Empower the Housewife for Inflation Free Economy By Jitendra Kumar Sharma

Coercive force and printing of currency are extraordinary powers all governments enjoy. Democratic governments are expected to use coercive force to enforce the rule of law.

The power to print currency is likewise an instrument for democratizing a society but governments keep this power shrouded in mystery and resort to a ‘bust and boom’  monetary system, holding the citizen in a state  of perpetual economic uncertainty….

Upturns and downturns of economy, once of no concern to the “aam admi” or common man, now agitate the expanding middle classes because the West no longer fears India’s “Population bomb” but covets it as an exploding market.

It is time we demystify money.

Ideally, currency like the electric current ought to be available to all citizens alike at all times. If, to live is a fundamental right, then, owning optimum cash or possessing adequate purchasing power too has to be a citizen’s basic right.

The governments readily print currency for war against other states or their real or imaginary enemies. They, however, do not regard poverty, disease and economic want as enemies in the same sense.

Rationally, the money must originate in the household sector or with the housewife who must be the first spender of new money. This will not be a debt but fully owned cash. Banks may distribute this money on behalf of the government.

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Empower the Housewife for Inflation Free Economy

By Jitendra Kumar Sharma

 

Coercive force and printing of currency are extraordinary powers all governments enjoy. Democratic governments are expected to use coercive force to enforce the rule of law.

The power to print currency is likewise an instrument for democratizing a society but governments keep this power shrouded in mystery and resort to a ‘bust and boom’  monetary system, holding the citizen in a state  of perpetual economic uncertainty.

Globalization has, however, increased interdependence among nation-states and diminished a state’s sovereignty over its national currency.

Upturns and downturns of economy, once of no concern to the “aam admi” or common man, now agitate the expanding middle classes because the West no longer fears India’s “Population bomb” but covets it as an exploding market.

The Indian Government too is waking up to new challenges. Prime Minister Narendra Modi has been exhorting the Indian Science Congress members to be innovative. He also invited innovative suggestions for advancing Indian technology for achieving a higher growth rate of economy.

He has a posse of bureaucrats and economists who advise him on money matters. Neither the Prime Minister of India nor his advisors, however, have ever suggested or invited suggestions from the common man for re-inventing the Indian Currency that fuels all engines of economic growth.  A re-think on Indian currency is especially called for because Western countries, from the mighty America to middling Greece, have been seeking bailouts for their failing monetary systems. Currently, several US and West European anti-Trump economists are predicting  unprecedented world recession and currency crisis in Trump’s election year 2020.

According to Nouriel Roubini, Brunello Rosa,because of the “unsustainable fiscal policies in the US …, the stage will be set for another downturn – and, unlike in 2008, governments will lack the policy tools to manage it.”

In fact, Western economists and financial experts are debunking their own banking and monetary systems.

A few years back, the Chief Economics Editor of the Financial Times, Martin Wolf, a member of the Independent Commission of Banking, observed that “the essence of the contemporary monetary system is the creation of money, out of nothing, by private banks’ often foolish lending”.  According to the former Governor of the Bank of England, Mervyn King, “of all the ways of organizing banking, the worst is the one we have today.”

The ongoing tussle between the Finance Minister Arun Jaitley and Reserve Bank Governor Urjit Patel  for supremacy  over the Monetary System is symptomatic of the malaise the Bank of England Governor Mervyn King and Financial Times Editor Martin Wolf had earlier spoken about.

Currently, Indian Rupee is sliding against the dollar steeply and oil prices are rising unbearably. This is the right time to rethink and re-invent the Indian currency and monetary system.

The government and economists explain value and devaluation of currency in obscure terms; inflation and deflation are considered as specialist’s domains.

It is time we demystify money.

Ideally, currency like the electric current ought to be available to all citizens alike at all times. If, to live is a fundamental right, then, owning optimum cash or possessing adequate purchasing power too has to be a citizen’s basic right.

A democratic state, just as it distributes only rationalized versions of justice, liberty, and equality through its institutions, so also distributes currency through Banks which, like the Public Distribution System, are corrupt and inefficient.

The institutions that create a nation’s money are its Banks. Unfortunately, the governments do not regard currency as a means of distributing national wealth; they print it merely to create new wealth. The result is short circuiting of currency; it reaches pockets from where it cannot return to serve the needs of the people and the state.

The governments readily print currency for war against other states or their real or imaginary enemies. They, however, do not regard poverty, disease and economic want as enemies in the same sense.

If India wants to become economically strong and attain a consistent rate of growth, the Indian government must start perceiving currency as an instrument of distributing national wealth to all its citizens instead of creating wealth for a few through big bank loans. Neither debt-financed stimulus, nor the gold standard, nor allowing total liquidation of all distressed businesses or households can break the ‘bust and boom’ cycle.

This is where the empowerment of housewives becomes an almost absolute condition for renovating the Indian economy.

For the purpose of creating new money, basically there are two sectors, namely, the Household and Business.

The Market and the Monetary System through the medium of Currency make the Household and Business sectors interact. Their interaction starts and sustains the chain of “supply and demand”. As long as householders pay to business for goods and services purchased from it no problem of inflation/deflation arises.

The problems arise when the banks create loans to earn interest and become parasites on the householder, thus, reducing the householder’s purchasing power. Writing off bad debts causes further burdens; it further decreases the householder’s purchasing power. 

Rationally, the money must originate in the household sector or with the housewife who must be the first spender of new money. This will not be a debt but fully owned cash. Banks may distribute this money on behalf of the government. 

In traditional Indian homes, the family earner used to handover all earnings to mother or housewife. Now the government,as the nation’s collective earner, can deposit in each and every housewife/household’s account a requisite amount of money for paying to the business sector.

The Banks shall not create money, they may only distribute it.

The reader may find the above highly workable idea naïve but complex problems have simple solutions.

Anyway, a debate on equitable money and economic freedom as basic democratic rights is overdue.

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