Recently Iran agreed to export 80,000 barrels crude per day to Pakistan. Pakistan requested a loan of $500 Million from Iran for the pipeline to be built. Iran refused for $500 million but agreed for half the amount – $250 million. This loan of $250 million doesn’t have the interest rate decided or the loan repayment length. The fun does end here. Russia is “pressuring” Pakistan to award a $1.2 Billion Oil Pipeline ‘no-bid’ contract to Gazprom, a Russian firm that has used its economic clout for political gains in Europe.
One Rupee was all I wanted for lunch at school during my early school days, enough to buy me one bag-a-chips, and three Rupees for Thursdays to enjoy Pepsi. This was about two decades ago. Today a bag of chips cost Rs7 and Pepsi Rs20. So what happened? Am I getting 7 times the amount of Chips or Pepsi? Or is it my money worth less? This one’s pretty easy to answer after enjoying Pepsi. If I had saved those Rs3 from 20 years ago, it would have lost 86% of its value today. So how did this happen? How did the value of my Rs3 erode away as time went by? Where did the purchase powergo? To answer this, we will have to understand Money and the role of Central Banks.