Financial Markets and the Economy - Intersections

 (The following article appeared on CNBCTV18 online on June 19, 2020 - per URL below: https://www.cnbctv18.com/views/explained-should-govt-raise-money-directly-from-retail-savers-and-other-questions-6166931.htm ) Money and Economic Activity – A Perspective   Here are a few topical questions that test our understanding of money, banking and economics.   Will excessive government spending now crowd out private investments? Should the government now raise money directly from retail savers, perhaps by way of a special Covid-19 bond? Is precautionary savings behind the current rising levels of deposits? Can rising money supply eventually threaten our financial stability? If money supply has to be controlled later, how should it be done?   We explore these and other questions below. In the discussions that follow, we will frequently refer to prior articles Banking & Money Explainer and RBI and Money Creation .   Money Supply and Economic Activity   Let us fi...

 (The following article appeared on Livemint on June 11, 2020 - URL below: https://www.livemint.com/industry/banking/beware-the-approaching-financial-train-wreck-11591795968121.html ) Truth and the Path to India’s Economic Recovery   As India’s already weak economy takes a body blow from Covid-19, the sector that best points to both the current issues in our economy and a possible path to our eventual prosperity is our financial services ecosystem – across banks, Non-Bank Finance Companies (NBFCs) and debt capital markets.   For a while now, there have been clear symptoms indicating that all is not well with this ecosystem. It has been suffering from a  trust deficit, and despite all the liquidity in the system, it has been unable to finance India’s growth aspirations. However, we have avoided a full report and diagnosis, and dragged our feet on treating the core issues.                 ...