When the Central Bank can print money, then, why capital is scarce (?) which is not, if followed could increase investment and supply and lower unemployment and prices, more employment would also increase production and reduce prices.
The only problem is
that credit should increase both demand and supply, [lower prices would
increase demand and then prices and then supply (oversupply happens due to lack
of data)], or productivity in the areas where we have higher price and price
expectations to increase supply and keep prices stable which is likely to
further reinforce lower and stable prices due to stability in the monetary
policy.....
At lower prices oil producing
countries would sell more... Higher prices lower demand... They fear depleting
resources even when oil production curbs have been the issues behind higher oil
prices... when population growth has been going down and more investments are
following, effect of renewables are the contributing factor... to lower oil
prices... higher oil prices are not natural...
When price falls it
means supply relative to demand has increased, people would get more and would
demand less than before especially the investment demand, consumption demand
might also delay, which may further reduce price until all the stock is consumed
and price stop falling...
When people expect
lower prices in the short run they also increase selling, which further reduce
prices as in the stock market or any market, the same short sellers...
Lower price increases
lower price expectations bcoz more will be supplied to adjust profits, people
would supply more... Lower price expectations would delay investment demand and
consumption demand...
Inflation lowers
demand, both, consumption and investment by reducing savings, higher interest
rate further increases inflation through higher borrowing cost that also lowers
supply and increase prices.....
Prices move between
higher/lower supply and high/lower demand and higher/lower prices or demand
supply and price bands amid lack of exact demand, supply and price data or
equations... Lower prices do the opposite, and further reinforce lower
prices...
We also need data on demand to manage supply and prices, since land is scarce, to increase productivity in agriculture and industry...
Notwithstanding, stable
prices and full employment are the goal...
The rupee has
appreciated in the month. The RBI might adjust interest cost of exporters to
the loss in the exchange rate in order to sustain competitiveness...
Last time when oil
prices were at 30 Saudi arab declined to cut production because it might make
it lose market share since its cost is too low to keep shale out ... higher
prices could make it uncompetitive...
The economic growth in
INDIA has faltered in Q2 to 7.1% from 8.2% in Q1. Hope the RBI at the next
monetary policy review oblige us with a 25 basis cut in the sight of low
inflation due to lower oil prices and imported inflation due to appreciation in
the rupee in the month of November (we can easily expect the data), also in the
face of higher real interest rate and less than potential growth rate...
Raghuram Rajan promised
1.5 - 2 % of real rates... Higher real interest rate would restrict demand
consumption and investment...
Current real rates are
too high in the economy which has made capital less productive and business
lose competitiveness...
The governor is doing
right to conduct dollar selling and OMOs the same time... it would not let
hardening in the bond yields and lower bond prices and exit leading to
depreciation... leading to further outflows...
Higher interest rates
are not good for FPIs...
The US has deferred
tariffs on the exports from China which shows that the US and China know that
tariffs and trade barriers are bad for the investment and economic growth including
the stock market...
China''s stock market
is down much due to trade war and tariff fears and the US is conscious that
higher tariffs could increase inflation and interest rate that is likely to
affect the stocks in the US...
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