tag:blogger.com,1999:blog-6917465355806677421.post4403041159888116957..comments2024-02-28T00:53:16.343-08:00Comments on Veritas: Anatomy of Money Creation in Singapore 1Veritashttp://www.blogger.com/profile/00269626703466474028noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-6917465355806677421.post-11065968785777374812011-05-30T22:17:33.867-07:002011-05-30T22:17:33.867-07:00////
It has been found again and again that change...////<br />It has been found again and again that changes in CPI and base money supply are only weakly correlated (in Malaysia, Taiwan, Singapore, US, Canada, etc). The normalized cross-correlation is something like 0.2 or less. <br />////<br />Re:<br />That must be a scam. You believe in that?<br /><br />///////////<br />Base money supply is only but one of the variables that determine TOTAL money supply.<br />///////////<br />Re:<br />Please go back and study ECONS 101. People do not call base money as "high-power money" for nothing.Veritashttps://www.blogger.com/profile/00269626703466474028noreply@blogger.comtag:blogger.com,1999:blog-6917465355806677421.post-14245180889783819112011-05-30T17:31:50.480-07:002011-05-30T17:31:50.480-07:00You can't just say that you disagree with the ...You can't just say that you disagree with the claim that there is no correlation between base money supply and inflation. You have to show us the data. For example, you can compute the normalized cross-correlation between inflation and the percentage change in base money supply. If it is close to one, ten you have a case. <br /><br />Unfortunately, such empirical studies have been conducted numerous times. It has been found again and again that changes in CPI and base money supply are only weakly correlated (in Malaysia, Taiwan, Singapore, US, Canada, etc). The normalized cross-correlation is something like 0.2 or less. <br /><br />This is because central banks can do other things like adjust interest rates, prime rates, capital reserve requirement, etc. Base money supply is only but one of the variables that determine TOTAL money supply.Foxhttps://www.blogger.com/profile/04726805279916950590noreply@blogger.comtag:blogger.com,1999:blog-6917465355806677421.post-8585073452959474812011-05-23T17:05:17.560-07:002011-05-23T17:05:17.560-07:00Re Fox
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In fact, there is no correlation between...Re Fox<br />//<br />In fact, there is no correlation between inflation and base money supply in most developed economies.<br />//<br /><br />I disagree.<br /><br /><br />//<br />Singapore probably does not hold much FX.<br />//<br /><br />MAS and GIC needs to open up their book. And GIC probably would did better if she holds only FX or "pseudo-FX" (sovereign bonds). They are throwing our savings into drain according to speculations.<br /><br />//<br />It(SGD) is backed by gold<br />//<br />LOL...... 2.5% back in gold.Veritashttps://www.blogger.com/profile/00269626703466474028noreply@blogger.comtag:blogger.com,1999:blog-6917465355806677421.post-38965321364450065492011-05-23T16:44:56.428-07:002011-05-23T16:44:56.428-07:00The SGD is not backed only by FX. It is backed by ...The SGD is not backed only by FX. It is backed by gold, equities, FX and securities. In fact, it is probably mostly in equities and securities. That is what GIC is for: to invest our foreign reserves in equities and securities. Singapore probably does not hold much FX.Foxhttps://www.blogger.com/profile/04726805279916950590noreply@blogger.comtag:blogger.com,1999:blog-6917465355806677421.post-76549409856007811642011-05-23T16:31:40.431-07:002011-05-23T16:31:40.431-07:00M1 does not determine the rate of inflation. In fa...M1 does not determine the rate of inflation. In fact, there is no correlation between inflation and base money supply in most developed economies. It is the *total* money supply that is related to inflation. This is something most central banks control through interest rates. MAS is a little different since it uses exchange rate to control inflation. <br /><br />The inflow of money is not solely due to the monetary expansion in the US. There were similar monetary expansion policies in Japan, China and the OECD countries. In fact, credit expansion was proportionally larger in China. <br /><br />MAS was stuck between a rock and a hard place with the USD, Yen and RMB flowing in. To be fair, it wanted those money to come in because Singapore is trying to be a financial hub and you can't restrict capital inflow if you want to be a financial hub. I can imagine MAS frantically selling Singapore government bonds in its attempt to sterilize all that hot money.<br /><br />It could have either let the SGD appreciate against the USD (and screw exporters/manufacturers in the process) or kept the SGD within a lower trading band (and allow inflation to grow). The end result was a little bit of both although the current policy is to go for steady controlled appreciation.Foxhttps://www.blogger.com/profile/04726805279916950590noreply@blogger.com