Glad To Be Wrong!


wealthymatters

Our government might have had its problems with Duvvuri Subbarao refusing to pump money into the system on demand,but I personally felt he didn’t attack the inflation problem in the country vigorously enough.So when I heard of the government’s decision to appoint a new RBI governor to replace him,I was like…….hmmmm,new guy brought in to toe the government’s line,somebody who when told to jump would ask “How High?”…….The rock star like  coverage of his appointment,in even the pink papers,made me even more cynical.”Stage-Managed”,”Command-Performance”were the sort of words that came to mind.And I tuned out whatever Raghuram Rajan had to say.

I am pleasantly surprised about his concern for savers,liquidity and inflation.And I am eagerly awaiting his Inflation Indexed Savings Certificate based on the CPI New Index.

In this case I am glad to be wrong!Here’s hoping Raghuram Rajan remains true to the anti-inflation tradition of the Chicago School of economics

 

The Difficulty Of Interpreting Inflation


wealthymatters“It is difficult, even for me, to interpret inflation.When I was young and I had a thick mop of hair, I paid Rs 25 for a haircut … now I have hardly any hair but pay Rs 150 for a haircut.I struggle to determine how much of that is inflation and how much is the premium I pay the barber for the privilege of cutting the Governor’s non-existent hair.”-Duvvuri Subbarao

Too Little Too Late


wealthymatters“Had we used the breathing time that this ( Fed’s QE Programme) gave us to address the structural factors and brought the CAD down to its sustainable level, we would have been able to withstand the ‘taper’. In the event, we did not. We, therefore, made ourselves vulnerable to sudden stop and exit of capital flows driven by global sentiment; the eventual cost of adjustment too went up sharply.”-Duvvuri Subbarao,RBI Governor in his farewell speech

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