[Samurai]

Checkout the discussion on money in the first few minutes. Both are very rich, but don't really understand economics or finance. And the radio/MTV DJ is pontifying on the future of money. I can't make out what he is saying.

https://www.youtube.com/watch?v=LRU-vVJxoSQ

This discussion is happening on the most popular and most watched show in USA. These are the real influencers of the current times. It is no wonder people are simply trusting crypto, NFT, etc.

[Samurai]

This is happening in the richest state of the richest country of the world...

If you think raising income equality is not a problem, think again.

https://www.youtube.com/watch?v=hhGrHlPGmng

[Samurai]

Nina Strohminger, a professor of legal studies and business ethics at the school, said in a tweet Thursday, "I asked Wharton students what they thought the average American worker makes per year and 25% of them thought it was over six figures. One of them thought it was $800k."

The real average is 45K (skewed), the median wage is 34K.

https://www.theblaze.com/news/wharto...merican-salary

These are the future corporate leaders, and they are so out of touch with the reality of income inequality. But I am glad that remaining 75% thought it was below 6 figures. There is hope.

[AltoLXI]

Originally Posted by Samurai

These are the future corporate leaders, and they are so out of touch with the reality of income inequality.

Their future employees may be lucky as they might get six figure salary

Read this article a long back when these two guys decided to check if it was possible to live on wages as defined by India's mean national income. The stark reality is a learning which cannot be learnt in classrooms alone.

Link

[Samurai]

https://www.youtube.com/watch?v=psSYiidw-v0

Looking at the trouble Jon Stewart was having, I decided this may be helpful to many.

There is a simple way of looking at it. If you own a ₹100 bill, it means the RBI owes you 100 rupees. You can buy stuff worth 100 rupees by passing that debt at any store or to any individual. But the RBI can't give you ₹100 to cancel the original debt. Then you will own ₹200 worth of debt. Similarly, USA can't pay the Chinese a trillion dollar to wipe the trillion dollar debt Chinese own. Then Chinese will own 2 trillion dollar debt.




Look at any Indian rupee bill, every bill will have a promise from the RBI governor to pay the bearer of the bill the amount of the bill. US dollar says nothing like that though.

[vrprabhu]

1. A good explanation. To put it another way, I was surprised to learn that there is more US $ with people outside USA than US citizens!!

2. There is an exception to the second part regarding the Indian Rupee note - guess what?

[navin]

Originally Posted by Samurai

If you think raising income equality is not a problem, think again.

It's going to be a problem in India too. Around 3 years ago my son wrote a paper on this topic and he found that income inequality began to become an issue around 1991 and accelerate after 2000.

So he asked me how come the change in income inequality (and wealth inequality) timed so well with the opening of the India Economy (under the PV Rao / Manmohan Singh).

I told him capitalism is very good at raising people out of extreme poverty and over the $2 per day poverty line but terrible at ensuring equitable distribution of this income/wealth.

[m8002?]

Originally Posted by vrprabhu

2. There is an exception to the second part regarding the Indian Rupee note - guess what?

Is it that the 1 Re note is special without that promise from the RBI? I remember reading it somehwere.

[alpha1]

Originally Posted by m8002?

Is it that the 1 Re note is special without that promise from the RBI? I remember reading it somehwere.

The 1 Re note (as well as all coins) is issued by the Govt of India.
All the other notes are issued by RBI with the promise that the bank will convert it into equal number of 1 Re note (or coins) when demanded by the bearer of the XXX (2000, 500, 100, 50, 20, 10 etc) denomination note.

Under ideal circumstances the coins' metal value should be equal to the denominated value.
Re1 note is also the only note that has a coin printed on it - thereby giving assurance to the public that its value is equal to the actual 1 rupee coin.


Edit: https://www.rbi.org.in/scripts/FAQView.aspx?Id=136 some more details.
1. What is the meaning of "I promise to pay" clause on the banknotes?

As per Section 26 of Reserve Bank of India Act, 1934, the Bank is liable to pay the value of banknote. This is payable on demand by RBI, being the issuer.

The promissory clause printed on the banknotes i.e., "I promise to pay the bearer the sum of Rupees …” denotes the obligation on the part of the Bank towards the holder of the bank note.


12. Are the banknotes issued by RBI backed by any assets such as gold?

All banknotes issued by RBI are backed by assets such as gold, Government Securities and Foreign Currency Assets, as defined in Section 33 of RBI Act, 1934.

[NetfreakBombay]

Originally Posted by alpha1

12. Are the banknotes issued by RBI backed by any assets such as gold?

All banknotes issued by RBI are backed by assets such as gold, Government Securities and Foreign Currency Assets, as defined in Section 33 of RBI Act, 1934.

All money is now just backed primarily by govt guarantee. Wording in bold highlights that.

Historically, our currency was indeed backed by Silver and Gold. https://rbidocs.rbi.org.in/rdocs/content/PDFs/89635.pdf

[vrprabhu]

Re. 1 notes are issued by Govt. of India & signed by Finance Secretary. Dr. Manmohan Singh is one who has signed both Re. 1 & other notes as RBI governor.

The observations made by others are correct - only point to note is that currency note is a demand promissory note (i.e. it should be redeemed for its value on demand).

Coming back to the income discussion - in this budget too corporates continue to get tax benefits, salaried class none. Do companies really pass on the tax benefits by reducing the price of their output? Or, the reward their employees by increasing compensation out of their tax savings?

Inequality in income & wealth distribution will continue, hopefully the deserving get the benefits due to them (through our tax payments) & in the long run the gap is shortened...

(Typing on my mobile, excuse the brevity.)

[neeraj0272]

Originally Posted by alpha1

The 1 Re note (as well as all coins) is issued by the Govt of India.
All the other notes are issued by RBI with the promise that

There is practically no difference between promise made by GOI or RBI as RBI is wholly owned by GOI unlike say Federal Reserve of USA.

Originally Posted by alpha1

the bank will convert it into equal number of 1 Re note (or coins) when demanded by the bearer of the XXX (2000, 500, 100, 50, 20, 10 etc) denomination note.

Can you please cite some quotation for this?

Originally Posted by alpha1

Under ideal circumstances the coins' metal value should be equal to the denominated value.
Re1 note is also the only note that has a coin printed on it - thereby giving assurance to the public that its value is equal to the actual 1 rupee coin.

What 'ideal' circumstances are you talking about?
Coin made of which metal? Is that metal value free of fluctuation in price? Suppose that metal is today Rs 1000 per kg but one month later due to over supply that metal turns Rs 100 pkg. So then what would be that Coin's metal value?
Also you are again talking about coin's metal value in terms of currency whereas currency's value is arbitrarily fixed by its issuer at least initially and then later it fluctuates due to demand and supply. But again it's issuer can always manipulate currency value by increasing or reducing money supply.

Originally Posted by alpha1

Edit: https://www.rbi.org.in/scripts/FAQView.aspx?Id=136 some more details.
1. What is the meaning of "I promise to pay" clause on the banknotes?

As per Section 26 of Reserve Bank of India Act, 1934, the Bank is liable to pay the value of banknote. This is payable on demand by RBI, being the issuer.

The promissory clause printed on the banknotes i.e., "I promise to pay the bearer the sum of Rupees …” denotes the obligation on the part of the Bank towards the holder of the bank note.

All the currencies in the world right now only have one thing that make them worth anything. Trust of the user of that currency that it will hold it's value. That trust is primarily built due to our trust in the sovereign government behind that currency. Without this trust currency or even COINS do not have any value except for the value of the melted weight of that coin.

Originally Posted by alpha1

12. Are the banknotes issued by RBI backed by any assets such as gold?

All banknotes issued by RBI are backed by assets such as gold, Government Securities and Foreign Currency Assets, as defined in Section 33 of RBI Act, 1934.

Governments have stopped using gold as backing of their currency long back. Government securities and Foreign currency assets are again assets based on 'trust' without having any actual intrinsic value.
Gold has value because of shortage of gold versus it's demand and that is the only thing along with its universal acceptability that makes it the 'Gold' standard for any financial transaction.

[Samurai]

Originally Posted by vrprabhu

Coming back to the income discussion - in this budget too corporates continue to get tax benefits, salaried class none. Do companies really pass on the tax benefits by reducing the price of their output? Or, the reward their employees by increasing compensation out of their tax savings?

Are you referring to Tax benefits extended for 1 year to give big boost for startups? Don't worry about it. Roughly 1% of the startups actually qualify for that tax holiday. That too after doing lot of circus, using special consultants to help qualifying. It is lot easier to just pay the tax, and take dividends.

[Samurai]

What Jeff Bezos thinks about rest of us... a very revealing anecdote from brilliant comedian Jon Stewart. Reminds us that we really don't want Billionaires running or controlling over economies. It starts as 2:00 if you want to skip ahead.

https://youtu.be/Vewz1v4rQYg

[alpha1]

Originally Posted by neeraj0272

All the currencies in the world right now only have one thing that make them worth anything. Trust of the user of that currency that it will hold it's value. That trust is primarily built due to our trust in the sovereign government behind that currency. Without this trust currency or even COINS do not have any value except for the value of the melted weight of that coin.

Governments have stopped using gold as backing of their currency long back. Government securities and Foreign currency assets are again assets based on 'trust' without having any actual intrinsic value.
Gold has value because of shortage of gold versus it's demand and that is the only thing along with its universal acceptability that makes it the 'Gold' standard for any financial transaction.

You are forgetting that the "demand" for gold is also SOLELY because of trust by people that it will hold its "value" if not increase with time. There is no other use of gold that lends it utility value.
This whole vicious circle of trust lends the "Value" to gold.

This is no different from trust on Fiat money issued by Govts worldwide.