Lower prices and scale matters, plus financial assets, plus excess capacity...

When you are certain that prices may rise, buy more at lower prices if you have capital....

You can do the same at current prices, 'coz we know prices could rise... It would be profitable, to buy low and sell at higher prices...

Buy at current prices and if prices fall more than 10%, buy more ( if you have capital), it 'ud reduce the average cost of investment and increase profits...

A businessman must maintain a capacity to invest more if prices fall beyond expectations.....

More spending through lower borrowing cost or real rates due to higher inflation could increase supply in the future leading to lower prices and higher real interest rate and savings investment employment and growth...

There is a considerable ratio of higher borrowing cost and wage cost, which is sticky (wages) in the short run, but commodity prices, partly due to lower borrowing cost, show no such pattern, but dependent on individual markets demand supply, due to the capital class that work with excess capacity to invest more at lower prices.... which could further increase investment employment and growth and expectations...

Higher inflation is a signal that supply could increase to lower future price and expectations....

Investment is the source for more employment and more tight labour force to increase productivity and production and lower inflation and increase real wages/incomes/profits and demand, consumption and savings and investment and growth........,

Expectations play a role in spending... if peo[ple expect that thier real wages would go up... they would spend more and save less to increase demand/spending and growth and (fu)/tu(r)th(e)r growth.... Real or inflation adjusted income help form rational expectations.... and rational spending,,,,,,,,

There is real wage and productivity gap since 1970s...

Therefore, demand is going down and prices, too, alongwith lower real gdp growth, estimates and expectations...

How the people can trust in future... they are not paid their productivity in the past...?

We can promise to compensate in the short run and expect correction in the future... real wages should equal productivity..... to reduce inequality......

Low compliance is above all the problems...

More formalisation of the economy through the incoming data on incomes and spending through bank account transactions, just like the GST on businesses, could help maximise the revenue function... most of the tax payers donot report their true income...

Even a peon in INDIA earns more than engineers, and on the top of it bribe and corruption has long been a tradition in the public life... unless people are brought under financial surveillance through bank accounts transactions they would find a way to dodge tax collection and revenue... only a few crores out of a 1 billion or 100 crore people economy report income, besides the under reporting cases...

26/01/2018.... INDIA + US....

Specialization is just another dimension in Economics... A country should specialize in that line of production in which it has low cost advantage or oppourtunity cost... More investment and supply, at even current prices, and lower price and price expectations, due to higher supply (and competition to achieve market share*), could also increase future demand and growth....

The distribution of labour and the distribution of national income or output, (locally and globally), are already the stated objectives...

Employ more people in the sectors which has the ability to lower prices or inflation, local/global level, and keep the borrowing cost low....

Currently, fracking is just same as coal... Sell oil and earn interest income or invest in other profitable assets, too, ... Lower prices would increase the real value of everything in the economy...

Otherthings remaining CONSTANT, higher investment and supply could result in higher or irrational expectations or exuberance leading to corrections in the market, but again invest when prices fall more than 10%,

It would reduce the average cost and the marginal cost 0r mean/median/mode costs and price or inflation.... Global local, both.... which means more demand, price, supply, investment, employment, income, consumption, savings and growth and expectations....

The GOI should curb nonsense expense... levy inflation cess to dump where there is too much private stockholding and there is excess profit, resulting in concentration of wealth... 1Re, perperson, perfamily just to contain real incomes and standard of living could be imposed...

It would help increase public savings by a billion everyday and which could be 365 billion in a year... though the government has a price stabilization fund of Rs 500, but it is inadequate and is rarely discussed since the economy has improved little on investment and business and supply to an extent... But, the government could use the Rs 100 Crore idea perday... to reduce revenue deficit...

Growth is much better than the hindu rate of growth before 1991 reforms of 2%... real gdp has been increasing since then... and in the case of nominal gdp it has been much higher... he is also undermining mms efforts... INDIA is the fastest growing economy in the leading economies... (why) he is talking so wrong...? he sooo wrong....

The commercial banks may try to restructure or refinance their bad loans at close to 0% rates with the help of the western or developed countries' commercial banks... it would also help with foreign exchange reserves especially the dollars because our demand for foreign exchange would go down, the rupee would appreciate... RBI could involve hedge funds to buy the troubled assets... since, growth is recovering they might help re-capitalize firms having bright expectations...

On oil prices.... more investment at, even the current prices, could help tame demand and prices and adequately manage supply or little more to have a downward bias in the price level, (TOINCREASEREALAND/ORREALEFFECTIVEDEMANDANDPROFITSTO TOMAXIMIESETHESCALEOFDEMAND.... but, maintain reserve or reserve capital to invest more if prices fall more than 10%... Had the lower borrowing helped more investment in energy or reserve oil it hadn't a headache for the domestic economy...

Dear Bitcoin and others….,

Invest to increase real effective incomes by creating education, skills and employment, increase innovation and productivity to lower prices by increasing supply and production and when and wherever prices have higher expectations, buy low sell high....not, until the answer, "how the bitcoin money is used ?" How good for lowering prices or increase employment and investment and growth... bitcoin might invest in education and skills... and data... 

Time has a function...

Businesses must maintain a capacity to invest more at lower demand and prices to increase employment and demand economywide... WORLDWIDE ..... ITISARULEFORDOINGFIRMS... Keyne's said the same... but he meant at higher prices and interest rates which is not true... it would increase cost... higher rates mean higher cost and prices... the just reverse of the Classicals... firms invest at lower prices and rates to increase profits which would increase investment and employment and demand supply prices and growth and expectations... Keynes said invest more at higher prices and rates, the speculative demand for money, in banks or other assets, to increase deposits lower borrowing cost and increase investment and growth which could increase price and inflation expectations.... which could reduce consumption savings and investment... it would also reduce employment demand and growth... and expectations............. INFLATIONREDUCEDEMAND........., LOWERPRICESWOULDINCREASEALLEXPECATIONs... LOWERPRICESINCREASEDEMANDPRICESSUPPLYGROWTHANDEXPECTATIONS.... in short, REALINCOMEEXPECTATIONSDEMANDSUPPLYGROWTHEXPECATIONS...

Not, nominal income because it increases due to inflation and lower real incomes...

ANDTHATISTHEPROBLEM.......

Otherthings remaining the same, higher inflation would reduce real effective variables and expectations.... means lower demand, supply, investment, employment and price and growth which next means further lower demand, supply, investment and growth... and prices... the knife edge problem... the central banks is just like the government intervention against the invisible hand, free market, laisseze fair theory.... if it sets the borrowing cost at zero the economy might generate inflation in the short run, but in the long run it would increase supply and lower inflation and inflation expectations which would mean higher incomes and growth and expectations... Inflation is assumed only is the short run... Keynes was wrong to think 100 or 90 years as short run... in his model time has no function, which is wrong... 

Import skills and tech... we have labour and capital... keep cost low... to produce and employ to produce more... with higher skills, education and innovation to increase productivity or supply to lower prices and increase demand and growth and expectations......., and increase real wages/income/profits... the world worldwide... also the real effective wag.......................................................................................................

Give permanent jobs... give skills... and tax income to get money back... INDIA produce nothing compared to china... giving employment is easy. ...

The Political Business Economy...

Increase spending (public) to 10%.... which could increase inflation to 10 (set limit or target price) and growth, but increase production or supply where INDIA is weak especially, food and fuel, it could save money...

Be populist, not capitalist, lower inflation for everybody.......,

It would reduce prices and borrowing cost the economywide, slowly in time... we have evidences from the West...

THE REVERSE MONETARY POLICY....

Lower borrowing cost could increase supply and lower the price level...

The Classicals knew it...

The knife edge is an old problem due to irrational expectations without full information from data... whenever prices go above ten percent increase interest rates... slowly the economy would get used to it...

It would help form rational expectations about income and savings and debt...

The government has missed the oppourtunity to store more or create a reserve capacity, too... ask, THE US... it ‘no's no political business economy... dependent on paid advisors...

It is (actually) taking no (actual) risk to create demand after disruptions... means more spending to increase employment and production... bound by the internal and central bank (politics)...

All of INDIAS' woes are due to low investment and production, when prices were decades low, higher borrowing cost deterred risk taking and more and cheap investment...

Core CPI only explains how far the demand has strengthened, except food and fuel... but, in INDIA most inflation comes only in food and fuel only... in the US, fuel...

Lower fuel prices were a time to boost demand and growth, especially through the monetary policy; however food has also come down due to better supply of food, which lacked...

In INDIA very few have education on market or knowledge about the market,...  The interest rate rates could be cut in the expectation of the (better) supply side management...

Lower borrowing cost had helped more investment and production... especially in the country... however, US has increased oil production...

It also increases the transport cost inflation... GST might lower tax cost and increase supply, thereby lowering inflation and inflation expectations...

Farmers, Food, Training, Subsidies, Borrowing Cost, Gold, Hedge Investment, CAD, Exchange Rate...

The subsidy for fertilizers should be changed for buying cattle and fodder which could be a long term solution for productivity of the soil, they would reproduce... cow dung for manure, they would give milk, too, to supplement farm incomes... Cattle breeding should be promoted...

The problem is more with the higher prices in other sectors which has flourished on cheap food prices and lowering borrowing cost, at the cost of farm incomes, which has depressed real incomes and share in the agriculture... The question is who will invest in a overegulated market where the government is the chief buyer which then distributes it itself... It is in the interest of the farmers to sell directly to the buyers through farmers unions or cartels... why the oil is dear and food is cheap... because the government is unable to control too much high supply which could be adjusted to keep prices high or more volatile to accommodate farm incomes when demand is too high... farmers are not benefited by higher demand, though... Farmers union should be obilized to bargain in the market to the suppliers... not to the government...

At their cost...

Food should be tax free... it is directly related to health... do not tax health... 

Lower farm share in the national income... points to an overegulated market, but inflation goes out... free market to export at higher prices and import at lower prices... 

On the job training... do your own (work) ? Subsidize skills and training...

Jobs are important... to lower unemployment... increase growth efficiency... the effective growth... 

A lot of subsidies are given to the political power... what 'bout that...? 

The Monetary Policy should target lower inflation by lowering the borrowing cost or nominal interest rate and higher real interest rate and savings... Other things remaining constant lower capital cost would increase productivity and competitiveness... lowering the price level... it would (also) increase supply to lower inflation... 

When businesses could earn higher in safe bank deposits... they would not invest... 

Who will take risk?

Probably, the real effective exchange rate (REER) for rupee and dollar is 21.33 rupees...

Because,

REER = the ratio of domestic and foreign exchange rate / the ratio of domestic and the foreign inflation or price level...

therefore,

nominal exchange rate INDIA-US is 64/1 or 64 : 1
inflation in INDIA is 6%,
in the US is 2%

again, therefore,

we have 64/3 after simplification,

and, on further simplification it comes at

21. 33...

The nominal value converges to the real effective value in the future, because of inflation, nominal inflation would converge between countries too... 

It .(gold). is because it increases CAD during slowdown... it is has had been considered a safe heaven investment during recessions and low demand... Nonetheless, there are gold bonds which give higher inflation adjusted returns... One could invest in literally anything which is going through a lower price period and has expectations of higher price expectations in the future if you hold the stock... 

Investment hedging or investment insurance could (true) reduce risks for the RBI and other banks... Would reduce NPAs in the future... 

Exchange rate adjustments could also be achieved by higher real effective wages and higher real effective interest rates, higher consumption, higher savings, lower nominal interest rate and higher investment), due to lower domestic price level through increase in productivity and competitiveness. (Internal Devaluation). Real wages and domestic demand should be contained or increased, and at the same time real exchange rate could increase export demand...

Storage, Irrigation, Skills, Automation...

The GOI should invest more capital in (FOOD) storage because a third of it has a poor shelf life without proper storage... Higher income of farmers could increase farmer's stockholding and release when prices are high...

The difference between whole sale market and the retail market is a game of 4% profit loss daily, the prices, other than the stock market, are less volatile in the absence presence of capital and the stock or demand supply and expectations... which could lead to higher farmers' stockholding and inflation adjusted prices...

The ability to hold or save is important... Lower irrigation facilities and higher cost is a much bigger problem coupled with capital investment...

MGNREGS should be transformed to GOI's SKILL DEVELOPMENT Program... It would increase productivity of the RURAL INDIA... It would help save labour and could increase productivity of the economy... Think not of labour alone...

GOI's implementation and information transmission mechanism, the case of the GST, to public is taking too much time or too slow... which has obstructed the revenue growth…

The RBI should give the pricing power to the markets by giving a limit to nominal income (real income plus inflation) at 10% to clear... it should drop the inflation target to 10... also by lowering the borrowing cost... it has not limited inflation in the securities... It has limited nominal income of the rest of the economy...

RBI may try to reduce the borrowing cost inflation... Flow of goods and services should lower inflation and increase real wages... Real rates have improved due to lower inflation and expectations... in a World of negative real rates...

Automations are capital intensive or require capital (money)... In INDIA the borrowing cost is higher compared to the developed and capital rich countries with few bottlenecks in supply... However, it has a plenty of cheap labour... which points to employ more labour than automation which is dear and require skills...

Skilling and re-skilling to increase productivity of the labourforce, according to industry needs and demand, would increase job creation... Education and internet education ( or self education) is important for self employment and business and entrepreneurship... It would help facilitate informed decisions and minimize risk...

Lower wages in INDIA could help to integrate with the global supply chain and value addition through increase in productivity or production in labour intensive line of output due to lower cost and prices... Exports are important for jobs...

Spend to increase production at lower cost and increase employment... The economy is going through a lower price period... except the borrowing cost... which could also reduce interest on PUBLIC DEBT...

Stock cycle is different from the stock market cycle.. A company with a credible and consistent performance is the best insurance... If a stock is good, people form very higher expectations, suppliers (offers) supply more at higher prices and demanders (bids) demand more at lower prices... resulting in higher prices... When risk is there... there is more profit... Look out for credible performance... it is safe... consistent, too...

Self-Fulfilling, Interest Cost Inflation...

Inflation and expectations increase cost expectations through higher wage and capital costs which means less supply, higher unemployment, lower consumption, and forced savings through higher interest rate, not natural, and lower investment, forced too, and demand supply price and growth and expectations...

Nonetheless, disinflation or little deflation and expectations might help improve the budgets…

Otherthings remaining constant, lower prices would help increase demand price supply and growth which could also be gained through lower borrowing cost and commodity prices when wages are sticky in the short-run…

There are evidences of lower nominal downward wage rigidity (LNDWR)…

But there is no real downward wage rigidity (LRDWR) since there has been a trend to lower real wages, interest and exchange rate through higher inflation and more supply and lower demand relatively and lower price level… which reduces consumption, savings and investment and growth expectations…

The economy reverts automatically in the reverse direction on the back of expectations (Milton Friedman) like a catapult…

However, to increase inflation it is important to increase demand by increasing real wages, interest rate and the exchange rate through higher productivity or lower cost and prices… 

  

The Fed is waiting for productivity, lower prices and higher nominal and real wages, too, to build but if it increases nominal interest rate it would also increase real interest, thereby reducing productivity and competitiveness gains...

There is a difference in voluntary savings and forced savings like voluntary unemployment, higher labour savings, and unemployment, involuntary unemployment, forced labour saving, due to higher interest rates...

The RBI's job (too) is to ensure price stability, higher savings and lower interest rate, higher investment/employment and growth, not higher interest rate and savings and lower investment and employment, and higher prices... and lower supply...

The GOI might tax 1 rupee, per person in the family, perday, inflation cess to dump food items where there is too much private stockholding...

However, there is also a price stabilization fund set up under past budget of Rs 500 Crore…

Nevertheless, if we increase inflation cess as per the above said it would add around Rs 1 billion per day or Rs 100 Crore everyday, enough to increase supply and reduce inflation in food…

Low credit penetration dependent on traditional money lenders, at higher rates, is also responsible for farmers’ suicide which has depressed demand and growth expectations...