Books, Uncategorized

How Inflation Fell

UntitledMore than a year ago, I wrote:

“In professions in which perceptions matter, real skills are not valued much. But, no amount of rationalization can change the fact that real skills do matter. In economics, theoretical competence matters. Intelligence and rationality matters. Raghuram Rajan is supposed to take charge as the Reserve Bank Of India governor today. On Twitter, I see many people who question his citizenship and lack of central banking experience. But, Raghuram Rajan is an extremely competent economist. In India, this is not the norm. Ben Bernanke, the current chairman of the Federal Reserve is a talented American economist who understands the importance of inflation targeting. Perhaps it is true that Bernanke and Greenspan did not live up to their potential. But, the first essay on monetary economics many Econ nerds read when they were teens was the previous Fed Chairman Alan Greenspan’s “Gold and Economic Freedom”, because it was published in Ayn Rand’s non-fiction collection. Almost everything that is being written on inflation in the mainstream media is nonsense, but this paper of Raghuram Rajan and Eswar Prasad is brilliant.

Untitled2A lot of people were saying that one man alone cannot do anything, as if inflation is beyond the control of the RBI. But, look at the results.

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