Friday, August 11, 2017

Catastrophe of bank interest rates – 19

Continues from the previous post -
In our country, in affluent societies, people are using these facilities since long; it is not a new thing. Prior to facility of on line people were using a cheque book and were paying by cheque. For sizable sums, it is most convenient to pay for purchases. However, Modi wants this method to be used for all types of transaction. That is foolish. Because every time you use it you pay commission to bank and that way, your purchase becomes that much more costly. Poor Indian cannot accept that. Therefore, we see there is growing resistance to this. Here we ask government why government insists that we do not withdraw cash from our accounts. It is my money I should be able to withdraw it as and when I want. Government has no reply to this. Existing law does not allow government to make people forcibly accept cashless transaction. Cashless method leave large sum of money with banks. This makes it like a fix deposit and by that, the bank can give large loans to the owner of that bank. Banks owned by government also benefit by this. This could be one possible reason after this insistence for cashless. This may be one reason why our government has put limit to withdrawals.
The hidden reason for not allowing people to have cash in their hands is horrible. Cash in my hand is my freedom. Modi government wants to curb your freedom. If you are free, you are likely to oppose his government and its nefarious undemocratic activities. He has power to curb your accounts and stop you from opposing his government when all your money is in banks. He can order to stop your account and by that kill your all movements. Our government has done it with one international NGO who had asked questions to it on certain deals in mining rights. Nevertheless, some cashless deals are taking place such as those with cheque. For large amounts, cheque has been the way since long. Modern technology has offered more facilities such as debit card, credit card etc. in spite of them right to keep his money of any value cannot be banned by any government if it poses as a democratic government. Modi administration has no acceptable reply to justify their demand that people will not have their money in their hand. All efforts to control value that a citizen may want to keep in his possession are indication that this government wants to curb freedom of Indian people. Unless RBI guarantees payment of all funds, incase of bank closer, this government has no right to curb our desire to hold our money to ourselves. Let Modi government bring in this provision and then if it says that citizens need not keep their money to themselves may be appreciated.

Continues in the next post –
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Tuesday, August 1, 2017

Catastrophe of bank interest rates – 18

Continues from the previous post -

People who want to justify low interest on loans and commensurate low interest on deposit come with an argument that more production creates more employment. In modern technical world, more products need not increase employment. We see more and more automation in industries and that kills any additional employment. The only activity that surely increases employment is farming activity. They are being looked after by special banks and their working does not need any deposits from ordinary citizens. NABARD is an autonomous body specially created to support farmers. However, if there is more sell then more employment it develops to manage those sells. Moreover, when sells are brisk additional interest they can manage without any difficulty. The problem of interest is highlighted by those borrowers who do not want to pay loans and those defaulters from gambler category. All efforts are made to keep interest rate down for their benefits. Honest industries generally do not raise this issue.
How cashless concept was introduced in America by banks we should see to understand this topic. Does economy benefit by introducing this concept in public? Answer is, not at all. Whether public withdraws money by so-called cashless or by cash does not make any difference for economic development. The origin of this modern method lies in the phenomenon of reduced interest rates on bank loans. When bank lending rates were continuously reduced during and after WW2, due to increasing influence of gamble group banks were frantically in search of some additional income to survive. During that time, INTERNET was developing and telephone system was already developed enough, the idea of credit and debit cards was visualized. This concept was immediately accepted by affluent society as they were spending large sums of money every time they made purchases. To carry that kind of currency was not proper and so this idea of carrying a small credit or debit card was found to be most convenient. Prior to that, they used to carry bank chequebook and would put the value and do the purchase. In that situation, there was chance that the cheque may not realize. To safeguard from cheating by purchaser shoppers would arrange delivery after realization of the cheque. This was often inconvenient and insulting to many buyers who were rich enough; therefore, they preferred this innovation as most reliable for both shopper as well as buyer. Banks would charge a small commission on every transaction. That was additional income to them. The more use of credit cards the more income and in this way, these innovations became popular. This was acceptable for affluent society such as in USA and Europe.

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Wednesday, July 19, 2017

Catastrophe of bank interest rates – 17

Continues from the previous post -
Gross Domestic product (GDP) is a noted count to see if economy is improving or not. However, I would advise that instead of Gross domestic product we should have a ratio on gross domestic sells, or say GDS. So far, this count is not considered and that is the shortcoming. When we notice a big difference in them due to low sells while production is good the market begins to suffer. Very often, they presume that since production happens commensurate sells also must happen but our experience shows that this is not true. There are companies loaded with commodity produced and filling their godown. With low rates of interest on borrowings, this happens. Apparently, it appears that economy is growing but actually, it is slowing down. Such situations are responsible for depression. To recover losses producers are tempted to increase prices of products that are not selling due to paucity of funds with buyers. This they do with logic that, there are some buyers, who need it so eagerly that they will buy it anyways; whatever be the price. This causes higher prices of products not in demand. This causes inflation in economy. This explanation shows how low interest rates on deposits of depositors in banks cause both depression and inflation; two measure ailments of economy. Understanding this reality, we should consider GDS in place of GDP while deciding economic condition. Gambler group will not allow this because if they do; then their purpose is harmed, rates on deposits will increase to ease the market and corresponding rise in rate on borrowing. We notice that every effort is made by this group to avoid making GDS as the corrective count.

We have been observing the way many business activities are closing down. The more reduction in interest rates on deposits, more closers are observed. The link in these two phenomena seldom noticed by concerned observers however, if we understand interlink in these two phenomena we can appreciate the importance of good sizable interest rate on deposits. The benefit to "Real economic group" by reduced interest rate on loans is negligible. Benefit by higher business return becomes important to keep their activity survive. To get that if there is increase in interest rate on loans they should appreciate that because over all increase is very small and they will appreciate the proportional rise in demand. For example, if interest rate is 15% on loans, the total expenditure on interest annually will be about 4% and if interest rate reduced to 12% (3% less) over all reduced expenditure on loans will 3.85%, that means, benefit of 0.15% only. For such a meager benefit at the cost of loss of business is definitely not acceptable to business. Very few businesspersons bother to look to this phenomenon.

Continues in the next post –

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Tuesday, July 11, 2017

Catastrophe of bank interest rates – 16

Continues from the previous post -
At present, we are shifting center of money to banks. That is most suitable for this gambler group. Naturally, center should be with public. Because when center is at public, money movement is normal and helps "Real economic group" borrowers who are the core of economy. When this center shifts to banks, free movement of money will be stalled. All worlds have been infested by this gambler group, players in money market. This is a very serious situation. This looks like a deep-set conspiracy to control money. Frequent devaluation of currency is one more bad effect of all activities of this dangerous category. If these are not stopped in time, economy of the world will be paralyzed. In fact this has already started. Gambler group is like cancer and it keeps growing until economy of that country is finished. American economy has already reached that level even though they do not want to accept it. Some times, it looks as if there is no return from the effects of activities of this category. Indian economy must protect itself from this cancer before it is too late.
Now we should see what happens if economic center is with public. More money in the hands of public means more business to market. So long as there is money with public, it is spent. By that phenomenon, market of sorts keeps on benefiting. As market benefits concerned business improves. Public has varied interests and according to them, those markets and concerned businesses improve by its support. When interest rates are decreased, public spends less money. This has cascading effect on all forms of markets. This decrease in business affects "Real economic group" borrowers and their activities. Less demand for their products makes it difficult to pay interest on their loans. One report recently published on RBI web site explains this. It says, for every one percent reduction in interest rate on deposits there is 4.3 percent increase in loan defaulters. This explains how reduction in interest rate on deposits negatively affects business (sells) and economy. If public does not have enough money in their hands to spend, market has to suffer. Who benefits by this reduction in loan interest reduction? The only group benefits is gambler group. They get cheap loans or at times free money to play their gamble, speculations, black market activities so on and so forth. This group does not have any contribution towards GDP since their activities do not contribute to any production.

Continues in the next post –

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Thursday, June 29, 2017

Catastrophe of bank interest rates – 15

Continues from the previous post -

Gamblers – this is one more class of financially active group who wants loans at lowest rates. They may be putting their money on horses, motor race, cricket matches and many such places of gambling. Their need is of short-term type and they make a lot of black money out of that. This group joins with the other groups we have just discussed.
Speculators – this group works in the similar manner and need easy money from banks. Generally, they are the people who could be defaulters of their loans. Shares Market, Grain market, Cotton market such are places where they put their stakes and work on the same lines as forward traders. They insist to have loans at lowest possible rates. They join the group just mentioned in my earlier discussion.
Crony borrowers – this group takes loans from banks and never wants to pay back. They are friends of Bank directors, bureaucrats or politically influential persons. Most banks are duped by this category of borrowers.
All these gambler group type borrowers are behind the conspiracy (all over the world) to reduce bank interest rates. When bank interest rates reduced everybody, (all borrower groups) benefit and so they all try to justify the reduction.
When we cannot implement social security considering enormous population we cannot allow reduction in interests on bank loans and bank deposits. In many developed countries, they have social security of many types. India does not have social security provision therefore, citizens need provide for themselves. That is why in India we cannot advocate for reduced rates on bank deposits. In most advanced countries have this facility of many sorts; therefore, there this reduced rate is justified by gambler groups.
Helplessness of bank depositors as being most neglected society, both Banks and depositors are principle victims of reduced interest rates. There is no protector for this section of society. We need rise against this aggression of gambler group in a typical democratic ways such as demonstrations, coming on street and other agitations. We should bring awareness amongst public on this issue so that fooling of people by gambler group by using their smart arguments we can control.

Continues in the next post –

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Monday, June 19, 2017

Catastrophe of bank interest rates – 14

Continues from the previous post -

Here I wish to give an example of notable financier Warren Buffet of USA. One smart player could convince him of his arguments and told him that if he invests the way his arithmetic formula suggests, he will make big profits. Mr. Buffet invested on that and suffered loss. Not one time but repeatedly, he finally stopped working as per that formula and reverted to his own intuition as he used to do before. This Warren Buffet told in one of his speeches. One university-trained economist approached him and told him to invest in stock market as per the finding from these formulae. Warren Buffet had never used them in his many years of successful practice. He decided to give him a chance. After some investments, he realized that most times investments went wrong and he suffered big loss. He then stopped working on those formulae. Warren warned the audiences in that meet to be aware of these formulae. This experience of notable investor we must consider before giving these imaginary formulae undue importance. I request our Indian universities to understand this limit of these formulae and while teaching them students made aware of that. Gambler group takes full advantage of this and keep fooling market. Our present economics world over is suffering from these wrong formulae, this must stop. American universities are creating many wrong theories and force people world over to accept them and worst part is that today we consider that anything American is perfect. They take worst advantage of that bias. We should understand that universities in USA are not that perfect, at least as far as economic science is concerned. I am of the opinion that if we stop this group from fooling world with their false theories we will save this world from all depressions and inflationary effects on our markets.
Black market – Black market means where sells are done without paying indirect taxes. Earning created by them is not accounted for in actual books of accounts. This group is much like money launderers insist for reduction in interest rates and join hands with those cronies to pressurize finance Ministry to force banks to reduce interest rates so that they get money to indulge in their nefarious economic activities at lowest rates of interest. All show they create with help of their smart economists that what they suggest is in accordance with the utmost (?) economic principles. A less alert person can be easily taken for ride and misguided. This ultimately leads to reduction in interest rates on bank loans and they benefit by that. A lot of black money they create out of that easily available money. This unaccounted money they use to purchase people in power and other influential people who would be of use to them in their financial activities. They create a big crony circle of stakes in political and other social media circles and by that; they can influence economic activities of the society. This is the most dangerous group to our economy. Smugglers come in this group. They are stinking rich; their being rich is a problem to honest society.

Continues in the next post –

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Monday, June 12, 2017

Catastrophe of bank interest rates – 13

Continues from the previous post -

What is wrong in those formulae they produce to justify their bogus arguments? The formula is not wrong but in all such formulae, several components are considered. According to principles of arithmetic when value of all components excepting one are known that value can be found by putting other known values in that formula. Such many formulae we have in our modern science of economics. These formulae are taught in universities all over world. Theoretically, they are correct since they are prepared according to rules of arithmetic. The hitch is that in any economic problem we always have more than one component with unknown value. However, we want to find out value of only one of them. In such situation, what they do is, they put some fictitious value to fill that gap and come with solution. Since that fictitious value is probably not correct, product is also not correct. In some formulae, there is no possibility of putting even a fictitious value. There they put some fixed value called constant, to complete the formula. There also it fails in giving correct value because in economic considerations these constants also keep changing, there is no such thing as true constant in any formula in economic arithmetic. All economic calculations are done with such formulae. As far as theory, concerned working in formula of this type is OK. Universities teach them, so students believe in them and when in business try to use them. However, if we want to use them actually, in market to come with values, we always go wrong. I would like to mention experience of notable financier Warren Buffet from America. He told his experience of these formulae in talk. Warren Buffet is known for giving lectures to enthusiasts every year and here I quote one of those experiences he mentioned.

Continues in the next post –

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