Thursday, December 30, 2010

An Economical Interlude

Today afternoon when I was aimlessly browsing the internet, my friend pointed me to a website which had numerous articles. Now I'm not a person who reads a lot but that doesn't mean that I read too little either. Then again, I'm not what one would term as a voracious reader. Asking for article recommendations from my friend was met with an opinion to follow my own instinct and choose articles to read. I ended up choosing one on Charity, one on Logic and another on Economy. Very different topics when compared to each other and each had a story of it's own to tell. I was particularly interested in the way the article on Economy was written. It offered a statement from one of the founding fathers of economy and proceeded to debunk the economic myths which are held in great regard as of today.

The article also served to explain the way The Great Depression was handled. The author expressed disappointment that the current state of economic affairs were simply praising the numerous economical myths rather than look at hard factual logic. It had been a bane when The Great Depression actually happened. It created more problems than solve the one problem at large: Unemployment. The author wrote in the article that Jobs are more of a concern today than ever. This is of course the cold bitter truth. The recession of 2008 took the world by storm and proceeded to devastate both the big and the small guys, the former cutting down their monetary expenses and the latter being forced to close down in an unfortunate turn of events due to a financial crisis. Employers who were hiring in droves transformed into Employers who sought to send away people in droves. This gradually had a great impact on the world's economy with every Industry being affected in one way or the other. How many tragedies have we seen on the news depicting suicides over unemployment? The number is depressingly large.

This doesn't mean that the economy was fabulous before the recession though. Some sectors did have a great advantage over others and were booming so much that they were tipped to become bigger in the future. One fact is, no matter how small or how large, in the end every Industrial sector depends on all of the other sectors in a direct or an indirect way. When production is affected in one sector it would slowly begin to affect another unless the rate of production remains constant. Production is also equal to the number of jobs created as well as lowering or increasing the demand of products in the market. As we know, lower production means high demand and with that we encounter an irritable and shady fellow named Inflation. Go down the opposite lane and you would meet his equally irritable but a rather...."charitable" fellow called Deflation. They are equally unwanted as one serves to reduce production and the other proceeds to eliminate demand to such an extent where production creates waste. You would do well to take a trip back to the past and examine and compare the prices of commodities with the present. This would present a very large difference to raise many eyebrows indeed.

The article points out that production is the key to a thriving economy. I'm inclined to agree and at the same time would add that demand along with production is the way towards a successful economy in the future. More demand would mean more production and in turn more production would mean more opportunities thus solving the unemployment scenario. I wouldn't say that production on it's own is incapable of standing up to improve economical conditions. I would place demand as a supporting companion to the main character that is production. At the same time demand is a rather unpredictable character, a double agent like those you see in movies. When demand increases in power beyond the maximum level of production it naturally invites Inflation to the party and wreaks havoc on people, rich and poor. High prices anyone? When it goes down to abysmal levels, it forces production to bow it's head out of the way due to it's creations being shoved onto forgotten shelves. Both tend to disrupt the economy of a nation and in turn invite a third person known as unemployment.

Let me underline the importance of demand with a fitting example. The recent and temporary price rise of Onions in the Indian market showed how demand can eventually overwhelm production. Due to unexpected circumstances, the availability of the number of Onions decreased to such a minuscule amount that prices were raised by a ridiculously large amount. The situation was prominent until the supply was put back into order. Demand is the important piece in the puzzle which constantly changes to bring about radical changes in the economy of any nation. Production is for naught when there isn't a reasonable demand to match up to it since nobody benefits when stuff produced in large quantities is not being sold at all. With this I end my rather amateur musings on the economical climate. This is just a newbie's point of view and you're all free to extend your opinions onto me. Here's hoping for a better future with affordable prices for all. Later then! Have a great time and a Happy New Year everybody! ^_^

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