The justification of Monetary Policy

A continuation from the previous blog, ( well i made this simple enough for dear readers to understand).

Whenever there is an inflation in the country, the government usually tend to reduce the money supply and reduce the purchasing power, how? this question can be answered from the previous post in this blog. However more importantly, when the government want to overcome inflation, they usually will reduce the money circulation in the country and makes money or currency become limited and people spend less than usual. Cost of borrowing which is interest rate is higher, and bank will restrict their loan policy and cost of borrowing become expensive.

 In the condition of recession, where money in circulation is not much, the government will apply the expansionary monetary policy, and increase the money in the circulation within the economy system. they reduce the interest rate and borrowing and lending become cheaper and people will spend more and more until the economy became stable, and high employment achieved. However, this only can be applied in the short-run. Why? this is because in the long run, increase in money supply may lead to inflation problem. we do not want that ,do we? for beginners SMEs, they can take advantage of the expansionary policy since they need the capital to run their businesses or productions.

During inflation, it is advisable for us to save more.

expansionary monetary policy is used to reduce unemployment, however, it is impossible for a country to reach zero unemployment due to frictional unemployment (people who between jobs and fresh graduates) and structural unemployment ( mismatch between job requirements and and the job skills).

There are 5 goals of monetary POLICY :

1. High employment
2. Economic growth
3. Price stability
4. Interest rate stability
5. Stability of Financial Markets

monetary policy

As stated, monetary policy is the government policy on money supply and credit creation. there two major types of monetary policies, contractionary or tight monetary policy and expansionary or easy monetary policy. inspite of the two consists of quantitative and qualitative instruments.

Quantitaves measures are:

1. Open Market Operations (OMO) - selling (inflation) and buying (recession) short term securities.
2. Variations of Legal Reserve Requirements - increase (inflation) and decrease ( recession) reserve requirements.
3. Funding - selling (inflation) and buying (recession) long term bonds.
4. Discount rate or bank rate - inrease (inflation) and decrease (recession) discount rate.
5. Interest Rate Policy - increase (inflation) and decrease (recession) interest rate.

Qualitative measures are:

For Inflation ;
1. Selective credit control -includes hire - purchase regulations (banking system may fix minimum down payment and maximum repaying period) and capital issue control ( CB issue directives to banks to give loans only to productive purposes)
2. Moral suasion - CB persuade the commercial banks to restrict their lending policy.
3. Special directives - CB set up directives and instructions to banks to reduce the volume of loans given to clients.

For Recession ;
1. Allowing and supporting the banks and financial institutions to advance credit to households and firms for productive and non-productive purposes.

Let us apply this in the REAL WORLD.
Aug. 14 (Bloomberg) -- Malaysia, which has raised interest rates three times this year, has “appropriately” shifted its monetary policy to support growth and keep inflation in check, the International Monetary Fund said.

The policy of a “measured pace” of rate increases “will help prevent financial imbalances in an environment of low interest rates while still supporting aggregate demand and limiting the drag on growth from needed fiscal consolidation,” the IMF board said in a statement e-mailed today following a July 30 meeting on the country’s economy.

Stronger manufacturing buoyed growth across Asia in the first half of 2010, prompting Malaysia and India to lead regional policy makers in raising borrowing costs. Malaysian central bank Governor Zeti Akhtar Aziz has raised the benchmark interest rate to 2.75 percent this year from a record low as economic growth surged to the fastest pace in at least a decade in the first quarter.

The IMF, whose discussions were based on the annual staff report on Malaysia’s policies, also said directors “took note of the staff’s assessment that the ringgit appears to be weaker than its equilibrium level in real effective terms.”

The Washington-based IMF predicts “favorable” near-term prospects in the Southeast Asian country, with growth of 6.7 percent this year and 5.3 percent in 2011.

--Editors: Christopher Wellisz, Paul Tighe

when we looked upon this, Malaysia economy is, as we know, is in the inflation condition. for your information, when the interest rate is high, this will lead to the strengthen of the currency, which make the value of the currency is actually appreciate which subsequently leads to the higher cost of production domestically. Thus, importation increase.

Is this Malaysian current policy is good? drop your comment please :

bang bang bang !! and die.

have you ever think that you want to feel death?
well i do, some part of me do.

i have always, think, whenever i cross the roads, i wish somehow, a car would hit me.
and yes, there was an accident.
somehow, at that time, when everything that i imagined happened, i would know who really loves me.
what is love anyway? i wonder.

Love can make people sick to death ain't it? but still people crave for the poison. it's like a drug u want to keep for the rest of your life. don't you agree? love can be painful when you do not know how to play your role in it. love do need sacrifice. and love needs appreciation.

well, as a lover,
I know how to play my role to You.
I know what I need to sacrifice to You.
I know how to appreciate You..

And I wish You do the same, LOVE.

Kalkulator, Buku dan Teh

Inilah Old Town White Coffe di Jalan Tun Bendahara, Melaka yang bersebelahan dgn Mercedes Benz showroom. Unik kan?..

saya, ms. blair and ms. F telah pergi ke tempat ini pada siang hari tadi. bermula dengan kelewatan bangun tidur, dan terus sahaja lapar, dan niat mahu belajar untuk final exam tetapi tidak tahu ala tuju. mula mula na study di library uitm KBM. pastu, nak study kat McD. pastu selepas beberapa perkara telah difikirkan, kami pergi ke Old Town sahaja.


apa yang dilakukan disana?
pertama >>>>> MAKAN!

 makan apa?
saya makan nasi lemak
ms. blair makan mee goreng
ms. F mkn french fries.

yes, cik carrot kekeringan idea ni sebenarnya.
apa apa pun, da kenyang makan, bermulalah marathon membuka buku dan menekan kalkulator.

xhi mun tea,

teh tarik panas,

teh tarik sejuk,

makanan da masuk perut!

ms. blair dan ms. F

.cik carrot aka tuan punya blog ni.

jadinya lama jugak la kami di sana. dari jam 5 sampai kul 9 mlm. sampaikan saya pun naik pening. tapi so far oklah stdy kat situ, sbb perot dapat di isi dan org pun tak ramai. sekarang ni pun old town nak pekerja, ada vacancy,

sebelum balik tu sempat lah juga saya tanya pasal vacancy tu, sbb niat di hati nak wat part time sbb biasalah org miskin, xda duit dan kenalah cari duit. kan? haha

tisu!

bukan resepi tetapi menu.

colgate dan sabun dove??!

yang last picture ni, colgate dan dove ni, tiada di jual di old town ya? jangan plak sesekali cuba pergi old town dan order sebiji colgate dan sebuku sabun dove! yang ni lepas kami blah dari old town, kitorg g dinner kat food court seblah hotel bayview (dekat dekat area old town tu jugak), pastu saya punya stok ubat gigi and sabun da hbs...so, g bli kat kedai runcit dekat food court tu.

p/s: tiada duit, jadi beli barang murah je.

"NANAS"; seekor kucing ataupun organisasi?

ok.
hari ni. eh bukan. bulan lepas kot.hahaha. mungkin keterlupaan di situ.
tajuk pelik kan?
tapi tiada pelik pon. meh bak sini wa na cita skit.

mende NANAS ni?

well, N.A.N.A.S is a stand for Noah's Ark Natural Animal Shelter. Basically, it is originally from Singapore is now relocated in Pekan Nanas, Johor. The stray animals who had moved here from Singapore in Year 2000 are happily settled and benefiting from the tranquil surroundings and fresh air. (ok mungkin aku copy from the website sebab malas nak wat rumusan, sbb bukan masuk periksa pon kan?). jadinya aku malas nak copy paste from the website sgt sbb takotlah pulak nanti ada saman menyaman copyright plak kan. as a conclusion, the big idea came from a chinese, singaporean guy. kaya atau miskin aku tatau la plak pasal mamat singapore tu.

macam mana tahu? haaaa, ini yg menariknya. pada suatu hari, saya dan "Ms Blair", telah merancang untuk melihat Evolusi KL Drift dan bergerak lah kami menuju ke Dataran Pahlawan.



setibanya kami disana, kami terus menuju ke GSC and tup tup, tayangan tu lambat 2jam lebih kurang camtulah. jadi kami pon mengambil keputusan untuk berlegar legar di dalam bangunan tersebut (seperti gambar yg di atas ni ya anak anak!) pastu, di main hall die ada macam exhibition ni lah, and kitorang ternampak ada banyak anak kucing kat dlm sangkar. kami pon tertarik dan pergi kat tempat kucing tu. dan disitulah kami mengetahui tentang kewujudan NANAS. derma rm5, dapat amek sekor kucing. jadi saya dan ms.blair pon dengan murah hatinya dermakan amount tersebut (sebenarnya duit ms blair sorg je).walaupun masa tu dua dua tgh sengkek, tak sedar diri. kami berdua pon setuju untuk menjaga kucing yg kami 'adopt' tu. gerek tak? dan bersempena nama organisasi tersebut, kami pon menamakan anak kucing betina kami yg sudah dimandulkan itu sebagai NANAS!!. hmm, mungkin rindu nanas kat rumah ms blair sbb now i am at the library. konon na study, tp berblog. mcm ms blair ckp, "cik carrot poyo!"..hmm redha je lah ye?

.
inilah, kesayangan kami berdua.

FOR MORE INFO, FEEL FREE TO GO TO THE WEBSITE VOLUNTEERILY
Noah's Ark Natural Animal Shelter

Bertemu kembali.

bertemu ke?
ke tak?
tapyah nak temu.
nanti jemu.
ok shut up ye cik carrot.

alright, jadinya da berbulan dan bersarang blog ni aku simpan jadi pekasam masam.macam bau ketiak lepas maen basketball.

hmm, rindu gak na maen natang tu. adui, apalaaa! last post is on the january. skang da bulan may la bai!!!..apa aku buat dlm bulan 1 sampai 5 tu??

na tau?
na tau ke?
ke xnak tau?
tape aku btau..

mcm mcm daaa... mostly blaja hidup kat melaka JAHANAM ni. sekali lagi..JAHANAM!.
tapi, despite all the JAHANAMness of melaka. ada jugak ketidakJAHANAMnya.
apa dia?

i found something.
what?
something that is precious. that i rather to keep in my heart alone.
saya selalu lukis kat tangan dia..
yes, you know who you are. and i hope you reading this.

so far,

melaka byk buruk dari baik.

mostly, the people lah...yg driving, yg bawa motor. semua mcm MASYA ALLAH.amek nafas panjang je la weh!!

2 Weeks in Malacca Historical City

Excitement is best describable, well, at first. Then it starting to blur. Why? This is probably because of me being passive without any activity to do! Staying in my college bedroom is just a lame, boring routine for me.

While i was back in Dungun. There is so much things to do. Coaching brassband, go to classand hanging out with my friends and such which keep me busy and i do not have the time for myself. Now, it all seems so different. I am starting to feel like a new person who always keep things organized, cleaned and smart. A good change for me and I am still getting use to it.

The weather in Malacca, is not much different as in Dungun. However, when you stay in an apartment at a average atmosphere (level 6), you may here the sound of wind which will creep you. It happened to me! i Got up early not because I want to, it is because of that creepy sound and I am not dare to go back to sleep.

One thing I like about the place is, nobody has an idea who I am. The real excitement is where I mingle with a new people, studying new things and the lecturers are cool. Malacca has a quite unique history.