Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Inflation’

Stop Inflating the Inflation Threat

Posted by hkarner - 30. Oktober 2019

J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

Given the scale and severity of inflation in America in the 1970s, it is understandable that US monetary policymakers developed a deep-seated fear of it. But, nearly a half-century later, the conditions that justified such worries no longer apply, and it is past time that we stopped denying what the data are telling us.

BERKELEY – In light of current macroeconomic conditions in the United States, I’ve found myself thinking back to September 2014. That month, the US unemployment rate dropped below 6%, and a broad range of commentators assured us that inflation would soon be on the rise, as predicted by the Phillips curve. The corollary of this argument, of course, was that the US Federal Reserve should begin rapidly normalizing monetary policy, shrinking the monetary base and raising interest rates back into a “normal” range.

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The Eurozone’s 2% Fixation

Posted by hkarner - 8. Oktober 2019

Daniel Gros is Director of the Centre for European Policy Studies.

The European Central Bank’s inflation target of “below, but close to, 2%” currently dominates economic policymaking in the eurozone. Moreover, the idea that this target supersedes the bloc’s fiscal rules seems to be gaining ground – with potentially worrying implications for financial stability.

BRUSSELS – Economic policy discussions in Europe used to be dominated by the number three, namely the 3%-of-GDP upper limit on national fiscal deficits. Although the fiscal rules enshrined in the Maastricht Treaty were in fact much more complex, public debate tended to focus on the 3% figure, especially when deficits ballooned during the euro crisis nearly a decade ago.

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Blackrock CIO: The Endgame Is Coming And Central Banks Will Debase Everything To Spark Inflation

Posted by hkarner - 10. September 2019

Date: 06-09-2019
Source: https://www.zerohedge.com

Blackrock’s Chief Investment Officer, Rick Rieder, best known perhaps for recently suggesting that the ECB should monetize stocks, writes in the Blackrock blog today and highlights the economic policy state-of-play today, and where it may lead to should economic growth falter, productivity not materialize, and populism continue to thrive.

* * *

The major global central banks continue to draw bigger guns in their battle against deflation, yet in some places, it appears to be of no avail. The fact is that the share of sovereign yields that are in negative territory keeps increasing and the average level of these interest rates becomes ever more negative. Further, quantitative easing (QE) purchases of sovereign debt have transitioned to purchases of corporate debt, and in some places equities; with inflation still elusive and improved growth prospects in question. That all leads one to wonder where (and how) these policies end? What is today’s monetary policy endgame?

Turn to economic history for perspective Den Rest des Beitrags lesen »

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Egypt is reforming its economy, but poverty is rising

Posted by hkarner - 10. August 2019

Date: 10-08-2019
Source: The Economist

Fast growth is not raising the incomes of the poor

Except for the glow of a mobile phone behind the watermelons, the fruit-and-vegetable shop on a busy Cairo street looks deserted. The owner says his wares are 25% more expensive than last summer. As prices rise, buyers skimp: regulars who used to buy a kilogram of fruit now settle for half. He keeps the lights off between shoppers to save a few pounds. There are no lights either at the butcher’s next door, who reckons revenues are down by 20%. “I sell a lot of bones for soup,” he says.

Last year Egypt vowed to halve poverty by 2020 and eliminate it by 2030. It is going in the wrong direction. On July 29th the national statistics agency released a long-delayed report on household finances. It found that 33% of Egypt’s 99m people were classified as poor last year, up from 28% in 2015. Even that dismal finding may not be dismal enough. The government has fixed the official poverty line at just 736 pounds ($45) a month, a figure that many economists say is too low. The World Bank said in April that 60% of Egyptians were “either poor or vulnerable”. Den Rest des Beitrags lesen »

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Das Ende der EZB Zurückhaltung

Posted by hkarner - 31. Juli 2019

Hans-Werner Sinn, Professor of Economics at the University of Munich, was President of the Ifo Institute for Economic Research and serves on the German economy ministry’s Advisory Council. He is the author, most recently, of The Euro Trap: On Bursting Bubbles, Budgets, and Beliefs.

MÜNCHEN – Nun haben sich die Erwartungen bestätigt. Die EZB hat beschlossen, die Eurozone mit Nachdruck zu inflationieren. Was harmlos als symmetrisches Inflationsziel von 1,9% deklariert wird, soll in den nächsten Jahren die Basis für eine neue Phase der expansiven Geldpolitik schaffen, die noch weit über das hinaus geht, was bislang realisiert wurde. 

Erinnern wir uns. Im Maastrichter Vertrag wurde der EZB das nicht verhandelbare Ziel mitgegeben, für stabile Preise zu sorgen, was, wenn man es wörtlich nimmt, eine Inflationsrate von null bedeutet. Sie erhielt ein ganz anderes Mandat als die anderen Zentralbanken der Welt. Als dann die vom Euro induzierte Zinssenkung in Südeuropa eine inflationäre Blase hervorrief, die die Inflationsraten in einigen Ländern auf deutlich mehr als 2% pro Jahr ansteigen ließ, argumentierte der EZB-Rat, das Ziel der Preisstabilität könne man nicht genau erreichen, und im übrigen gebe es viele Messfehler. Den Rest des Beitrags lesen »

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The ECB Needs New Inflation Rules

Posted by hkarner - 3. Juli 2019

Michael Heise

Michael Heise is Chief Economist of Allianz SE and the author of Emerging From the Euro Debt Crisis: Making the Single Currency Work.

The European Central Bank has consistently undershot its inflation objective of “close to, but below 2%” for over a decade, potentially threatening its credibility. To maintain credibility, the ECB should adopt a two-pronged strategy focusing on a medium-term inflation target and systematically smoothing financial cycles.

MUNICH – The upcoming change of leadership at the European Central Bank represents an opportunity – if not an obligation – to review the Bank’s policy framework. The ECB can take credit for major achievements during Mario Draghi’s presidency – most importantly, stabilizing the eurozone during the 2007-08 global financial crisis and ending speculation about the possible breakup of the single currency during the sovereign-debt crisis in 2012. But the ECB’s strategy of steering consumer-price inflation has been much less successful.

The ECB’s policies regarding inflation have had some powerful side effects – including increased risk-taking, skewed capital allocation, rising inequality, and growing pension gaps. Yet annual inflation has undershot the bank’s objective of “close to, but below 2%” for over a decade, and has averaged only 1.2% since the financial crisis. To bolster its credibility on inflation in today’s uncertain policymaking environment, the ECB should adjust its rules and adopt a more flexible approach.The impact of monetary policy on economic activity and inflation has been hotly debated ever since John Maynard Keynes published The General Theory of Employment, Interest and Money in 1936. Although there have always been cracks in the transmission of such policies to the real economy and prices, the financial crisis and its aftermath exposed major ruptures. Den Rest des Beitrags lesen »

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Inflation im Euroraum sinkt deutlich – Druck auf die EZB steigt

Posted by hkarner - 6. Juni 2019

4. Juni 2019, 14:16 derstandard.at

Die Teuerung ging im Mai auf die bisher niedrigste Rate des Jahres zurück. Am Donnerstag treffen sich die Euro-Wächter in Vilnius

Frankfurt – Die Inflation in der Eurozone hat sich wieder deutlich von der Wunschmarke der Europäischen Zentralbank (EZB) von knapp zwei Prozent entfernt. Im Mai sank sie unerwartet kräftig auf 1,2 Prozent, was die bisher niedrigste Rate in diesem Jahr ist, wie die europäische Statistikbehörde Eurostat am Dienstag mitteilte. Im April war die Teuerung noch bei 1,7 Prozent gelegen. Für EZB-Chef Mario Draghi dürfte damit der Handlungsdruck steigen, zumal die Konjunkturaussichten wegen des sich verschärfenden US-Handelsstreits und der Brexit-Hängepartie ebenfalls unsicherer geworden sind. An diesem Donnerstag kommen die Euro-Wächter in Vilnius zu ihrer nächsten geldpolitischen Sitzung zusammen.

Warten auf Preisauftrieb

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Wie die Inflation zurückkehren könnte

Posted by hkarner - 24. Mai 2019

Mohamed A. El-Erian, Chief Economic Adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-Chief Investment Officer, was Chairman of US President Barack Obama’s Global Development Council. He previously served as CEO of the Harvard Management Company and Deputy Director at the International Monetary Fund. He was named one of Foreign Policy’s Top 100 Global Thinkers in 2009, 2010, 2011, and 2012. He is the author, most recently, of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.

NEW YORK – Die Debatten über die Inflation in den Industrieländern haben sich in den letzten Jahrzehnten auffallend verändert. Abgesehen von Problemen der (Fehl-) Bewertung sind die Bedenken hinsichtlich einer lähmend hohen Inflation und der übermäßigen Macht der Anleihemärkte längst verschwunden. Die Sorge besteht nun vielmehr darin, dass eine allzu niedrige Inflation das Wachstum hemmen könnte.

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Silent Inflation

Posted by hkarner - 26. November 2018

Robert J. Shiller, a 2013 Nobel laureate in economics, is Professor of Economics at Yale University and the co-creator of the Case-Shiller Index of US house prices. He is the author of Irrational Exuberance, the third edition of which was published in January 2015, and, most recently, Phishing for Phools: The Economics of Manipulation and Deception, co-authored with George Akerlof.

Inflation targeting is supposed to reduce uncertainty about prices. But keeping the inflation target at 2% or more, might actually increase a sense of uncertainty about real things like home values or investments.

NEW HAVEN – In many countries, inflation has become so low and stable in recent decades that it appears to have faded into the woodwork. Whereas galloping inflation was once widely viewed as the number one economic problem, today most people – at least in the developed countries – hardly ever talk about it or even pay attention to it. But “silent inflation” still has subtle effects on our judgment, and it may still lead to some consequential mistakes.

Since New Zealand’s central bank set the first example in 1989, monetary authorities around the world have increasingly pursued a policy of setting inflation targets (or target ranges) that are substantially above zero. That is, policymakers plan to have inflation, but steady inflation. What used to be a dirty word is now announced publicly, and moderation is enforced. Den Rest des Beitrags lesen »

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Double Debt Problem

Posted by hkarner - 24. November 2018

November 23, 2018

The selloff in GE is not an isolated event. More investment grade credits to follow. The slide and collapse in investment grade debt has begun… (and later) Don’t be fooled by bond prices holding up, because trading volumes are down. There are fewer bids in the market, and the dispersion of bids is wider. It is time to jog—not walk—to the exits of credit and liquidity risk.

– Scott Minerd, Guggenheim Partners Chief Investment Officer

From a 50,000-feet viewpoint, we’re probably in a global debt bubble…Global debt to GDP is at an all-time high…This is going to be a very challenging time for policymakers moving forward.

– Paul Tudor Jones at the Greenwich Economic Forum in Connecticut, November 15, 2018

Last week, I talked about Ray Dalio’s new book on debt cycles. He describes how debt is inherently cyclical, because it enables more spending now that must be offset by less spending later.

Ray’s book helped me refine my description of The Great Reset. It’s a critical refinement, too. After reading the book I realized it is entirely possible we will have another debt crisis before what I think of as The Great Reset.,  I firmly believe the latter is still coming, but there may be another “mere” credit crisis beforehand. Den Rest des Beitrags lesen »

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