Comments on: Saving and Spending in the Model Village (Part III) http://www.ravikiran.com/blog/classic/200801/saving-and-spending-in-the-model-village-part-iii/ Where I torture reality till it confesses the truth Wed, 08 Sep 2010 03:02:20 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Anonymous Coward http://www.ravikiran.com/blog/classic/200801/saving-and-spending-in-the-model-village-part-iii/comment-page-1/#comment-90373 Anonymous Coward Sat, 02 Feb 2008 14:38:58 +0000 http://www.ravikiran.com/blog/classic/200801/saving-and-spending-in-the-model-village-part-iii/#comment-90373 Keep going... Keep going…

]]> By: Ravikiran Rao http://www.ravikiran.com/blog/classic/200801/saving-and-spending-in-the-model-village-part-iii/comment-page-1/#comment-89965 Ravikiran Rao Tue, 29 Jan 2008 02:13:29 +0000 http://www.ravikiran.com/blog/classic/200801/saving-and-spending-in-the-model-village-part-iii/#comment-89965 Ah... I had to read your comment multiple times to understand where you are getting confused. No... it is not "new goods" being produced for future needs. Note that while a factory is being built or a road is being constructed, nothing at all is being produced for current consumption. (After the factory is built and starts production, it is a different matter) So if people get diverted from a factory that is producing goods right now to working on constructing factories that will produce goods three years from now, it is inevitable that the price of the current basket of goods will rise. Ah… I had to read your comment multiple times to understand where you are getting confused.

No… it is not “new goods” being produced for future needs. Note that while a factory is being built or a road is being constructed, nothing at all is being produced for current consumption. (After the factory is built and starts production, it is a different matter) So if people get diverted from a factory that is producing goods right now to working on constructing factories that will produce goods three years from now, it is inevitable that the price of the current basket of goods will rise.

]]> By: ~A http://www.ravikiran.com/blog/classic/200801/saving-and-spending-in-the-model-village-part-iii/comment-page-1/#comment-89934 ~A Mon, 28 Jan 2008 16:24:44 +0000 http://www.ravikiran.com/blog/classic/200801/saving-and-spending-in-the-model-village-part-iii/#comment-89934 Sorry if this is a stupid question...The way Model Village seems to work is, there are new goods that are being produced (for the future needs) at the cost of current needs. If this cost (w.r.t the villagers' current needs) is high, the inflation is going to be high and vice versa. Am I correct so far? If this is the case, Does a high inflation mean the newly produced goods are really for the future and are not effectively satisfying the present needs of our villagers? (I am guessing this is incorrect, but let me wait to hear from you). If so, the newly produced goods aren't going to get increased profits for the producers. Basically, I am confused on what 'high inflation' (in this model village) implies. Sorry if this is a stupid question…The way Model Village seems to work is, there are new goods that are being produced (for the future needs) at the cost of current needs. If this cost (w.r.t the villagers’ current needs) is high, the inflation is going to be high and vice versa. Am I correct so far?

If this is the case, Does a high inflation mean the newly produced goods are really for the future and are not effectively satisfying the present needs of our villagers? (I am guessing this is incorrect, but let me wait to hear from you). If so, the newly produced goods aren’t going to get increased profits for the producers.

Basically, I am confused on what ‘high inflation’ (in this model village) implies.

]]> By: Ravikiran Rao http://www.ravikiran.com/blog/classic/200801/saving-and-spending-in-the-model-village-part-iii/comment-page-1/#comment-89914 Ravikiran Rao Mon, 28 Jan 2008 08:47:30 +0000 http://www.ravikiran.com/blog/classic/200801/saving-and-spending-in-the-model-village-part-iii/#comment-89914 Because inflation means that they will make greater profits on paper... Because inflation means that they will make greater profits on paper…

]]> By: ~A http://www.ravikiran.com/blog/classic/200801/saving-and-spending-in-the-model-village-part-iii/comment-page-1/#comment-89911 ~A Mon, 28 Jan 2008 08:18:30 +0000 http://www.ravikiran.com/blog/classic/200801/saving-and-spending-in-the-model-village-part-iii/#comment-89911 Ravi, How is "factory owners can offer higher wages" possible in the model village? Ravi, How is “factory owners can offer higher wages” possible in the model village?

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