Pakistan's Monetary, Fiscal, Commercial and International Trade Issues - Resolved.

[AsifAmeer]

A new prospective at Pakistan’s Monetary and Economic Policies
By Asif Ameer July 11, 2011

The complexities of the International Financial Markets are abstract by nature but the underlying principles are very simple - Lower the supply, higher the price and vis-versa. Combine this simple rule with the fact that the Government will leave no resources unwasted. The Private sector will always be more efficient (provided there is healthy competition) than the Government. Example is the explosion of the Mobile Phone market after the privatization of PTCL. Combine these simple common- sense ideas and we have laid a sound framework of our Economic Model.

National Sovereignty:

With that said, let‟s put our prospective on the word Sovereignty in terms of Economics.

Sovereignty gives a sovereign Government

• The right to issue and maintain its own currency.
• Taxation
• Regulate International trades as its agenda dictates (For e.g. Pakistan wouldn‟t sell arms to India)

Money is the medium of trade and the most important aspect of the economy. Almost every empire has failed by mismanaging its money supply. Money shares the same market principles – scarce supply higher its value. Issuing money against thin air dilutes the currency. This is the most dangerous form of taxation. This is taxation via inflation. Taxation of this kind effect reduces commerce, encourages hoarding and puts an unfair burden on the already struggling class. Today in principle, Pakistan Government prints against its foreign reserve balance – The US Dollar. Dollar itself is created out of thin air. Key to a stable economy is its stable currency.

Even in principle, the foundations are flawed. Treating the US Dollar as the foreign reserve currency goes back to the Bretton Woods agreement when the dollar was backed by Gold. West Germany was the first country to withdraw from this agreement after the „Gold window‟ was closed. This action alone translated into West Germany‟s signs of economic improvement in a matter of three months.

The government has it wrong on both fronts – Money Supply and Taxation. The Pak Rupee was being backed by Gold via the US Dollar till 1971. It needs to be put back to the Gold standard to bring in confidence and stability. Gold cannot be printed but minted. This alone will stop the Government‟s runaway spending.



Implementation of the Gold Standard:

Last year, Pakistan booked US $ 17 billion in its foreign reserve. These reserves, that are bought via valuable Exports (Cotton, Wheat, Fish, Fruits, Vegetables, etc), in return Pakistan gets fiat US Dollar which then the Pakistan Government leverages to get more debt from IMF, a subsidiary of the US Federal Reserve, to entertain its bureaucracy. With the way relations Pak-US relationships have been going, it wouldn't be unwise to dump the US Dollar into the International Market and buy Bullion Gold and Silver from it. Make a Public announcement that every issue currency note of Rs 5000 would be backed by 1gm of 24ct Gold coin. Hence the government would buy back its own Rs 5000 note for 1 gm of 24ct Gold. State Bank should maintain a fixed percentage of Pakistan‟s GDP in Gold reserves. Then default on all its existing international debt. There is nothing immoral about it. World Financial Institutions knowingly financed Pakistan Government‟s bureaucracy, not its infrastructure. Iceland defaulted too. Sure it was painful in the short run but they have already been upgraded by Fitch Rating Agency and the World Bank, the same institutions that promised doom and gloom if Iceland defaulted.

In the meantime, impact of moving to the Gold Standard would change the realities on ground. Imagine going out for grocery and realizing that price of rice, atta and daal have fallen 10% because Gold prices went up compared to the food prices. Electric rates are falling because natural gas and Oil prices are stabilizing. Removal of inflation would fix hoarding of goods.

From an international prospective, putting the Pk Rupee on the Gold standard would guaranty a huge influx of foreign capital. Returning monetary and currency stability would immediately bring help the Pk Rupee appreciate, cause commodities prices to fall, reducing inflation.



Taxation and Government spending

Along with a strong currency policy agenda, the Government would need to implement fair taxation for the social welfare of the nation. Taxation is best divided on 3 levels

• Fixed Tax % on the income side – this covers the higher income bracket
• Fixed Tax % on consumption – this covers the lower income bracket
• Imports Tax – to regulate foreign trades and policies
• Set up Bait-ul-Maal – discourage idle capital and provide safety net for the society.

Government should not spend any more than what it collects in via taxes. Direct taxation is the only form of representative taxation, unlike inflation taxation. Just like a common household, Governments should always run a balanced budget. Nor should the Government be allowed to borrow. This would be a steep contrast to the system in place in Pakistan today where prices are fixed for Petroleum to sugar by the Government.

Current conditions are a proof that the status- quo is not working. This will not be easy by any degree because all inefficient systems in the economies will collapse but sounds investments will be made in industries that will no longer rely on Government subsidies. Also this policy will encourage the “roll-up-sleeves and get it done” attitude of the general public. If a Pakistani can work 16 hrs-a-day in a developed country and remit money back to his family in Pakistan, he will gladly work 14 hrs while living with his family. Opening of the markets will also reverse the on-going brain-drain process Pakistan has been witnessing since the 60s.

Above mentioned points cover policies pertaining to Money Supply and Taxation. Implementing just the „Gold Standard‟ will not be enough to fix everything. For the Gold Standard monetary policy to work, the Banking Infrastructure has to be reformed.



Leverage, Credit and Banking:

Any attempt to reform the monetary system without touching the Banking sector would be pointless. There is a practice in the Banking Industry called “Fractional Reserve Lending”. When money is deposited into a commercial bank, it is completely legal for the bank to lend out 15~30 times the deposited amount on interest. If a new bank is chartered with an initial amount of Rs 1 crore, that money can be counted as deposit and now the bank can lend out Rs 15 crore, creating Rs 14crore out of thin air, collecting over 8% on the lent Rs 15crore which would be Rs1.2Crore. Mind it, the initial investment of the bank was 1crore. The bank isn‟t making 8% on the lent money, its making 120% per year on its initial investment.

Not only is it immoral, but this action is a direct dilution of the currency in circulation. This is currency-counterfeiting made legal. If this practice is not outlawed, eventually Private Commercial Banks in Pakistan will asset strip its citizens of every belonging and own the whole nation. This is where banks will end up owning ever ything and the citizen and its government will be owing everything to the banks. Western countries have already started witnessing this cycle. Putting Pakistan back on the Gold Standard would be rendered meaningless if the Private Banks continue to create its own money.

Banning of this practice should include naked short positions in the equity, bond, currency and options markets. These practices are all tied to the Fractional Reserve Lending that causes erosion of private savings and misallocation of resources in the economy. This was the leading cause of the Great Depression in 1930s in US. One wouldn‟t be off the mark to blame the current Global Financial crises on this practice either. This is no different than stealing private property. It‟s not clearly visible because the whole society pays the price via inflation. Banks should also reform how they invest savings. Instead of guaranteed profits (interest), Banks should be encouraged to enter partnership. Ever y entity should have its skin in the game. Western Banking system may be fair for the free-market but not for a free and fair market.



Fallacy of Export:


Every major industrial sector in Pakistan aims for the International markets even if there remains a severe shortage of goods in the local market. Profitability dictates business decisions. Accept it as a part of life. Fleeing goods from the local market further causes inflation. In return for goods, Pakistan receives inflation by injection of dollar liquidity into the State Bank which pays the exporters in Pak Rupee. Exports do not help Pakistan where it stands today. It is productive to export products with deflationary pricing trend in the local market. With this in mind, everything disqualifies for export in the current market situation. Also Export transactions should be settled in Pak Rs only. Case against importation of Consumer goods is just as strong. This excludes basic necessities. Importation of Capital Goods may cause cyclical deficits but has higher returns for the long time. Taxation and tariffs should be used to accommodate this policy.



A Welfare State:

The concept of Government and its role has varied over time and over culture. It always best to keep ideas simple and avoid abstraction. Governments are nothing more than Home-Owner- Association (HOA) or a „Maintenance Committee‟. The Association or committee can only work with the funds it has. Providing welfare is essential but it should only be based on a balanced federal budget. Implementing welfare policies on financed budgets is simply an accounting fraud on the nation because it will eventually result in inflation, asset pricing bubbles and so on. Whatever the Government decides to provide for its people, those services have to be funded
with direct taxes. The concept of Welfare comes from Islam. But the concept of clarity and cleanliness, especially financial clarity and cleanliness is a big part of Islam as well. Without financial clarity and cleanliness, a welfare state is a failed idea. Issues should not be politicized or funds would not remain in economic grounds, but it would breed a rent-seeking atmosphere.




Status Quo:
There are basically two political parties in Pakistan that I have witnessed during my childhood.
1. Roti, Kapra aur Makaan.
2. Karz utaro, Mulk Sawaro
Mere bhai agar kio roti kapra aur Makaan banaye ga he nahi to kahan se ayega Roti Kapra aur Makaan? There were times when PTCL was run by the Government and subscribers had to wait years to get a phone line. Now imagine the Government being reponsible for Roti, Kapra aur Makaan. Let the People of Pakistan maintain their dignity. Thanks but no thanks!
About the other slogan, how can a Government achieve “Karz Utaro” by importing millions of imported Hyundai, creating trade imbalances and Federal Deficits? Mulk Sawaro” - How can a country flourish when its budget is being designed by the IMF - a subsidiary of the US Federal Reserve, World Bank - a subsidiary of the US Federal Reserve, and Charter Accounts working private banks (For E.g. Citibank - a subsidiary of the Federal Reserve) Whose interests will these institutions maintain?



The Role of Media:

Speaking to a few politicians, I come to find there are 3 types
1. Those don‟t understand the matter.
2. Those who get it but its against their interest
3. And those who get it but feel the political cost is too high to speak of these issues, let alone working on implementing them.

Sorting out technical issues in Finances and Economics was never a challenge for the human mind. It‟s the alignment of difference of interests and opinions that causes the rift. The media has a very responsible role in this regards. Atleast one media channel should be created and maintained via public and private donations to foster non-politicized education on Science, History and Economics. Afterall, without education, we are only social animals.

[TABLE="width: 100%"] [TR] [TD]http://tinyurl.com/pakgoldstandard

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Asif Ameer is a concerned ex-pat Pakistani. He doesn’t hold an MBA from Cornell nor does he share views of conventional economists.

 

[ealtaf]

A new prospective at Pakistan’s Monetary and Economic Policies
By Asif Ameer July 11, 2011

The complexities of the International Financial Markets are abstract by nature but the underlying principles are ver y simple - Lower the supply, higher the price and

vis-versa. Combine this simple rule with the fact that the Government will leave no resources unwasted. The Private sector will always be more efficient (provided there is healthy competition) than the Government. Example is the explosion of the Mobile Phone market after the privatization of PTCL. Combine these simple common- sense ideas and we have laid a sound framework of our Economic Model.


National Sovereignty:

With that said, let‟s put our prospective on the word Sovereignty in terms of Economics.
Sovereignty gives a sovereign Government
1. The right to issue and maintain its own currency.
2. Taxation
3. Regulate International trades as its agenda dictates (For e.g. Pakistan wouldn‟t sell arms to India)

Money is the medium of trade and the most important aspect of the economy. Almost every empire has failed by mismanaging its money supply. Money shares the same market principles – scarce supply higher its value. Issuing money against thin air dilutes the currency. This is the most dangerous form of taxation. This is taxation via inflation. Taxation of this kind effect reduces commerce, encourages hoarding and puts an unfair burden on the already struggling class. Today in principle, Pakistan Government prints against its foreign reserve balance – The US Dollar. Dollar itself is created out of thin air. Key to a stable economy is its stable currency. Even in principle, the foundations are flawed. Treating the US Dollar as the foreign reserve currency goes back to the Bretton Woods agreement when the dollar was backed by Gold. West Germany was the first country to withdraw from this agreement after the „Gold window‟ was closed. This action alone translated into West Germany‟s signs of economic improvement in a matter of three months.

The government has it wrong on both fronts – Money Supply and Taxation. The Pak Rupee was being backed by Gold via the US Dollar till 1971. It needs to be put back to the Gold standard to bring in confidence and stability. Gold cannot be printed but minted. This alone will stop the Government‟s runaway spending.



Implementation of the Gold Standard:

Last year, Pakistan booked US $ 17 billion in its foreign reserve. These reserves, that are bought via valuable Exports (Cotton, Wheat, Fish, Fruits, Vegetables, etc), in return Pakistan gets fiat US Dollar which then the Pakistan Government leverages to get more debt from IMF, a subsidiary of the US Federal Reserve, to entertain its bureaucracy. With the way relations Pak- US relationships have been going, it wouldn‟t be unwise to dump the US Dollar into the International Market and buy Bullion Gold and Silver from it. Make a Public announcement that every issue currency note of Rs 5000 would be backed by 1gm of 24ct Gold coin. Hence the government would buy back its own Rs 5000 note for 1 gm of 24ct Gold. State Bank should maintain a fixed percentage of Pakistan‟s GDP in Gold reserves. Then default on all its existing international debt. There is nothing immoral about it. World Financial Institutions knowingly
financed Pakistan Government‟s bureaucracy, not its infrastructure. Iceland defaulted too. Sure it was painful in the short run but they have already been upgraded by Fitch Rating Agency and the World Bank, the same institutions that promised doom and gloom if Iceland defaulted. In the meantime, impact of moving to the Gold Standard would change the realities on ground. Imagine going out for grocery and realizing that price of rice, atta and daal have fallen 10% because Gold prices went up compared to the food prices. Electric rates are falling because natural gas and Oil prices are stabilizing. Removal of inflation would fix hoarding of goods. From an international prospective, putting the Pk Rupee on the Gold standard would guaranty a huge influx of foreign capital. Returning monetary and currency stability would immediately bring help the Pk Rupee appreciate, cause commodities prices to fall, reducing inflation.



Taxation and Government spending

Along with a strong currency policy agenda, the Government would need to implement fair taxation for the social welfare of the nation. Taxation is best divided on 3 levels
1. Fixed Tax % on the income side – this covers the higher income bracket
2. Fixed Tax % on consumption – this covers the lower income bracket
3. Imports Tax – to regulate foreign trades and policies
4. Set up Bait-ul-Maal – discourage idle capital and provide safety net for the society. Government should not spend any more than what it collects in via taxes. Direct taxation is the only form of representative taxation, unlike inflation taxation. Just like a common household, Governments should always run a balanced budget. Nor should the Government be allowed to borrow. This would be a steep contrast to the system in place in Pakistan today where prices are fixed for Petroleum to sugar by the Government. Current conditions are a proof that the status- quo is not working. This will not be easy by any degree because all inefficient systems in the economies will collapse but sounds investments will be made in industries that will no longer rely on Government subsidies. Also this policy will encourage the “roll-up-sleeves and get it done” attitude of the general public. If a Pakistani can work 16 hrs-a-day in a developed country and remit money back to his family in Pakistan, he will gladly work 14 hrs while living with his family. Opening of the markets will also reverse the on-going brain-drain process Pakistan has been witnessing since the 60s.


Above mentioned points cover policies pertaining to Money Supply and Taxation. Implementing just the „Gold Standard‟ will not be enough to fix ever ything. For the Gold Standard monetary policy to work, the Banking Infrastructure has to be reformed.



Fractional Reserve Lending:

Any attempt to reform the monetary system without touching the Banking sector would be pointless. There is a practice in the Banking Industry called “Fractional Reserve Lending”. When money is deposited into a commercial bank, it is completely legal for the bank to lend out 15~30 times the deposited amount on interest. If a new bank is chartered with an initial amount of Rs 1 crore, that money can be counted as deposit and now the bank can lend out Rs 15 crore, creating Rs 14crore out of thin air, collecting over 8% on the lent Rs 15crore which would be Rs
1.2Crore. Mind it, the initial investment of the bank was 1crore. The bank isn‟t making 8% on
the lent money, its making 120% per year on its initial investment. Not only is it immoral, but this action is a direct dilution of the currency in circulation. This is currency-counterfeiting made legal. If this practice is not outlawed, eventually Private Commercial Banks in Pakistan will asset strip its citizens of every belonging and own the whole nation. This is where banks will end up owning ever ything and the citizen and its government will be owing everything to the banks. Western countries have already started witnessing this cycle. Putting Pakistan back on the Gold Standard would be rendered meaningless if the Private Banks continue to create its own money. Banning of this practice should include naked short positions in the equity, bond, currency and options markets. These practices are all tied to the Fractional Reserve Lending that causes erosion of private savings and misallocation of resources in the economy. This was the leading cause of the Great Depression in 1930s in US. One wouldn‟t be off the mark to blame the current Global Financial crises on this practice either. This is no different than stealing private property. It‟s not clearly visible because the whole society pays the price via inflation. Banks should also reform how they invest savings. Instead of guaranteed profits (interest), Banks
should be encouraged to enter partnership. Ever y entity should have its skin in the game. Western Banking system may be fair for the free-market but not for a free and fair market.



Fallacy of Export:

Every major industrial sector in Pakistan aims for the International markets even if there remains a severe shortage of goods in the local market. Profitability dictates business decisions. Accept it as a part of life. Fleeing goods from the local market further causes inflation. In return for goods, Pakistan receives inflation by injection of dollar liquidity into the State Bank which pays the exporters in Pak Rupee. Exports do not help Pakistan where it stands today. It is productive to export products with deflationary pricing trend in the local market. With this in mind, everything disqualifies for export in the current market situation. Also Export transactions should be settled in Pak Rs only.




Status Quo:

There are basically two political parties in Pakistan that I have witnessed during my childhood.

1. Roti, Kapra aur Makaan.
2. Karz utaro, Mulk Sawaro

Mere bhai agar kio roti kapra aur Makaan banaye ga he nahi to kahan se ayega Roti Kapra aur Makaan? There were times when PTCL was run by the Government and subscribers had to wait years to get a phone line. Now imagine the Government being reponsible for Roti, Kapra aur Makaan. Let the People of Pakistan maintain their dignity. Thanks but no thanks!
About the other slogan, how can a Government achieve “Karz Utaro” by importing millions of
imported Hyundai, creating trade imbalances and Federal Deficits? Mulk Sawaro” - How can a country flourish when its budget is being designed by the IMF - a subsidiary of the US Federal Reserve, World Bank - a subsidiary of the US Federal Reserve, and Charter Accounts working private banks (For E.g. Citibank - a subsidiary .. do you want to guess?) Whose interests will these institutions maintain?

There is one simple rule that explains politics, economics, social agendas, national and individual priorities - its follow the money. Keep your eyes on the ball or you'll loose the pitch.

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Asif Ameer is a concerned ex-pat Pakistani. He doesn’t hold an MBA from Cornell nor does he share views of conventional economists.

I agree with you on these matters, specially related to money supply and control. Backing of Pak Rs with gold is need to be done, either we are suffering and we will suffer more. Instead I wanted to take it one step further by issuing gold dinars and silver dirhams as currency, complete ban on fractional reserve banking, leaving interest based lending economy to interest free lending economy....

 

[AsifAmeer]

There is some publication work by Frederick Von Hayek titled "Denationalization of Money". That is even better than gold Dinar. Well its actually like gold dinar but supplied by competitive free market! Google it up.
Using that mechanism, I had written an article earlier which NO newspaper wanna touch. You can read it at
http://tinyurl.com/pkresist
Suggestions arent the easiest steps but its better than slavery to the Govt. "Give me freedom or death"

 

[AsifAmeer]

Guys... not even a single question?

It covers issues that Pakistan faces today. It states SOLUTIONS that Pakistan NEEDS today. And no one has a single question?

Sometimes it makes me wonder people dont really wanna help themselves. Here, someone else, who doesnt even live in your country, is trying to explain you, and folks still wouldnt care? Wow.. Do people really want misery just so that they may have something to complain about?

 

[rafay1122]

Hey Asif Salam,

I couldn't reply to your gold card opinion the other day in that thread we were discussing in because I was stuck at work.

That said, I really liked your article and appreciate if you would forward it to PTI on there website.

However, there is a fundamental problem with your article. You see it all sounds good on paper and practically possible too because for 1300 years this was the way Muslims did business. The amount of money you would needed to buy chicken in 632 AD was the same in 1300 AD by some rough margin!

Because you have given a very beautiful solution to the most annoying problem, i.e Inflation.

Inflation is caused because money is just not backed by any proper standard!

That said, problem is you failed to mention the bosses of the monetary system. You have assumed that countries like Pakistan and others have taken this option by choice. See we are forced to use these standards otherwise we are calling for war.

Please refer to John Perkins who himself wrote a book called confessions of an economic hitman to depict how this economic warfare is taking place. He himself was an economic hitman.

The biggest problem is that when money is created out of thin air and is given to govt as debt, the interest payment the government would payback DOESN'T even exists. Therefore its a vicious chain which would never end and so the govt would always be in debt.

Just like whatever happens with US govt in US, they have institutions like IMF and Worldbank that do the job for them and using the same logic have forced countries into debt.

Exactly like you said, Pakistani people are working hard and exporting goods to US but wait a minute; US nevers pays us any money for those exports, infact the money never really leaves their banks, it just gets used to pay our interest that NEVER exists. Therefore, in FY2010-2011, millions of people worked their arse off in Pakistan (and all over the world, even brasil) and never earned anything.

So US has enslaved the world into working for them without ever paying them anything really!

This is the reality my friend and that is why they would take you to war if you try and talk about Gold.

Examples?

Saddam, Qaddafi, Bhutto, Faisal ohh and wait a mintue, John F Kennedy and even Abraham Lincoln.

Acording to John Perkins Iraq is the best example because they first force to ensalve you using research and reports of damn etc and other projects that the country can't even afford and promising money for them and if the country's leader doesn't agrees, than taking him out (Ali Bhutto) and if they can't take him out (Saddam) then go to war with them!

This is the reality my friend. To get out of this vicious circle, we need to think of deceiving them in a similar way with an equally deceiving system that looks equally good on paper but does something else just like they have done it with us and then get our gold standard back.

jzk

 

[charique]

Asif

I agree with most of the points but I think you forgot to mention some of the points which are effecting our economy. These areas includes law and order situation, easy loans, lower interest rate, power outages, gas outages and corruption free atmosphere. These are the problems which prevents investors to invest in Pakistan which causes monopoly and demand and supply formula (which you already mentioned). I think we should resolve the root causes first, which directly / indirectly effecting our economy.

Thanks
Shariq

 

[AsifAmeer]

Asif

I agree with most of the points but I think you forgot to mention some of the points which are effecting our economy. These areas includes law and order situation, easy loans, lower interest rate, power outages, gas outages and corruption free atmosphere. These are the problems which prevents investors to invest in Pakistan which causes monopoly and demand and supply formula (which you already mentioned). I think we should resolve the root causes first, which directly / indirectly effecting our economy.

Thanks
Shariq

Shariq, You are right. My article isnt worth anything without law and order. And sadly, I do not have a solution for that. Maybe a student of LAW should shed some light here.
Your other issues,

• Easy loans
• Lower Interest Rates
• Power Outages
• Gas Outages

I feel they are tied to the Monetary and fiscal policies. ENFORCE the fiscal policy I mentioned. Provide a strong sound currency to the market and see the wonders. Lekin again, my article doesnt even tough the issue of law and order which is a major major issue that has to be adddressed before Pakistan moves forward.

 

[maksyed]

@AsifAmeer , good article ....... but I would not agree with your approach like you criticised all members of the forum (Hopes you wont mind) ..... brother, the best way to attract the people is "YOUR PRESENTATION SKILLS" , if a person good in Accounting,Economics etc but he/she cannot present his informative ideas in an effective an efficient manner then the chance of his/her success is lesser than the person who have an average knowledge but his/her presentation's skills is better than him/her.

I agree with your points & would like to say that the only solution is "ISLAMIC SYSTEM".......well, our major problem for our declining economy is corruption & waving of any sort of tax on agriculture income of our "ZAMEEN DARS" ....

The root cause of failure of any system is the lack of sincerity for the homeland ..... I agree with @charique , about the Law & Order issue .... infact in our country majority of people are in habit to break the law...like they will not follow traffic signals in their country but when they travelled outside they will follow the law because they know if they break the law they will face the consequences but here in Pakistan everyone knows that if they break the law they will use "MUK MUKA" before facing any consequences....

In short, your article is aiming the best scenario ignoring the current issues we are facing since 1948.... as "WE WILL HAVE TO FREE OURSELVES FROM DOLLAR" .... you see ... what they did in LIBYA .....????

Hopes you understand the situation that unless we get freedom from US we will not in a position to maintain our country & economy in a better way .......

 

[Nadeem]

Blah blah blah blah

 

[AsifAmeer]

MakSyed

I have gotten some very amazing questions from you'll. Just like you mentioned here - What do we do with Law and Order. Now I am not a expert in Law but I understand the nature of money and how it moves around in the Market and how it affects behaviour.

Now I am speaking from an Economics point of view. There may very well be much more efficient ways to reduce corruption. Here is how I look at corruption
Corruption = Power = Money
Corruption comes from Power.
Power comes from MONEY.

What if we take money out of Politics and Govt? What if we take away the Monetary rights away from the Govt? What if we take away the right from the Govt to print money? Then the Govt can only spend what it collects in taxes. Now the Govt is FORCED to collect taxes from RICH and poor. Govt is smart enough to know there is no money in the pockets of the poor. So the Govt will HAVE TO go after the RICH because thats where the money is. You see my point? Now who are the rich? ZAMEENDAR, Thekedaar, Jagirdaar!

There is 1 rule in life - FOLLOW THE MONEY.
Use the characteristics of money to achieve your goals.

Now how do you take away the rights from the Govt to issue notes? Simple! Stop using Rupee notes.
http://tinyurl.com/pkresist
http://www.siasat.pk/forum/showthrea...t-for-Pakistan.​

​

@AsifAmeer , good article ....... but I would not agree with your approach like you criticised all members of the forum (Hopes you wont mind) ..... brother, the best way to attract the people is "YOUR PRESENTATION SKILLS" , if a person good in Accounting,Economics etc but he/she cannot present his informative ideas in an effective an efficient manner then the chance of his/her success is lesser than the person who have an average knowledge but his/her presentation's skills is better than him/her.

I agree with your points & would like to say that the only solution is "ISLAMIC SYSTEM".......well, our major problem for our declining economy is corruption & waving of any sort of tax on agriculture income of our "ZAMEEN DARS" ....

The root cause of failure of any system is the lack of sincerity for the homeland ..... I agree with @charique , about the Law & Order issue .... infact in our country majority of people are in habit to break the law...like they will not follow traffic signals in their country but when they travelled outside they will follow the law because they know if they break the law they will face the consequences but here in Pakistan everyone knows that if they break the law they will use "MUK MUKA" before facing any consequences....

In short, your article is aiming the best scenario ignoring the current issues we are facing since 1948.... as "WE WILL HAVE TO FREE OURSELVES FROM DOLLAR" .... you see ... what they did in LIBYA .....????

Hopes you understand the situation that unless we get freedom from US we will not in a position to maintain our country & economy in a better way .......

 

[AsifAmeer]

 

[gazoomartian]

Hey Asif Salam,

I couldn't reply to your gold card opinion the other day in that thread we were discussing in because I was stuck at work.

That said, I really liked your article and appreciate if you would forward it to PTI on there website.

However, there is a fundamental problem with your article. You see it all sounds good on paper and practically possible too because for 1300 years this was the way Muslims did business. The amount of money you would needed to buy chicken in 632 AD was the same in 1300 AD by some rough margin!

Because you have given a very beautiful solution to the most annoying problem, i.e Inflation.

Inflation is caused because money is just not backed by any proper standard!

That said, problem is you failed to mention the bosses of the monetary system. You have assumed that countries like Pakistan and others have taken this option by choice. See we are forced to use these standards otherwise we are calling for war.

Please refer to John Perkins who himself wrote a book called confessions of an economic hitman to depict how this economic warfare is taking place. He himself was an economic hitman.

The biggest problem is that when money is created out of thin air and is given to govt as debt, the interest payment the government would payback DOESN'T even exists. Therefore its a vicious chain which would never end and so the govt would always be in debt.

Just like whatever happens with US govt in US, they have institutions like IMF and Worldbank that do the job for them and using the same logic have forced countries into debt.

Exactly like you said, Pakistani people are working hard and exporting goods to US but wait a minute; US nevers pays us any money for those exports, infact the money never really leaves their banks, it just gets used to pay our interest that NEVER exists. Therefore, in FY2010-2011, millions of people worked their arse off in Pakistan (and all over the world, even brasil) and never earned anything.

So US has enslaved the world into working for them without ever paying them anything really!

This is the reality my friend and that is why they would take you to war if you try and talk about Gold.

Examples?

Saddam, Qaddafi, Bhutto, Faisal ohh and wait a mintue, John F Kennedy and even Abraham Lincoln.

Acording to John Perkins Iraq is the best example because they first force to ensalve you using research and reports of damn etc and other projects that the country can't even afford and promising money for them and if the country's leader doesn't agrees, than taking him out (Ali Bhutto) and if they can't take him out (Saddam) then go to war with them!

This is the reality my friend. To get out of this vicious circle, we need to think of deceiving them in a similar way with an equally deceiving system that looks equally good on paper but does something else just like they have done it with us and then get our gold standard back.

jzk

If you havent already, you should be receiving call shortly from the FedRes of Minniapolis, MN (bigsmile)(bigsmile)

 

[Temojin]

Asif, excellent piece of work there. I exactly wanted you to write this since some good amount of time and there it is.

We can talk about implementations afterwards but this is somewhat a blue print for what should and can be done in this regard. Now even trying to take first steps in this regard might be problematic even threatening for people yet as always said, there is always a first drop and this can be the preparation of that first drop even if many amongst us don't like to call it with the title of the "first drop".

This also further concretes the proof of what has been done during musharraf's era by bringing shaukat aziz in and letting private banks weak havoc in this country.

I know you must have had read this article some times before posting it and even after posting it like an artist looks at his piece of art with love again and again and you should surely be proud of it.

For the mates who want law and order to be the first priority, the stability of law and order situation always comes with a stable economy. We wouldn't have muggers if people are earning the amounts they need or know that even if their earning isn't raised very much, at the least it wouldn't depreciate in the coming 6 months so they can make both ends meet one way or another. Generally we have a misconception about our greed but Pakistanis are a content nation (many might call it names) and believe you me, if it was another country in this situation, there would be riots going on for years now.

 

[AsifAmeer]

Temo,

I actually wrote this article almost a year ago. Even PTI's research team has a copy of this. My views evolve from time to time but the principles do not change. I have only added this this framework. Read up now. I just expanded International Trade, added Role of media and a welfare state. This article was the result of my frustration watching the Pak news. I wrote it, created twitter, FB , siasat.pk , defence.pk account. I even sent it to DAWN. Those jacka$$es chopped off the article & only printed the Gold Standard portion. Now no other newspaper wanna touch it.

Honestly, the article I feel proud of is that "We make it the mighty dollar". This idea is so simple, yet its the key in a floating currency model. Without it, the floating currency model will fail. period! I am going to expand it and explain its implementations in a trade deficit scenario which results in no foreign debt buildup, interest savings on the bridge loans. All at the expense of depreciated Rupee in the forex market.

Asif, excellent piece of work there. I exactly wanted you to write this since some good amount of time and there it is.

We can talk about implementations afterwards but this is somewhat a blue print for what should and can be done in this regard. Now even trying to take first steps in this regard might be problematic even threatening for people yet as always said, there is always a first drop and this can be the preparation of that first drop even if many amongst us don't like to call it with the title of the "first drop".

This also further concretes the proof of what has been done during musharraf's era by bringing shaukat aziz in and letting private banks weak havoc in this country.

I know you must have had read this article some times before posting it and even after posting it like an artist looks at his piece of art with love again and again and you should surely be proud of it.

For the mates who want law and order to be the first priority, the stability of law and order situation always comes with a stable economy. We wouldn't have muggers if people are earning the amounts they need or know that even if their earning isn't raised very much, at the least it wouldn't depreciate in the coming 6 months so they can make both ends meet one way or another. Generally we have a misconception about our greed but Pakistanis are a content nation (many might call it names) and believe you me, if it was another country in this situation, there would be riots going on for years now.

 

[Keepinformed]

The implementation of Gold standard, in my own defense I say that I have not read the entire article, because the belief that Gold Standard is the answer for correcting the evils of inflation is not correct.

Inflation is caused when there is an oversupply of a medium of exchange ie Paper I Owe Yous, and reduction of skill sets in the economy who can create new jobs and thus correspondingly increase the demand of the exchange object (paper).

Worth of an item is determined by its demand. An original picture by Da Vinci would sell for a lot more than its copied versions.

Demand of Pak Ruppee and the resultant decrease in inflation will increase when we have

1. New infrastructure projects (Look at Dubai for example). The gas pipe lines, roads, new schools, shopping malls, mcdonalds, victoria secret outlets (yes we have them here now).

2. Effective Taxation System. Paper money supply is controlled this way and can directly help in the implementation of my point 1 above.

3. Population. This I believe is THE MOST IMPORTANT of all. Majority of Pakistani population is young and skill training is gradually building up and we DO have the man power or the skill set available.

The issues with Pakistan are NOT complex and do not need the injections of fancy ideas of what should be associated with the print of the worth of the money.

To bring about TRUE change of internal demand for the money supply, one needs to CREATE demand and that too massive one.

Create demand by spending money on infrastructure, skill building and then taxation. The biggest of problem of man power is already well oiled up and ready to go.

Watch this episode. This basically sums up what I am trying to put forward

[video]http://www.southparkstudios.com/full-episodes/s13e03-margaritaville[/video]

The need of the hour is not conspiracy theories but just plain and simple hard work on building the buildings.

 

[AsifAmeer]

Didnt know anyone watched South Park in Pakistan! That episode is one of my favorite ones!


Reason why I advocated the Gold standard was 2 reasons
Put a limit to deficit spending
Directly tie up forex pricing into the local market pricing. The faster the pricing adjusts, the better a free market system would work.


Demand is ALWAYS there. ALWAYS. Its the Goods that isnt limitless. Problem is the PURCHASE POWER. And its a big topic to be discussed here. Lekin I have covered the PURCHASE Power issue in this article. The issue of purchase power in the local economy is another issue. Since I do not have immense knowledge of the on-ground realities, I will base my comments on my experience from my trip 2 years ago. The disparity in wages, the class mobility has tied directly to nepotism, corruption, monopolies and the ever expanding weight of the Govt on Pakistan economy.


Pakistan's population is not an asset but a liability. Japan's population is an Asset. German population is an asset. Education makes all the difference.

The implementation of Gold standard, in my own defense I say that I have not read the entire article, because the belief that Gold Standard is the answer for correcting the evils of inflation is not correct.

Inflation is caused when there is an oversupply of a medium of exchange ie Paper I Owe Yous, and reduction of skill sets in the economy who can create new jobs and thus correspondingly increase the demand of the exchange object (paper).

Worth of an item is determined by its demand. An original picture by Da Vinci would sell for a lot more than its copied versions.

Demand of Pak Ruppee and the resultant decrease in inflation will increase when we have

1. New infrastructure projects (Look at Dubai for example). The gas pipe lines, roads, new schools, shopping malls, mcdonalds, victoria secret outlets (yes we have them here now).

2. Effective Taxation System. Paper money supply is controlled this way and can directly help in the implementation of my point 1 above.

3. Population. This I believe is THE MOST IMPORTANT of all. Majority of Pakistani population is young and skill training is gradually building up and we DO have the man power or the skill set available.

The issues with Pakistan are NOT complex and do not need the injections of fancy ideas of what should be associated with the print of the worth of the money.

To bring about TRUE change of internal demand for the money supply, one needs to CREATE demand and that too massive one.

Create demand by spending money on infrastructure, skill building and then taxation. The biggest of problem of man power is already well oiled up and ready to go.

Watch this episode. This basically sums up what I am trying to put forward

[video]http://www.southparkstudios.com/full-episodes/s13e03-margaritaville[/video]

The need of the hour is not conspiracy theories but just plain and simple hard work on building the buildings.