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I studied PPE at Lady Margaret Hall college, Oxford University, and currently work as an Economics A Level teacher. I have also examined several different economic units for Edexcel AS and A2.
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Srinu ji
There is nothing wrong in bonds. Currency is paper, it is govt ‘s promise which convert paper into currency. If govt makes promise in form of deposit certificate on paper or electronically , there is nothing wrong. YOU can compare both with shares of companies. Many years ago shares were available in form of paper. But now these are available in electronic form stored in computers. Yet they represents ownership in company. So brother there is nothing wrong in govt bonds. You can exchange them with currency after certain period.It does not matter they are in paper or digitally stored in computers. Because this does not change there basic character i.e bond holder will receive currency on behalf of these certificates. So you can call them money.
thanks
Dear Raj,
Thank you very much for all your time and effort on replying to me. I appreciate. After reading your reply, I got some “qualitative understanding”. But I am trying to understanding “quantitatively”. After I googled about printing currency, I read an article and found that Govt. will electronically increases the balance in the account of an investor (bank) and the investor owes the Govt the same amount with interest. This is called “Treasury bond”. This looks like 100% scam. Govt has not transferred anything to the investor like Gold or property or any thing quantitatively. If this not scam, then if a computer hacker hacks bank computers and increase balance in his account is not a scam too. Am I missing something here?
Alex
I think these four seems more related with debt problems.
Devalue of own currency can decrease internal debt of govt. If currency is like dollar devalue of currency can also help to decrease foreign debt. Default is generally considered helpful mostly in foreign debt.
Sneha Singh
I think if quantity of export in the world remains same i.e India exports same quantity which today is exported , rate would be not much different. Indian economy will become rich, it depends on how much gold India exports.
Naturally India would get much foreign currency and trade deficit would decrease. This can make Indian Rupees stronger.
Hi!
I have recently read an article stating that “a country has only four options for getting out of a financial crisis: devalue, inflate, default, or deflate”… Would you be so kind to explain what this options comprehend??
Thanks in advance