A Quote by Vladimir Putin
If we speak about fundamental things, regulation of the rate is actually the function of the main regulator, namely the function of the Central Bank. And it should think of how the economy and industry react, but also of its fundamental tasks in order to ensure the stability of the rate.
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The stability of the rate is the main issue and the Central Bank manages to ensure it one way or another. This was finally achieved after the Central Bank switched to a floating national currency exchange rate.
The lesson for Asia is; if you have a central bank, have a floating exchange rate; if you want to have a fixed exchange rate, abolish your central bank and adopt a currency board instead. Either extreme; a fixed exchange rate through a currency board, but no central bank, or a central bank plus truly floating exchange rates; either of those is a tenable arrangement. But a pegged exchange rate with a central bank is a recipe for trouble.
If form follows function, as we know it does in this Universe, then consciousness will adapt to whatever form it requires in order to function. Hopefully, it will also develop its fundamental function; what that is may be debatable within many schools of thought, but it is indisputable that evolved thinking recognizes the universality of Life.
Function is fundamental to design, of course. If something doesn't work, it's a bad product, and I certainly get frustrated by things that aren't functional. But there has to be more than function. A house has to function, but if that's all it does, you don't love it.
The Central Bank should take into account other things as well: the stability of the bank system in the country, the increase or decrease of money supply in the economy, its influence on inflation.
The Fundamental Regulator Paradox ... The task of a regulator is to eliminate variation, but this variation is the ultimate source of information about the quality of its work. Therefore, the better the job a regulator does the less information it gets about how to improve.
The best way that a central bank can support growth on a durable basis is to ensure inflation is low, stable - there is financial stability - and that is the role that the central bank plays.
Therefore, let me reiterate that the rate should not meet the interests of a specific group or one or two groups, it should meet the fundamental development interests of the economy itself.
Everyone may have some advise for the RBI. Some may advise, 'Cut your lending rates and raise the deposit rate.' How will a bank function? We take a medium term view. The bank has an 80-year-old history. I don't want to destroy it for a few decisions.
The brain has a good error rate. But, the point is, you can function with that error rate. Animals do a lot of guesswork.
One grave and fundamental Keynesian error is to persist in regarding the interest rate as a contract rate on loans instead of the price spreads between stages of production. The former, as we have seen, is only the reflection of the latter.
It was one time when people thought the value of the fine structure constant was important. Now of course it's still important, of course, as a practical matter,but we now know that the value it has is a function, that in any fundamental theory you derive the fine structure constant as a function of all sorts of mass ratios and so on and it's not really that fundamental.
As a former economy minister, I can't not think about economic growth. The central bank should also think about this but through its own instruments.
Banks are concerned the central bank is imposing too many regulations. If the trend continues, we'll swing to heavy regulation. We need to have balanced regulation to encourage the economy.
The central predictions of the quantity theory are that, in the long run, money growth should be neutral in its effects on the growth rate of production and should affect the inflation rate on a one-for-one basis.
I also believe that it is time to begin the fundamental analysis of how we got here, what led us here and what we need to do in order to ensure that we are equipped with the best possible intelligence as we face these issues in the future.
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