Double Entry Journal #9

“Perhaps the main reason for the very success of the inflation targeting, may be the less inflation-prone environment created across the globe by the very fluid new world economy with its twin economic and technological revolutions.” According to chapter five of “High Noon; 20 Global Problems, 20 Years to Solve them,” inflation rates have decreased the world over. The book states that global inflation was 15-20 percent in the 1980s and early 1990s, but it fell below 10 percent by 1995 and below 5 percent by 2000.

The new information economy will progressively be a positive-feedback economy, according to the book.  “In the old economy, things start out rare and expensive before they become widespread and cheaper. In the new world economy, addition capacity becomes available so quickly and inexpensively that traditional supply constraints become almost unimportant. A negative-feedback economy is limited by short-term supply-and-demand constraints.”

Many evolving countries could benefit excessively from the opportunities brought by new technologies and new ways of doing things. Some examples are  Bangalores’s software services exports, garment assembly in Lesotho, and U.S. insurance paperwork in Ghana.

“The new world economy is full of unprecedented, wonderful opportunities. But it also brings its load of stresses.”

“The market’s own mindless expansion, effective as it is in the short term, inevitably brings its own long-term problems as it further taxes the planet’s carrying capacity beyond the already bad overload coming from the population increase. The new world economy has no clue about limits; nor do most politicians and thinkers, trained by the prosperous second part of the twentieth century to be overly market-trusting.”

Efficient markets and market Regulation

I did not know much about market regulations before these readings, and in my opinion, the market needs not to further tax the world’s people beyond the overloaded population. In “Efficient markets and market Regulation” I have discovered that “market prices are good indicators of rationally evaluated economic value”. I also learned that “securitized credit has improved allocative efficiency and financial stability, mathematical analysis can deliver robust quantitative measures of trading risk, market discipline can be used as an effective tool in constraining harmful risk taking, and financial innovation can be assumed to be beneficial.”

Does the market try to be fair at all?

Does the market think about the consequences of the things it carries out?

“The two forces of the population increase and the new world economy spew unprecedented complexity in economic, social, political and environmental matters. Human problems are becoming more pressing, more global, and more difficult to solve—technically and politically.”

Sources:

"Efficient markets and market Regulation." Financial Services Authority. N.p., n.d. Web. 11 Oct. 2012. <http://www.fsa.gov.uk/library/communication/

Rischard, J. F.. High noon: twenty global problems, twenty years to solve them. New York: Basic Books, 2002. Print.