America’s robust consumer economy helped it emerge as a global powerhouse. Nations once stood in line, eager to sell to America as our consumer economy composed over two-thirds of GDP. Grappling with the cost of living crisis and amid a private wave where confidence has been lost, Americans are spending significantly less but are more […]
The Federal Open Market Committee unsurprisingly voted to maintain rates at 5.25% to 5.5%. The numerous cuts others were anticipating are completely off the table, as the central bank said there might be one reduction for the year compared with their optimistic forecast made in March of three rate reductions in 2024. “In recent months, […]
John Maynard Keynes in his 1936 book, ‘The General Theory of Employment, Interest and Money,” argued aggregate demand was too volatile to be stable and would lead to inflation or recessions. His theory honed in on spending as a means of price control. Low aggregate demand, Keynes argues, would lead to high unemployment and stagflation. […]
COMMENT: It was great seeing you here in Europe. It was even more interesting to see how the central banks are starting to use the ECM rather than wait six to nine months before acting. Back in 2007, your model turned in February, but the Fed Funds Rate did not drop to 3% until one […]
Inflation can be felt at every tax bracket. Federal Reserve Bank of Minneapolis President Neel Kashkari came out this week and said the public “viscerally hates high inflation,” and for good measure. Everyone is seeing the impacts of inflation on their quality of life. Those defined as rich, the demographic one side of the […]
Government spending has consequences. The US national debt has surpassed $34.6 trillion at the time of this writing and continues to grow every minute. America has never been in a deeper deficit. The Committee for a Responsible Federal Budget (CRFB) has reported that America was forced to pay $514 billion in the first seven months […]
Federal Reserve Bank of Minneapolis President Neel Kashkari has advised against anticipating near-term rate cuts. While speaking to the Financial Times, the Fed president stated that people would simply prefer a recession to continued inflation. “I have learned that the American people—and maybe people in Europe equally—really hate high inflation. I mean, really viscerally hate […]
Some people have a very hard time understanding that we are in a massive deflationary spiral; they think that rising prices simply means it is inflation and not deflation. Then they mistake stagflation for deflation and wonder why people are spending more on less. They only see prices, not disposable income, and certainly not economic […]
The history of interest rates is provided on this site. Interest rates in a developed economy reflect the “option” value on the expected decline in purchasing power of money. If I expect it to decline by 5%, then I expect a profit, and say want 8%. You in turn will pay the 8% only if […]
All those investigating cycles within the economy made a simple mistake. Kondratieff followed agriculture/commodity prices when agriculture accounted for 70% of the GDP pre-19th century. That only began to decline from 1850 forward, dropping to 40% by 1900 as the Industrial Revolution emerged with the invention of the steam engine. Moreover, aside from climate impacting […]
