Economists, Policy Makers, And Governments don't have a skin in
the game. Yet they take decisions that affect the economy without having a skin
in the game.
Entrepreneurs who play a vital role in the
economy, take risks and bear the consequences of their risks are ignored. The
reason Global Economy is in a mess is because of allowing decisions to be made
by people with no skin in the business and ignoring role of entrepreneurs with
skin in the business.
Global Trade or Commerce only in each country's currency will ensure sovereignty
of each country. Keen observers would have observed that all countries got into
trouble because of adverse balance of payments in a foreign currency. India is
an example in 1991 when it got into deep trouble because of adverse balance of
payments in dollars.
Today many countries are in trouble after receiving foreign aid because of
inability to repay principal and interest in a foreign currency. The problem of
a country with adverse balance of payments is compounded when it receives aid
to overcome the current problem of balance of payments in a foreign currency.
The institution offering loans dictates terms of the the aid or loan on terms
which is euphemistically called reforms. The reforms don’t solve the problem as
India's example will illustrate. India till date runs adverse balance of
payments in a foreign currency in trade.
The solution suggested is simple. American Exporters to India will get paid
in Indian Rupee. This will ensure Americans import something from India to
balance the trade. India's exporters will get paid in Dollars. There will be no foreign currency liability. No need for
foreign currency speculation. No need for foreign currency reserves.
There will be no need for a euphemism called structural reforms which
essentially means ignoring economic policy in tune with local reality to an
economic policy suggested by the aid giver.
Every country that is facing trouble on the foreign currency liability like
Srilanka, Maldives, India should resort to this option of trade.
