inflation

The distributional problems of inflation and the limits of monetary policy.

Vie, 10/21/2022 - 01:36 -- bacosta

The Fed remains resolute in its policy of raising interest rates. In its statements, it shows particular concern about an imbalance in its labour market following the social protection policies during the pandemic in the USA.

How is 2022 doing

Vie, 07/01/2022 - 11:39 -- bacosta

In January 2022, the IMF predicted a year of low growth with high inflation. Since then, the IMF has twice lowered its projections giving a gloomy outlook for global growth. OBELA estimated that the FED and the European Central Bank were in a dilemma where they would either ride with high inflation and some recovery or use the conventional monetary instruments of raising the interest rate and knock down the fragile consumption and investment dynamics to bring down inflation. There was a difference between the Fed having a monetary problem and the ECB recognising the geopolitical inflation issues. The result has been that both decided to raise interest rates and reduce liquidity, with predictable consequences.

Inflation is more than a monetary problem.

Lun, 06/27/2022 - 16:08 -- bacosta

On June 15, the Fed raised its target interest rate by 75 basis points, the most substantial increase since 1994. The rate has already reached 1.75%, the pre-pandemic level. It does not seem to be enough; the expectation is that it will get 3.5% by the end of the year. Meanwhile, political and media discourses are looking for who to blame for the highest inflation rate in the last 40 years. A recession comes next. 

How does the world cope with fertilizer shortages?

Vie, 06/10/2022 - 23:12 -- bacosta

 

After being postponed for two years due to the COVID-19 pandemic, the World Economic Forum in Davos finally took place. The central agenda of world leaders and business leaders revolved around four points, climate change, rising inflation, Russia's special military operation and how it aggravated the energy and food crisis. 

The Molotov cocktail of hunger: inflation, shortages, climate crisis and war

Sáb, 05/21/2022 - 01:35 -- bacosta

Drought, climate crisis, fertilizer shortages and war threaten world food security and inflation; the Molotov cocktail fuse of hunger is burning. As the special military operation continues, it is not clear whether classical monetary theory will control inflation nor whether it will solve the problem of hunger.

The Return of Inflation: Realities, Perceptions, Politics

Mié, 05/18/2022 - 21:40 -- bacosta

Headlines are abuzz with the return of inflation, which, according to some measures, is now reaching 40 year highs. Considering that vanquishing inflation is supposed to be the one undisputed achievement of neoliberalism, why is it rising? Many explanations – from excessive money creation to disrupted supply chains to tightening labour markets and a post-lockdown surge in demand are offered.

The view that it would be a short term affair is giving way to a more sobering assessment of its persistence, particularly since geopolitical conflict gave inflation a booster shot. As for its solution, one thing is clear, dealing with it as Paul Volcker famously did in the late 1970s is not a politically affordable option for governments beholden to elites whose outrageous fortunes depend on low interest rates.

This panel will seek to examine this phenomenon by asking question such as why is inflation rising? Can we expect it persist? What are the major policy-options being discussed and what are their political implications of each? How should socialists think about this new problem?

Russia and Ukraine at war: the icing on the cake of global post-pandemic inflation

Sáb, 03/26/2022 - 00:17 -- bacosta

Since the late 2020s, the world began to experience a sustained rise in inflation that has not stopped. As the outbreak of the COVID-19 pandemic began to subside, the world experienced a sustained increase in price levels that has not stopped. The Russian military operation on Ukrainian territory has become a further force pushing up prices globally. While several commodity-exporting countries see rising commodity prices as an opportunity to improve their external economic balances, they will also have to face the pressure that prices will put on them.

Palabras clave: 

Stagflation Threat: Be Pragmatic, Not Dogmatic

Mar, 03/22/2022 - 14:56 -- bacosta

“If your only tool is a hammer, every problem looks like a nail”. Still haunted by the clever preaching of monetarist guru Milton Friedman’s ghost, all too many monetary authorities address every inflationary threat or sign they see by raising interest rates.

Friedman’s dictum that “inflation is always and everywhere a monetary phenomenon” still defines the orthodoxy. Despite changed circumstances in the world today, for Friedmanites, inflation must be curbed by monetary tightening, especially interest rate hikes.

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