Government deficit debit and citizen’s concern – Part VII By Dr. Bobby Srinivasan and Dr. Sudhakar Balachandran

April 22, 2015 | Posted by bobbysrinivasan << back to blog

This is an ongoing conversation between a student and his professor.

Student: Professor, I have many questions regarding as to how the government monetizes debt or follow a strict and budget wrenching austerity measures. You also told me that budget tightening could lead to a recession earlier. But tell me what should an average citizen do to protect himself from irresponsible government fiscal and monetary policies.

Professor: Your concern is well taken. If inflation grows unabated, any amount of money saved will not help you retire in peace. You will go broke, run out of money during your retirement. One of the possible solution is to keep buying gold. History has shown that those who bought gold in India have no reason to worry. The government will continue to abuse money by increasing deficit and debt over years. The interest paid by the bank will fall far short and hence will not cover inflation. So one must buy what the government cannot produce and is likely to be in short-supply like land.

Student: All these alternatives are already chosen by smart investors. Is there anything else that will be attractive?

Professor: Yes, of-course. To start with sell the Indian currency in the futures market and buy say dollar. Our contract site is small. So one needs to buy in large quantities like say 1000 contracts amounting to million dollars. But the roll over cost and commission can be expensive. The banks are not suckers ad they want to make money from you and so there is no free lunch.

Students: Are you suggesting that all the knowledge is going to be only academic since I can’t do anything about what the government is doing?

Professor: Yes or no. There is only one option. That is trading. In this you are taking advantage of the volatility. You could use the nifty index to make money. I don’t want to elaborate but I suggest that you take my trading course, attend the class regularly and get involved with real funds and at worst even on a simulated basis.

Student: Is it easy to learn and practice trading?

Professor: Hell no. Learning is one thing; practicing is the other. Practice requires conviction and effort. One need to discipline oneself to participate in the market. Winning and losing are all part of the game. But with training and discipline, one can win most of the times. Overtime I have trained hundreds of students all over the world to do trading. Some have even become huge fund managers. All I can say is that the ball is in your court. Whether you want to participate in the game, it is absolutely your call at this point. I will stop and say Good luck. Keep learning and there is no end to it. Experience has shown that good things happen to people who put in their efforts and commitment.

Student: Thanks you for this interesting and enlightening blogs.

Professor: Thanks for reading it. Bye for now.

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