Thursday, November 19, 2009

value of money: increased or decreased

Money is the most fundamental requirement of every individual in the world (except for a few who have renounced the world for eternal happiness). Every country has its own currency and it is a common practice to exchange goods and services for money.

Way back in 1996, I was earning a pay of Rs.5000/- per month ($151) and at the end of the month I was having a balance of atleast Rs.500/- ($15.15) lying with me after all the expenses. Today, my living standards haven't changed much over a period of 13 years when I earn a pay of Rs.36,000/- per month ($725) and at the end of the month I manage to have a balance of only Rs.500($10).

This clearly shows that though my pay has increased 700% over 13 years (or on the average 50% every year), my savings doesn't remain the same 10% for the same period. Can anyone understand anything from this? Did the value of money come down? There is no doubt that the value has come down.

Let me share another example. A maruti suzuki std 800 car costed about Rs.1,30,000/- ($4,300)in 1996 which is 26 times the monthly pay. While the same maruti suzuki std 800 car costs about Rs.2,00,000/-($4,300) in 2009 which is 6 times the monthly pay. Now, i wonder whether the value of money has come down or it has gone up. In dollar terms the price has just remained the same.

During this period expenses on food, clothing and shelter have increased manifold but how can the price of a car remain just the same. Didn't the cost of inputs for making the car viz., steel, glass, tyres, etc have not gone up. Or is it that the car manufacturer was ripping us with his prices way back in 1996 and reduced his margins now.

What money can buy?
Many people say that money can buy anything and everything. Money in abundance can buy all the luxuries like owning a yacht, aircraft, a designer home, a Bentley car, fashion accessories designed by the best designers like Georgio Armani, partying in Paris, buying a European Football team with the best coach, manager and players, binge on the choicest foods available at 7-star hotels. You name it and you can have it. This is true only in case of 20% of the world population of around 700 million.

Why then is that the most wealthiest people in the world like a Bill Gates of Microsoft set up a Melinda Gates Foundation to fund the underprivileged population of the world. Though they own one or many of these luxuries after establishing a very successful software corporation, they have realised that the real happiness lies in sharing the wealth rather than storing it. Not all people may be so rich and this shouldn't deter someone from sharing the wealth.

What money can't buy?
We are living in a wonderful world where there are developed countries, developing countries and the not-so-developed countries. Recession has set in worldwide a year ago and people lost jobs. Many were deluged and committed suicides just with the thought of going jobless. Wealthy people have stashed away their money in places where no one knows and I mean to say that they have withdrawn all their investments and let the money lie unused. This has created a situation where there is no liquidity in the markets. Now, in this scenario what is it that money lying in a few hands buying? Is it buying happiness? Many surveys conducted over the years have revealed that people in the not-so-developed countries (read poor countries) are much happier than those living in the highly developed countries like the USA and Europe. This clearly reveals that money can't buy happiness.

I have seen a Hollywood movie starring Nicolas Cage who is a henpecked husband doing an ordinary job and his wife wants to live a rich life socialising and Cage comes across a poor waitress (played by Bridget Fonda if I remember correctly) and befriends her. The waitress suddenly becomes rich and buys the restaurant she was working in. She is also invited to attend a party on a yacht where Cage family is also invited and she comes there in a cab.She gives a few dollars as the fare to the cab driver and waits for him to return the change. Cage comes there and asks her to say to the cabbie "Keep the change". Though she is not used to giving owing to her earlier status she learns it and feels very happy. Though I don't remember the name of the movie, it went on to become a big hit. The theme of the movie is giving, helping, sharing, caring and all the good qualities one must possess as a good human being.

People should be sensitised not to feed a hungry person but to teach him how to fish so that he not only feeds himself but also render a helping hand to others just like him. Did I deviate from the main topic? Well, probably yes. I just included these stories only to say that there should be equitable distribution of wealth in the world and if this can be achieved, there would not be a need for artificial manipulation of the value of money. Well, there are people who only give importance to applying their mind with a steady head and these people only help themselves. It is only the people who think with their heart who would make a difference.

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