The Business Cycle Is Not Dead

Businesses, economies, nature and life move in cycles. Cycles are driven by reversion to the mean. If that was not the case, we would have a planet inhabited by 100 feet tall and 1 foot tall humans.

Just like in times of euphoria, we forget that profits can fall, that growth can fizzle and that the party can end; in times of pessimism we forget that the reverse can happen. More...

Insufficient Investment Fuels Inflation in India

The whole world is suffering from collapsing aggregate demand. Monetary authorities everywhere are struggling with liquidity traps as they experiment with alternative ways of injecting money into the system after taking short term interest rates to zero.

China stimulates its economy fiscally by planned and targeted capital investment (fraught with gross capital misallocation albeit).
India is suffering from a completely different problem. India has structural and too much aggregate demand. Its demographics are driving demand that is relatively price inelastic. In India, inflation is not being driven by the classic monetary reason of too much money chasing too few goods but is being driven by too many people chasing too few goods. More...