Friday 28 September 2012

How to rebuild our Economy

Money should not grow on trees
Knowing a fact of life, there is nothing in this world that last for ever. The reason for that is, nothing is perfect. Our modern economic system is not perfect. The proof of that is the current failures that have the potential to recapture the growth of our children.

In our world today, we are captured by the chains of economic growth and monetary well being. Nothing seems worth it, if it's not worth the money. That's the methodology adapted by us to choose. And since we have the power to choose, then lets choose a system that rewards hard work and increases the growth of true value.

The truth about our economic system lies in the fact that it fails to adequately reward value created. Abstract occupations today are more profitable than others. This leads to the increase in price of the output generated and causes inflation.

There should be a system that can reward value created with respect to the need it fulfils. 
As generic economics goes to explain the price of a product to be directly proportional and positivity related to the demand for it in the market, it fails to take into account the amount of money circulated in the market and also fails to account for the uneven distribution of income, and these factors warp the prices and product demand forecasts. Hence the new system must ensure a correct distribution of currency in-line with the economic growth, and also the rightful distribution of revenue generated from value creation.

To implement such an economic system, there must be a simple and effective measure put through the nation or nations.

There mustn't be any artificial sources of income including
  • Interest rates
  • Future Trading
  • Stock Trading
  • Option Trading
  • Forward Trading ect..
Any form of income that is accrued without creating value is to be eliminated.
Trading physical stocks and assistance in distribution and sales of goods and services produced is equally productive an activity as production itself. 

The moment artificial income is eliminated, we must ensure accurate valuation of the economy size and monitor/control the currency flow into the system. Some may argue that in today's times currency flow controls are implemented to ensure effective international trade, and i agree with them. This should be a strategic move that can succeed only if there revenue distribution is of a higher quality. 

Revenue distribution cannot be equal. This is simply because no man is equal. Revenue distribution should be based on value creation. The price of the value shall be accurate only if there is no man with black money, which is a tall statement. Nevertheless, this situation is commendably possible if there is no artificial income floating in the economy.

Such an economy shall be free from inflation, depression, and stagflation of the economy. Such an economy can only be tow things, it's either stable, or in a growth phase and I feel that both situations are much more desirable than our current inflationary, and in a few other economies - depression like states.          

    

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