Venezuela - edge of today

[kkkk]

Venezuelan president Madura appears to have taken a leaf out of Modi's book. He has ordered devaluation of the bolivar by loping of 5 zeroes of the old currency. To differentiate it from old currency, the re-valued currency is called sovereign bolivar. so what was earlier 1 million bolivar is now 10 soverign bolivar.

sounds to me like a good step. Ridiculous prices and inflation (of the order of thousands of percent!) - will they come down or not - needs to be seen. It could have been done better (even if these are early days) like not tagging it to the petro or making the process longer in some way. The country is surely about to go through a long paralysis period when everybody gets to grips with the new currency.


I have sometimes felt, we should do something similar in India..... imagine devaluing the currency by a factor of 10, so a sandwich which costs 50rs will cost 5rs - which is in line with the 'good times' I remember. Quite subjective I suppose... good India for my parents generation would probably peg the price of sandwich at 5paise.

what do you guys think?

[sarv_shaktimaan]

I don't think it's needed for a country like India.. for Venezuela, Syria, Somalia, its fine.

[sgars]

Originally Posted by kkkk

imagine devaluing the currency by a factor of 10, so a sandwich which costs 50rs will cost 5rs - which is in line with the 'good times' I remember. Quite subjective I suppose... good India for my parents generation would probably peg the price of sandwich at 5paise.

what do you guys think?

It will defnitely make someone who wants a lower salary feel better
1300 instead of 13000.
But most will not feel good. Even an entry level Cybercoolie now gets 40000 per month. They wont like 4000 a month.

BTW, Indian Rupee is now mostly based on Market value. More than Chinese Yuan or South Korean Wong which are pegged to dollar and Yen.

When government pegged the INR, it had to be devalued a few times.

[sgars]

Originally Posted by sarv_shaktimaan

I don't think it's needed for a country like India.. for Venezuela, Syria, Somalia, its fine.

Russia also did it a while back. replaced 100 Rubles with a new 1 Ruble.

[kkkk]

Originally Posted by sgars

It will defnitely make someone who wants a lower salary feel better
1300 instead of 13000.
But most will not feel good. Even an entry level Cybercoolie now gets 40000 per month. They wont like 4000 a month.

BTW, Indian Rupee is now mostly based on Market value. More than Chinese Yuan or South Korean Wong which are pegged to dollar and Yen.

When government pegged the INR, it had to be devalued a few times.

its not just income though is it? the expenditure will also reduce by a factor of 10? 500rs sandwich will go down to 50rs, chocolates available again for 5paise...

[sgars]

Originally Posted by kkkk

its not just income though is it? the expenditure will also reduce by a factor of 10? 500rs sandwich will go down to 50rs, chocolates available again for 5paise...

Now, thats the thing. In case of inflation, both the incomes and the prices rise. But everyone complains about rising prices. Likewise, in case of a deflation, people will complain about falling incomes (except one)

What mango person wants is Falling proces and Rising incomes

[kkkk]

Originally Posted by sgars

Russia also did it a while back. replaced 100 Rubles with a new 1 Ruble.

countries with strong currencies dont need this. inflation remains under control. UK's inflation has been around the 2% mark, India's has never been under 4% as far as I remember. Russia's inflation is also around 2.5% now...

[kkkk]

Originally Posted by sgars

Now, thats the thing. In case of inflation, both the incomes and the prices rise. But everyone complains about rising prices. Likewise, in case of a deflation, people will complain about falling incomes (except one)

What mango person wants is Falling proces and Rising incomes

the incomes do not necessarily rise at the same rate as inflation though - thats one of the reasons why everyone complains about rising prices. UK is not deflating at this time, however incomes have remained more or less stagnant over the last few years.
in India I dont know whats happening to incomes, people appear ready to spend loads of cash but that appears to be more relaxing attitudes about savings than increasing incomes.

[echarcha]

Venezuela took to socialism with a vengeance... Today its a crap chute! Unbridled socialism has never worked and will never work.

India too is quite socialist, but thanks to private industry, it has managed to plow through.

There are many things socialist in India which need to go, but will not, owing to two things - 1) Certain section of the population is now used to freebies and handouts
2) There is no political will owing to vote bank politics.

[kkkk]

Originally Posted by echarcha

India too is quite socialist, but thanks to private industry, it has managed to plow through.

There are many things socialist in India which need to go, but will not, owing to two things - 1) Certain section of the population is now used to freebies and handouts
2) There is no political will owing to vote bank politics.

not very different from the UK. the welfare state in the UK is the reason so many want to make their way to the United Kingdom. People's way of living is dependant on handouts from the government.

there is equal amount of capitalism too though.

[sgars]

Originally Posted by kkkk

there is equal amount of capitalism too though.

Because of Maggie

Originally Posted by sgars

Living Person i admire - Lee Yuan Kew, the mentor of Singapore.
Others close are Margaret Thatcher and Helmut Kohl.

The post was in 2013 before she went RIP. She privatized British Telecom, British steel, etc. She also introduced PPP (Public Private partnership) in London Underground.
This term PPP was widely copied by Manmohan Singh.

[kkkk]

Originally Posted by sgars

Because of Maggie



The post was in 2013 before she went RIP. She privatized British Telecom, British steel, etc. She also introduced PPP (Public Private partnership) in London Underground.
This term PPP was widely copied by Manmohan Singh.

Maggie or no Maggie, the brits have always been good at keeping their country and their pockets lined. the hoi-polloi rely on state handouts but those who make money, make it by tonnes....

[sgars]

^^
Prior to Maggie, Britain was in midst of ‘Stagflation’ stagnation + inflation. Maggie’s privatization policies plus many unpopular measures put Britain on growth path. Her critics say she caused inequality to rise, but every thing has a cost.

[sgars]

Originally Posted by sgars

Russia also did it a while back. replaced 100 Rubles with a new 1 Ruble.

Remembered in between sleep spells, some radio Moscow broadcast plus soviet propaganda in schools.
In USSR, rouble had a sub unit Kopek. 100 kopecks was or ruble. Sounded like aver Soviet earned 100 rubles a month. But bread was 2 kopeks and for 4 kopeks you could ride anywhere in Moscow metro.

[echarcha]

Communism and Socialism never work and have never been successful anywhere. Capitalism has its flaws but it works.

The principle of Capitalism is summed up by the awesome lines delivered by the character Gordon Gecko in the movie Wall Street from 1987 - The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms, greed for life, for money, for love, knowledge, has marked the upward surge in mankind and greed, you mark my words, will not only save Teldar paper, but that other malfunctioning corporation called the USA. Thank you very much.

We have seen how Nehruvian Socliasm screwed India since 1947. I remember, as a kid, that I used to go with my grand uncle once a year to the government office to pay a license fee for the radio we had at home! Yes, it was License Raj where everything needed a license.

I remember the case of Premier automobiles where the company could not manufacture more cars (Padmini fiats) thant he allowed license permit.

I remember how Reliance becamse big because Dhirubhai Ambani said 'screw permits, I am going to make more of this 'kela silk' (nylon, rayon) and export it'. It used to be called Vimal then and later became Reliance.

I remember how a shopkeeper needed a license to even the rolling shutter on his shop.

Socialism is nothing but Communism in a deceptive garb. Venezuela has failed because of it and the might USSR also crashed and burned because of Communism.

The only exception - and that too because they were smart - is China. China has used communism to keep absolute control over its people but have adopted Capitalism to become the world's manufacturing hub.

Anyway, I think you know all this.