Is this a time for monetary policy easing?

`Headline inflation’: The year-on-year change in CPI-IW, with target zone superposed.

The best price index in India is the CPI-IW. `Headline inflation’ in India corresponds to the widely watched year-on-year change in the CPI-IW. The above graph shows us the experience of inflation in India from 1999 onwards. The informal target of policy . . . → Read More: Is this a time for monetary policy easing?

A Useful Idiot

Paul Krugman:

So minting the [$1 trillion] coin would be undignified, but so what? At the same time, it would be economically harmless — and would both avoid catastrophic economic developments and help head off government by blackmail.

What we all hope, of course, is that the prospect of the coin or some equivalent . . . → Read More: A Useful Idiot

A Lack of Prudence

What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.—Adam Smith, The Wealth of Nations

Here’s some nonsense on stilts:

Richard Feynman was once asked what he would pass on if the whole edifice of modern scientific knowledge had been lost, and all he . . . → Read More: A Lack of Prudence

After Jackson Hole, Clear Road Ahead?

In terms of forward guidance I think the Fed Chairman’s speech provided little direction, but Friday’s precious metal price action into the close and the various sell side notes that I have seen suggest that this, at least initially, is too bearish a conclusion. The following excerpt from the speech, in particular, was . . . → Read More: After Jackson Hole, Clear Road Ahead?

Has monetary policy in India helped or hurt?

Carlos Vegh and Guillermo Vuletin have an article Overcoming the fear of free falling: Monetary policy graduation in emerging markets, in `The role of Central Banks in financial stability: How has it changed?’, Federal Reserve Bank of Chicago, 2012. They have drawn on this to write a column on voxEU titled Graduation from monetary . . . → Read More: Has monetary policy in India helped or hurt?

The Curious Case Of Liquidity Traps And Missing Collateral – Part 2

In this second part of my take on liquidity traps and missing collateral in global financial markets I would like to respond to some of the talking points set out by FT Alphaville’s Cardiff Garcia (again in response to the much talked about piece by Credit Suisse). Even though blog posts tend to . . . → Read More: The Curious Case Of Liquidity Traps And Missing Collateral – Part 2

A Most Magnificent Speech

From one Robert Wenzel:

I will now give you more warnings about the economy.

The noose is tightening on your organization, vast amounts of money printing are now required to keep your manipulated economy afloat. It will ultimately result in huge price inflation, or, if you stop printing, another massive economic crash will occur. . . . → Read More: A Most Magnificent Speech

The inflation crisis has not ended

The most important measure of inflation in India is the year-on-year change of the CPI-IW index. This time series, for 120 months, is shown above. From 2006 onwards, India slipped into a new phase of macroeconomic instability, where inflation has strayed far outside the informal target zone of inflation at four-to-five per cent.

. . . → Read More: The inflation crisis has not ended

Monetary vs. Fiscal Policy

Brad DeLong

University of California (Berkeley) economist Brad DeLong took my late-in-life education on economic issues to a new level. I’ve plenty more to learn, of course, but I enjoyed his discussion.

Here’s a snippet from his article in the Seeking Alpha web site:

In such a setup, the conclusion of Mankiw and . . . → Read More: Monetary vs. Fiscal Policy

China’s Currency Holdings

Chinese Yuan and U.S. Dollars

The Wall Street Journal reports that China is decreasing its holdings of  U.S. dollars

Fresh data suggest China is moderating its appetite for investing in U.S. securities, a trend that could mean lower flows of cheap capital from Beijing and a possible rise in borrowing costs across the American . . . → Read More: China’s Currency Holdings