Aah, the old "beggar thy neighbour" approach, devalue the currency.

Which has only ever worked in the short term, never been particularly effective and leads to everybody being worse off in the end.

Take Greece as an example. Before the Euro they constantly devalued the Drachma, had consequently high inflation as they had to import most of their stuff and high interest rates tp try and contain things. They were still all just as poor as ever.

Luckily we have steadier hands on the helm in Asia and they avoid round after round of stupid competitive currency devaluation.

Any other benefit you can see in slashing the interest rates?

Many people in Greece would like a return to those bad old days.

However in this case the IMF isn't advocating printing money to cause a major devaluation, just an interest rate cut to stimulate the economy and generate a little inflation. In case you haven't heard, deflation is considered a much greater risk to the world, and Thailand's, economy than inflation.

So, interest cut, small depreciation in the baht (perhaps to the point it was at 15 years ago), more competitive exports, more tourists, less risk of recessionary deflation, and a little inflation would reduce the pain of the high debt levels of the Thai people.

Or ignore the IMF and.... What is the benefit of maintaining things as they are?

The Greeks have always been an economical basket case.

I have already answered the "competitive currency devaluation" road to riches fallacy. This can only ever be an inefficient short term bodge. There is also no reason to believe that a drop in the THB interest rate will cause anything but a small blip in the exchange rate. Japan went all the way to zero, currently monetises through the Bank of Japan every bit of government debt and still the JPY rises, much to the dismay of Abe.

It is also a fallacy to think that a devaluation in the THB would increase exports. That makes a few assumptions a main one being the supply of goods is flexible and there actually is more rice, shrimps, chicken, sugar available to be sold than could be sold at a slightly higher price. And that the "Lower Price * Higher Volume > Higher Price * Lower Volume".

Generally apart from populist government intervention in building rotting rice heaps, all available product is cleared internationally at a USD price determined by a huge market. If the THB dropped, it would, when the USD's are converted back to THB's put a bit more money into the large exporters' pockets. This would not be passed down the chain to farmer Somchai, who had already agreed a price in THB with the exporter.

Tourism. I do not think any tourists are all that worried by a few percent in currency movements. They are not that price sensitive. If the Thais could get a handle on tourist safety and stop killing people in speedboats, buses and beating the cr4p out of them by yobs, there would be more tourists coming.

You have bought into the Central Banking bu77shit on deflation.

Bankers primarily do not give s sh1t about jobs and the economy. All they want is the debt plus interest to be paid back.

Deflation in capital assets is anathema to them, as the whole of the shadow banking sector depends on borrowing against financial assets. If those assets fall in value, then they all get hot under the collar and we have another crisis. This is why the Fed, the BoE and ECB are supporting them.

The other deflation nonsense story is that if people think prices will fall, they will put off buying goods, which will reduce sales and cause production to go down, resulting in loss of jobs. Hands up all those who have actually put off buying something because the price might fall in a year. Doesn't happen. We all want today, on credit, instant gratification is way better than some perceived future price benefit. Loss of jobs is not going to come from deflation. Loss of jobs is going to come from robotics, the process is accelerating, 60,000 jobs lost here, another 45,000 there. Any job which is routine can and probably will be automated away.

The real banker horror of deflation is that if wages stick, then maybe the debts do not get paid back.

But back to inflation. Where, indeed, does it come from?

There is a certain amount of inflation through the cost of raw materials. But the big lie and widely accepted fallacy is that consumer price inflation can be almost directly controlled through the interest rates. There is no evidence that this is the case, it is, at best a third order effect. Check out Japan, Europe, USA, UK. If you follow the Central Banker's rhetoric over the last couple of years, you will notice that they talk about "setting expectations" and "anchoring inflation expectations".

This is the only f3ckin tool they have. As long as they can get people to believe that the Central Banking Crystal Ball is accurate ( ) then prices will rise.

It is all a mind game.

They are losing, as faith in their ability to control our thoughts is waning.

You use orthodox economic theory when it supports your point and challenge it when it doesn't. You also use problems with the Thai economy that are independent of interest rates as an argument against adjusting interest rates to reflect economic performance . I won't attempt to sort it all out and address every point. I will comment on one obvious foolish statement:

"Hands up all those who have actually put off buying something because the price might fall in a year."

My hand went up, as did the hand of every thinking person with disposable income. If interest rates are low now and I expect higher inflation later, I make big purchases now. If I expect prices to be lower in the future, I defer as many purchases as I can until later and only buy the necessities. When many people do this deflation becomes a self-fulfilling prophecy, and the economy grinds to a halt because nobody will spend any more money than they have to.

I don't think the Thais can go wrong by ignoring the IMF. It's only function is to put countries into debt through loans they can't manage and then have them sell off state owned assets to the ever hovering 1% at bargain prices. When have they ever given good economic advise to anyone, remember the Asian financial crisis, countries that ignored the IMF recovered much quicker and had less pain.

The IMF are just an extension, with the World Bank of the banker parasite class. Why parasites? They leech of the work, lives and debt of the rest of us, they actually produce nothing whatsoever themselves. Even their loans are produced out of thin air, nice deal loaning money you don't actually have, but money produced on a computer screen, what a racket.

You use orthodox economic theory when it supports your point and challenge it when it doesn't. You also use problems with the Thai economy that are independent of interest rates as an argument against adjusting interest rates to reflect economic performance . I won't attempt to sort it all out and address every point. I will comment on one obvious foolish statement:

"Hands up all those who have actually put off buying something because the price might fall in a year."

My hand went up, as did the hand of every thinking person with disposable income. If interest rates are low now and I expect higher inflation later, I make big purchases now. If I expect prices to be lower in the future, I defer as many purchases as I can until later and only buy the necessities. When many people do this deflation becomes a self-fulfilling prophecy, and the economy grinds to a halt because nobody will spend any more money than they have to.

In that case you are among the very few who think about inflation when buying something, unless one lives in countries with unusually high inflation rates, Zimbabwe or Venezuela. And indeed among the very few who have some financial understanding. Most are either hopelessly financially illiterate or just can't be bothered to think about it.

https://www.rt.com/usa/318027-us-savings-low-nonexistent/

IMO the inflation consideration is pretty much restricted to buying property, where people have been programmed to think prices will always go up, so "buy now before it is too late".

Nowadays the utility (and status value) value having the item now is ranked higher than deferring the purchase to possibly save a few percent. People don't do the "I am saving to go on holiday" or "I am saving to buy a car" anymore. It is all purchased on the pump, enjoy now and pay (more) later (through interest payments).

Edited June 9, 201610 yr by 12DrinkMore

You use orthodox economic theory when it supports your point and challenge it when it doesn't. You also use problems with the Thai economy that are independent of interest rates as an argument against adjusting interest rates to reflect economic performance . I won't attempt to sort it all out and address every point. I will comment on one obvious foolish statement:

"Hands up all those who have actually put off buying something because the price might fall in a year."

My hand went up, as did the hand of every thinking person with disposable income. If interest rates are low now and I expect higher inflation later, I make big purchases now. If I expect prices to be lower in the future, I defer as many purchases as I can until later and only buy the necessities. When many people do this deflation becomes a self-fulfilling prophecy, and the economy grinds to a halt because nobody will spend any more money than they have to.

In that case you are among the very few who think about inflation when buying something, unless one lives in countries with unusually high inflation rates, Zimbabwe or Venezuela. And indeed among the very few who have some financial understanding. Most are either hopelessly financially illiterate or just can't be bothered to think about it.

https://www.rt.com/usa/318027-us-savings-low-nonexistent/

IMO the inflation consideration is pretty much restricted to buying property, where people have been programmed to think prices will always go up, so "buy now before it is too late".

Nowadays the utility (and status value) value having the item now is ranked higher than deferring the purchase to possibly save a few percent. People don't do the "I am saving to go on holiday" or "I am saving to buy a car" anymore. It is all purchased on the pump, enjoy now and pay (more) later (through interest payments).

I've lived in UK, France, Australia and (briefly) USA.

I can't say I've ever noticed buying something and thinking "Wow, I'm glad I didn't buy that last year, it's so much cheaper now and I've saved all that money."

If you have, then good luck.

More Kool-Aid please...

W

Edited June 9, 201610 yr by Winniedapu

Many people in Greece would like a return to those bad old days.

However in this case the IMF isn't advocating printing money to cause a major devaluation, just an interest rate cut to stimulate the economy and generate a little inflation. In case you haven't heard, deflation is considered a much greater risk to the world, and Thailand's, economy than inflation.

So, interest cut, small depreciation in the baht (perhaps to the point it was at 15 years ago), more competitive exports, more tourists, less risk of recessionary deflation, and a little inflation would reduce the pain of the high debt levels of the Thai people.

Or ignore the IMF and.... What is the benefit of maintaining things as they are?

nal?0

Missed out that.

Stability.

There is a major conflict between the financial industry and the rest of the economy. The finance lot make way more money when things are unstable.

But everybody else prefers a stable foundation on which to build. If the bankers continually use the blunt tool of interest rates to attempt control of everything, there is no stable framework and investments in manufacturing are not made.

make way more money when things are unstable......Like use the low-int borrowing rates and gamble on the stock market and buy homes to prop up the

housing market while conditions are favourable......they don't mind junk bonds either-potential large gains against small loss.So yes they do make

more like present....but they got the world into this mess thru improper(criminal?)lending practices!

The world cannot move forward(growth wise)until debt is removed which probably means a worldwide finanacial catastrophe like we've never

seen before...http://kingworldnews.com/egon-von-greyerz-warns-the-world-now-faces-an-economic-disaster/

Good read Drinkmore

Many people in Greece would like a return to those bad old days.

However in this case the IMF isn't advocating printing money to cause a major devaluation, just an interest rate cut to stimulate the economy and generate a little inflation. In case you haven't heard, deflation is considered a much greater risk to the world, and Thailand's, economy than inflation.

So, interest cut, small depreciation in the baht (perhaps to the point it was at 15 years ago), more competitive exports, more tourists, less risk of recessionary deflation, and a little inflation would reduce the pain of the high debt levels of the Thai people.

Or ignore the IMF and.... What is the benefit of maintaining things as they are?

nal?0

Missed out that.

Stability.

There is a major conflict between the financial industry and the rest of the economy. The finance lot make way more money when things are unstable.

But everybody else prefers a stable foundation on which to build. If the bankers continually use the blunt tool of interest rates to attempt control of everything, there is no stable framework and investments in manufacturing are not made.

make way more money when things are unstable......Like use the low-int borrowing rates and gamble on the stock market and buy homes to prop up the

housing market while conditions are favourable......they don't mind junk bonds either-potential large gains against small loss.So yes they do make

more like present....but they got the world into this mess thru improper(criminal?)lending practices!

The world cannot move forward(growth wise)until debt is removed which probably means a worldwide finanacial catastrophe like we've never

seen before...http://kingworldnews.com/egon-von-greyerz-warns-the-world-now-faces-an-economic-disaster/

Good read Drinkmore

Another gold/silver pusher forecasting, in this case, USD 1,000 for an ounce of silver. Ridiculous.

He also fails to understand the difference between national debt in a sovereign currency, which never has to be repaid, and private debt, which has to be repaid.

For example:

the Fed has over 1,200,000,000,000 Dollars of US debt.

the BoE has 375,000,000,000 Quid of UK gov debt.

the BoJ buys up all of Japan's debt every month.

And..... nothing happens. No inflation, but a load of bills have been paid and money spent into the economy. If Japan had tried to tax all that out of the economy, they would be in deep brown stuff.

Indeed it is necessary for USA to run a current account deficit to supply the world with enough USD's. (See Triffin's dilemma).

This is not a problem.

Bankers have always financed governments, particularly in war, and charged interest. With a Central Bank and a sovereign currency there is really no problem in "monetizing the government debt". Just don't tell the lunatic politicians or let the peeps out there know about it. It is an open secret.

It is only against the rules of the IMF, but clearly Lagarde is not stupid and understands how this really works. So she has not been rapping hands, and the Central Banks have done a bit of bookkeeping, which leaves the debt on the books of the Central Banks. So we have to believe it was just a temporary measure.

And there it will stay for eternity. If a single USD of all that trillion is not rolled over into new debt, then I will eat all my hats including my two crash helmets.

He also mentions that the SNB made huge losses. To be honest, I don't think it matters a bit. Just a number in the accounts. Any Central Bank can simply write it good by issuing currency to itself at no cost or liability. That is one thing they are really good at.

You use orthodox economic theory when it supports your point and challenge it when it doesn't. You also use problems with the Thai economy that are independent of interest rates as an argument against adjusting interest rates to reflect economic performance . I won't attempt to sort it all out and address every point. I will comment on one obvious foolish statement:

"Hands up all those who have actually put off buying something because the price might fall in a year."

My hand went up, as did the hand of every thinking person with disposable income. If interest rates are low now and I expect higher inflation later, I make big purchases now. If I expect prices to be lower in the future, I defer as many purchases as I can until later and only buy the necessities. When many people do this deflation becomes a self-fulfilling prophecy, and the economy grinds to a halt because nobody will spend any more money than they have to.

In that case you are among the very few who think about inflation when buying something, unless one lives in countries with unusually high inflation rates, Zimbabwe or Venezuela. And indeed among the very few who have some financial understanding. Most are either hopelessly financially illiterate or just can't be bothered to think about it.

https://www.rt.com/usa/318027-us-savings-low-nonexistent/

IMO the inflation consideration is pretty much restricted to buying property, where people have been programmed to think prices will always go up, so "buy now before it is too late".

Nowadays the utility (and status value) value having the item now is ranked higher than deferring the purchase to possibly save a few percent. People don't do the "I am saving to go on holiday" or "I am saving to buy a car" anymore. It is all purchased on the pump, enjoy now and pay (more) later (through interest payments).

I've lived in UK, France, Australia and (briefly) USA.

I can't say I've ever noticed buying something and thinking "Wow, I'm glad I didn't buy that last year, it's so much cheaper now and I've saved all that money."

If you have, then good luck.

More Kool-Aid please...

W

Deflation, outside of Japan, is a new phenomena. In the past it was the fear of inflation that motivated people to make inflation resistant investments, such as property. In Japan, deflation is considered at least partially to blame for many years of poor economic growth.

Except in electronics. Have you never met anyone who held off on an electronic purchase while they waited for the device to get better and cheaper?

You use orthodox economic theory when it supports your point and challenge it when it doesn't. You also use problems with the Thai economy that are independent of interest rates as an argument against adjusting interest rates to reflect economic performance . I won't attempt to sort it all out and address every point. I will comment on one obvious foolish statement:

"Hands up all those who have actually put off buying something because the price might fall in a year."

My hand went up, as did the hand of every thinking person with disposable income. If interest rates are low now and I expect higher inflation later, I make big purchases now. If I expect prices to be lower in the future, I defer as many purchases as I can until later and only buy the necessities. When many people do this deflation becomes a self-fulfilling prophecy, and the economy grinds to a halt because nobody will spend any more money than they have to.

In that case you are among the very few who think about inflation when buying something, unless one lives in countries with unusually high inflation rates, Zimbabwe or Venezuela. And indeed among the very few who have some financial understanding. Most are either hopelessly financially illiterate or just can't be bothered to think about it.

https://www.rt.com/usa/318027-us-savings-low-nonexistent/

IMO the inflation consideration is pretty much restricted to buying property, where people have been programmed to think prices will always go up, so "buy now before it is too late".

Nowadays the utility (and status value) value having the item now is ranked higher than deferring the purchase to possibly save a few percent. People don't do the "I am saving to go on holiday" or "I am saving to buy a car" anymore. It is all purchased on the pump, enjoy now and pay (more) later (through interest payments).

I'm not sure how reliable a Google Consumer Survey commissioned by GoBankingRates is, but a finding that two thirds of Americans have less than $1000 in their savings account doesn't surprise me. I don't see what that has to do with this topic.

The OP is about the IMF urging the Thai Central Bank to lower interest rates on the grounds that the Thai economy is under-performing, Thailand has just emerged from a period of deflation, and inflation at 0.5% is well under the Central Bank's target of 1% to 4%. Conventional economic thinking is that this is a good time to lower interest rates.

Most posters take the position that the IMF is evil and that any advice from it must be rejected. I considered the recommendation and consider it a good one. I speculated that the reason not to lower interest rates would be to protect the value of the baht while the wealthy transfer assets to other countries. I don't know if this is the reason but I won't rule it out.

Your responses have been a mixture of referring to some conventional economics, rejecting others, accusing everyone in finance of having sinister motives, and stating that no one has disposable income or thinks about the future.

I'll stick with conventional economics; while there are many people living from one paycheck to the next, there are many others with money to invest or spend who consider present circumstances and future projections when deciding how to invest or spend. I'll also stick with the conventional conclusions; low interest rates and anticipated higher inflation prompt immediate spending and investment, which is what the Thai economy needs. Low interest rates also prompt a depreciation in the currency, which also has benefits for the economy. Finally, lower interest rates, higher inflation, and a better economy will help those with debts to pay.

For those who think the IMF is bad an therefore its advice must always be rejected--what makes you think the Thai Central Bank is wise and good and looking after the interests of all Thai people?

IMF= Impossible Mission Force.

IMF=International Mafia Federation

Many people in Greece would like a return to those bad old days.

However in this case the IMF isn't advocating printing money to cause a major devaluation, just an interest rate cut to stimulate the economy and generate a little inflation. In case you haven't heard, deflation is considered a much greater risk to the world, and Thailand's, economy than inflation.

So, interest cut, small depreciation in the baht (perhaps to the point it was at 15 years ago), more competitive exports, more tourists, less risk of recessionary deflation, and a little inflation would reduce the pain of the high debt levels of the Thai people.

Or ignore the IMF and.... What is the benefit of maintaining things as they are?

nal?0

Missed out that.

Stability.

There is a major conflict between the financial industry and the rest of the economy. The finance lot make way more money when things are unstable.

But everybody else prefers a stable foundation on which to build. If the bankers continually use the blunt tool of interest rates to attempt control of everything, there is no stable framework and investments in manufacturing are not made.

make way more money when things are unstable......Like use the low-int borrowing rates and gamble on the stock market and buy homes to prop up the

housing market while conditions are favourable......they don't mind junk bonds either-potential large gains against small loss.So yes they do make

more like present....but they got the world into this mess thru improper(criminal?)lending practices!

The world cannot move forward(growth wise)until debt is removed which probably means a worldwide finanacial catastrophe like we've never

seen before...http://kingworldnews.com/egon-von-greyerz-warns-the-world-now-faces-an-economic-disaster/

Good read Drinkmore

Another gold/silver pusher forecasting, in this case, USD 1,000 for an ounce of silver. Ridiculous.

He also fails to understand the difference between national debt in a sovereign currency, which never has to be repaid, and private debt, which has to be repaid.

For example:

the Fed has over 1,200,000,000,000 Dollars of US debt.

the BoE has 375,000,000,000 Quid of UK gov debt.

the BoJ buys up all of Japan's debt every month.

And..... nothing happens. No inflation, but a load of bills have been paid and money spent into the economy. If Japan had tried to tax all that out of the economy, they would be in deep brown stuff.

Indeed it is necessary for USA to run a current account deficit to supply the world with enough USD's. (See Triffin's dilemma).

This is not a problem.

Bankers have always financed governments, particularly in war, and charged interest. With a Central Bank and a sovereign currency there is really no problem in "monetizing the government debt". Just don't tell the lunatic politicians or let the peeps out there know about it. It is an open secret.

It is only against the rules of the IMF, but clearly Lagarde is not stupid and understands how this really works. So she has not been rapping hands, and the Central Banks have done a bit of bookkeeping, which leaves the debt on the books of the Central Banks. So we have to believe it was just a temporary measure.

And there it will stay for eternity. If a single USD of all that trillion is not rolled over into new debt, then I will eat all my hats including my two crash helmets.

He also mentions that the SNB made huge losses. To be honest, I don't think it matters a bit. Just a number in the accounts. Any Central Bank can simply write it good by issuing currency to itself at no cost or liability. That is one thing they are really good at.

i agree with what u say although i didn't google/read triffin's dilemma......i think we're on the same page in that private debt matters....not gov't debt

so much.

The article i asked u to read before wasn't the one i really wanted to show you-finally found the link(below)....

The OP gives a good run-down of how global debt and global population have changed since the early 1900's.Also included is global debt

vs GDP worldwide......yes again,private debt matters most,but no one in their right mind would argue the FED is not BROKE!

As for the US exporting USD's.......all they are doing(and getting away with for many years-1971 a turning point-off the gold standard)is

exporting inflation.......then buy cheap goods from overseas........1971 was when the US created it's biggest export......the US DOLLAR!

http://kingworldnews.com/coming-crisis-will-totally-devastating-world-economy-humanity/