Inflation – the new villian

Are you a little surprised at the title when the government is proudly talking of inflation at -1.56%? Well you should be! But look at the ground reality. Monsoon is not great – this is bound to put a lot of pressure on dal and vegetables. Luckily for us oil is not rearing its ugly head. Also these low numbers have made us complacent and we are expecting to see inflation numbers so low PERMANENTLY. We all know this is not going to happen. Walk into a shop – vegetable and pulses are shooting up much faster than the press wants to write about. Bajra has gone up from Rs. 22 to Rs. 35. Jaggery from Rs. 35 to Rs. 50. Wheat from Rs. 25 to Rs. 35. Apart from writing blogs I also have to face a wife who laughs at my comments about inflation being -1.56%! Save me.

But see what the government is doing. That is worrisome. The great P C told us the impact of the 6th Pay Commission would be about Rs. 15,000 crores. The impact on Maharashtra alone is Rs. 18000 crores. Look at what Obama is doing – he is printing notes so fast that more money will chase less goods. China, India and Brazil are questioning the logic of having the US $ as the reserve currency. The dollar has to go down and go down fast. Again inflation.

This takes us to what Ronald Reagen said. Two of his quotes are very famous. The first one is “Trust, but Verify”. The second one is what he said about inflation. He warned us to be ever vigilant of a threat “as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.”

Just what was he talking about?

It wasn’t Iranian terrorists… A Russian nuclear sub… Or some of Castro’s henchmen.

No. Reagan was talking about the thief that robs us all… Inflation!

In fact he was warning us against Governmental action. For example Obama should have let Citibank and General Motors die. Government of India should let Air India die. When the inefficient get oxygen, the efficient ones start stuttering and wondering how to breathe. Sheila Dixit of course takes the cake. She finds price of pulses high so she announces ‘subsidised’ pulses in Delhi. This will mean all the inexpensive (price) and cheap (quality) pulses will find their way to the Public Distribution Scheme. Fantastic for all till there is some food poisoning case in Delhi out of the poor quality!

Second she is sending a signal to the poor all over the country that the state can do something please either ask your state to do it, or migrate to Delhi! Poor signal to the rest of the country, what say?

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