Wednesday, June 27, 2012

Prime Minister Manmohan Singh is Going to Put Us All into More Troubles

Recently prime minister mr. manmohan singh said that, 'India cannot expect "outside help"  on a scale on which can see the country through its difficulties'. I am not sure what kind of "outside help" prime minister was expecting but after looking at the immediate steps which his government is gong to take to supposedly revive the sagging Indian economy, it becomes clear that those steps are going to result in more disaster and more troubles for all of us. Instead of making things better, these steps will further worsen the problems and put the economy under more heavy stress. Let us take a look at what these steps are and how they are going to do further damage to already slowing Indian economy.

While returning from Rio+20 (phony) climate summit, manmohan singh said, "we must plan our economy in such a manner that we cannot expect outside help on a scale which can see us through our difficulties ". Carefully read the emphasized word: plan our economy. This means, Mr. singh wants to implement the same policies which got us into this troubles in the first place! The present economic mess is a result of government's central planning only. The central planning authority which is in control of the supply of money - the central bank RBI - is solely responsible for inflation and the boom-bust cycles. Their manipulation of the market rate of interest via loose monetary policy - i.e., endless money creation out of thin air via printing presses - is the root cause of price rise and the business cycle. They created an artificial boom in many sectors of the Indian economy which is now bursting. The economy is under recessionary situation because it is trying to liquidate all those unhealthy boom time mal-investments. It will be a pure absurdity to put RBI in charge of economic recovery! People need to realize that RBI is the wolf in sheep's cloth. It will be a height of lunacy to expect RBI thugs to safeguard our lives!

Years of historical experiences and sound economic theory has shown us time and again that central planning can never work. As Ludwig von Mises said, economic calculation is impossible for the socialist central planning agency. Hayek pointed out that government central planning can never replace the individual's planning of his own life. Only an individual has the knowledge regarding his value rankings. No matter how hard the government central planning agency tries, they can never gather that knowledge of individual value rankings; it is an impossibility. Despite this, prime minister singh is still insisting for more central planning. He still wants to micro manage the complex economy about which he is totally ignorant.

Some of the steps which his government announced are also counterproductive e.g., allowing commercial enterprises to borrow more money from outside, offering government bonds to NRIs and a possible rate cut by the RBI. First, it does not make any sense that the problems which are caused by borrowings (debt) in the first place are somehow going to be cured by more external borrowings! It also doesn't make any sense that NRIs buying government bonds is going to solve any problems. It is a known fact that government is a pure consumption sector - a parasite - which squanders society's wealth. NRIs money will be similarly consumed and wasted by the profligate wasteful government officials. That much amount of private wealth will not be available for the private sector of Indian economy. That will retard economic progress further! And a further rate cut by the RBI will only add more fire in already highly inflationary Indian economy. It will create more artificial booms which surely will bust in future.

All these steps of singh government is only going to further exacerbate our problems. People must clearly understand one thing, that as long as the State is present, nothing will change for better. As long as government is intervening in the economy, things cannot improve. As long as government is meddling with our lives, we cannot live peacefully.  Situation can only improve when the State become extinct.

Sunday, June 17, 2012

Finance Minister Mr. Pranab Mukherjee is Lying and Misguiding the Public

Recently Indian finance minister Pranab Mukherjee, during Zee television award function, said that there is a "need to dissuade people from investing in gold " (see here). Finance minister is obviously lying to his teeth. He is clearly trying to misguide the innocent public for his own political benefits. Inept finance minister is ignorant of basic monetary theory, just like other gold disparaging mainstream economists like the chairman of US federal reserve, Ben Bernanke. In his interview he revealed his total cluelessness regarding the true nature of money and many other things related with economics. Below I present his statements with my critique in italics.

 He said, "there is a need to spread financial literacy to encourage people to invest in market instruments"

People are already literate about their finances in this part of the world Mr. FM and that is the reason why they are buying Gold and Silver to protect their wealth against raging inflation which you only have created. You stop preaching about the matters which you truly don't understand. You want to encourage people to invest in market so that they loose everything in those phony paper promises? You should go and check Gold's record for last 5000 years before making such nonsense statements; And, if you can't check 5000 years history, then at least check last 11 years history of Gold v.s. market paper promise investment options. They all are in gutter right now compared to Gold. By encouraging people to invest in phony paper market instruments you are encouraging them to commit financial suicide! Mr. Mukherjee,  who is advising people to commit suicide,  is basically in need of financial literacy!

Then he said, "the Minister regretted that people are investing in gold with the expectation that the value of their investment would appreciate"

Mr. Finance Minister you should stop regretting about what others are doing. People know what is good for them and what is bad. You don't need to tell them what is good and what is bad for them. People don't invest in gold primarily with an expectation of value appreciation. They buy Gold as their cash-balance because Gold is market chosen money since last 5000 years. People know that only in Gold the purchasing power of their hard earned wealth will remain safe and so they buy it. Gold's value does appreciate when government is debasing currency rapidly but that is an added advantage of having Gold in your portfolio. 

He also said, "Quantum of import of gold ... is a clear indication (that) large section of community...want (to) investment in dead asset only with expectation that value would appreciate".

Mr. FM, gold is not a dead asset. Gold is MONEY. And money can never be dead. Gold gives you protection against highly uncertain future and that's its productivity. I advise Mr. FM  you read William Hutt and Hans Hermann Hoppe to understand the productive nature of money. 

He said, "time is ripe to motivate our educated upper middle class to climb from saving mode to wealth generation mode."

Saving mode is wealth generation mode Mr. Mukherjee. There is a difference between saving and hoarding, which Mr. Mukherjee doesn't understand, just like his Keynesian economic advisers. And, Mr. Mukherjee, when you, your government and your central bank RBI is debasing the rupee at such a rapid speed - via inflation - then how can people think of generating any wealth!? Whatever wealth the productive class of this country is generating is being stolen from them by you and RBI via inflation. In this highly inflationary economy, the  need right now for people is to protect their hard earned wealth and that's what they are doing by buying Gold and Silver. If you want people to generate wealth, then,  first stop stealing their wealth! 

Then he said, "...My request to financial analysts and other experts and leaders in this field is to ensure than we can create confidence in market, spread financial literacy and merit of investment could be widely spread".

Yeah your friends in the financial world are trying every bit hard to fool people by giving similar advise like you to them to invest in paper promises. Mr. Finance minister need to know that the problems which economy is facing is not a confidence problem. It is a problems of flawed State interventionist Keynesian policies. And, if people don't have confidence in the financial markets, then, it is because you are screwing those markets via myriad of government regulations. Remove all the regulations and free the markets and see how confidence returns.

He said, "The Minister added that the government is committed to make India an investment-friendly destination and financial power house of the world."

How? By retrospectively levying heavy taxes on foreign  companies and by intervening more in the market?! As long as government is committed to anything, make sure that nothing good will happen. As long as government is meddling in the free market, nothing good can happen.

As you can see above, Mr. Mukherjee is basically blaming innocent public - who is trying to safe guard their hard earned wealth against the raging inflation, which is a creation of central bank RBI and finance minister Mukherjee and his government - for his and his government's own shenanigans. This is the usual tactic of knave politicians: first create the problems and then blame people for it. Finance minister should be ashamed of himself for destroying peoples' livelihood through inflation. Instead of misguiding the public, he should better put his own house in order first. He should mind his own business and leave people alone to make their own decisions.

My advise to public: Please don't listen to these politicians because they are fooling you all. Continue to buy Gold and Silver periodically using rupee cost averaging method. Governments around the world are going to print huge amounts of money which will destroy all the fiat paper currencies and all paper promise investments like stocks, bonds, mutual funds, bank accounts etc. At least maintain 15-20% of minimum allocation in Gold and Silver, if  you want to survive the government central bank generated inflationary tsunami.