Friday, October 26, 2007
Seeking to tame galloping food prices ahead of parliamentary elections in early December, the Russian government on Wednesday signed an agreement with major food producers instituting temporary price controls on basic products.
A tersely worded statement posted on the Web site of the Agriculture Ministry said the producers had signed the agreement �at their own initiative.�
�Producers and retail organizations, understanding the social responsibility of business in the balanced and stable development of the consumer market in Russia, will take necessary measures over the course of the agreement to ensure that the most vulnerable strata of the population can purchase products at acceptably stable prices,� the statement read.
Prices for products like cheese and vegetable oil have jumped and even doubled in some regions in the past two months.
Here's the Nixon period from Commanding Heights. Arthur Burns at the Fed raised the money supply 13% in that period in advance of Nixon's re-election. M2 in Russia at this time is up almost 28%.
A deep recession followed the relaxation of price controls in the US in 1974-75. Those investing in Russia are hereby warned.
(h/t: Greg Mankiw.)