Paradox of Thrift : Macroeconomics

While each of us may have different to save money out of our regular income ( typically salary for the employees, monthly profits for neighbour kirana store and so on) , it is no doubt the primary reason is to secure our future against unforseen events. and Most of us save money in the form of Stocks, bonds,NSCs and of course some money is stored in banks etc for the lure of interests ....Have you ever wondered wat happens to the money which stashed in these bonds and NSCs and banks ( leaving aside stocks as they fall under different category of Risk driven savings)

While here starts the intriguing story of the money. The money you save in the banks is the money which is used by banks to lend out to investors and industrialist. The same money is used by the government to invest and pay for short term debts !!!!!!! ...The basis assumption of course is that of all the money which is kept by individual investors in banks, everybody will not withdraw the cash in one go. If that happens ( remember ICICI bank going bankrupt rumour a couple of yrs back) ....... then the banks are in for a liquidity crises and will run out of cash to pay it's own employees.

Now what happens if the ordinary people don't save and instead spend all the money which they get from regular income ? ..This is a really good ecomomic sign and helps the economy become a demand market and increases growth rate. At the same time, it implies that this growth cannot be funded with the domestic investments and for growth we will need to be now dependent on External Inflows ( the FDIs ) ........So one hand, less savings is better for the economy .. on the other hand it makes the country dependent on external flows to fund this growth ..........( the classic is that of the US economy ) This is commonly known as the "paradox of Thrift !!!!!!!!!"...

PS : Sorry if I am sounding like a economic prof ...

Unexpected expectations

Somethings in life are unexplainable ....they are like the Murphy's law.. what can go wrong will go wrong ... no matter how what you do or how much ever efforts you put ......... well I was destined to one such experience yesterday :(

Had my MBA interview yesterday ....... I must have prepared for this interview for the last one week or so ....... I prepared myself for every possible topic which I cud think of ........ I prepared myself for all types interviews ....stress interviews .....surprise questions ......rapidfire interviews and what not ..........questions on my essays........ my hobbies .......my extracurricular activities .......... current business stories and political stories

But I enter the interview room ......it is a normal interview ( hell not even that ........just a discussion.) ......... the topic they quiz me ???????? you guessed it right ..... none of wat I had prepared on !!!!!!! ........some damn question on my company's product Vs some rival company product..( ok I shud have preped on this .....but then perhaps this was only topic I had overlooked) ......... caught offguard .........some questions on my domain which thankfully I was a champion in ............ a stupid marketsize question......( hell I don't want to get into Consulting/marketing..... why the hell shud I estimate market sizes !!!!!!) .......

but that is way it is but as they say .. it aint over till the fat lady sings ( and sings a tune which I like ) .........and the fat lady sings after 40 days ...... wat do I do till then .....go ahead with my Plan B and hope Murphy does not spoil my party this time