Friday, August 21, 2009

Demerits of Money

Money do doubt has played a very significant role in the economic development of a country. It is infact blessing to mankind but this blessing has also a darker side. “Money is a good servant, but, bad master” means that money is good so long it remains under control but then it is not efficiently managed; it is then a source of peril and confusion. Money has proved dangerous in several ways. The major evils of money are as under.
(i) ECONOMIC INSTABILITY
Some economists are of the view that money is responsible for economic instability that is to be found in capitalist economics.
When there was no money, saving was not divorced from investment. Those who saved also invested. But in monetised economy, saving is done by certain people and investment by some other people. Hence it does not follow that saving and investment should be equal. When saving is a community exceeds investment than national income, output and employment decrease and the economy is engulfed in depression. On the contrary, when investment exceeds saving (i.e. investment financed not by genuine savings but through deficit financing) then national income, output and employment increase and there is spell of prosperity. But if the process of money creation and investment continuous beyond the point of full employment inflationary situation will be created. Hence disparity between savings and investment resulting from the creation of money is said to be the main cause of economic fluctuations.
(ii) DANGER OF OVER-ISSUE
The main changer of money lies in its liability of being over-issued in the case of inconvertible paper money. The over issue of money may result in hyper-inflation. Excessive rise in prices hits hard the consuming public and the fixed incomists. It engenders speculation and inhibits productive enterprises. If also upsets detor-creditor relationship. If adversely affects distribution of income and wealth in the community so that the gulf between rich and poor widens.
(iii) ECONOMIC INEQUALITIES
Money has proved to be very convenient tool far amassing wealth and of the xploitation of the poor by the rich. It has created a yawning gulf between the ‘haves’ and ‘have nots’. The misery and degradation of poor is, thus, to no small measure due to the existence of money.
(iv) MORAL DEPRAVITY
Money has weakened the moral fibre of ma. The evils to be found in the affluent society are only too obvious. The wealthy monopolise all the social evils like corruption, the wine and the woman. In their case money has proved to be soul killing weapon. In the words eminent German economist Von Mises “money is regarded as the cause of theft and murder, of deception and betrayed. Money is blamed when the prostitute sells her body and when the bribed judge perverts the law. It is money against which the moralists declaims when he wishes to oppose excessive materialism. Significantly enough avarice is called the love of money and all evils is attributed to it”. Money in itself may not be had, but its possession no doubt fascilitates corruption and crime.
Thus “money which is a source of so many blessings to mankind becomes unless we control it, a source of peril and confusion.

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