Monday, November 25, 2019

Inflation at the target is the objective of the Monetary Policy... Some inflation is good for the economy and demand and spending...




"Inflation at the target is the objective of the Monetary Policy... Some inflation is good for the economy and demand and spending..."


If few rules of the thumb are applied to the stock investing too much volatility could be avoided, investors should buy on big corrections and sell on big appreciations... Buy cheap stocks of good companies that have given consistent returns in the past... In other words, Buy stocks when their P/B ratio is lower than 3 and P/E ratio is high...


And, if you do this during correction and sell during appreciation that would help stabilise prices and the market and increase profits...It is time to invest in battery stocks used in EVs that would compete with oil demand and prices...


Corporate Tax Cut was a big bonanza for the stocks which gained 3000 points in just two days and is likely to increase corporate earnings and cashflow in the medium term and pricing power and more investment and employment and demand/supply and price and growth expectations...


There have been quite sufficient stimuli given which is likely to showup in competitiveness and productivity of the economy and lower unemployment and increased demand/supply in the forms of lower interest rate, lower oil prices, GST and Income tax cut (2018), GST and Corp Taxcut...


As the benefits of low cost and prices have been passed to the consumers and producers it would increase disposal income and demand and growth... Most of the wishes of the industry are fulfilled, except removal of LTCG tax...


Lower tax by the Govt could increase demand and price expectations and investment spending... Lower taxes are also a form of public spending...


The RBI and Govt may scrap interest rate linked deposits and instead they could link bank deposits with bonds which give better inflation adjusted premium, lower bond yields increase bond prices and vice versa or something like inflation indexed bonds...


Real GDP or price expectations are important for investment decisions and the economy is on the Knife-Edge (Solow), if they expect lower growth they would invest less and growth rate and expectations go down and vice versa... if firms increase employment and demand and growth and prices and expectations might improve...


Higher price expectations increase demand or delay supply and spending and lower price expectations increase supply or delay demand which self reinforce prices and expectations... Lower prices should increase demand and higher prices should increase supply to stabilise prices and investment and growth...


If Chinese could grow their GDP double every 5-6 years, why couldn''t INDIA?... All we need to is to scale up our ambitions and investments to be a valuable part of the global supply or exports chain by relying on domestic and foreign competitiveness and productivity... 


Like low growth is vicious or virtuous and self-reinforcing, high growth is also self-fulfilling... Once the growth starts INDIA would soon catch up space probably even better than China...


INDIA has improved a lot on ease of doing business and competitiveness... INDIA is a developing country where taxes and prices are high so that redistribution of income and spending for the poor become possible...


As the economy grows with reforms and production and demand increase, a larger base could lower tax burden on all, also due to lower poverty, and increase competitiveness... Lower prices would increase demand and supply and growth... which have been a characteristic of Chinese growth... cheap currency, too...


To big scale of production reduces cost of production and price and increase income manifold...


The Govt may provide everybody a unique bank acc. no. linked with Adhar Card, easy to remember to facilitate transaction on the mobile phone without POS machine, also for security purpose against counterfeit notes and illegal transaction, to promote cashless payments and reduce black money...


It would also reduce the cost of printing money and could help capitalise banks and increase monetary policy rate cut transmission...





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