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During the Great Moderation that preceded the Covid-19 pandemic, years of low inflation led to the growth of sovereign debt issued at fixed interest rates and long maturities. And now, two years of unexpected US inflation have effectively diluted these obligations, in America and elsewhere
30 Sep 2022
Opportunities for investors prepared to be flexible, seek out potential safe havens
30 Sep 2022
The US Federal Reserve’s latest interest rate hike is just one more step on the long and difficult road away from quantitative easing. While the Fed and other central banks, such as the Bank of Japan, must complete the journey, governments must refrain from politicizing the pitfalls that await
30 Sep 2022
After previously eschewing interest-rate hikes, the US Federal Reserve has been tightening monetary policy at an unprecedented rate. But the current market turmoil and the central bank’s own revised projections show that a great deal of damage has already been done
29 Sep 2022
It is difficult to argue with the logic behind the Economic Research Institute for Asean and East Asia’s latest Comprehensive Asia Development Plan. But no matter how compelling a top-down development plan for Asia might be, it is highly unlikely ever to be implemented
29 Sep 2022
The problem with the United Kingdom’s growing budget deficit and public debt is not that they condemn the currency to being weak or strong. It is that they can constrain monetary policy, create uncertainty that spills into financial markets, complicate the inflation/unemployment trade-off, and hinder long-term growth
27 Sep 2022
When a factory wants to remove toxic waste, it charges a negative price for it: its managers pay someone to get rid of it. But when central banks begin to treat money like car manufacturers treat spent sulfuric acid, one knows that something is rotten in the kingdom of financialized capitalism
23 Sep 2022
Surging inflation and an ongoing economic slowdown should have hurt demand for the US dollar, and yet the greenback is at a 20-year high. The US economy’s relative strength and the Fed’s rapid monetary tightening will likely keep the dollar strong for some time
22 Sep 2022
Globalization survived Brexit and Donald Trump, and it appeared to be thriving even after the Covid-19 pandemic. But with Russia’s invasion of Ukraine, the economic “mutual assured destruction” that was supposed to deter decoupling apparently reached its limits
22 Sep 2022
Despite August’s disappointing inflation numbers, the US economy is uniquely equipped to mitigate and overcome the current price surge, owing to its relative energy and food independence, abundance of immigrant labour, strong production capacity, and the capital needed to boost domestic manufacturing
21 Sep 2022
Kwasi Kwarteng, the United Kingdom’s newly-appointed finance minister, is said to be keen to do away with the cap on bankers’ bonuses, which the bankers who have been relentlessly lobbying for ever since it was introduced tell him will make the City more competitive as an international financial centre. Exactly how is unclear – to me at any rate.
19 Sep 2022
While the pound’s recent declines may evoke memories of the 1992 Black Wednesday crisis, sterling's weakness does not reflect a general loss of confidence in UK assets. But the newly announced plan to cap household energy prices may now lead to currency trouble by exposing the government’s balance sheet to huge potential losses
19 Sep 2022
While America’s Inflation Reduction Act is a historic achievement in its own right, its largest benefits will come in the form of global economic spillover effects. Ultimately, all countries will pay much less to cut their own emissions at the speed and scale necessary to keep climate change in check
19 Sep 2022
With recent data showing that both inflation and inflation expectations have eased, it would be irresponsible for the US Federal Reserve to create much higher unemployment. Amid so much uncertainty, it should instead pause interest rate hikes until a more reliable assessment of macroeconomic conditions is possible
14 Sep 2022