Nobel Laureate asked India to print more money and not to worry about inflation - page 2.

South Park

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Quote from: bitgolden on April 14, 2020, 01:41:44 PM

That is the thing about the printing money and actually having a problem or not having a problem. Now if one nation prints money and others don't, that will cause some inflation inside and we are talking about a big problem for that nation, however if 50 nations prints money that means there will not be an inflation that big since all other nations printed as well, still a problem inside because things will go higher with people having more money but things costing more money as well, but not as big as doing it alone since you can at least use it for global payments as well.

However looks like countries will go for cheap or zero interest rate loans to big companies so that they could both restart the economy and not have to print money as well if they can afford to.

No, the advantage so to speak of having almost every country in the world printing money is that your export sector is not going to suffer, a measure that has been known for a long time in order to raise your exports is to weaken your currency so foreigners can buy more of the stuff being produced in your country, and how do you weaken a currency? By printing money of course, however when everyone is doing it then no one gets any advantage in the exports sector, but the internal market will suffer as the price of everything goes up and the salaries stay the same.

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Quote from: crwth on April 14, 2020, 10:01:44 AM

This wouldn't be a good idea. If they want to be like the Zimbabwean dollar with the hyperinflation thing affecting their economy, go right ahead. I think the best move for India is just to ask the private and government companies to help the needy. It's just the same right? Helping them without affecting the economy.

In situations like this the government must act quickly and decisively. It can take months before some rich companies will make up their minds to shell out something to help the needy. And some of them will not do it at all. I think Abhijeet Banerjee suggested a good thing, and of course he's aware of Zimbabwe, Venezuela and similar examples of money printing turning bad, and he knows how prevent that from happening.

Renampun

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This is a bad idea...
the cost to print money is very expensive, it is better if the money/cost to print the money they share with the poor. people generally think that printing money is easy. Undecided

Wenbing

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Quote from: figmentofmyass on April 09, 2020, 06:22:22 PM

Quote from: avikz on April 09, 2020, 10:44:14 AM

Nobel Laureate Abhijeet Banerjee has recently asked India to print more money and transfer them to the poor class of people to increase demand in the market to tackle upcoming recession post COVID-19.

Reference: https://m.telegraphindia.com/business/abhijit-banerjee-offers-print-money-pill/cid/1763262

A lot of economists will say it is a bad idea because later it will become very difficult to arrest inflation rate. But increasing the demand is a major challenge as well.

Voice your opinion! Will be good or bad step for a diverse country like India?

it depends: do you want stability or revolution?

the lockdowns are hardest on the poorest populations, who have no savings, live in overcrowded slum conditions, and are worst equipped for a complete economic stoppage. if this continues for months and nothing is done to mitigate their suffering, they will begin rioting and revolting and taking by force what they need to survive. with a population like india's, no police or armies could ever stop them.

the question for policymakers is, do you want millions and millions of hungry poor rioting in the streets (which will also make the pandemic grow exponentially as society stops heeding social distancing and quarantines)? or do you want stability at the cost of future inflation?

if i were a policymaker trying to maintain the rule of law, the answer seems obvious.

You have an intelligent point here.
There can't be stability in any economy as there is never a situation of economic equilibrium.

Yes, in regards to exponential growth of the virus and inflation there is need for a tradeoff between the two.

Better still, a stimulus package should be given to people.

Leonardo7

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This is what happens with a limitless volume of fiat, they want to destroy the world economy by printing more money. Well when Zimbabwe was printing more money without corresponding export and production to back it up, this lead to a total collapse of their economy leading to hyperinflation.

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Can we just point out one thing here:

Quote

“Forget about the macro worries. We can avoid a 1929-like situation. Go long on printing money,” said the Nobel prize-winning economist who is the Ford Foundation International Professor of Economics at Massachusetts Institute of Technology.

This guy not only known in India for being an economist, he works at MIT and has been recognized by the world. Sigh. I'm assuming that India thinks that they can do this b/c no one is spending money now, which means that inflation will probably stay in the realm of 2-3 percent even with more QE (money printing) then usual.

Vishnu.Reang

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First of all, I never give much importance to these Nobel prize winners. It lost all the credibility, when the prizes were awarded to people such as Barack Obama. Nowadays, Nobel awards are being decided through a lot of political interference. And secondly, the Nobel prize for economics is not being given by the Nobel Committee. It is awarded by Sweden's central bank (Sveriges Riksbank).

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That is the thing about the printing money and actually having a problem or not having a problem. Now if one nation prints money and others don't, that will cause some inflation inside and we are talking about a big problem for that nation, however if 50 nations prints money that means there will not be an inflation that big since all other nations printed as well, still a problem inside because things will go higher with people having more money but things costing more money as well, but not as big as doing it alone since you can at least use it for global payments as well.

However looks like countries will go for cheap or zero interest rate loans to big companies so that they could both restart the economy and not have to print money as well if they can afford to.

South Park

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Quote from: Lucius on April 10, 2020, 10:12:52 AM

Quote from: figmentofmyass on April 09, 2020, 06:22:22 PM

it depends: do you want stability or revolution?

I share your thinking, and I don't think there are any solutions that can help at this point, and that on the other hand, does not cause negative consequences in the future. If USA prints money (let's say it has about 4 times less population than India) and a much lower poverty rate then USA, what choice does India then have if they do not want a complete collapse of society and economy?

The idea is not good, but it is said that from two bad things we should always choose one that is at least somewhat better. People have to eat, they need basic things for life - and if you quarantine them for a few months, it's only a matter of time when they rebel and take matters into their own hands.

snip

If the money to be printed was to be given to the poor as a measure to try to keep the stability of society to avoid riots and the like during these difficult times then it could be considered, however we know that is just an excuse, of all the money that will be printed around the world to try to solve this most of it is not going to be given to the people and instead it is going to be given to the banks and other big businesses deemed too big to fail, this will only help the rich and while the poor may get some short term help, over the long run this will be counterproductive for them as inflation will grow really quickly during the next years.

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Quote from: avikz on April 09, 2020, 10:44:14 AM

Nobel Laureate Abhijeet Banerjee has recently asked India to print more money and transfer them to the poor class of people to increase demand in the market to tackle upcoming recession post COVID-19.

Reference: https://m.telegraphindia.com/business/abhijit-banerjee-offers-print-money-pill/cid/1763262

A lot of economists will say it is a bad idea because later it will become very difficult to arrest inflation rate. But increasing the demand is a major challenge as well.

Voice your opinion! Will be good or bad step for a diverse country like India?

Well, these are economic reactions of these coronavirus lockdown:

1. Limited in production and supply being that many non essential sectors are temporarily closedown.
2. Demand is obviously higher than supply- for both essential and non essential goods.
3. The income level of people can't sustain the economy at this state of little or no incoming of income.
4. Printing the rupee and injecting it into the economy will cause a demand-Pulled inflation, a situation were too much money is chasing few goods.

Well, that's not a good monetary policy at this stage of the economy.

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Quote from: avikz on April 09, 2020, 10:44:14 AM

Nobel Laureate Abhijeet Banerjee has recently asked India to print more money and transfer them to the poor class of people to increase demand in the market to tackle upcoming recession post COVID-19.

Reference: https://m.telegraphindia.com/business/abhijit-banerjee-offers-print-money-pill/cid/1763262

A lot of economists will say it is a bad idea because later it will become very difficult to arrest inflation rate. But increasing the demand is a major challenge as well.

Voice your opinion! Will be good or bad step for a diverse country like India?

Other than what we have been taught in classes as to the effect of excess money in circulation, a Nobel laureate is surely not some quack or speech writer looking for attention. It must have been from a fully thought out process but that does not mean its right. Zimbabwe to my understanding have tried this model which eventually backfired but situation, economy and time differs which could return a different outcome. Its on government and its policy advisers to think a way through and actually address his fear rather than just discarding his own private suggestion.

crwth

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This wouldn't be a good idea. If they want to be like the Zimbabwean dollar with the hyperinflation thing affecting their economy, go right ahead. I think the best move for India is just to ask the private and government companies to help the needy. It's just the same right? Helping them without affecting the economy.

FanatMonet

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Printing money is always two sides of this decision, with one of them, it increases inflation and a decrease in real incomes of citizens, on the other, it will provide the demand for goods from the population, and will help businesses that help taxes to the state.

mersal

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Quote from: Vanessamix on April 14, 2020, 01:44:32 AM

Quote from: mersal on April 12, 2020, 02:16:03 PM

The same thing is going to be done by most other governments as well to tackle demand and supply issue in the economy.But this could be an eye opener for all the people who have been trusting the fiat money issued by the governments which is day by day the value of the money we having is going to get decreased so we need something which cannot be printed anymore like bitcoin.

It won't be "eye opener" since fiat economy is not falling.
It is printing more money, it is inflating as hell, but it is not falling and people's faith will remain

Inflation is the sign of fall and people won't recognize it until they turns out to be hyper inflation but most governments will keep the inflation under the moderate rate so people will have their faith remain but as an individual we have to see that value of fiat is falling and falling years after years.

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A Nobel prize winner wouldn't probably suggest anything stupid so it could be a possible move that their government could take. It's just, this move would probably require the government of India to closely watch over or maintain constant surveillance to the country's economy. As was said, the ones leading don't probably know what the hell is going on with their country, especially with the poor side, so this may actually be hurtful to them in the long run instead of actually helping. Well, it could help at the start, but really, without the government properly managing literally anything, inflation would probably just a matter of time and would severely impact their economy.

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Quote from: avikz on April 12, 2020, 04:22:53 AM

Quote from: gentlemand on April 10, 2020, 06:46:44 PM

The feeling I get from India is that the leadership either doesn't know or doesn't care what real life is like for most people. They have their space program. They also have people who live in toilets.

The rescinding of bank notes fucked millions of people. Their lockdown fucked even more. How they didn't figure out that most people live hand to mouth on a daily basis and would face starvation within a few days is beyond me.

That being the case I think the Indian establishment should commit suicide and enrich the real people they're supposed to serve on the way down. Do it. It's not as if day to day life would be much more desperate than it already is.

I totally agree with it! The disparity between the riches and poor class is really eye-popping. The world's costliest house is in India and at the same time, world's biggest slum is also located in In India, in the same city indeed! It happens because India has been rules under bureaucracy since independence for the benefit of politicians where common people have no/little power! I too think the current administration should step down and let the young blood take over the country. Our PM failed us miserably and we are seeing highest number of social unrest due to the hate politics undertaken by the ruling party! It's a shame indeed!

This could be a way for us to look up as to why China had become very successful by the way how they rule their own people. Its always the militarize government that will win in the end and can control the baddest situation could ever happen like riots and chaos. Armed forces are always going to be the best solution to control that even a starving individual will just have to find a solution to feed himself and family instead of raiding someone else storage.

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Quote from: mersal on April 12, 2020, 02:16:03 PM

The same thing is going to be done by most other governments as well to tackle demand and supply issue in the economy.But this could be an eye opener for all the people who have been trusting the fiat money issued by the governments which is day by day the value of the money we having is going to get decreased so we need something which cannot be printed anymore like bitcoin.

It won't be "eye opener" since fiat economy is not falling.
It is printing more money, it is inflating as hell, but it is not falling and people's faith will remain

Betwrong

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Quote from: gentlemand on April 12, 2020, 12:15:07 PM

Quote from: Betwrong on April 12, 2020, 11:58:11 AM

I just want to add one point, which may seem controversial, but that's what I think based on my experience. Poor people don't suffer from inflation because they don't have savings, and thus nothing in their possession can be devalued. A daylaborer spends all he earns the same day, or the day after, and if inflation comes, the prices rise and he's paid more for the same job.

If inflation really takes hold then the whole country seizes up and even if you're earning in an effectively inflation free way there might not be anything to buy. Look at supply chains, imports and production in places like Zimbabwe and Venezuela.

I don't know how you moderate it but you'd need to keep a careful eye on it.

In Zimbabwe and Venezuela they were printing money, right, but they weren't giving it to the poor, as Abhijeet Banerjee suggested for India. Since this has never been done before, it's unknown how can it affect the economy overall. But most likely it would affect it positively since the suggestion comes from a Nobel Prize winner in Economy.

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Quote from: avikz on April 09, 2020, 10:44:14 AM

Nobel Laureate Abhijeet Banerjee has recently asked India to print more money and transfer them to the poor class of people to increase demand in the market to tackle upcoming recession post COVID-19.

Reference: https://m.telegraphindia.com/business/abhijit-banerjee-offers-print-money-pill/cid/1763262

A lot of economists will say it is a bad idea because later it will become very difficult to arrest inflation rate. But increasing the demand is a major challenge as well.

Voice your opinion! Will be good or bad step for a diverse country like India?

In India there is no middle class, either you are very rich or so poor that they can't afford drinking water. Printing more money wont solve the problem because India is the country with the second biggest population so there is a need for good social politics, not just printing money.

mersal

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The same thing is going to be done by most other governments as well to tackle demand and supply issue in the economy.But this could be an eye opener for all the people who have been trusting the fiat money issued by the governments which is day by day the value of the money we having is going to get decreased so we need something which cannot be printed anymore like bitcoin.

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