RBI drops interest rates

Today RBI dropped interest rates by 0.5%. In India M3 money supply or inflation is 11.2%, during the last 12 months, as per RBI. Dropping interest rates means higher inflation. So was dropping interest rates the right action?

There is deflation in the world. Governments hate deflation because it means lesser tax revenues. Foolish people hate defaltion because their income falls. Smart people like deflation because the purchasing power of their existing currency rises.

Governments all over the world e.g. Russia, Brazil, Venenzuala, etc and now India combat deflation by devaluing their currency; lower interest rates means that currency will become less valuable. Inflation is a form theft; it steals from savers to the benefit of debtors. The only way to protect yourself is by investing in physical assets like gold and silver.