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After the financial crisis of 2008, the Federal Reserve used two policies to prop up the economy: zero percent interest rates and pumping newly-created money into the economy through quantitative easing (QE). Because of 40-year-high inflation, the Fed has recently reversed policy and is raising its key interest rate target on overnight loans between banks. The Fed is also doing quantitative tightening (QT, the opposite of QE), and is withdrawing money from the economy.
Sep 6, 2022 - 08:37:56 PDT
Even a failed inflation fight could result in the economy shrinking, unemployment spiking, and asset prices crashing, Roubini said.
Cooperation between BRICS members is steadily growing, according to the Executive Dean of Chongyang Institute for Financial Studies.
Latest inflation-relief aid reportedly cannot stem economic downturn.
"Putin Has Pushed Europe Into An Inflationary Depression And Currency Collapse"Sep 6, 2022 - 08:24:02 PDT
With US markets closed yesterday for Labor Day all the action was in Europe – and given that Nord Stream 1 had been shuttered and the European Commission had floated war economy style regulations, and Russia then made clear that unless sanctions on it are dropped, no gas will *ever* flow through Nord Stream 1 again, it was no wonder Eurostoxx were down and EUR dipped below 0.99 for the first time in 20 years, as the Dollar wrecking ball momentum continued.
Trillions In "Liquidity Support Is Going To Be Needed" As Swiss, Finns Join Europe's Bailout BrigadeSep 6, 2022 - 08:22:55 PDT
As we detailed over the weekend, many companies are finding it increasingly difficult to manage margin calls, an exchange requirement for extra collateral to guarantee trading positions when prices rise...
Yields Soar As Europe Unleashes Fiscal Stimulus Tsunami Which Will Require Debt MonetizationSep 6, 2022 - 08:21:14 PDT
... on what according to Nomura's Charlie McElligott is one clear catalyst - the same one we laid out in "Europe Unleashes Energy Hyperinflation Bailout Bazooka" - namely Europe's “moment of intervention” from various euro governments with regard to the Euro Energy crisis via mega-stimulus, while a report from MNI citing “ECB sources” and stating that President Lagarde is “likely to opt for 50” bps hike only at the upcoming meeting, which is a de facto easing relative to recent expectations which have built for 75bps hike, certainly helping.
But seriously, the US U-3 unemployment rate is 3.7% in August, the lowest since Donald Trump was President and BEFORE the Covid outbreak. The Covid economic shutdown saw a surge in the unemployment rate to 14.7% in April 2020 that begat a huge spike in M2 Money growth (22% YoY in May 2022 (green line). Only now is M2 Money growth returning to Trump-era growth rates.
What drives me crazy about The Fed is their failure to removed monetary stimulus following the financial crisis of 2008 when they dropped their target rate to 25 basis points (0.25%) and began assets purchases (orange line). The Fed raises their target rate only once during Obama’s Presidency but then raised rates 8 times after Trump was elected President.
Sep 6, 2022 - 06:13:55 PDT
Gold Performance in Major Currencies, 2000-2022 YTD.
Historian Niall Ferguson Warns the World Is Sleepwalking Into an Era of Political Economic UpheavalSep 6, 2022 - 05:55:44 PDT
Historian Niall Ferguson warned Friday that the world is sleepwalking into an era of political and economic upheaval akin to the 1970s — only worse.
The euro zone is almost certainly entering a recession, with surveys on Monday showing a deepening cost of living crisis and a gloomy outlook that is keeping consumers wary of spending.
Europe’s energy crisis is getting worse, piling pressure on the commodities industries that provide building blocks for the continent’s economy.
Just months ago, the Chinese yuan was reigning supreme as emerging markets’ own haven asset, shielding investors from the turbulence of war and runaway inflation.Today, it’s turning into a threat.
Turkish inflation exceeded 80% for the first time since September 1998, as policies that prioritized economic growth and cheap lending exact a toll on the lira and price stability.
Sentiment has fallen to levels typically associated with worse financial and economic conditions than today’s.
Buy stocks now? Historically speaking, if we are in a bear market when it really comes time to buy stocks, you will not want to.
A big pandemic-era distortion in the world of finance is well and truly over -- and the new normal is helping fuel the worst cross-asset selloff in decades.
Investors who might be looking for the world’s biggest bond market to rally back soon from its worst losses in decades appear doomed to disappointment.
The US plans to sell Taiwan $1.1bn in weapons, including 60 Harpoon anti-ship missiles, as Washington steps up efforts to bolster the country’s defences as it comes under increasing military pressure from China.