Article;
Eurozone economy shows glimmers of hope.
Comment;
But it is good to let the prices fall, people will purchase
costly things at cheap prices, their power to buy things will increase, they
will buy more… As soon as the inventories are sold people will demand more
labor to increase supply, overall demand and supply will go-up. Both are
affected to reach equilibrium price-level at which demand equals supply, market
clearing principle. But the ECB is targeting inflation by cutting interest
rates down which is the opposite of the market mechanism will lead to. The
economy is trying to gain demand due to falling prices, and, rising real wages
and income, but the central bank is trying to inflate the economy… But, again
complete price stability, zero inflation, is more common than periods of
fluctuations. Definitely people will post-pone spending till the policy of
inflation-targeting is over… There is a complete reason to believe that prices
will come down. The expectation is rational… The central bank (i think) is
trying to negate the Germany’s
example of internal-devaluation. The path the price-level (downwards) chose was
different from the direction the central bank is trying to achieve, upwards...
Within Europe Germany is doing best of all… unemployment at 5% and a surplus in
international-trade… The central bank is defying the German evidences of
growth. The purpose is to create demand either by revaluation or by
devaluation, wages and incomes must increase either in nominal terms or
real-terms… demand will be created…
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