Slowdown and the Central Bank...

Big corrections are an oppourtunity to increase profits by lowering the rupee average cost and increase investment, lower prices shall increase demand and price expectations...

The stock market people yet need to grow up and not respond to every bad news and stay invested till the market reaches high price... They should invest slowly at least till a stock price reaches its high price and buy when the stock price is lowest possible or the gap between current price and the high price is higher...

If everybody sets a same limit price for buy and sell, everybody would gain... bid price should be low and the offer price should be a high price... It is like giving some bargaining power to the investors if investors bid and offer at same prices...

Moreover, if the nominal gdp growth is 11-12% then the real gdp must be 8-9% if we have deflator or inlation of 3-4%...

Indian businesses should think of increasing capacity and economies of scale to increase growth (of sales) by increase in exports, since inflation is low and wages (labour) are cheap in INDIA it could increase demand by increasing productivity and competitiveness... Lower real interest rate could further reinforce demand and growth...

Flexible labour laws pertaining to hiring and firing of labourers require a good social security system or unemployment benefits or claims system as in the US to support during no work, otherwise lower demand and employment could reinforce lower growth and slowdown during crisis.

Both food and fuel affect real wages and the cost of living because, higher prices of food would lower real wages and demand and higher fuel prices are translated into higher transport prices thus again lower real wages and incomes and profits because of pricier goods and services and lower demand... Lower real wages lower demand and growth...

The central bank must match nominal interest rate equal to inflation or loss in the value of money savings to contain the value of money and demand and growth and savings and investment...

At too much higher interest rate savings would increase and then lower the interest rate and at too much lower interest rate people would save less and then increase interest rate, therefore the goal is to neutralize interest rate at zero real interest rate and balance savings and investment...

Since money could be printed we cannot say that it is scarce, but it is scarce because of less production or productivity, therefore the real interest rate on money should be neutral or zero and nominal interest rate must be equal to inflation to contain price and demand and supply and quantity of money...

Oversupply of real estate has been further aggravated by higher interest rate on home loans and lower demand, a price correction is all due which could increase demand and price expectations due to slowdown in the economy and slow recovery from the last trough... This has resemblance with the shadow banking crisis in the US and China...

The RBI must better regulate the shadow banks... If home loan rates are lowered that could also help increase demand... There could be a real estate bubble in the economy which should be controlled to help maintain demand and price expectations...

The most important reform Trump may bring to the US and the emerging markets is to unload some of the weight behind the dollars status as a reserve currency and settlement of oil exports in the dollars... The US has done extremely well as far as oil production is considered which has lower price expectation in the US...

The US imports are higher because of the US dollars and a strong currency means cheaper imports... To increase exports the US must increase supply of dollars to increase devaluation and exports... Lower inflation in US has been offset by a strong dollar and has not turned exports... Cheaper dollar would help in terms of oil prices to the emerging markets...

People would buy more dollars at dips which could keep the dollar stable... US dollar is the world's reserve currency because it is more stable than others... The dollar kept its stable nature despite the three rounds of QE...