Very timely read for me that puts some of the ideas in the Deficit Myth to test and reports outcomes. That book has been on my mind since I started reading it mainly because it defies common sense and makes economics sound like voodoo. The reader is expected to believe what does not compute on small scale just works out as you scale up. Maybe it does but it is not easy to understand how.
Prioritizing economic support over inflation risk seemed like the right move: Many emerging market central banks initially offset the impact of fleeing foreign investors and rising borrowing costs, while helping to lift their stock prices.
This logic makes sense even to a layperson like me. It reads a lot like doing whatever it takes to prevent an immediate crisis and hope that the system works somehow and blunts the pain of these measures. Turns out that is not so guaranteed
Declining currency values can in turn be damaging to emerging markets reliant on foreign imports of basic goods like food and fuel. Countries like Turkey, Brazil, and Nigeria are now smarting from the pain of food inflation, a major contributor to overall inflation for many emerging markets.
With my parents in India, I see that their retirement savings shrinking (in dollar terms) as the years go by despite rising interest income and frugal living. When my mother talks about how much their monthly expenses are for food and utilities, the numbers are astronomical compared to what I remember them to be in the 1990s.
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