Russia’s invasion of Ukraine, with its tragic human toll, likely marks a turning point for the geopolitical and global economic order. A lot has been written on the many aspects of this war. In this note, I want to focus on two key economic questions: firstly, the implications for the US dollar’s status as dominant reserve currency and, secondly, the implications for the pace … [Read more...] about The US Dollar and the Retreat from Globalisation
Russia’s invasion of Ukraine led western nations to impose the most draconian economic sanctions in the modern era. The Russian stock and bond markets have collapsed, along with Russia’s currency, the ruble. Many investors fear that China, which has always wanted control of Taiwan, will use the mayhem of the moment to take it. Obviously, this would create even more … [Read more...] about Will Russian Sanctions Lead China to Sell US Debt?
Investor attention is now focused on the immediate challenge that central banks face in recalibrating policy against rising inflation. That’s a crucial issue. But we should pay even more attention to the perilous multi-year adjustment process that lies ahead, during which markets will have to relearn to price risk without the central banks’ ever-present safety net. In recent … [Read more...] about The long and winding road…
The U.S. Federal Reserve (Fed) is the world’s most influential central bank—when it makes major policy decisions, the impact is felt across the globe. It was no surprise, then, that the Fed’s recent announcement that it will begin raising interest rates in March prompted such anxiety among investors about the impact on financial markets. To assess whether this anxiety is … [Read more...] about Putting the Fed’s planned rate hikes into context
Consumer prices rose 7.0% in 2021 in the US, the largest increase for any calendar year since 1981. As a result, politicians across the political spectrum are working overtime to find someone to blame and attack. Some politicians on the left are blaming “greedy” businesses for inflation. But we find this explanation completely ridiculous. Of course, businesses are greedy, in … [Read more...] about Who gets the blame for inflation