4 ms·

Over the past 10 years, inflation in India has typically been ~5% [0] and the currency has also fallen against the USD at ~4% per year [1], so I don't think thi

by Youden 4y ago

Over the past 10 years, inflation in India has typically been ~5% [0] and the currency has also fallen against the USD at ~4% per year [1], so I don't think this is a good idea. [0]: https://tradingeconomics.com/india/inflation-cpi https://tradingeconomics.com/india/inflation-cpi [1]: https://www.xe.com/currencycharts/?from=INR&to=USD&view=10Y https://www.xe.com/currencycharts/?from=INR&to=USD&view=10Y

imtringued 4y ago
If countries adopted negative interest rates we could stop the inflation nonsense and then you could easily compare countries based on their interest rate. In this case the Indian interest rate would be somewhere between -1% and 0% instead of 5% inflation and 4-5% interest.
- JumpCrisscross 4y ago
  > countries adopted negative interest rates we could stop the inflation If you're talking about monetary policy, this is wrong. Low rates spur inflation. Raising rates fights it. Countries that implemented negative rates did so to fight deflation and spur inflation. If you're talking about how we quote and talk about rates, we quote nominally because that's how most bonds are written. When you buy a 10Y Treasury, it will pay you a specific nominal rate. You know that ex ante. Inflation is whatever it is now, but we have zero guarantee around what it will be between now and ten years hence. Also, there is no single figure for inflation. It's a measure on a basket of goods. That basket is designed to approximate the average American's, but nobody is an average American. (Or an average Indian.) Your experience of inflation will be different from mine based on our purchasing preferences. (This doesn't make inflation subjective. Just heterogenous.)
- anm89 4y ago
  this is totally backwards. negative interest rates cause inflation, not the other way around

4 ms·

Over the past 10 years, inflation in India has typically been ~5% [0] and the currency has also fallen against the USD at ~4% per year [1], so I don't think thi

by Youden 4y ago

imtringued 4y ago
If countries adopted negative interest rates we could stop the inflation nonsense and then you could easily compare countries based on their interest rate. In this case the Indian interest rate would be somewhere between -1% and 0% instead of 5% inflation and 4-5% interest.
- JumpCrisscross 4y ago
  > countries adopted negative interest rates we could stop the inflation If you're talking about monetary policy, this is wrong. Low rates spur inflation. Raising rates fights it. Countries that implemented negative rates did so to fight deflation and spur inflation. If you're talking about how we quote and talk about rates, we quote nominally because that's how most bonds are written. When you buy a 10Y Treasury, it will pay you a specific nominal rate. You know that ex ante. Inflation is whatever it is now, but we have zero guarantee around what it will be between now and ten years hence. Also, there is no single figure for inflation. It's a measure on a basket of goods. That basket is designed to approximate the average American's, but nobody is an average American. (Or an average Indian.) Your experience of inflation will be different from mine based on our purchasing preferences. (This doesn't make inflation subjective. Just heterogenous.)
- anm89 4y ago
  this is totally backwards. negative interest rates cause inflation, not the other way around