to introduce a thing as currency, e.g., silver, gold, copper. In nearly all cases, when something has been monetized, it is legal tender and debtors are legally obligated to accept it as payment for debt.
Debt can also be monetized. A government can either buy the debt of companies whose growth it favors as a matter of policy (as in pre-War Japan) or permit its own bonds to be be used as banking reserves (for the creation of money).
Debt can also be monetized. A government can either buy the debt of companies whose growth it favors as a matter of policy (as in pre-War Japan) or permit its own bonds to be be used as banking reserves (for the creation of money).
by Abu Yahya January 23, 2009
In economics, a policy in which the authorities insist on some permanent, precise guarantee of the value of the local currency to some other thing: a unit measure of gold, the US dollar, the euro, or the pound. Historically, the US dollar had a hard peg to gold from 1946 to 1971, while other currencies in the developed world had a hard peg to the US dollar. Since 1971, most of the world's money is in floating currency (whose relative value is set by the free market).
Nonetheless, advocates of hard pegs frequently downplay the ... difficulties of establishing greater nominal flexibility in fiscal spending and wages...
by abu yahya June 24, 2008
(ECONOMICS) the effective ratio whereby a country exchanges its goods with those of another country. Hence, a country that exports (say) mostly coffee and chocolate has to import almost everything else; if the price of chocolate and coffee declines, the country has no choice but to increase production of both, further reducing the price of both on world markets, and increasing the relative cost of everyhting it imports.
Terms of trade are determined notionally by the forex markets, but more fundamentally by (a) the markets for commodities, and (b) the ability of the country to finance transitions to other, higher-priced export goods.
Terms of trade are determined notionally by the forex markets, but more fundamentally by (a) the markets for commodities, and (b) the ability of the country to finance transitions to other, higher-priced export goods.
Terms of trade typically lead to very high real exchange rates for currencies like the Indian rupee.
by Abu Yahya May 17, 2010
(ECONOMICS) the administrative committee of the Federal Reserve System that actually administers monetary policy. There are 12 members of the FOMC.
The 12 members include all seven governors of the Federal Reserve Board (FRB).
In addition, representatives of each Federal Reserve Bank are eligible to serve on the FOMC. The FOMC implements sales/purchases of treasury securities (open market operations) in order to create credit at member banks. This is the process by which banks with FRS membership can create money. The difficulty of open market operations lies in ensuring that rates for short term securities remain lower than those for long term securities. Otherwise, monetary tightening cannot succeed in curbing inflation.
The Federal Reserve Bank of New York (2nd FRB) is by far the most important of the 12 district banks. Historically, its president has often gone on to become either chairman of the Federal Reserve Board, or else Secretary of the Treasury (as, for example, Treasury Secretary Timothy Geithner). Nearly all bank holding companies have subsidiaries in the 2nd District, and the 2nd District is uniquely guaranteed a seat on the FOMC. The other 11 rotate, with 4 taking a turn of the FOMC at any given time.
The 12 members include all seven governors of the Federal Reserve Board (FRB).
In addition, representatives of each Federal Reserve Bank are eligible to serve on the FOMC. The FOMC implements sales/purchases of treasury securities (open market operations) in order to create credit at member banks. This is the process by which banks with FRS membership can create money. The difficulty of open market operations lies in ensuring that rates for short term securities remain lower than those for long term securities. Otherwise, monetary tightening cannot succeed in curbing inflation.
The Federal Reserve Bank of New York (2nd FRB) is by far the most important of the 12 district banks. Historically, its president has often gone on to become either chairman of the Federal Reserve Board, or else Secretary of the Treasury (as, for example, Treasury Secretary Timothy Geithner). Nearly all bank holding companies have subsidiaries in the 2nd District, and the 2nd District is uniquely guaranteed a seat on the FOMC. The other 11 rotate, with 4 taking a turn of the FOMC at any given time.
The Federal Open Market Committee conducts transactions in treasury securities at the Open Market Window.
by Abu Yahya May 05, 2010
a number that is the sum of the unemployment rate and the inflation rate. It reflects the overall caliber of a country's prior economic management.
The term was coined by Arthur Okun and was inspired by the Phillips Curve.
The term was coined by Arthur Okun and was inspired by the Phillips Curve.
During the 1980's and '90's, Austria had the lowest misery index in the world. Unemployment rates AND inflation rates were almost nil.
by Abu Yahya February 15, 2009
(FINANCE) on a financial derivative, the price at which the final transaction occurs. For example, the strike price of a call option is the price at which the owner of the option may buy the underlying item. If a call option is for 100 bbls of WTI crude oil at a strike price of $85.75/bbl, and the spot price is $86.50, then the option is worth (86.50 - 85.75) x 100 bbls = $75.
by Abu Yahya April 05, 2010
the amount of goods and services that a country exports, minus the goods and services that it imports *in a calendar year*. In 1999 Japan exported much more than it imported, so it had a trade surplus. The same year, the United States imported more than it exported, and therefore had a large trade deficit.
While Japan had a trade surplus and the USA had a trade deficit, both had something called a trade balance, which was negative for the USA and positive for Japan.
A country can have an overall trade deficit (like the USA in all years since 1980) and still have trade surpluses with individual countries (e.g., the USA occasionally has trade surpluses with Brazil).
While Japan had a trade surplus and the USA had a trade deficit, both had something called a trade balance, which was negative for the USA and positive for Japan.
A country can have an overall trade deficit (like the USA in all years since 1980) and still have trade surpluses with individual countries (e.g., the USA occasionally has trade surpluses with Brazil).
Usually, when a country runs a trade surplus it tends to export the excess foreign currency back to the deficit country as portfolio investment. In this way, the foreign currency retains its value.
by Abu Yahya February 14, 2009