Discovered a New System of Governance: Constitutional Capitalism:  Proved economic inefficiency and unconstitutionality of the current system of money and finance and obtained an economically efficient constitutional system within a general equilibrium model in a paper, entitled, "Economically Efficient Constitutional Governance." The model is more general than any ever written with a micro-economic foundation to determine macro-economic policies which are very profound to the economies worldwide. The paper is filled mostly with theorems and proofs to obtain many significant results in equilibrium. The results are accurate because existence of equilibrium results have been numerically demonstrated and plotted in graphs.  No one has yet found any error in the proofs or in the economic intuition behind the results. These discoveries lead to the new philosophy, christened as Constitutional Capitalism.

   Prosperity amid Stability: A New Economic Paradigm for Democratic Capitalism:  "I have pursued in the real world for adaptation of a new economic paradigm to choose optimal rules of governance by which individuals can maximize utilities of their net worth (prosperity), but not cause instability like global depression or warming. Communism denudes social strength because it enforces equal pay with no incentive for individual perseverance. Maximum prosperity is possible under capitalism. But without optimal rules of governance capitalism, even under democracy, can financially bondage the vast majority, cause instability and ultimately erode individual prosperity. My rational inference based the steps undertaken globally, following my communication on optimal rules for prosperity amid stability, shows a robust ulterior support for this paradigm. I present a few major optimal rules: on exchange rate policy beyond the purchase power parity, safe banking to avoid systemic moral hazard, containing usurious credit growth, and the price of credit. I also list pertinent actions undertaken by leader globally, consistent with the optimal rules communicated to them through memorandums." Abstract excerpted from paper written by Sankarshan Acharya

   Banking reform in USA:  To contain moral hazard problem in the banking industry.   If not monitored, the American banking industry and finance sector can create havoc for an absolute majority of Americans.  The global capital and financial markets are dependent on viability of the banking industry in USA and Europe.   Great Depression of 1929 followed serious panics and runs in the banking industry as some bank owners misappropriated depositors’ funds.   Then the government insured bank deposits.  But this led to moral hazard with ailing banks taking risky bets at the expense of taxpayers.  Such bets cost taxpayers $300 billion in late 1980’s and early 1990’s.  Optimal bank capital requirement and deposit insurance premium policy is therefore vital.  Our research has in this regard been enacted in to U.S. bank regulatory law in 1991 and in Basel Accords on International Bank Settlements in 2003.

Banking and Social Instability in China:  China has infused $70 billion in its state-run banking industry to stave off rapid erosion of capital due to exponential rise in nonperforming bank loans.  This was after we suggested in August 2003 that they were creating more money than optimal for a few exporters and expatriates though an artificially lower value of their currency, yuan.   Lower yuan creates jobs.  But it also leads to the government creating more money for a few exporters and expatriates.  This floods banks with money which is misused.  The government may not be able to repay these loans taken for public projects which may not yield the necessary returns.   This also makes very few exporters and expatriates ultra rich as compared to the rest, who may agitate to destabilize prosperity of Chinese society. 

System of Governance in India:   We have engaged the union and state governments in India to repeal a colonial system of government that renders disservice to the vast majority of people by wasting colossal sums of scarce capital in state-run bankrupt and dysfunctional industries.  India’s colonial system of governance has wasted mind-boggling sums of capital artificially created by printing rupees.  In addition it is steeped in corruption at all levels that stifles entrepreneurship and creativity.  India’s competitiveness is being hampered as a result.  It cannot balance its trade.  It resorts to exporting human capital and raw materials by denuding, deforesting, polluting, and scorching earth.   India’s currency rupee has been depressed badly.   India is also creating massive sums for a few exporters and expatriates.   This has fueled inflation and hurt the vast majority of households who do not get the fiat money.  We have convinced the Union government of India that this system is not viable: they have to choose between reforming the system of governance and angry mobs.   The Union government has recently taken steps to reform the bureaucracy to promote and reward performers and punish the derelicts.  But India has to go a long way to change a colonial system that has subjugated masses for 400 years. 

Safe Banking in USA:  We have some success in pushing for a system that would eliminate bank regulation and unleash the effectiveness of banking on society.   We have proposed to White House (January 2005) and Senate Banking Committee (August 2003) to enact a law to have (a) safe banks which will be permitted to invest only in government securities and (b) universal banks that can invest any way they like.  The safe banks will cater to the interests of panic-prone customers so that there will be no repetition of banking panics and runs.   This will also eliminate the costly bank regulatory system in place.   After the suggestion, the Federal Reserve Board has organized seminars on safety and soundness of banking.  

Capital Market Regulations:  We wrote to the Security and Exchange Commission in 2001 to investigate trading activities between mutual funds and their principals and associates.  The proposals hibernated until new leadership took over SEC.  Then the U.S. Congress enacted laws to ban trading after hours between mutual funds and investment bankers.  Other critical aspects of our proposal have not been enacted into laws yet.