Tuesday, August 4, 2015

VenuG Presents: Why We Ready? Open Letter to Central Banker Raghuram Rajan, Draghi & Janet Yellen on Interest Rate Review

"वीणा के तार इतने भी ना कसो
कि वे टूट जाऐं
इतने भी ना ढीले छोडो
कि वे बेसुरे बजें"
~गौतम बुद्ध
It is strange, that, there is a move to curtail independence of the Central Bank of India, The Reserve Bank of India, popularly known as the RBI on its role in monetary policy , I.e. which basically is used to control inflation.
My latest tweet

@VenuSpeak: 11:00 AM IST. #Monetary_Policy review. #RBI rate #MyView here
SLR reduction 25 Basis Points. Expected.

Market Pundits Status Quo.
Sensex & NSE
Buy low NPA/PE high NIM PSU Bank Stocks.
Monetary policy is a measure generally used by Central Banks(Like RBI, ECB, US FED)
or sometimes by some regulatory body defined by the Sovereign Governments (which the Indian Government is seeking suggestions whether to set up or not {the clarification given by the Government of India last night , intends to deny of any such move)
Monetary Policy is basically affected by the following. } to control inflation using measures like hike/reduction in either the interest rate or statutory reserves to be maintained by the Banks. Also by sale or purchase of Bonds(Like QE1/2/3 & suggestion of 'tapering) by Ben Be nanke in US from 2009 & Japan in 2007 or US & UK during The Great Depression of 1930.
Rise & Fall of Inflation.

Demand / Supply increase in M1(Money Supply ) rise increases fall decreases inflation.
Cost push. Cost of Inputs, wage rate, jobs, (1997-2008)input material prices.(1970 oil prices increase, 2000 increase in crude prices, 2014 fall in crude prices.

How inflation is controlled?
1 Interest Rates
2 Statutory Reserves to be maintained by Banks with the Central Bank.
3. Bond Sale/Purchase.

What affects inflation?
1 Increase/Decrease in Money Supply(M1)
2. Crude oil/Gold Prices.
3 Cost of basic necessities like food clothing, shelter, healthcare & energy prices.
4 Balance of Payments.
5 Gap between Real Rate of Interest & Rate fixed BT the central bank.
6 Foreign Exchange Reserves.
7 Jobs increase increases decrease decreases.
8. Sentiments of trade cycles, boom, recession, depression, stagflation, hyper inflation

What is #VenuQuotes
"Inflation is a by-product of development cycle , hence a reasonable level of inflation is a necessary evil"

I have one Pro Tip to Both Raghuram Rajan & Janet Yellen.
Read what Buddha told his disciple
 Excess & Obsession about just one thing causes break or cacophony.
Do NOT put over emphasis on either inflation or jobs.
Excess of everything is bad.
At the end of the day, it is meant for human race. What's the use of this hawkish stand, when there is slump in demand resulting in lack of jobs?
Reduce Rates to Rajan
Increase Bond Rates to Yellen.
Satyameva Jayate.
To Government of India, Ministry of Finance & Arun Jaitley
Keep a Hands of Policy.
India is today better than Europe, US & China, because of an independent & adamant Cebreal Banker called Dr Y V Reddy. Had he not put an embargo on mortgage loans & realty loans in 2005, India would have had 2008 contagion too.
Jai Hind.

Once, when the Buddha was told that one of his disciples was having trouble, he went to the young man’s room to see what the problem was. This young man had been born in a rich family, and he had been trained in music, so he still kept his vina – an instrument something like a guitar – in the corner of his room. When the Buddha entered, he saw the vina and said, “Let me see if I can play your vina.”
The disciple reluctantly brought it forward. He didn’t know that the Buddha had been an expert musician.
The Buddha tightened the strings of the vina until they were about to break. The disciple protested, “You are not supposed to tighten the strings like that, Blessed One; they will break!”
So the Buddha, with tender cunning said, “Oh, yes! Then should I make them loose?” And he loosened all the strings until they couldn’t be played at all. “Here, let me do it for you, Blessed One,” said the disciple, and he adjusted them. “They are now just right, neither too tight nor too loose.”
The Buddha smiled, “Yes, you see, that is what my path is: just right, neither too tight nor too loose. Moderation in everything. Temperance in everything.”

Receive the inspirational quotes and commentary of Thought for the Day every day via email.

The Thought for the Day is a daily excerpt from Words to Live By by Eknath Easwaran.

Click here to download Easwaran’s Thought for the Day for the iPhone or iPad.

No comments:

Post a Comment