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Echonomix_01_July 2020
1. ECHONOMIX
ISSUE 01 / JULY 2020
INSIDE THIS ISSUE
CRISIS: TAKING A LOOK AT FAMILY BUSINESSES , INDIVIDUALS, & THE GOVERNMENT/ FOCUS
ON: NATIONAL AND INTERNATIONAL RELATIONS/CALL TO ACTION: BOYCOTTING
CHINA/HISTORICAL ACCOUNTS: HYPERINFLATION IN ZIMBABWE AND GERMANY/THE OPEC
1973 CRISIS/"DEAR MONEY"
2. ABOUT US
03
all the whats, whys, hows and
whens of our journey
THE CASE OF LE
KHANNA
JEWELLERS
06, 07
take a look at a family-run
jewelry business devastated by
the pandemic by Nitin Sehgal
SOME GOOD NEWS
09
we explore how postivity strikes
in the midst of the pandemic by
Riya Gupta
CONSUMER
PERSPECTIVE
12, 13
the voice of a household spender
by Ridhima Agarwal
CRISIS: NOTE FROM THE
EDITOR
04, 05
...and what the issue holds in
store by Mukesh Dharanibalan
INTERNATIONAL
DAMAGES
08
economic and political
consequences of the pandemic by
Vaanya Gupta
HOME GROUND
10, 11
how the coronavirus crisis has
torpedoed the Indian economy by
Amitesh Mohan
THE ANGRY DRAGON
14, 15
what boycotting China could
mean for the Indian economy by
Shaunak Handa
3. WORTHLESS GREEN
16, 17, 18
"DEAR MONEY"
21
an epistolary poem by Riya Gupta
ACKNOWLEDGMENTS
& BIBLIOGRAPHY
24
..cheers!
TROUBLE IN
DEUTSCHLAND
19, 20
historic hyperinflation in
Germany by Sanjali Ladha
THE OPEC 1973 CRISIS
22, 23
...and how millenial defiance
sounds by Saumya Chowdhary
hyperinflation in Zimbabwe by
Ishita Pal
4. ABOUT USECHONOMIX started as a student led magazine, which focuses on
empowering student views and perspectives. We aim at exploring possible
solutions to the worlds problems and give a platform to the students who
wish to voice their opinions. After some careful considerations, Echonomix
is not only for young writers, but for anyone irrespective of age, gender,
cast and nationality, who would like to voice their opinions and ideas.
In a nutshell, Echonomix is us, trying to discuss the resounding ripples that
economic policies create on a global level.
Why Echonomix?
-It is a great platform to get collaborative, financial and
social experience
-Looks amazing on your curriculum vitae if applying for
economics, finance and entrepreneurship related courses,
internships and jobs.
-We are verified officially, so we can rightfully provide our
writers with letter of recommendations for
acknowledgement purpose
-An experience you would not forget if you want to
become a journalist, economist or even a freelance writer.
-Most importantly, the unforgettable and unique support
you would receive and the influential skills you could
develop throughout the collaborative process
03
6. Well of course, a pandemic threatening to hundreds of thousands wasn't enough for our tastes, was
it? March St came with desolate views and emptiness following the lockdown. It would only get
worse wouldn't it, walk further down the road and to your left you see the United States Leaving the
WHO, and to the right India and China Border conflicts, Hong Kong Protests, National Security bills,
and Australia's war against Chinese Technology to name a few. To say the least, we've got a lot to
learn from this singular set of 6 months which would definitely go down in history. This edition aims
to cover the particular implications of 2020’s fabled Pandemic on the global and national economies,
and offer some insight from personalised accounts of businesses, and residential accounts. We really
hope you enjoy the first edition of Echonomix, we've sure enjoyed making it so far, do email us any
queries at echonomix@outlook.com or any feedback you'd have for us, we'd love to see what you have
to say and how we can improve. Of course, Stay Home, and Stay safe, just a little longer.
Well, this has been one fantastic way to start the year and follow through with it as we approach the
midway of the dumpster fire that is 2020. We started with global political tensions and threats of
nuclear warfare, descended into any alleyway full of Australian bushfires then onto a road unseen
since 1918, sending the whole world barrelling into their concrete structures to seek protection
against a nanometer sized organism that threatened the entire planet. Phew.
05
7. This article is from one of the writers who
personally oversees the operation of a
business in Ludhiana, Punjab. He expresses
his views on the situation of operations
under the influence of the pandemic,
particularly the consequences and
repercussions of the lockdown. He gives
valuable insight into the intricacies of
business aspects unique to his field as well
as their expectations for the future of their
business and the industry as a whole. For
context, the institution of nation wide
lockdown measures in India were
established on the 24th of March 2020,
and only partially reopened on June 1st.
The writer denotes his experiences as a
business owner over the course of these
tumultuous 2 months.
THE CASE OF LE
KHANNA JEWELLERS
BY NITIN SEHGAL
"Established in 1928, our family prides
itself on the operation of our jewelry
business, More so as we approach our
Centennial Anniversary in the next 8 years.
After years of persistence and hard work,
our ancestors have built the business from
the ground up, and shaped into the icon it is
today.
For the first time since 1918, A pandemic
has taken the world by storm, and has
throttled the very basis of business and
economics on a global scale. A subset of the
vast spectrum of economic activity, the
jewelry has been hit quite hard by the wave
of infections and the institution of the
national lockdown. Instrumentally
inhibiting basic operations and grinding the
industry to a halt. The gold standard,
adopted by the United States as a peg for
the value of its currency for the largest part
of history, this singular metal has been
widely accepted as the most stable or
reliable option for investment, primarily
attributed thanks to its stable and
concurrent value.
06
8. Despite the millennia of stability, the
pandemic has virtually shattered its
presence, with prices fluctuating, arriving
at an all time high of 4270 Rupees per
gram of 24 Karat Gold. At a time of such
gross uncertainty on the basis of societal
constructs such as currency, more and
more people defect to the metal, in order
to preserve their wealth. A surge in such
demand for gold only results in a surge in
the price of gold itself.
Commonly agreed as one of the most
prosperous times for us Jewellers, the
wedding season was virtually vaporized as
a consequence of the Pandemic and the
subsequent lockdown. Besides the direct
inhibition of business activity, the
uncertainty in consumer confidence only
makes us more doubtful of our reliance or
belief of their spending on Jewelry in the
near future. Will they buy the jewellery?
Will they buy the same amount? How much
are they willing to pay? Are just a few
questions that all of us are asking the
world and ourselves at this point in time.
Industry wide, we expect to face a loss of about
70,000 Crores in Indian Rupees as a
consequence of this pandemic. Most businesses
do rely on seasonal consumption surges, and
being robbed of our wedding season, and
Akshay Tritya does not help our case in
sustaining our operations industry wide. Most of
us don’t know what to expect in the near future
or even after the lockdown. Needless to say,
Jewelry won’t be a priority of the government’s
relief fund or that of people recovering from the
pandemic’s restrictions.
Owning a business at this point of time is
definitely not the best option to consider,
especially non essentials. No one really knows
what to expect or foresee, all we can do is bear
the loss and hope for the best in the future.
07
9. The WHO enables the education of global
health threats, alongside collaboratively
allocating any protective/medical
equipment to facilitate containment and
better prevention against such a threat.
How will they cope without the funding of
the States? How the States will survive
without such a body? These are some
questions on everyone's mind right now.As
a consequence of the waves of laid off
workers spread across the country, many
choose to return home, seeking a more
stable and comforted stay before their
return. Such are being documented as
Official Unemployed. As for the prospects
and eagerness for people to reopen their
business, it’s certainly not going to be all
sunshine and rainbows as people would
want it to be. The lack of workers
considering their emigration to their
hometown, may just starve business
operations in and off themselves. On a
global scale, the IMF estimates the global
economy to shrink from about 1-3% as a
consequence of this singular pandemic.
Amidst the wasteland of damage left in the
wake of this pandemic, the global economy is
inevitably one of the most prominent and
significantly impacted by the lockdown and
pandemic. Considering the largely monetary
based mediums of measurement considered in
economics, this can be most tangibly seen
through rising dollar exchange rates, falling Oil
Prices, and Rising food costs. With more people
demanding the international standard for
exchange, the dollar sees significant
appreciation, while the fall in travel and
transportation represents a slump in Oil
demand and therefore a fall in its prices, at an
all time low (since 2002) of 19.27$ following a
decrease of 6.6% in Demand in the US West
Texas Intermediate. Outside of purely economic
detriments, global tensions continue to rise,
from the recent discontinuation of the United
States from the WHO, as well as conflicts
rampant in Asia ranging from Hong Kong to
India, and China. At such a crucial time with dire
need for global cooperation in combating such a
threat, the withdrawal of the United States,
especially considering its podium stand at the
most cases globally, does not spark any
optimism in the minds of citizens all around the
world.
INTERNATIONAL
DAMAGES BY
VAANYA GUPTA
08
10. The most sensational topic of the new decade,
COVID-19, has sent the world into a position like
none other. A Worldwide pandemic threatening
the basis of the modern status quo, giving rise
to inexplicable dubiousness about the socio-
political and economic atmosphere of the
planet; and the one question that everyone’s
mind: How does a singular microorganism
fundamentally transform the planet. Well,
talking in terms of GDP and GNI, the global
economy is seeing significant downturn, but
these numeric representations do not account
for aspects such as pollution and ecology.
Within such a short time span, levels of
pollution and greenhouse gas emissions have
plummeted in orders of Magnitudes. On paper,
these values would see significant numerical
falls. As the primary priority of most
governments around the world, these falls
result in oversights over some of the benefits
seen globally. Specifically, in reference to Green
GDP. Although hard to quantify, its impacts are
visible on an ecological scale.
"India's GDP growth for the current fiscal is
expected to slow down to 4.8 per cent, a UN
report has said, warning that the COVID-19
pandemic is expected to result in significant
adverse economic impacts globally.”
The NO2 levels demonstrate the extent of the
difference in the air quality around India’s most
prominent Metropolitan cities. The downward
trend following the initiation of the lockdown
measures clearly represent the immediate fall
in emissions.
Beyond these benefits, the planet still depends
on the basic principles of a global economy, and
the acknowledgement of the persistent
downturns in the economy cannot be ignored in
favour of praising a decrease in pollution and
such. Experts estimate that the global economy
could shrink by almost one percent this year
€”0.9 percent €”due to the COVID-19 pandemic,
and world output could contract further if
imposed restrictions on economic activities
extend to the third quarter of the year and if
fiscal responses fail to support income and
consumer spending, according to a new
briefing issued by the United Nations
Department of Economic and Social Affairs
today.
While the whatsapp messages and memes float
back and fro, the silver lining in such turmoil,
serves as an eye opener of citizens of the
world, and especially India, of the stark benefits
of clean, clear, and pure air.
References: EconomicTimes
SOME GOOD NEWS
BY RIYA GUPTA
09
11. In February, COVID-19, a highly contagious virus
first emerged in India. Due to the fact that it has
an unknown death rate and no cure till date, it is
considered dangerous throughout the world
despite having a low actual death rate. This has
not only had an impact on individuals, but has
also created a major crisis in the Indian
economy. At the end of February, India was
considered to be recovering from an economic
downturn due to contracted manufacturing
activity, weakened investments, and lessened
consumption demand. However, this recovery
has not only been halted by the virus, but has
also been reversed.
Unemployment levels have risen as India was
forced to go into lockdown, with the situation
having created an extreme impact on the
overall economy. While several countries have
come up with fiscal and monetary policy
measures, India’s measures seem to be more
monetary, which makes up about 11% of the
GDP, whereas the fiscal measures make up 1.5%
of the total GDP. There have been further
problems as the lockdown has been
unsuccessful in removing the disease, due to
which the exit from the lockdown has been
patchy with no coherent national strategy.
In the month of April, production consisted of only
essential services and goods, but gradually,
manufacturing services have been allowed to open in
May, though unable to operate at full production. The
service sector has been hit the highest, with travel,
tourism and retail coming to a complete standstill.
There has been mass movement of migrant labour
back to their homes in north and east India, and they
are not expected to return for at least 2-3 months.
This has meant that 50% of the economy’s output in
the urban areas has been affected due to the mass
migration..
The situation does not bode well for recovery, as
labour shortages have started to emerge as
businesses try to reopen. Because of the lockdown,
presumed loss of GDP ranges from 25 to 40% in the
first quarter of the current financial year, bringing
India into extreme recession and have gone to the
extent to which India’s full year GDP Growth will
probably be negative, with various financial
institutions now talking about a 5% or higher real
GDP contraction. This is supposed to be the highest
ever contraction on record since India’s
independence.
HOME GROUND BY
AMITESH MOHAN
10
12. Past contractions were driven by the
agricultural sector, but this time, agriculture
is the only sector that has positive growth,
with the manufacturing and service sectors
all having negative growth. Earlier, large
recessions in India were caused by monsoon
failures which often led to political turmoil,
but it is believed that this year, political
turmoil will be avoided and the rural sector
could also avoid recession.
The spike in unemployment is going to hit
urban areas the highest, rising to 25% during
lockdown. There is also a possibility that the
labour participation rates might be reduced
by upto 10% as a result of the loss of jobs
and mass migration.
When it comes to inflation, it might not be
such a huge problem, despite the large jump
in fiscal deficit because of the economy in
depression and social revenues drying up,
because the CPI basket of goods is heavily
tilted towards food and fuel. Strong
agricultural production and low oil prices
may also be able to counter the inflationary
pressure by the large fiscal deficit.
With the low inflation, nominal GDP growth
could be negative for the first time since
independence. The Indian banking system
will especially be vulnerable as Indian
businesses have been hurt badly due to
output loss and the reduction in consumer
demand, which makes up 60% of the
country’s GDP.
Non-performing assets of banks can spike
after the loan repayments moratorium of
companies is removed. Despite the
government’s best efforts to provide credit,
banks may be unwilling to offer credit
expansion to businesses. Consumers which
were powering consumption through NBFC
loans may find sources of credit drying up as
finance companies’ facing credit crunch with
wholesale lending markets having
completely frozen for all but the largest
NBFCs.
The foreign portfolio money invested in INR
denominated debt is also fleeing the country
as the real interest rate becomes close to 0,
driven by the RBI’s monetary policy of
lowering interest rates.
All this adds up to a very frightening cocktail
of economic pain that may take up to two
years to go away. All in all it can be said that
the governments needs to act quickly by
bringing in new and effective policies to
combat this downward spiral of the Indian
economy.
11
13. COVID 19- the dreaded word of 2020. The news
of the Lockdown in other countries before India
didn't mean much to me then. But when it was
announced in India, needless to say it was
torrential. Suddenly everything came to a halt.
Final exams shelved, kids and men at home, and
no house help. The night of 24th march was a
sleepless one. Then came the first day of the
lock down, it was a mad morning, but everyone
in the house did their bit and are still doing that,
the best they can.
Our Relationships with family have become
better, we all work for each other, care for
each other and love each considerably more so,
considering the confines we've all been locked
into, with each other. Cooking together,
mopping together, and watching movies has
become the new norm that most of us can
identify with. Online schooling, and the carrom
& Ludo games keep the kids and the elders
occupied and deviates their minds from the
situation. The Husband and the kids not only
doing their own chores but helping with the
household chores at the same time is an unseen
dream come true for me. We avoid going out as
much as possible, not for ourselves but to
protect our family and others from the
pandemic.
This crisis has made me cautious with my
spending, as I know that the future is uncertain.
The only spending is on grocery and medicines.
Every other expenditure has taken a back seat
as the income is affected adversely. There is a
lot of economic damage, but the fixed bills have
to be paid. We are going back to the basics and
trying to have a sound financial plan.
CONSUMER
PERSPECTIVE BY
RIDHIMA AGARWAL
12
14. Some expenditures are inevitable, but others
we don't require anymore. We don't need to
spend on any kind of socializing, partying and
the collateral damage that comes with it. No
travelling bills to pay, no shopping bills, only
essentials are the need of the moment,
however I do wonder if life will ever get to
normal. Will pleasures like watching movie in a
theatre, expensive salon trips, partying at the
best places, family holidays, shopping for
luxuries be a part of our lives ever again?
The only thought that helps, is that every
person almost all over the world is in the same
situation. Practicing gratitude each day is what
keeps us going. When we watch the news, we
can't help being thankful. This allows us to see
the best in each other and what we have in our
lives. This lockdown has taught me and my
family a lot and has given us a lot to be grateful
about.
Don't know when will things go back to normal,
but what we are optimistic about is that we will
survive this catastrophe collectively.
13
15. THE ANGRY DRAGON
BY SHAUNAK HANDA
With tensions between India and China rising
amidst a global pandemic and border disputes,
many are expressing their anger by pledging to
a movement known as #boycottingChina, but
what would this truly mean for the Indian
economy and Chinese products sold in India?
Over the years China and India have been
prominent trading partners while China has
also served the role of India 's largest trading
partner. However, India buys more goods (India
's imports) than what China does from the
Indian economy (India 's exports). Now you may
ask why boycotting China shouldn 't be the way
forward, but the answer is simple; China is the
worlds largest manufacturer and boycotting it
wouldn 't be as simple as it sounds.
As a result of boycotting China, India will
undergo two drastic changes, it will have to
import the same goods from another country
which would result in a higher price than
before, leading to higher total exports and
therefore reducing GDP. While India can do this
to Chinese goods, the same can be done by
China which can have some adverse effects. Be
that as it may, India 's imports account for
hardly 3% of total Chinese imports and 4% of
total Chinese exports. India on the other hand
gets 14% of its imports from China, while
exporting just under 5%. Some argue that
boycotting China will promote Indian
manufacturers and India will take over, this
however isn 't the case as India does not have
the manufacturing capabilities as China and
boycotting China would only be from an Indian
standpoint and will not affect other countries '
relationship with China.
14
16. INSIDE THIS ISSUE
WHEELS OF THE DAY: TAKING A LOOK AT THE CATERHAS / FOCUS ON ME: PUSHING THE
SPEED LIMIT OF THE TX-29 / LUXURY CARS: THIS YEAR'S GRAND LINEUP / NEED FOR SPEED:
TRAVIS MCGEE'S LAP OF VICTORY / A DEFINITIVE RANKING OF THE BEST TYPES OF PUBLIC
TRANSPORTATION IN THE USA
In addition to this, a handful of Indian
companies have Chinese investments while
many also possessing branches in China. The
Foreign Direct Investment from China into India
has increased 8 times since 2014 with
companies such as Swiggy, Zomato, Flipkart,
Oyo, Ola, Make my trip, and Big Basket being
partially owned by Chinese companies.
While diplomatic relations might not be the
best at this moment in time, the trade between
the two is vital to the Indian economy. Although
some may argue that this is the right thing to do
and must be done to fight China on all fronts,
this does not seem like a wise move for India. I
would recommend to those who are supporting
this movement to rather focus on rather
promoting Indian Goods and not boycotting
China as only when India reaches the
manufacturing ability as China, it can match
China as the manufacturing Goliath it now is
and will be able to face China.
15
17. In the 90s, Mugabe's government
introduced ‘indigenization’ policies
which attempted to create greater
income equality between its people.
This involved land reforms where land
was seized from white farmers and
redistributed among the black ones.
The problem with this seemingly
utopian approach was that some of
them were not skilled farmers let alone
those that took any interest in
maintaining quality output. As a result,
agricultural output declined
substantially. On the other hand, the
nation had to worry about fuelling its
proxy war in the Congo. With mounting
pressure on its banks, Mugabe sought
the printing presses as the answer to
Zimbabwe's worsening fiscal deficit.
“If I was the president of the country, I
would just print more money and make all
problems go away.” Said no one ever.
Except for the former Zimbabwean
president Robert Mugabe. And in a twisted
way, some Money Heist fans who haven 't
seen season 4 yet.
WORTHLESS GREEN
BY ISHITA PAL
16
18. Accompanied by liquid cash, the aggregate demand in the economy
increased as consumers spent their money at an exponential rate to
benefit from the lower prices. This paved the way for demand-pull
inflation. However, inflation levels led to an increase in the costs of
production for firms and the short run aggregate supply was forced to
shift leftward. Workers demanded higher wages to maintain their
purchasing power, fuelling the cost-push inflation. The firms now had
zero incentive to supply as their profit margins diminished. Inflation
also lowered the international competitiveness of Zimbabwe 's tobacco
and several other exports.
Needless to say, debt increased and to combat this debt, the simple-
minded government printed more money. This cyclic policy of printing
more money as a response to debt, shot down any possibility of foreign
direct investment as confidence levels in the economy plummeted.
With high unemployment and high inflation resulting in the drastic
event of stagflation, the economy was in freefall. Stagflation gripped
the economy, and black markets emerged. Soon the money at dawn
possessed about 1/50th of its value by sunset.
17
19. In 2008, Zimbabwe had the second highest incidence of hyperinflation
on record. The estimated inflation rate in November 2008 was
79,600,000,000%. By the end of the year, Mugabe was forced to
legalise transactions in foreign currencies. In 2009, the Zimbabwean
government printed its first 100 trillion dollar bill. As per the Wall Street
Journal, this was worth approximately 5 USD. With Mugabe's
resignation in 2017, the nation breathed a sigh of relief.
When Zimbabwe started experiencing fuel shortages at the beginning
of 2019, its president, Emmerson Mnangagwa doled out faith in the
funds transfer system RTGS (Real Time Gross Settlement) into the
mouth of its starving. With firms once again experiencing a rise in
production costs, the average price levels rose in anticipation of
another economic downturn.
Following an announcement from their Finance Minister in February of
2020, official consumer price index (CPI) figures stood at 540.16%.
Zimbabwe is once again said to be experiencing hyperinflation.
As businesses close down every day, the nation's passport agency has
refused to issue passports till the government clears its debts. It now
takes over a year for the passport of a citizen to be issued. With public
infrastructure in shambles, in addition to its rural population, the World
Food Programme now feeds all its urban areas as well. Electricity is
available for no more than a few hours a day. Workers at the Robert
Gabriel Mugabe Airport use the flashlight on their phones to check the
passports of citizens who long to escape the former “Jewel Of Africa”.
18
20. October 19th 1973. The only thing that even
slightly interests me about the date is the fact
that my best friend's birthday falls close to it.
Yes, I am aware of how millennial that sounds.
Regardless, that date marks the occurrence of
one of the most talked about economic crises,
one that resulted in the quadrupling of oil prices
in the span of a single year: the Arab Oil Embargo.
Tracing back to the origin of the global crisis, at
the heart of this crisis lies OPEC. The
Organization of Petroleum Exporting Countries
currently consists of 13 member states out of
which the largest producer remains Saudi Arabia,
closely followed by Iraq, Iran, Kuwait and U.A.E.
Giving a little more context to the organisation, it
controls about 42% of the world's oil supply,
60% of the world's oil export and approximately
72% of the world's oil reserves.
THE OPEC 1973
CRISIS BY SAUMYA
CHOWDHARY
At the time of the imposition of the Arab
Embargo, there was an ongoing war in Israel
called the Yom Kippur War. Launched by Egyptian
and Syrian soldiers, the war was fueled with the
desire to win back the land won by Israel during
the third Arab-Israel war on the day of Yom
Kippur: a Jewish holy day, also referred to as the
Day of Atonement and arguably one of the most
significant holidays of the faith. This also
triggered massive resupply efforts on part of the
Soviet Union and the United States, an attempt to
back up their respective allies. The US president
at the time was- no bonus points for guessing-
Richard Nixon, arguably not one to hold the best
reputation in office.
19
21. On the 19th of October he requested for a $2.2
billion emergency aid for Israel which prompted
all OPEC nations to collectively institute an oil
embargo on the United States along with a
selective collection of oil shipments to few
consumers in Western Europe and Japan.
During the embargo, adjusted oil prices rose from
$25.97 in 1973 to $46.63 in 1974. Experts go so far
as to also blame the trade embargo for being the
cause of the 1973-1974 recession. Higher gas
prices translated into lower disposable income in
other aspects of consumption which lowered
demand in effect, leading to low consumer
confidence. It was this lack of consumer
confidence that drove consumption down, an
important part of GDP calculations that may have
been the cause of the recession. However, the
embargo may have also played a role in further
promoting US hegemony as later Arab nations
with extensive amount of oil surplus, deposited
the extra oil in US banks which allowed them to
fuel this to developing countries in the form of
aid and thus, establishing the nation as a provider
in times of difficulty, an ally of all nations which
gave the nation the superiority it possess now.
Yes, once again, I am aware of how millennial
that sounds.
20
22. I wanted to explore an epistolary poem and develop one myself, so
I decided to write a letter to ‘Money' from myself, discussing some
ideas prevalent to the poem ‘Making Money' by Carol Ann Duffy.
I believe today's materialistic world is a fatal crisis to humanity.
So here it is:
"DEAR MONEY" BY
RIYA GUPTA
Dear Money, or should I address thou as Loot,
Why'th left people insane? Materialistic, so I say.
Rushing, hurrying, escaping, maybe even barefoot,
Risking dignity and lives of self and own, then why
stay?
Dear Cash, or should I address thou as Bread,
Why making the man dig through the sewage, for
you?
Toiling, hours and hours, days and days, till red,
And still your identity being a great taboo.
Dear Black or White, or sometimes Grey,
Did you know that human eyes can recognize
only about 30 shades of the colour gray,
Then why do agonies lie in exhilaration with this
compromise..
21
23. Between 1921 and 1923, the Germany saw
one of the worst inflation of all times, one
of the biggest economic crisis faced by
Germany . In 1923, 4,210,500,000,000
German marks were just worth a dollar.
Let's see what caused this inflation and
how did Germany come out of it.
Many may say that the conflict in Ruhr
caused the Hyperinflation, however the
problem started much before. To pay for
the large costs of the ongoing WWI ,
Germany suspended the gold (the
convertibility of its currency to gold) when
the war broke out.
TROUBLE IN
DEUTSCHLAND BY
SANJALI LADHA
Unlike France, which imposed its first
income to pay for the war, German
Emperor Willhelm and the Reichstag
decided unanimously to fund the war
entirely by borrowing, a decision criticized
by financial experts as a dangerous risk for
currency devaluation. The government
believed that it would be able to pay off
the debt by winning the war, as it would be
able to annex resource-rich industrial
territory in the west and east and impose
massive reparations on the defeated Allies
.Thus, the exchange rate of the mark
against the US dollar steadily devalued
from 4.2 to 7.9 marks per dollar, a
preliminary warning to the extreme post
war inflation. However the strategy failed
as Germany lost the war. Post the defeat,
the Treaty of Versailles was drawn up
which aimed to weaken Germany's
economic position ,demanding high
reparations. 22
24. This further devalued the currency making
the rate of a dollar to 48 marks. The final
issue which broke the bark from the tree
was, the crisis in Ruhr. After Germany
failed to pay France an instalment of
reparations on time in late 1922, French
and Belgian troops occupied the Ruhr
valley, Germany's main industrial region, in
January 1923. Reparations were to be paid
in goods, such as coal, and the occupation
was supposed to ensure reparations
payments. The German government's
response was to order a policy of passive
resistance in the Ruhr, with workers being
told to do nothing which helped the
invaders in any way. While this policy, in
practice, amounted to a general strike to
protest the occupation, the striking
workers still had to be given financial
support. The government paid these
workers by printing more and more
banknotes, with Germany soon being
swamped with paper money, exacerbating
the hyperinflation even further.
The Weimar Republic began to recover
from 1924 with the policies of Stresemann.
Stresemann had negotiated the Dawes
plan which gave loans to Germany so as to
rebuild industry. He also scrapped the old
currency and introduced a new one, the
Rentenmark which stabilised the German
currency and stopped hyperinflation. This
allowed the German economy to recover
and big business boomed and German
industrial production went up.
23
25. T H E E C H O N O M I X T E A M
Thank you all for
contributing to our debut
edition by reading, writing,
sharing, or even skimming!
BIBLIOGRAPHY
24
ACKNOWLEDGEMENTS
Our writers have referred to several sources
including Times Of India, Economic Times, and
other such online newspapers and websites. We
acknowledge the contribution of their facts to our
magazine and condemn plagiarism.
