An interesting Dialog

Anytime the word Hindutva (stop squirming) is even uttered, the audience starts squirming. Fundamentalist, BJP, RSS thats all that comes to mind. In my opinion the average Indian (caste/religion no bar) is a very intelligent person. It is unfortunate that most Indians have formed an opinion and an unassailable posture about this idea.

Here is an interesting dialog to throw some light into this subject.

Sivaji the movie and its myth

Sivaji the Robinhood - An idea for failure
Shankar has tried to assert his logic of social awareness thru a one man act - A repeat of all his previous attempts

Gentleman - education
Indian - corruption
Mudhalvan - political corruption
Anniyan - social discipline
Sivaji - black money

The first four were of a different nature since they tackle a tangible problem. But the last one a block buster with Rajini

theorizing economics like Robinhood - steal from the rich and distribute to the poor - albeit as infrastructure instead tackles an age old theory. The only way to help the poor is to steal from the rich.

The movie addresses the parallel black economy in India as the root cause of all poverty problems. That if the rich paid all their dues without hoarding then the poor wouldn't have to suffer. Rajini discusses this as the root cause of all social problems in India and muscles his way thru the economic fabric in delivering to the poor. At the end, Shankar espouses his vision of identity based transactions to keep the money from flowing into the black economy.

The problem that this vision espouses rooted in the origins of money itself. First visualize the fact that money is traded as a piece of paper today. This is exactly what we criticize Muhammad-bin-Thuglak for printing money in leather seals and floating it alongside an existing gold based currency. People started hoarding gold and soon the treasury had piles of leather pieces.

Now imagine the last scene in the movie where the villan and the public run around picking pieces of paper (albeit with a 500 and gandhi picture all over it). For over 10,000 years if this scene were published people would have laughed and thought of the actors and the appreciating audience as idiots - Only donkeys run behind paper, people should run behind GOLD or Silver or diamonds. Better yet they ran behind pepper, cloves and spices and never behind paper or leather. Why? Because that is fiat money - under the power of somebody who can produce more of it than reality.

To explain clearly, if we traded using plastinated mackerel fish as money, then you have a finite amount of money - how much ever you can fish for the day. If I needed more money I would fish more but still have to work for it and even then there is only a finite amount anybody can produce in a period. Plastination could extend the life of the money but there is a finite amount. But more the fish, the value of it is not the same anymore. If a bag of rice equals one fish in a 2000 fishes only world, the valuation is definite. But in a 200,000 fish world the value of rice to fish could be 100 times more. This is inflation 101.

If you replaced fish with Gold then this theory gets better light. Gold is finite and hard to produce. Its valuation is clearly determined in every community in the world.

Now imagine paper money - the amount produced is left to the Reserve bank of India (Central bank in other every country) under the thumb of the same corrupt politicians. They can promise the world and deliver the same by printing more money when they dont have what was promised. They used to hold gold in the reserve to print an equal amount in paper but that practice was abolished since the early 60s. They used to hold dollars as reserve to print but since America turned on its printing machines in the recent past, you have started seeing the dollar value against the rupee plumet in the recent past. (You havent seen anything of this yet.)

What use to be around 2000 crores of black money in the Indira gandhi era is now 20 lakh crores. There was not even that much money in circulation in those days. The more you print, the more it gets hoarded.

First of all the folks who hoard paper money are no less a genius than Muhammad-bin-Thuglak. Every time the Govt prints more money their hoard gets devalued. Next folks who think that getting this hoarded money out would solve all problems are barking up the wrong tree. Throwing more money at the poor will never make them rich. I like the idea of opportunity enablement in the movie but ultimately it is the nature of people to hoard. When the middle class does the same, it is called savings. But for the rich it becomes hoarding.

Arguments of beyond limits - In a free country who is the government to set these artifical limits on savings. If the rich cannot save in legal means, they decide to hoard and hide. If not in this country then they use Swiss accounts for the same, where they have to pay to hoard.

Bringing in an identity based transaction scheme will only enrich the Visa's and Mastercards of the world. People will find any means to hoard. In fact when paper money was introduced, everybody thought that all the hoarded gold will be useless since nobody would hoard paper !! Imagine that.

The only solution to this and all its related problems are to introduce "Full Reserve Banking" money backed 100% by gold or other commodities. This was the basis of economy over 1000s of years and will eventually be. Every other scheme is bound for failure in one form or the other - You will see the effects of this in the comming Global economic crisis.

Americans are as Unhappy about the status of their currency being the global reserve as you hate it being the super power.

Who cares for super power - some rich schmuk. All they want is milk and bread at reasonable prices - just like you.