I
shall discuss woes of fiat values of currency and plausible ways to
protect our fortunes from dwindling down in case government devalues
its currency. Here I shall chat and mention all ways legally
acceptable as well as not; since I treat this as an academic
exercise. Legality of any proposal is also a matter of acceptance or
not and so all so called legal issues are subject to adjudication.
I
remember, a few years ago government of India canceled thousand rupee
notes. How it damaged the economic plans of several people I saw and
that gave me the clear picture of woes of fiat valuation. We see a
small promise written in one corner of every currency note that
promises that the signatory is promising to pay the bearer "the
value of that currency note on giving that note to the Reserve Bank".
How that payment will be made is not clear. Actually it is a
fraudulent statement and does not make any sense because during gold
standard the type of statement and promise implied had some meaning
as RBI could honor the currency by giving value of that note in gold.
Today in times of fiat value this statement is nothing short of fraud
and that is going on. This promise is nothing but cheating. An
example of fiat value is easily given from a play of children; in
that a few children play market market act. In that soda water bottle
caps are considered as coins and they are given a supposed value.
This giving supposed value is termed fiat value. That means, it is a
value put on it by mutual acceptance by parties involved in the act.
Similarly today all currencies of world are given specific fiat value
in comparison to Dollar. This arrangement world body created in 1947
at Bretton woods. That time Dollar was a strong currency. However,
things have changed and today Dollar is a weak currency. What mistake
the countries made has become a problem to all countries today.
Nobody had imagined during that conference that dollar will fall in
price but it did fall in its true price as America's GDP has gone
beyond repair. The mistake was that while deciding values dollar
value of 1947 year Dollar should have been taken as standard. That
was not done. Dollar at any time was considered for valuation.
Because of this blunder all countries are suffering at the exchange
market.
We
shall study various aspects of this American trap to keep Dollar
upright. First question is why America wants to keep Dollar at that
artificially high level even though the actual economic condition of
America is degrading day by day? One plausible excuse could be simple
prestige issue. That country does not want to accept that it is
lacking in economic development. When a matter becomes a prestige
issue anything that country would do to stick to it whatever may
happen. Second excuse I feel possible is that the rise of speculating
element in America's money market. Gamblers engaged in that activity
hold large amounts in their stock and it is always convenient to have
maximum value for the currency they hold. At the beginning of
twentieth century and up to middle of it enterprising element ruled
the market and that made the country one of the most prosperous
nations on earth. Around middle of it and particularly after the WW2,
things changed. Desire to exploit its special position as the richest
nation became an irresistible motive and during that time gamblers
entered in the speculative money market and ever since that time all
illegal economic gimmicks began to be used by American government.
Many vicious circles are now created by this desire to keep Dollar on
top and now the situation is so much spoiled that it is practically
impossible to come clear out of them.
We
shall also discuss and chat about what would happen if America
realizes that need to keep Dollar high is not required and accepts
the true value of Dollar based on economic laws as other currencies
are valued. This is a million Dollar question because remedy to this
trap, that America has been building for its creditors, lies in its
answer. When I compare economic maturity of British with that of
America I get a very clear picture that USA is not mature enough to
understand that obeying laws of economics may be annoying at times
but in the end that is the wise method to overcome any economic ill.
Today what America is trying, comes under "smart tricks".
As we all know smart tricks are good for the present time it creates
serious problems in future those could be fetal for the economics.
However, when a government is seized with some prestige issue that
government becomes blind to reality and any amount of prodding to
bring that government to sense goes in vain. I have been observing
that most economists of that country are repeatedly requesting the
U.S. government to stop it but government is in no mood to care for
their advice. If Washington accepts this suggestion and relents and
allows laws of economics to rule on Dollar; there will be some
hardships to cop up with the difficulties but eventually American
industry will rise for the challenge and America's GDP position will
improve and that will also solve the problem of unemployment. Since
America's basics are strong soon Dollar shall pick up and reach the
level it deserves. Unfortunately, present government is not in any
mood to relent from its stand to keep Dollar high, come what may. If
that government look back it will see that their country was the
richest because it was a country having large exports to almost any
sensible country all over the world. Today America is the biggest
importer country and that is the crux of the matter. Today we see
that the government relies most on money laundering tack ticks to
keep position of Dollar. This is not going to work for all the time;
but blinded American government is not prepared to bother for the
posterity.
We
shall see what is the end of this drama of dollar.
Who
shall suffer most? What India should do in this context? Some
examples those show how this is engulfing America in its own trap.
What creditors can do to dodge the trap's effects? How creditors can
use this trap to counter the effects to ambush America? At present,
we see that America has made it a prestige issue of Dollar's price
and in spite of falling GDP they want to keep Dollar up; what lesson
we should learn from this? This is happening only because present
Standard bank of U.S. wants to continue its dependency on gambler's
economics of FOREX market in stead of true economics. To save it,
American bonds are trying to attract black money from other countries
like India. Asking BM holders to invest it in their bonds. There is
where Indian BM has passed I recent times.
You may contact me on
my Email ID given below,
You are invited to visit
my other blogs
I
reckon,
http://kotharesviews.blogspot.com/
for philosophy
You
may visit blog, Freedom
of Expression,
http://blogs.siliconindia.com/kothare/
for intelligent discussions.
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