Posts tagged ‘Time Lag’

I have post in earlier article, Time lag and Intervention talked about how long time lag is needed in order to make intervention (cut interest rate) work.

As we see, time lag maybe runs in short time or long run; while time lag work, what the impact or reaction when time lag is working. Reuters to day, send us the good report (actually bad report to American employee) because the impact from interest rate intervention by FED doesn’t work till now.

According to Reuters, The Labor Department on Friday said non-farm employment fell by 80,000 jobs in March, the biggest decline in five years. Financial markets saw the drop as reinforcing the need for further Federal Reserve interest rate cuts.

This is just the beginning; FED expectation on their interest rate cut doesn’t work well. Time lag make unemployment rise. The report is bad news but it’s real. Read more »

Case on Interest Rate and Regulation Intervention on American Economic

Time lag, in economic theory, Time lag means time to wait the intervention works. Simple example is drug (medicine). Takes time from the medicine reaction and fight the ill. Nobody knows how long time the intervention was taken to realize or to heal the economic problem. So, all of us are still waiting.
Yesterday, I got good news from Reuters. Reuters in report said that American economic start to reborn by some good indicators. One of the best indicators is Credit Score for the highest lenders company in America is appreciated
The problem is in time lag period, we see bad reaction or good reaction in short run, I mean, there are two payouts (results) time lag made.

For more understand my opinion, I will put real economic condition, America is down because of recession and some intervention by the authorized bureaus.
Bad Reaction in time lag
We have seen that FED has cut 0.25 percent interest rate and allowed millions dollar for credit healing. In their analysis, they know exactly that in time lag period (short run), there are bad things will be happened. In real example when time lag is working, Dollar declined against major currencies more and more, some credit lenders also fall in credit score, because all people have the same psychology, waiting and do nothing in time lag period.
In time lag period, Investors, Brokers and Speculators take profit. They care about the time lag, but they made conditions become worst. In their mind, bad and good things are profit taking. If America is in time lag (recession), they gain profit taking with selling dollar. Read more »