China is definitely not collapsing, and, is better positioned than the rest of the world to contain any financial crisis that it may face. Be that as it may, I wanted to talk about a more important subject: It regards monetary policies. That's because monetary policies should be preferred than fiscal policies because they are more effective and efficient.

Regarding the on-going debate whether Economics, as a discipline, is more science than art, I would like to say that I believe it is more science than art because the purpose of science is to discover and disseminate knowledge so that humanity can be advanced, while the purpose of art is to create utility or value in individuals. Having said that, we should note that too much math and statistics in Economics should be taken with a grain of salt, because their importance is to create models that Economists can use to solve the prevailing conditions. However, since Economics is unlike the natural sciences, the principles of which are clear-cut across all sections, the laws and principles of Economics depend on the variances that people add to a prevailing condition. Therefore, there's a need to discover more models that can fit as many scenarios as possible so that general Economic principles can be derived from them. That's the importance of math and statistics in Economics. But, the stated math and statistics should not replace Economics because the science of Economics is more philosophical than physical (physics). Therefore, the science of Economics is harder to master than that of the natural sciences and/or pure mathematics.

For this reason, I would like to urge central bankers all over the world to re-calibrate their monetary policies as follows: When the Fed believes that it is time to tighten policy by raising interest rates, they should tighten by increments of 1/40 or 0.025%. This may not seem significant enough but, when you take 0.025% of an $18 trillion economy like the United States, that small 0.025% translates into $4.5 billion into or out of the economy (just for the United States). Then, when you add the money multiplier of a factor of 2.5, the $4.5 billion turns into $11.250 billion into or out of the United States economy. That is an amount that can be controlled and evaluated. If it's too much, the Fed can let the economy absorb that shock by not raising interest rates until when it's time to do so. Also, if it turns out that the rate is too small, the Fed can increase another 2.5 basis points, in 30 days. But, there's no prudent Economic law that says that the Fed must always adjust with 25 basis points (i.e. 0.25%) or more, every time that monetary policy needs to be adjusted. Finally, because there are too many people who are not participating in the labor force (people who would like to work but have given up because there are no jobs, or, those working part-time but, would like to work full-time), the natural rate of unemployment would be around 4.5% to 4.7%. That's when the Fed should start to tighten the economy by raising rates with 0.025%.

