The “Banking: Theory & Policy” class of 2020–21 was a sounding board. The comments of an anonymous reviewer added value to an earlier draft. The usual caveats apply.
For macroeconomics, the government is divided into the central bank and the treasury. Positive profits recorded by the first are cancelled out as a negative item in the second. However, a debate has been generated by the transfer by the Reserve Bank of India of a record surplus to the coffers of the overnment. The issue is examined in a stock-flow-consistent model. A tension is found to reside in the pledging of profits for advances to banks on the one hand, and reducing the government budget deficit on the other. In the case of India, we conclude that central bank profits are intended to substitute for taxation.
Passage from India to America: Billionaire Engineers, Extremist Politics & Advantage to Canada & China by Ignatius Chithelen, Bryant Park Publishers LLC, New York, 2018; pp 212, $40.95 (hardcover).
A critique of the notion of universal basic income is presented, using a basic microeconomic model. While the monetary authority can implement the golden rule of consumption for its citizens, the consequences for work, saving and investment are ambiguous, and the price level is indeterminate.
Fascism is the usurpation of the economic process by the elite and the related decimation of the working class and the poor. This process is represented by the shrinkage of fiat money backing the production of goods and services and its substitution by financial instruments. This domestic coup is accomplished by the spread of what is generally referred to as “false consciousness.” The tools of basic economics can be fashioned to introduce students to these concepts. Mainstream economists continue to demonstrate the different ways utility functions can be manipulated.
An elementary model of the Urjit Patel report is formulated here. Along with the positive repo rate-infl ation rate target connection, open economy controls as well as institutional data are potentially adjusting variables
Economic theory tells us that there should be at least as many instruments as there are targets. But the Reserve Bank of India does try to kill two birds with one stone: increasing interest rates so as to shoot down infl ationary expectations as well as bring capital into the country. This is poor macroeconomics. A comment that elaborates on Partha Sen's "India's Current Account Woes: An Attempt to Clarify" (EPW, 12 October 2013).
