The fate of India has been to be ruled by economic idiots

Growth equals inflation -RBI (Reserve Bank of India) and the government continue to play this false narrative of  economic growth causing inflation.

Despite the recent spate of concerns about moderating growth, the Reserve Bank of India came out with guns blazing against inflation. The higher than expected 50 basis points hike caught the pundits and markets wrong footed.

-- snip --

The bank is not overly concerned about growth moderating. It says that it will “manage the risk of growth falling significantly below trend.”

Even when they have a clue-

The bank also noted the possibility that commodity prices may still go up because of abundant liquidity even if demand is subdued.

they are clueless.

These eminent experts do 'know' that prices go up even if demand goes down due to "abundant liquidity". And yet they continue to act as if that knowing did not really register in the important areas of their cerebral cortex. How did the liquidity become abundant - did it just drop from the skies? They have no idea that they collectively (politicians, state economists, planners, state bankers) are the cause of general stress now felt by the common man.


 Henry Hazlitt had something to say about it (What You Should Know About Inflation) in 1960-

Yet the plain truth is that our political leaders have brought on inflation by their own money and fiscal policies. They are promising to fight with their right hand the conditions brought on with their left.

Inflation, always and everywhere, is primarily caused by an increase in the supply of money and credit.

This is so important that it is worth repeating and highlighting-

Inflation, always and everywhere, is primarily caused by an increase in the supply of money and credit.

I strongly recommend reading all of it. Pdf of Hazlitt's book is here.
His book came out over 50 years ago! How the things have not changed. False narratives and bad ideas are like zombies - nothing seems to kill them.


The Indian government has been peddling this hogwash of 'Growth equals inflation' to shirk blame for the high inflation spreading misery for the last few years but I'm afraid these people really do believe it. After all, India's Prime Minister is a lifelong government and academic economist as is his cabal of economic advisers. Amartya Sen and Keynes are their models not Milton Friedman or Von Mises. Times change, data changes -but the musty and stifling bureaucratic mindset of state economists and their colleagues tenured in the universities is a constant.

Just as the fate of Russia has been to be ruled by strongmen, the fate of India has been to be ruled by economic idiots.

There is a predictable dreariness about Obama - his championing of one bad, already failed idea after another:

Increased infrastructure spending has significant support in Washington these days. President Obama wants a new federal infrastructure bank, and some members of both parties want to pass big highway and air-traffic-control funding bills.

-- snip --

Their histories show that the federal government shouldn’t be in the infrastructure business. Rather, state governments and the private sector are best equipped to provide it.

-- snip --

Some of the highest-profile failures include the Great Mississippi Flood of 1927. That disaster dramatically proved the shortcomings of the Corps’ approach to flood control, which it had stubbornly defended despite outside criticism. Hurricane Katrina in 2005 was like a dreadful repeat. The flooding was in large part a man-made disaster stemming from poor engineering by the Corps and misdirected funding by Congress.

(emphasis mine)

Wait that can't be!  Katrina was unleashed by the evil Bush to hurt black people!