My friend Rajesh attended a seminar in Delhi on the financial crisis – and returned unimpressed.
He has raised the following questions, which the panelists at the seminar did not address. They are:
1) I am not convinced that inflation is not a problem.
2) That trade deficit is also not a problem.
3) That printing fiat money is also not a problem.
4) That only liqudity is a problem?
5) How will it affect me, if I do not get loans anyway, do not invest in stocks- basically if I live in a village, like rest of India?
I will attempt to answer these:
First, trade deficit is not a problem. Since individuals trade, each individual must balance his own account. If money is sound, trade deficits are meaningless. The idea of the trade deficit as a "problem" is based on "national economy," central banking, fiat money and mercantilism.
Second: "Liquidity" will definitely be a problem for those banks that invested in these "securities" that were not secure. They should be forced into making big losses. The injections of "liquidity" are based on fiat money and the banking cartel's ability to create credit without matching savings. These are inflationary.
Thus, we arrive at our conclusion: Fiat money is a problem. Inflation is a problem. And the common man in the village will get screwed by the "inflation tax."
Hope that helps, Rajesh.
And you owe me a kilo of Baluchar for that!