Solutions to Change

By Deepthi Mary Mathew* The world has witnessed two major economic crises over the last decade – Sub-prime and Euro zone crises. These periods witnessed a string of discussions and debates aimed at lifting the ailing economies out of the crises. Keynesian economics that lost its glory during the 1970s returned to the centre stage. The central banks in the crisis-hit countries resorted to unconventional measures and started pumping money into the economies. From ‘Quantitative Easing’ to ‘Helicopter Money’, we were introduced to different concepts, while capital was flooded to financial institutions. The result was a sudden movement of capital between the countries in search of maximum returns. Consequently, there was huge instability in the currency markets that witnessed sudden depreciation/appreciation of major currencies. Now, the central banks in these economies are in a major dilemma, as the withdrawal of measures meant to combat the crises could possibly lead to another ...

By Rahul V Kumar* The Government of India has decided to phase out the existing higher denomination (500 and 1000 Rupees note) currency from circulation. Many have hailed this decision as an important step to eliminate black money from the system. At the broadest level, I put forward a hypothesis that the decision has many possibilities to strengthen the role of the state. A stronger state has its own consequences on individual freedom and liberty. This, in turn, has more potential to create an unstable monetary environment in the long term. Given the distant possibility of a complete wipe out of black money, there are a few immediate considerations that are worthy of analysis. Arbitrary and quick decisions from the side of the government will be carefully observed by the business community. This could lead to precautionary measures adopted by these groups in future to avoid discretionary government decisions like the present phasing out. Arbitrary and dramatic decisi...