About Jimmy

Welcome to my blog. I am a CFA Charterholder involved in the profession of finance. I also intend to formalize my education in physics and mathematics but that shall come later. I plan to write about two things: the first one is my perspective about life and I intend to channel my thoughts through this blog. My second objective is to write on topics in finance. We have seen a divergence between theory and practice and I will mostly write on the shortcomings of the system. I aim to create a vision that lies beyond sight and explore reality from an angle less explored. Jimmy Dotiwala

The Pitfalls of a Monetary System

This post talks about why any monetary system (based on the concept of money as a medium of exchange) does not fit into an ideal design of the global economy. This is just a bird’s eye view of a failed system.

Before I start the topic, I want to provide my view on the age old question – was the gold standard (monetary system) any better than the current? The proponents of the gold standard argue it is easier to keep interest rates stable over a long period under a narrow band (How interest rates are set?). Theoretically, it keeps a check on the liquidity in the system. However, some of the pitfalls of such a system, in my view, are the same as the current one. The gold standard could be a relatively better system but I disagree it would serve us better. I feel the gold standard is not a good substitute to the current one. However, this post is not about current versus the gold standard. Continue reading