Yes. The marginal difference between these two is the actual profit one makes...If by chance inflation exceeds the interest rate then the investment is in loss, no use if it's even three digit (imaginary situation). Earning highest interest rate at the period of the lowest inflation rate is the maximum profit one could earn.
Thats y it's advisable to not entirely rely on earning interest from Bank. Learn the risk and invest in inflation beating investments like mutual funds..
Thats why its the centeral banks job to control inflation and raghuram saying this theory to why he prefers lower inflation and higher intrest rates as when he was the cheif of rbi ultimately taking the consumer safety into his calculation or managemnet or plicies whatever you wanna say .... thats the irigin of theory and this video just explain it to us common folks ...
You guys are seriously great. Just watching Ur video for 20 mins I have gathered lot of knowledge that I can explain anyone and impress them Great job guys
Great Theory- But whenever there is 2.75/per Dosa Increase- DOSAWALA will increase it 5 Rs. So cost of DOSA will be 55 Hence more Interest rate is better. Theory only on STREET VENDOR PRODUCTS Raghuram Rajan's Theory + COMMON SENSE :) To great man
For the second case, you took the inflation to 5.5% while interest 8%, but for the first one you took both of them equal (10%). That is exactly where the difference is coming from. If you would have considered the inflation lower than the interest rate, lets say 7% the results would be comparable.
ucchechachari Yet, it still will be larger. Point is, controlling inflation is more important than more interest. If you want more interest, government will have to print that money for you, thereby, increasing inflation
I see a fundamental flaw in this. When pensioners ask for higher interest rates, the investment would slow down, demand would decrease leading to lower inflation, basically decreasing the inflation rate. Higher the difference between interest rate and inflation rate, more would be the benefit to the pensioners ( though it may be short lived). Hence, it makes absolute sense to ask for higher interest rates.
Raghuram Rajan is a diamond in the field of Economics... He even predicted the 2008 great depression... But India is neglecting his talent... He is teaching in USA...
Inflation is not dependent on Interest rates . Inflation will be there irrespective of interest rate 8 or 10. That is why pensioners argue for higher interest rate. The concept is not properly decoded ..
RBI lends money to other banks at an interest rate, if this interest rate is high, people taking out loans at high interest rate is low which reduces inflation. If RBI interest rate is low, people take more loans at low interest rates which causes inflation.
Well, India's economy has already become "khichri" with the GDP dropping down to -23.9% in this quarter. Hope the Govt. can revive the economy soon with some kind of "Biryani economics" or such.
When the interest rate comes down to 8%, why does inflation go down to 5.5%? Is it based on a correlation factor between rate of interest and rate of inflation?
i dont really know economics subject that well but i definitely want to know this topic thanks to Raghuram for making me curious.can anyone explain me this bit in detail cz i don't know what just happened.and why pensioners want more interest rates?how does it benefit them?
What Mr.Rajan says is accurate but I think the point he's missing is that a pensioner never wishes to withdraw his principal and wishes to live his life only with interest income in general because if he withdraws the principal as well he's afraid that he'll not be able to earn it back as he's retired..!! I hope it makes some sense..
For RR's justification for low interest-low inflation model to be useful, it is necessary that the interest rate be greater than the inflation rate. I don't see anything in the video that says this would happen.
Problem with this economic theory is first we cant get actual inflation rate, it's just estimate be it wpi or cpi. Second he is giving dosa as eg, different products will get impacted at different rate of inflation like good, clothing and shelter. Third, overall his logic is right that people should focus on inflation rather than interest rate but both are related inflation and rate of interest is related, interest rate which u get in banks or pf is always lesser than inflation rate, which ultimately means you will get return which is less than inflation rate meaning you will be at loss,
I have a question you took 10% interest and also inflation at 10% so this becomes a sense that real rate becomes 0 ...but with low interest y did you lower the inflation more ...? Which clearly shows a real rate of 2.5%
isn't the inflation inversely proportional to interest rate? lesser the interest rate, lesser the interest the people earn keeping money in the bank.. hence more money with public, which pushes up the inflation
I think the pensioner intended to live by eating dosas on interest alone, not withdrawing his working principle to assist. Raghuram should know that you can't have your dosa and eat it too
The narrator is not different from a 8th grade student reading a PPT in her school. अरे भाई, विडिओ 2 minute लंबा बना चलेगा पर स्पष्टीकरण ठीक रखो. Rest is great 🙏🏻
If you keep on increasing interest rate the inflation rate will automatically increase because people have more money to buy things... That's what he suggest
Such a basic stuff was not really known to our policy makers ? Man...even MBA/CA aspirant could have deciphered it....Bhai bhateja policymakers lagte hai...
But inflation and interest rates are tied together. How exactly will you mess around with interest rates without affecting inflation? Either you have to tell banks to increase/decrease the reserves, lower/increase Taxation or increase or decrease government spending. Lol economy is far more complex. It seems like Rajan was trying to simplify it for Common man but he seems to have Deliberately left out many aspects of the economy to not cause confusion
Usually I really like the voice of the host in scroll.. I hated it for the first time, it's not soo much the voice, just the way she read it. But the video was nice.. exact same example from the book (y)
With these dosa evonomics, you will have no money to buy dosas next year as your principal is used up. The pensioners like to live on interest without eroding the principal as they have usually no other source of income.
Doesn't the inflation rise when the interest rate is low ? less the interest rate, more money people keep with themselves rather than keeping it in bank. More money with people pushes up interest rate
@@aniruddhasurana6983 No it was because of hoarding by Congress chamcha's in agriculture business. India is a large producer of agricultural produce , in fact prices fall becoz of excess production , so there is Minimum Support Price . Middle men were making a killing in Congress time. So food inflation shot up increasing the real inflation. Also real estate prices went up when Sonia Madam allowed Birla to increase cement prices . All this increased inflation to double digit causing trouble to common man.
Check real estate prices from 2004 to 2008 , it shot up fast . After financial crises the speed of real estate prices moving upwards slowed a bit. When real estate prices shoot up they become un affordable to common man. That is y Modi bought Aawas Yojna which give subsidy to first time house buyers .
I have a very genuine concern here. Through out the video hands were making dosas.. How come at the end it ended up putting vadas on the plate? Where are those dosas which I cooked? #raghuram #dosa #iwantmydosaback
It's 3am and I'm now craving dosas. Thank you Raghuram Rajan :/
:D
Haha, same 😛
Yesss..🤣 was thinking the same 😂😂😂
This is what real journalism means keep on making such content 😍
Please explain Pakoda Economics.
SandyRocks Teri samajh mein nahi aayega. Uskey liye zyada IQ aur EQ chayie! 😂😂🤣
Pakoda economics ke liye PhD hona....aur BQ bi hona bhakt Q
gaurav nirwal aab youtube pe comment karne wale Jhatu mera IQ judge karenge. 🤢 🤮
You need to study in the universities of Haldirams and Bikanerwala!
@pings007 haha funny
Now please explains modi s PAKODA theory of economics.
B's pakode lgao. Reri pe. Na tax do bacche paida kro na padhao na likhao. B's desh aage bdega
@@sun20004u wahi toh Ambani karta tha tera baap pehla Mumbai ma
@@sun20004u aur sun Lauda pakoda ka Liya material lagta hai wo tax Deka hi kharidna pad ta hai
Savage
Soja bhai😂
But the pensioner can only choose the interest rate on his investment. He has no control over the inflation that happens in the market.
Yes. The marginal difference between these two is the actual profit one makes...If by chance inflation exceeds the interest rate then the investment is in loss, no use if it's even three digit (imaginary situation). Earning highest interest rate at the period of the lowest inflation rate is the maximum profit one could earn.
But lower interest rates increases liquidity, which in turn increases the inflation rates.
Thats y it's advisable to not entirely rely on earning interest from Bank. Learn the risk and invest in inflation beating investments like mutual funds..
Thats why its the centeral banks job to control inflation and raghuram saying this theory to why he prefers lower inflation and higher intrest rates as when he was the cheif of rbi ultimately taking the consumer safety into his calculation or managemnet or plicies whatever you wanna say .... thats the irigin of theory and this video just explain it to us common folks ...
You guys are seriously great.
Just watching Ur video for 20 mins
I have gathered lot of knowledge that I can explain anyone and impress them
Great job guys
Simple & Clear!! Thank you Raghuram Rajan & Scroll.in :) :)
The best and simple way to explain to our Politicians.😊👍
Great Theory- But whenever there is 2.75/per Dosa Increase-
DOSAWALA will increase it 5 Rs. So cost of DOSA will be 55
Hence more Interest rate is better.
Theory only on STREET VENDOR PRODUCTS
Raghuram Rajan's Theory + COMMON SENSE :)
To great man
The dosa is not a literal example - it's metaphorical.
He was one of Greats at his position..
You guys deserve to have a million subs. Keep up the good work.
All i could focus on was masala dosa.
me too🤣
For the second case, you took the inflation to 5.5% while interest 8%, but for the first one you took both of them equal (10%). That is exactly where the difference is coming from. If you would have considered the inflation lower than the interest rate, lets say 7% the results would be comparable.
ucchechachari Yet, it still will be larger. Point is, controlling inflation is more important than more interest. If you want more interest, government will have to print that money for you, thereby, increasing inflation
Wow! Please make such videos!! Please!! Thank you for sharing this..
Damn! I love your content.. Keep growing and keep going!
Thank you for explaining. It’s pretty cool and I’m gonna go buy that book.
I see a fundamental flaw in this. When pensioners ask for higher interest rates, the investment would slow down, demand would decrease leading to lower inflation, basically decreasing the inflation rate. Higher the difference between interest rate and inflation rate, more would be the benefit to the pensioners ( though it may be short lived). Hence, it makes absolute sense to ask for higher interest rates.
Thank you ur all videos is too much informative
Raghuram Rajan is a diamond in the field of Economics... He even predicted the 2008 great depression... But India is neglecting his talent... He is teaching in USA...
Lol and in USA banks are going bankrupt. Why is he not talking about that. Oh wait he is funded by the west just like Congress.
Good one👍🏼
I came here to know something different but this was a simple common sense. Every commerce student would have known.
I'm cringing at the way she's pronouncing "Dosas"
🤢
I was getting on my nerves. I muted it and then watched 🙄
Haha exactly
😂😂😂😂
Douhsas 😬
Superb video
Inflation is not dependent on Interest rates . Inflation will be there irrespective of interest rate 8 or 10. That is why pensioners argue for higher interest rate.
The concept is not properly decoded ..
RBI lends money to other banks at an interest rate, if this interest rate is high, people taking out loans at high interest rate is low which reduces inflation. If RBI interest rate is low, people take more loans at low interest rates which causes inflation.
Abis brother please check your basics i think u r nit getting the point of connection between interest rate and inflation
You should refer to the Applied Economics to understand the inverse relationship between inflation rate and interest rate.
i saw this channel like 15 min ago and i have already watched 3 videos
Benefit from high interest rates are always > damage from high inflation
Good video
Domestic Vox. Great video BTW.
I am really great at solving financial problems..... I have a great solution for this......
..
..
..
Just make dosa at home 🤷♂️😜🤣
😂😂
Price of raw material also rises due to inflation and so does of gas cylinder.
@@pranavmathur2275 let them live in their irrelevant virtual world,:)😜😂
He was baking dosa and idly in Reserve Bank for three years.
Well, India's economy has already become "khichri" with the GDP dropping down to -23.9% in this quarter. Hope the Govt. can revive the economy soon with some kind of "Biryani economics" or such.
Excellent!
When the interest rate comes down to 8%, why does inflation go down to 5.5%? Is it based on a correlation factor between rate of interest and rate of inflation?
Mr. Raghuraman sir, do something good for India ignoring politics .
Breakfast and dinner and lunch problem for the family solved for 6months.. with 1L
Well explained
i dont really know economics subject that well but i definitely want to know this topic thanks to Raghuram for making me curious.can anyone explain me this bit in detail cz i don't know what just happened.and why pensioners want more interest rates?how does it benefit them?
coz they are the investors.
Mitochondria is the powerhouse of cell
You explained about plain dosa and masala dosa...
What Mr.Rajan says is accurate but I think the point he's missing is that a pensioner never wishes to withdraw his principal and wishes to live his life only with interest income in general because if he withdraws the principal as well he's afraid that he'll not be able to earn it back as he's retired..!! I hope it makes some sense..
The pensioner withdraws or not doesn't matter. During high inflation purchasing power of rupee reduces and everyone loses their wealth slowly.
Make him the prime minister please!
how much will pound fall and what will pound to rupee bee after brexit, make a video on that.
For RR's justification for low interest-low inflation model to be useful, it is necessary that the interest rate be greater than the inflation rate. I don't see anything in the video that says this would happen.
Problem with this economic theory is first we cant get actual inflation rate, it's just estimate be it wpi or cpi.
Second he is giving dosa as eg, different products will get impacted at different rate of inflation like good, clothing and shelter.
Third, overall his logic is right that people should focus on inflation rather than interest rate but both are related inflation and rate of interest is related, interest rate which u get in banks or pf is always lesser than inflation rate, which ultimately means you will get return which is less than inflation rate meaning you will be at loss,
I have a question you took 10% interest and also inflation at 10% so this becomes a sense that real rate becomes 0 ...but with low interest y did you lower the inflation more ...? Which clearly shows a real rate of 2.5%
So you brought down inflation almost by 50% but Interest rate by 20% , Nice
This is amazing 👏
I love poorie .make a video about that.
Why is it when the inflation rate is less the interest is not equal to the inflation rate? And when it's high it's equal to the interest rate?
Coz it won't make any difference . You will still be able to buy only 2000 dosas, just like at 10%
the assumption is that inflation rate is lower than interest rate
then this will apply
Thats really smart
Did none noticed how in one example interest and inflation are 10. in other 8 and 5.5
Next video: Idly vada economics 👍🏽
The love for dosas.❤😂
Watching dosa is more mind soothing to listening to ur economics... 😂😂😂... Not to troll I'm actually hungry now thanks...
First time i got distracted by dosa ; played the video again
U guys are really amazing, uploading fantastic stuff 👍
Couldn’t understand. Can you make this video again and explain the same using Vada Pavs?
As good as it gets!
🔥🔥🔥
isn't the inflation inversely proportional to interest rate? lesser the interest rate, lesser the interest the people earn keeping money in the bank.. hence more money with public, which pushes up the inflation
I think the pensioner intended to live by eating dosas on interest alone, not withdrawing his working principle to assist. Raghuram should know that you can't have your dosa and eat it too
Nice
The narrator is not different from a 8th grade student reading a PPT in her school.
अरे भाई, विडिओ 2 minute लंबा बना चलेगा पर स्पष्टीकरण ठीक रखो.
Rest is great 🙏🏻
This is assuming that inflation and interest rates are interdependent. Which isnt always true
A street vendor knows present day economics but a professor is not.
Inflation rate must be lower than interrest Rate
If you keep on increasing interest rate the inflation rate will automatically increase because people have more money to buy things... That's what he suggest
I love Masala dosa´s!
Can someone ask him to explain about the loans given to crony capitalists during his regime
Such a basic stuff was not really known to our policy makers ? Man...even MBA/CA aspirant could have deciphered it....Bhai bhateja policymakers lagte hai...
Bhai, lekin bechara pensioner itane saare dosa kha payega? Yehi dekhate hai aaj ke DNA test me, Sudhir Chaudhary ke saath.
Being a CA student....ye toh sala 11th class ma hi pata tha hama .... Hamari teacher na Coca-Cola ka example liya tha us time...
I dint listen to any explonation rathrr enjoying dosa preperation here..
Could someone explain the chaiwala economics !!
Too many Dosa for the day.
But inflation and interest rates are tied together. How exactly will you mess around with interest rates without affecting inflation? Either you have to tell banks to increase/decrease the reserves, lower/increase Taxation or increase or decrease government spending.
Lol economy is far more complex. It seems like Rajan was trying to simplify it for Common man but he seems to have Deliberately left out many aspects of the economy to not cause confusion
I got nothing....should have take eco in 11th😂😂😂
Usually I really like the voice of the host in scroll.. I hated it for the first time, it's not soo much the voice, just the way she read it. But the video was nice.. exact same example from the book (y)
I don't like dosa ,I will buy idly😂😂😂
Who wrote the subtitles. So many spelling mistakes. 2:30
What does he call the economy where the saved notes get abolished overnight? The oh shit! Economy?
Just decreasing the interest given to pensioner..it will not decreas the inflation across the country
Interest rates can not be reduced selectively
india doesn't know his value
dosa economics does not applies when Major portion of income is expenditure
Smart man
Dosa > pakoda
Unfortunately educated dosa has no place in uneducated chaiwallas pakoda govt.
Result- We all loose.
Well he is graduated
Why do always he is regarded as a Chaiwala.
Fortunately when educated people were in UPA all they did was playing scams.
Instead of this government should start pension fund which Norway has 1 trillion dollars in pension fund.
Genius in economy
Nobody:
North Indians: डोसा
Good informative video
But vadas are the next big thing
Easter egg... Lol
My dosa is on the way 😏😋
With these dosa evonomics, you will have no money to buy dosas next year as your principal is used up. The pensioners like to live on interest without eroding the principal as they have usually no other source of income.
Three minutes I'm never getting back.
Doesn't the inflation rise when the interest rate is low ?
less the interest rate, more money people keep with themselves rather than keeping it in bank. More money with people pushes up interest rate
Inflation is also 10 and interest rate is also 10 Bhaiya tho bank mai paise q dalu mai jab paisa mera badh he nhi raha
All Congress fans need to check inflation rate during Manmohan Singh's time . 😂😂
It was due to higher agro commodity prices in international markets
@@aniruddhasurana6983 No it was because of hoarding by Congress chamcha's in agriculture business. India is a large producer of agricultural produce , in fact prices fall becoz of excess production , so there is Minimum Support Price . Middle men were making a killing in Congress time. So food inflation shot up increasing the real inflation.
Also real estate prices went up when Sonia Madam allowed Birla to increase cement prices . All this increased inflation to double digit causing trouble to common man.
Check real estate prices from 2004 to 2008 , it shot up fast . After financial crises the speed of real estate prices moving upwards slowed a bit. When real estate prices shoot up they become un affordable to common man. That is y Modi bought Aawas Yojna which give subsidy to first time house buyers .
Instead of dosa he should have given chai example and modi would have begged for profitable business venture.
... and the last shot is a vada.
I have a very genuine concern here. Through out the video hands were making dosas.. How come at the end it ended up putting vadas on the plate? Where are those dosas which I cooked? #raghuram #dosa #iwantmydosaback
Are people actually that dumb that they don’t know this already??