when the petrol
crossed 50 bucks per litre
superman decided to
stop using his car
and bought a motorcycle!
--
but when petrol soared
beyond 60
he sold off his motorcycle
went to tohana
and bought
a fine horse!
--
next morning
he went to office
riding horse!
--
he got much more attention
than he had attracted
when he had moved across the city
on his brand new hero honda karizma!
--
he was happy with the ride
as well as the "horse-power"!
there were no pollution worries
no registration costs
no insurance expenses
no service overheads
.....easy to park
.....easy to "drive"!
and above all
no fuel cost!
--
every evening
he started leaving the fine horse
in the open ground in front of the house
to graze on the unlimited free supply of grass!
he even didn't have to worry about water
as there was a pool in the middle of the ground!
--
all went ok for a week
when one day
the horse refused to move!
the trader tried hard to push him
but failed!
he took it to a vet.
the vet checked thoroughly
and asked about the horse's diet!
and when the shrewd comic hero
proudly revealed it all
the vet gave him a sound snubbing
"if you don't provide him what he loves
he won't move!" the vet ordered!
--
the hero left the horse home
went to the market
to buy the right food for "horse-power"
hey, oats, carrots, apples....
he got it all packed
but when he was handed over the bill
his own "horse-power" tanked!
--
he dropped it all
rushed home
took the horse back to the studd farm
returned it at half the price
went to the mall
and bought himself
a brand new
iron horse
with two wheels
and a paddle
powered by his
"superpower"!
Showing posts with label inflation. Show all posts
Showing posts with label inflation. Show all posts
Wednesday, March 16, 2011
Sunday, January 23, 2011
remembering russia's pain
before disintegration
of the mighty USSR
in 1991
russians had huge money in circulation
all of which
couldn't be spent in russia itself
simply because the money supply was too huge
for the russian markets
to absorb!
so, russians spent it
in buying from other USSR states!
--
but when USSR disintegrated
other fellow states
became independent countries
with separate currencies!
rouble was no longer
worth anything there!
--
huge money supply resulted into
huge inflation!
products and services became very costly.
simultaneous external liberalisation
(as a precondition to getting huge dollar loans
for buying raw materials and essential commodities)
ensured that costly russian goods
got crushed under cheap imports
small corporates went bust
bigger ones barely clung on.
--
rouble suddenly became very very weak in front of dollar
crushing for inevitable imports
superb for nearly impossible exports
--
with the collapse of businesses
ability to pay taxes went down.
without taxes, government couldn't pay salaries
(most russians were in government jobs)
government couldn't undertake infrastructure development
or social welfare.
--
all this while
government couldn't opt for
deficit financing
as the money supply was already very very high
deficit financing would have driven it to suicidal levels!
so, those who had roubles without salaries
could still manage for some time
while others were on street.
--
all that the government could do was
1) either wait till even the rich russians were penniless
and then release more roubles, or
2) wait till inflation had hit peak (and trade had touch its bottom)
hopefully without serious casualties
and then gradually release fresh roubles.
none of these were good options
despite being nothing more than temporary hopes!
--
best options available were
- default on debt repayment saving precious foreign currency
- stop imports except most crucial
- export whatever was possible
- let russian industry stand up on its feet in the absence of imports
- reduce taxes, tax the rich
- not to stop paying salaries, but reduce them
- reduce ineffciency
- reduce payrolls, give others indirect employment
- let corporations and industries make profit
- let equilibrium come over a period of time
------
almost overnight
the communist
closed-economy
superpower
was reduced to a developing
capitalist
open-economy
struggling to remain afloat!
--
this was to be
one of the most painful economic transitions
in the world history
with no short-cut solution!
--
it was 1991 then
today is 2011
...20 years have past
the giant
has silently recovered
from the nightmare!
--
russia
has been forgotten
on the world economic stage
and it is a big mistake!
--
pray nothing ever happens to dollar
otherwise the results will be
hundred times more painful
for 3/4th of the world!
of the mighty USSR
in 1991
russians had huge money in circulation
all of which
couldn't be spent in russia itself
simply because the money supply was too huge
for the russian markets
to absorb!
so, russians spent it
in buying from other USSR states!
--
but when USSR disintegrated
other fellow states
became independent countries
with separate currencies!
rouble was no longer
worth anything there!
--
huge money supply resulted into
huge inflation!
products and services became very costly.
simultaneous external liberalisation
(as a precondition to getting huge dollar loans
for buying raw materials and essential commodities)
ensured that costly russian goods
got crushed under cheap imports
small corporates went bust
bigger ones barely clung on.
--
rouble suddenly became very very weak in front of dollar
crushing for inevitable imports
superb for nearly impossible exports
--
with the collapse of businesses
ability to pay taxes went down.
without taxes, government couldn't pay salaries
(most russians were in government jobs)
government couldn't undertake infrastructure development
or social welfare.
--
all this while
government couldn't opt for
deficit financing
as the money supply was already very very high
deficit financing would have driven it to suicidal levels!
so, those who had roubles without salaries
could still manage for some time
while others were on street.
--
all that the government could do was
1) either wait till even the rich russians were penniless
and then release more roubles, or
2) wait till inflation had hit peak (and trade had touch its bottom)
hopefully without serious casualties
and then gradually release fresh roubles.
none of these were good options
despite being nothing more than temporary hopes!
--
best options available were
- default on debt repayment saving precious foreign currency
- stop imports except most crucial
- export whatever was possible
- let russian industry stand up on its feet in the absence of imports
- reduce taxes, tax the rich
- not to stop paying salaries, but reduce them
- reduce ineffciency
- reduce payrolls, give others indirect employment
- let corporations and industries make profit
- let equilibrium come over a period of time
------
almost overnight
the communist
closed-economy
superpower
was reduced to a developing
capitalist
open-economy
struggling to remain afloat!
--
this was to be
one of the most painful economic transitions
in the world history
with no short-cut solution!
--
it was 1991 then
today is 2011
...20 years have past
the giant
has silently recovered
from the nightmare!
--
russia
has been forgotten
on the world economic stage
and it is a big mistake!
--
pray nothing ever happens to dollar
otherwise the results will be
hundred times more painful
for 3/4th of the world!
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