Monday, July 21, 2008

My version of controlling inflation(not exactly mine, copied from my friend)

Read in totality & think about the logic......it willdefinitely work tocurb the inflation menace. Do not underestimate the powerof theconsumers. & in any case, there is no harm if we limitourconsumption. ..it will only add up to our savings !!!
A man eats two eggs each morning for breakfast. When he goes to the Kiranastore he pays Rs. 12 a dozen. Since a dozen eggs won'tlast a week henormally buys two dozens at a time.
One day while buyingeggs he noticesthat the price has risen to Rs. 16. The next time he buysgroceries, eggs are Rs. 22 a dozen.When asked to explain the price of eggs the store ownersays, "The pricehas gone up and I have to raise my price accordingly" .This store buys 100dozen eggs a day. He checked around for a better price andall thedistributors have raised their prices. The distributorshave begun to buyfrom the huge egg farms. The small egg farms have beendriven out ofbusiness. The huge egg farms sell 100,000 dozen eggs a daytodistributors. With no competition, they can set the priceas they see fit.The distributors then have to raise their prices to thegrocery stores.And on and on and on.As the man kept buying eggs the price kept going up. He sawthe big eggtrucks delivering 100 dozen eggs each day. Nothing changedthere. Hechecked out the huge egg farms and found they were selling100,000 dozeneggs to the distributors daily. Nothing had changed but theprice of eggs.Then week before Diwali the price of eggs shot up to Rs. 40a dozen. Againhe asked the grocery owner why and was told, "Cakes and baking for the holiday". The huge egg farmers know there will be alot of baking going onand more eggs will be used. Hence, the price of eggs goesup. Expect thesame thing at Christmas and other times when familycooking, baking, etc.happen.This pattern continues until the price of eggs is Rs. 60 adozen. The mansays, " There must be something we can do about theprice of eggs".He starts talking to all the people in his town and theydecide to stopbuying eggs. This didn't work because everyone neededeggs.Finally, the man suggested only buying what you need. Heate 2 eggs a day.On the way home from work he would stop at the grocery andbuy two eggs.Everyone in town started buying 2 or 3 eggs a day.The grocery store owner began complaining that he had toomany eggs in hiscooler. He told the distributor that he didn't need anyeggs.Maybe wouldn't need any all week.The distributor had eggs piling up at his warehouse. Hetold the huge eggfarms that he didn't have any room for eggs would notneed any for atleast two weeks.At the egg farm, the chickens just kept on laying eggs. Torelieve thepressure, the huge egg farm told the distributor that theycould buy theeggs at a lower price.The distributor said, " I don't have the room forthe %$&^*&% eggs even ifthey were free". The distributor told the grocerystore owner that hewould lower the price of the eggs if the store would startbuyingagain.The grocery store owner said, "I don't have roomfor more eggs. Thecustomers are only buying 2 or 3 eggs at a time. Now if youwere to dropthe price of eggs back down to the original price, thecustomerswould start buying by the dozen again".The distributors sent that proposal to the huge egg farmersbut the eggfarmers liked the price they were getting for their eggsbut, thosechickens just kept on laying. Finally, the egg farmerslowered theprice of their eggs. But only a few paisa.The customers still bought 2 or 3 eggs at a time. Theysaid, "when theprice of eggs gets down to where it was before, we willstart buying bythe dozen."Slowly the price of eggs started dropping. The distributorshad to slashtheir prices to make room for the eggs coming from the eggfarmers.The egg farmers cut their prices because the distributorswouldn't buy ata higher price than they were selling eggs for. Anyway,they had fullwarehouses and wouldn't need eggs for quite a while.And those chickens kept on laying.Eventually, the egg farmers cut their prices because theywere throwingaway eggs they couldn't sell.The distributors started buying again because the eggs werepriced towhere the stores could afford to sell them at the lowerprice.And the customers starting buying by the dozen again.
Now, transpose this analogy to the gasoline industry.What if everyone only bought Rs 200.00 worth of Petrol eachtime theypulled to the pump? The dealer's tanks would stay semifull all the time.The dealers wouldn't have room for the gas coming fromthe huge tanks. Thetank farms wouldn't have room for the petrol comingfrom the refiningplants. And the refining plants wouldn't have room forthe oil being offloaded from the huge tankers coming from the oil fiends.Just Rs 200.00 each time you buy gas. Don't fill up thetank of your car.You may have to stop for gas twice a week, but the priceshould come down.Think about it.Also, don't buy anything else at the fuel station;don't give them anymore of your hard earned money than what you spend on gas,until theprices come down..."...just think of this concept for a while............. ......please pass this conceptaround....reaching out tothe masses ...the world .....