Thursday, April 28, 2016


The interesting question to ask is who makes a better governor of the central bank - an economist or an accountant.

Self-deprecating economists would joke that since economic theory has nothing to offer now that monetary policy has deteriorated into this mindless expansion of the monetary base either by helicopter money or by quantitative easing, there is really no policy value from an economist. This could indeed be true and it is indeed a serious matter. Look at the present monetary policy stance of the issuer of the international reserve money who is fearful that even a slight notch up for the interest rate is going to send the whole world down into economic chaos. Well, that has not been entirely true. The main cause of the current global economic downturn and slowdown is the political cleaning up in China. As with all spring cleaning, we all have to lift our feet up from the ground and nobody can move.

Of course, the reality is that for a small fry like our nation, we cannot have an independent monetary policy. The only thing to do is to mimic what is happening in the US. This is a no brainer.

Nevertheless, an accountant and a banker may be a better person than an economist to be the governor. The accountant will not spend but will make money by saving up. This will be good to put the government budget in order. The banker will ensure that banks do not go overboard, extend themselves and make themselves vulnerable to insolvency. The accountant banker will ensure that the house will be need and tidy.

Now, I have always argued with the matriarchs in my household that a tidy house is a house not lived in. For a house to be lived in, the occupants will be busy with many ongoing projects at the same time and therefore will have work in progress all over the house. The house will be messy but there is order in chaos. This has always been the condition in which I like to see the economy in. A vibrant economy is a messy economy with everybody busy going about their daily lives and not being bothered by others or others bothering them.

Our economy is not vibrant with the economic growth committee laying out investments and directing what projects will go on. This is central planning.

But for the central bank, it is good to have a nice and tidy central bank. We are lucky.

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