Sunday, January 01, 2017

' Money Matters '

‘ Money Matters ‘
  • P.Natarajan.

I remember the definition for money, which I learnt in the Commerce Class in 1959 as that
“ Money is what money does “.  Money is used to buy things and services. Money is what many people take for selling their own materials or services. Money is also called as currency or cash.
The attributes of money are: (i) medium of exchange (ii) portability (iii) durability (iv) store of Value (v) divisibility (vi) non counterfeit ability.

In the wake of demonetization of Rupees 500 and 1000 brought by the Govt. of India, availability of cash as medium of exchange has become scarce. The trend will be a surge in non cash transactions through digital options such as mobile wallets or debit cards which is a clear sign that India is embracing the cashless economy.

It is right time now to refresh our memory to know the clear meanings of certain and relevant economic terms:-

  1. Inflation:-  Inflation is a sustained, increase in the general price level of goods and services in an economy over a period of time resulting in a loss of value of currency. In simple words - a reduction in purchasing power per unit of money.
  2. Stagflation:- A situation where the inflation rate is high, the economic growth rate slows and unemployment remains steadily high. Inflation and recession is regarded as mutually exclusive. Once stagflation starts, it is difficult to eradicate both in social terms and in budget deficits.
  3. Demonetization:- Is the act of stripping a currency unit of its status as a legal tender. It becomes necessary wherever there is a change in the National Currency. The old unit must be retired and replaced with a new unit. In the present context, Rupees 500 and 1000 notes account for 86% of country’s cash supply.
           The Government's goal was to eradicate counterfeit currency, fight tax evasion, eliminate black money gotten from money laundering and terrorist financing activities and.promote a cashless economy
(5) Devaluation means official lowering of the value of country’s currency within a fixed exchange rate.system - a new fixed rate w.r.t a foreign reference currency.  When the face value of the currency is altered without reducing its exchange rate is redenomination and not a devaluation.  
(6) Depreciation and devaluation are sometimes incorrectly used interchangeably but they always refer to the values in terms of other currencies. Depreciation of a country’s currency refers to a decrease in the value of that country’s currency. The classical example is the ruling rate of Rupee is devalued and stands at Rs. 67.71 with respect to US $ as of today.

Value System:-  We have seen the term Value in an economic sense above. It may be worthwhile to discuss human values also. Value means the generalised end which has the connotations of rightness, goodness or inherent desirability. Human value is a theory about what things in the world are good, desirable and important. For example, we accept “ Truth always prevail”, “ Love thy neighbour’, " Believe in God", " Total Surrender to God “,  to mention a few.
Human value is the conception of mankind in general. It is true that the individual is the chief concern but as long as the individual exists in the society, it can be believed that modern society would not outgrow its existence.
Value system can be different from culture to culture. One may value aggressiveness and deplore passivity, another in reverse. Some value ‘virtue of sobriety’ over ‘emotionality.’.
Values are often emotionally charged because they stand for things we believe worth defending.
Values vary from individuals to individuals. for instance one may spend the money to buy fruits. He feels that he has spent the money and gained some utility in return or in exchange. Another person spends the money in buying flowers. Of course flower is not edible. But the buyer gets satisfaction when he uses them for puja. Another example:  You may have heard that ‘Gandharva Veda’ consists of dance, drama and songs. A person who gets tired due to stress or works would like to relax and he can switch on to ‘Gandharva Veda’ or hear melodious music. He values music rather than money. This is known as intrinsic value. Everyone should abide by the values prevailing in the society which is common and collective in nature. Some may put up a show which others would rate as external value.
Kanchi Kamakoti Periyava had advised to pray to almighty to walk in the right path and for this purpose Paramacharya had said to think of God as father and mother or Ammai and Appan. Just like parents correct an erring son, one should hold on to ammai and appan as pillar by holding which one is prevented from a fall. This is the principle of Gita Charya's “MAMEKAM SARANAM VRAJA” (18/66).

New is the Year 2017
New is the Hope
New is the Revolution
New are Rs. 500 and 1000 Currencies
A Happy New Year to you !!


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