators of economic activity over their real content, and is a consequence of redistributive processes in the Russian economy initiated by monopolistic associations and the state. These processes are aggravated by structural imbalances in the economy and the presence of inflationary expectations among economic entities" [2]. "The main cause of inflation is a violation of the commodity-monetary equilibrium caused by the overflow of the sphere of monetary circulation," notes E.O. Bryskina [3].

Systemic inflation covers the entire economic system and is characterized by an increase in inflation expectations, developing by the mechanism of a price spiral. Examples of systemic inflation are inflation in Russia throughout the history of post-Soviet development. The features of pricing in economic sectors are comparable to the points of price growth or decline in these sectors of the economy. Balanced (homogeneous) inflation is inflation that occurs when the growth rates of the price of the final product and the growth rates of the prices of its components are equal. Unbalanced (heterogeneous) inflation, respectively, occurs when these components are unequal. Balance has a close connection with the intensity of inflationary processes. The higher the rate of inflation, the higher the heterogeneity of prices. A manifestation of the price imbalance is the situation of "price scissors", which is reflected primarily in agriculture. This conclusion was made in their study by Gordievich T.I., Ruzanov P.V. [4]. Inequality in consumption and inflation by socio-economic groups of the population depends primarily on the structure of consumption, as noted by Gordievich T.I., Ruzanov P.V. [5].

One of the most common causes of inflation is the imbalance between the main elements of the market mechanism supply and demand, as concluded by Efanova L.D., Shmukler S.A. [6].

Based on the cost approach of E.A. Perevyshina, D.A. Egorov, the following inflation factors were identified: "prices of agricultural producers, prices for housing and communal services, the ruble exchange rate against the US dollar and adaptive inflation expectations" [7].

Taking into account inflation expectations, economic entities make decisions on consumption, savings and investments, set interest rates, wages and prices. Inflationary expectations of the population largely determine the dynamics of consumer demand, which ultimately affects prices for goods and services, according to Gordievich T.I., Ruzanov P.V. [8]. At the same time, V.K. Burlachkov, in his research on inflation targeting, suggests considering inflation expectations as "a form of adaptation of economic entities to the prevailing inflationary process" [9].

Foreign researchers have confirmed the close relationship between the prices of raw materials, the possibility of an increase in domestic inflation and monetary policy. The rise in oil prices contributes to the growth of the money supply in dollar-ruble equivalent, which orients domestic prices to growth and forces the Central Bank of the Russian Federation to pursue a restraining policy (S.Szilagyiova. A study of bilateral relations between commodities and the UK economy in the context of inflation targeting: Doctoral dissertation. - University of Huddersfield, 2014. [10]).

Sinelnikova-Muryleva E.V., Grebenkina A.M. investigated the threshold level of inflation in comparison with the targeted level of inflation and concluded that "the choice of the target is at the level of 4%" [11]. Historical data show that developed countries set a target (target level) for inflation at 2%, and developing countries set a target of 3% or higher. The problems of using inflation targeting are highlighted in the works of foreign researchers [12-16].The history of this form of monetary policy dates back to 1989 in New Zealand. For the first time in the world, there was an attempt to counteract inflation by legal rather than economic methods. A law was approved that established as the main goal of the central bank, ensuring the stability of the price level; it was about zero inflation. The powers between the Reserve Bank and the government were divided so that all economic policy goals related to the rate of economic growth, the unemployment rate, and the volume of investments were within the competence of the government, but were not considered as priorities in comparison with the inflation target [9].

As a result of scientific research by V.K. Burlachkov, paradoxes of the theoretical foundations of inflation targeting were revealed. Their essence lies in the assumption of the influence of the legislative framework on the inflationary expectations of economic entities and the application of the central bank's key rate on reserve money to influence aggregate demand and price dynamics, in fact determined by the dynamics of deposit money created by commercial banks in the lending process [9]. From which Burlachkov V.K. concludes that the key rate, being the rate on the reserve money of the central bank used for settlements between commercial banks, does not affect aggregate demand and price dynamics [9].

F.S. Kartaev, answering the question in his scientific work whether the choice of monetary policy regime affects inflation, came to the conclusion that "the money supply targeting regime is an inefficient way to reduce inflation, both in developed and developing countries" [17].In his other work, F.S. Kartaev comes to the conclusion that "the rates of long-term economic growth depend on many factors, among which monetary factors are not decisive and are inferior in importance, for example, to competent institutional reforms." [18].

The trend of the Russian economy, which has been stagnating for decades, has divided researchers into two groups. One group of researchers (A.Kudrin, V.Trunin, E.Goryunov, etc. [19-23]) over the past decades has seen a way out of the critical situation of the Russian economy in targeting inflation and free exchange rate policy. Interesting in this regard is the work of Goryunov E.L., Drobyshevsky S.M., Mau V.A., Trunin P.V., in which they conclude about the possible weakening of the effectiveness of monetary policy in Russia in the foreseeable future and the expediency of using hybrid fiscal and monetary instruments [24].

Another group of researchers (A.Agangebyan, M.Ershov, S.Andryushin, S.Glazyev, etc. [25-28]) for a number of years proposed:to abandon the regime of free floating of the ruble; to use targeted preferential loans to certain industries; to introduce restrictions on foreign exchange transactions; to abandon inflation targeting with a reorientation to economic development; to severely limit the growth of tariffs of natural monopolies.

Proponents of inflation targeting consider it as a fulcrum of price stability. It is believed that price stability contributes to the preservation of the purchasing power of the national currency, is a condition for reducing economic uncertainty and increasing the welfare of economic entities.

Serious analysis with a proposal to take practical measures to allow Russia to avoid the collapse of economic and state institutions in the face of opposition to the West was made by Academician S. Glazyev of the Russian Academy of Sciences in 2015 at a meeting of the interdepartmental commission of the Security Council of the Russian Federation [28]. It was noted that "in our conditions of demonetization and monopolization of the economy, they are accompanied not by a decrease, but by an increase in inflation. The second gross mistake of the Central Bank, as mentioned above, was the transition to the free floating of the ruble exchange rate. There is no scientific proof of the need for such a transition when targeting inflation." "The combination of these two mistakes led to the fact that by announcing the transition to inflation targeting in 2014, the Central Bank achieved exactly the opposite results: instead of a decrease from 6.5% to the announced 5%, it exceeded 11%. The question arises: what do monetary authorities mean by inflation targeting if they cannot not only achieve the target parameters set by them, but even predict the direction of their movement?".

"In English, targeting is goalsetting (target-goal, target). In other words, inflation targeting means that the Central Bank subordinates its policy to inflation reduction. But reducing inflation has always been the main priority in the activities of the Bank of Russia, which set its targets for the planning period" [28, pp.27-28]. "It follows from the above that the Central Bank's policy of targeting inflation does not correspond to the semantic meaning of these words" [28, p.31]; "the Russian economy is artificially driven into a stagflationary trap. The ongoing contraction of the money supply aggravates these processes and entails a breakdown of the entire system of reproduction and monetary circulation" [28, p.33]. "To ensure expanded reproduction, the Russian economy needs a significant increase in the level of monetization, expansion of credit and the capacity of the banking system. The necessary level of money supply to boost investment and innovation activity should be determined by the demand for money from the real sector of the economy and state development institutions with the regulatory value of the refinancing rate. Real inflation targeting is impossible without the implementation of other macroeconomic policy goals, including ensuring a stable ruble exchange rate, investment growth, production and employment" [28, p.33]. Almost seven years have passed since the announcement of the report of Academician S.Y. Glazyev in 2015. Nothing has changed fundamentally, including with regard to monetary policy. Thus, the key rate of the Central Bank of the Russian Federation, starting from March 2021, increased again and, a year later, i.e. in March 2022, during the period of economic sanctions, reached the level of 20%.An increase in the key rate will once again lead to the devaluation of the ruble, which will cause another inflationary wave, since such a measure does not provide a long-term effect of stabilizing consumer prices. In the near future, we should expect a decrease in lending, "investment hunger", a reduction in production, mass bankruptcy of enterprises in the manufacturing sector of the economy and not only, technical degradation and mass unemployment. Academician of the Russian Academy of Sciences S.Y. Glazyev called the strategy of raising the key rate a "ruinous" strategy; "the damage from such a policy will amount to 30 trillion rubles of unproduced GDP, as well as over 15 trillion rubles of undeveloped investments" [29].

December 2014, during the introduction of economic sanctions against Russia, appeared in the dynamics of economic development as a bifurcation point in inflation expectations. The consequences of economic sanctions were clearly shown in the study Gordievich T.I., Ruzanova P.V. in the matrix of inflation factors [30]. After the 2008 financial crisis, many central banks around the world adopted unconventional monetary easing measures to stimulate the economy. Short-term nominal interest rates reached zero, and central banks poured money through purchases of long-term government bonds (M.Z.Mulkaman. The influence of monetary policy and the macroeconomic environment on Islamic banking operations in the dual banking system of Malaysia: Doctoral dissertation. - Durham University, 2016 [31]).

The normal development of a market economy is possible only with a creeping form of inflation, i.e. with an average annual price increase of 5-10% [32]. At the end of 2021, researchers noted that real inflation was already higher than can be assumed based on official figures. The overall price increase does not fully reflect the actual level of inflation. There is "deficitflation" the simultaneous occurrence of price inflation and suppressed inflation, accompanied by a deficit [33].

In the conditions of economic sanctions at the beginning of 2022, the factors determining inflation in our country, in particular, are mainly those that have taken place for decades:

-the rise in the cost of imports as a result of the devaluation (depreciation) of the Russian national currency, i.e., the so-called imported inflation;

-strong monopolistic elements in the market structure of the economy, leading to the monopolistic practice of raising prices;

-increased pressure on the prices of production costs, the increase of which exceeds the average price increase [32];

-tax maneuvers in significant sectors of the economy (for example, the replacement of export duties with mineral extraction tax);

-acute shortage of certain goods and resources (under conditions of economic sanctions);

-deformation of external (global) and internal transport and logistics chains (under conditions of economic sanctions).

"In the current conditions, priority should be given to the growth of production and investment within the limits of the established restrictions on inflation and the ruble exchange rate. At the same time, to keep inflation within the established limits, a comprehensive system of measures on pricing and pricing policy, currency and banking regulation, and the development of competition is necessary. In our conditions, the source of financing for these investments from backwardness and poverty to the advanced standard of living and technical development can only be a targeted credit issue organized by monetary authorities in accordance with centrally established priorities" [28, pp.44-45].

Based on a study of 211 countries for the period from 1990-2019, the researchers found that in the least developed and poorest countries, the outpacing dynamics of both consumer lending and lending to real sector companies positively affects economic growth. As GDP per capita reaches US$ 4700-7000 in 2010 prices, advanced consumer lending begins to negatively affect economic growth, and the positive impact of lending to real sector companies persists. With an increase in GDP per capita, lending to the latter also begins to negatively affect economic growth, while the threshold value of GDP per capita is 6-42 thousand dollars in 2010 prices. In the most developed and rich countries, advanced lending to real sector companies has a negative impact on economic growth [34].

Thus, the main course of Russia's modern economic policy is still the fight against inflation. Even in the government's program for 1995-1997, it was indicated that "it is necessary to build a bridge between the inflationary past and the investment future" [35]. To overcome high inflation, N.Ya. Petrakov proposed to carry out a soft monetary reform in a few years, which was based on the introduction of a parallel currency as a means of protecting investment costs from inflation, which would serve investment activities and, as the economy revived, would be able to displace the soft ruble. It is enough to refer to the experience of monetary reform in Russia in 1922-1924, which led through parallel currencies to a single convertible currency in just two years [35].

The ideal value of inflation is zero, which corresponds to a stable/unchanged price level.As practice shows, inflation can actually grow to infinite values, or it can either approach zero, or decrease to zero, that is, disappear.

The average annual inflation rates (for 15 years (1970-1985)) in the Soviet economy were as follows: in industry +0.37%, in mechanical engineering and metalworking 1.5%, in the food industry +0.83%. The transition to market relations in Russia was accompanied by a sharp aggravation of the problem of inflation in all industries, which led to significant difficulties in the reproduction of fixed assets. During the beginning of the development of the market economy in Russia, the price indices of producers of products have changed dramatically. Prices and average annual inflation rates (2004 to 1994) for the decade were by industry, respectively: in industry +40.5%, in mechanical engineering and metalworking 51.7%, in the food industry +37.2% (Golikova, Ekaterina Igorevna. The mechanism of intensification of the reproductive function of depreciation: abstract of the dissertation of the Candidate of Economic Sciences: 08.00.05 / Moscow State University of Food Production (MGUPP). - Moscow, 2006. - 28 p.).

The methods and methods proposed by the government and the Bank of Russia to combat inflation have not yet led to a reduction in inflation in the long term and in practice do not give the proper result on the scale of the Russian market economy. The Russian government system does not put into practice the proposals of scientists on the transformation of approaches to the consideration of inflationary processes and the adoption of a comprehensive system of measures on pricing and pricing policy, banking regulation. In the near future, in the context of tightening economic sanctions in 2022, a so-called stagflationary crisis may arise, when a decline in production is combined with inflationary growth. A prolonged period of high inflation with a decrease in the growth of real incomes of the population may eventually lead to socio-political tension and instability. And the regions will have the hardest time, especially in which the so-called city-forming enterprises are located. This also applies to strategic enterprises, which, first of all, include military-industrial complex enterprises, taking into account that "hopes for the decentralization of the Russian management system during the pandemic were not justified, in inter-budgetary relations the degree of dependence of regions on federal authorities has increased" [36]. When assessing the structural levels of regional inflation, such factors of regional inflation heterogeneity as the volume of lending to individuals, the level of price rigidity, inflation expectations and the nominal effective ruble exchange rate showed the greatest importance [37].

Inflation: statistical data from previous years and forecasts for the future.

The purpose of this article is not a comparative analysis of inflation indicators from different countries of the world with inflation indicators in Russia, therefore, the dynamics of inflation in other countries of the world is not given in this article. According to the Rosstat of Russia, the consumer price index (hereinafter referred to as the CPI) has not tended to decrease in recent years, unfortunately, as evidenced by the data on Chart 1 of the CPI for 2018-2021. And it's no secret that this state of affairs has been observed in Russia for a long period of time, more than one decade. Graph 2 shows the inflation rate in Russia by year over the past ten years.

Graph 1.CPI for 2018-2021 Data source: Rosstat of Russia [Electronic resource]. URL: https://rosstat.gov.ru /(accessed 10.01.2022).

Schedule 2.The inflation rate by year over the last ten years in Russia. Data source: Statistics. Inflation in Russia. [electronic resource]. URL: https://- .RF/charts-inflation (accessed 10.01.2022).

Graphs 1 and 2, the linear trend of increasing inflation in recent years clearly show that the anti-inflationary policy tools used do not lead to a long-term steady decline in the inflation rate over the past decade, including the pandemic period, which indicates deep structural and institutional inflationary problems in the Russian economy and the need for a radical change in approaches to solving it.

Let's pay attention to the data of the inflation calculator according to Rosstat. Price change due to inflation: at the beginning of 1991 1000,00, at the end of 2020 108,774,130.52.Accumulated inflation in Russia for three years (2018, 2019, 2020) amounted to 12.73%.Accumulated inflation for the selected period (1991-2020) 10,877,313.05%. The dynamics of inflation for the year (%) and accumulated inflation (%) for the period beginning of 1991 end of 2020 is shown in Graph 3. Graph 3 makes it possible to compare current (annual) inflation and accumulated inflation for the period from the destruction of the USSR to the present and analyze inflationary withdrawals of money from Russian consumers in historical perspective events that took place in our country and in the world during this period.

After the collapse of the Soviet Union, hyperinflation began, prices were not controlled by anyone; the shortage of goods led to a catastrophic increase in prices. In 1991, inflation was 160.4% at the end of the year. At the end of 1993, inflation decreased from 2508.8% (at the end of 1992) to 840%. The decline continued until 1998. In the crisis year of 1998, there was a sharp jump in inflation from 11% to 84.4%. And this jump played a decisive role in the rapidly increasing linear trend of the accumulated inflation indicator.Russia was not spared by the crisis of 2008-2009, which broke out in the United States and showed the vulnerability of the Russian economy and its dependence on the global conjuncture in the conditions of integration and globalization. By 2011, the Russian economy had recovered. The crisis of 2014-2015 was caused not only by the collapse of oil prices, but also by economic sanctions after the annexation of Crimea. Inflation in these years was 11.4%-12.9%, respectively. Inflation was at a record low in 2017 (2.5%) and in 2019 (3.0%). In 2017 and 2019, inflation was subdued.There was a decrease in consumer and investment demand during these years and economic growth was 2%.The crisis of 2020 as a crisis of a special nature revealed the anomalies of the Russian economic system and showed that the existing model of the economy in Russia is morally outdated and unable to continue to adequately respond to the challenges of the XXI century and function in the conditions of global economic turbulence.

Graph 3. Dynamics of inflation for the year (%) and accumulated inflation (%) for the period beginning of 1991 end of 2020. Data source: Country statistics. [electronic resource].URL: https://svspb.net / (accessed 10.01.2022).

Graph 4 shows the dynamics of a comparative analysis of the producer price index and consumer prices in % compared to December of the previous year. As shown in Graph 4, the growth of consumer prices for goods and services at the beginning and in the middle of the crisis year 2020 outstripped the growth of prices for industrial goods, but by the end of 2020 the advance almost disappeared and in 2021 the picture changed exactly the opposite. Prices for manufactured goods increased by 24.5% in 2021 compared to 2020, according to Rosstat of Russia. The largest growth was observed in the field of mining, by 46.2% in 2021. Manufacturing goods have risen in price by 21.8% over the year. In the field of electricity, gas and steam supply, the growth was 5.3%, in the field of water supply, waste collection and disposal - 3.2%. Using the principle of dynamic pricing in order to maximize profits, manufacturers raised prices for building materials and rolled metal to a record level (from 40% to 50%), which was due to the expected shortage of the latter due to the pandemic. As Graph 4 shows, the prices of manufacturers of industrial goods in 2021 are more dynamic than prices in the consumer market, which is evidence of an aggravation of the economic situation.

Schedule 4.Producer and consumer price indices in % compared to December of the previous year.Data source: Rosstat of Russia. [electronic resource].URL: https://rosstatgov.ru (accessed 10.01.2022).

The inflation boom in Russia continues. According to Rosstat, inflation in Russia in 2018 was 4.26%, in 2019 3.04%, in 2020 -4.91, in 2021 8.39%. The annual inflation rate in three weeks of the new year increased from 8.39% to 8.64%. The Bank of Russia has raised its inflation forecast by the end of 2022 to 5-6%. This forecast was given in the statement of the Bank of Russia on the results of February 11, 2022. At the same time, the Bank of Russia maintained its forecast for annual inflation in 2023-2024 at 4%, stating that in mid-2023, annual inflation will return to the target. Inflation in February 2022, according to the Bank of Russia, was 9.2%. In January 2022, the inflation expectations of Russians decreased to 13.7%.

Note.Demand inflation and cost inflation in the context of economic sanctions in 2022 act simultaneously, which complicates the implementation of anti-inflationary policy without a system of strategic management and planning.

Inflation: a new look at the causes and mechanisms.

The state in a broad sense is arranged in the form of a set of basic systems: authoritative, administrative, security, content and custody. Each such system produces a property of its own type [38].

Inflation is interesting in its substantial essence.The reasoning is based on the English word "to inflate", which means "to inflate" and the special significant position of some subjects of economic activity unknown to a wide range, including in the power system, for example, foreign investors of various investment directions, bankers, monopolists, to whom the state grants priority to conduct economic activities on the territory of Russia. The basis for the formation of initial capital back in the early 90s was the distribution of money, and most of it in relative shares to significant entities with a special position. The distribution of money increased both from the beginning of the year relative to the distribution in the previous year, and during the year relative to the previous distribution in the time interval chosen by the power system independently. Moreover, each time money was distributed, money was added based on the relative importance of economic entities.

It should be noted that there is no need to talk about fair competition in a market economy, within the framework of such an approach to the formation of initial and subsequent capital.

The money added during the distribution causes monetary inflation, and therefore it is quite fair to call them inflationary money. After a certain time lag, inflationary money is withdrawn through an increase in bank rates, prices, taxes, tariffs, duties in order to repeat the circulation of money distribution and add them at each subsequent distribution to significant entities with a special position. The mechanism of price withdrawal of inflationary money is interesting. It is based on information interaction between the system of power managers and large manufacturers of finished products and suppliers of goods, works, services; within the framework of such interaction, the permission of the system of power managers to change (increase) prices to one entity has a chain character in relation to other entities. As a result of this mechanism, prices gradually rise, and at the same time there is a redistribution of income, as a result of which the rich get richer and the poor get poorer.

The redistribution of income takes place strictly within the boundaries of the additionally distributed money to significant economic entities. Thus, there is an invisible relationship between significant entities with a special position (foreign investors, banks, monopolists, etc.) and inflationary processes.

Significant economic entities in their number can both increase and decrease.

The money supply, which is growing due to the "blowing in" of additional money like a snowball, may also cause the appearance of more banknotes with a large face value, and, accordingly, a reduction in banknotes with the lowest face value. In the end, sooner or later monetary inflation leads to the need for denomination. Denomination is the end of the cycle of distribution of additional (inflationary money). After the denomination, a new cycle of monetary inflation begins [38].

If the indicators of significance change radically (for example, as during perestroika in the USSR and Russia), then in order to take into account these changes, the system of power managers can create and introduce completely different money, i.e. again resort to "blowing" money.

From what has been said, it follows that inflation, i.e. the injection of money, is rather weakly related to the ratio between the amount of money and the amount of goods, as representatives of classical and neoclassical theories relentlessly narrate [38].

Since, as mentioned above, the withdrawal of funds is carried out in different forms, different components are put into the inflationary funds distributed, for example, interest, tax, duty, tariff, price and others; their share varies depending on the economic situation.

To imagine at least an approximate cost estimate of the components of the added (inflationary) money to significant entities, let's turn to one of these components, which is withdrawn after the distribution of money in the form of interest on a loan (loans).

Interest as the main component of inflationary money.

Interest on loans (loans) are, according to the American expert on the history of economics John L. King, "an invisible machine of destruction" in the so-called free market economy. The problem is that money can slow down the exchange of goods and services if they accumulate from those who have more money than they need and do not enter circulation. And the rapid accumulation of funds from significant entities with a special position (for example, bankers) is carried out by charging compound interest, which leads to a doubling of the monetary state at regular intervals, i.e. capital accumulation is carried out due to the exponential dynamics of compound interest. The impact of the exponential dynamics of compound interest on the monetary system is so great that for a long period of time, the payment of interest when it is economically necessary to repay obligations becomes mathematically impossible, which causes an insoluble contradiction and ultimately leads to the collapse of the entire monetary system. The formula of exponential dynamics of compound interest:

where

V is the current value of the starting point subject to exponential growth, S is the initial value, x is the interest rate, t is the number of elapsed periods; on the graph, the curve starts slowly, remains almost flat for a while, and then increases rapidly and becomes almost vertical.

According to the Bank of Russia, the debt of the population as of January 2021 amounted to 20.08 trillion rubles, including overdue 913.9 billion rubles (for comparison: expenditures of the federal budget of Russia in 2019 amounted to 18.2 trillion rubles).

As of 01.12.2020, the debt of Russian citizens on housing loans issued amounted to 8.943 trillion rubles (Graph 5 debt of resident individuals on housing loans issued in rubles as of 01.12 (for 2006 2008 as of 01.10), trillion rubles).

Graph 5. Debt of resident individuals on housing loans issued in rubles as of 01.12 (for 2006 2008 as of 01.10), trillion rubles. Source: Bank of Russia. [electronic resource].URL: https://cbr.ru / (accessed 10.01.2022).

The curve in graph 5 is interesting because it has an exponential trend and resembles a graphical description of a mathematical function, an exponential function whose derivative is equal to the function itself, of the form: y(x)=e x, where e is an Euler number with an infinite number of digits after the decimal point; transcendental (does not satisfy any algebraic equation) and irrational (it cannot be represented as a fraction m/n, where n is not zero). In other words, it resembles an exponent that increases monotonically. The exponential increase in housing loan debt, as shown in Graph 5, only confirms the occurrence and increase over time of the contradiction described above.

Note.The Swiss mathematician Jacob Bernoulli (1655-1705) deduced the number e when he was trying to solve a financial problem. The mathematician was trying to understand how interest should be accrued on the amount of the deposit in the bank, so that it would be most profitable for the owner of the money. In addition, J. Bernoulli tried to understand whether there is a limit to the income received as a percentage, or it increases indefinitely.

The weighted average rate on residential mortgage loans in rubles in 2016 was 12.7%, in 2019 it varied from 10.55% to 9.19%. In previous years, the stakes were higher.Thus, the population annually pays to credit institutions only interest and only on mortgage loans hundreds of billions of rubles. Mortgage interest is calculated according to the formula of compound interest, mortgage loans are provided for long periods and therefore, based on the contradiction described above (economic and mathematical), the number of non-payments will increase from year to year, which will eventually develop into a collapse of the entire monetary system.

In the USSR, the interest rate for HBC was 0.5% [39]. In Russia, mortgage lending has been counting since 1999 35% and loans are only in US dollars. The preferential rate of 6.5% introduced in 2020 led to a sharp increase in housing prices, i.e., thus, there was a redistribution in the components of the withdrawal process: the percentage component of the withdrawal decreased, and the price component of the withdrawal increased. This is a vivid example of the fact that each time inflationary funds are added, when withdrawn, they can be redistributed depending on the need for the flow to move in one direction or another.

The dynamics of debt on loans granted to legal entities and individual entrepreneurs in rubles and foreign currencies is shown in the graphs below (in Graph 6, the annual growth rate of debt as a percentage and in Graph 7, debt on loans to insurance and financial, as well as other organizations and individual entrepreneurs).

Graph 6.Annual debt growth rate, %. Data source: Bank of Russia. [electronic resource].URL: https://cbr.ru/statistics/bank_sector/sors/1021 / (accessed 10.01.2022).

The debt on loans granted to legal entities and individual entrepreneurs in rubles and foreign currencies totaled as of 01.11.2019 - 33010 billion rubles, as of 01.11.2020 - 37725 billion rubles, as of 01.11.2021 - 41709 billion rubles.These are the amounts that organizations of different sectors of the economy will have to return; in other words, which should be withdrawn from them along with interest. As can be seen from Graph 6 and Graph 7, the debt on loans is increasing from year to year, which, according to the above, are prerequisites for a subsequent monetary collapse. The conditions prevailing outside Russia and inside Russia at the beginning of 2022 only contribute to its approach.

Graph 7. Dynamics of debt on loans granted to legal entities and individual entrepreneurs in rubles and foreign currencies. Data source: Bank of Russia. [electronic resource].URL: https://cbr.ru/statistics/bank_sector/sors/1021 / (accessed 10.01.2022).

Inflationary money added to the economy is distributed unevenly to different sectors of the economy, and they are unevenly withdrawn from different sectors of the economy, as shown in Graph 8 with respect to debt on loans granted to legal entities and individual entrepreneurs in rubles and foreign currency as of 01.11.2021.

Schedule 8. Debt on loans granted to legal entities and individual entrepreneurs in rubles and foreign currency as of 01.11.2021 Data source: Bank of Russia. [electronic resource].URL: https://cbr.ru/statistics/bank_sector/sors/1021 / (accessed 10.01.2022).

In the presentation above, an attempt is made to determine the valuation of the added (inflationary) funds in various sectors of the Russian economy.

So, when distributing inflationary money, a percentage component is laid in them, which will be withdrawn after a certain time lag. However, it is also important to understand from whom this percentage component will be withdrawn and in what form: in pure percentage or in price (as part of the price of a product or service).

According to the regulatory documents on accounting (Decree of the Government of the Russian Federation of 05.081992 No. 552 "On approval of the Regulations on the composition of costs for the production and sale of products (works, services) included in the cost of products (works, services), and on the procedure for the formation of financial results taken into account in the taxation of profits" (as amended since 01.01.2002, it has become invalid, except for certain provisions)), the Order of the Ministry of Finance of the Russian Federation dated 06.05.1999 No. 33n with subsequent revisions "On approval of the Accounting Regulations "Expenses of the organization" PBU 10/99") interest is included in other expenses and when forming the tax base for income tax after 2002 in the composition of non-operating expenses when calculating corporate income tax (the Tax Code of the Russian Federation Part 2, approved by Federal Law No. 117-FZ of 05.08.2000, with amendments and additions).

Thus, one way or another, interest indirectly affects the formation of the price of goods and services.

It turns out that, in the end, the percentage component of the previously added money is withdrawn from the final consumer (people) not only directly by banks in case of borrowing money from them by the population, but also through price withdrawal, since the producers of the goods, before producing the goods, paid for all components of the cost of this product at the expense of credit funds;

the price of almost any good or service includes a percentage of inflationary funds previously added to the economy, and a percentage is included in each component of the price, which, in turn, causes a multiplicative effect of inflation.

Thus, interest is a means of hidden redistribution of money; a deterrent to economic development and the exchange of goods and services. The redistribution of money in this case is based not on labor participation, but on the importance of economic entities involved in their distribution; there is an outflow of money from those who have less than they need to those who have more money than they need. In order to preserve such a redistribution, inflation actually exists, and interest is one of the components of the entire process of economic (inflationary) growth according to the following scheme:

blowing money into the economy distribution of money to significant entities with a special position economic growth /withdrawal of money in various forms and their redistribution blowing money into the economy -...denomination.

It is possible that with inflation increasing in Russia from month to month, our country, according to the scheme described above, is on the threshold of denomination.

Let us note once again that such a scheme stimulates economic growth, but not economic development in any way.

After the distribution of funds, significant entities, depending on the state of affairs in the economy (on a profitable basis exclusively for themselves), either hold the funds or put them into circulation;

the benefit for significant entities is the absence of obligations to the state and society for the use of distributed funds and the use of distributed funds without any expenses; the period of time for the use of distributed funds is in no way limited by legislative norms; significant entities with a special position are only waiting for the moment of "liquidity benefits".

Payment for free ("dead") money as a natural economic order.

To reduce inflation to zero, it is necessary to release funds from interest encumbrances and assign a fee for the "deadening" of free funds for all participants in economic activity, including credit institutions, thereby establishing a natural economic order [40].

A successful businessman Silvio Gesell, back in the nineteenth century, working in Germany and Argentina, noticed that goods were sold quickly and at a high price exclusively during a period of low interest rates; the activity of buying goods increased with a decrease in interest rates and decreased with an increase in interest rates. From which he concluded that the sales of goods depend on the price of money in the money market and do not depend on either demand or the quality of the goods themselves.

Entrepreneur Silvio Gesell in 1890 formulated the idea of a "natural economic order" [40] in relation to the payment for the "deadening" of money. The essence of this idea is very simple, clear and pursued quite a good goal: to exclude the negative impact of interest on money circulation and the economy as a whole. In order to abolish the special significant position of any subject of economic activity, that is, to equalize all subjects in economic relations and in monetary circulation, it is necessary to introduce a fee for unjustified retention of free funds. Such a fee is a fee for the "deadening" of free cash, that is, a fee for using cash for a longer period than is necessary for the purposes of exchange. At the same time, the fee for the "deadening" of free cash was considered as an expression of public profit, therefore it should be put into monetary circulation to maintain a balance between the volume of monetary circulation and the volume of economic activity; this fee was considered exclusively as a source of public income. The introduction of such a fee in Russia at the same time could solve the socio-economic problems of modern Russian society, including with regard to the reduction or disappearance of inflation and the reduction of unemployment growth.

As you know, practice is the best criterion of the truth, the truth of an idea embodied in life. Followers of S. Gesell moved from his theoretical idea to practice and conducted several successful experiments with free money (unencumbered interest) in countries such as Austria, France, Germany, Spain, Switzerland and the USA. In the 30s of the last century, experiments with free cash (unencumbered interest) were carried out in these countries in order to eliminate unemployment.

Currently, unemployment is a big problem in Russia. Official statistics on this indicator do not seem to change only because of the increased natural population loss. According to official statistics, the number of unemployed aged 15-72 years (according to sample surveys of the labor force), thousand people:

The number of unemployed aged 15 - 72 years

(according to sample surveys of the labor force) by districts, thousand people

Table 1

District/Period

Aug.-Oct.

2020

Dec.2020-Feb.2021

Jan. - March

2021

Aug.-Oct.

2021

russian federation

4755,7

4327,8

4202,2

3296,3

Central Federal District

961,8

878,4

856,3

677,6

North-Western Federal District

437,9

363,9

339,9

260,0

Southern Federal District

522,9

476,5

463,3

395,6

North Caucasus Federal District

681,0

679,0

666,6

516,9

Volga Federal District

821,0

734,0

713,9

544,3

Ural Federal District

384,8

338,0

327,4

234,1

Siberian Federal District

669,0

587,8

574,8

440,3

Far Eastern Federal District

277,3

270,2

260,0

227,5

Data source: Rosstat of Russia. [electronic resource].URL: https://rosstat.gov.ru/storage/mediabank/trud3_15-72.xls (accessed 17.01.2022).

According to official statistics, the number of unemployed aged 15-72 years (according to sample surveys of the labor force) by year, thousand people:

The number of unemployed aged 15-72 years (according to sample surveys of the labor force) by year, thousand people

Table 2

District/Period

2009

2010

2011

2012

2013

2014

2015

russian federation

6283,7

5544,2

4922,4

4130,7

4137,4

3889,4

4263,9

Continuation of Table 2

District/Period

2016

2017

2018

2019

2020*

Aug.-Oct.

2020*

Aug.-Oct.

2021

russian federation

4243,5

3966,5

3657,0

3461,2

4316,0

4755,7

3296,3

* - discrepancy of official statistics data

Data source: Rosstat of Russia. [electronic resource]. URL: https://rosstat.gov.ru/storage/mediabank/trud3_15-72.xls (accessed 17.01.2022).

As can be seen from official statistics, unemployment in Russia is not directly related to special periods of late 2019 early 2020, mid-2021. In fact, there are many times more unemployed. The problem of unemployment in Russia has a long-term dynamic character, and in the case of active introduction of artificial intelligence (robotics) into the economy, as evidenced by the signing in 2021 of a memorandum on the establishment of a Center for the Fourth industrial revolution in our country, in the next two or three years, unemployment may take on the character of a social catastrophe. Unemployment is an unnatural economic disorder.

A practical example of the economic miracle of S. Gesell's idea.

The idea of S. Gesell's monetary reform in 1932-1933 was successfully implemented as an experiment in the Austrian city of Vergl [40].As part of the monetary reform, 5,000 "free shillings" were issued, i.e. unencumbered with interest money, which was covered by the same amount of ordinary Austrian shillings in the bank. Trade organizations and entrepreneurs accepted unencumbered free shillings as payment for goods and services from the residents of the city, and the latter received these shillings as payment for their labor. The fee for using unencumbered interest with free money was 12% per year (1% per month). The payment had to be made by those who had a banknote at the end of the month. The payment was made in the form of a stamp, which was glued to the banknote, with a nominal value of 1% of the value of the banknote; without a stamp, the banknote was invalid. A small fee for the "deadening" of funds, i.e. the balance of funds in a person's hands for the horses of the month led to the fact that during the year 5,000 free shillings were converted 463 times, goods and services were produced in the amount of about 2,300,000 shillings (5,000 shillings x 463 times). An ordinary shilling has been in circulation only 213 times. Anyone who received interest-free shillings as payment tried to spend them as quickly as possible before switching to paying with ordinary money, which was also in circulation. The residents of the town repaid their tax obligations in advance, so as not to pay for the rest of the "free shillings" at the end of the month on their hands. That is, at first the residents paid with banknotes with stamps on the back of the banknotes ("free shillings") and only then with ordinary money. The results of such an experiment in the city of Vergl led to the following results: the unemployment rate decreased by 25% over the year, structures (a bridge) were built, the condition of roads was improved, investments in public services increased. All the "free" shillings were spent on public, and not on personal, wealth augmentation, for the public needs of the city and its inhabitants. And, most importantly, there is almost no inflation. This was the proven economic miracle of S. Gesell's idea of the natural economic order.

Monetary reform in Russia as an experimental way to reduce inflation.

An experiment of monetary reform similar to the one that was successfully carried out in the Austrian city of Wergl can be implemented in any city or region of Russia in order to reduce inflation and unemployment, as well as the beginning of economic development. At the same time, when testing the monetary reform of the natural economic order in any region of Russia, free money (unencumbered by interest) can be used in this particular region to exchange goods and services produced in the region where the experiment is being conducted; ordinary money pays for everything that is purchased outside this region. Wages for residents of the region can also be paid with free money. Thus, two monetary systems will operate in parallel in the tested region of Russia. The test region for the period of the experiment of monetary reform of the natural economic order is equated to a free trade zone, where production and trade are not taxed.

The technical aspects of the implementation of monetary reform within the framework of the currently modern settlement system are very simple, namely: the fee for the use of free funds after the introduction is charged by taxing cash deposits on accounts at the end of the month or cash at the end of the month from any subjects of economic relations. Such monetary reform does not cancel lending in the bank. However, within the framework of the natural economic order, it will be natural not to pay interest on the loan, but to pay only the risk premium and the fee for administrative and technical operations on the loan, which are currently included in the costs of a bank loan and amount to no more than 2-3% of all expenses.

It is assumed that all economic entities, including credit organizations, will be involved in the monetary reform. Thus, the latter will be more interested in issuing a loan, since if there is more money in the accounts of a credit institution at the end of the month than it needs, then it will have to pay the state a fee for using the free money unreasonably withheld by it.

The essence of the experimental monetary reform, which significantly reduces the inflation rate (almost to zero) and reduces the unemployment rate, stimulating economic development, is that the payment for the use of money is a regulator of social justice;

the percentage embedded in the money added during the distribution and generating inflationary processes and unemployment is a regulator of the distribution and redistribution of wealth and economic growth exponentially.

Currently, under the conditions of severe economic sanctions, all prerequisites have been created in Russia for the introduction of a system of state strategic management as a platform for more effective application of monetary reform in Russia (on the scale of a city, region or country as a whole).

The planned results and advantages of the monetary reform in Russia through the introduction of fees for the use of unencumbered free cash.

The reforms carried out within the framework of monetary reform, in aggregate, will prevent a social catastrophe, prevent, i.e. reduce the intensity of social unrest in our country and gently lead Russia out of the global crisis.

The advantages of monetary reform of the natural economic order in combination with other reforms are as follows:

-reduction of inflation (almost to zero), which is caused mainly by a significant percentage of the distributed funds;

-exclusion of percentages from the cost components and, as a consequence, prices as an instrument of income redistribution in an unfair way, i.e. accumulation of most of the income from a small group of individuals, and in amounts larger than they need;

-prevention of social catastrophe, prevention of social unrest and social clashes, reduction of the level of aggressiveness in society and the onset of social justice;

-reduction of prices for goods and services up to 50%;

- the emergence of a stable nationally-oriented quality economy;

-the possibility of updating physically and morally worn out fixed assets of public infrastructure;

- GDP growth.

The disappearance of the percentage component for capital investments and in the production process will lead to lower prices for goods and services in the region conducting an experiment within the framework of monetary and other reforms, the profitability of production will increase and there will be an opportunity to diversify production aimed at meeting the needs of Russian citizens.

The proposed system of payment for the use of unencumbered free money within the framework of the natural economic order and within the framework of an experiment in one region, if successful, can be extended to other regions and to the Russian economy as a whole. It's time to move on to economic experiments of a natural order, gently motivating to real actions, with the expectation of economic development.

Further research may continue to explore other reforms that will be aimed at reducing socio-economic conflicts. Their implementation is possible in parallel or sequentially with the introduction and implementation of experimental monetary reform.

The most effective monetary reform will manifest itself on the platform of state strategic management (planning).

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First Peer Review

Peer reviewers' evaluations remain confidential and are not disclosed to the public. Only external reviews, authorized for publication by the article's author(s), are made public. Typically, these final reviews are conducted after the manuscript's revision. Adhering to our double-blind review policy, the reviewer's identity is kept confidential.
The list of publisher reviewers can be found here.

The subject of the article is the mechanisms that generate inflation, in particular, in the economy of the Russian Federation, as well as the problems of a macroeconomic nature associated with it. Recently, the problem of accelerating inflation has seriously concerned the country's monetary authorities, and the Central Bank has consistently pursued a policy of increasing the refinancing rate in order to bring down this wave. There is no doubt that the unwinding of the inflationary spiral has a negative impact on business, investment, and to a large extent on the population, whose incomes already lag behind changes in consumer prices. In addition, a significant increase in the dollar exchange rate is taking place even against the background of, albeit slowly, but still rising oil prices. The research methodology is based on the analysis of statistical data directly or indirectly related to inflation, on the analysis of existing theories of monetary circulation, as well as the works of domestic authors analyzing various causes of inflationary susceptibility of the Russian economy. The author covers the classical theoretical aspects of inflation in sufficient detail, which, in our opinion, is unnecessary within the framework of a scientific article, and they could well be shortened for a better perception of the material. The relevance of the study of inflationary processes in the Russian economy is due to the high degree of dependence on foreign investments, bank capital, technologies and consumer goods, the price of which is determined by the exchange rate. This is accompanied by a high level of risks generated by the sanctions regime and the pandemic, which also makes foreign investments expensive, and in order to return them, domestic producers need to raise the price of their products, thereby accelerating the inflationary spiral. Therefore, the key question is to what extent the policy of the monetary authorities of the Russian Federation is generally capable of radically influencing inflation by changing the refinancing rate. The scientific novelty of the study boils down to the proposal to conduct an experiment with the introduction of the so-called Gezzel money, which, according to the author's idea, should eliminate the problem of inflation altogether. As we have already noted, the nature of Russian inflation and inflation is by no means rooted solely in the problems of monetary circulation, but is generated by many other reasons, primarily a high degree of dependence on commodity exports. Here we can also cite a variant of the Soviet monetary circulation system, where money serving consumption was separated from investment money, which solved the problem of keeping low interest on capital much more successfully. Unfortunately, the article suffers from unjustified length, excessive deviations from the outline of the logical presentation, which makes it difficult to perceive the material. In addition, the scientific style of presentation is not always sufficiently sustained, the author uses journalistic phrases that have no place in scientific research. In our opinion, the article would only benefit if the author found it possible to shorten it, as well as to present the logic of the study more consistently. The bibliography includes 32 sources, but not all of them are equivalent even in scientific terms, since the list of references includes publications on popular Internet platforms of a journalistic nature. Very few scientific studies have been mentioned in recent years devoted to this problem, including foreign ones. We believe that the bibliography should be finalized taking into account these comments. In general, we believe that the article can be published, but it needs to be finalized. The article is devoted to an urgent problem, contains relevant statistical data, and the author's proposals can be considered in the course of scientific controversy as one of the options for the monetary policy of the Russian Federation.

Second Peer Review

Peer reviewers' evaluations remain confidential and are not disclosed to the public. Only external reviews, authorized for publication by the article's author(s), are made public. Typically, these final reviews are conducted after the manuscript's revision. Adhering to our double-blind review policy, the reviewer's identity is kept confidential.
The list of publisher reviewers can be found here.

The subject of the study. Based on the title of the article, the author suggests conducting an experiment on the disappearance of inflation in the Russian Federation. At the same time, the text of the article contains proposals for monetary and tax reforms (and the latter is designated as a consequence of monetary). It seems that the title of the article does not correspond to the content due to the fact that in the text of the article the author considers a broader list (and not a complex!) existing problems. Research methodology. The author analyzes the consumer price index, the index of manufacturers of industrial goods, the debt of individuals on housing loans, including using graphic objects. At the same time, the author should argue the need to study the relevant data, and all graphic objects should be numbered. The relevance of the study of anti-inflationary policy issues is beyond doubt due to their importance both for the Russian Federation (and not only in temporary conditions of economic instability) and for the whole world (since the problem of price increases has affected all countries of the world, and now it has intensified even more). In this regard, the development of real practical recommendations for solving this problem is of interest not only for Russia, but also for the entire world community. Scientific novelty. The text of the article contains the results of an analytical assessment of the current situation carried out by the author, as well as some interesting ideas (for example, regarding the introduction of a tax on the use of artificial intelligence), but does not provide any justification for the order, specifics and consequences of their implementation. In this regard, it should be concluded that there is no clearly expressed scientific novelty. Style, structure, content The style of presentation is, in general, scientific. The author clearly highlights the structural elements of the article in the text, however, some of them differ in content from the stated title. For example, in the paragraph "The system of state strategic management as conditions for an effective experiment of monetary reform in Russia", the author pays considerable attention to the experience of China. Studying the experience of foreign countries is a positive characteristic of the study, but it is recommended to separate it into a separate item. It should be noted that the content of the article contains a lot of declarative proposals that require justification, including a multi-vector (for the state, for citizens, for organizations) assessment of the consequences. For example, the author proposes the abolition of personal income tax and insurance premiums (in part of the latter, the author considers the possibility of reducing, but does not specify to which tariff). It should be noted that the revenues of regional and local budgets are extremely dependent on the personal income tax what will compensate for the shortfall in income? Speaking of insurance premiums, they amount to about 10 trillion rubles in the revenues of the state extra-budgetary funds of the Russian Federation and, in fact, are the main source of financial resources used to pay pensions, temporary disability benefits, maternity benefits, child care benefits up to 1.5 years, the implementation of state guarantee programs free medical care for citizens of the Russian Federation. At what expense does the author propose to finance the fulfillment of these expenditure obligations of the Russian Federation? In turn, the author proposes the introduction of a tax on the use of artificial intelligence. It is important to note that the introduction of any tax requires the definition of all elements of taxation. Unfortunately, they are not given in the text of the article. At the same time, this initiative may have the potential to be implemented, but it also requires justification, including using evidence. It should also be emphasized that the word "possible" is not commonly used in scientific papers. Moreover, the phrase "you can be sure" looks extremely contradictory, because etymologically, the first word indicates the presence of variability, and the second excludes it. It is also recommended to avoid the abbreviation "RF". Acceptable variations of the name of our state are specified in Article 1 of the Constitution of the Russian Federation. The use of abbreviations must be formalized in accordance with the requirements of GOST (at the first mention it is written in full, the turnover "(hereinafter - ...)" is indicated and subsequently only the abbreviated name is used in the text). This requirement was not met by the author, for example, when using the abbreviation "Central Bank of the Russian Federation" at the very beginning of the reviewed article. Bibliography. The author presents an extensive bibliographic list. It is valuable that it contains publications by both domestic and foreign authors. It should also be noted that it mainly includes scientific works published in recent years, which indicates that modern economic thought is taken into account on the problem considered in the text of the article. Appeal to opponents. In the text, the author repeatedly refers to the research results of other authors. At the same time, the scientific publications of most of the researchers mentioned in the text are not presented in the bibliographic list. It is recommended to eliminate this problem in order to enable the reviewer and the reader to refer to the relevant publication for an independent assessment of its content. It should also be noted that the full reference to the electronic source should be indicated in the bibliographic list, and not in the text (which is observed repeatedly in the text of the reviewed article). Conclusions, the interest of the readership, Taking into account the extremely high relevance of the topic, the article is of interest to the readership (both in Russia and abroad), but in its current form cannot be recommended for publication. The author needs to eliminate the comments mentioned in the review, and also consider the possibility of softening the title from "disappearance" to "reduction", since inflation is an integral attribute of a market economy. If the author does not agree with such a judgment, it is necessary to reflect in the text the relevant arguments in support of the position on ensuring the disappearance of inflation.

Third Peer Review

Peer reviewers' evaluations remain confidential and are not disclosed to the public. Only external reviews, authorized for publication by the article's author(s), are made public. Typically, these final reviews are conducted after the manuscript's revision. Adhering to our double-blind review policy, the reviewer's identity is kept confidential.
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Inflation in Russia is becoming more than an economic problem. Despite the efforts made by the Government and the Central Bank, it is not possible to overcome its high level in the long term. The decrease in inflation to the planned values in 2017-2019 led to negative consequences for the economic development of Russia in the following years. Inflation has been accelerating since 2021. The article is devoted to the study of the problems of inflation, inflation targeting, as well as the socio-economic consequences of inflation and possible prospects for overcoming them. Sections are allocated in the article in accordance with the requirements of the journal. In the introduction, the author gives a brief description of the research, substantiates the relevance, sets a goal and describes the vision of the scientific novelty of the conducted research. In the section "Research results, inflation assessment and conclusions", the author describes the approaches of leading domestic (including academicians S.Y. Glazyev, A.G. Aganbegyan) and foreign scientists to the assessment of inflation and its consequences, ways to reduce and overcome it, as well as modern approaches of the Bank of Russia to inflation regulation. Please note that the word "conclusions" in the title of the section does not seem appropriate, as it requires additional comments, since it is not accepted in scientific articles in this version. In the section "Inflation: statistical data from previous years and forecasts for the future" provides a statistical overview of inflation data in Russia since the 1990s in various sections. The breadth of the use of drawings to illustrate the results of the study is positive, since it contributes to a better perception of the research results by readers. Please note that the text of the section does not fully correspond to its title. There is practically no information about forecasts. The section "Inflation: a new look at the causes and mechanisms" outlines the author's approach to understanding inflation and inflationary money as money poured into the economy in various directions. In the section "Interest as the main component of inflationary money", the author gives a description of the negative consequences of increasing lending, taking into account inflation. In the section "Payment for free ("dead") funds as a natural economic order", the justification for the payment for an unjustified increase in the cost of funds is given. The experience of S. Gesell's monetary reform, implemented in 1932-1933 as an experiment in the Austrian city of Wergl, is described in the section "A practical example of the economic miracle of S. Gesell's idea". The section "Monetary reform in Russia as an experimental way to reduce inflation" is devoted to substantiating the possibility of implementing such an experiment in Russia. The section "The system of state strategic management and planning: the experience of China and other countries" describes the experience of the USSR, China and other countries in overcoming inflation within the framework of the system of strategic public administration and five-year plans. The prospects for Russia in using strategic management to overcome inflation and ensure economic development are described in the section "The system of state strategic management and planning as a condition for an effective experiment of monetary reform in Russia". The emphasis on the need to reform the tax system in order to overcome inflation is put in the section "Taxation within the framework of the national concept". In conclusion, the conclusions of the work carried out are presented. What is not typical for scientific publications, the "Conclusion" is not the last section, after it comes the section "Planned results and benefits of monetary reform in Russia through the introduction of fees for the use of unencumbered free cash." It describes the advantages of the measures proposed by the author in comparison with traditional instruments, including those used by the Government and the Bank of Russia. We suggest that the author not allocate this to a separate section, but leave it in the "Conclusion" section. We consider it necessary to divide the article into 2 independent ones or publish it in two parts. There is a lot of interesting material and conclusions in the article that deserve attention, but within the framework of one article it is an overabundance of material.
The methodological basis of the research is analysis, synthesis, ascent from the abstract to the concrete, logical and historical method, as well as other general scientific methods. Among the specific economic methods used are the analysis of time series, coefficient and factor analysis. The abundance of statistical data in the article allowed us to form better and reasoned conclusions. The article uses illustrative material, which helps to increase the level of perception of the research results by the readers of the journal. The author presents 2 tables and 8 figures. The relevance of the article is beyond doubt. The consistently high inflation rate in Russia, despite the measures taken by the Government and the Bank of Russia, indicates the need to find new options in the fight against high inflation. The situation of geo-economic and geopolitical uncertainty, as well as exogenous macroeconomic shocks, sharply accelerated inflation in Russia. In March 2022, inflation, according to preliminary estimates, amounted to 15-16% in annual terms, which also actualizes the need to find new tools to overcome inflation in the new socio-economic reality. At the same time, we draw attention to the need to supplement such a large-scale study with data for March 2022, which are already available in publications, as reflecting a new manifestation of the inflation regulation situation. The article has practical significance, since the presented research results can be used in the current economic conditions as experimental alternative instruments of economic policy in the field of overcoming inflation in Russia. However, full-fledged evidence of the possibilities of using the claimed new tools is not provided. We believe that this is a necessary component for articles of such a plan. The article reveals the elements of scientific novelty possessed by the author's research. The scientific novelty consists in a new approach to the consideration of inflation, inflationary money and the proposed solution to problems related to inflation, in particular, in conducting an experimental monetary reform, which will entail other reforms, within the framework of state strategic management. The presentation style is scientific and meets the requirements of the journal. At the same time, we consider it necessary to exclude certain lengthy descriptions and loud statements that require much more substantial justification than the existing ones, for example, "social catastrophe", "economic collapse". The bibliography is presented by 47 sources: research by domestic and foreign scientists, as well as databases of statistical data. We draw attention to the existing inconsistencies in the design of the list of references, as well as references to the sources used in the text. The advantages of the article include, firstly, the relevance and significance of the chosen research area. Secondly, the breadth of the author's horizons, manifested in the study of inflation and its consequences from various points of view and from the standpoint of the best world practices for overcoming it. Thirdly, the breadth of use of illustrative material. Fourth, the presence of elements of increment of scientific knowledge. Fifth, the variety of sources in the list of references and its significant volume. The disadvantages include the following. Firstly, the need to shorten the text of the article by dividing it into 2 or publishing it in two parts. Secondly, the inconsistency with the requirements of the journal in terms of the design of references to sources and the design of the literature. Thirdly, the lack of analysis of inflation data for March 2022. Fourthly, comments on the content of individual sections of the article and their titles indicated in the text of this review. Conclusion. The article is devoted to the study of the problems of inflation, inflation targeting, as well as the socio-economic consequences of inflation and possible prospects for overcoming them. The article is able to arouse the interest of a wide readership of the magazine. It is recommended to accept for publication in the journal "Finance and Management", provided that the comments indicated in the text of this review are eliminated.
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