What is this fiat money that experts are talking about ?

Junbeel is about 65 km from Guwahati, Assam.

In Jan or Feb, a festival is hosted here – Joonbeel Mela.

The mela is unique – it is a mela to exchange.

Money doesn’t play a role here. People from different parts of Assam come here to exchange goods.

People from the hills, people from the plains – they bring their produce and exchange it.

Barter system!

This mela is hundreds of years old and is going strong even in this day and age.

Barter System

Before our modern age with money, barter was the only way trade was done.

For thousands of years, people exchanged what they had for what they needed.

It is what makes us human.

You have grown a lot of rice. You can’t eat it all. Someone else has many cows and a lot of milk. You both exchange. He gets some rice, you get milk.

But there are a few drawbacks. You have excess rice but you don’t need milk. You need clothes. What now?

You take the milk, give him the rice. Later, you find someone who is willing to take the milk and give you clothes.

As trade and commerce developed, a few things emerged most traded.

Things like milk and rice, more people wanted.

Things like clothes and special tools were needed less often.

So these common things – rice, milk, sheep, etc – they started being treated like money.

People would exchange their commodities and accept say rice even if they didn’t need rice simply because they knew they could easily exchange rice and get what they wanted later.

This made trade easier.

Money just got invented – sort of.

Commodities to Coins

Great, but this still had some drawbacks.

What if the milk goes bad; rice decomposes, sheep runs away or dies?

For any money to be able to store value, it needs to be durable.

This is why metals replaced common commodities like milk and rice.

Iron, copper, tin started being used as currency.

But they rust too.

Silver and gold were discovered. They don’t rust easily. So silver and gold became currency.

As time progressed, the metals were beaten into shapes and became something we use today also – coins.

Certificates

Metal coins were heavy. Think of a wallet filled with Rs 100 in coins. That’s very difficult to store and carry.

People started storing money in certain places or institutions (similar to banks).

When storing money, these institutions would issue a certificate that mentioned how many coins a person had stored with them.

This was proof of storing money.

So when someone would need coins to give to someone else, they’d go with their certificates and give them to the bank.

The bank would give them their coins. The person would take the coins and give it to whoever they wanted to buy something from.

But often, this person who would get the coins would again, come back to the same bank and deposit the coins in his account.

Over the years, people stopped taking out the coins to spend. They would simply give them their own certificate!

Do you realize what happened?

Notes! Notes just got created here.

This is why most notes around the world actually read like a certificate.

Take out a Rs 100 note. It reads, ‘I promise to pay the bearer the sum of one hundred Rupees’, signed by the RBI governor.

People started dealing with these notes.

But still, if you wanted, you could always go to the bank and ask for the actual metal coins.

The paper note has no real value or purpose. But the metal does.

The notes were backed by gold in most countries.

So if you want to a bank with $100, you could ask for $100 worth of gold to be given to you instead of the note.

The money was backed by gold.

In 1971, a historic, monumental change occurred.

The world’s largest economy, the one that practically affects the world – the USA – announced that the US dollar wouldn’t be backed by gold anymore.

They would simply be backed by the US government.

Value was not stored in gold anymore. It was stored as trust in the US government. Trust that the promise the US government is making on its notes will be honored.

Money that isn’t backed by any commodity is called fiat currency.

The US dollar became a fiat currency.

Today, most currencies around the world are fiat currencies.

This was an extremely controversial move. But a move the US needed at the time.

Fiat currencies allow governments better control over the economy.

See, if money is backed by gold (or silver), the government cannot do anything. There can only be as much money in the world as there is gold.

And there isn’t much gold in the world.

With fiat currency, the government can simply declare and create more money (or reduce money).
Why is that important?

When economies suffer, it starts spiraling.

People know things are bad, so they spend less and save more. When spending goes down, the economy suffers even more.

What governments do in such cases is, print more money and give it out to the public – in the form of easily available loans.

With more money in hand, people relax and spend a bit more.

This leads to better economic growth – thus saving the country from going into depression.

In 2008 during the housing crisis, the US economy and practically the world economy was supposedly headed into a collapse.

The US printed money and saved the economy – by triggering growth.

But that wasn’t the last time money was printed.

A massive amount of money was printed again in 2020-21 – when the pandemic struck.

Of course, there are advantages and disadvantages to fiat currency.

But let’s talk about the most relevant disadvantage facing the world right now.

What happens when everybody tries to buy a few things?

Think supply and demand.

The price of that thing goes up!

Inflation

After the recent printing of money, there’s too much money in the system.

But the items of daily use – fuel, food grains, steel, etc – their production is more or less the same as before.

So more money chasing the same items has caused a price rise of everything – inflation!

If $1 could buy 1 liter of milk earlier, now it can buy maybe 900 ml.

It has lost some of its buying power.

This is one of the biggest arguments against fiat money.

History has many examples where some countries printed so much money, they caused hyperinflation.

Read about the hyperinflation in Germany, Hungary, and Zimbabwe.

Savior and Collapse

People who are against fiat currencies say: that because the US has printed so much money, it is losing its value. They even go on to predict a collapse of the US dollar.

Since the world economies are all interconnected, all of this affects most of the world economy practically speaking.

The topic of fiat currency is extremely vast and something even the best people don't fully understand.

It is easy to read the words ‘collapse’ and think the worst is about to hit us.

At the same time, there’s no denying, that money printing did save economies in 2008.

And it has prevented depression during the pandemic – so far.

Fiat currency is loved for its advantages by many economists including Nobel prize winners.

Many economists believe that money printing if done within limits is helpful; and that the US dollar is within safe limits.

There are also those who are only against the excessive printing of money – not fiat currencies as such.

It is an interesting topic – a topic we all should learn more about. Especially given that fiat money runs much of the world today.

PRISON ADMINISTRATION IN INDIA

Introduction:

According to the Oxford English Dictionary, “Prison is a place, properly arranged and equipped for  the reception of persons who by legal process, recommitted to it for the safe custody while awaiting trial for punishment”.

The prison system dates back to the period of civilization itself. It is a system /method of punishing the culprit for the offender. Prison is a centre where the people who go against the society, state or country or try to harm them are kept to undergo some punishments. The main objective to behind keeping the offenders in the prison is to rehabilitate them so that they can start a new life. And, for some other prisoners, there are provisions of short time imprisonment, life imprisonment and death penalty. Imprisonment is considered to be a contemporary method of dealing with the delinquents since the very beginning. In the present day scenario, the prisons have also began to act as correction facility centres. Thus, prison system and reformatories are considered to be the hindmost part of criminal justice regime. Prisons, in present day context play the role of the reformatories as well. Today, the prisons act more of as a correctional or improvement facility which clearly denotes that more emphasis is being placed on the reformation of prisoners in the form of punishment. To attain the goal, a pleasant atmosphere has to be cultivated in the jails for the benefit of the inmates. Rather than accentuating social and ethical values for the integration of the society after the waiver, inmates require educational, recreational and vocational equipping facilities. This acts as a way of aiding them with alternate sources of livelihood and furlough. In India, the prison reforms were not the outcome of any social movement but were rather the outcomes of the awful conditions of treatment faced by the prisoners during the time of confinement. “The ancient Indian society has demonstrated all the qualities of a given social system. All the sins and crimes that were committed were entitled to secular punishments and supported by the religious sanctions of the Indian society. The state did not perform the function of administering justice during the Vedic period. Usually, the king or an authorized officer would act as a judge and deal with the offences like murder, adultery and theft. But, in reality, the weaker sections of the society were helpless because, the society was a graded one”.

Prison Reforms in India:

The major objective of the prison reforms is to enhance the conditions of the prisoners during the term of their confinement and also to enhance the efficiency of the penal system. It stresses more upon guaranteeing the rehabilitation of all those whose lives have been affected by the crimes.

Prison reforms Prior-independence:

TB Macaulay introduced the Modern Prison system in India, in 1935. A committee known as The Prison Discipline Committee was elected in 1836. The committee submitted its report in 1838. The recommendation made by this committee was that the prisoners should be treated harshly while completely excluding all the humanitarian needs and reforms of the prisoners. The central prisons were constructed from 1846 after the recommendation made by the committee. The contemporary system of prison administration regime in India is thus a bequest of the British rule. The suggestions made by the 2nd commission of inquiry into jail management and discipline in 1864 were similar to the recommendations made by the 1836 committee regarding the settlement for the prisoners, modification in diet and medical care. Another committee named The Jail Reforms Committee of 1919-1920 was appointed under the oversight of Sir Alexander Cardio to suggest measures for prison reforms. The committee gave suggestions regarding the maximum intake capacity should be fixed depending upon its shape and size. This committee gave numerous recommendations like- differential treatment of child offenders, construction of modern jails, division of offenders like women offenders, habitual offenders and etc.

Prison reforms post-independence:

After the independence, the reformation work of the jails had accelerated. Thus, in 1956, the punishment for transportation of life was swapped for imprisonment for life. In 1949, the Pakwasha committee gave the permission to the prisoners for taking up the work of construction of roads an in return, wages would be paid to them. In 1951, Dr. W.C.Reckless (Technical Expert) made certain recommendations on prison reforms. Later, a committee named “All India Jail Manual Committee” was appointed in1957 based on the suggestions made by Dr W. C. Reckless. The main objective of this committee was to examine the problems of prison administration and to suggest modifications that can be uniformly adopted throughout India. The committee further went on to deliver its report in 1960. The committee was configured under the chairmanship of Justice Anand Narain Mulla. In 1986, The Juvenile Justice Act was enacted where, observation homes, special and juvenile homes were set up for the ragged children and the juvenile delinquents. The juveniles however, could not be kept in the prison. In 1987, ‘Justice Krishna Iyer Committee’ was elected to undertake a study on the situation of women prisoners in India. The Supreme Court in its landmark decision in Ramamurthy Vs. State of Karnataka has observed nine major problems which require urgent attention for executing prison reforms. The court has thus discerned that the present prison system is affected with major problems of:

a) Overcrowding

b) Delay in Trial

c) Torture and Ill-treatment 

d) Neglect of health and hygiene

e) Prison Vices

f) Deficiency in communication 

g) Streamlining of jail visits

h) Insufficient food and adequate clothing

i) Management of open air prisons.

Laws relating to Prison Administration in India:

The administration of prisons in India falls in the hands of state of the state governments, and is governed by the Prisons Act, 1894 and the Prison Manual of the respective state governments. Thus, the states have the primary responsibility and authority to change the current prison laws, rules and regulations. There are a number of legislations that directly or indirectly take charge of the administration and reformation of the prisoners. “The existing statutes which have a bearing on regulation and management of prisons in India are:

 i. The Indian Penal Code, 1860;

 ii. The Prisons Act, 1894;

 iii. The Prisons Act, 1900;

 iv. The Identification of Prisoners Act, 1920;

 v. Constitution of India, 1950;

 vi. The Transfer of Prisoners Act, 1950;

 vii. The Representation of People’s Act, 1951;

 viii. The Prisoners (Attendance in Courts) Act,1955;

 ix. The Probation of Offenders Act, 1958;

 x. The Code of Criminal Procedure, 1973;

 xi. The Mental Health Act, 1987;

 xii. The Juvenile Justice ( Care & Protection) Act, 2000;

 xiii. The Repatriation of Prisoners Act, 2003;

 xiv. Model Prison Manual 2003”.

Conclusion:

For ensuring a good domain and conduct, an initial classification must be made to separate male from females, the young from the adults, convicted from the unconvict prisoners, civil from criminal prisoners and from casual from the habitual prisoners. The main object was to engage them so as to prevent mental damage and to enable them to contribute to the cost of their maintenance. The under trial prisoners are presumed to be the innocent and most of them are discharged or acquitted after immeasurable physical and mental loss caused to them by detention due to delay in investigation and trial. Research and crime and the criminal is still in its infancy. The immediate need of research is to evaluate the existing methods of treatment and to suggest new approaches to the prevention of the crime. The value of probation, open prisons, parole and home leave as reformatory measures need to be established. Prisoners constitute important institutions which protects the society from criminals. The obstacles in prison reforms are resource allocation, the deterrent functions of punishment, the notion of rehabilitation, and internal control.