On Obama's India Visit

Obama's visit to India is being hugely over hyped, Bollywood-style, by our media. There is much talk of "trade" - of imports and exports. Yet, it is extremely important to note that what America is actually "exporting" to India is INFLATION. The latest round of "quantitative easing" by the US Fed, some $600 billion worth, is going to result in a lot of that fiat paper money coming into India and creating "asset bubbles" in areas such as property and the stock market. The end result will be a further erosion of the value of the Indian rupee - and this will hurt our poor people hardest.

The fact that quantitative easing will cause asset bubbles in India has been unequivocally admitted by the government of India's chief economic advisor, Kaushik Basu, in this interview with Mint. Basu says:

Even though the ostensible reason for America’s quantitative easing is to lower the long run interest rate by generating more money, it does tend to lower the value of its currency. The collective impact of these varied actions is a competitive lowering of exchange rates. To manage this will require economics and politics. It is as much a matter for Ben Bernanke as for President (Barack) Obama.

As to the solution, Basu says:

The one-currency world is where, I believe, we will have to ultimately move to. But that is not happening now. The British economist Stanley Jevons suggested this 125 years or so ago. It was premature then and is premature now. Till that happens, we have to move to some form of coordination and cooperation among the various systemically important central banks.

Actually, what we all must realise is that there is no alternative but to get all governments out of money and banking. No more "central banks." No more fiat paper money. Hard money - GOLD. It is this alternative paradigm that must attack the idea that Kaushik Basu is promoting - namely, a "one currency world" with fiat papers issued by "systematically important central banks." The IMF is also promoting this horrific idea.

Continuing with "trade relations" with the US - Obama has stressed the importance of "reciprocity." This means nothing else but the "politicisation of international trade." Actually, nations do not trade; people and firms do. If the world is to prosper, these people and firms must be able to trade freely. The most important thing to understand, for our own country, is that the Customs Department is an "obstruction." Its true purpose is NOT "revenue." Its true purpose is to exclude competitors from our markets - in exchange for political graft: cronyism. This is "privilege." This is "plunder." Our people, especially the poor, lose - as consumers. For our own people, and for the benefit of all the other nations of the world, India should abolish the Customs Department and institute unilateral free trade.

Lastly, I read somewhere that India and the US are about to sign some agreements on "higher education." In yesterday's post on the academic credentials of Ben Bernake, it was seen that he has received elite "mainstream education" in the US - and Kaushik Basu too hails from an elite US university. This US "education" is extremely dangerous for the minds of our young - a potentially far worse export than inflation.

In the US, libertarians hate Obama's policies - which are considered "socialist" as well as "corporatist." They hate Ben Bernanke and the US Fed. They want to end the US empire. I fully endorse their point of view.