On Jan 6, 2021, the always stellar Mr @deepakshenoy tweeted, this:
https://t.co/fa3GX9VnW0
Innocuous 1 sentence, but its a full economic theory at play.
Let me break it down for you. (1/n)
91 day TBills at 3.03%. Interest rates are even lower than RBI has them.
— Deepak Shenoy (@deepakshenoy) January 6, 2021
In essence, if RBI opts and continues to manage exchange rate, then that is "fiddling with the exchange rate"
RBI has done that in the past and has restarted it in 2020 - very explicitly. (3/n)
Implying INR will be bought from the open markets in order to prevent INR from falling vis a vis USD (4/n)
https://t.co/9kpWP7ovyM
Which is what the subject of my Sept 2020 essay with @CFASocietyIndia was. (6/n)
This:
Consider three legs of a stool of an economy-
a. Ability of Dollar to flow in when excess in global economy
b. Fixed Exchange Rate
c. Ability to set interest rates (7/n)
You can choose any 2 of the 3 legs.
Choose : controlled interest rate (and hence low inflation) and fixed INR/USD rate, you cannot have an open economy.
Which India was till 1992. (8/n)
INR will fluctuate around.
Which India has adopted in the recent years. (9/n)
Many famous currency bets were made because central banks sought to ignore this theory. (10/n)
Because RBI has chosen to have a 'fixed exchange rate' (or at least as fixed as markets would allow) and an open economy, it is losing its influence on setting the interest rates in the market (12/n)
More from Economy
What do a Tory Peer, Selwyn Gummer (Lord Chadlington), David Sumner ( Sumner Group Holdings) and the Sanchez Perez family (drugs money, laundered through Gold mines) have in common?
It’s another company-saving a £50 million PPE contract shaggy dog story
Connections, connections
What a start to the story
“A bulletproof truck trundled down the road in downtown Lima, guarded by 18 policeman
They were wearing body armour & wielding high velocity rifles
No-one was taking any chances
This was a Special delivery for Peruvian Prosecutor for an anti drug trial
That was in 2011, the same year that Lord Chadlington’s daughter got married in Chadlington to Henry Allsopp.
Who was there?
Yes Kirstie Allsopp of Location, location, location and all this Covid nonsense fame) is his sister
Camilla, his Godmother
Jeremy Hunt
Cameron
Well. Come on. Lord Chadlington had been chair of the local Witney Conservative Association. It’s only fair.
Hang on. Julian Wheatland, Director of SCL Group/ Cambridge Analytica had also been chair of Witney Conservative Association...and campaigned for his mate Cameron
Are we sure Julian Wheatland and his side kick Alexander Nix were not there too @JolyonMaugham ?
I mean. They move in the same North Oxford circles.
It’s another company-saving a £50 million PPE contract shaggy dog story
Connections, connections
The *staggering* tale of a Tory Peer and a \xa350m PPE contract. https://t.co/SH2qxOmfQ4
— Jo Maugham (@JolyonMaugham) December 10, 2020
What a start to the story
“A bulletproof truck trundled down the road in downtown Lima, guarded by 18 policeman
They were wearing body armour & wielding high velocity rifles
No-one was taking any chances
This was a Special delivery for Peruvian Prosecutor for an anti drug trial
That was in 2011, the same year that Lord Chadlington’s daughter got married in Chadlington to Henry Allsopp.
Who was there?
Yes Kirstie Allsopp of Location, location, location and all this Covid nonsense fame) is his sister
Camilla, his Godmother
Jeremy Hunt
Cameron
Well. Come on. Lord Chadlington had been chair of the local Witney Conservative Association. It’s only fair.
Hang on. Julian Wheatland, Director of SCL Group/ Cambridge Analytica had also been chair of Witney Conservative Association...and campaigned for his mate Cameron
Are we sure Julian Wheatland and his side kick Alexander Nix were not there too @JolyonMaugham ?
I mean. They move in the same North Oxford circles.
Long rant: This @WSJ article bemoaning the decline of price theory is really worth highlighting. The economic theories and so called "laws of economics" that the WSJ consistently and religiously defends, are the source of their authority, power and privilege.
So called economic "theories" like "you get paid exactly what you are worth" and "markets are perfectly efficient" and "when wages rise, jobs fall" and "raising taxes on the rich kills jobs and growth" and "increasing justice decreases economic efficiency" and...
"Government intervention in markets always creates more harm than good" and "any regulation that constrains corporations kills growth and productivity", etc etc are effectively a protection racket for the rich. It is a set of internally consistent and mathematized conjectures...
That are all demonstrably nonsense. But getting people to accept these "theories" as laws of nature and immutable, timeless truths is the most effective way our current economic elites have found to maintain and enhance the status of the powerful and persuade the weak and poor...
to shut the fuck up and accept their lot in life. Now, FINALLY, some economists- are actually beginning to look at the real world evidence to determine whether these propositions actually describe anything real here on planet earth. Let me save you some time. The answer is NO.
Hilarious. The WSJ editorial page bemoans the waning influence of The neoliberal priesthood, and hence their own. https://t.co/pQT8Dstg8I
— Nick Hanauer (@NickHanauer) January 28, 2021
So called economic "theories" like "you get paid exactly what you are worth" and "markets are perfectly efficient" and "when wages rise, jobs fall" and "raising taxes on the rich kills jobs and growth" and "increasing justice decreases economic efficiency" and...
"Government intervention in markets always creates more harm than good" and "any regulation that constrains corporations kills growth and productivity", etc etc are effectively a protection racket for the rich. It is a set of internally consistent and mathematized conjectures...
That are all demonstrably nonsense. But getting people to accept these "theories" as laws of nature and immutable, timeless truths is the most effective way our current economic elites have found to maintain and enhance the status of the powerful and persuade the weak and poor...
to shut the fuck up and accept their lot in life. Now, FINALLY, some economists- are actually beginning to look at the real world evidence to determine whether these propositions actually describe anything real here on planet earth. Let me save you some time. The answer is NO.
