Price or Inflation Expectations Affect Spending...

The central banks are committed to maintain stability in prices and full-employment... If the economy responds negatively and prices go too low and unemployment goes too high, they start cutting the interest rates... The point is that the central banks are there to minimise the risk and people shall not worry... Higher interest rates and lower demand and price expectations would reward people to delay spending and increase savings which could reinforce low prices... When we say that rate hikes would bring demand down, at the same it also means that supply would go up... Demand and supply have a negative relationship...

Higher interest rate means lower prices which are good for real wages and incomes, which also mean lower business cost, though borrowing cost has increased which involves a trade-off, which is good for investment. Most investors miss that low prices increase demand and price expectations and vice versa...

If the RBI commits that interest rate in the short, medium and long run would increase gradually and investors expect the same then it could increase investment demand and lower supply, which could reinforce high prices... Therefore, higher interest rate could be self reinforcing and vice versa... Though, higher interest rate could lower demand and increase supply lowering prices and vice versa...

Rate hikes have failed to stop depreciation and outflows and are already factored in by the markets... Preemptive actions to stop outflows have not worked... To stop or increase inflows the RBI may try to use the foreign exchange reserves... Strong exchange rate expectations could increase inflows and lower imported inflation could reduce domestic inflation and increase competitiveness and exports...

The economists wanted to cut the value of debt and lower real wages, interest rate and exchange rate with inflation to increase investment demand and profits, but they forgot that it would reduce real wages, income, profits and demand... Inflation means less spending... Lower interest rate and inflation has only helped the capitalists, though higher borrowing cost could also increase the value to money and demand and investment...Lower interest rate has increased demand for riskier assets... Poor people must be made able to save plenty and higher interest rate would also help lower inflation gradually and increase supply...

Higher interest rate and expectations are also good for the economy when inflation is high, because it leads to lower demand/increase supply and lower prices or inflation which could increase real wages income profits and returns on savings and investment... Higher interest rate in the long run could increase poor peoples' savings and investment and returns due to low prices or inflation and could also help increase spending, both consumption and investment... The Pigouvian view... Higher interest rates are good during periods of high inflation... People are induced to save more and spend less due to lower price expectations...

Lower domestic prices or inflation means higher real wages, incomes and profit and demand... Higher food prices could get translated in higher living cost especially for the vulnerable, the poor and result in a wage-price spiral... Lower food prices could lower the cost of living and increase domestic demand...

Low prices could increase demand and lower supply, but low prices expectations could lower demand and increase supply reinforcing low prices... Nonetheless, high prices could increase supply and lower demand, but higher price expectations could increase demand and lower supply reinforcing higher prices... There are three key prices in the economy -- interest rate, wages and exchange rate... Higher interest rate, wages and exchange rate decrease demand and increase supply due to lower price expectations, but higher interest rate, wages and exchange rate expectations increase demand and lower supply reinforcing high prices... Notwithstanding, low interest rate, wages and exchange rate increase demand and lower supply, but low interest rate, wages and exchange rate expectation delay demand and increase supply reinforcing low prices... High interest rate in the INDIAN Economy could lower demand/increase supply reinforcing low prices, but high interest rate expectations could increase demand and lower supply and price expectations...

High interest rate in the INDIAN Economy could lower demand/increase supply reinforcing low prices, but high interest rate expectations could increase demand (and lower supply) and price expectations...

Higher interest rate is to induce the investors to save or delay demand spending due to lower price expectations, to increase returns, which is also likely to increase supply spending, which, together, could reinforce low prices... People who could hold would be rewarded better in the future when they deploy fresh invest at low prices which could increase demand and price expectations due to the low base effect... and, vice versa... Therefore, higher interest rate is to reduce or delay spending due to lower price expectations... Real Balance effect could increase wealth and spending... Lower inflation expectations could help delay demand and increase supply which could further reinforce low current prices... What is widely expected could become self fulfilling...

Investment spending is done by keeping price expectations in the mind, which depend upon earnings expectations... In order to maximise returns the investment is done when prices are low during significant market correction and sell when prices are high during significant appreciation... If everybody does the same the markets would be a lot stable and risk would be low and returns would be high... Nonetheless, expectations about prices could be self-fulfilling... Commentators and analysts shall help build consensus among investors on a single buy price and a single sell price... Divergent views could confuse the investors...

From the investors’ perspective, the rate hikes could go as high as the pre pandemic levels in the medium term, though too much tightening could backfire because defaults could increase... The last time when Urjit Patel increased interest rate in 2018 the NBFC's flourishing on banks' money started defaulting... NBFCs have advanced more loans than the regular banks which could turn out to be a shadow banks fiasco...

Investment depends upon price expectations... Higher price expectations from a low base increase demand/lower supply and lower price expectations from a high base increase supply/lower demand... Investors try to maximise profits... Investors' expectations behaviour and actions affect current prices...

If everybody follows profit maximisation behaviour, returns for everybody would increase... Means that people shall set buy limit order lowest of the price range and set sell limit order highest of the price range... If everybody does the same profits would be maximised...

Everybody wants to invest in the stock markets, but very few know that if they follow the profit maximisation behaviour they might be able to get the maximimum returns… Yes, if everybody set same buy limit price (lowest) and set same sell limit price (highest) according to price range, profits could be maximised and everybody would gain…

If everybody follows profit maximisation markets could stabilise because when prices are significantly low investors could buy which could increase prices and when they are significantly high investors could sell which could lower prices...

This kind of reaction, like we are seeing today, could be categorised as irrational exuberance, when market has corrected 10, 000 points and people are expecting more correction... Doing this kind of prediction is a kind of disfavour to the existing investors... Though, it could be a good time for the new generation investing in the stock market and lower average cost... Telling people to delay demand could lead to self fulfilling correction...

As far as inflation and value of rupee are concerned this govt is as good as the past govt... Inflation has increased more than incomes... In a sense the Congress govt was better, in case of oil the past govt did not let prices increase too much by borrowing more through oil bonds while Modi govt reaped rich dividend from lower oil prices, but put 50% tax on the public and lowered taxes when there was no solution left under pressure... The grain Modi govt is distributing to the poor instead of jobs is actually owed to Food Security Bill passed during the past regime... The Modi govt is anti-poor, but pro-business and the Congress is good as far as poor people are concerned... Higher prices of cereal during UPA actually helped the agriculturists... The growth UPA left never recovered at full employment level even after 8 yrs of power... Inflation is increasing; the growth rate of inflation every month is 1% and yearly 10%... Real wages and incomes have gone down... Even the inflation targeting regime we have today dates back to Congress... Modi is trying to claim that that all the change we see today is only the result of BJP and that is hard to digest... His way of criticising others for votes and power has yielded nothing yet to the common man... his real wages are going down and down and inflation is going up and up, no difference, and no relief during 8 yrs of rule...

When we were hit by demonetisation and the economy suffered yrs and then hit by covid and lockdowns which were shocks for demand and supply, both, then how he could claim that his regimes outshone the past rules... when the INDIAn economy's growth rate never fully recovered from the lows it touched during the past interest rate hikes ... The growth rate increased in double digits under Dr Manmohan Singh...

Demonetisation made all the black money white and was an extreme example of corruption during the current government which involved all the banks... Religion is opium for the public and the govt understands this very well, it is resorting to appeasement of the Hindus... Public shall not be emotionally exploited and fooled...

The present govt done nothing to stop the rate of increase in inflation and depreciation in the rupee... which has lowered and eroded real wages, incomes and profit... The average household has become poorer since 2014 as inflation adjusted per capita income has come down... The situation of employment is even worse... which has made the govt to provide record food grains... The govt has made poor people poorer by increasing unemployment... Even agriculturists has not been spared and govt has put a lid on their incomes by administering agri prices and let other prices increase which has lowered farm incomes... Agriculture is no longer a profitable venture...

Food inflation is due to mismanagement of the supply side when storage is a big problem which leads to a lot of wastage and higher prices... INDIA is a net exporter of cereals with huge stockpiles, therefore the problem is mishandling of the stock... The next inflationary item is fuel which is also in the hands of the govt and RBI, the govt could further lower taxes on fuel and the RBI could commit a strong exchange rate to lower fuel prices which is also likely to increase foreign exchange inflows and increasing dollar reserves at lower prices...

This govt is concentrated on talking lot, but does little to achieve its plans; it only shows dreams about future, but doing nothing to implement its plans... The $5 trillion dollar economy by 2025 looks a distant dream and doubling farm incomes by 2022 has already back fired... This is the time to evaluate the promises made during 2014 polls and what the public has achieved...

No matter how much schemes have been implemented, but their effect could only be gauged by lower prices or inflation and higher employment and productivity which are missing, but the situation is opposite higher prices and lower employment and productivity...

INDIA's productivity has been severely hit by demo, covid and, now, war on Ukraine, which is reflected in higher prices and expectations and high interest rates... Higher cost of capital means lower productivity and considerable delay in $5 trillion economy...

MGNREGA brought win to the Congress two consecutive terms and is still very helpful in providing employment in rural areas... The chances of win in next term would depend upon the Congress' ability to think and implement an employment scheme that provides employment to all according to their capabilities...

We need 8 million or 80 lakh jobs every year keep the workforce fully employed or to achieve full employment... It’s just a piece-meal effort to tackle the problem of unemployment...

In the macro-economic perspective, price stability and full employment are the twin objectives of the policy making; on both INDIA has a negative record... Too much Fiscal Spending in a demand dominated economy could further increase inflation... During Modi government the productivity of the INDIAn economy has been severely hit by DeMonetisation and covid and now tension between Russia and Ukraine, which has led to higher prices... So this was (Modi's term) a very tumultuous period... UPA had only one disruption, 2008 recession...

Higher interest rate is in the interest or for the sake of public, too...

Not long ago the economists favoured expansionary or inflationary policies, because they believed that it would stoke demand and growth, though without supply side policies response it is likely to increase inflation, which they said is likely to lower value of debt and further increase demand and could increase spending... But they forgot that inflation would lower real wages, incomes and savings and investment too... Nonetheless, we could expect the opposite outcome if they favoured gradual tight or contractionary policies which could increase savings and investment with higher real wages, incomes and profit... Wages are consumed and profits are saved and invested, therefore it is the capitalist who saves money and the increased return on savings and investment is also likely to benefit the capitalist, return on his investment increases... A gradual tight monetary policy and low inflation also increase the value of money and demand... Inflation reduces real wages, incomes and profit and savings/investment and demand and growth while lower prices are likely to increase real wages, incomes and profits and demand, too. A gradual contractionary policy is also likely to increase demand by lowering inflation and increasing real wages, incomes and profits...

The RBI has to manage spending in the economy to maintain price stability and FULL_EMPLOYMENT... The right way to increase spending is to increase the value of money and demand by lowering prices and increase real wages, incomes, profits and returns on investment... A gradual increase in the interest rate and expectations over the long run is needed to increase spending... The price of everything is going up but the price of capital -- read the interest rate -- is going down... The bond yields shall also go up in the long run to increase investment spending, though bond prices move in the opposite direction... For forward guidance the RBI shall notify the bottom and top of prices of financial assets in order to avoid uncertainty...

A gradual lower price expectation by gradual interest rate hike expectations is likely to increase supply and lower prices... A gradual rate hike expectations in the long run is likely to increase investment spending...

Stabilising or increasing spending without stoking inflation and unemployment is the aim and for that the RBI shall increase the value of money by increasing rate hike expectations in a slow manner so that lower price expectations increase supply and lower demand... reinforcing low prices... Higher interest rate on savings would also increase investment demand...

Nobody understands that interest rate hikes are not directly related to stock market investment, but it works with long lags between investment and earnings and perception and expectations about the company... If people could become millionaire and billionaire by investing in stocks of INDIAn companies then think of profits they must be earning... A 40 basis point hike in interest rate is going to do nothing to their investment plans and earnings... While investing earnings and expectations are very important, company that has consistently achieved its estimated earnings and revenue means actual earnings are equal or higher and the estimated earnings and revenue are higher for the next quarter/year...

Gradual rate hikes and expectations from the bottom could help increase investment spending and lower prices expectations could help increase supply and lower or delay demand ...

Higher interest rate is in the interest or for the sake of public, now, it would also lower business cost in a trade-off with the borrowing cost... Higher yields are good for the investors...

High price or inflation expectations could set speculative tendencies as far as investment is concerned, but higher interest rate expectations could lower earnings expectations and prices or inflation which could delay demand and increase supply... This is the time to curb such speculation...

The RBI shall lower inflation in order to make the economy competitive which is likely to increase appreciation expectations and exports... Higher or strong foreign exchange expectations could increase export demand... Strong exchange rate is also likely to lower import bill due to lower price expectations...

Rate hike by the RBI was a preemptive attempt to stop/stabilise foreign exchange outflows due to inflation and depreciation and expectations... Higher yields than the US or the arbitrage between the US and INDIA could stabilise... In the hindsight of inflation and depreciation and expectations, this rate hike seems reasonable... It could lower inflation and depreciation and expectations and could limit foreign exchange outflows from both debt and equity...

Further appreciation of the dollar is possible if the RBI demands too much dollar... Appreciation or lower reserve expectations could be self-fulfilling... INDIA owns debt in its currency and little in foreign exchange... Countries that owe debt in their own currencies do not involve the risk of default... The RBI is also the finance arm of the GOI... If it is necessary monetisation of debt by the RBI is possible...

Economic decision making often involve trade-offs... If the government reduces taxes on oil it would help increase spending and taxes elsewhere... Lower interest rates could further increase investment spending and taxes... Though, it depends upon the tax multiplier...

Vast unorganised sector like agriculture has a lot of disguised unemployment... 50% of the labourforce is seasonally employed by the agri-economy... which needs skilling to provide productive employment…

Like other markets investors could bargain buy or sell price in the market... The investors may choose or bring consensus on a single buy and sell price, highest possible it could go to sell or lowest possible it could go to buy, which is a profit maximisation outcome... Everybody would gain...

If everyone in the stock market set same sell limit order at the highest price for the day, it could soon become a reality. Everybody shall choose same price, for entry lowest and exit highest price... If this could happen everybody would gain... and would also help stabilise the markets...

The real question is that what could happen if everybody expect and set limit at the highest price according to the high price range for the day or if they expect or set limit lowest price according to the low price range for the day, or if everybody set same limit price for buy or sell... what would happen with the actual or current prices...

Everybody shall invest in index funds or mutual funds having nifty 50 and bse 30 companies, they are the top companies and investors does not need thorough research, they could take advantage of others... Investors shall buy significant correction in corrections... Investment mean three things buy low and sell high buy low sell high and buy low and sell high... Investments need timing...

Food inflation is high which could get translated in higher demand for wages that could further increase prices... Modiji shall serve INDIA first, people who have voted for him... He could be in-sensitive for the pain of the Ukrainian people and remain neutral and and show-off by that he cares for other countries people by donating vaccines and exporting wheat... Both, seems inconsistent... All are linked to the Ukrainian invasion... All countries must dislike Russia... It’s a humanitarian issue and all countries shall unfriend Russia...

Like the govt has backed off from farm laws, it has also retreated from CAA and NRC... By bulldogging illegal construction it has indulged in appeasement of its vote bank... The govt must stop illegal immigrations as it could destroy govt flagships and lower employment oppourtunities for the lower class citizens of INDIA...

Expectations Paradigm...

 Academics, theorists and philosophers are always in search of truth that proves to be useful in modeling human theories based on simple assumptions to predict response or outcome of some stimulus, if acted upon, which is the goal of the behavioral economics, a quite novel branch of economics. Expectations have been the one of the concepts that drove a lot of attention in predicting and forecasting the current and future outcome or response. Nonetheless, “expectations are self-fulfilling” which is a universal concept, which applies almost anywhere and everywhere, and especially in psychology and economics.  What you expect and what is your action decides the outcome.

Inflation is a problem as long as the price level does not come down... Higher prices and lower prices both are good for either demand or supply, higher prices mean higher demand and lower supply and lower prices mean higher supply and lower demand... The problem enters when people experience and expect or estimate prices (high/low) and increase speculation and investment based on price expectations, higher price expectations would increase demand and lower or delay supply and lower price expectations increase supply and lower or delay demand, which only could maximise returns, though expectations affect investment and consumption decisions today... If they expect higher prices they increase demand which would increase current prices and if they expect lower prices they increase supply which would lower current prices... To control inflation the govt may think like investors or traders... Create strategic reserves when prices are low to increase supply during high inflation... 

There is another view in the market, too, except the supply side disruption, that the current inflation is high due to low base a year ago, which is also likely to fade as inflation and growth stabilise... The Fed missed the neutral stance by jumping to the restrictive stance in order to stabilise inflation expectations... Since the objective is to balance on the neutral real interest rate... Otherthings remaining constant, if prices or inflation increase it lowers real interest rate, wages and exchange rate which should increase demand and spending... In this state of affairs, if the Fed increases nominal interest rate it would not let the aforesaid mechanism work - as inflation increases the Fed would hike and the real interest rate would remain same... In real terms the situation would remain same, the real rate would remain same... Nonetheless, if higher inflation increases demand (or lower supply), inflation begets more inflation which could be self-fulfilling...

Probably, there is one more reason for lower inflation expectations, is lower (investment and) employment in construction, because it consumes a lot of unskilled labour which creates demand more than any other sector, tightening leads to higher unemployment and lower inflation and expectations... Lower inflation or price expectations would further delay demand and reinforce lower prices...

Stable inflation and interest rate and expectations are important for financial stability, higher inflation means price of everything, including labour, is increasing, it is a problem when real income doesn't increase... Higher prices mean that demand would be in control and stable interest rate means that supply would not be disrupted... Rate hikes and higher unemployment could further reduce supply and reinforce higher prices... Higher prices could help increase supply and restrict demand, rate hikes could further reinforce higher prices and vice versa...

Economic decision making often involve trade-offs... If the government of INDIA reduces taxes on oil it would help increase spending and taxes elsewhere... Lower interest rates could further increase investment spending and taxes... Though, it depends upon the tax multiplier...Until INDIA provides free food and free education and skills upto the secondary level, it would get stuck in low productivity and income like agriculture... Distribution of labour and income according to the aptitude/skills and specialisation is the goal of the economic policy-making...

Rainy season is still away the govt must protect the coal from water to stabilise future supply to the power sector, it must be stored and transported safely and at lower cost... Coal and electricity demand during rain and lower supply could further reinforce higher prices... The govt must be proactive to control supply/demand and prices... The govt must think like a trader... Lower prices now and higher price expectations could increase investment returns by the rainy season... it would also help increase supply during high prices to increase stability...

Everybody shall invest in index funds or mutual funds having nifty 50 and bse 30 companies, they are the top companies and investors does not need thorough research, they could take advantage of others... Investors shall buy significant correction in corrections... Investment mean three things buy low and sell high buy low sell high and buy low and sell high... Investments need timing...

Russian ambitions are worthless, its economy has flared poorly on diversification of production and exports, its oil exports are going to take a hit as EVs could lower oil demand and exports and prices would return to normal...Back to back Corona (from china) and Russian invasion of Ukraine forces to think of some socialist-communist agenda working to derail the global economy... It must have something to do with the oil prices, the US is a net exporter of oil now... During Corona oil prices hit low which hit the US shale companies and investment in it got down, though oil prices have bounced back sharply since then, but not shale production... Investment in oil is done keeping future or expected prices in the mind, but shale could not catch up...

Inflation expectations affect spending, today...

 A marked change of the past one decade in the economic theories has been the slow recognition to the supply side economics, which had taken a back seat in the debate circles and the demand side took the lead in the policy making, both at the Govt and the central bank level. 

This has happened in the light of the evidence that the developed economies experienced slow or lower growth in the price level or inflation against the quantity theory of money, that higher money supply lowered interest rate and borrowing cost and higher supply resulted in lower price level and inflation. 

In the long run, the supply side has improved a lot and kept prices low, which also increased savings reinforcing lower interest rate and prices that kept inflation and expectations under control until the pandemic hit in 2019 which severely affected the supply side and inflation and expectations spun out of control. 

Inflation expectations affect spending today, that is why the Fed tried to increase inflation expectations since the crash of 2008, but it did not happen, prices remained muted and the inflation was behind the target because investors and people experienced and expected inflation to remain low. 

Though, the scene has changed dramatically on the eve of the covid-19 when lockdowns hit the supply side and the economic activity around the world was deeply disrupted and lowered employment, too. 

Lower economic activity resulted in lower demand which sent the commodity prices into a tailspin, but since then demand has bounced back quickly than supply which has now sent the commodity prices re-inflating.

When prices increase they themselves restrict demand, there is no need for the central bank to increase borrowing cost to lower supply and demand which could further reinforce higher prices, it probably helps stabilise the situation and vice versa. 

Otherthings remaining constant, an increase in the prices would control demand and increase supply and if the central bank increases interest rate it would reinforce higher prices and demand and supply would go down more than before at a quick pace and vice versa. 

Higher price expectations could increase spending today which could further reinforce higher prices and spending... Significant higher prices would reduce demand and increase supply... Little higher prices and expectations are good for investment and consumption too...

Fed's objective is neither inflation nor deflation, but stable inflation and expectations to ingress spending and growth...  Higher interest rate are good for savings, people must welcome the move, investors too...

Stagflation is high inflation-high unemployment, but this time we have high inflation-low unemployment, we are in a more comfortable zone as far as unemployment is concerned... The economy is in good shape...

An important part of the Monetary Policy is the neutral stance or stabilising inflation and interest rate expectations which the commentary misses... Analysts either talk about rate cuts or hikes, about extremes, but miss neutralising or stabilising inflation, interest rate, prices and growth and expectations...

The Fed has said that it is targeting the neutral rate at which inflation and expectations are stable, though if the Fed hikes or cut that might reinforce prices... Rate hikes could reduce supply and reinforce higher prices and rate cuts would reinforce higher supply and lower prices which could increase volatility... 

If the Fed tries to carve out expectations investors would try to speculate to gain by being preemptive which could be self fulfilling... Though, a stable or neutral interest rate might make the investors conscious of speculating and expecting too much or reading too much the Fed's words and try to gain from it in the short run and invest in a stable manner...

Foreign exchange inflows depend upon inflation and expectations, too... It is good that the RBI has sufficient reserves, but oil and imported inflation could increase depreciation and could increase outflows... The RBI must target an exchange rate that is conducive to lower imported inflation...

Stable inflation and interest rate expectations are pivot for incentivising spending, investment and consumption...

 When others are constrained, govt spending would increase employment and income, interest rates are record low... Price of capital, interest rate is different from commodity prices; higher interest rate expectations would increase supply of funds because everybody would try to resolve their debt which reinforces lower price or borrowing cost... Nonetheless, higher prices would also increase savings which would also help lower borrowing cost... The central banks actions would reinforce lower prices and demand and increase supply, and vice versa... It would do the opposite...

Lower taxes are like heaven for foreign investors... To attract foreign investment lowering taxes could help... Lower borrowing cost could converge to the lower borrowing cost abroad... The evidences from developed countries show that the long run borrowing cost has gone down and so the short run interest rate... Higher money supply has lowered interest rate...

Investors are more concerned with what the RBI “WILL” do if inflation and expectations spin out of control and their investment, they try to be proactive or preemptive in order to gain... It is per the rational expectations theory... RBI actions' expectations affect investment and consumption today...

The RBI has no data for unemployment rate, so it would be difficult to justify the rate hikes, since there is bound to be output gap till we reach full employment and prices or inflation are likely to go down with stable interest rate regime... Das has no clue of the UNEMPLOYMENT-RATE... The objective of monetary policy is price stability and full-employment... and growth is the underlying objective...

INDIA's inflation expectations are too high to and a neutral stance is what is needed now to control inflation and expectations, the RBI may shun its accommodative stance...

Higher inflation expectations would increase demand and lower supply which could further reinforce higher prices... In this supply induced slowdown it is important to keep supply increasing by lowering and stabilising inflation expectations which is likely also likely to lower demand furthering lower prices... Higher borrowing cost would also be self fulfilling... The objective is to find the r* or the neutral real interest rate, neither inflating nor deflating the economy...

If the RBI commits a gradual stronger exchange rate by selling dollars it could help limit foreign exchange rate outflows, higher prices expectations could help increase spending or demand for exports... Lower supply of rupee could further reduce domestic inflation or prices... Strong exchange rate would also reduce imported inflation...

Depreciation and expectations would delay export demand and increase supply which would reinforce depreciation whereas appreciation and expectations could delay supply and increase export demand and reinforce appreciation... Strong exchange rate means prices or inflation has gone down relative to the real exchange rate which would increase export demand... Even China's huge export led growth is followed by a strong exchange rate... In the long run a strong value of money could help maintain growth in the face of lower population growth rate...

Inflation is in the RBIs target... Between the 4 /- 2 the monetary policy could remain neutral to use low and stable inflation growth rate and expectations... Investors expectations low/high could help time investments according to the rational expectations theory... little inflation/deflation and expectations help increase returns on investment...

Inflation in INDIA is not sticky or rigid atleast not supported by commodity price inflation, higher prices also increase supply and contain inflation every year, and it is more seasonal... Oil supply would increase if prices increase... OPEC has cut supply in the hindsight of oversupply and lower oil prices... Inflation is a problem if real wages do not increase...

Low real interest rate is an oppourtunity for fiscal spending; when others are constrained the govt spending would crowd-in private spending... The govt Rs 100 trillion infra push could help drive a long way... Roads have a direct affect on productivity and demand... Implementation is the key for demand...

Food and fuel have highest weightage in the inflation indices... This is high time when the govt should bring oil under the GST... Expectations of arrival of ethnol blended petrol have the capacity to limit demand of imported fuel...

Fed is consistently reinforcing the signal that it would maintain financial stability, an environment that would increase safety of people's money and jobs... People should be easy on the outcomes and avoid overreact... sky is not going to fall... The United States Consumer Inflation Expectations show that it is expected to go down as the base year normalises...

Higher inflation and lower real interest rate, actually negative real interest rate, zero interest rate - inflation equals negative real interest rate, 0-7=-7, and if investors increase investment demand, supply would reinforce lower prices and interest rate... Lower money supply would help bottom-out negative real interest rate and increase investment demand... Higher interest rate would increase savings and investment and employment and consumption demand...

The Fed shall make only gradual moves to avoid a sudden crash and overkill demand and growth and try to stabilise inflation consistent with the inflation target... Some inflation expectations is good for spending... Lower growth is often associated with deflation or low prices and higher growth is associated with higher inflation or prices as observed in the stock market...

Investors are missing that growth has returned to normal, when actual growth surpasses warranted growth, investors shall invest more which could be self-fulfilling... These rate hikes are justified because demand and inflation have outpaced demand and inflation in the recent past, therefore few rate hikes are healthy, the Fed needs rate hikes to slash it during a downturn... Normalisation may increase investment and returns...

Low price expectations due to rate hike expectations sooner could help increase supply and delay in demand which would help lower inflation and expectations, both, consumption and investment... The equity markets have responded first... If one has money corrections would help increase returns... Otherwise wait...

To earn in stocks investors must use rules of thumb 1) buy significant correction during significant market corrections in good stocks 2) which have achieved forecast earnings and revenue consistently mom and yoy...

If investors follow few rules of thumb like buy on significant corrections and sell on significant appreciation in the stock indices everybody would gain... that would also help stabilise the markets... Business and investments are forward looking and depend upon forecast, past quarter data shall not affect investment decisions...

Short term investors, less than a month, shall pick a price to exit 2%, 3%, 5%, long term investors shall stay invested... Short term is a play of quantity and price... Higher quantity of good share would help increase returns in the short run... Quantity of shares is also important than the right price...

Depreciation expectations could delay demand for exports, though a gradual strong exchange rate expectation would help increase exports... Depreciation and expectations would delay investment and demand, foreign exchange inflows and exports, too... Too much govt expenditure could increase depreciation and expectations...

The farm quota is used in the US to control prices of agricultural produce to protect farmers' income and living, in INDIA everybody is producing cereals and dump the market hurting marginal farmers due to the absence if proper storage and holding facilities... The ability to hold stock could help gain farmers because they would be able to sell on high price... If OPEC could restrict supply to boost prices, farmers’ organisation shall be able to restrict price fall...

A Universal Health Care is the need of the hour, during Covid holes in the healthcare system were visible, Sitharaman must devote larger funds for strengthening health, it would help increase productivity...If INDIA wants to increase its productivity it must provide universal free education upto secondary level and universal food security... Not only distribution of income, but distribution of labour according to skills and specialisation is equally important for increasing productivity and competitiveness...

Crypto currencies’ underlying value is currency it is purchased with and what could be done with the money... It has an income, investment and spending multiplier value... It is an investment asset than a medium of exchange... its value is determined by the same factors of demand and supply... Anything's value or price is determined by its demand and supply or quantity they are its underlying base...No other asset prices move 150% in three days...Expectations about the crypto’s work in the same way as other stocks they are self sustaining and self reinforcing just like other price expectations...

We have abandoned gold standard long back... Today's fiat currencies, sovereign issue, are also not back by anything... Its demand and supply in the market determine its value... Like stocks it is backed by its demand and supply... Crypto’s are not derivatives so to derive its value; their price is demand and supply dependent...

भारतीय अर्थव्यवस्था एवं अपेक्षाएं...

कोविड़ के दौरान भारत के कृषि क्षेत्र ने अन्य क्षेत्रों, सट्टा बाज़ार छोड़ कर, से बेहतर प्रदर्शन किया है, क्योंकि वह लॉक-डाउन से बचे हुए थे, वहां बंदी नहीं हुई थी. भारत का असंगठित क्षेत्र मुख्यतः कृषि अर्थव्यवस्था से बना हुआ है, भारत की श्रम सेना का ७०% भाग मौसमी रूप से कृषि में खपा हुआ है, जिसका सही आंकड़ा सरकार के पास नहीं है, जो ब्याज दर निर्धारण के लिए आवश्यक है.  भारत में मांग और विकास की कमी नहीं है, परन्तु वह महंगाई/स्फीति एवं उसकी अपेक्षा में जकड़ा हुआ है. यदि हम मुद्रा की आपूर्ति को बढ़ाए तो वह विकास और महंगाई दोनों को बढ़ाएगा, यद्यपि कम महंगाई वास्तविक विकास दर, वास्तविक आय और मांग एवं कीमत अपेक्षाओं को बढ़ाएगी, क्योंकि सभी की मांग एक साथ बढ़ेगी.  

रिज़र्व बैंक का कार्य है कि वो अर्थव्यवस्था में निवेश को बढाने के लिए स्फीति एवं ब्याज दर अपेक्षाओं को स्थिर रखे. व्यापार उत्पादन बढाने एवं स्टॉक में निवेश बढाने के लिए अपेक्षित कीमतों को भी ध्यान में रखते हैं, ऊँची कीमत अपेक्षाएं निवेश मांग को बढ़ातीं हैं, जो कीमतों को और भी बढ़ाती हैं, यद्यपि उपभोग मांग भी कीमतों को बढ़ा सकती हैं, इसका विपरीत भी उतना ही सत्य है. काफी अधिक या कम कीमतें, वृद्धि/ह्रास की अनुभूति या अपेक्षाओं में बदलाव के लिए उत्तरदायी होते हैं, जोकि आधार या निराधार प्रभाव पर निर्भर करता है. 

हांलाकि सट्टा बाज़ार का मूल्यांकन दिखाता है कि निवेशक भारत की विकास कि कथा में विश्वास करते हैं, क्योंकि वह विश्व कि सबसे अधिक गति से विकास करने वाली अर्थव्यवस्थाओं में से एक है, सभी उसके लिए उत्साहित हैं.

अल्पकाल में देश-विदेश में घटने वाली घटनाएं और प्रोत्साहन की सूचनाएँ सट्टा बाज़ार सूचकांक को कंपनियों की आमदनी और बुक अनुपात से ज़्यादा प्रभावित करती हैं, अपितु वह भी महत्वपूर्ण होते हैं. हालांकि अभी ओमिक्रोन को छोड़कर कोई बड़ी मुसीबत अप्रत्याशित हैं, जिसके कारण बड़ी गिरावट कि आशंका कम ही है, मगर ५-१०% का सुधार कभी भी हो सकता है, परन्तु ५-१०% का चढ़ाव भी नकारा नहीं जा सकता है. 

ऐसी संभावना हो सकती है कि सट्टा बाज़ार किसी बड़ी गिरावट के पहले अपनी स्वाभाविक स्तिथि में आये. विश्लेषक आम तौर पर चरम स्तिथि कि बात करते हैं, जबकि यह समय स्तिथि के सामान्य होने का है और कोई भी बड़ा सुधर निवेश को बढाने का सही समय होगा. हम बाज़ार कि सीधी चढ़ाई की स्तिथि के मध्य में हैं, जैसा की २००९ से २०१७ के बीच में अनुभव किया गया था, जबकि अर्थव्यवस्था में आधार-प्रभाव के कारण  सुधार की काफी गुंजाइश हैं और वह अपनी पकड़ भी बना रही है और इससे ऊँची अपेक्षाएं है. आर्थिक सुधार धीरे-धीरे अपनी रफ़्तार बढ़ा रहा है. 

अनलॉक और अर्थव्यस्था के खुलने के पश्चात कम्पनीयों कि आमदनी बढ़ने की अपेक्षाएं ज्यादा हैं, परन्तु जहाँ मूल्य बहुत ज्यादा बढे हुए हैं वहां लोग अपेक्षा करते हैं कि दाम घटेगा. 

यदि बाज़ार अपने लोकप्रिय अपेक्षाओं के हिसाब से बढता-घटता है, तो यह निवेशकों के लिए अच्छा होता है, परन्तु अनिश्चितता और नकारात्मक चौकाने वाली घटनाएँ निवेश के लिए बुरी होती हैं. सट्टा बाज़ार एक अग्रोंमुख तंत्र होता है जोकि अच्छी या बुरी सूचना को कीमत अपेक्षाओं के ज़रिए कीमत में पहले ही सम्मिल्लित कर लेता है. कम कीमत की अपेक्षाएं मांग में विलम्ब कर पूर्ती को बढाती हैं जिससे कीमत और घट जाती है एवं ज्यादा कीमत की अपेक्षाएं पूर्ती में विलम्ब कर मांग को बढाती हैं जो कीमतों को और भी  बढाता है. 

कोविड़ काल के कम कीमत आधार की वजह से दुनिया की आर्थिक शक्तियों की इस साल कि आर्थिक वृद्धि दर एवं महंगाई एवं अपेक्षाएं काफी ऊँची रहीं और इसी वजह से निराधार प्रभाव के कारण अगले साल की महंगाई  और विकास दर नीचे रहने का अनुमान या अपेक्षा है.

भारत एवं अमेरिका में ऊँची महंगाई और विकास दर का एक कारण एक सांख्यिकीय भ्रम भी है, जिसे आधार प्रभाव कहा जाता है, जिसका उल्लेख ऊपर किया गया है. यह ऐसा यूँ होता है, क्योंकि आधार वर्ष में बहुत कम महंगाई एवं विकास दर के कारण अर्थव्यवस्था के सामान्यीकरण के कारण काफी उछाल आ जाता है, परन्तु जब महंगाई और विकास दर का आधार सामान्य हो जाते है, तो आगे के वर्षों महंगाई और विकास दर भी सामान्य हो जाती है. आधार समय सामान्यतया पिछली तिमाही या पिछला वर्ष होता है, यदि हम आधार समय बदल दें तो, यह सीधे सीधे वर्तमान आंकड़ों को प्रभावित करेगा. कम महंगाई और विकास दर वाला आधार वर्ष वर्तमान में महंगाई और विकास दर ऊँचा या अधिक दिखाएगा और ज्यादा महंगाई और विकास दर वाला आधार वर्ष वर्तमान की महंगाई और विकास दर को कम दिखाएगा.

जहाँ तक आंकड़ों और सांख्यकी का सवाल है, तो हमारे लिए यह जानना जरूरी है कि पिछली तिमाही या पिछले साल क्या हुआ था, जो की इस वर्ष के लिए आधार होगा. अनुक्रमाणिका चाहे वह महंगाई के लिए हो या विकास के लिए, वह हमेशा पिछली तिमाही या पिछले वर्ष को आधार मान कर बनाया जाता है. पिछली तिमाही या पिछले वर्ष क्या हुआ हमारे वर्तमान महंगाई और विकास दर को सीधे-सीधे प्रभावित करता है, यदि हम आधार तिमाही/वर्ष बदल दें तो हमारा वर्तमान आंकड़ा भी बदल जाता है, भूतकाल में क्या हुआ वह वतर्मान का निर्धारण करता है.            

भारत में वर्तमान महंगाई दर ४.९१% है जिसका आधार वर्ष २०२० है, यदि हम २०१२ को आधार वर्ष मान कर २०२१ की महंगाई दर निकाले तो वह ७०% है, और यदि हम उसे १० (वर्ष) से भाग दें तो प्रति-वर्ष महंगाई ७% होगी. जहाँ तक महंगाई का प्रश्न है तो हम एक ही नदी में कभी नहीं उतरते, वह हर वर्ष बढ़ती ही रहती है. सही आकडे प्रतिशत और अनुपात के पर्दे के पीछे रहते है, जो आम आदमी को ज्यादा समझ नहीं आते है. सरकार को चाहिए की वह सापेक्षिक आंकड़ों की बजाये निरपेक्ष आंकड़ों को सार्वजनिक करे, जो की जनता समझ आये और यह निवेश बढ़ने और बजट बनाने में मददगार होगा.

सभी देशों की विनिमय दर समय के साथ मजबूत हुई है, परन्तु भारत की विनिमय दर समय के साथ कमजोर हुई है, जो कि नीति के तौर पर भारत के नीतिनिर्माताओं की एक बड़ी भूल है, जो देसी मांग को कम कर निर्यात को बढ़ावा देती है, जो सुधार योग्य है, भारत को भी अन्य देशों से सबक लेना चाहिए. भारत को चाहिए की वह धीरे-धीरे अपने विनिमय दर को मजबूत करे जिससे आयातित महंगाई कम होगी और कम महंगाई के कारण निर्यात भी बढ़ सकते हैं.

यदि लोगों की आय महंगाई से ज्यादा बढ़ती है, तो थोड़ी महंगाई अच्छी होती है. मौद्रिक नीति के सामान्यीकरण का मतलब होगा की अर्थव्यवस्था अपने दीर्घकालिक लक्ष्यों को प्राप्त करने की राह पर है. भारत में सामान्यीकरण के कारण ऊँची ब्याज दर अपेक्षाओं की वजह से महंगाई की अपेक्षा कम ही है.          

भारत में महंगाई चुनावों की दिशा तय करती है ...

कोविड़ १९ के पूर्व भारतीय अर्थवयवस्था ८ % की सम्मानजानक आर्थिक वृद्धि दर के साथ विश्व की सबसे तेजी से विकास करने वाली आर्थिक शक्तियों जैसे अमेरिका एवं चीन में से एक था, या ये कहें कि आर्थिक वृद्धि दर के मामले में उनसे भी आगे तो अतिश्योक्ति नहीं होगा I परन्तु ऐसा तभी संभव हो सका है, जबकी भारत सरकार की वित्तीय सहयोगी रिज़र्व बैंक ने सरकार द्वारा मान्य लचीले स्फीति लक्ष्य को अपनाया है और भारत में स्फीति सीमा के अन्दर रही है, तथापि यह अंतर्राष्ट्रीय बाज़ार में तेल की कीमतें एवं खाद्य महंगाई  के कम रहने के कारण ही संभव हो सका, जो अर्थव्यवस्था में महंगाई और स्फीति के लिए ऐतहासिक रूप से जिम्मेदार रहे है I यह कथन वर्तमान के परिपेक्ष में भी उतना ही सत्य है I

लचीले स्फीति लक्ष्य के अनुसार भारतीय रिज़र्व बैंक कि मौद्रिक नीति को स्फीति और आर्थिक वृद्धि में सामंजस्य स्थापित करना है, स्फीति को एक सीमा में नियंत्रित कर आर्थिक वृद्धि को अधिकतम करना है I भारतीय संसद द्वारा रिज़र्व बैंक को स्फीति को ४ % +/- २ % तक ही सिमित रखना है और अगर ऐसा नहीं होता है तो गवर्नर को संसद को स्पष्टीकरण देना होगा I चार्ट पर गौर करें -

 

भारत की खुदरा मूल्य स्फीति सितम्बर में ४.३५ % कम हुई है जो अगस्त में ५.३% थी, यह बाज़ार की अपेक्षित स्फीति ४.५% से कम रहा है, यह ५ महीनों में सबसे कम है  जो आर बी आई के २ – ६% के लक्ष्य के अन्दर लगातार ३ महीने रहा है I भारत में खाद्य महंगाई ०.६८ % रही वहीँ जबकि २०१९ में वह ३.११ % थी, जो की काफी कम है I कृषि लागत भी कम हुई है जबकि तेल की कीमत बढ़ी हैं, वह १२.९५ % से बढ़ कर १३.६३ % हो गयी है I  

जैसा की ऊपर कहा गया है कि भारत में तेल और खाद्य महंगाई ऊँची स्फीति और अपेक्षित स्फीति के दो प्रमुख कारण हैं, क्यूंकि इनकी सप्लाई की अनिश्चितता बनी रहती है I तेलों के दाम महंगे डॉलर में होने के कारण और ऊँचे आयात दोनों ही स्फीतिकारी हैं I भारत तेल का एक बड़ा आयातक देश है और अन्तर्राष्ट्रीय कारण का उपाय कम ही हो पाता होता है और तेल उत्पादक देशों में अस्थिरता है, सबको तेल की आवश्यकता है, तेल कि सप्लाई कम और डिमांड ज्यादा है I सभी तेल पर कब्ज़ा चाहते हैं, जो आर्थिक दृष्टि से अहम् हैं I जहाँ तक खाद्य महंगाई का सवाल है वह कुप्रबंधन और वर्षा की वजह से चढ़ जाती है I आवश्यकता से अधिक पूर्ति और उसके कम विविधिकरण  के कारण कृषि अर्थव्यवस्था सुस्त पड़ गयी है, सभी चावल गेहूं पैदा कर रहें हैं I यही नहीं, रोज़गार के लिए कृषि पर निर्भरता बहुत अधिक है और कृषि का सकल घरेलु उत्पाद में हिस्सा कम होता जा रहा है, कृषि में जरूरत से ज्यादा लोगों के होने के कारण कृषि अर्थव्यवस्था में प्रतिव्यक्ति आय और मांग कम हो गई हैं I भण्डारण व्यवस्था न होने के कारण किसान परेशान हैं, वो स्टॉक को नियंत्रित नहीं कर पाते और इसका फायदा बिचौलियों और खुदरा व्यापारियों को जाता I अगर किसान अपना स्टॉक सीधे खुदरा व्यापारियों को बेचेंगे तो खाद्य पदार्थों की कीमतें एवं महंगाई कम हो जाएगी और किसानों और उपभोक्ताओं को भी फायदा पहुंचेगा I  

जो लक्ष्य रिज़र्व बैंक के लिए हैं वही सरकार का भी लक्ष्य है ( और होना चाहिए), सरकार की आर्थिक नीति या राजकोषीय नीति  और आरबीआई की मौद्रिक नीति समन्वित तौर पर अपेक्षित मांग एवं पूर्ति एवं कीमत स्तर और रोजगार को प्रभावित करता है,  जिसका सीधा असर वास्तविक निवेश और कीमतों पर पड़ता है I अपेक्षित मूल्य स्तर ज्यादा या कम निवेश मांग को सीधे-सीधे प्रभावित करता है, कम कीमतें मांग बढाती या पूर्ति घटाती हैं और ज्यदा कीमत मांग घटाती या पूर्ति बढाती हैं, यह मांग और पूर्ति के नियम हैं I सारा निवेश अपेक्षित मूल्य को ध्यान में रख कर किया जाता हैं I मांग बढ़ेगी तो अपेक्षित कीमतें बढेंगी, निवेश बढेगा - उपभोग बढेगा I  

रिज़र्व बैंक एवं सरकार के बीच मतभेद आम हैं I सभी सरकारें चाहती हैं की उनके कार्यकाल में ब्याज दर कम रहे, ताकि आर्थिक वृद्धि दर ऊँची रहे, जिससे रोजगार बढे I परन्तु विभिन्न कारणों, जैसे उपरोक्त कारण, तेल एवं खाद्य महंगाई एवं अपेक्षित महंगाई या कीमत स्तर एवं संलग्नित अनिश्चितता के कारण ब्याज दर को हमेशा कम रखना संभव नहीं होता है I यही वजह थी कि हमारे निवर्तमान गवर्नर उर्जित पटेल को अपने कार्यकाल से पहले ही त्यागपत्र देना पडा I उन्होंने २०१८ में बढती तेल कीमतों के कारण दो बार ब्याज दरें बढ़ा  दी थी, जो सरकार को नागवार था I यही स्थिति वर्तमान गवर्नर शक्तिकान्त दास के साथ भी आ गयी (मतभेद), जब उन्होंने कहा की तेल की बढती कीमतों के कारण अपेक्षित स्फीति बढ़ गयी है, जिसके लिए सरकार को तेल पर टैक्स कम करना चाहिए I आरम्भ में सरकार का कहना था, कि भारी टैक्स कोविड़ की वजह से बढे खर्च को निकालने के लिए लगाया गया है I तदोपरांत वर्तमान गवर्नर का कार्यकाल ३ सालों के लिए बढ़ा दिया गया है, उन्होंने स्फीति के बजाय आर्थिक वृद्धि दर पर बल दिया है और सरकार ने तेल पर एक्साइज ड्यूटी को घटा भी दिया है I  

यदि आरबीआई भी चाहे तो तेल की कीमतें कुछ कम की जा सकती हैं I अगर वो बाज़ार मैं डॉलर की सप्लाई बढ़ाये या आयातित तेल को डॉलर डिस्काउंट पर दे, जिसके द्वारा भी तेल की कीमतें और महंगाई कम की जा सकती है, सस्ते डॉलर की वजह से आयातित तेल और अन्य आयात की कीमतें सस्ती हो सकती हैं Iकिसी भी अर्थव्यवस्था में कीमतों को प्रतियोगितात्मक और स्फीति को कम रखने के लिए आवश्यक है कि उत्पादन संरचना को प्रभावी बनाया जाए ताकी लागत कम हो, नवाचार हो और पैमाने की अर्थव्यवस्थाएं हो I  

अर्थशास्त्रियों का मानना है की महंगाई और बेरोजगारी में काफी सम्बन्ध होता है, जब बेरोजगारी होती है तो कम ब्याज दर महंगाई और कीमतें घटाती हैं और अगर पूर्ण-रोजगार होता है तो महंगाई बढती है I भारत के नीति निर्माताओं के समक्ष रोजगार और रोजगार का आंकड़ा भी एक बड़ा मुद्दा है, क्योंकि उसके बिना पता लगाना मुश्किल है की अर्थव्यवस्था के पास कितनी क्षमता बाकी है, और उसका क्या उपयोग करना है, जो सीधे-सीधे महंगाई को प्रभावित करता है I भारत की अर्थव्यवस्था का लेबर क्षेत्र ज्यादातर  असंगठित  है I