Currency printing

By jagadish

Countries come into relationship with trade as basis to settle food crisis in their countries

Foreign exchange is kept at 50 rupees which keeps changing every day based upon exim bank

Inflation shoots up 5% annually based upon number of students joining jobs and increasing cash

For every 100 rupees 5 rupees extra you should pay every year

Minimum threshold held by country to gdp growth rate is 45%

For every 100 rupees 45 rupees additional is to be paid every year

Other way to see is

When inflation shoots up from 5% to 10%

For every 100 rupees 10 rupees has to be paid instead of 5 rupees

Which means there is increase of additional 5 rupees paid instead of regular 5 rupees paid

Meaning profit margin has decreased and instead of enjoying 95 rupees as profit

The country enjoys 90 rupees as profit for the inflation shoot up increase from 5 to 10 percent

If threshold is 150 % to gdp growth country has to lose additional 50 rupees to get back 100 rs

If threshold is 50 % to gdp growth country has to lose only 50 rupees and not 150 rupees above

For every 100 rupees earned country loses to outside 50 rupees

For every 100 rupees earned country loses to outside 150 rupees

Hence what to observe is

For every 100 rupees country had profit margin of 50 rupees when threshold was 50%

For every 100 rupees country had loss margin of 50 rupees when threshold was 150%
Country made a profit of 50 rupees for threshold of 50 percent

Country made a loss of 50 rupees for threshold of 150% to gdp growth

Now what happens if inflation keeps on increasing 5% annually

Every year when inflation is 5 %

1st year payment is 5 rupees

2nd year payment is 5.25 rupees

3rd year payment is 5.26 rupees

Which means for 1st year

Financial gain was 95 rupees to every 100 rupees

For second year profit decreased by 25 paisa

Which means profit earned was 94.75 rupees

Inflation shot by 5 % so cost of prices increased by 25 paisa

For third year profit decreased by 26 paisa

Which means profit earned was 94.74 rupees

Inflation shot by 5% cost of prices increased by 26 paisa on third year sequence

Etc etc etc

Suppose for example the inflation is inconsistent

1st year inflation shot by 5 percent

2 nd year inflation shot by 10 percent

3 rd. year inflation shot by 15 percent

1st year profit made is 95 rupees

2nd year profit made is 90 rupees

3rd year profit made is 85 rupees

Hence cost price of goods

1st year for every 100 rupees 5 rupees is profit made

2nd year for every 100 rupees 10 rupees is profit made

3rd year for every 100 rupees 15 rupees is profit made

So from above statement made

County is losing money to outside country as it has to earn less than normal

For every 100 rupees it manufactures in the country it has to forego 5 rupees

Meaning for every 100 rupees it makes profit of 95 rupees

Meaning profit is 5 rupees less than normal

Hence to get back the finance of 5 rupees it has to do double the effort to be in 100 rupees bracket
Projects when taken up in the country

For every 100 rupees country is losing 5 rupees

For every 1 lakh country is losing 5 thousand rupees

For every 1 crore project country is losing 5 lakh rupees

Which means you can’t take up higher end projects when threshold is little bit on higher side

Or within reach if threshold is 45 rupees you can take up projects of magnanimous

But if threshold is 95 percentages to gdp growth rate projects of huge are disadvantageous

If threshold is 150 percentages to gdp growth loss of 50 rupees has to be born for every100 rupees

If threshold is 100 percentages to gdp growth rate profit is seen else loss if threshold crosses 100

If for every 100 rupees due to threshold being 150 50 loss is to be done

Projects are usually cancelled or higher projects are postponed as cost value is huge

If for every 100 rupees due to threshold being 50 50 profit is made on every 100 rs investment

Projects are usually taken up and more profits are enjoyed as threshold is not above 100

Higher projects require threshold to be less to gdp growth rate for countries to take up projects

When threshold to gdp growth rate is higher countries projects to take up is less

Hence inflation is inevitable as job creation is part and parcel of every economy to watch out for

Substitute threshold with inflation you get the same equation

Higher inflation higher threshold profit margin less

Lower inflation lower threshold higher profit margin

Threshold inflation is inversely proportion to projects taken up by country

Inflation 105% loss to country is 5%

Inflation if lesser than 100 say 45% profit to country 55%

Hypothetical case if true a case study of its own

So over a period of time rupee appreciates and becomes 1 rupee

Previously it was 25 paisa

Due to inflation coming into operation

Profit margin has decreased

Previously chocolate was available at 25 paisa is now available at 1 rupee after 5 years of inflation

A child used to pay 25 paisa is now paying for the same chocolate 1 rupee

Why he is paying more

Because of inflation

Circulation of money in the market has increased

Demand for the product has increased

Supply of the product must have decreased

Many causes

So why printing 1 rupee is beneficiary to printing 25 paisa

Printing has nothing to do with usage of currency

Even now country can print 25 paisa today also

But printing 1 rupee is beneficiary as cost of producing 25 paisa is costly to 1-rupee printing

You have to print 4 times to get 1-rupee status tag for every 25 paisa printing

whereas one printing of 1 rupee is enough to waste time and energy and cost of production
why 25 paisa is never to be printed after 5 years of inflation

chocolate to get require 1 rupee

previously it was 25 paisa 5 years back

now it is 1 rupee

5 years back price of chocolate was 25 paisa

3 years back price of chocolate was 50 paisa

Now it is 1 rupee

Which means over a period of 5 years’ profit to earn on chocolate has decreased

Previously 5 years back it was available at 25 paisa

3 years before it was increased to 50 paisa

There has been increase in cost price of chocolate increasing from 25 paisa to 50 paisa

Which means if I sell the product chocolate now at 1 rupee

Cost price being 50 paisa I make a profit of 50 paisa

But when 5 years back cost price was 25 paisa I made a profit of 75 paisa selling at 1 rupee

Which means there has been decrease of profit of 25 paisa because of inflation 5 years later

If I mint 25 paisa now to get chocolate of 1 rupee

I have to mint 4 times to pay 1 rupee because of inflation has risen the cost of chocolate

If I mint 50 paisa now to get chocolate of 1 rupee

I have to mint 2 times to pay 1 rupee because of inflation has risen the cost of chocolate

So me minting 25 paisa or 50 paisa today is not compulsory or voluntary

I am only making my work easy and convenient by directly printing or minting 1 rupee

Instead of 25 paisa or 50 paisa at a stroke

Minting or printing has nothing to do with cost of print

I can even in 21st century can mint 1 paisa and sell it to community

1 paisa is not rare or easy to get because rbi says it so that it has stopped printing 1 paisa

And not available in the market

It is rbi which removed its validity and made it rare

Nothing to do with community rules but banking rules

As it takes to print 100 coins to pay 1 rupee to get chocolate

Because of inflation rbi can’t print 1 paisa as cost of chocolate has increased

Or profit margin has decreased

Or supply demand for the chocolate has decreased increased

Previously it was possible for children to get chocolate at 25 paisa

Inflation shot up because of various reasons and cost price increased

Margin of profit to earn by seller if he sells at 25 paisa even now

When inflation shot up his profit margin decreases

So in order to keep profits same he increases the selling price of the chocolate

He keeps it at 1 rupee previously kept at 25 paisa then 50 paisa respectively

Now if rbi prints 25 paisa even now when it is 1 rupee

The purchaser has to pay 4 coins instead of 1 coin of 1 rupee

In order to not be stupid in the market

Rbi has removed 25 paisa as it is no longer the standard price with which purchases can be made

Issued a notice to the public that from now 1 rupee would be printed and made operational

Hence 25 paisa are now rare to find

1 rupee is common because below it goods value is not there for buyer and seller to transact with

50 paisa can be printed instead of 1 rupee but there is not payment of 50 paisa available

Whatever is available to pay it is above and around 1-rupee coin

If it is 50 paisa coin it is transaction of 2 coins to pay for 1 rupee goods

Hence to make the world easy to transact

Rbi removed it from the market 25 paisa and 50 paisa

Introducing 1 rupee coins for easy monetary transaction between buyer and seller

Would 1 rupee lose its importance or significance

Cost price of goods is more than 1 rupee

Goods available to manufacture increases more than 1 rupee cost price

Then 1 rupee would lose its value

To keep profits same 1 rupee would be substituted

Cost price is more than 1 rupee hence selling price is more than 1 rupee

1 rupee would be removed away from the market

For many reasons when selling price and cost price of products don’t tally at 1 rupee

1 rupee would be substituted and made to grow bigger

1 rupee would be out of production when cost price doesn’t match 1 rupee

25 paisa and 1 rupee and 50 paisa can now also be printed

But it is heavy in pocket size of pants and purses

It is only commonsense to remove it from the market

If kept it doesn’t do any harm but only heavy as products pricing is effected

Margin of profit decreases over a period of time because of oversupply of cash

Methodology by which cost price of product increases is many ways

Once this cost price increases automatically printing and other currencies change

As of now 1 rupee can be printed but not to print it can happen if rbi wishes to
Selling price of goods have to be above 1 rupee permanently

Cost price should never touch 1 rupee and should be above

Printing 1 rupee is emotional drama and nothing to do with financial knowledge

Losing 25 paisa and 50 paisa was rbi decision not to print it

Nothing to do with financial knowledge part

You can print it back if you wish to but no use

Can prices of commodities decrease

it all depend upon printing

if rbi is printing 50 paisa now

commodities can decrease prices

it is companies wish if it has cost price favorable to its side

companies can even now sell items at 25 paisa and 50 paisa

if rbi keeps 1 rupee as standard minimum printing

companies have to forego selling 1 item and must sell 4 items else 2 items minimum

so it is not compulsory to see only 1 rupee printing

any time rbi can print 50 paisa and get it back else 25 paisa back

prices of cost price if it is lesser than 25 paisa

commodities can even decrease their selling price and sell it at 25 paisa now also

inflation is just a hypothetical case of seeing prices of commodities increasing

prices of commodities increase because of cost price and not inflation

inflation only facilitates in increasing certain portion of goods items to increase

if all products to make commodity doesn’t increase even though inflation shot up

commodity can be sold at 25 paisa if cost price is not increasing and company favorable
contracts of countries can become monthly contracts

contracts are signed for a decade , years to sustain

when inflation sets in contracts lose weightage

when threshold increases more than 100 contracts lose their weightage

when threshold to gdp growth is more than 100

projects when taken up huge currency can never be returned back

it only increases every year making payments of balance impossible feat to achieve

if written off bad debts it is loss to the opposite party as goods are not transacted with

contracts keep goods cost price and selling price at a fixed cost for a duration

threshold when increases makes these contracts obsolete

automatically prices of goods fluctuate as projects cost keep changing

both countries become vulnerable as threshold is on higher side

projects which are costlier become much costlier over a period of time

deficit goes on increasing and needs to be decreased

increased deficit eats away the income of the country and money supply decreases

to pay money to outside party interest rates are kept high

contracts become volatile for knowing nothing about inflow outflow of capital

contracts become monthly contracts and finally fail and economy loses support of outsiders

threshold that’s why should never ever touch more than 85% and should be around 45%

thought of the day

currency printing is not compulsory to stop printing something , it can be rejuvenated back to life
END OF CURRENCY PRINTING