Archive for April 2nd, 2019

To build the cities of the future, we must get out of our cars

April 2, 2019

Nat Geo has a fascinating essay with lots of photos drawn from different cities..

One of the Japanese rail companies could accept bitcoin for payments…

April 2, 2019

Interesting article from Land of Rising Sun.

The Japanese preoccupation with Bitcoin is legendary. The land of the rising sun moves 11 percent of all global Bitcoin trading volumes. It is also at any given time either the first or second runners-up largest Bitcoin economy globally.

Perhaps Satoshi Nakamoto’s Japanese name serves as an initial  attraction, but the country’s interest in cryptocurrencies has deeper roots. The nation has been at the forefront of technological advancement. All cool gadgets once came from Japan; Nintendo to Sony to bullet trains.

It does not come as a surprise then that this culture would be at the forefront of the adoption of technology as cutting edge as blockchain. Soon travelers on East Japan Railway Company’s (JR East)trains could foot their bill using cryptocurrencies. JR East is working with IIJ an internet and cloud service provider to roll out this service using Suica, the train company’s Smart-cards.


Japan is an interesting case study for the mainstream adoption of cryptocurrencies because it is mostly a cash-based economy. Its immediate neighbors South Korea and China have quickly gone cashless, but it seems that the Japanese have not found use cases for electronic and mobile payments. So will they really ditch their treasured banknotes and coins for digital wallets?

Japan has over 3.5 million cryptocurrency die-hard traders; die-hard because even after the Mt. Gox and CoinCheck mega-losses, their enthusiasm for Bitcoin and crypto never waned.

You would think their government’s friendly stance towards cryptocurrency trading would change with the hackings. Surprisingly, the authorities have further embraced the technology, and today it is the first nation on earth to recognize cryptocurrencies as money—not legal tender—but assets subject to tax.

Hmm.. They are also eyeing the Tokyo 2020 Olympics to become cashless…

Arthur Burns and how things fell apart in the 1970s

April 2, 2019

David Glasner in his Uneasymoney blog revisits Fed Chair Arthus Burns’s policies:

I discussed the horrible legacy of Nixon’s wage-and-price freeze and the subsequent controls in one of my first posts on this blog, so I needn’t repeat myself here about the damage done by controls; the point I do want to emphasize is, Karl Smith to the contrary notwithstanding, how incoherent Burns’s thinking was in assuming that a monetary policy leading aggregate spending to rise by a rate exceeding 11% for four consecutive quarters wasn’t seriously inflationary.

If monetary policy is such that nominal GDP is growing at an 11% rate, while real GDP grows at a 4% rate, the difference between those two numbers will necessarily manifest itself in 7% inflation. If wage-and-price controls suppress inflation, the suppressed inflation will be manifested in shortages and other economic dislocations, reducing the growth of real GDP and causing an unwanted accumulation of cash balances, which is what eventually happened under wage-and-price controls in late 1973 and 1974. Once an economy is operating at full capacity, as it surely was by the end of 1973, there could have been no basis for thinking that real GDP could increase at substantially more than a 4% rate, which is why real GDP growth diminished quarter by quarter in 1973 from 7.6% in Q1 to 6.3% in Q2 to 4.8% in Q3 and 4% in Q4.

Thus, in 1973, even without an oil shock in late 1973 used by Burns as an excuse with which to deflect the blame for rising inflation from himself to uncontrollable external forces, Burns’s monetary policy was inexorably on track to raise inflation to 7%. Bad as the situation was before the oil shock, Burns chose to make the situation worse by tightening monetary policy, just as oil prices were quadrupling, It was the worst possible time to tighten policy, because the negative supply shock associated with the rise in oil and other energy prices would likely have led the economy into a recession even if monetary policy had not been tightened.

I am planning to write another couple of posts on what happened in the 1970s, actually going back to the late sixties and forward to the early eighties. The next post will be about Ralph Hawtrey’s last book Incomes and Money in which he discussed the logic of incomes policies that Arthur Burns would have done well to have studied and could have provided him with a better approach to monetary policy than his incoherent embrace of an incomes policy divorced from any notion of the connection between monetary policy and aggregate spending and nominal income. So stay tuned, but it may take a couple of weeks before the next installment.

Hmm..Looking forward to more such posts..

RIP: Dr. N.K. Thingalya, former economist and head of Syndicate Bank

April 2, 2019

I received this tragic news very late. Dr. NK Thingalaya passed away in Mangalore on Jan 25 2019.

He joined Syndicate Bank as an economist in 1966 after finishing his PhD from then Bombay University. I think Syndicate Bank was the first commercial bank to open an economic research department in 1966 and Dr Thingalaya perhaps the first economist to serve in a bank. I could be wrong here and would love to be corrected. List of his publications is here.

Dr Thingalaya also became the CMD of Syndicate Bank in 1997, again perhaps one of the few economists to head a bank. We have banks formed by economists but have rarely come across a case of a professional economist going on to head a bank. The two banks formed by economists were: Bank of Maharashtra by Prof VG Kale and New Bank of India (in Lahore) by Mulk Raj Kohli. New Bank of India was merged by PNB in 1992 and its history is long lost (along with several such banks as noted in my piece).

Dr Thingalaya was the lone researcher who wrote extensively on history and importance of banks in erstwhile South Canara region (Mangalore/Udupi). My own research on Indian banking history was hugely inspired by his work and stands on his shoulders. I had the good fortune of meeting him and he encouraged me immensely to undertake research on Indian banking history. He also would call me his “only student” which was a badge of honor. The conversations with him would go into amazing historical insights on emergence of banking and regions.

It is a pity that higher authorities never really took notice of his excellent scholarship and dedication to the cause of inclusive and rural banking. He should have clearly headed atleast a few committees on Indian banking especially those pertaining to financial inclusion. It is really rare to get both perspectives of research and practice. He was both.

He was really alert and would respond to all my articles/research with sharp comments. I sensed something wrong as he did not respond to few mails and calls lately. A google search broke the bad and feared news to me.

This tribute to Dr Thingalaya by Dr Bhamy V Shenoy sums up much what I have to say. Even these lines:

One may wonder that despite being not ambitious and our system being corruption-ridden, how did Dr. Thingalaya was promoted as CMD of a public sector bank. Unlike many, he would not have attempted to buy the position or approached the politically connected to get the appointment. The only factor which helped him to get his job was his outstanding qualities and contribution to the bank.

It was inspiring and humbling to have visited him in his ordinary flat in Mangalore. Since he was a CMD of a public sector bank, I was expecting a luxurious flat. How many CMDs of Banks will readily agree to give an appointment to a common person like myself whose only credential he knew was that I was writing articles for Industrial Economist.

Absolutely! I had same feelings visiting his apartment in Mangalore. He agreed to meet me based on me seeking guidance in my PhD work on Indian banking history.  But then this is what you see when you visit the bankers of South Canara who built the excellent banks of South Canara. It is a far cry from today’s world where bankers are mostly known for ostentatious display of their wealth. One of them even told me that banks are meant to serve people not serve oneself.

I will surely miss you for all the guidance and encouragement. I wish someone had informed me of his sad demise earlier.

Rest in Peace Sir!


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