Monday, 17 September 2012

More the surplus money, more the problems at the consumers level:

The theory of demand and supply, as envisaged in the literature of Economics, has direct impact in money matters. If the money in currency in a particular country is more in supply and is incompatible to production based demand for it, the prices of different products are bound to rise sky high. May be, the great pundits of economics give some other name to this phenomenon in a better pronounced terminology, but what I am talking is simply from the point of view of a consumer trespassing the subject as a layman. If a basket has, say 100 points, in it as supply with another basked of production based demand having, say 75 points, the prices are obviously high, and both these factors taken conjunctionally, whatever occurs as a matter of fluctuations, determines the ratio accordingly. Production factor is subordinated by the economy measures adopted by the government, which are time taking. Fluctuations in money ratio are determined by sources like this:

Budgetary allocations decided by the government
Deficit financing by way of false money declared by the government.
Black money in circulation
Artificial currency in circulation through illegitimate measures

The kind of money like enumerated above is in abundance in the country and there is no dearth of it. The government is just helpless in taking measures to curb illegal money in the country with the result that those earning it through nefarious means are flourishing by leaps and bounds. They have the capacity to purchase more than what is available in the market. There are thus hardly any chances to recover from this colossally ghastly scenario. The only alternative against such a malady lies in the hands of the government, which is just a flop on all counts including the cost factor.

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