Re: Perspectives on the global economic changes
Posted: 07 Oct 2017 11:05
US Economy where we are right now
Consortium of Indian Defence Websites
https://forums.bharat-rakshak.com/
Janet Yellen, the Federal Reserve chair, has warned that there is an “uncomfortably high” risk that the central bank will have to deploy crisis-era stimulus tools again — even in the case of a less severe downturn than the Great Recession.
Her comments come as President Donald Trump considers a sharp change of direction at the Fed which could see him install new leadership that is much more dubious about the Fed’s use of quantitative easing.
Ms Yellen said in a speech that the US economy had made “great strides” but that policymakers may be unable to lift short-term rates very far as the recovery proceeds.
This could leave the Fed once again leaning on quantitative easing and forward guidance on the future rate outlook when the economy hits a downturn, she suggested.
“The probability that short-term interest rates may need to be reduced to their effective lower bound at some point is uncomfortably high, even in the absence of a major financial and economic crisis,” she said in a speech in Washington DC.
Ms Yellen said unconventional policy should be used once again if the Fed has to cut its target range for the federal funds rate to near-zero levels, from about 1-1.25 per cent now.
In her speech, Ms Yellen pointed out that most Fed policymakers only expect to lift the federal funds rate to about 2.75 per cent in the coming years, well below previous norms, suggesting there will be little room to cut rates again when a new downturn strikes. This meant the Fed needed to remain prepared to deploy new rounds of asset purchases.
“Does this mean that it will take another Great Recession for our unconventional tools to be used again? Not necessarily. Recent studies suggest that the neutral level of the federal funds rate appears to be much lower than it was in previous decades,” Ms Yellen said.
“The bottom line is that we must recognise that our unconventional tools might have to be used again. If we are indeed living in a low-neutral-rate world, a significantly less severe economic downturn than the Great Recession might be sufficient to drive short-term interest rates back to their effective lower bound.”
Alfaro and Chauvin caution that the broad finding from the macro literature is that across countries, FDI is not unambiguously associated with GDP growth; sound local financial markets are an important precondition for benefits of FDI to materialize. But inflows of FDI do seem less likely to end in tears.
The stylised Lucas Paradox was never the puzzle that overall current account data suggested. EMEs have benefited from net flows of private capital from advanced economies before and after the global financial crisis, masked by the behaviour of sovereigns and their reserve accumulation. But some elements of these private flows (portfolio and banking) have proven fickle in recent years. If EMEs are to successfully ride the current wave of positive sentiment, in the face of a normalisation of monetary policy in advanced economies, they will need to continue to strengthen the credibility of their policy frameworks and institutions.
Want to know about
*BITCOIN*
A lot of monkeys lived near a village.
One day a merchant came to the village to buy these monkeys!
He announced that he will buy the monkeys @ $100 each.
The villagers thought that this man is mad.
They thought how can somebody buy stray monkeys at $100 each?
Still, some people caught some monkeys and gave it to this merchant and he gave $100 for each monkey.
This news spread like wildfire and people caught monkeys and sold it to the merchant.
After a few days, the merchant announced that he will buy monkeys @ 200 each.
The lazy villagers also ran around to catch the remaining monkeys!
They sold the remaining monkeys @ 200 each.
Then the merchant announced that he will buy monkeys @ 500 each!
The villagers start to lose sleep! ... They caught six or seven monkeys, which was all that was left and got 500 each.
The villagers were waiting anxiously for the next announcement.
Then the merchant announced that he is going home for a week. And when he returns, he will buy monkeys @ 1000 each!
He asked his employee to take care of the monkeys he bought. He was alone taking care of all the monkeys in a cage.
The merchant went home.
The villagers were very sad as there were no more monkeys left for them to sell it at $1000 each.
Then the employee told them that he will sell some monkeys @ 700 each secretly.
This news spread like fire. Since the merchant buys monkey @ 1000 each, there is a 300 profit for each monkey.
The next day, villagers made a queue near the monkey cage.
The employee sold all the monkeys at 700 each. The rich bought monkeys in big lots. The poor borrowed money from money lenders and also bought monkeys!
The villagers took care of their monkeys & waited for the merchant to return.
But nobody came! ... Then they ran to the employee...
But he has already left too !
The villagers then realised that they have bought the useless stray monkeys @ 700 each and unable to sell them!
The Bitcoin will be the next monkey business
It will make a lot of people bankrupt and a few people filthy rich in this monkey business.
That' how it will work
Like all big, sweeping theses about the economy, this story can’t be proven or disproven with a single research paper, or even a dozen papers. But like detectives, economists can probe various pieces and see how each one checks out. In the past few years, researchers have found that industrial concentration -- measured by the market share of the four biggest companies in an industry -- has indeed been increasing in most parts of the U.S. economy. They’ve documented a correlation between industrial concentration and a decline in labor’s share of national income. They’ve confirmed that profits have risen substantially. They’ve documented a slackening in the enforcement of antitrust law. And they’ve found some evidence that after mergers, prices go up while productivity doesn’t improve.
The World Gold Council (WGC) is considering a global standard for 1 kilogram gold bars so they could be used as collateral in futures markets and potentially encourage demand.
People close to the matter told Reuters the aim is to include companies from the world of gold refining, banks and brokers that trade the precious metal in the futures and physical markets, and the London Bullion Market Association (LBMA).
“The plan is to create a standard for kilobars that can be adopted around the world, delivered anywhere, possibly using blockchain to identify the bars, their origins,” a physical gold trading source said. “Rigid standards and blockchain would bring in people who are worried they could be getting conflict metal.”
The kilobar measure dominates Asian trade as gold contracts on the Shanghai Gold Exchange, Shanghai Futures Exchange, and Hong Kong Exchanges and Clearing are all in kilobars.
However, lack of transparency about their origin and the absence of a global standard thwart their use on exchanges elsewhere. They cannot be accepted at London Metal Exchange clearing arm LME Clear because they differ from its standard bars which are typically around 400 ounces.
According to sources’ estimates, top consumer China imports about 95 percent of gold in kilobars, while second-largest consumer India imports 80 percent in kilobars. The WGC estimated China’s 2017 gold demand at up to 1,000 tons and India’s at 650 tons.
“The Asian consumer market is in kilobars, it dominates gold trade,” a gold industry source said. “If you want to trade on the LME and you want to lodge your collateral in kilobars in another location, why shouldn’t you be able to? There are vaults all over the world.”
#Gold ignores #cryptocurrency craze having its best year since 2010 https://t.co/FjYV1H0RElpic.twitter.com/FtwvukQnb4
— RT (@RT_com) December 30, 2017
Some refiners worry the global kilobar standard will lead to losses of income, others say it will boost the market.
“You can add a lot of information with blockchain, where the gold was mined, where it was refined, serial numbers, who owned it previously. It could bring new demand to the market,” a physical market source said.