Dr. Susmit Kumar, Ph.D.

The two tables and six charts shown below prove which economic model India should follow, either:

• The US economic model that lost millions of jobs related to:
  – a decrease of nearly 35% (from 14.2% in 2000 to 9.3% in 2008) of the world export market in just eight years (thereafter it is hovering around 9%), and also
  – the goods for its own consumption corresponding to record increase in trade deficit since mid 1990s (as shown in Chart 1), or
• The Chinese, 3.7% in 2000 to 8.4% in 2008, a 127% increase, and the German which has kept a steady percentage despite the rise of the global Chinese workshop.

One point worth noting is that the US economy was in severe recession at the onset of economic crisis in 2008 whereas both China and Germany did not have a similar issue. Even a high school student will tell you not to ask US economists for advice but instead adopt a combination of the German and Chinese economic models.

Despite the historic loss of millions of middle class jobs during 2000 to 2008 and job losses related to the record increase in its trade deficit in this period, the US economy kept on booming firstly due to the tech stock bubble and then the real estate price bubble. When the real estate bubble burst in 2008, the Bush administration (and later the Obama administration) had to spend trillions of dollars to prop-up banking and real estate sectors. During the early 1990s and 2000s US economic recessions, the Fed could counter the recession by lowering interest rates, as shown in Chart 6. But the same treatment by the Fed is not working now despite the interest rate having been kept to a historic zero level since the 2008 Great Recession. The reason for its failing is that this time banks are not finding enough people, with good credit rating (as they do not have good paying jobs), to provide loans to. The US economy has a deadly cancer (massive loss of good paying jobs) whereas the zero interest rate is just a pain-killer. The low interest rate is not the cure this time.

The US is a bankrupt country surviving by printing its currency, which happens to be the global currency (read my article The US Dollar – A Ponzi Scheme). The only attacking weapon in the arsenal of the US economists appears to be to increase share prices. At the onset of the 2008 recession, the economies of the East European countries were on the verge of collapse. In an October 2008 speech, Romanian President Traian Basescu pinned the blame on “corrupt” outsiders. He said, “There were smart guys coming to Romania, who had studied at Harvard and Oxford, and they invented how to increase the value of one’s shares without actually having money.” (Craig Whitlock, “Financial Crisis Leaves Romania Reeling,” Washington Post, November 5, 2008.) His statement describes in brief the Reaganomics, the current fundamentals of the US economics. Wall Street has created and sold the US to its Frankenstein China.

Dr Manmohan Singh (previous Prime Minister of India) is credited world-wide for the 1991 economic liberalization of India. Actually, he was forced to do so under the IMF dictates when India had to airlift 67 tons of gold to London to get a loan from IMF to overcome FOREX crisis. I give a “Fail” grade to Dr Singh for his work. Both China and India started their new phase of economic liberalization at the same time, in the early 1990s, but China is now the global economic leader whereas India is nowhere. Yes, the growth rate of India in last couple of years is the highest in the world but it is vulnerable to economic collapse, due to an economic crisis as a result of generating trade deficits year on year. For 15 years out of the 25 years since economic liberalization, Dr Singh was at the helm of the government to steer the Indian economy: first five years as Finance Minister and then ten years as Prime Minister for two terms. People blame high crude oil prices for the economic crisis during 2011-13, a time when economists were writing obituaries of the Indian economy (read: "None of the experts saw India's debt bubble coming. Sound familiar?", The Guardian, UK, August 26, 2013; "‘Fragile Five’ Is the Latest Club of Emerging Nations in Turmoil", New York Times, January 28, 2014), but blame “lies” on Dr. Manmohan Singh who did little to try to turn perennial trade deficits into trade surpluses. Due to the record trade deficit during 2011-13, the exchange rate of India’s rupee (vis-à-vis the US dollar) tumbled from 44.17 in April 2011 to 62.92 in September 2013. One point worth noting is that Russia and China were not included in the new club of “Fragile Five”. Both Russia and China have been running trade surpluses since the early 2000s. Had high crude oil price persisted for a couple of more years, it was certain that India would have had to go to the IMF to take loan, which would have destroyed the Indian economy for next decade or longer, due to the IMF’s bitter medicine of getting rid of subsidies to balance the budget, significant increase in the interest rate, and selling the crown public sectors to Wall Street bankers at throwaway prices.

Table 1 World Export Market Shares of Goods and Services 2000-2008:
(Data source: World Economic Outlook which is published twice a year by IMF):

Table 2 World Export Market Shares of Goods and Services 1970-1999:

Chart 1 US Monthly Balance of Trade (1975-2017):

Chart 2 US Share of World Exports:
(Source: “Why Is the U.S. Share of World Merchandise Exports Shrinking?,” Benjamin R. Mandel, Current Issues in Economics and Finance (Federal Reserve Bank of New York), Volume 18, Number 1, 2012,
accessed at: https://pdfs.semanticscholar.org/a7e5/df2ffaa6e85d45856f7f0a98f048286c543c.pdf)

Chart 3 US Trade Deficit with Various Countries (in USD billions):

Chart 4 The 20 Countriers with the Highest Trade Surplus in 2015 (in USD billions) :
(source: https://www.statista.com/statistics/256642/the-20-countries-with-the-highest-trade-surplus/)

Chart 5 Largest Trade deficit by Country (in USD billions):
(source: http://www.worldsrichestcountries.com/trade-deficits-by-country.html)

Chart 6 US Fed Rate:
(Source: http://www.macrotrends.net/2015/fed-funds-rate-historical-chart)

Susmit Kumar, Ph.D.

Published at South Asia Monitor on May 1, 2016

During World War II, only the US and UK deliberated about the future of global economy, culminating into the 1944 Bretton Woods Accord. At that time, entire Europe was under Hitler and countries like India and China did not have any economy to have a say in the Accord. Under British Plan, which was rejected, there would have been one Global Currency (say Bancor) manage by an international bank and also an International Clearing House to oversee export and import of each country. 

The British team was led by none other than John M. Keynes, a genius in economics. Keynesian stimulus plan is named after him. That “neutral” world currency would be exchangeable with national currencies at fixed rates of exchange. Under Keynes’ plan, both debtors and creditors would be required to change their policies. A country with a large trade deficit would pay interest on its account and devalue its currency to prevent the export of capital. On the other hand, a country with a large trade surplus would increase the value of its currency to permit the export of capital. 

A country with a Bancor credit balance more than half the size of its overdraft facility would be required to pay interest on it. Keynes went so far as to propose the severe penalty of confiscation of surplus if at the end of the year the country’s credit balance exceeded the total value of its permitted overdraft. But the US was able to impose its dollar as global currency, as UK was entirely dependent on US, even for food. It also created institutions like IMF where nothing can happen without the wishes of the US. In IMF, nearly all decisions require 85% vote and US, with 16.72% vote share, is the only country which has more than 15% voting share with Japan being the 2nd largest with 6.56% vote share.

Till now taking advantage of dollar being the global currency the US has been funding its twin deficits – trade and budget deficits, by printing its currency whenever it wants. The United States imports goods and services from other countries by simply giving them pieces of paper i.e. dollars. Countries like India, Brazil and South Africa have to “earn” dollars to pay for their imports whereas the US has to just “print” the dollar to pay for its imports. In return, the manufacturing and service-providing countries deposit majority of the same pieces of paper in the United States. It is nothing but a Ponzi scheme run by the United States. According to economist Allan H. Meltzer at Carnegie Mellon University, “We (United States) get cheap goods in exchange for pieces of paper, which we can print at a great rate.” 

It is a little known fact that the Soviet Union collapsed because it could not get external funding for modernizing its economy under Mikhail Gorbachev’s Perestroika and Glasnost policy. There was drastic reduction is price of crude oil, the main Soviet export, during late 1980s and early 1990s after the end of Iraq-Iran War (1980-88). Crude oil price dropped from an average of $78.2 a barrel in 1981 to as low as $7 a barrel one time. These two factors led to a rise in Soviet external debt. In 1985, Soviet oil earnings and net debt were $22 billion and $18 billion, respectively, whereas these numbers in 1989 were $13 billion and $44 billion, respectively. By 1991, when external debt was $57 billion, creditors, many of them major German banks, stopped making loans and instead started demanding repayments, contributing to the collapse of the Soviet economy. Had oil prices increased, like it did during early Putin administration (2000s) or had German banks financed Gorbachev’s Perestroika and Glasnost like Japan and China financed US debts since 1980s, the USSR and communism would not have collapsed in 1991. 

Unlike the Soviet Union, the US has been getting external funds from Japan during 1980s and 1990s, and thereafter from China, in form of treasury bond investment as well as foreign investments in its private sectors and other government bonds, like Fannie Mae and Freddie Mac bonds. Till last year, both Japan and China had more than $1 trillion US Treasury Bonds, each. Even countries like India and Russia had nearly half of their FOREX invested in the US financial system. 

But in last several years, China has become the number one trading partner, replacing the US, of nearly all major countries. For an example, China has become the number one trading partner with the entire Africa continent. It is using its currency yuan, instead the US dollar, as the mode of transaction with its trading partners. In 2009, only 1% of Chinese trade was in yuan whereas in 2014, 19% of Chinese trade was in yuan. As per HSBC CEO, more than 50% of Chinese trade would be in yuan by 2020. Hence in next several years, yuan is going to replace the US dollar as the mode of transaction in global trade. Describing the stranglehold of China over the US economy, Richard Haass, President on Council of Foreign Relations, a premier US think tank, said: 

"Essentially the U.S. took advantage of Britain's Sterling problem to exercise economic leverage over the British government, and that led to a hasty retreat in the 1956 Suez War (despite defeating the primitive Egyptian army on all the fronts, the invading forces had to withdraw). So one can imagine a situation nowadays, where, say, there is a crisis over Taiwan between the U.S. and China—which holds a significant number of dollars—and one can imagine the Chinese might be prepared to threaten the dollar, make some comments to weaken it unless the U.S. backs off some of its support of Taiwan.” 

In 2009, the Pentagon for the first time held a series of economic war games exercises. The soldiers were Wall Street traders and executives, economists, and academics. The weapons were stocks, bonds, and currencies. The participants were divided into teams: the US, China, Russia, Japan, the EU, and so on. Then the teams were presented with different scenarios—North Korea is imploding, a major global economy is melting down—and told to do what was in their best interests. What the exercises showed was that the United States consistently lost to China in economic warfare. China won, without so much as reaching for a gun. 

After creation of two international financial organizations by China, Asian Infrastructure Investment Bank and New Development Bank (formerly BRICS Bank), the IMF and World Bank, dominated by the US, are bound to lose their status to the former two. Once UK joined the Asian Infrastructure Investment Bank, against the wishes of the US, all Western countries, except the US, Canada and Japan, joined it. Commenting on it, Lawrence Summers, ex-US Treasury Secretary and ex Harvard University President, wrote, “[it] may be remembered as the moment the United States lost its role as the underwriter of the global economic system. I can think of no event since Bretton Woods comparable to the combination of China’s effort to establish a major new institution and the failure of the United States to persuade dozens of its traditional allies, starting with Britain, to stay out.” 

Since last year, China has started to sell its dollar holdings, reducing it to $3.2 trillion from near $4 trillion, as per its plan to get rid of dollar as global currency. It is just a question of time that both the former banks would start to lend money in yuan, leading to the collapse of US dollar status as the global currency. Once the US dollar loses the status of global currency, the US economy would collapse in the same way the Russian economy collapsed in late 1980s. But China would not be able to impose its will on the global economy. Instead the collapse of US economy would lead to the global Great Depression. The world will not have an option but to implement the British proposals during the deliberation before the signing of 1944 Bretton Woods Accord.

Copyright Dr. Susmit Kumar 2016
susmitkumar.net

Mass Capitalism; A Blueprint for Economic Revival. Apek Mulay. Book Publishers Network, 2014. 242 pages. $15.57 paperback, $9.99 Kindle Get it at Amazon

By Trond Overland

Semiconductor expert Apek Mulay may have been a naughty child. His own mother may or may not agree but Mr. Mulay still appears to be mischievous today. In Mass Capitalism, A Blueprint for Economic Revival, Mr Mulay serves up heavy systematic criticism of capitalism — while promoting “mass capitalism.” Mass capitalism? Everyone knows there is no such thing as mass capitalism. We have private capitalism, state capitalism (as under communism), mixed economy (where private sector sponsors public sector directly and indirectly through such means as employment, taxation, etc.), corporate capitalism, crony capitalism, to name but a few. But we will never have mass capitalism and for a very good reason: Capitalism is naturally limited to economic exploitation carried out by the few on the many.

In fact, everyone cannot perpetrate economic exploitation in the same way as a herd of cows cannot subsist for very long only by drinking the milk of each other. Cows must graze and calves must stop drinking after a while to allow for newcomers — and someone quite different must do the milking and butchering, that is how exploitation of cows goes. Even if one construes a term such as “majority capitalism,” where economic exploitation would be carried out by the many on the few, it would be a misnomer. Such a system cannot sustain, at least not over time, let’s say for more than a few minutes, as there simply would not be enough genuine source material to be exploited by the disproportional (majority) number of exploiters. This is the reason pyramid schemes invariably collapse, and sooner rather than later. So what does Mr. Mulay mean by mass capitalism?

Alas, it appears that the imaginative Mr. Mulay is not alone but in cahoots with the spirited economist Ravi Batra, Professor of Economics at Southern Methodist University, Dallas. The latter is the actual coiner of the term mass capitalism. When employees own the majority of shares in large companies and private property on a massive scale, it is mass capitalism according to Dr. Batra.* Similarly, Mr. Mulay suggests a system “that would lead to free market reforms, enabling capitalism to work for the masses, and would take the US semiconductor industry to the next level of innovation and financial success.”

Then what is their mass capitalism actually? Mr. Mulay reveals to us that it is nothing but a pseudonym for PROUT, the Progressive Utilization Theory. It is well known that American policy makers and most of the public and the media are wary of the term “socialism” in the same way as a hyperallergic person is wary of fiendish allergen. So while PROUT´s founder Shrii Prabhat Rainjan Sarkar dubbed PROUT “progressive socialism” (while dismissing capitalism to the scrapheap of destructive and useless systems), Mr. Mulay goes along with Dr. Batra´s local market plan.

PROUT postulates that no one should be allowed to accumulate physical wealth without the permission or approval of society. This is its first fundamental principle. Its scientific base is that physical wealth is finite whereas human urge is infinite, and therefore accumulation of physical wealth must be limited in the interest of all, while accumulation of mental and spiritual wealth should be unlimited. Becuase of the inherent limitedness of all things physical, capitalism in any form and shape can never sustain.

There is no way we can call PROUT capitalism; PROUT is not a system of private capitalism and it is also not state capitalism, it rejects economic centralisation and promotes economic decentralisation. Since the picture of Shrii Sarkar adorns the book´s dedication page, and PROUT is the ideological focus of the Mr. Mulay´s work, it seems only right to emphasise this point.

Is Batra and Mulay´s mass capitalism only a contrived selling point then? Yes, in all probability. Since the beginning of the semiconductor race, the US has been the leader of the pack, with Intel, Qualcomm, Texas Instruments, Broadcom and Micron Technology claiming nearly one third of the global market share at present, while the combined force of South Asian giants Samsung and Hynix (South Korea) and Toshiba and Renesas (Japan) amounts to less than 20%. Mr. Mulay proves to be a strong advocate of the US sustaining and even increasing that share – by “mass capitalism.”

All in all, Mr. Mulay´s work offers a great view from the American standpoint. As is common knowledge, all indications are that the Western economy is in for a very rough ride, in particular because the Western individualised world has sacrificed so much of its social, cultural, and industrial base to external interests, and in the process has outsourced large chunks of its technical skills and knowhow to foreign agencies and lands. Life on other continents on the other hand seems to have retained more of a traditional structure. Therefore it seems probable that a sinking global economy and the eventual collapse of capitalism as we know it would harm the First and Second Worlds infinitely more than the Third. It is therefore not inexplicable that Mr. Mulay and Dr. Batra find it opportune to stimulate a will and sentiment to do something radical about the impossible situation of their (new) country and economic sphere.

The author´s solid background in the semiconductor industry, and his lofty vision of an economic and industrial system based on PROUT is instructive at a time when our very survival is in need of a new paradigm that can carry it forward into a world of numerous new beginnings. Thinkers and activists, also from other parts of the world, would be able to draw lessons from Mr. Mulay´s patriotic fervour based on his methodical professional and systemic analyses and syntheses.

* Statement in interview with New Zealand National Radio, 5th November 2011, http://proutglobe.org/2012/03/ravi-batra-predictions-and-politics/ (sourced: October 8, 2014).

By T N Das

“PROUT involves a revolutionary transformation of the world and mystical love involves the merger of both in the inundation of Bliss or infinite happiness. In this article we will explore the roots of economics by examining the meaning of the English term “economics”, as well as the Sanskrit term artha. Through this we will discover the roots of the PROUT paradigm for the liberation of humanity not just from exploitation, but from limited states of Consciousness and the mind itself.

“Economics is by definition a form of housekeeping. This is why one of the meanings of oikanomia is thrift or prudent and wise use of resources, saving as much as possible in the pre-production and post-production stages. So we can see that economics is essentially part of family dynamics and family growth. Hence economic decisions are then made with the welfare of the entire family foremost in mind. This family includes the animals and even the trees.”

Download the whole article (PDF 7,5 MB)

The upcoming Mass Capitalism: A Blueprint for Economic Revival by Apekshit Mulay offers to solve the economic problems which are threatening the survival of the US and world economy. The  solutions presented in the book would help establish a free market economy. They would lead to a balanced economy, high investments, high growth, and increased motivation for employees to work hard and result in a steady growth in corporate profits.
Click to read more about the book
CLICK TO PRE-ORDER THE BOOK

(PROUT Globe, June 2013) – The gap between haves and have-nots in the Unites States is now so unhinged that researchers find it difficult to fit it with that of other developed nations. A new report from the International Labour Organization shows that U.S. inequality has literally gone off the chart, TruthOut reports.

“Income inequality in the United States is soaring so high, in fact, that the authors of the ILO’s new 2013 World of Work report couldn’t even place the United States on the same graph with the other 25 developed countries their new study examines,” the agency writes.

The last time income inequality in America rose to such heights was at the time of the Great Depression, noted a 2010 U.S. Senate report. The report suggested that high levels of income inequality may precipitate economic crises, and that income inequality may be part of the root cause of the 2008 Great Recession.

See an informative video on the present income inequality in the U.S.

Little has changed since in terms of government income policy. In an interview with PROUT Globe last year, Proutist economist Ravi Batra stated that the wealth gap “is conscious government policy. The sad part of it is that it reflects political corruption. Anything that reduces labor demand will reduce the real wage and reduce people’s salaries.”

PROUT’s solution

In its effort for creating a dynamic and just economy, PROUT focuses on the surplus available to society after the minimum necessities have been supplied to all. By fixing both a ceiling for maximum salary and private property, as well as a minimum wage, a surplus will be available for further distribution to the meritorious. This factor, the allocation of incentives for further dynamics among the meritorious after first having secured basic necessities for all, is called atiriktam in the PROUT system.

“For long, economic efficiency and fairness have been regarded as two separate issues. Many have argued that economists should not even consider equity at all,” notes a recent book on PROUT, After Capitalism, Economic Democracy in Action.

“Atiriktam resolves this dilemma both logically and morally,” argues the book. “PROUT asserts that the only justification for granting higher income to a person is to reward him or her for providing a greater benefit to society.”

At present in America, inequality is not only “off the chart” but still rising. Income inequality in the U.S. rose during the recession of 2008-2009, and continued rising through the lackluster recovery of 2010-2011.

Read also: The Bubble and the Wealth Gap

By Manas Nandi, India

Every citizen will be given an electronic card for all-purpose purchases. Government will provide an electronic Purchase Card to a citizen based on his monthly income. The Purchase Card will contain an assessed Purchasing Factor. Purchasing Factor depends on one’s purchasing capacity. Every citizen needs to credit a money balance. The amount of money balance will be credited as per the citizen’s wish and ability. The citizen can credit any value of his money to his electronic purchase card from registered centers. Money filling can only be done from directly debit card to purchase card. Cash money or paper money and coins will be banned to control crimes. How will the registered money filling centers get paid? The centers will be paid by the government on the basis how much money they have filled to citizens’ electronic card. So if a citizen wants to credit Rs. 100 to his electronic purchase card, he needs to visit any money filling centres. He can himself transfer Rs. 100 from his debit card to his electronic purchase card. The money-filling centre will fill exactly same amount Rs. 100 to the citizen’s electronic purchase card. The money-filling centre will not take any charge or any remuneration from the citizen for money filling in return. Rather, the money-filling center will be paid by government at any time on the basis of how much money the center has filled till date.

The money-filling center will have record electronically. Also there will be a check during payment to money filling, if the centre has correct information. The centre can be caught red handed in case of false information. Suppose the money filling centre false claims that it has filled Rs. 1 million to 50000 number of citizens purchase card. The electronic data of money filling centre will be checked electronically with fraction of seconds, if misused is occurred. Because every money-filling is carried out by transfer certain amount of money from one debit card to one purchasing card. The money amount is debited from the debit card and credited on purchase card. Every such transaction will contain the debit card information and the purchase card information. The money-filling centre is basically an electronic machine that facilitates the transfer of fund from one debit card to a purchase card and secondly the money-filling centre contains all the transaction in details and aggregate transaction. So there is no possible for an owner of a money-filling centre to claim more from a government as commission.

Now every citizen have the purchase card. Every purchase will be made only by the purchase card. No cash is allowed to purchase any kinds of things like bus ticket, train ticket, grocery goods, cloths, furniture, hospital bills, electricity bills … any thing. As of now citizens are used to purchase all goods with the help of cash. But, todays article, every body will purchase only with the help of his purchase card. Why such arrangement? This arrangement is made to rationalize the purchase cost. Let me explain it clearly. Any nation has millions of citizens. But, all citizens do not earn the same amount – it should not be same. Income should be different according to one’s labor, hard work, innovative, investment, honesty, skill and qualification. Since income is rational ( in other words income is not equal), so the purchasing capacity should be rational. As of now, purchasing capacity is considered as equal for all citizens. Say, 1 kg wheat costs Rs. 22 for all citizens irrespective of purchasing capacity. It means, a rich citizen can purchase 1 KG wheat at Rs. 22 whereas a beggar has small price to purchase 1 KG wheat because the purchasing price is high for him (Rs. 22 per KG). If the wheat price could have Rs. 10 per KG, the beggar could have purchased it. Hence we need to rationalize the purchasing cost. Purchasing price or purchasing cost should be varied with respect to one’s earning. Less earning less purchasing cost. More earning more purchasing cost. Gradually, it will become more clear.

Table of purchasing factor versus income need to calculated based on the economy

The purchasing factor obviously vary time to time with respect to supply-demand rule, inflation and other relevant economic criteria. How will the table will look like and what should be the working principle? Table : Purchasing Factor Vs Income (Values are arbitrary. Values need to be calculated based on certain economic criteria. The values will vary according to certain economic rules)

How may it be facilitated? Citizen will go for any purchase to a merchant. He will show his card and the merchant will swipe the card and provide him the material. The merchant will know the Purchasing Factor, because as soon as the Purchase Card is swiped, all relevant information such as card balance, purchasing factor, card validity will be displayed. So the merchant will calculate the bill according to above method. During payment the bill amount will be debited from the purchase card. Now, how will the merchant get paid? Every merchant will also have Merchant’s Purchase Card and Selling Card. Merchant will purchase any goods as per standard purchase cost from framers and the producing companies or cooperatives. But the merchant cannot sell his products at standard cost. Why? The reason is already explained above. The merchant needs to sell as per rational selling cost.

Some particular situations arise here:

• The more higher income citizens will purchase from a merchant, the merchant’s earning will be increased and the more poor citizens will purchase from a merchant, the merchant’s earning will minus i.e. the merchant will face a loss.
• To balance it, the merchant will need to produce his selling details such product quantity sold to the government centre. The selling details are also maintained in a card electronically. The government centre will know the selling status and the government will pay the merchant based on how much goods is sold. The calculation to pay the merchant by the government will be:

Merchant payment by the government= (Sold Product 1 Quantity* Product 1 Standard Purchasing Cost + x% profit) + (Sold Product 2 Quantity* Product 2 Standard Purchasing Cost + y% profit) + (Sold Product N Quantity* Product N Standard Purchasing Cost + z% profit).

Ex. Suppose a grocer has sold out in March 2013 the following:

100 kg wheat
200 kg rice
10 tooth paste
10 soaps.

The grocer has purchased the above items from a company at standard purchasing cost as per following:

Wheat = Rs 20 per kg
Rice = Rs. 30 per kg
1 tooth paste = Rs. 25
1 soap = Rs. 15.

Different product has different profit percentage. Say for wheat it is 20%, rice it is 15%, toothpaste it is 20% and soap it is 10%.

So the grocer’s total purchasing cost from the company = 100 kg wheat * Rs. 20 + 200 kg rice * Rs. 30 + 10 tooth paste * Rs. 25 + 10 soaps * Rs. 15 = Rs. 2000 + Rs. 6000 + Rs. 250 + Rs. 150 = Rs 8400/-

Now after selling above quantities, the government will pay the merchant:

100 kg wheat merchant payment= Rs. 2000 + Rs. 2000*0.20= Rs. 2000 + Rs 400= Rs. 2400.

200 kg rice merchant payment = Rs. 6000 + Rs. 6000*0.20 = Rs. 7200
10 tooth paste merchant payment= Rs. 250 + Rs. 250*0.20= Rs. 300
10 soaps merchant payment= Rs. 150 + Rs. 150*0.10= Rs. 165.

So total merchant payment by government= Rs 10065.
So total merchant’s profit= Rs 10065 – Rs. 8400 = Rs. 1665.

In this way the purchasing price remains rational. The merchants are paid with profit. Income of merchants are visible to the government. The merchants can not cheat customer as well the merchants can not can not hide their income tax and their other relevant taxes.

The merchant is also a citizen. So depending upon his monthly net profit he will also hold a purchase card for his family. He will get same benefits like all other purchase card holders. Remember, purchasing card is for purchasing family goods and items for personal and family use. Whereas, a merchant uses different card called Merchant Purchase Card for purchasing goods for business. And merchant uses Merchant Selling Card for selling the goods.

Moreover, those who hold negative purchasing factor, government allow themselves to purchase products in less price. These low cost products should be labeled properly so that they cannot sell it further. Suppose a citizen has below Rs. 1000 monthly income. So his purchasing factor is minus ½. So he can but product at half cost. These negetaive price products must be labeled in such as way so that every body will understand that these are negative purchasing factor products and cannot be sold further.

As cash money and coins are banned, then how your friend will lend some money from you in case he has shortage of money in his debit card. It is simple to lend a person some money, it can be done through fund transfer from your debit card to your friend’s debit card.

If cash money and coins are banned, how will a day labor get paid? The day labor will also have a debit card, so his debit account will be credited with his wages by fund transfer.

Furthermore, in this way false billing can also be restricted.

Author’s blog:
http://devoteesofshriishriianandamurti.blogspot.in/2013/04/rational-purchasing-cost-for-all-goods.html

Copyright The author 2013