Purchasing Power

In Europe the Greece bail out effort is stuck mostly due to Finnish people demanding collateral by Greece for the possible loans. I said Finnish people, because it is not only the ministers…. The right extremist Finns-party (True Finns) became popular while demanding, that Finland should not bail out anymore failing EU countries. The Finns-party success couraged the regular left and right wing parties to keep better their promises to voters and to be strict with the bail outs, which is actually the real spirit of Finnish people: to be responsible with finances – naturally this means loans to be guaranteed. Finnish person actually is amongst most honest people in the world, so cheating and manipulation is been taken as serious offence. Finnish people help only when the other party is sincere and trustworthy. This delay with bail doesn’t mean much for Greece but might be more damaging for EU banks. Finland might get treatenings if not sabotage due to this sincerity, but that is the fact in every case when you stand for righteousness.

Finnish government has increased also the basic income of its unemployed people, which is good example, what governments should do instead of giving up to IMF type of treatment; reducing benefits and public services. Anyhow that is also happening some other ways in Finnish politics. While the economics is in crises or under recession, good care has to be taken of the purchasing power of the people, that they are able to buy necessities… that production can go on… that there is no need to cut jobs, which would mean purchasing power going further down. And so on circle going on…

These efforts - to bail out banks and cut down public services - we see now in many countries. Those countries will have great difficulties to step out of financial crises, if ever they can do it. Island so far didn’t go down the road for bailing out banks, which gives chance to the country at least somewhat to recover. Although Island has very severe disadvantages; transportation to other countries is expensive and as cold country its food production is dependent on other countries. While food prises are souring, they face more difficulties.

There are now many troubles and signs that the global economy is going further down. Besides people´s purchasing power going down all over the globe, many predict (even Goldman Sachs) collapse of EU and US economy, and with them many more countries. Roubini expects 60 % chance of a recession worse than 2008 in 2012. Also autumn is the time when economics go down the road usually. In Scandinavia Nordea (2000), Nokia and Eriksson are laying of workers. Finnish paper industry, once the base of economy, is now constantly on lay off mode. Global banks plan to lay off more than 60,000 workers and they have $2 trillion exposure to PIIGS. Banks are afraid to give loans, like in 2008. People save and invest to gold, lands and other non productive assets. Money flow commonly is becoming more stagnant. Consumer confidence is going down in US, EU and also in Finland.

According Bloomberg, when GDP fall down below 2%, it usually leads to recession…. Other headlines express; U.S. economy 80% chance of recession. UK Telegraph; banks boldly predict; "Market crash 'could hit within weeks." Latest on WPost; robo-singing of mortgages may go back 1998. Fed and ECB are printing more money (inflation) and buying debt. Corruption and manipulation of markets has increased. US housing bubble is not solved yet at all. Countries are overburdened with debts. The calamities such as Fukusima, Irene, volcanoes and riots and wars are causing huge local and national expenses. There are panic feelings in stock market, due to uncertainty. Global controllers of finances are battling against those who want change - causes tremors and even destructive attacks.

What can we do to protect ourselves? I think small - at least for over winter - food storage (and other important things), and some alternative cooking and heating systems might be good to have, as also other types of calamities might come.

Sarkar: In the economic structure of the society, the purchasing power of the people plays the most important role in their all-round physical welfare.

Though there has been inordinately high investment, the purchasing power of labourers has not been sufficient for them to meet the minimum requirements. Hence, while on the one hand labourers received less consumable goods due to less purchasing power, on the other hand entrepreneurs have captured excessive purchasing power and consumable goods causing excessive disparities in wealth. Economic balance has been upset.

The minimum necessities of human society should be guaranteed. We are not only to recognize these requirements, but also to guarantee the availability of the requirements, which includes our social responsibility of supplying individuals with purchasing power… if consumable goods are supplied to everyone, people will become lethargic. They should therefore be supplied with purchasing power in exchange for their work according to their physical, psychic or spiritual capacity.

Depression is not a natural phenomenon. Pause is a natural phenomenon. In a Proutistic structure pause may occur but depression will not occur.

Political democracy has no doubt granted voting rights, but it has snatched away the right of economic equality. Consequently, there is gross economic disparity between the rich and the poor, immense inequality in people’s purchasing capacity, unemployment, chronic food shortages, poverty and insecurity in society.

The purchasing capacity of common people in many undeveloped, developing and developed countries has been neglected, hence the economic systems of these countries are breaking down and creating a worldwide crisis.

The first thing that must be done to increase the purchasing capacity of the common people is to maximize the production of essential commodities, not the production of luxury goods. This will restore parity between production and consumption and ensure that the minimum requirements are supplied to all.

There are two main causes for economic depressions – first blockages in the rolling of money and secondly the concentration of wealth.

The money will have to be kept in circulation. It must be understood that the more the purchasing capacity of money is not utilized or money is kept stagnant, the more the economic stratum is damaged. The second is that money, and indirectly its interest, can bring about disparities in wealth if it loses its ability to be the unit of economic equilibrium and stability. If these two fundamental factors of economics are even partially forgotten, a worldwide economic depression will result.

When they (capitalists) discover that the investment of money does not bring profit up to their expectations, then they stop rolling money. This keeps money immobile or inert; consequently, there is no investment, no production, no income and hence no purchasing power. The situation becomes so dangerous that there are few buyers to buy commodities.

However, if a country discontinues trade related to direct or indirect economic transactions and commences barter trade instead with other countries, it will not suffer much from such an economic depression.

The difference between the previous depression and the future depression will be that in the previous one there was little inflation, but the future depression will be associated with inflation. Hence, it will be more detrimental to the integrated development of human society.

If the circulation of the capital decreases as a result of staticity and the quantum of production also goes down, then inflation is bound to take place. If a country has a constant deficit in foreign trade, in that case also there is the possibility of inflation. On the other hand, if there is sufficient production and adequate supply, but suddenly the quantum of demand falls, then the value of money suddenly increases for the buyer. This is called “negative inflation” or “deflation”.

An endeavour should be made to shorten the span of this economic depression. Before the final culminating point comes, it is possible to avert the disaster and accelerate the speed of social movement…As the world is passing through a most critical phase, we should be more active and create an impact. If the positive impact we create coincides with the explosion, the effect will be excellent.

Sometimes, due to economic depression or devaluation, many people die because their existence was solely on money. But when your existence is pinnacled, that pinnacled existence comes in contact with the Supreme. So it is said that the devotees are the most cunning fellows. Who are the most cunning fellows? Devotees are the most cunning fellows. Others are fools.
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Didi Annapurna