Shekel Rate, Interest Rate, Stagflation and 'Good' Inflation

pms laflame at aaahawk.com
Wed Jun 12 12:33:28 PDT 2002


When the market raises interest rates sharply don't central bankers raise the shorter interest rates just to keep up appearances? Then feed a bunch of catch phrases to the press to explain what's going on to us Rubes? ----- Original Message ----- From: Doug Henwood <dhenwood at panix.com> To: <lbo-talk at lists.panix.com> Sent: Wednesday, June 12, 2002 1:59 PM Subject: Re: Shekel Rate, Interest Rate, Stagflation and 'Good' Inflation


> Bryan Atinsky wrote:
>
> >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
>



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