Take a look at your post this 'layman 12345' posted again
"India the death is imminent
Indian borrowing rates are very high, and with the persistent inflation problem they cannot cut interest rates too low.
but since the current account deficit, investors are losing confidence in the indian currency.
the indian borrowing rates will continue to rise.
india is pretty much screwed, if they loosen monetary policy, inflation will get worse.
but if they raise interest rates to fight inflation, borrowing ability will be much harder.
things will get even worse when gdp growth starts to slow down causing fiscal revenues to slow and the government budget deficits will get even worse causing them to borrow even more. but with borrowing rates so high, indian government cannot afford these high interest payments.
the only solution is to cut the spending and reduce the budget deficit, but since the indian economy only grows because of its debt based consumer economy, if it cant spend beyond its means(by going into debt) then its gdp growth will slow dramatically.
this is the problem when you rely on deficit spending for gdp growth and being a debtor nation.
india is in deep trouble.
the US runs the same sort of ponzi scheme, but the US dollar is the reserve currency and thus have a global demand so inflation is not a problem as global investors hold dollars the federal reserves prints. global investors go to the dollar as a 'safe haven'.
but the indian rupee is not a reserve currency so it does not have that priviledge.
india has to run an economy the old fashion way.
only reserve currencies have more rope to hang themselves.
india must turn into a manufacturing powerhouse to reduce the current account deficit.
india must also balanced the budget and stop living beyond its means. if that means accepting a slower growth rate, then so be it.
Author C.Century
Source:
http://www.defence.pk/forums/world-...-cant-catch-chinese-hare-8.html#ixzz1wSMch3Eq