Archive for November 10th, 2017

What Keynes, Sraffa and Hayek knew about bitcoin….

November 10, 2017

Andy Mukherjee in this piece:

While preparing antidotes for the widespread unemployment of his time and imagining a future age of leisure and abundance, John Maynard Keynes also worked out the interest rate on bitcoin. 

Amend that. Since cryptocurrencies weren’t around in the 1930s, the famous British economist worked out the price at which bitcoin should be lent and borrowed, were it to be invented.

 That interest rate is 57 percent. Before we get to the how and wherefore of that astonishing number, another qualifier. The original insight wasn’t Keynes’s. As part of his takedown of Friedrich Hayek’s idea of a uniquely important interest rate for the economy, Italian academic Piero Sraffa posited that every commodity has its own borrowing cost. For example, there’s such a thing as a cotton rate of interest. Keynes borrowed the concept for The General Theory of Employment, Interest and Money.
While nobody I know tries to work out how many bales or barrels it would cost to borrow some cotton or oil today, currency traders deal with implied interest rates all the time. Here’s how it works. Suppose you’re marooned on an island with some Singapore dollars but the bank there can give you a deposit facility only in U.S. dollars. What the island does have, however, are foreign-exchange spot and forward markets. So on Nov. 9, you take 100 Singapore dollars, sell it for about 73 U.S. dollars, deposit the money in your greenback account for 50 days through Dec. 29, and simultaneously buy Singapore dollars in a forward contract for Dec. 29, using up all your principal and interest. 
Come to think of it. We have just given bitcoin etc a cryptic name like cryptocurrency. But the broad fundamentals still apply..
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Robert Frost on Accounting…

November 10, 2017

Oleg Komlik points to the lines:

(more…)

Learning mental accounting from Salman Khan and a 5 year old!

November 10, 2017

On 7 nov 2017, Prof Betsey Stevenson tweeted:

Then on 8 Nov 2017, Archit Puri picks a Salman Khan movie to give us similar lessons:

Salman, as usual, has some economics lessons for us. In a scene from the movie (see image below), he separates his money into different accounts. He does this by putting his cash in multiple earthen pots which are labeled with a spending objective. You can see that there is one for his sister’s marriage and another for his grandmother’s medical expenses.

Hosuefull economics….amazing as always….

Digitial push is leading banks to turn away senior citizens and differently-abled persons? Also missed lessons from Syndicate Bank…

November 10, 2017

In October 2017, RBI in its Statement on development and regulatory policy noted (released along with monetary policy):

8. Banking Facility for Senior Citizens and Differently abled Persons

It has been reported that banks are discouraging or turning away senior citizens and differently abled persons from availing banking facilities in branches. Notwithstanding the need to push digital transactions and use of ATMs, it is imperative to be sensitive to the requirements of senior citizens and differently abled persons. It has been decided to instruct banks to put in place explicit mechanisms for meeting the needs of such persons so that they do not feel marginalised. Ombudsmen will also be advised to pay heed to complaints in this context. Necessary instructions in this regard will be issued by end-October 2017.

So, in this digital madness suiting the young and efficient, banks are making these choices. Amazing how every person in this country is seen as dishonest till he is totally digitalised.

Having said this, one is really surprised to see some banks actually doing this. But trust humanity to do anything these days. I mean one still can’t figure why should a regulator have to step in for such basic things. Have Indian banks totally lost it?

Anyways, based on above RBI released a notice asking banks to take steps to reach out to senior citizens and differently abled people. It includes measures like accepting forms physically, cheque book facility, dedicated counters for senior citizens and soon. The last step is:

(g) Door Step Banking

We have issued instructions on Doorstep Banking vide circular DBOD.No.BL.BC.59/22.01.010/2006-2007 dated February 21, 2007 under Section 23 of Banking Regulation Act, 1949. However, in view of the difficulties faced by senior citizens of more than 70 years of age and differently abled or infirm persons (having medically certified chronic illness or disability) including those who are visually impaired, banks are advised to make concerted effort to provide basic banking facilities, such as pick up of cash and instruments against receipt, delivery of cash against withdrawal from account, delivery of demand drafts, submission of Know Your Customer (KYC) documents and Life certificate at the premises/ residence of such customers.

Amazing again. How little we learn from lessons of past practices in banking! This is perhaps unique to India where despite a rich financial and banking history, we just pay no heed to the lessons. Syndicate Bank had in late 1920s showed the utility of door to door banking but it seems nothing was learnt. The scheme was mainly for mobilizing pigmy desposits but showed how banks could connect with customers in a big way.

Infact door to door banking goes a long way here but earlier it was manly to give credit and collect the proceeds. These were all called as loan sharks and quite a few Hindi and regional movies show them. But Syndicate Bank turned it towards deposits which was seen as really positive as it “nudged” people towards savings and then borrowing against the same.

Infact, I learnt from series of circulars mentioned in the 2017 circular that RBI restricted door step banking in 1983. So, instead of taking positives from the scheme one just limited it. Then in 2005, RBI lifted some restrictions for government departments and the further guidelines were issued to streamline the process in 2007.

All in all, as we keep digitally pushing people and glorify tech leaders who are just destroying jobs, there is realization that age old practices still have relevance. Earlier door step banking was used for one and all and now RBI is suggesting banks to use it to serve the old and differently-abled people..

How women use food to negotiate power in Pakistani and Indian households

November 10, 2017

Interesting piece by Punita Chowbey.

My findings show that knowledge about food and healthy cooking alone is not enough to encourage healthy eating. The power imbalance between men and women within these South Asian families when it comes to the household budget and cooking responsibilities plays a vital role in maintaining a healthy diet.

Although this study focused on South Asian households, the link between food and patriarchal value, and women’s tactical use of food within the household, is also relevant to other cultures. This means that to encourage healthy eating, we need to engage with both men and women, as policy responses such as healthy cooking courses often delivered to and attended by women, may not lead to transformative changes if men refuse to eat what is cooked.

Hmm..We hardly look at food this way but is deeply important to understand the hierarchy in society..


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