Rising Inflation in India
Here is a typical news story This Diwali is Costlier than Ever Before from The Hindu.
Along with inflation comes nonsensical “explanations”, from unnamed “economists” (emphasize mine):
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This Diwali, skyrocketing prices of essential commodities have left the “aam admi” [common man] very concerned. Be it sweets, dry fruits, crackers, pulses, dairy products, fruits or vegetables, the prices have registered massive increases compared to the Diwali last year. Even gold, the much sought after item during this festive season, is touching Rs.9,000 per 10 gm compared to Rs.7,000 last Diwali. … While in the case of pulses and food grains, forward trading in the wholesale market and the Government’s failure to check hoarders and big traders are blamed by economists, the steep increase in the price of diesel — a whopping Rs.6 per litre effected on three occasions between June last year and June this year — has also led to the overall increase in prices in a big way. |
Gold has gone up nearly 30%, and essential commodities are up even more - Indians are gold-bugs, and I believe that is crucial to understanding the impressive stability of India in spite of all its problems.
The cause of all this inflation? Forward trading and “hoarding” are to be blamed, of course. Does it ever occur to any of these “economists” quoted that the Reserve Bank of India has been on a printing spree, fooled by the deluge of dollars pouring in to India, that deluge being Alan Greenspan’s gift to the world? And have these economists ever heard of the Friedman dictum “Inflation is always and everywhere a monetary phenomenon?”
This being India, the parliament and various state legislatures will soon pass laws to ban “hoarding”. They will unleash inspectors on traders, providing those inspectors ample opportunity to earn an extra income. Some essential commodities will disappear from sight altogether.
Inflation has consequences. The long run does arrive, before we are all dead.