Chicago School of Economics from the point of view of Economic law

A fundamental study of the Chicago school of economics from the point of view of Economic Law- Advanced courses of Higher Educational 

Research 

Research and 

Dr.Mohammad Shakibi Nejad

Director of the Department of Judicial Sciences & Law Enforcement

Abstract of the Article⬇️

The Chicago economic school, supporters of the open market with a large scale, defended the principles and foundations of capitalism against the wave of interventionism that was influenced by the Keynesian school in the economic system of capitalist countries, and the source of all problems have been mentioned by governments' intervention in the economy. The Chicago school is based on Milton Friedman's theory. While in the American economic system, the government had the least role compared to other capitalist countries, and the share of the American government in the gross national product did not exceed 1%, but the theorist said: To solve the problems in the liberalism system, interests must be The public through the interests of individuals, what are their rights, what are their real rights, what are their effects in terms of banking rights, insurance and capital. In the continuation of Friedman's theory: if we limit the power of influence and governments and men's government, and at the same time, we do something that governments in doing Become empowered in their main tasks. The mission and goal is to protect the privacy of the nation against corrupt governments, and the regime must have the ability to assist and defend the entire people against force and coercion, and make correct judgments in cases of disputes between the people, and this procedure must help so that with the help of The rules and regulations took a fair trial. The mission of the model (Chicago School) of Hakkait supports the non-interference of the government in determining the interest rate and considers the consumer to be the determiner of the interest rate, so that in this school, interest is the income of capital, and the interest rate is in an equilibrium state, with the surplus of production resulting from the cost of the loan. It is equal. This situation is quite similar to the equality of the wage rate with the surplus product of labor.

Main subjects 📖🖋️

The meaning of interest rate or in the Iranian banking law system (interest and interest rate) is received from the borrower in order to prevent the decrease in the value of the recipient's money and because of that, the payer will pay back on a certain date, taking into account the nominal and volume value of the money and the inflation rate factor. Also, in normal market conditions, in order to compensate the lender's investment opportunities, an amount may be added to this rate as the lender's expected minimum profit. The amount that the applicant receives from the bank or non-bank economic credit institutions and must pay that money within a certain date is called interest rate.

⬇️Footnote 📑Doctrine of Author

Interest rate targets are calculated as an important model in monetary policy and when dealing with various fluctuations such as: war, earthquake, risk factor for investing, inflation and unemployment rate in society, although when force majeure or crisis such as various sanctions in as well as money and rent, embezzlement and money laundering, as well as obtaining loans from the International Monetary Fund and creating and issuing money and financial documents without support, that government and nation, taking into account all the risk factors, from the sources of the same country "if it has the resources" Whether they use mines, clean and renewable sources and energies or elephants to solve the problem. The central banks of the subordinates who have a seat in the GATT-WTO, if they want to increase investment and consumption in their country's economy, should reduce taxes and value added taxes at the same time to reduce the inflation bubble as a model of economic policy and legal procedure.However, low interest rates as a macroeconomic policy can be dangerous and may lead to the creation of an economic bubble in which large amounts of investments are transferred to the real estate market and the stock market. In developed economies, the adjustment of interest rates is made in such a way as to keep inflation within the target range for the health of economic activities or to reduce interest rates simultaneously with economic growth to protect economic momentum.

👇The result of the discussion🖊️🗒️

Most of the profit from the interest may be taxed, the lender may insist on a higher rate to pay this loss, because he has not yet been able to fill the gaps in his business, he must also pay tax in the annual balance. This means that the institutions Financial and credit banking or authorized non-banking lenders assume the rule of failure risk with risk insurance to ensure that in case of failure there is a way to compensate.

Footnote and Doctrine of the Author🖋️📈⬇️

The best and fastest solution to this problem of loans, bonds and securities may be one of the features of money, but it should be noted that it should be included in the supply of money.

Setting formula Simple Interest 

 P*I*N

P: The principal amount of the loan or deposit in the bank

I: Annual or daily interest rate

N: number of days left

Government or public bodies can influence the market to change the total amount of loans, bonds and stocks issued. In general, a higher real interest rate reduces the broad money supply.

Reference of Sources 👇

1️⃣Doherty, Brian (June 1995).Best of Both Worlds: An Interview with Milton Friedman. Reason. Retrieved March 29, 2023

2️⃣Chicago Remembers Milton Friedman, Sanderson, Allen; 2012, University of Chicago

3️⃣Milton Friedman.Commanding Heights. PBS. October 1, 2000. Archived from the original on September 8, 2011. Retrieved September 19, 2011

4️⃣ Glasner, David (1997). "Attwood, Thomas (1783–1856)". In Glasner, David (ed.). Business Cycles and Depressions: An Encyclopedia. Taylor & Francis. p. 22. ISBN 978-0-8240-0944-1

5️⃣ O'Sullivan, Arthur; Sheffrin, Steven M. (2003)Economics: Principles in Action.Upper Saddle River: Pearson Prentice Hall. ISBN 978-0-13-063085-8

6️⃣https://sites.lsa.umich.edu/stolyar/wp-content/uploads/sites/394/2019/11/Paper-UM19-05-Stolyarov-Tesar-Nov-13-edits.pdf

7️⃣https://pages.stern.nyu.edu/~pschnabl/research/DSS_2021_JF_MT.pdf

8️⃣https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3752271