cafeconomics

Most of the time economic issues are the underlying factors for any political upheavals or turmoils and other form of social evils. Economic prosperity, at least most of the time ensures a good standard of living and respect in the society irrespective of your caste or creed or whatever. So why not think of a bill for economic representation? Any elected representative should be representing the economic majority of the electoral constituency. Caste, religion, region, race etc are secondary, if a person belongs to your economic class at least he or she can empathize with your problems, if not solve them.Theoretically if a political party has 20 million members then it should not matter who among them holds the electoral positions. In reality, most of the time electoral representatives are 'muscle men' or 'money men' or self declared prophets of some religion or caste or region etc. Time to think of a bill for economic representation because economic justice delayed is

This article discusses some of the issues and applications in monetary economics. 1.Disconnect between money supply and inflation:   The quantity theory of money proposes the following identity:       Money Supply * Velocity = Price * Quantity of Goods and Services (MV = PQ)  By rearranging the equation we can state that P = M*(V/Q) which implies that holding velocity constant and assuming that quantity changes only gradually, price level is a factor of money supply. In fact monetarists argue that in the long run  a) money supply is the only factor that influences nominal GDP and b) all real variables such as output, employment and unemployment are independent of money supply. In the chart below we examine the relationship between change in money supply M1 and change in Consumer Price Index for the US economy from 1960 to present.   As we can observe, the regression between Change in Money Supply M1 and Change in CPI is a loose fit and the correlation between these variables is not of