Olivier Blanchard's Book for Open Review

If you want to read on how fiscal policy operates during low interest rate regime, you can read the Draft of the book by Olivier Blanchard here. You can also post your comments and suggestions.

In another post, he wrote 45 Key Takeaways from the book, explaining why the low real interest rates require a revisit to the scope and roles of fiscal policy. I posted 3 take aways below:

"ON THE EVOLUTION OF RATES

1. Safe real interest rates have declined steadily since the mid-1980s. The decline is due neither to the global financial crisis nor to the COVID-19 crisis. It has been common to all advanced economies.

2. Taking a much longer view, safe real interest rates have actually declined since the 14th century.... But the recent decline is much more pronounced.

3. The decline in safe real interest rates reflects a decline in neutral interest rates, i.e., the rates consistent with full employment. They reflect a chronic weakness in private demand—equivalently strong saving and weak investment, together with a strong demand for safe assets. This situation is what Alvin Hansen and, more recently, Lawrence Summers have called secular stagnation..."

Image credit - IMF Blog

Soaring Consumer Food Prices

Here are four facts why the food prices increase during the pandemic, according to this article (verbatim):

Fact #1: Food price inflation started increasing before the pandemic.

Fact #2: Early lockdown measures and supply chain disruptions induced a spike in consumer food prices.

Fact #3: Soaring shipping and transport costs.

Fact #4: Global food producer prices have rallied reaching multi-year highs.

Excerpt:

"Outlook

Based on the four facts presented, it is plausible that consumer food price inflation will pick up again in the remainder of 2021 and 2022. Indeed, the recent sharp increase in international food prices has already slowly started to feed into domestic consumer prices in some regions as retailers, unable to absorb the rising costs, are passing on the increases to consumers. More is likely to come, however, since international food prices are expected to increase by about 25 percent in 2021 from 2020, stabilizing in 2021. A pass-through of 20 percent (13 percent in the first year and 7 percent in the second) would, thus, imply an increase in consumer food price inflation of about 3.2 percentage points and 1.75 percentage points on average in 2021 and 2022, respectively. An additional 1 percentage point to the 2021 global consumer food inflation could be added by the higher freight rates."  

Note: For my PhD thesis, I estimated the pass-through of PPI to CPI. Glad to see that the estimate was quite close. Time to re-visit exchange rate pass-through.

Source: IMF Blog

The Tradeoff in Patents Rights for Intellectual Property for Covid-19

An interesting question  from the Econlife Blog here. What do you think?

Excerpt:

"However, the tradeoff takes us to the role of incentives in vaccine markets. An unusually large proportion of economists agree that by removing intellectual property protections, we negatively impact future vaccine development:.."

Image credit - econlife Blog.

Image credit - MSF Access Campaign

Inflation and Reconversion

Since inflation is on the rise lately, here is another interesting take on the issue.

Excerpt:

"Reconversion: a better lesson from history

A better historical analogy than the 1970s for today’s inflation problem is the reconversion of the U.S. economy from wartime to peacetime production after World War II and the Korean War. For instance, civilian automobile production ended in early 1942 and didn’t resume until late 1945. It took time to reconvert factories from making aircraft engines to automobile engines."

Image credit - Pinterest. Vintage Art of Inflation in 1946.

Depression in terms of a Cyclone - Tropical Depression 29

A Tropical Depression: As the heat energy is released from the cooling water vapor, the air at the top of the clouds becomes warmer, making the air pressure higher and causing winds to move outward away from the high pressure area. ...When the winds reach between 25 and 38 mph, the storm is called a tropical depression.

Tropical Depression 29 repercussions are now hitting Malaysia. Stay Safe Everyone.

Source - Internet.

Image credit - The Vibes

$226 Trillion Global Debt

Excerpt from the IMF Blog's article:

"In 2020, we observed the largest one-year debt surge since World War II, with global debt rising to $226 trillion as the world was hit by a global health crisis and a deep recession. Debt was already elevated going into the crisis, but now governments must navigate a world of record-high public and private debt levels, new virus mutations, and rising inflation."

Image credit - IMF Blog

Turkish Lira and Zambian Kwacha

The inflation rate is rising globally due to Covid-19 endemic. Every central bank has responded by either raising interest rates or committing to raising them in the immediate future. Since September, Turkey has cut interest rates by four percentage points from 19% to 15%, The lira has now lost nearly 40% of its value since the beginning of the year. More of the story here.

Excerpt:

"It was the best of times, it was the worst of times", so begins the Charles Dickens classic, A Tale of Two Cities. In 'A Tale of Two Currencies' divergent trends have been seen in Zambia and Turkey over the second half of 2021 so far, and the latest PMI business survey data compiled by IHS Markit for these countries highlight the impacts currency movements can have on inflationary pressures and business performance.

Image credit - IHS Markit

Innovations Ideas

This article is written in 2016. Now in 2021, we have Samsung Galaxy Z Fold3 5G. Solar panel is everywhere and Big Data  is King. 

Have you heard of Gene Editing?

Image credit - UNCTAD Technology and Innovation Report 2021

Book Review - Companionship in Thought

This article from the LSE Impact Blog conveys my thought. Doing a Book Review is time consuming, but it is worthwhile.

Excerpt:

"In a piece for a collection on The Craft of Knowledge, Les Back has recently suggested that reading is ‘companionship in thought’. The book review is one expression of that companionship, while also being an expression of our companionship with our fellow thinkers. For this reason, along with the others I’ve suggested here, I think we need to actively defend the writing of book reviews. Perhaps we should approach book reviews as a very minor form of resistance: a space in which we declare our interest in the value of knowledge, debate and dialogue; a space that we use to put a notion of collective knowledge ahead of the pressure for individualised contributions. The book review presents us with an opportunity to show that we value the things that might otherwise be lost in the logic of the systems that govern our research. We may even find that by defending the book review, the other aspects of our work might be enriched anyway."

Image credit - The Book Commentary

The Pandemic and Mason Jar Shortage

Since people are lockdown and taking-up new hobby,  gardening is one of the option. Then the extra fruits and vegetables need to be canned. 

We have a new shortage trending. The Mason Jar. The lid, actually. Read the full story here.

Image credit - Pinterest.

The Rice Straw Journey

More on the story of edible rice straw of Coffee Bean & Tea Leaf here.

Image Credit - MIDA. Testing the Rice Straw

Image credit - Shopee Malaysia

Food Inflation, Rice is Gold

Rising food prices in Brazil since 2020, exacerbated by Covid-19 pandemic. Full story here.

Before the pandemic, a pack of rice cost less than USD2 in Brazil. In 2020, it costs USD 7.50

Image credit - Hedgeye. "What Inflation?"

Shrinkflation - The Economics of Shrinking Sizes

Visiting Elaine Schwart's Blog again. 

Excerpt:

"Economists have hypothesized that consumers care more about rising prices than shrinking packages. Paying much more attention to price (and the law of demand), we monitor inflation. Not only are we aware of its ups and downs but also we perceive the original price as an “anchor” that influences our response to the price increase. By contrast, quantity is less of an anchor."

Image credit - BBC

I, Pencil

The classic parable of Leonard E. Read first published in 1958. Read the full essay here.

Excerpt:

"I, Pencil

By Leonard E. Read

I am a lead pencil—the ordinary wooden pencil familiar to all boys and girls and adults who can read and write.

Writing is both my vocation and my avocation; that’s all I do.

You may wonder why I should write a genealogy. Well, to begin with, my story is interesting. And, next, I am a mystery —more so than a tree or a sunset or even a flash of lightning. But, sadly, I am taken for granted by those who use me, as if I were a mere incident and without background. This supercilious attitude relegates me to the level of the commonplace. This is a species of the grievous error in which mankind cannot too long persist without peril. For, the wise G. K. Chesterton observed, “We are perishing for want of wonder, not for want of wonders...” 

Image credit -  FEE

'100% Turtle Friendly' Rice Straw

Yesterday I had chai and bagel with cream cheese with my daughter at Coffee Bean. She told me about the RiceStraws of Coffee Bean and Tea Leaf's Malaysia. Here is the full story

Excerpt:

"Did you know The Coffee Bean & Tea Leaf Malaysia is using RiceStraws to replace the plastic and paper straws?

RiceStraws is made of 100% natural ingredients and able to completely decompose in less than 90 days. It is sustainable, edible, and biodegradable.

CB&TL has implemented many practices to reduce waste and contribute to a healthier, happier world. This move shall further reaffirm its pledge to care for the environment. The beautiful tagline of "100% Turtle Friendly" enables coffee lovers to establish a closer caring and awareness with marine life."

Let us define our own sustainability practices. US. NAQLI. AQLI.

Image credit - WeirdKaya

Greek's Little O (Omicron) and Inflationary Pressure

 Recent post in the IMF Blog. Excerpt:

"With inflationary pressures intensifying and Omicron generating new uncertainties, monetary policymakers are facing new and challenging tradeoffs."

Other Cartoonists expression on the Omicron here.

Samsung Galaxy Z Fold3 5G - Bending the Smartphone Industry By Half

Samsung. The Archenemy of iPhone. 4K and the Stylus pen (SPen) for doodling. 120hz refresh rate. Based on the review, it is a great productivity device. I will wait for ZF4.

Watch the video below unboxing Galaxy Z Fold3. The comments are useful as well. 

Source: Youtube

Image credit - Wikipedia. Fold (Geology). Alpine deformation in Greece. I wonder if Samsung think of Z and S folds of geology in the design.

Structural geology - Internet.

Tuna and the Subway Footlong

Another hilarious yet meaningful economic lesson from Elaine Schwartz's Blog. You can read here.

Excerpt:

"Footlong eaters sued Subway.

During 2013, an Australian teenager posted on Facebook a picture of his 11-inch Subway Footlong. Feeling cheated (I guess), two New Jersey guys sued, others followed, and we wound up with a class action suit. Subway said the problem was inconsistently stretched bread. Eventually a court threw out the case. (An attorney said that everyone ate the evidence.)

Now, Subway is back in court."

Image source: Hypebae. 'Subway responds to tuna fake lawsuit with discount.'

The King's Salad

Dr. You Yee Xing, a young scientist in Malaysia, has successfully created a Ulam Raja (Cosmos caudatus) supplement that is rich in polyphenols and antioxidants to prevent senile dementia in the elderly. Ulam Raja literally means the 'King's Salad' in Malay. The leafy part of Ulam Raja is commonly eaten raw and consumed with rice. The young leaves of Ulam Raja has a subtle peppery tinge. The full story here.

Source: Internet