I am a wannabe half economist at heart. It gives me the killer advantage of being able to confidently cook up astonishing concepts, without being bothered about the minor aspects of having sound theory to back it up! Here’s one more such half theories you may thoroughly enjoy – it is shocking, true (at least it sounds true!) and ‘seems’ well founded (to me!).
“I promise to pay the bearer the sum of xx rupees” – the line that’s printed on each and every note got me curious. Why is it that the note is a “promise” and not the real thing? It so easily could have been the real thing – after all there is no such thing as ‘real’ rupee – therefore the note itself could so easily have been the rupee. But alas – it is not! It’s only a promise – I wondered why?
Then there’s this open secret. The total amount of currency printed by any government is significantly lesser than sum total of bank balances held by all of its citizens via numerous bank accounts! If all of us were to simply convert our bank balances into cash at the same time– a perfectly legal thing to do- any government will go bust! They simply didn’t bother printing so much of money. And it is the case with all governments worldwide since hundreds of years.
Let’s take an example to understand this. Say there are only 4 persons in the economy. A,B,C and D. Each one of them decides to buy a house. So they go to a builder – Mr BIG – and pay him money to buy 4 flats – one for each one. But the builder – Mr BIG – instead of handing over the flats – hands over a promissory note to each one of them which reads ““I promise to GIVE the bearer the sum of 1 FLAT”. Now instead of building 4 flats – one each for 4 of them – Mr BIG builds only 2 flats. Each time one of the four buyer comes to Mr BIG with the promise note – Mr BIG can give the buyer his flat – not a unique one but an interchangeable one from total of 2 flats that exist. But should all 4 of them want to have their respective flat at the same time? Oops! The ponzy scheme goes bust! Now imagine that the builder has to pay salaries this month – what does he do? He simply prints more promissory notes and gives more such “flats” to his employees. Is this legal? Is it right? Is it ethical? Think think…
Now replace the BIG Builder with your government and the word flat or house with our national currency “RUPEE” – and see what you get. Yup – a perfectly legal economy! That’s what your govt does day in and day out.
Let me not mislead you – it’s not as if this is some kind of fraud or something. It’s just that this is how the concept of ‘currency’ works which many of us are unaware of. Your money is as safe in the banks as it is anywhere else – and it is being invested in multiple projects in the time you don’t need it in cash form. That’s alright with me.
The point I am making it something else. Your economy – which many of us believe to be based onhard science – is in reality nothing else but a derivative of faith! Think of it – the economy survives till the time everybody continues to together believe that it exists. The minute that faith is shaken – kabhhooommmm …. It will all go up in thin air. And the moment that faith shatters – it creates spiral that doesn’t stop at your bank balance alone – it takes your job, your savings, value of your assets - everything. Similar to what happened in recession 2008. Indeed it has happened to many countries before – and will continue to happen in future as well.
Think of it – all the wealth that exists - is in reality a “collective national imagination”. IT IS therefore IT IS– a self fulfilling prophecy! Because everybody together believes that we all have so much of wealth – therefore we all actually have so much of wealth. It’s a pack of cards - the minute one card is removed – this castle of cards will collapse as if it never existed.
The ‘hard’ cash, the ‘concrete’ real estate and ‘safe’ bank deposit, ‘booming’ stock market – all of it exists because we all together believe it does. Our faith is the source of Mukesh Ambani’s billions, and the neighborhood politician’s millions.
Mull with the logic a bit more and its finer nuances will begin to emerge on you.
The Looser Majority- It will emerge to you that the marginalized poor of this economic hierarchy is not so ‘unimportant’ after all… far from being a looser, he actually is an integral part of the system. The system can’t exist without the loser’s belief that he is poor and he is marginalized – another self fulfilling prophecy! In a strange way the system feeds on the marginalized silent majority which believes that it has been beaten in the game fair and square by the powerful clique of minority. It’s his blood that the system feasts on – and therefore he is indispensible! Strangely enough if the marginalized together start believing in a new system – the renaissance uprising – then they will succeed more often than not. They have a veto power to bring down the status quo - that they are not aware of! More often than not – this sleeping giant never wakes up!
The Winning Minority – <10%>80% of all wealth. They manipulate the system to make the majority believe that the game is fair and square – without acknowledging that their winning is highly dependent on other’s accepting defeat and favorable rules that are turned & twisted.
Sadly - The rules of the game are set in such a manner that there are only a few winners and lots of losers. Mr Ambani’s billions are extremely dependant on the majority continuing to believe that he has those billions – even more than his own hard work or self belief.
The question is why then can’t we tweak our beliefs to give billions to everybody? Is it necessary that the system should have only a few winners and so many losers? Why can’t we all be rich at the same time if it mainly depends on our faith and belief?
Can we create an economic faith / belief system which allows everyone to be rich?
The answer is more shocking than fiction …. In reality – yes we can!
There truly can be a panacea for economy – where all participants are wealthy and well off…. I can imagine it, feel it, but can’t put to theory – not as yet. After all I am only half a economist !!!