Why is statism good in money?

04Apr07

Here’s a question from an amateur to all you Econ grads because I don’t understand this too well: “Why is state monopoly in money a good thing?”

Mint, an otherwise relatively liberal publication, is advocating statism in money and using the Swedish central bank as a guiding example:

“It [The Riksbank] uses a detailed annual survey that covers household income, debt and wealth. For the analysis, households are divided into five categories based on their level of disposable income,” says IMF.

There’s more. The Swedish Riksbank then carries out various “stress tests” to understand what can happen to households in case interest rates and unemployment go up. In other words, it tries to assess how well indebted households can manage economic shocks.
This is precisely the sort of data Indian economists and policymakers will need on their desks in the years ahead, if they are to adequately understand what damage higher interest rates, a drop in asset prices or an economic slowdown could have on indebted households—and the extent to which their woes can spread into the rest of the economy.

Replace interest rates with say…. shoes, and you have socialism. A state that collects information about shoes, the demand for shoes, the type of shoes demanded, who wants how many and fine-tunes production of shoes so that they remain cheap and everyone stays employed. Finding the perfect equation for the production of shoes and other goods while collecting data and keeping tabs on who is doing what for the public good.

Tell me, what’s good for shoes isn’t good for money?

Filed under: Indian Media, Liberty, Money   |  2 Comments