“Credit Points the world economy will have to work under a special arrangement

for alternate money which can be used in domestic as well as international market.
Credit points are like transferable bonds and need approvals of state financial
authority.”

Theory of Limited Restriction in Open Economy

Cease and sort

Fundamentals
• In open economy there are many chances of unexpected development which can
be resulted due to competition or innovation or diversification.
• Supply of money is not the only reason for adding value or devaluing a
product (price hike or discount)
• State can control production and take over establishments when required
• State can buy all unwanted stock of the market and ask industries not to
produce or sell it to state only.
• State can be only buyer and control the market with complete monopoly
• State can create pool of goods/services and bid in open market
• State got complete authority to amend necessary laws and stop future
development for unspecified time period
1. Market although open but need monitoring from the state
2. State is responsible for any major loss occurred due to uncontrolled
business practices
3. State is the guarantee for business establishments and other investors to
ensure smooth liquidity of money
4. State is responsible for any bankruptcy occurred due to policies and
permission guided and given by state
5. State is responsible and authorized to cease assets and control of any
organization, group, individual whom state feels has failed to perform as per
norms or created panic in market
6. State is authorized to value the properties and decide selling terms
7. State can levy taxes on certain product on the basis of location or quantity
or its future use.
8. State can levy taxes on supplementary products to support a specific
industry or organization or group
9. State can restrict a company, or organization or person to buy a specific
product or services for unlimited time period.
10. State can negotiate with other groups or organization or industries or
individuals those effected by these restrictions and create a balancing way to
help desired industry, or organization or persons
11. State can overprice a product in specific market and ask trader to deposit
the margin in states account
12. State can give incentive or finance to promote sale of any specific product
or service
13. State can pool funds for funding or subsidize a product for sale
14. State can ask other industries or organization or individual to stop
production or sale for unlimited period
15. State can wave off levies for same services or product in a specific zone.
16. State can buy or take control on any industry or organization or firm for
unlimited period
17. State can ban import or export of a particular product or service for
unlimited period
18. State can enter into strategic alliance with another state or foreign
organization or individual to pool resources or barter

Rules of Economy
• Any entrepreneur is responsible towards its employees and investors and
vendors and associates and buyers and end users.
• Any entrepreneur is responsible for all business plans and expansions
• An entrepreneur is liable for any misadventure which cause loss to investors
and vendors and associates and buyers and employees and end users
• An entrepreneur is responsible for any loss occurred to vendors and
associates and buyers and users happened due to poor management
• An entrepreneur operates in a market which is provided by state and interest
of entrepreneur cannot be placed higher than interest of state
• An entrepreneur is abide by any decision taken by the state in case of
default or business losses
• An entrepreneur is not allowed to earn exceptional profits and this is his
responsibility to inform state if the profit goes above certain limits
• An entrepreneur will create defense pool in custody of state to counter any
economic turmoil

Duties of the State

1. Interest of the consumers remains on highest priority in any situation and
the state must safeguard interest of investors and buyers on priority
2. State will act as intermediary till the crises are over
3. Job of the state is not to run business establishments thus after the crises
is over the ceased industry, property, service will be handed over or sold to
deserving group or individual or organization.
4. State will act as crises manager and will charge for services which will
again paid as compensation for effected individuals or organizations or groups or
industry during cease
5. State can create a pool to safe guard different industries and ask for
contribution on the basis of their risk factor
6. State can control disaster fund which is been collected from different
industries or group or individual apart from taxes.
7. Disaster fund is the contribution made by different industry in the form of
tax or duty
8. Disaster fund unlike income tax levied on industries on the basis of their
risk element and volatility.
9. Profits can be restricted by state for any industry
10. State can ask to buyback a product or service and create reverse marketing
to control the damage.

Needs of Control
Situations
• In the market where prices fall due to over supply
• In the market where profits shrink result monitory loss to investors
• In the market which is been taken over by speculators
• In the market product or services undervalued
• In the market where shortage been created by suppliers
• In the market where holding capacity of industry or organizations or
• suppliers or retailers fall down
• In the market where the chances are to get effected by outside sentiments
• In the market where recession is started
• In the market which is sensing recession

Explanations

What is the Role of state?

Cease the market and takeover all the operation either directly or through
intermediary (governing body). This is emergency position.

What is controlled restriction?

State ceases the market and takeover the control for one or two heavily effected
industries. Only state can declare if any industry needs to be taken up under
controlled restrictions

Why limited control?

State cannot control all establishments and run it for longer period.

Will state play as manager?

State will play as facilitators and the industry will be managed by industry
people in controlled environment

Will state pay any price to the entrepreneur for taking over the establishment?
In this situation the assets of the industry/establishment will be ceased for such
period. Entrepreneur can not claim any compensation or return on the assets until
state control the situation; as he failed to fulfill his social responsibility of
running the establishment.

Does it mean that the state will own all assets and liability of the industry
ceased?
State will never takeover or own the liabilities but state will manage the assets
and the liability of the industry for specific period. In the case of further
losses the entrepreneur will be charged for the same

Why entrepreneur will be charged for the further losses if the entrepreneur is not
controlling the establishment?
It is believed that the crises are resulted due to poor management or willful act
of the entrepreneur consequently makes the entrepreneur responsible for the same.

If the industry is contributing towards disaster fund will the entrepreneur will
be liable in same degree?
No, in this case if the industry keeps suffering losses than the state will
evaluate present asset and liability ratio and will buy the assets of entrepreneur
on evaluated value

Is the limited restriction is a situation similar to when an

establishment/industry file for bankruptcy?
No, this is to stop bankruptcy and the state will monitor the industry and rise
alarms to alert industry from any such fall down

Can the industry/establishment raise the alarm and ask the state to announce
crisis situation?
Yes, the industry is also responsible to make state aware of internal situation
and ask for amnesty

What is the amnesty under limited restriction?

In limited restriction industry can ask state to come forward to take on a
specific industry for specific time period to support and avoid possible disaster

Does the state need to take over the management?

Not necessarily, state need not to change the management completely but can ask
the industry to go ahead with same management with close monitoring and support to
the industry/establishment by creating some restrictions or favorable law

According to the theory of limited restriction how the restrictions will be

implemented?
In limited restriction the state will restrict the activities of the specific
industry/establishment and other industries, those effect growth and
sustainability of specified industry

How to counter the damage to other industry due to limited restriction?

State will provide credits points to effected industry/establishments those will
be effected by the restriction to support them and to avoid setback; these credits
will be reimbursed from the industry/establishment specified after the
industry/establishment reach at sustainable level.

How these credits points will be counted?

A monitoring committee will keep the eye on damage control mechanism and access
damage to other industry due to limited restriction. Credit points will be awarded
on the basis of damage to other industry due to restrictions.

Why limited control needed?

Objective of limited restriction is to revamp a specific industry/establishment
suffering form market situations; and safeguard the interest of employees,
customers and associates.

Why state should support a specific industry/establishment in open market

situation?
In any economy different industry act as a link in a chain; any weak link can
break the chain. To support the link for a limited time it’s essential to ease out
that link and transfer additional pressure to other links those can tolerate extra
pressure for time being.

Can this limited restriction be applied in a small area?

It is only possible in large economic zones and cannot be applied in special zones
but to meet out local competition and to support a particular restriction new
restrictions can be imposed in such areas.

How the state will pool the resources?

State is a powerful entity and the state must be ready to take touch decision;
make laws which may create long lasting effects on the people and economy.
Apart from the basic amenities state does have a right to restrict facilities and
privilege in case of emergency

Is limited restriction is the state of emergency?

Yes, it’s a limited emergency situation,

What kind of long term provisions required countering such emergency?

In open economy the state is bound to face the situation of emergency time and
again; limited restriction is a method of disaster management when the situation
moves beyond control in normal circumstances

What is the theory?

The theory of limited restriction says that to support the interest of investors,
industry/establishment, employees, and associate organizations is the
responsibility of the state because they all acted into an environment and
facilities given/provided by the state only. State can take necessary action and
restrict same or other industries for desired situation.

Can there be more than one industry adopted by the state at one time?
As many as industries can be adopted by the state depending upon the situation

Is the state capable of pooling the resources for so many industries at one-time?
Limited restriction is the state of emergency and in the case of emergency the
state must take the charge to save small players, buyers and investors in the
market. It’s mandatory for the state to announce economic emergency and if needed
restrict other industry to create right balance

In global market is it possible to close the doors for any state as every state is
bound by so many international treaty?
In this situation state will have to give credit points to effected states and
renegotiate terms in new situation. Other states must realise that in open economy
all the markets are vulnerable and can effected by each other. Thus to support
other states in crises international market need to work on new mechanism to
giving credit points to each other for any adverse consequence on other states
too.

How to value credit points?

Credit points are going to substitute currency in international business treaty it
will become mandatory in future to work on credits as the currency may not able to
measure the damage on given situation. Different economic zones have to negotiate
potential loses and bargain for future gains in the cost to support present
situations

What is the credit?

Credit is a process to calculate damage and it will be unaffected by any currency
rate and these credits can be decided in international treaty

Do the credit point is the substitute of currency?

Yes, but you need not to pay any hard cash against credit as it will be substitute
for credit only.

What other states can do with the given credit?

If state ‘A’ puts some restriction on import and effect export of state ‘B’ and
the state ‘A’ give credits to state ‘B’ which can be used for other trade ties or
later on when the ban lifted. In the mean while state ‘B’ can pass this credit to
the effected industry or companies in their areas this can be transferable to
other industries trading to state ‘A’
Example:
State A is importing handicraft from state B
State ‘A’ put restriction on handicraft import from state B
If state A and state B got some treaty than state A will give credit to state B of
approximate value of the losses to the industries of state B
State B will pass on the credit to the effected handicraft exporters
Handicraft exporters of the state B sell these credits to electronic exporters of
the
State B
At present state A put import duties on the electronic goods imported from state
B
When exporters of state B export to state A than they can cash those credit points
for discounting their product.
Any new model can be adopted by both the states after mutual consensus

How credit points are different than currency

Credit points can be used only for business transaction and only state can convert
them. These credit points can only be redeemed for the purpose of paying taxes and
duties and will have add on value as the time passes. The state will issue the
noting with every credit point how much value addition it will get after the time.

How these credit points can be redeemed within state?

The credit points can only be used for the payment of taxes and other liabilities
to the government.
Can these credit point transferred to the any other person?
Yes these credit points can be transferred and used for any international trade
but the issuing state can only redeem them.

How these credit points are different than currency?

Credit points unlike currency keep adding value to themselves in addition to the
currency value.
Example in case you got 10 credit point equaling of 10 US$
Issue date of credit point 10/10/2008
Value addition 5 points (this is % of annual value addition and this can differ of
different credit point issued time and the industry)
Value of credit pint after 2 years will be the interested calculated for 2 years @
5% p.a. on the currency value. In case of international transaction i.e. if a
exporter want to redeem these credit points issued by US than the current value of
the dollar will be taken along with the yield.

What will be role of currency in future international trade?

Credits will never take place of currency as they will be measured on the basis of
prevailing currency rates only but the credit will be the transferable instrument
and the state can govern it with 0 liabilities as it can be redeemed for tax and
levies only.

How many credits to be issued by the state to control a disaster?

The best situation is that the state should not any credit and owner those credits
as early as possible but the it all depends on how serious is the condition

.
Email : economic.theory@yahoo.com