In the name of nationalism countries do mischief ;Great recession will be the consequence

I am a Tamil by birth and Pondicherry is my home town
It is now called as Puducherry.
Formerly a French territory but now a part of India
A great sub continent far bigger than Europe.
By that accident I am an Indian

Why should I confine myself with this narrow frontier?
With all my anger against the artificially created language barrier
And the hegemony of a single language which is nowhere to
many classical languages and their rich cultural heritage?

The whole world is mine and all the citizens of the world are
My brothers and sisters ,my kith and kin.
That is how my Tamil tradition has valued it and embraced
The entire humanity of the world under one roof

without generating any hate politics or polarizing the nation
In the name of caste and creed or color, or region and religion

North Korea and India inclusive of the U S and china,
to name only a few countries as sample
wish to thrive and fool the masses in the name of nationalism
as against the much needed universal ism
Knowing full well that it is the extreme form of parochialism

Scientist Einstein said long ago:
Nationalism is the measles of mankind
Like George Santayana we can only lament
Mankind is a tribe of animals,living by habits and thinking in
symbols, and it can never be anything else..

The result:world will enter into a prolonged recession and the poor
women and children will suffer more

Do you tell your wife that you love her?

When I saw her first first/I liked  her/
Was it love at first sight?/I can not say/
But I am sure it was a classic case of lustful love/

When I married her /she was in sweet eighteen/
I was just  twenty Two/Both of us were young/
Inexperienced bristling with innocence /
And ignorance of  the nuances of dealing
with relationship.

She was my love, my fire and energy
I remember to have read , the best way to
show your love towards your children is
just to love their mother
And I did love  / but did I say?
There I failed to say  that I loved her
Inadvertently; and the invisible hand of destiny
Had its own share in the drama.

This was despite my professor  writing to me
In an inland letter from Manacud,Trivandrum:
I quote from memory
you must not only love her/ but also tell her/
On a daily basis that you love her....

Kindly tell us about the data on better tax compliance and the breaktrough achieved in unearthing black wealth Mr FM ?

The positive side of  the stupid act of demonetization was that  gradual transition from cash to cashless economy would ultimately help track the electronic transactions and that will make it difficult to avoid income , property and general sales tax leading to  better and higher tax compliance, enhanced tax revenue and ease the budget constraint in the long run.

The finance Minister is now duty bound to tell the following:
To what extent   the increase in the number of bank accounts and the number of transactions undertaken has led to higher tax compliance and also to what extent the authorities have taken firm action against many crooks whose real economic faces have been revealed at margin while many whales have been freely looting the country without paying taxes?

How much black money have been unearthed?

Long ago and not so long ago Miss Jayalalitha received $ 3 lakh  through bank draft only and did they find out who was the sender?
Is the Govt serous in tackling the black wealth and tracking down the anti nationals, namely   the non tax payers and black wealth holders   ?

Why is that the Govt has not bothered to transfer the gains of the oil price fall in the recent years and like a thief it has pocketed in lakhs of crores? will GST bring any difference? what is the fun in service tax? which service is rendered by whom?


there are a lot of  questions which common man wants to ask  and kindly don't treat him as antinational because he is more patriotic than you and your colleagues. 

Decoding of the final match between India and Pak 2017- defeat sometimes help to know where we actually stand

The only certainty in life is uncertainty .when things go wrong as they usually do and the unexpected happens you ask the question  Why Me?.It is human nature  ;In the arena of sports a team on a particular will be on song  and do well  .It so happened that for Pak both semi final and final days were extremely benign and the God conspired the hardworking team  No regrets.

while  the Hockey conferred glory the cricket  the much adored deity  disappointed.When pakistan piled up a massive total the highest in the tournament here was a golden opportunity for the in form batsmen namely Rohit sharma and Shikkar Dawan to compete and complement with each other in scoring the largest run for individual glory as also for the champion  trophy..But alas they were not destined to be!

The wise and benevolent destiny for Pak  sealed it in a different way.The truth of the matter was simply that after batting incredibly well they did not forget the essentials of the game that they must bowl exceptionally well in a more intimidating way so that the opposition would meekly submit and surrender  .
In  less than 2 overs India was 2 wickets down for a solitary run on the board.I switched off the TV and went out to resume my reading..As I was too eager to see the  contest between two rivals I restarted and the score read 55/5.I did not bother to watch the game  and the middle order meekly surrendered in a more humiliating way .cricket is not a war but in this case it is more than that .that is how pak always look at and get motivated.

Today morning only i saw the final score in the news paper..The nature of the massacre was  more insulting for a side which is supposed to have a strong  batting line up on paper..the vulnerability and the weakness of the team on the batting terrain was fully exposed ...Losing is not the problem .Only one team can win  but there must be honour in defeat...congratulations to Pak team fpr performing well and giving shock...When I wrote Last time about bulldozing of England by Pak I never imagined that , that was only the rehearsal for the final onslaught. 

Meditating on demonetization = a few fundamentals 4

From the above it will be obvious and apparent that  in any given time period the whole economic activity  depends upon among others on the amount of money supply allowed by the RBI, the proportion in which the general public would like to hold currency and deposits and the scale and speed with which the commercial banks can create credit depending upon the demand.Central bank's monetary policy and the government's fiscal policy together will have a far greater impact on the health of the economy

This is the reason why Alfred Marshall told long ago that money and banking is the center around which the economic science clusters.The current phase of money and banking  especially after the exit of Raguram Rajan is not that pleasant to  look at .
Going back to the motives of holding money we shall say that Transaction demand for money is the primary motive .Milton Friedman captured this spirit by saying that money is a temporary abode of  generalized purchasing power.This also further means that before using the money for transaction money has to rest in the wallet or Almira and there fore medium exchange function pre supposes that money must also serve as a store of value pending its final disposal IN GOODS OR FINANCIAL MARKET,

Keynes introduced the precautionary and speculative motives for holding money.We always keep some money extra to carry out some unexpected purchases or go on unplanned short trip or to take care of the members of the family falling sick..That is precautionary demand for money.

The speculative motive is important in the sense that  it is held to take advantage of the fluctuations in the interest rate in the future or any favorable movement in stock prices.It is sufficient to understand that as compared to the active transaction demand for money  this idle demand for money is the asset demand for money which will be more active in the financial market..speculation is an intelligent anticipation of future events and  many scrupulously gamble on the future interest rate, exchange rate and stock prices.

The liquidity preference  ie the decision to sit on the cash and not to spend will rise in times more uncertainty.For instance in times of depression of falling prices and rising unemployment and plausible bank failure  and low expected profit both the firms and hoousehold would like to be in cash ie remain liquid and take time to invest in real assets or consumer spending at a future date.Here comes the role of money to the present and the future in uncertainty.
there is also another motive that I coined while delivering a lecture at the central university of Hyderabad long ago.I called it as Sukh ram's suitcase demand for money..Some of you can recall that he was caught with 4 lakhs or crores in asiut case at home and he declared that it was party money and not his personal fortune..Now people hold in thousands and lakhs of crores.Basically it is the politicians ill gotten black money looted from the people and exchequer..During elecion time and or when illegal or illicit trade is conducted in collusion with the criminal elements in society  the politicians might find themselves with more cash before it gets siphoned off to swiss accounts or converted into real estates or gold biscuits

meditating on demonetization few fundamentals 3

We have seen that money is primarily a medium of exchange and that there must be sufficent money supply in the country to facilitate the transaction processes in many markets.It shall not be neither excessive nor fall short of the output GDP as it is called , that we generate.If too much of money is chasing too few goods that will be inflation- state of rising prices and that if output outsmarts limited money supply deflation will set in .the real economy will suffer and unemployment will set in..Keynes told that inflation is unjust and deflation is inexpedient...By taking away 85 % 0f money supply and not replacing it by new usable notes Mr Modi's Government  caused a great damage  to Indian economy not to speak of many devastating economic and social consequences which we shall explore in the text.

Narrowly defined. money supply in a country is equal to currency plus bank deposits.People have their preference either to hold cash or bank deposit. It is their will or choice .you cannot compel anyone in what form one should hold ones wealth.So there is a currency deposit ratio at any given time.It has greater implications for the economy.

Since we introduced the term bank let me brief about it when I taught pre degree students in Mahe college near Tellicherry  I learnt Hart definition of bank which I will try to collect from memory:
A bank or banker is a company or person carrying on the business of  accepting  moneys and collecting draft subject to the obligation of honoring cheques drawn upon him from time to time to the extent of capital available on his current account .

You would have read in the newspaper that both the state bank and some other private sector banks have introduced stupid regulations on keeping huge minimum balance and also levying tax on withdrawls...I can call this only as a rascalised behavior.

More on this later.We must educate them that we have lent money to the banker without which he cannot do business He borrows from us shot and lend the  money long and make a profit.We all know that given the high inflation rate in our country foolishly we keep the money in the bank and now we are charged  and taxed in all possible ways   we are living in troubled times indeed.

I should tell one technical point here .The money supplied by the RBI , our central bank is called base money or high powered money  because the commercial bank creates more money out of this base money or high powered money.In this sense depending upon the cash reserve ratio ie depending upon the amount of cash that they keep with themselves to meet the cash drain everyday and also the statutory requirements of cash to be kept at the central bank  the bank can manufacture  credit money and give push to the expenditure stream of the economy..Thus money plus credit govern the expenditure side of the economy.Mr Modi's govt punctured this crucial chain ..There were too much old currency notes outside but very little new notes inside  and they also went into hoards given the criminal role of some bankers not all So they all choked the economy to death for a few months atleast  
.

Meditating on demonetization : why do we hold money? fundamentals 2

why do we hold money ? The pre- keynesian economists opined that money is basically a barren asset and will not yield any interest when kept idle .therefore they concluded that all the money pumped into the  the scale , the speed and ariety of economy must be held by the public (and also Banks) and the money is meant  for undertaking transaction ie in a predomintlya cash economy and our country is one where many people are poor  people do keep  cash  to buy many things.Money held for buying things is  called transaction demand for cash-.
 Then what is transaction?.
This is a basic concept.We must bring the concept of market and buyers and sellers.Here I can give a lengthy poem written by R A MUNDELL on goods and market  I think i hae already put that in my blog earlier and try to locate it .All of you know there are many markets ranging from fish to flower and a wide range of economic activities take place in a variety of markets.Buyers and sellers giggle and bargain for a better price..The price signals what to produce and where to produce and transport cost  and the type of taxation ruling in a country also matters most while talking about transactions.Market is not merely a geographic location but  connected by a network  of institutions and individuals and the market is now more international than domestic.Earlier the domestic demand used to determine the supply but now the whole indigenous production machinery is geared  keeping into account both national and foreign demand.Even when business is basically domestic many develpments overseas do affect us .
therefore the scale, the speed and the variety of transactions that take place in the real economy eventually determines the economic health of the country .In the circular flow of production process we do import raw materials semi processed goods and final goods from other countries and likewise others also buy from us.
So money is a medium of exchange oiling the wheels of exchange like a lubricant...this simply means there must be enough quantity of money in circulation to facilitate exchange in so many markets  ;otherwise for want of money the real economy will suffer..We started with the question why do we hold money but  in the process we did explain some other related macro aspects of the market and about exports imports and taxes in a rudimentary way .Now imagine when Mr Modi removed nearly 85% of money supply at one stroke without having any sensible strategy to replace by new notes how much the real economy would have bleed ed and suffered?