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Friday, 22 February 2013

More Inflation Is the Cure for the Fed’s Impotence

Bloomberg

More Inflation Is the Cure for the Fed’s Impotence.

PIGS have to stay impotent since there is no help from the ECB with higher inflation and unlimited credit.

Thursday, 21 February 2013

Response from Hans Hoogervorst, Chairman of the IASB

The following is the response from Mr Hans Hoogervorst, Chairman of the IASB, to my open letter to him.
 
Dear Mr Smith,
Thank you for your email of 21 January 2013. I thank you for your interest in our work in the area of hyperinflation.
I am sorry that you were disappointed with your experience of working with some of our staff. I understand that the staff decided to withdraw their paper on the issue you submitted in order to carry out more work on the matter, and that in doing so they will take your comments into consideration.
In response to the specific questions that you raise I would like to make the following comments:
1. Consideration of your proposal: When we undertake our research project on inflation accounting, we will consider all submissions that we receive on the subject. This will include yours and it will include the Argentinian Federation’s proposals. Each submission will be treated fairly.
2. Method of staff collaboration: It is important that our staff collaboration approach retains a degree of flexibility and agility to respond to the circumstances, and to respond in a timely manner. The staff will frequently have informal communications with submitters and other stakeholders to help them understand the issues raised and to develop their analysis and proposals. In many circumstances an informal approach will be more efficient and productive. I do not think that all informal, private telephone conversations should be recorded, or that we should provide a minute service. I think that there should be agreement reached between the parties on each call about what the next steps should be by each party, and I understand from the staff that this was done on the telephone calls that they had with you. However, the staff will reflect on the comments you raise and think about how their collaboration can be improved.
3. Staff paper 20 for the January 2013 Interpretations Committee meeting: This paper was withdrawn and further work will be performed by the staff. A new paper will be brought to a future meeting of the Interpretations Committee.
In the light of the concerns that you have raised, I think I should clarify some matters about how we operate and how we collaborate with our stakeholders. The paper that was prepared in response to the submission you made was prepared for the purpose of giving the Interpretations Committee sufficient information to allow it to make a decision about whether or not to add the issue to its agenda. As such it is not intended to be an exhaustive analysis of the issue; to do so would not be a responsible use of resources on the occasion that the Interpretations Committee decides not to add the issue to its agenda. If the level of detail is not sufficient for the Interpretations Committee to make that decision then it will ask the staff to perform further analysis. I can understand that this might be frustrating to you but we need to balance competing demands on the time of the IASB and the Interpretations Committee. We rely on the staff to make judgements about allocation of resources and if we think they have got those judgements wrong then we tell them and ask them to address the deficiencies.
I trust that this answers the questions that you raised, and I hope that our staff will be able to continue to seek your input and assistance on their work on your submission.
Yours sincerely,
Hans Hoogervorst | Chairman

International Accounting Standards Board (IASB)
30 Cannon Street | London EC4M 6XH |
UK

Friday, 15 February 2013

Difference between Fed and ECB

Difference between Fed and ECB

The Fed's mandate is "to promote sustainable growth, high levels of employment, stability of prices to help preserve the purchasing power of the dollar and moderate long-term interest rates." The ECB has no mandate to promote high levels of employment. The result is very real with 29 million unemployed in Europe.


Nicolaas Smith

Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.

EMU countries are dollarized in terms of the Euro (Deutsche Mark)

EMU countries are dollarized in terms of the Euro (Deutsche Mark)

Dollarized countries have no independent monetary policies. EMU countries have no independent monetary policies. Their Central Banks have no autonomous monetary policy capability, the same as in dollarized countries like Zimbabwe, Equador and Panama.

Nicolaas Smith

Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.

Wednesday, 13 February 2013

Unlimited credit for PIGS

America and Japan successfully use the economic policy of unlimited credit in their economies: creating inflation in the case of Japan and quantitive easing in the case of the USA. Germany used the policy of unlimited credit very successfully in the case of East Germany after unification, but refuses to agree to the ECB using it in the case of Portugal, Ireland, Greece and Spain.

Europe uses the economically destructive policy of austerity in Portugal, Ireland, Greece and Spain (PIGS).

Inflation means that where the inflation is created, i.e., where the unlimited credit or free money is injected in the economy the country receives unlimited credit at no cost while the rest of the economy (consumers) pays for it in a slight increase in prices over a single year.

The ECB should supply PIGS with unlimited credit and consumers in the European Monetary Union would pay for it in a sligth increase in prices in every transaction over a single year. This would eliminate the neccessity for disastrous bail-outs at punitive payback rates that could stretch over a number of years.

When PIGS are economically sound again, the ECB would stop the unlimited credit.

Nicolaas Smith

Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.