LETTER | One of the best ways to increase our GDP is to spend more.
money i.e. money that is not backed by anything of value other than the guarantee by the government of that country which makes it legal for that particular currency to exchange for goods and services.
For instance, the US has the largest GDP and more than 70 percent of this is from private consumption or consumer spending. Government spending constitutes the other major part of the equation.An increase in the GDP means the government is able to print more money for the people to use, without the foreigners devaluing our money.
Because America is the only superpower in the world and because everybody presumes that America will always be there, its money is considered to be a"safe haven asset" and as such, it can create as much money as it likes without the fear of devaluation. There is no other"safer" currency which can be devalued against as the British pound, the yen and the euro are all in trouble as well and are also in the process of"quantitative easing".
When a country like Malaysia prints more money, we have to make sure that our GDP rises, otherwise our ringgit will be devalued by the foreigners. One of the best ways to increase our GDP is for the people and the government to spend more. man can charge only RM1 per plate and is not allowed to increase his price for the next 10 years, he will not able to contribute to the GDP increase.man increased his product to S$10 per plate, he is obviously able to increase his contribution to the GDP by 10 times and in the end, you will know which country is going to be richer.
What I am trying to say is that there are certain types of economic activity, especially those involving the service sector, where the input is predominantly quality human expertise and where science is not relevant in increasing the output. The best way to increase the contribution to the GDP is still by increasing the prices.
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