Articles

Cost of Living: Monetary & Fiscal Policy

Date: 26th June 2018

Contrary to popular belief, population is not the reason behind increases in cost of living. Rises in Petrol/diesel prices are more due to policy rather than a reduced supply of oil. Owing to new technology more oil is being discovered everyday. Most politicians do not know how it works. Cost of living, today, is a direct result of Monetary and Fiscal policy. RBI sets Monetary policy. It’s responsible for regulating the money supply and interest rates. Govt. sets fiscal policy where taxes, budget and other spending are covered. GST is Fiscal policy. Demonetization is Monetary Policy.

Tweaking Monetary policy can be used occasionally to stabilize and help the economy but it's overuse has always lead to abuse. Fiscal policy by corrupt and incompetent rulers is leading to cronies looting public wealth. Simultaneously causing a huge increase in public debt which in turn will lead to increased taxes. Cost of living increases means a devalued rupee which means that there is lesser value for a man’s work each day. Houses are now being bought as a profit making commodity making them even dearer to the much needed low-income families.

Great Recession in 2008 was caused by Monetary and fiscal policy; With no correction to the course the same failed policies are continuing worldwide.

The entire video is added below.