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Joe

Hello,

I chanced upon your blog, after many years.

Please share ATOM impact on India.

As a small-scale manufacturer of components for consumer durables, I am eager to know your predictions for India, with its 1.2 billion population and millions of problems.

Technology is already having impact on the IT outsourcing business, with layoffs happening and recruitment outlook becoming bleak. Companies are moving up value chain than merely offering cost arbitrage.

Uber and Ola is disrupting taxi and sort distance travel market, but Govt has started regulating them.

With millions of youth expected to to join job hunt each month,with no sensible plan to absorb them into working population, India could be staring at a disaster.

Govt has started some initiatives like skilling the youth, I am skeptical.

Would love to hear your views.

Kartik Gada

Hello Joe,

India has a very low technological density, which is why it still is one of the few places with inflation. Even China does not have inflation.

As the ATOM penetrates India, progress will be quick, but disruption will be unusually rapid. Basically, everything will be in fast forward.

Artificial intelligence can be of great use to India, for the AI that can displace even US jobs can be used in India for high output with low input.

But India will not get to a DUES until the 2030s.

Zyndryl

"Hence, the sequence of decisions involved in this sort of restructuring can be made and executed quickly. Due to currency pegs, a currency flight is not a risk. The stipend may have to start small, but can rapidly scale up at speeds a large country could not manage. The stipend could reach $50,000/year within five years, without triggering inflation."

Ok. Both don't have hard pegs (currency boards with 100% reserves -- in which they couldn't do this DUES thing at all) but soft pegs, which are challenged on the international forex markets every day. So , in order to maintain their pegs, they have to withdraw base money from circulation if the target pegged price rises or add base money when it drops.. Which defeats the purpose of what you are trying to do. Next...

Zyndryl

"If the Canadian Parliament were to authorize the Canadian central bank to merely create the entire $300 Billion of federal expenditures and waive all federal income taxes, the amount of monetary expansion is negligible relative to the broader US money supply. This ensures that there is no possibility of any Canada-specific inflation."

That makes ZERO sense. I mean, this Modern Monetary Theory chartelist crack pipe is truly getting out of hand.

US dollar are not the currency used for internal trade in Canada. Thus greatly expanding the Canadian monetary supply means more Canadian money being used to outbid previous prices in Canadian transactions. It's like how ever expanding mortgage credit impacting monetary velocity does the same with housing prices.

Zyndryl

"Due to this, a DUES program can be constructed in short order without generating any discernible inflation in either Canada or the US. "

Canada pumping out more of its base money wouldn't effect US inflation levels anyway, ATOM or not.

Being a Zimbabwe is simply being a Zimbabwe regardless of where it is or who it's trading partners are.

Kartik Gada

Zyndryl,

We have already seen that QE flows across borders without hindrance. Canada's small size relative to the US, and the fact that overseas trade (particularly with the US) is such a large portion of their economy means that large action by the Canadian Central Bank will not create inflation in Canada, even in most intra-Canada transactions.

But that does not make Canada a Zimbabwe. Quite the opposite in fact. Canada can fund a DUES without taxation, and can ramp up to that in a very short time if it wanted to.

Zyndryl

"We have already seen that QE flows across borders without hindrance. Canada's small size relative to the US, and the fact that overseas trade (particularly with the US) is such a large portion of their economy means that large action by the Canadian Central Bank will not create inflation in Canada, even in most intra-Canada transactions."

QE from the US only flows out because the dollar is the world's reserve currency. Canada's is not. So dollars can be used in Vietnam to buy oil from Saudi Arabia, copper from Chile and precision machining equipment from Germany, for example. Nobody does that with Canadian money.

So yes, that would make Canada a Zimbabwe if it printed money into circulation above the natural market demand for it. Because like in Zimbabwe, Canada's money is only mostly used in Canada, for transactions involving a limited number of services and commodities within Canada -- which would be chased by way too many Canadian dollars in circulation.

Kartik Gada

Zyndryl,

QE from the US only flows out because the dollar is the world's reserve currency.

No. Japan's QE flows out of Japan and into the US, China, etc. Same with the EU's QE.

All QE just flows into the worldwide total. This is well established by evidence that the US inflation rate had upticks during the first few months of Japan's QE (while US QE was constant).

Even China's large QE injections (which are big one-offs, rather than monthly programs) were evident in their simultaneous jolts to US indicators.

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