INFLATION IN U.S — THE LOOSING WORTH OF ECONOMY

Inflation in a developed country or in a developing country is an inevitable menace. Some nations try to rein the vicious spiral by enforcing strict fiscal measures. Inflation in US has been relatively steady. Though, there have been occasional cases of erratic high inflation, US have maintained a steady inflation rate of 3% for the last 30 years. In India, inflation has escalated to 8% on 30.05.2008.
If we scrutinize the reason for inflation in recent US, we will see that increasing cost of business plays an imperative role. The reason for inflation in US being significantly low is that the people have relied too much on the stock market rumble of the 90s for the supply superfluous cash. US economy says that even 3% inflation has a momentous role to play. US economists say that after 30 years of 3% inflation, one million dollar will buy about $400,000, that means 3% of inflation has already devoured 60 % one million dollar. Though 3% inflation is considered to be manageable, rate of inflation will rise once again, when the majority of the US middle-class will get saturated with debt. This will create an impasse in the sense that it will stagnate the economy until some of the debt is paid.
The recent inflation in US has brought to focus one obvious factor- no stock- even a commodity stock is resistant to inflation. Though gold has managed to make a come back to deal with a price above $700/oz , oil-and- mining put a halt in its drop, resource stock are getting over-heated. This is the case especially with the precious metals like gold and heavy stocks. This calculated fall of dollars is likely to turn into a fiasco. If this is not controlled in time, it will adversely affect the economy. US economists fear that it will eventually take gold near $ 1000 and oil near $100. Gasoline prices have hit up to $3.8 a gallon and diesel price by 64% from a year ago.
Inflation, as Peter Schiff puts it, is America’s ‘greatest export’. The substantial increase in prices of domestic consumer goods is created by the growth in money supply. This is a direct effect of the artificial demand of inflation, which has put more dollars in the hands of the US consumers. In USA, there are two ways open to the US citizens to use up the excess dollars. One- to buy US financial assets and two- to exchange the dollars with commodities like gold or oil. If they exchange it, then it comes back once again to the economy without adding any extra value.
But in the end, let us concentrate on the fact whether low inflation has any effect on the mechanism of business. Though low inflation increases the chance that at some point, the business mechanism will generate deflation, the danger is not great. In fact, deflation and low inflation revolves round the same point somehow. All economists put their belief in the Fisher theory which states that if one can change the average trend rate of inflation and then wait long enough, nominal interest rates will adjust point-to point to the change in the rate of inflation and real rate of interest will return to equilibrium. There is no reason that we cannot rely on this theory since the failure of this theory (if it happens) will only cause a certain degree of wealth to be redistributed from creditors to debtors.

The grotesque attendance

Imagine one typical bucolic scene. Cows and cattle, trees and sheds, vast green stretch of land that concur with the horizon. Now imagine something bizarre - a cluster of young boys and girls amidst these going to school. What drives poor rural students en route for school? If you think that these poor creatures have made up their mind to become ‘Mohan’ (the role played by Shahrukh Khan in the film ‘Swadesh’) of their village, then its high time to ask anyone of them a simple question- why they are going to school in large numbers? The only common rejoin that you will get is that it’s the mid day meals that impel them towards school.
Mid-day meal, the landmark decision taken by the apex court to increase the attendance in school. But how far the decision has been fruitful to drive the students towards school? Let’s take a closer look. The scheme of mid day meal has been on the cards in Madhya Pradesh since 1990s, but was materialized in 2001 with two main objectives- providing nutritious food to school children and increasing the attendance in schools. But almost after eight years of implementation it’s high time to dissect the performance of this. The only trustworthy people who can be banked upon are the students of the school. Let’s go there and ask them.
According to government sources there are some 78,000 government primary schools in 203 backward blocks of all the 45 districts of the state, reports indiatogether. But if you ask the students, the common rejoin you will get is that the food provided to them is neither good nor ample. However these students are lucky enough so as to get at least some crumb of food as government compassion which Kharwahi panchyat of Rampur block doesn’t get even, indiatogether reports. Here the picture has been worst even as the meal here has been stopped since January 2007 due to dispute between teachers. Another thing that fans the flame of disgruntlement is the fight between the teachers to clinch the post of secretary of the schools. This chronic fight creates an annulled post. Adds to this is the shortage of food materials, while the PDS shop cuts a sorry figure with dearth of food supply. Another problem is that the teachers have to spend time from the school schedule to buy stuff for midday meals. In an interview to indiatogether Madhya Pradesh Shiksha Abhiyan (Education Campaign) State Coordinator Avinash Jhade says, "You can get many such cases where mid-day meal was stopped in schools. Mostly due to differences between the teachers. We get many such complaints from all over the state.” More than that the officials play a spoil sport as they always demand a cut from the school they give for the mid day meals. As a result the students suffer. But teachers also sometimes play spoil game. The Block Resource Coordinators who work for the Government’s panchayat give coupons to the teachers at Rs. 2 per students. The teachers then pick up the ration from a local shop but such ration never enters the kitchen and even in some place the teachers sell the mid day supplies in the market and thus earn money. But taking a inclusive vision we get a view - the attendance has really increased. The poverty level has risen to such an extent that even after such a murky experience the students progress towards school. One question arises- if such a scrap of neglect drags the students to school, what do they get at home? Who will say? Who knows?