Expanding the Legacy
Tag: Monetary policy
9 Posts
Central Bankers Debate Yield Curves
Whilst BRICS leaders discuss ways to challenge US hegemony and plot to overthrow the mighty dollar as the global reserve currency, the minders of the financial status quo are descending on Jackson Hole, a picturesque town and refuge for millionaires and artisans in Wyoming at the foot of the majestically...
Seesawing Stock Markets Rattle Investors
And just like that… the party was over. Wednesday’s stock market rally, sparked by the dovish comments of US Federal Reserve Chairperson Jay Powell, not only fizzled out but reversed with Nasdaq suffering its biggest drop since June 2020.
US Federal Reserve Moves with Cautious Resolve
Markets may have disliked what Jay Powell had to say before; however, what he does now proves a bullseye hit – pardon the pun. The US Federal Reserve surprised no one when, at the end of a two-day policy meeting, its Open Market Committee yesterday unveiled a 0.5 percentage point rise in the federal fund rate. It was the first such robust hike in 22 years and the first back-to-back rate rise increase 2006. Usually, the central bank moves in 25 basis point increments.
Searching in Vain for a Dollar Alternative
The seizure of Russia’s dollar reserves, part of the first wave of sanctions decreed in response to Moscow’s ‘special military operation’ in Ukraine, has a growing legion of pundits wondering if the time has come to look for a new global reserve currency. Some of the more outrageous suggestions suggest a fresh look at China’s renminbi and a renewed appreciation of bitcoin.
Exposing the Wage-Price Spiral Myth
Inflation equates thievery. It erodes the purchasing power of salaries and steals from creditors. Worse, most economists now issue dire warnings about the evils of a ‘wage-price spiral’ which is said to fuel inflation because workers demand compensation for the increased cost of living – essentially seeking to preserve the spending power of their income.
A Reacquaintance with Inflation
An entire generation of workers, executives, and entrepreneurs has never experienced inflation and know the phenomenon only from history books. The Great Inflation of the 1970s is usually attributed to the sudden rise of oil prices after OPEC asserted its power in the wake of the Yom Kippur War. However,...
An Outsider on the Inside
When the going gets tough, Christine Lagarde has often been called upon to broker a deal or find the solution to a conundrum that baffles lesser minds. In a word: she gets going and likens that to being suspended from a ‘glass cliff’ – as opposed to bumping against a glass ceiling – a phenomenon whereby a complex and hazardous job is handed to a woman, making her success improbable, and affording men a measure of plausible deniability.
Inflation Spike Puzzles ECB
For years on end, central bankers in Europe and the United States have implored providence to deliver a modicum of inflation. Over the past five years, the Eurozone slid twice into deflationary territory. As recently as August 2020, the consumer price index retracted by 0.2% (year-on-year), prompting President Christine Lagarde...
The End of Cheap Money?
It had to happen and it just did. The untold joys of expansive monetary policy as the engine of growth in lean times are, of course, always of a temporary nature. As the global economy emerges with a vengeance from years of lacklustre growth, the need to keep interest rates...
