Another possible factor for the much elevated price level (at least to some extent) could be the concept of money neutrality (given the current massive US$8.8 trillions in the US FED balance sheet, some from “rollover” from the 2009 to 2014 US FED QE1,2,3 (Quantitative Easing) & Operation Twist and the remaining about US$5 trillions since July 2019, when they reversed the QT (quantitative tightening) embarked on in Oct 2017 by then US FED chairwoman Janet Yellen starting at US$10 billion per month and incrementally raised by US$10 billion in each succeeding quarter capped at US$50 billion, but mainly from the QE Unlimited by FED Chairman Jerome Powell since Mar 2020.
An additional factor could be what is called ”Voodoo Economics” (a term coined by Bush Snr during the 1980 US Presidential Election campaign about Ronald Reagan’s then proposed supply-side tax cut policy often advocated based on the dynamic scoring principle). Empirically the benefits especially economic growth arising from tax cut is fairly limited and proven short lived but the downside is possibly heightened price level in the longer run. Due to the 2017 tax cuts policy, the full-blown price level impact might be felt significantly from 2022 onwards.
Turning away from the US, what are the potential ramifications on our (beloved) Little Red Dot and the possible measures that can be undertaken to mitigate the downsides and navigate through this potentially turbulent period? First of all, our monetary policy differs significantly from the rest in that our central bank (MAS) manages via our exchange rate. Our main monetary policy tool namely the Singapore Dollar Nominal Effective Exchange Rate Band (SGD NEER Band) was implemented in 1981 by our then DPM Goh Keng Swee, given the extremely open nature of our economy, its miniscule size relative to the world, utter lack of any natural resources and its strategic geographical location. Singapore has limited capacity and thus needs to import most of what it needs for its domestic consumption, value-add production and exports. The mandate of a central bank often centres around price stability, sustainable economic growth and full employment. For that, in the past 4 decades, our exchange rate based monetary policy has achieved far beyond what we could imagine and we should be extremely thankful and grateful for the superb foundation and system that our old guards such as MM Lee, DPM GKS, DPM Toh Chin Chye, FM Hon Sui Sen, Foreign Minister Rajaratnam, Law Minister E W Barker, Social Affairs Minister Othman Wok, National Development Minister Lim Kim San, Labour Minister Ong Pang Boon, etc etc had done and laid down for the future generations (including ours).
To fully understand the implications of our unique exchange rate-based monetary policy, we need to understand a basic concept in international finance known as the trilemma or impossible trinity .
To be continued in Part 2 – 3
Leo 81
Disclaimer: Please do your own research. The comment/ writing above consists mainly of personal opinion or interpretation &/ or to be and must be used by any party for informational purposes only. Any party should take financial advice from professionals in respective fields or do their independent research and verify any information found here for the purpose of investment decision or otherwise.
Leadership: Apologising Is A Weakness Or Strength?
ReplyDeleteIt has been commonly believed, upheld and maintained consistently in Singapore by certain quarters of leadership that to apologise for a mistake is a display of weakness.
Is it true that to admit a mistake is to reflect a weakness on the part of the one who said sorry?
The UK's PM, Boris Johnson, has just apologised to his MPs for a mistake/blunder he should not have made. Here is his full Statement made in Parliament:
"Mr Speaker, I want to apologise. I know that millions of people across this country have made extraordinary sacrifices over the last 18 months.
I know the anguish that they have been through - unable to mourn their relatives, unable to live their lives as they want, or do the things they love.
And I know the rage they feel with me and with the government I lead, when they think that in Downing Street itself the rules are not being properly followed by the people who make the rules.
And though I cannot anticipate the conclusions of the current inquiry, I have learned enough to know there were things we simply did not get right and I must take responsibility.
No 10 is a big department with the garden as an extension of the office - which has been in constant use because of the role of fresh air in stopping the virus.
And when I went into that garden just after six on the 20th of May 2020, to thank groups of staff before going back into my office 25 minutes later to continue working, I believed implicitly that this was a work event.
But, Mr Speaker, with hindsight I should have sent everyone back inside, I should have found some other way to thank them, and I should have recognised that even if it could be said technically to fall within the guidance, there would be millions and millions of people who simply would not see it that way.
People who suffered terribly, people who were forbidden from meeting loved ones at all, inside or outside.
And to them and to this House [of Commons], I offer my heartfelt apologies.
And all I ask is that Sue Gray be allowed to complete her inquiry into that day and several others, so that the full facts can be established. And I will of course come back to this House and make a statement."
In reality, a good leader bound by his conviction to a high standard of morality, ethics, justice and fairness, and his ability to discern right from wrong, is bound to apologise to his people for mistakes, oversights and blunders made by himself, his colleagues or his subordinates. It shows his courage and strength in character. It displays his willingness to take full responsibility.
On the other end, cowards will never apologise or say sorry because they are afraid of making mistakes. They are afraid of being blamed. They are afraid to see themselves in the mirror. Why?
Because they believe that to apologise or say sorry is to admit a mistake, an oversight or a blunder done, and therefore it is a weakness. Perhaps, in their dreams at night, in the dark hours, they are seeing the images of ugly ghosts in themselves?
In truth, to be able to admit a mistake, oversight or blunder and say sorry, is a mark of a great man with great strength and great courage, not a weakness as has been maintained by some cowardly leaders both in the UK and in Singapore.
For a long time, I have been wanting to write about this inability or unwillingness of certain Singapore leaders to apologise to the people for the mistakes and blunders that they have made over the last 55 years or so.
I held it back because it does not reflect well of their legacy (a legacy of cowardice and irresponsibly in leadership), and it is better that it remains that way.
Why correct them when you know that the leopards will not be able to change their spots?
Why now? Think.
A-non-y-mouse.
Scotist Tory leader, Douglas Ross, an MP and an MSP, said he had a "difficult conversation" with Mr Johnson after the PM apologised earlier on Wednesday in the House of Commons.
DeleteHe said he would write to the 1922 Committee - which organises Tory leadership contests - to register his lack of confidence in the PM.
"He is the prime minister, it is his government that put these rules in place, and he has to be held to account for his actions," he said.
If 54 backbench Conservative MPs send letters to the 1922 committee it will trigger a leadership challenge.
Possible 2022 conspiracy stories from USA watchdog:
ReplyDeletehttps://usawatchdog.com/2022-wild-unpredictable-year-craig-hemke/
'So, it’s safe to say the entire CV19 vax and virus story is going to be the wildest of wild cards. What Hemke can predict is the actions of the Fed in terms of fighting inflation and ending the easy money policies. Considering the trillions of dollars in exponential money creation and debt, can the Fed make a wrong move and blow up the system cutting off liquidity and raising rates? Hemke says, “Could they lose control? Yes. Will they? Well, not yet, and that is all part of the challenge in forecasting, and that is you don’t know when that rubber band will reach that breaking point. . .'
The world is waiting to see how this House built on the wildest of cards collapses and who it would take along with.
ReplyDeleteThe coercive use of a controversial vaccine with controversial results could be what it takes to bring this world of fake leaders on their knees to beg for forgiveness.