Archive for June 5th, 2018

Pathalagadi movement and when tribals of Jharkhand open their own bank!

June 5, 2018

Mumbai Paused sent me this story which is quite interesting.

First, rhere is this tribal movement in Jharkhand called Pathalagadi:

(more…)

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Why do 12 billion Deutsche Marks still exist and remain relevant?

June 5, 2018

Fascinating article. I did not know that old D-Marks are still present in Germany.

Nearly 28 years after the complete demise of the East German mark and 16 years after the introduction of the euro, these people are patiently waiting to hand in some of the billions of old deutschmarks still in circulation.

Today German marks are travel souvenirs, bits of history forgotten at the back of a drawer or still stashed in safety deposit boxes. Most assuredly, marks are not an old-fashioned alternative to cryptocurrencies. Yet with so much of the cash still out there, many more Germans are holding onto the old currency than will probably ever own bitcoin, the most famous digital asset.

Breaking the numbers down, on December 31, 2001, the last day before the introduction of the euro, there were 162.3 billion marks in circulation according to the Bundesbank. By now over 92 percent of that hard currency has been handed back to the bank, but at the end of April, a booty of 12.6 billion marks is still out there stuffed in socks, hidden between the cushions or buried in the garden.

10 mark note (Public Domain)

The exchange rate for marks has remained unchanged since it was established in 2001

These marks are not worthless and — if issued after June 20, 1948 — can be exchanged in unlimited amounts for euros at one of the 35 branch offices of the Bundesbank indefinitely.  And unlike most currencies, the official exchange rate of 1 euro for 1.95583 marks has remained unchanged since it was established in 2001.

The open door policy of the bank and the lack of exchange rate fluctuation take the pressure off. No need to do today what can be put off until tomorrow! Elmar, a retiree from the Neukölln neighborhood of Berlin, found a 500 mark note stuck between the pages of a book well over a year ago and finally made his way to bank. Slowly but surely German magpies are making their way to the exchange windows.

Apparently,few other Euroised countries allow indefinite conversions:

Each country that now uses the euro has different rules and timelines about exchanging their former national banknotes and coins. It’s a complicated patchwork. Some central banks no longer accept coins, but still take notes, among them Belgium, Luxembourg, Slovakia and Slovenia. For those in Spain, Portugal and the Netherlands time is running out.

Read more: Bundesbank reports decline in counterfeit bills

Still other countries no long accept their former currencies in any form: France, Finland, Greece, Italy, Malta and Cyprus. Any drachma or francs found behind the bookcase can be pasted into an album or tossed.

Among the eurozone countries, only a small group including Germany, Austria, Ireland, Latvia, Lithuania and Estonia has no time limit for exchanging their old currencies.

To many Germans the mark was much more than paper or pieces of round metal. Its strength was a sign of the country’s economic rise. It is no exaggeration to say that the transition to the euro was a traumatic time. But time heals all wounds and no one in line at the Bundesbank admitted to calculating back into marks to get a better idea of what something costs. To finally clear the accounting ledgers, the Bundesbank needs to now convince everyone to turn in those remaining marks.

Superb.

What all banknotes mean to certain people.

How to think like an economist?

June 5, 2018

Nice interview of Bill Dudley, outgoing President of NY Fed:

http://libertystreeteconomics.newyorkfed.org/2018/06/hey-economist-outgoing-new-york-fed-president-bill-dudley-on-fomc-preparation-and-thinking-like-an.html

He speaks on what it means to think like an econ and how econs differ in Wall Street and Policy:

 

Q: Lawyers sometimes refer to ‘thinking like a lawyer.’ How would you describe what it means to ‘think like an economist?’
The classic joke is that economists are ‘on the one hand…on the other hand.’ Lawyers are advocates for a given point of view and prosecute under a well-defined set of rules of law. I think of lawyers as advocates and economists as almost like a justice balance—where they’re trying to weigh the evidence very carefully to see where the preponderance of the evidence lies.

So economists may be a little bit more open-minded to the facts—not to say that lawyers aren’t, but a lawyer’s job is to do something, to advocate a position, to protect a positon. So they’re starting with a very strong
a priori view. I think economists start with a priori views, in the form of a hypothesis, but if the evidence is inconsistent then they start to change the theory and hypothesis, as opposed to arguing that the evidence is obviously not applicable.

Q: You were an economist on Wall Street before joining the Fed. What differences have you noticed between Wall Street economists and the research-oriented economists here on Liberty Street?
A big difference is that Wall Street economists cover a broad range of topics. When I was at Goldman Sachs we had four people covering the U.S. economy—they covered pretty much the gamut of all the policy issues that might have some economic content. Wall Street economists try to synthesize an abundance of information into material that’s useful for the person who’s trying to figure out the world that we live in. A research economist is trying to push the frontier of knowledge outward, so that’s a very different goal.

At the New York Fed, research economists play a hybrid role. They’re doing research that’s trying to push out that knowledge frontier. But they’re also taking all of their knowledge and analytical ability and applying it to real-world policy problems. In my mind, a good research department in a Federal Reserve Bank consists of people who are top-notch in terms of their academic qualifications and ability, and who are interested in real-world policy problems—which creates a tremendous value for the Bank.

He also discusses about how culture matters so much in finance.

 

How to make economics more gender inclusive? Lessons from San Francisco Fed…

June 5, 2018

A hard hitting speech from Mary Daley of San Francisco Fed:

https://www.frbsf.org/economic-research/publications/economic-letter/2018/june/getting-from-diversity-to-inclusion-in-economics/

She narrates her personal experiences on how economics profession was always shocked to hear a woman speak in conferences. She also notes how she and San Francisco Fed have been trying to make their organisation a more woman friendly place.

Much of economics is seen as an old boys club. Lot more needs to be done to make economics inclusive.

 


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