However, even this only may increase inflation if we have
crossed full employment which is not the case........,
The evidence from the US suggest that prices increase very slow
if there is unemployment in the economy... prices expectations have failed to
materialize, even with negative real interest rates...
Nonetheless, wage demand has increased, that is still less
sharp...
But, supply side is further gotten strong which lower borrowing
cost which has further lessen pressure on other prices and cost of capital
expectations...
Inflation targeting would not let supply increase beyond price
limit, in INDIA, it is 4 %, in the US 2 %,.........
Imagine if you were spending 10 % and now, you pay 11 % it is
only 10 %.... In the US and INDIA inflation targets are two low...
Prices in the US are allowed to go up 10.2 % or 102 (index wise)
and in INDIA 10.4 0r 104...
Higher prices increase supply and demand, both, the Central
Banks should target higher real incomes 10 % or 8% when prices are low....
It would increase labour skills and productivity leading to
higher real wages... Complete automation is not possible, therefore, but,
skills are important...
Equality in the Economy through effective real income
distribution and jobs for the young and expertise of the old is a
sine-quo-nan...
The World is worried about tightening and higher bond yields and
less investment when fundamentals tell that capital is not scarce or actually
no capital cost in a capital rich country like the US....
Rent on capital is a rent on debt fuelled demand and growth and
expectations........., The whole business community is run on debt...
Equity is profitable when you buy low and sell high and again
buy at lower 10%.... and sell again.... buy.........,
Stock price rise and fall, take full advantage of that...
Otherwise, bonds and FDs are better if you donot want to work
harder...
But, ofcourse, stocks might double money in two years,
easily....
Bond market is worried about tightening and lower bond prices...
but, the evidence suggest that interest rates might go to around zero, as the
Western countries feel....
People in share market, mainly, invest over less than 3 months
horizon... when quarterly results come...
However, there could be other styles of investing, but it is
profitable to buy a share at lower prices and sell high, and, could again buy
more when prices fall more than 10%, of the same consistent shares with higher
price expectations...
Tax on LTCG won’t affect day trading and people investing for
less than a year.........,
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