>Obvioulsy Israel is in the second type of Inflationary
>period...which in our case seems to me pretty much a form of
>stagflation: an inflationary period accompanied by rising
>unemployment and lack of growth in consumer demand and business
>activity.
>
>Israel has raised the interest rate several times in the past year
Which is basically all central bankers know how to do. I don't know much about Israel's economy, but the security situation, to put it euphemistically, has probably disrupted things enormously - labor supply, trade, business and consumer confidence, supply chains, etc. - plus the long-term distortions of being a garrison state. It would seem the last thing the country needs now is a standard tight money policy.
The present governor of the Bank is David Klein, right? But wasn't his predecessor Michael Bruno, also ex of the IMF? That's by way of saying that the Bank of Israel's connections and thinking are highly orthodox (in the monetary sense, that is).
Doug