Archive for June, 2018

Nudging Air Conditioner settings at 24 degrees to check power wastage

June 25, 2018

This is an interesting nudge from Indian government.

It wants Air Conditioners to have default temperature set at 24 degrees.

Soon air-conditioners (ACs) sold in the country could come with a default setting of 24 degrees Celsius and will allow temperature setting between 24 and 26 degrees only as part of a campaign to promote greater efficiency in electricity consumption for cooling.

The ACs will also have labels indicating the optimum temperature setting that is best suited for savings in power bill and health of consumers. To begin with, the power ministry intends to issue an advisory to all commercial and public establishments such as airports, hotels, shopping malls as well as manufacturers to keep temperature setting at 24 degrees.

Based on the public feedback and a six-month awareness campaign, the ministry may consider making these measures mandatory. According to a ministry statement, these were decided at a meeting with AC manufacturers on Friday.

“Every degree increase in the AC temperature setting results in a saving of 6% of electricity consumed. Normal human body temperature is approximately 36-37 degree Celsius but large number of commercial establishments, hotels and offices maintain temperature around 18-21 degree. This is not only uncomfortable but is unhealthy,” the statement quoted power minister R K Singh saying at the meeting.


Indian Monetary Policy in the Time of Inflation Targeting and Demonetisation

June 22, 2018

Rakesh Mohan (Former Deputy Governor RBI) and Partha Ray (Prof at IIM Calcutta) review India’s Inflation targeting framework:

This paper provides a narrative of Indian monetary policy since the North Atlantic Financial Crisis (NAFC) in the mid-2008 till the current period. The period 2009- 13 was dominated by the joint monetary and fiscal stimuli of the Indian authorities prompted by the NAFC. These, along with some structural shocks and a hands-off attitude in forex market intervention, could have had their role in rising inflation and external account instability (leading up to the taper tantrum episode). In this backdrop, after considerable discussion during 2013-2014, a Monetary Policy Framework Agreement (MPFA) was signed between the Government of India and the Reserve Bank of India (RBI) on February 20, 2015, which formally adopted flexible inflation targeting (IT) in India. Under the new statutory IT framework, a six-member Monetary Policy Committee (MPC) met for the first time on October 3 and 4, 2016.

While the IT regime so far has coincided with significant reduction in inflation in India, the atmosphere has been benign. Now that fuel prices have started moving in the north-east direction, a revised framework for the Minimum Support Price (MSP) in the Union Budget for 2018-19 has been proposed by the government and fiscal slippages have started happening, it remains to be seen whether IT can withstand more rough weather in the days to come. Finally, in recent years, Indian monetary policy has been dominated by two significant events: the emergence of significant deterioration of Indian public sector balance sheets, and the demonetisation episode in November 2016. Monetary policy in both of these periods wrestled with fashioning an appropriate strategy for managing the impossible trinity.


How studying history brings success?

June 22, 2018

David Meltzer, CEO of  Sports1 Marketing says studying history helps us in many ways which we only realise with time:

When I was a child, my mom told me that studying history would greatly benefit me. My initial thought was, History is in the past — I need to focus on the future.

My young, arrogant mind didn’t fully grasp what my mother meant until I realized one thing about her advice that brought everything together for me: Human nature never changes.

Probably everyone has heard the phrase, “History repeats itself,” but most of us do not make the effort to investigate why this phrase is so often repeated.

In my estimation, the reason this phrase has become so commonplace is simple. While people might change, their nature does not. Understanding human nature gives you a massive advantage in business and in life because it enables you to emotionally connect with others. Understanding both human nature and history prepares you to act while others react.

One of my favorite pieces of advice that I give to my interns and coaching clients is, “View history as a mentor.” 

That is a good way to put it..


Petition to the US President and Congress to end the Federal Reserve..

June 22, 2018

Just came across this petition filed with White House to end the Federal Reserve:

WE THE PEOPLE insist that:

1) Any authority previously given to the Federal Reserve be immediately terminated;

2) The President and Congress fully reestablish Congress’ singular power to mint, regulate, print, or otherwise control the form, amount, and backing of all U. S. legal tender;

3) Our U.S. Government undertake all necessary means to assure the ongoing operation and stability of U.S. currency;

4) Presidential Executive Order #13818 be applied to any Federal Reserve-affiliated person or entity involved in corruption, trafficking, etc., and that all assets thereof be frozen; and

5) All assets held by the Federal Reserve, and any and all of its holders of value, be nationalized and applied to reducing the federal deficit.

For more, Please Visit:

The petition was filed on 13 May 2018 and required 100,000 signatures. It could just manage 12628 signs. Thus it just closed without any action.  The website ( makes hefty allegations against Fed.

I am surprised to see not much articles on this petition. There was some focus o Swiss referendum but barely any discussion on this petition. Part of this reason is there have been few more such petitions in the past (one , two). So, people have stopped noticing.

But even then filing petitions to end Federal Reserve, the mightiest of financial institutions in the world is quite something.



Argentina signs up for another IMF bailout..

June 22, 2018

Argentina’s fortunes in football and economy go parallel. In 2002 , the country was facing huge crisis and expectations were on the Football team to bring some hope and respite. But a world beating team crashed out in Round one itself.

It is staring at a similar position now with the football team looking to crash after round one and the economy has already crashed. The country has again signed up for an IMF bailout. Christine Lagarde addressed the media on the plan:


A Brazilian Adam Smith: José da Silva Lisboa as the Founding Father of Political Economy in Brazil

June 22, 2018

Interesting paper on how ideas transcend borders.

Paulo Roberto de Almeida (Brazilian Ministry of Foreign Relations; Centro Universitário de Brasília (UniCEUB)) points to works of José da Silva Lisboa> He brought Adam Smith teachings to Brazil:


Why Did We Start Living in Cities? Were homo sapiens destined to become metro sapiens

June 22, 2018

Nick Cassella on this fundamental question: Were homo sapines destined to become metro sapiens?

The city life did not immediately spark human flourishing like Aristotle argued and Civilization VI implies, nor did it offer sweet refuge from a brutal world, like Hobbes claimed. Our evolution towards greater population density, like all things human, was messy and anticlimactic.

It’s not hard to understand why this less glamorous explanation has been omitted or ignored. Humans love a good, linear story and have a low tolerance for uncertainty. We prefer to embellish our place in the universe, instead of demean it. Frankly though, it’s more impressive to know that our modern world emerged from trial and error and not simply because of destiny. Our species’ success loses no shine by acknowledging that “lesser” truth.

Nonetheless, Civilization VI, like the rest of us, has continued to idolize an attractive, yet imprecise past. We now have enough evidence from our ancestors to know better. And if they’re anything like us, they’d want their story to be told accurately.


Eurogroup completes its 20th anniversary…

June 21, 2018

Amidst all the European doom, Eurogroup completes its 20 years today.

Eurogroup  is the group of euro area finance ministers and they released a statement on the anniversary:


Bhutan warns its citizens of holding Indian Rupees..

June 21, 2018

A strong notice from Royal Monetary Authority of Bhutan (HT: TCA Sharad Raghavan’s piece):


The coins of LGBTQ rulers through history

June 21, 2018

Fascinating post by Kelsey Wiggins, a museum specialist for the National Numismatic Collection.

With Pride Month celebrations recognizing LGBTQ history and culture throughout the country this June, what better way to highlight the occasion than by studying historical LGBTQ rulers with coins?

Throughout history, there are many examples of world leaders who for their gender expressions and sexual orientations would today be seen as members of the LGBTQ community. In some regions or eras, a range of expressions of gender and sexuality were accepted and even encouraged. In regions where certain forms of self-identification and expression were unwelcome, some individuals were still true to their own identity in their own ways. Chief among those who had the privilege of living and loving as they saw fit were historic rulers we would today describe as LGBTQ. It should be emphasized that although we would describe these rulers as gay, lesbian, bisexual, transgender, or queer today, that identification may not have been the way they would want to be described. These terms are modern constructs and are used as aides in telling these human stories.

These historic LGBTQ rulers, like so few other LGBTQ people, have been immortalized through coins from their eras. The National Numismatic Collection has several examples of such coins that represent a wide range of LGBTQ rulers throughout history.

It features rulers from Spain, Sweden Japan etc and pictures of coins during their reign…

Thousands of Swedes are inserting microchips into themselves – here’s why

June 21, 2018

Prof Moa Petersen in this article:

So why are Swedes so happy to put microchips into their body? One theory put forward is that Swedes are more prone to sharing their personal details because of the way the Swedish social security system is structured.

This myth of the “naive Swede”, who innocently trusts the government and Sweden’s national institutions, is an exaggeration – which has even been noted by the Swedish Ministry of Foreign Affairs. If it is part of the explanation, it is certainly not the whole truth. More convincing is the fact that in Sweden, people have a strong faith in all things digital. Swedish people have a deep belief in the positive potential of technology.

Over the past two decades, the Swedish government has invested heavily in technology infrastructure – and it shows. The Swedish economy is now largely based on digital export, digital services and digital tech innovations. And Sweden has become one of the most successful countries in the world at creating and exporting digital products. Notable companies, such as Skype and Spotify, were founded in Sweden.

A belief in digital technology and a trust in its potential has strongly affected Swedish culture. And the transhumanist movement has built upon this. In fact, Sweden played an important part in the formation of the transhumanist ideology. The global transhumanist foundation Humanity+ was co-founded by the Swede Nick Bostrom in 1998. Since then, many Swedes have become convinced that they should be trying enhance and improve their biological bodies.

So as the world expresses shock at the number of people being microchipped in Sweden, we should use this opportunity to delve deeper into Sweden’s remarkable relationship with all thing digital. After all, this latest phenomenon is just one manifestation of an underlying faith in technology that makes Sweden quite unique.


Women’s unpaid work must be included in GDP calculations: lessons from history

June 21, 2018

Prof Luke Messac has this Interesting bit of history on GDP calculations.

There was a researcher names Phyllis Deane who had pointed to the limitations of GDP in 1940s itself:


Macroprudential tools, capital controls, and the trilemma: Insights from the Bretton Woods era

June 21, 2018

Jean Monnet of Paris School of Economics in this piece points how history keeps coming back in different ways:


How to Avoid Getting Sick From Financial Markets

June 21, 2018

Barry Ritholz has a piece which if not now will affect all of us very soon.

Falling stock prices seem to precipitate a broad range of physical and psychological problems. 1  Studies have found a strong correlation between market volatility and health. The number of hospital admissions increasesheart attacks rise. Anxiety, panic disorder and major depression increases significantly; suicides increase substantially. To take an extreme example, during the 1987 Black Monday crash when U.S. markets tumbled almost 23 percent in one day, California’s hospital admissions spiked more than 5 percent.

Perhaps every mutual fund, stock certificate and exchange-traded fund should come with the following notice: “Warning: Investing may be hazardous to your health.”

This is no joke. As my colleague Nick Maggiulli explains, “financial post-traumatic stress disorder” is a genuine threat to individuals. He says we “replay traumatic market moments in our head over and over again and they can come to define how we invest in the future.” There is a sort of “helplessness cycle” that I believe gives rise to dangerous and occasionally fatal emotional responses.

He says one should take cues from behavioral economics to let go off things which are beyond our control:

A helplessness cycle is caused by the illusion of control. It is how most people operate; that moment of realization that they lack control over many important events gives rise to fear and then panic.

Behavioral finance has provided a solution to this problem: Understanding what is and isn’t in your control can go a long way toward avoiding the sorts of emotional reactions that can put people in the hospital.

Easier said that done. The way we are all moving and being pushed into financial world, we are going to be paranoid about slipping value of investments….

Why do the Governments appoint economic advisers who eventually leave citing personal reasons?

June 20, 2018

One was actually expecting it and wondering what took so long.

The Finance Minister Arun Jaitley announced that the Chief Economic Adviser Arvind Subramanian will not continue. He will leave to US for personal reasons.


Now is the time for banking culture reform

June 20, 2018

The new President of New York Fed – John Williams (earlier President of SF Fed) – in his first speech talks about banking culture:

This brings me back to the issue of culture as a long-term investment that can’t be “fixed” overnight. Several years ago, Rich Lyons, Dean at Berkeley’s Haas School of Business, spoke at the San Francisco Fed and talked about culture in a way that has stuck with me ever since. Transforming a culture is a five- to ten-year project; keeping it that way is an ongoing mission that requires strong leadership and consistent action.

As a leader of a large organization, I’ve taken that message to heart. I’ve found that a culture based on the principle of open and authentic dialogue, that embraces our diverse backgrounds and perspectives delivers better results. I’ve found that well-defined collective values and direction lead to greater collaboration and innovation. Finally, I’ve found that this work is never a finished project, but an ongoing one that constantly evolves.

I started by saying that I feel a sense of urgency in addressing banking culture. So where do I see the priorities for supervision?

As supervisors, we need to ensure that bank management and boards are exerting strong and effective leadership with robust governance. That means holding management and boards of directors to high standards in terms of culture and conduct, even when the numbers look rosy. It means ensuring corporate values are clearly articulated and incentives are squarely align with a bank’s strategic goals. It means identifying, communicating, and mitigating risks in a timely and effective manner. It means that employees feel empowered to raise their hands if they see wrongdoing, and that comprehensive fixes are implemented when something goes wrong. 

Banking culture has become such an important issue in recent years…

How Broadcasters should handle the Prime Minister lying?

June 20, 2018

Nice post by Prof Simon Wren Lewis:

One of the most remarkable polls during that campaign was that more people trusted Trump than Hillary Clinton. How can someone who lies all the time, almost every time he says anything, be trusted more than Hillary Clinton, who has had countless Republican inspired investigations into her affairs and has never been convicted of anything. For some time cognitive linguist and philosopher George Lakoff has pioneered the idea that (among many other things – see for example a Guardian article with Gil Duran) lies that are repeated often enough become associations in people’s minds that they find it hard to combat. So the phrase ‘crooked Hillary’ that Trump repeats all the time has a purpose beyond firing up the base. Equally when Republican’s start investigations into her affairs that alone puts an association of guilt in people’s minds. That is a key reason why before the election they trusted Trump more than Clinton.
In the United States Trump played the media big time, and continues to do so. If the media is not careful the same thing could happen here. The phrase ‘Brexit dividend’ is the equivalent of ‘crooked Hillary’. If it is repeated enough, a sufficient number of people will begin to associate Brexit with a ‘dividend’, whether that dividend is real or not. And in case someone reading this does not know by now, the Brexit dividend is a complete fiction.
But I think its importance goes well beyond Brexit. Why don’t politicians lie more often to enhance their cause? Some have integrity, but for the others the deterrent is being found out. But being found out depends critically on the media calling out lies when they happen. And when a large section of the media are very selective about how they treat lies depending on who said them or why they were said, or indeed are often the source of these lies, society has a serious problem.
That is the situation in the US with Fox and Trump and in the UK with the right wing press and Brexit or the Conservatives more generally. How the print media in the US and the broadcast media in the UK treats lies has therefore become critical. With lies ‘she said, he said’ type reporting is just not sufficient to defend democracy. Now often it is quite difficult to prove someone is lying, but if I could delineate a barefaced lie as one where it is very easy to establish the truth, then the Brexit dividend is a barefaced lie. OBR documents, accepted by the government as the basis for their tax and spend decisions, show quite clearly that the money has already been spent. You cannot spend the same money twice.
The right wing Brexit press have already supported this lie. As most of their readers also watch broadcasters, it is imperative that these broadcasters inflict some political damage on those who tell the lie. If they do not, the lesson certain politicians will draw is that they too can get away with barefaced lies, encouraging the kind of behaviour we see with Trump. For that reason broadcasters have to speak truth to power, otherwise the non-partisan media becomes complicit in propaganda or just a mouthpiece for politicians.
Hmm.. One could say this is happening in quite a few countries. Media is just playing to the government gallery and making lies appear as profound truth…

Why do eminent bankers usually fall? Case of Chanda Kochar

June 20, 2018

It is still quite unbelievable to read all the drama around Chanda Kochar, ICICI Bank’s CEO. Common sense would suggest that the CEO should have stepped aside until the inquiry was over. But once again it showed common sense is not so common.

Amidst all this one still cannot fathom this happening with Ms Kochar of all people. She was seen as this bright jewel amidst all the bankers and took over ICICI when it was under trouble following the 2008 crisis. Much of her tenure was without much hype and earned huge admiration from all quarters. How quickly all this has unraveled?

It is another case of an eminent banker falling from tall heights:

Kochhar has had a dream career. In 1984, when she joined ICICI as a management trainee, no one would have imagined she would become MD & CEO 25 years later. From a trainee to the CEO & MD to Padma Bhushan to the stain of corruption, Kochhar’s rise as well as fall seem incredible. 

Why does this happen so frequently in banking of all sectors. One could actually be weary each time you see a central banker/banker earning huge praise. You never know how the downfall will come.

Each time it happens, one cannot help but recall John Galbraith’s words:


One of the planks of Communist Manifesto was to have central banks in most countries…

June 19, 2018

A food for thought article by Prof Dipankar Gupta. He titles it as: We are all marxists: Liberal democrats have understood The Communist Manifesto better than communists”.

The article is in written for 200th birthday of Karl Marx. Prof Gupta says Marx would be pleased that around 60% of his suggestions have already been implemented in most countries which prize themselves as liberal democracies:


Solving rising indebtedness: learning from debt jubilees of the past…

June 19, 2018

Charles Goodhart and Michael Hudson in their research argue to learn lessons from debt jubilees:

The increasing income and wealth inequalities within countries is one of today’s great social concerns. This column describes how the tendency towards increasing indebtedness in much earlier societies was held in check by debt-cancellation Jubilees, and discusses ways to deal with today’s debt overhang and accompanying wealth inequalities. The funding of a modern Jubilee could come mostly, perhaps entirely, from a land/or property tax.

These debt jubilees were held for multiple reasons. Earlier, the governments/rulers were the main creditors and waived off debt owed to them:


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