Archive for September 1st, 2014

Book review – Exorbitant Privelege

September 1, 2014

I just finished reading this book – Exorbitant  Privelege – by Prof Barry Eichengreen, leading econ historian.

The book is really good as it goes into history of American Dollar and what makes it the most preferred currency across the world. As it talks about US Dollar one gets a flavor of history of international monetary system and the politics behind it. I mean hardly anything matters more than politics.

The book is simply written for a layman and explains many important concepts and trivia. For instance I learnt that Dollar got its name from Joachimsthaler (see this as well), a coin used in much of Europe. The Brits on colonising used this coin as not enough Pounds were minted. Hence, these thalers circulated which later came to be called as Dollars.

The book is full of these characters which led to the role Dollar plays in world economy today. Exorbitant Privilege was a term given by French Finance Minister Valéry Giscard d’Estaing to the status of Dollar.

The book discusses many aspects of US economy which led to the Dollar becoming the reserve currency of the world. he also discusses what countries like China need to do to unsettle US from its position. There is this discussion on Euro and how it has squandered the chance (atleast for sometime now) to replace the Dollar or atleast compete with it.

Highly recommended.

KBC 8th edition and Nudging

September 1, 2014

Kaun Banega Crorepati or KBC (a serial based on Who will become a millionaire) is currently in its 8th edition.

In each edition there are these new lifelines which make the serial really interesting. This blog is a huge fan of the way these lifelines are framed and how people choose them. Given a choice one would love to look at the data and see at what stage do people opt for what kind of lifelines, which lifelines work (on this I am quite sure that phone a friend fails most of the time) etc etc.

So, what does KBC 8 offer? Instead of one ask the guest we have ask the three guests (called triguni), Power Paplu is gone from this edition and so on.

However, what interested me most is this new idea which reminded me of the Nudge literature.


Eliminating open defecation in India…

September 1, 2014

Not sure how many people saw this really interesting series of 38 maps that explained world economy albeit in a limited way. Map no. 35 just hits you given scale of open defecation in India. The new govt has made some noise on ending this really gross practice in India and time will tell whether they succeed or not.

This post by Dean Spears says just building toilets will not be enough. People have to be pushed into using them. There are cases where there are toilets but people still prefer the open lands. One of those posts which makes your stomach churn while reading..

In a way Joan Robisnon’s quote of each and its opposite being true in India remains as true as ever. On one hand we are looking at creating all kinds of smart cities and on the other we struggle to even fix something as basic as this.

From Abe’s three arrows to Draghi’s three arrows…

September 1, 2014

Nouriel Roubini monikered as Dr Doom suggests that like Japan’s three arrows, Europe also needs its three arrows.

There is one crucial difference though which Dr Roubuini misses. In Japan this was done by PM Abe who could ask both his govt and central bank to participate in the bow and arrow strategy. However, in Europe’s case Roubini credits this shooting to Draghi who can hardly do anything to improve structural growth, take productivity reforms etc. It is the role of govt and not central bank. Moreoever, how does Draghi shoot all these three arrows across its 18 members?

Draghi can just shoot one arrow of more monetary stimulus. Rest it has no say.

It is also interesting to note how little criticism Draghi (% ECB) is getting vs how much criticism Bernanke (& Fed) got for all this QE business.

Argentina’s use and abuse of Keynes

September 1, 2014

Andres Velasco in Proj Synd piece says how Arg has got the message from Keynes wrong. Well, it is rare that a country gets anything right in economics.


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