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VikasKaushik1823
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This question was put to a class of college students and various answer were forth coming. There would be come lazy and do no work was another answer. Everybody would start living a life of pleasure and luxury, was still another answer given. And there was yet another answer received. And this was to the effect that it was case prices would shoot up sky high and the result would be general and country-wide poverty. And this was the only right answer given to the question. A magic find of currency notes worth one hundred rupees every morning by nearly fourteen crore heads of Indian families would cause such an inflation of paper money as would make pricesrise many thousand times within days.
Paper currency is not real wealth. If the government does not have sufficient gold reserve, then the more the paper currency, the less its value. And this is what inflation means. Another vital and decisive factor is the ration or proportion of consumer goods to the paper money in circulation. More and more paper money does not necessarily mean more and more and more goods. If there is no proportionate rise in the production of goods, the price spiral will go on rising with every increases in paper currency. So inflation also means and imbalance or disproportions between the total amount of goods and the total amount of circulating money. Higher pay or higher wages are no remedy for sowing prices. Even from ration shope goods disappear into the balck-maket. Instead of raising wages and salaries or dearness allowances, it is far better to freeze prices and hold the price line. But this is not practical unless the production of necessary goods is adequate to meet the demand for them. Production of mass consumption goods in necessary quantities is our main problem. Inflation leads to avicious circle. Higher pries, more paper currency.