India VS USA Economy : Why India Can Never Beat USA Economy | The Total History of USA and Indian Economy | The HNT
India VS USA Economy : While India boasts a burgeoning economy and significant potential, surpassing the economic prowess of the United States seems improbable. Despite India's rapid growth, the USA's robust infrastructure, technological innovation, and global dominance in finance and industry present formidable barriers. Analyzing key indicators and historical trends can shed light on the intricate dynamics shaping the economic landscape between these two nations.
India and USA Economy
There is only one superpower left in the world, and that is the USA. America's GDP is $28 trillion, 1.5 times more than China, and 7 times more than India. And superpowers are not just made with money Superpowers are made of wallets and bullets as well During World War II, America got two big advantages. One, that America was the only country on which there was no big economic impact.
And second, America had atomic weapons. And after World War II, America made sure that they remain at the top forever. In which many dark decisions were taken, which changed all of our lives forever. India needs to learn from America because about 250 years ago, America was also a British colony like us
So what did they do right and what they didn't This is our series, World Cup of Economies, where we will understand the economies of different countries But in an interesting way. Here we discuss the main topic in some part, ...
Chapter 1 Where does America stand today?
Let's know some facts about America that will blow your mind Whenever you talk about America, what comes in front of your eyes? Big buildings, Hollywood's shining world, and Silicon Valley's technology. Today, more than 2000 tech companies, brands like Apple, Google, Meta, reach your home from America.
The GDP of America is one-fourth of the world. America's stock exchange. NASDAQ has more than 50% market capitalization in the world. But that doesn't mean that everything is good in America. One-third of the country's money is in the hands of only 1% people. 11% of the country's population lives below the poverty line. 45% of students say that they can't afford college education.
They either have to find a scholarship, or have to do some low-wage jobs alongside college. 70% students can't even complete their college education without a loan. America's trade balance is always in the negative with most countries And how much is that?
Their trade balance was negative $1 trillion in 2022 That means America imports more than it exports. If America's GDP is $28 trillion, then their debt is $31 trillion. That means their loan is more than their GDP. Actually, it's not $31 trillion, it's $34 trillion.
It might have increased by $1 trillion Wait, wait, wait. On one hand, we're saying that America is the richest country in the world. And on the other hand, America has such a huge debt. How is this possible? If you have a lot of loans, then how can you be rich?
Because America has one facility that no other country in the world has. And that is the facility to print unlimited money.
Part 2. America's printing machine.
It was 1933 when President Herbert Hoover said, we have gold because we cannot trust governments. In those days, gold used to be the standard. That means the amount of money you have is equal to the amount of gold in your country's central bank. And you can go and take as much gold or silver as you want.
In exchange for the money you have, every penny was accounted for After World War II, all the major powers of the world were in economic difficulty. And no one had the money to rebuild it In 1944, the Bretton Woods Agreement was signed. There were 730 delegates from 44 countries were present The bottom line was that other currencies would be pegged to the US dollars.
And the US dollar was based on gold. In a way, all European countries were dependent on the stability of the US currency for the post war development The dollar's strength was based on two pillars. One pillar was international support. And the other pillar was the gold standard.
But by 1971, the Bretton Woods Agreement was dissolved. At that time, the Vietnam War was going on. And America also needed money. They needed to print extra money. And because of the gold standard, they were stuck. And President Nixon said that the dollar would now become a fiat currency That is, the dollar would no longer be connected to gold.
That is, one pillar of the dollar was broken So why didn't the dollar collapse? Why didn't America's progress stop? Because during that time, America built a new pillar. And that is oil. The world's oil-producing countries decided to take to take dollars instead of oil. This is called the Petrodollar Agreement.
America was very smart. It removed one pillar and immediately built another In this chart, 80% of the world's oil is traded in in US dollars, These two pillars give America a superpower. And that is unlimited trust. But why can't RBI print unlimited money ?
The simple answer is that the more money you print, the lower the value of money That is, inflation will increase. Because believe it or not, this is just a piece of paper. Its actual price is equal to the amount of goods we can buy exchanging it During school days, two lemons cost Rs. 10 Today, one Lemon costs Rs. 15 That is, inflation has happened.
Now the prices of Lemon haven't increased because RBI has printed notes. A little inflation is good for the economy. For example, we keep a target that the inflation is between 4-5%. But we also trade with other countries. When we print money, other countries say that it is your problem But by printing money, you are devaluing your currency The value of any currency is decided on the basis of its demand in the world.
According to the current chart. 59% of the world's trade is in US dollars Because the world believes in dollars. When India trades with Japan, Japan says why should we accept rupees? India says why should we accept yen?
Both think that let's trade in dollars. Because of this, it becomes a unique situation for the dollar, that is, America. Until there is no alternative to the dollar the dollar is the world's reserve currency Until oil producing countries come together and say that they will stop trading in dollars America's currency will remain stable This is an absolute power.
And as they say, absolute power corrupts absolutely. Chapter 3 Embezzlement of Money When the Covid pandemic started in 2020, America was going through risk of recession America's stock market was crashing Unemployment rate had crossed 14%. GDP fell by 32%.
To save the economy, America adopted many plans. One of them was Quantitative Easing. The word sounds very fancy, but basically it means printing money for economic growth. This money is not printed randomly. Bonds are issued in return.
People can buy these bonds. And they also receive interest on them. This extra money is injected into the markets as handouts or relief. It is given to the poor. Instead of increasing taxes, it is reduced. From February to June 2020, the US Fed printed $3 trillion And because of this money, America was able to escape the economic impact of the COVID This is why America's national debt is high.
Now there is no scam in this action. But what if this was the case of any other country? We have studied in economics that if unlimited money is printed, the value of the money is destroyed. This happened in Zimbabwe.
This happened in Venezuela. But this will not happen in America. Because the demand for Zimbabwe's money is only in Zimbabwe. The demand for Venezuela's money is only in Venezuela. The demand for Indian rupees is only in India But because the US dollar is a global currency its demand is all over the world.
The money that was received by Americans that money was also spent on imports. They bought oil made from Saudi Arabia. They bought spices made in India. Electronics were imported from China. So the more the supply increased, the more the demand increased.
The burden of inflation was not only on America, it was distributed all over the world. Of course, there was inflation in America too. Where the Fed, America's RBI, has a target of 2% inflation, America's inflation reached 8% in 2022 This is a very high inflation rate for any developed country. But America did not reach hyperinflation.
And this is why America is a superpower. We understood three main reasons for this in the entire article.
No 1. The whole world trusts the dollar.
No 2. There is no replacement for the dollar. And
No 3. It's America who decides how and how much to print the dollar.
This is why in 2023, the Silicon Valley Bank of America sank But still, it did not have an impact on the economy. There was a recession in 2008, but in the next few years, the economy stabilized. If it was any other country, it would have taken decades. America took only 3 years. America is a superpower. Its only reason is not the American dollar.
Part 4. Lessons for India.
Okay, America is a superpower. What can we learn from it? How can we make India better by learning from the American economy America and India have two big similarities.
No. 1. The population of both the countries is a mixed population. And
No. 2. Both countries are a democracy. 'Democracy'
There was a lot of controversy on this word in the last few months. Some people believe that the country is leaning towards dictatorship But in these elections, it was proved that no one is above the citizens of a country If the citizens of the country wants, then the government can change.
Decentralized power is the power of democracy. Which you can also see in America. But America has learned to use this decentralized power properly. It is important to keep the dollar strong. Both the Democrats and the Republicans know this.
Even if the government changes Fiscal policies are always in the national interest. Donald Trump just said that he will punish the countries that are looking for an alternate dollar. Even if the government changes on the Russia-Ukraine issue, the stance will not change.
The Total History of USA and Indian Economy
America will always support Taiwan. No matter any government is in power. Keeping the national interest above the political interest gives economic stability. Which India needs to learn. Recently, I saw a video of KK Create. Where they have explained that Amaravati city was going to become India's Singapore.
But then the state government changed. And today the whole city has become like such ruins. The common people are suffering, due to these political fights There was also international investment in this project. But what will the investors think after this project gets stalled? India is very unstable. Governments keep changing here in every few years.
And the problem is not that the governments change. The problem is that the new government wastes its energy in reversing the decisions of the previous governments without any logic. Investors think that why should we invest our money in such a country? Why should we start trading in rupees by listening to that country Why should we invest in the companies of that country?
Global trust makes the dollar a global currency. And America a global superpower. Similarly, our leaders will have to understand that trust increases not by big promises but by fulfilling those promises. We have been making promises of Make in India for the past 10 years. Our target was that by 2022, growth of manufacturing sector will be 25% After Covid, we extended this target and made it 2025.
But even today, our manufacturing sector is stuck at 13% Russia wants to trade in rupees with us. The global scenario is also such that it can trade in rupees. But ultimately, we will have to manufacture those things that they want to buy from us. Our trade with Russia is about $65 billion But India sells goods worth only $4 billion And Russia sells goods worth $61 billion This is the issue of world trade.
Everyone wants to trade with us. And in future, they talk about trading in rupees instead of dollars But this negative trade balance makes us restless Because if we start trading in rupees and we pay Russia in Rs. 61 billion then Russia can only use Rs. 4 billion It can buy the same amount of goods from us What will it do with the remaining Rs. 57 billion rupees?
This imbalance stops the rupee from becoming international. This lack of execution negatively reflects on India. This is the truth. If you want to solve any problem, first you have to admit that there is a problem. Just by saying nothing happens that we have to become a superpower.
Before becoming a superpower, we have to become a reliable trade partner. We have to have faith in our own capabilities We have to leave party politics and think about national issues. And this will happen only when we make the economy a national interest.
And sharing this important message with you, matters to me Today, there is only one superpower left in the world, and that is USA. America's GDP is $28 trillion, 1.5 times more than China, and 7 times more than India.
And superpowers are not just made with money Superpowers are made of wallets and bullets as well During World War II, America got two big advantages. One, that America was the only country on which there was no big economic impact. And second, America had atomic weapons. And after World War II, America made sure that they remain at the top forever.
In which many dark decisions were taken, which changed all of our lives forever. India needs to learn from America because about 250 years ago, America was also a British colony like us So what did they do right and what they didn't This is our series, World Cup of Economies, where we will understand the economies of different countries But in an interesting way.
Why India Can Never Beat the USA Economy
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