Government implementing ounter cyclical policy is an oxymoron if ever there could be one. The business cycles themselves are the result of credit cycle, which itself is created by central bank,,,100% owned by government in case of india.
The government's typical response to handle economic downturn are :
1. Borrow and spend : Employment schemes, CONs excel in this style of pork barrel economics. Infrastructure projects, which eventually may have better impact.
2. Print money and spend : This is the road which ultimately all distressed government take eventually and have actually taken in recorded history when faced with prohibitively high cost of borrowing. This is why Hitler rose in Germany and why Zimbabwe is now measuring inflation in quintillians. This is the best way to confirm if hell exists. Usually the answer is in affirmative.
3. Tax cuts : This is probably the best response but it depends on existing high rates of taxes and a willingness of government to cut wasteful expenditure incurred on themselves. The only side effect is that government and its staff are forced to be more efficient. Hence this is the least popular of all the responses.
Whenever I read 'The Economist', hear those market messiahs cheering the devaluation of the dollar on CNBC and/or anyone who claims to have any idea of economics, I feel a sort of disdain people develop for lesser forms of life.
What exectly is Economist trying to say here? The whole game of economy is rigged by worthless paper called 'money'. Naturally the country which can print the money (dollar) of international acceptance has unfair advantage in world trade and economics.
Not much is really left for government or cenrtal banks of other countries to manipulate their own economies, except for encourage/discourage devaluation of their own currency. Asian countries are textbook case of nations trapped in trade relations in foreign currencies.
As some american said long bank, "Dollar is our money and your problem". The devaluation of dollar is now shifting into high gears. The nations which export the goods and services to get price in dollars are going to be proved chumps.
2 comments:
Government implementing ounter cyclical policy is an oxymoron if ever there could be one. The business cycles themselves are the result of credit cycle, which itself is created by central bank,,,100% owned by government in case of india.
The government's typical response to handle economic downturn are :
1. Borrow and spend :
Employment schemes, CONs excel in this style of pork barrel economics.
Infrastructure projects, which eventually may have better impact.
2. Print money and spend :
This is the road which ultimately all distressed government take eventually and have actually taken in recorded history when faced with prohibitively high cost of borrowing.
This is why Hitler rose in Germany and why Zimbabwe is now measuring inflation in quintillians.
This is the best way to confirm if hell exists. Usually the answer is in affirmative.
3. Tax cuts : This is probably the best response but it depends on existing high rates of taxes and a willingness of government to cut wasteful expenditure incurred on themselves. The only side effect is that government and its staff are forced to be more efficient.
Hence this is the least popular of all the responses.
Whenever I read 'The Economist', hear those market messiahs cheering the devaluation of the dollar on CNBC and/or anyone who claims to have any idea of economics, I feel a sort of disdain people develop for lesser forms of life.
What exectly is Economist trying to say here? The whole game of economy is rigged by worthless paper called 'money'. Naturally the country which can print the money (dollar) of international acceptance has unfair advantage in world trade and economics.
Not much is really left for government or cenrtal banks of other countries to manipulate their own economies, except for encourage/discourage devaluation of their own currency. Asian countries are textbook case of nations trapped in trade relations in foreign currencies.
As some american said long bank, "Dollar is our money and your problem". The devaluation of dollar is now shifting into high gears. The nations which export the goods and services to get price in dollars are going to be proved chumps.
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