Controlling inflation.... our own way...

The inflation did come down a little... but its still pinching our pockets.
I recieved the following email as a forward... and I thought that maybe it will be helpful to pass on the message...!!!

A man eats two eggs each morning for breakfast. When he goes to the Kirana store he pays Rs. 12 a dozen. Since a dozen eggs won't last a week he normally buys two dozens at a time. One day while buying eggs he notices that the price has risen to Rs. 16. The next time he buys groceries, eggs are Rs. 22 a dozen. When asked to explain the price of eggs the store owner says, "The price has gone up and I have to raise my price accordingly". This store buys 100 dozen eggs a day. He checked around for a better price and all the distributors have raised their prices.

The distributors have begun to buy from the huge egg farms. The small egg farms have been driven out of business. The huge egg farms sell 100,000 dozen eggs a day to distributors. With no competition, they can set the price as they see fit. The distributors then have to raise their prices to the grocery stores. And on and on and on. As the man kept buying eggs the price kept going up.

He saw the big egg trucks delivering 100 dozen eggs each day. Nothing changed there. He checked out the huge egg farms and found they were selling 100,000 dozen eggs to the distributors daily. Nothing had changed but the price of eggs. Then week before Diwali the price of eggs shot up to Rs. 40 a dozen. Again he asked the grocery owner why and was told, "Cakes and baking for the holiday". The huge egg farmers know there will be a lot of baking going on and more eggs will be used. Hence, the price of eggs goes up. Expect the same thing at Christmas and other times when family cooking, baking, etc. happen. This pattern continues until the price of eggs is Rs. 60 a dozen.

The man says, " There must be something we can do about the price of eggs". He starts talking to all the people in his town and they decide to stop buying eggs. This didn't work because everyone needed eggs. Finally, the man suggested only buying what you need. He ate 2 eggs a day. On the way home from work he would stop at the grocery and buy two eggs. Everyone in town started buying 2 or 3 eggs a day.

The grocery store owner began complaining that he had too many eggs in his cooler. He told the distributor that he didn't need any eggs. Maybe wouldn't need any all week. The distributor had eggs piling up at his warehouse. He told the huge egg farms that he didn't have any room for eggs would not need any for at least two weeks. At the egg farm, the chickens just kept on laying eggs. To relieve the pressure, the huge egg farm told the distributor that they could buy the eggs at a lower price. The distributor said, " I don't have the room for the %$&^*&% eggs even if they were free". The distributor told the grocery store owner that he would lower the price of the eggs if the store would start buying again. The grocery store owner said, "I don't have room for more eggs. The customers are only buying 2 or 3 eggs at a time. Now if you were to drop the price of eggs back down to the original price, the customerswould start buying by the dozen again". The distributors sent that proposal to the huge egg farmers but the egg farmers liked the price they were getting for their eggs but, those chickens just kept on laying. Finally, the egg farmers lowered theprice of their eggs. But only a few paisa. The customers still bought 2 or 3 eggs at a time. They said, "when the price of eggs gets down to where it was before, we will start buying by the dozen." Slowly the price of eggs started dropping.
The distributors had to slash their prices to make room for the eggs coming from the egg farmers. The egg farmers cut their prices because the distributors wouldn't buy at a higher price than they were selling eggs for. Anyway, they had full warehouses and wouldn't need eggs for quite a while. And those chickens kept on laying. Eventually, the egg farmers cut their prices because they were throwing away eggs they couldn't sell. The distributors started buying again because the eggs were priced to where the stores could afford to sell them at the lower price. 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 each time they pulled to the pump? The dealer's tanks would stay semi full all the time. The dealers wouldn't have room for the gas coming from the huge tanks. The tank farms wouldn't have room for the petrol coming from the refining plants. And the refining plants wouldn't have room for the oil being off loaded from the huge tankers coming from the oil fiends. Just Rs 200.00 each time you buy gas. Don't fill up the tank of your car. You may have to stop for gas twice a week, but the price should come down. Think about it. Also, don't buy anything else at the fuel station; don't give them any more of your hard earned money than what you spend on gas, until the prices come down..." ...just think of this concept for a while...................please pass this concept around....reaching out to the masses ...the world ..... let us put an end to oil rich countries fleecing the poor and developing countries …..

Do you think...that this will work....???

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3 Thoughts:


Sunday, July 20, 2008 1:38:00 PM

I doubt if this will work. See,basically price is a function of supply n demand. And in this method,there's no change in either. Only the distribution of demand gets spread out. So why should the price change?? Plus,petrol is nt chicken dat will lay eggs even if nt wanted. If the demand gets spread out,the supply also will. This cant work.


Sunday, July 20, 2008 11:27:00 PM

Hello, hope all is well...I never quit understood the law of supply and demand until now. It does appear that we are consuming less gas, changing our opulent habits. Things are having an affect on the barrel of oil. If only we continue with that understanding of frivolous waste and consumption as prices go down.

Pressure from the consumer is our biggest weapon. Great post..blessings to you..

Dorothy from grammology


Monday, July 21, 2008 3:43:00 PM

I agree with both of you. My economics is as bad. But yes, the biggest weapon that the consumer has is the pressure that we can put on the government and the suppliers.
Yes souvik, oil is not like chicken.But then by finding alternate source of energy and by utilising wisely not only our money but also the resources, we may be able to control the prices that are soaring.