A friend asked me online why India can buy arms for $654.38+0 billion every year and is always cheated. Why not buy it into US Treasury bonds and make some money?
To separate this matter, I will start with "why does India spend huge sums of money to sell arms". "Why doesn't India buy US Treasury bonds?" "Can the money from arms sales be used to buy government bonds?" Three questions to explain.
1, why does India spend huge sums of money to sell arms?
India's annual military expenditure is 60 billion US dollars, which is not low for a small economic country with only 20,000 US dollars, but it is not high for a big country with a total population of over 65.438+300 million. The population of the United States is 300 million, which is only a fraction of India's, but the annual military expenditure is more than 700 billion, ten times more than India's! Russia will only spend $40 billion a year to challenge American hegemony.
Of India's $60 billion military expenditure, a considerable part is paid for the salaries and benefits of high-caste officers, and about 654.38+0 billion is used to sell arms, which is amazing both in the total military expenditure and in the world arms trade.
In essence, India's huge investment in arms sales is to maintain its absolute dominant position in the South Asian subcontinent and ensure its absolute control over South Asian countries. Although India has a territory of less than 3 million square kilometers, it directly and indirectly controls Nepal, Bhutan, Sri Lanka and other countries, and its military and political presence abroad is probably comparable to that of the world hegemon, the United States. However, India's hegemony has been challenged by Pakistan. Pakistan has been tightening its belts for years to buy arms and build weapons, while India intercedes with arms-selling countries internationally. "Are you allowed to sell weapons to minibuses?" While selling arms at full speed, I want to gain an advantage over Pakistan.
However, Pakistan, a reliable ally, is beyond India's reach. Both the United States, Russia and even Israel are exaggerating the tension in South Asia, treating Pakistan and its partners behind them as children and selling weapons crazily. In fact, they don't really want to improve India's military strength.
After buying arms for so many years, India's military strength has not been greatly improved. It is time for India to wake up. It is better to buy this thing than to build it. Only by establishing its own military industry can it be regarded as a real big country.
2. Why doesn't India buy US Treasury bonds?
Internationally, the safest and most stable investment product for capital investment is, of course, US Treasury bonds, because the United States takes fiscal revenue and national reputation as collateral, which will be repaid in any case and will not default. Therefore, all countries in the world, especially those whose currencies have a low position in international trade, will reserve a large amount of US Treasury bonds as the main investment method of foreign exchange reserves.
However, US Treasury bonds are really not suitable for India. Because India is a country that can't make ends meet, its foreign exchange reserves can't make ends meet every year, and there is no money to buy government bonds. The data shows that the Indian foreign exchange reserve stock is only more than 300 billion US dollars, which is not only lower than Taiwan Province Province of China, but even higher than the Hong Kong Special Administrative Region! Moreover, India has always maintained a trade deficit, with imports less than exports, but its foreign exchange reserves tend to decrease.
However, India also has advantages. Many Indians go to work in the United States, and the dollars they earn are sent back to India, forming a considerable part of India's foreign exchange reserves. Like the Philippines and Egypt, there are "remittances".
3. What's the difference between buying arms and buying US Treasury bonds?
India's arms sales must be collected through taxes from the financial system. These Indian Rupee must be converted into US dollars in the foreign exchange administration department before they can be bought from buy buy all over the world. This money must belong to the Indian Federation, not to the Indian people.
The money used to buy government bonds is dollars earned by exporters in these countries, and then converted into rupees in foreign exchange management departments. In other words, if India wants more foreign exchange, there must be two conditions. First, Indian enterprises earn foreign exchange income from net exports. Second, India issues more rupees in exchange for these dollars.
Therefore, the money in foreign exchange reserves is not the money of Indian finance, but the result of the Indian central bank issuing foreign exchange to dilute the wealth of the whole people. This money belongs to all the people of India, not to Indian finance.
A country's foreign exchange reserves are too much and too little. Too much foreign exchange means too little import, and the pressure of maintaining and increasing value is great; Too little foreign exchange means that there is no money to import, and even foreign debt is needed to maintain the balance of payments.
Obviously, India is a country with too little foreign exchange and no money to buy government bonds. It is actually an insult to squeeze some money out of its teeth to buy arms.