The information Mr Market receives could also be neurotic
Published in FT, Friday May 26, 2006
Sir, Martin Wolf’s very interesting although not quite sure where-it-finally-leads-you article “Neurotic Mr Market has plenty to be anxious about” (May 24), bases itself on an argument made by William White, in a working paper of the Bank for International Settlements (BIS), that there is something intrinsically destabilising derived from stabilising inflation.
I would argue instead that it is solely the way how inflation is measured that creates the confusion.
Let us not forget that inflation as they, our monetary authorities, know it, is just obtained by looking at a basket of limited consumer goods chosen by bureaucrats and that although they might be highly relevant to the many have-nots, are highly irrelevant to measure the real loss of value of money.
For instance, who on earth has decided for that the increase in the price of houses is not inflation? And so what should perhaps be argued is that really our monetary authorities have not been so successful fighting inflation as they claim they have been.
Sir, Martin Wolf’s very interesting although not quite sure where-it-finally-leads-you article “Neurotic Mr Market has plenty to be anxious about” (May 24), bases itself on an argument made by William White, in a working paper of the Bank for International Settlements (BIS), that there is something intrinsically destabilising derived from stabilising inflation.
I would argue instead that it is solely the way how inflation is measured that creates the confusion.
Let us not forget that inflation as they, our monetary authorities, know it, is just obtained by looking at a basket of limited consumer goods chosen by bureaucrats and that although they might be highly relevant to the many have-nots, are highly irrelevant to measure the real loss of value of money.
For instance, who on earth has decided for that the increase in the price of houses is not inflation? And so what should perhaps be argued is that really our monetary authorities have not been so successful fighting inflation as they claim they have been.
Posts
