If a ten-year-old asks me why a US dollar costs 60 INR, how should I explain it? How do we determine the currency trade values? Why has the INR sunk this much?
Principle of price parityMe - “son, I have this iPhone. Do you know it's company's name ? “10yr old- “oh yes! , it's Apple from US.”Me- “ I bought this for 60,000 rs . Don't you think we should import this from Apple company at US at cheaper rate and sell here . “10 yr old - “oh yea. Sounds cool. Gift me one iPhone as well please. “Me- with a smile, “ oh yes. I can buy it for 1000 US dollar and sell it for 60 thousand rupees. Isn't that profit? “10 yr old- “ wow, 60000–1000 = 59,000 profit “Clearly, this is where the boy gets confused. He assume USD and rupees are same.Me- “ ok ok yes you are right. Now can you tell me how many years does it take our bank to make our capital double. ? What I mean is, if we deposit 60,000 at bank, you know in how many years we can double it?”Boy - “ Hmmm…Oh yes. At 8% interest that banks give us, we can double in 10 years approx “Impressed by his answer we continue our conversation.Me-” and how many years in US? “Boy-” err…I..I don't know that “Me-” it's 25 years approx at 0.50% interest rates “I continue as he listens now.Me-” don't you think all US people should bring there money here to India and give it to our banks? “Boy-” of course. What's the need to think twice. They save 25–10= 15 years “Me- “ perfect. Yes they should do that. But….” Taking a pause, while he is trying to get the catch, I continue,” we are sending our money to US for this iPhone . and those US people receive our rupees. “Boy-” Hmmm so we send our money rupees to them for goods and, they bring there money dollars to invest in our bank. Isn't it? “Me- “ well you know , in this world everything sounds be fair to one another. We are making alot of money by selling iPhone in India while US people make money through our bank interest rate “ I wait , as he images the two weights kept on both sides of this weighing machine.Boy-” so you mean to say , the iPhone won't be cheap, and US people can't double in 8 years from India? “Me-” they can do it. But somehow to be fair to everyone that 1000$ iPhone and 60000 rupees...... iPhone must have equal purchasing power.Or 1000 = 60000Hmmm,1$ = 60 INR" we don't make money by importing iPhone from US dear. And our banks first convert their dollars into rupees first, before taking deposit. “
What kind of people will not succeed in life?
Those who think a lot.Those who plan a lot.Those who live in past.Those who avoid present and build castle in air.Those who think they have time.Those who think NO WORRY NEXT TIME.Those who don't dare to dream big.Those who don't dare to explain.Those who don't clear their doubt.Those who TALK the TALK but don't WALK the TALK.Those who think stay nice all the time.Those who stuck on to something and don't know to move on.You are living to the same place from years.Continuing your job even you don't want to work there for a second.Staying in a relationship which causing more pain than pleasure.Working things to impress others.Thinking about a person day and night instead focusing on carrier.Checking phone every five minutes to see whether she or he is online or what.Checking out each and every girls on street.Day dreaming but doing nothing.Staying in bed even after you wake up.Loving someone and expecting the same in return. And if things are not going as per your expectation then blaming whole world.You think if you can do this after 50s then you ask from from your future wife, you can do or not and then you will realize how pathetic you will become in coming years.You have no purpose.You are constantly blaming other people and circumstances for your condition.Getting offended by everyone's opinion about you.Getting into argument even if it is no where related to your life.Talking about masterbation and discussing whether it's good or bad.Doing things to garner sympathy and attention.Your very ownSachinJai Hind