Economic growth around...

 Food and fuel inflation is high in INDIA... the main sources of inflation... Lower fuel taxes could help lower inflation and increase productivity and demand and growth... Lower taxes could also help... Government is not a family business... It is there to increase happiness and prosperity... productivity increases when the cost goes down, the government is a big cost at present... The government has failed on employment and inflation... There are not enough skills to increase productivity and employment... Personal loans are available easily, but business loans lack as the govt discourage risk taking... One reason for higher prices or inflation is the fiscal deficit, 6.5% of it could increase inflation expectations by economists.

 

Unemployment in INDIA is grave despite being the goal of all policies and all governments and central banks around the world try to push infrastructure and construction as it consumes a lot of unskilled labor and creates a lot of employment and gives rise to shadow banks and asset price bubbles or inflation and instability and correction... like US and China in 2008 and 2023 respectively... The unskilled population is a big burden for policymakers around the World... INDIA's cheap labor is its competitive edge which shall be employed productively to meet its unmet demand... Instead of betting on property and real estate to create employment, INDIA shall try to promote other businesses by subsidizing costs... Credit for investment is costly and scarce in INDIA to do business on a large scale... It should promote large scale business though with proper risk management... Cheap credit is must for productive investment...

 

INDIA has $ 620 billion in foreign debt and it has 600 billion in foreign reserves, the debt if not hedged could create uncertainty for the rupee and inflation and employment which could prove self-fulfilling if people expect that the rupee would depreciate. Inflation expectations could increase nominal exchange rate...

 

INDIA needs FTA for itself, for exports, but negotiable trade for imports, this is the diplomacy part... How the government would increase employment?

 

 

In the US, lower price expectations and higher real interest rate expectations could reduce/delay spending and increase supply relatively reinforcing lower prices If the Fed skips the rate hikes it would not lower supply further and could help lower prices and expectations. Higher interest rates could lower supply and increase price pressure and interest rate expectations. A lower base increases price expectations and vice versa...

 

If people expect that borrowing cost could go down in the near future they might delay their spending which could make rate cuts self-fulfilling and earlier than expected because demand would go down and supply could increase relatively. Money demand lower than money supply could lower market interest rates...

 

People have seen that 2% inflation is possible, last decade, Fed policies with ultra-lose policy, quantitative easing, et al., did not produce much inflation. The memory is still fresh. The supply disruption could be attributed to covid and the GDP and prices have recovered. We have observed a special quantity theory that more money supply reduces borrowing costs and increases supply in developed economies as productivity is increasing, too.

 

Expectations shall play an important role in decision-making because consumers and investors spending actions and actual inflation depend upon future prices in order to maximize gains, they are forward-looking. And, inflation expectations are drifting down and demand and spending could go down, relative to supply and prices would come down quickly because people would delay spending in the expectation of lower prices, faster than we expect, as per rational expectations. Fed's impatience to tighten could lead to lower prices than the inflation target. We forget that full employment is 0 unemployment when people have no incentive to switch/swap between jobs ie frictional unemployment and other types of unemployment due to low inflation and wage expectations because their loyalty would be questioned....

 

Prices and growth are connected and have a negative relationship, higher prices and interest rates lower growth and vice versa, and therefore price and growth expectations are connected, too. Lower prices increase demand and growth, but, lower price expectations, including interest rate expectations, delay demand and increase supply reinforcing lower prices and growth. If we have lower price expectations we might have a period of slow demand and growth though it depends upon the level the Fed chooses to offer. 3% interest rates or 1% real interest rates seem reasonable after accounting for 2% inflation. It could prevail as long as people have rate cut expectations and the Fed would not like to push the economy into liquidity trap because rate cuts and expectations could be self-fulfilling, delay in demand could lower prices and interest rates. Therefore, we might have a slowdown...

 

People realised that price and wage expectations are self-fulfilling and unemployment is no solution to higher prices and higher unemployment would reduce supply further reinforcing higher prices. That could be the collective perception.

 

 

Spending is the answer to deflation to increase demand and defend a bottom while increasing price or inflation expectations, in China. Fiscal policy has a higher multiplier than the monetary policy. Higher money supply could lower interest rate expectations and delay in spending though higher government spending would increase price expectations. Higher inflation and depreciation could increase exports, nonetheless, depreciation expectations could delay export demand. This is the time to increase appreciation expectations therefore selling dollars could help... Higher prices and interest rate expectations through higher government spending could help increase private sector spending and multiplier...

Nobody knows how to maximise returns in a stock. Union is also important in the stock market, unison of buy and sell prices. If everybody set same buy and sell prices profit could be maximised for all. The upper and lower circuit are given, low price range and higher price range, use lower circuit to buy and upper circuit to sell, the market price would be either at the lower circuit or the upper circuit and quite predictable.

Ultimately a successful economy would have full employment and low inflation in order to maximise products, investors' concern is what the prices would be in the future in the short run, everybody wants to earn quickly and easily and have more leisure and health at their disposal by technological advancement. The real wages and incomes are higher in the US and people consume more than in China, adjusted for population.