In part one of my analysis of China’s economic future, I dealt with the claims that China would slow towards stagnation because its investment rate was too high, the working population was falling fast and the economy needed to become like mature Western capitalist economies based on consumption-led growth. I argued that the Western capitalist […]China: Xi’s third term – part two: property, debt and common prosperity
Will global inflation subside?
“El riesgo de una recesión global absoluta está aumentando. Si los bancos centrales continúan aumentando sus tasas de política, todo lo que hará será aumentar el costo de los préstamos para los consumidores y las empresas, lo que llevará a las empresas más débiles a la bancarrota y suprimirá la demanda en todos los ámbitos. Claro, eso finalmente puede reducir la inflación, pero solo a través de una depresión.”
Imagen tomada del Banco Mundial.
Is the global inflationary spiral peaking? And if it is and inflation is set to fall over the next year, then has the inflation scare been just a momentary blip and now things will start to turn back to the previously low pace of inflation in the prices of goods and services?
That seems to the view of investors in financial assets in the US, where the stock market has rallied by as much as 20% from lows in mid-June; and both government and corporate bond yields have steadied. Markets seem to believe in what is called the ‘Fed pivot’, where the US Federal Reserve, having hiked its policy rate aggressively since April, will now start to end its hikes going into 2023 as inflation subsides.
Certainly, there is some evidence of peaking inflation in the US where the consumer price inflation (CPI) rate slowed more than expected in July…
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Has globalisation ended?
Apart from inflation and war, what grips current economic thought is the apparent failure of what mainstream economics likes to call ‘globalisation’. What mainstream economics means by globalisation is the expansion of trade and capital flows freely across borders. In 2000, the IMF identified four basic aspects of globalisation: trade and transactions, capital and investment movements, migration and […]Has globalisation ended?
In several previous posts, I have highlighted what are called ‘zombie’ companies (companies whose regular profits do not even cover the cost of servicing their outstanding debts) and so must, to paraphrase former BoE governor Mark Carney, depend on the kindness of their creditors”. An OECD study found that such zombies take up a frighteningly […]Fallen angels
The three contradictions of the Long Depression
One of my basic theses about modern capitalism is that since 2008, the major capitalist economies have been in what I call a Long Depression. In my book of 2016 of the same name, I distinguish between what economists call recessions or slumps in production, investment and employment; and depressions. Under the capitalist mode of […]The three contradictions of the Long Depression
A world rate of profit: important new evidence
Marx’s law of the tendency of the rate of profit to fall (LTRPF) has either been heavily criticised or ignored as being an irrelevant explanation of crises under capitalism, both theoretically and empirically. The critics are not from mainstream economics, who generally ignore the role of profit in crises altogether. They partly come from post-Keynesian […]A world rate of profit: important new evidence
Books of the year
This is not a review of the best books of the year, but a reminder of the books that I have reviewed during 2021. In this second year of COVID, let’s start with Adam Tooze’s Shutdown. Tooze is the liberal left’s current favourite historian. And Tooze is the ultimate ‘historian of the moment’. By that […]Books of the year
The Fed, interest rates and stagflation
“The economy has made progress toward employment and inflation goals and if progress continues broadly as expected, a moderation in the pace of asset purchases may soon be warranted”, the US Federal Reserve officials said in their September monetary policy statement. The Fed also signalled interest-rate increases may follow more quickly than expected, with 9 […]The Fed, interest rates and stagflation