I started my day reading James Grant’s essay in the Wall Street Journal entitled “Is the medicine worse than the illness.” (Thanks to LRC.)
And it was only thereafter that I read about Sonia-ji ordering a dose of the same quack medicine for Mera Bharat Mahaan. The news says:
"In the next 100 days, the United Progressive Alliance (UPA) government has decided to inject Rs 1 trillion [1,00,000 crore] in the Indian economy to stimulate internal demand to keep it insulated from the world recession. This would be done in association with the private sector," Manish Tewari, Congress spokesperson, told reporters.
Tewari said the decision was taken on the advice of UPA chairperson Sonia Gandhi.
"UPA has taken the decision to provide stimulus to the Indian economy on the advice of Sonia-ji. This is to increase productivity, control inflation and increase employment opportunities," he said.
In reality, as Rothbard said, we are faced with “a robber who justified his theft by saying that he really helped his victims, by his spending giving a boost to retail trade.”
What will happen if 1,00,000 crore rupees are spent in the next 100 days? Well, there will be a mad scramble to be one of the first to spend the new paper money. Those who succeed in this race, through bribery and corruption, will get to buy up assets at today’s prices. If they take loans, they will repay at tomorrow’s prices – and gain even more. The netas and baboos and their cronies would quickly convert their papers into gold – as a hedge against inflation. The purchasing power of the rupee will rapidly decline – and it is only then that this new money will finally “trickle down” to the poor. All poor people, savers, those on fixed incomes (including rents) will lose.
Sonia-ji says she intends to “increase productivity, control inflation and increase employment opportunities.” Quack.
James Grant, in the WSJ essay referred to above, concludes thus: Ben Bernanke should be directed to put himself into the shoes of a foreign holder of U.S. dollars. And then asked, under oath, would he continue to hold dollars?
Of course not!
Just as our politicians and netas won’t hold paper rupees. They’ll grab their loot and invest it in secure gold. The rupee is for the poor – as a means of keeping them poor.
soniaji is omnipresent and omnipotent. Anyway I think the current stimulus package is a good step.
ReplyDeleteA currency note, when it is "legal tender," becomes a "claim to property" in the sense that you can possess other people's properties by offering these notes in exchange.
ReplyDeleteThus, any increase in the quantity of notes, without any increase in the properties and services offered on the market, can only cause a "redistribution of property."
It is not a "stimulus" in the sense that every part of the economy is energized. Some win - the netas, baboos and cronies. The rest all lose. The poor lose most of all via the "inflation tax."
Think about it, Venkat.
point is which side are yu on....loosing or gaining?
ReplyDeleteeven the most sane have no choice but to run and run really hard..
I cant find the direction as yet....!