Sunday, 15 May 2011

"Government Needs Inflation Plan"

"This year, Taiwan, along with many Asian economies, is again facing higher consumer inflation, driven by a steady increase in food and energy prices."
No it isn't - the inflation is driven by low interest rates. The aggregate prices of other goods are only being driven up because the market continues to receive so much artificially cheap credit as to retard consumer reaction to increases in food and energy prices.
"However, using a strong NT dollar to partially offset the gains in imported commodities has its limits, because this measure could harm the competitiveness of Taiwanese exports."
That conflict between exporting and importing businesses over currency value only occurs because the value of the NT dollar is a political instrument. The currency is not neutral, and consequently there will always be conflicts of interest over monetary policy.
"In fact, the most effective way to fight price pressure is for Taiwanese consumers to minimize their use of imported commodities, look for cost-efficient substitutes and carefully consider their options to cut costs."
That depends; the people selling goods at newly inflated prices now are also consumers - consumers whose incomes and consequent spending would suffer were that advice to be taken (although for people such as myself, it may well be good advice).
"The government can help by making the market more fair and transparent as well as by better informing the public about the latest price changes."
The government could help even more by getting itself out of the business of monopolizing the money and credit system.


  1. I think Taiwan is for lack of a better term "Fu%^ed" no matter what it does. After many years of an artificially lowered currency and horrendous social policy a mixture of inflation and it's target country debasing their own currency has finally hit in what promises to be a perfect storm of stagflation and pain for the common and painfully-ignored consumer. Resources were wasted or used inefficiently and nothing can undo that. Fortunately the whole world is going through it so there may be a silver lining, but the pessimist in me doesn't buy it.

  2. Agreed. But there are degrees of "Fu%^ed" - I'd rather have it over with quickly and honestly than see it dragged out over a decade.

  3. Only if they didn't kiss you first. ;)

    I'm betting you don't watch South Park.

  4. Right - just spare me the alien anal probe...

  5. Made a similar argument in response to Bergsten's argument for weakening the dollar: This is piss-poor economics; the only real sense made is political. And his argument that Chinese will then buy American is mere guesswork and does not take into account Chinese political calculations. They've been building their economy over the past three years (and more) to consume more CHINESE-made goods.

    I just love it when economists use politics as an explanation; it allows their leftist leanings to shine through.

    "The government could help even more by getting itself out of the business of monopolizing the money and credit system."


  6. Pimco(world's largest Bond fund?) recently sold all their US treasuries when they determined that around 70% of them were being bought by the fed. Not a whole lot of play on that story because one it makes the Obama admin look bad and it saves Pimco from the fed's.

  7. "Made a similar argument in response to Bergsten's argument for weakening the dollar:"

    Nathan: this is how to embed your links in your text: * description *

    I watched that video and agree that Bergsten's argument is flawed. A weakened dollar is certainly not an "unambiguously" good thing for the U.S. and for him to say that is a disgrace.

    "Pimco(world's largest Bond fund?) recently sold all their US treasuries..."

    Bill Gross, yes I saw that story too - but, of course, not in the business section of the Taipei Times.

    I'm worried about the situation here too because if this report was correct, then Taiwan's national debt (NT$21 trillion) is nearly 170% of GDP (NT$12.5 trillion), which proportionally, is far worse than in the U.S.

  8. Doh! I forgot, I can't actually show you the html code unless I write it down on a word document or something... You've gotta learn html codes Nathan.

  9. I think I've got it down. (If that takes you to my blog, then I have.)

  10. Good - then let's have no more cutting and pasting of URLs like you're a 60 yr old grandad or something...

  11. I didn't realize it was such an abomination. . . .


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