Monetery Policy, Fiscal Policy or Invisible Hand are First?

Bill Gatet rank as richest men in the world went down as global crisis; Lehman and WaMu were collapsed, Major Wordwide Industries housed their employers, cut their production and went to debt problems. Central Banks tried to help with lowering interest rate to recover the crisis and to refresh market. FED were third time to cut their interest rate, but so far so good. Government tried to recover with debt help, injection fund, restructurization and to buy back any bankrupts and bad financial reported.

Both Governments and Central Banks fight force to recover the crisis before too late or getting worst with their stimulations. Like a doctor and patient. If patient didn’t check their health, there was no cancer but once doctor analyzed the patient, the cancer will be worst. The same case happened on Economic. Time lag took long period with crucial problems on companies. Lower demand forced companies to reduce their production as over stocks. this crisis took very long time lag to recover. Estimated more than million people were housed and the number will increase in near if fundamental economic doesn’t resolve, To increase Purchasing Power Parity.

There is one tool we dont hear so far. Economists believe that Invisible Hand will born to solve this situation. Does the battle of Israel and Hamas play the insivible hand? or the lowering oil price is invisible hand? or both of them?

Keynes, the Invisible Hand Hater believed Government and Central Bank are two main points of the solution. Keynes also put investors as the third to make one economic goes bad or good. As the example, the battle of Hamas and Israel has been increase the gold price in stock market. Many companies stocks were depreciated and appreciated by their financial reports in crisis. Investors make it worst in crisis.

Oil crude price is lower than $48, House sales were dropped in November US data, reuters reported today. the reason is very simple, Low demand, indicated by PPP (puschasing power parity). Ghost Cycle are very hard to break.

To talk about where the invisible hand is, must ask to Government and Central Bank. Invisible hand come when any policies have been run. I talk about the positive invisible hand – increase demand and supply power. Once the policies didn’t run well, insivible hand still sleep somewhere.

Monetary policy tries to refresh rill sector to gate interest rate with investment and Fiscal to gate rill investment with government budget and goverment policy such as taxes, infrastruscture, good condition to invest and others support.

Invisible hand still waits goverment and central bank plans in order to find itself on positive point.

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