Monday, 20 December 2010

Of economics, currency and life........


Some home truths hold true in more than one sphere . I realized this while watching a report on the G20 meet in Seoul which begins in earnest tomorrow . Of the member nations the United States is busy pointing an accusing finger at China saying that they are deliberately devaluating their currency so as to boost the value of their exports and to try and revive their economy.

Not to be left behind, the Chinese as well as the European countries are accusing the United States of doing the same i.e devaluing the dollar by increasing money supply in the market .
The United States just pumped in $ 600 billion into the economy by printing new money .
Now here lies the universal truth which holds true in economics as well as life . When there is too much liquid cash in the market , its value decreases , which is called devaluation of currency. That is when there is easy availability of something and in plenty people and markets don't give it much value and its intrinsic value falls but when the very same thing becomes rare or short in supply , its value sky rockets eg. Saffron , platinum etc. which are in short supply hence highly valued .
This is pure economics and this is a rule which applies to the market .
How is it the same in life one may ask ? I was just thinking, if one spends too much time with someone , I mean way too much, doesn't the other person start taking one for granted or in effect not attach value to the person's presence . But when the same person is in short supply, so to say not with one anymore( dead or otherwise ) , one starts attaching greater importance , understands their value etc. etc. Isn't it so ?? What is it if not a mirror effect of the law of economics but in a slightly modified way ?

Similarly how many pay attention to something said by a person who blabbers non-stop ? Not many i guess , but everyone takes notice when someone who speaks less has something to say . Not meaning to say that one should talk less, but just drawing a parallel here between abundance and scarcity  and its effects.
Its not for nothing that phrases like "Too much familiarity breeds contempt , Too much of anything is not good " etc. have come up over time.
All these are just thoughts that came crowding in with the G20 news , weird isn't it ?



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