Archive for September 1st, 2017

An ode to India’s Demonetisation…

September 1, 2017

Written by yours’ truly:

On the night of 8 November,
Just after the Diwali splendour,
The Indian Government in one stroke,
Decided that notes of Rupees 500 and 1000 were valid no more.

For their decision they gave us many a reason,
Black money, terrorism, counterfeiting and above all corruption,
This simple looking piece of paper was the devil,
And removing it will rid society of many an evil.

What was initially thought of as a joke,
Soon became a huge choke,
These notes were held by one and all,
And they were worthless after all.

What followed was huge chaos,
With authorities offering no pathos,
People just had no clue,
All they could do was find a shorter bank queue.

Central Bank was the key brain,
Their Board anticipating future gains approved the pain,
Though with their continuous change of many rules,
Bankers and people looked more like fools.

Just like most economic matters,
The move left economists in tatters,
Some called it an absolute disaster,
Whereas some others termed it a blockbuster!

As the economic data rolled by,
Some showed a decline whereas others showed a rise,
The final word was with the Central Bank,
Which kept us waiting in the dark.

Finally on an August evening,
Central Bank released its much anticipated annual account(ing),
It revealed nearly 99% demonetised notes are back in the system,
Making most ask what was the point of all this mayhem?

The Government though thinks differently,
Appreciates the central bank for all its efficiency,
The stated goals have all been forgotten,
The goal was always aadharisation and digitization.

This exercise made one think,
Power of the State is such a thing,
It decides the value of its own rupee one night,
And makes them valueless in the hands of others the next night.

 

 

 

 

 

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Why have shares of Swiss Central Bank risen so sharply?

September 1, 2017

 

JP Koning again tips to this interesting chart which shows how shares of Swiss central bank have risen so sharply in recent times. He had blogged about it in 2016 but prices have continued to rise ever since. On Sep 1 2016, the share price was 1400 CHF and is now at CHF 3040.

Koning in 2016 wrote about this phenomenon:

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How economists are the new astrologers…

September 1, 2017

As one was reading this piece, popped this piece in the mailbox.

The first piece features an this economist whose projection/prediction of India’s GDP for Q1 2017-18 was as per the printed numbers.

The second one says economists are the new astrologers:

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When central banks issue new redenominated currency: Case of São Tomé and Príncipe

September 1, 2017

São Tomé and Príncipe is a small island in West Africa which win its independence from Portuguese in 197. At that time it asked one of the local banks to become a National bank and serve as both a central bank and a commercial bank . In 1992 the National bank was converted into a pure central bank called Banco Central de São Tomé e Príncipe

The region continued to see chronic inflation:

The inflation rate in Sao Tome and Principe was recorded at 7.20 percent in July of 2017. Inflation Rate in Sao Tome and Principe averaged 15.63 percent from 1997 until 2017, reaching an all time high of 86.80 percent in February of 1998 and a record low of 3.50 percent in May of 2017.

This led the central bank to issue of higher denomination notes:

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