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.
Continues
in the next post –
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