From a common man's perspective, what does economy really means? Does it mean the GDP or the per capita income of the people or purchasing power or what? I will never be able to understand all these.
Today I read a report that says China's economic growth from 1970s to mid of 1980s was hot air. He also predicts China's speculative growth from 1980s to mid of 2005 is also hot air. What does it mean? How can an economy that is predicted as good and solid be hot air? In other words, good economy is not necessarily good as projected, it may be hot air(inflated). So, whom should we common people believe? Is it the media that plays a major role in making and breaking economies?
In good old days, when there were no definition of countries, rich princely states were those that had adequate food, clothing and administration and wealth (in form of gold). People were buying and selling goods by paying gold coins and it was the standard. That was the basic form of economy. As civilization grew, boundaries were raised around regions marking them as countries, policies were made, then came the dirty economics policy. This means, people that work hard or produce goods are not necessarily the richer people, rather they are very poor. Where as countries where people worked least, had enough entertainment and breaks were richer and could afford more. How does this equation work? The developed countries (read USA) raised their currency price, thus are able to buy more goods from countries whose currencies are cheaper. In return, they would sell the arms and ammunition, at a higher rate gaining their currency back. For that, they have to make sure there is unrest everywhere in the world. But things always don't work the way the developed countries plan. Because of their lazy habits, the jobs are done better by the poorer countries and hence they have steady flow of income and they can spend on stuff. Where as the lazier lot started loosing jobs and had less money to spend and depend on govt. programs for their survival. This makes the "developed" country poorer and people un-productive and hence a economic collapse. Up to this I understand well, but I still don't understand why China had to buy US bonds. Is it for interest returns? China can invest the money in something else or may be invest in India where the interest rate is much higher. Or do they think dollar is the global standard and Indian currency is unstable? In any case, I seriously don't understand all these economic stuff other than the simple equation that you buy and sell products. It would have been a better world if economics did not expand beyond that...
Today I read a report that says China's economic growth from 1970s to mid of 1980s was hot air. He also predicts China's speculative growth from 1980s to mid of 2005 is also hot air. What does it mean? How can an economy that is predicted as good and solid be hot air? In other words, good economy is not necessarily good as projected, it may be hot air(inflated). So, whom should we common people believe? Is it the media that plays a major role in making and breaking economies?
In good old days, when there were no definition of countries, rich princely states were those that had adequate food, clothing and administration and wealth (in form of gold). People were buying and selling goods by paying gold coins and it was the standard. That was the basic form of economy. As civilization grew, boundaries were raised around regions marking them as countries, policies were made, then came the dirty economics policy. This means, people that work hard or produce goods are not necessarily the richer people, rather they are very poor. Where as countries where people worked least, had enough entertainment and breaks were richer and could afford more. How does this equation work? The developed countries (read USA) raised their currency price, thus are able to buy more goods from countries whose currencies are cheaper. In return, they would sell the arms and ammunition, at a higher rate gaining their currency back. For that, they have to make sure there is unrest everywhere in the world. But things always don't work the way the developed countries plan. Because of their lazy habits, the jobs are done better by the poorer countries and hence they have steady flow of income and they can spend on stuff. Where as the lazier lot started loosing jobs and had less money to spend and depend on govt. programs for their survival. This makes the "developed" country poorer and people un-productive and hence a economic collapse. Up to this I understand well, but I still don't understand why China had to buy US bonds. Is it for interest returns? China can invest the money in something else or may be invest in India where the interest rate is much higher. Or do they think dollar is the global standard and Indian currency is unstable? In any case, I seriously don't understand all these economic stuff other than the simple equation that you buy and sell products. It would have been a better world if economics did not expand beyond that...
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