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9 Out of 10 Economists Recommend Inflation
What the U.S. economy may need is a dose of good old-fashioned inflation.
So say economists including Gregory Mankiw, former White House adviser, and Kenneth Rogoff, who was chief economist at the International Monetary Fund. They argue that a looser rein on inflation would make it easier for debt-strapped consumers and governments to meet their obligations. It might also help the economy by encouraging Americans to spend now rather than later when prices go up.
“I’m advocating 6 percent inflation for at least a couple of years,” says Rogoff, 56, who’s now a professor at Harvard University. “It would ameliorate the…
20May2009 | The Real Deal | 0 comments | ContinuedWeak Exports and Domestic Spending Declines Push Eurozone to the Recessionary Brink
The Eurozone economy recorded its first decline in more than a decade as slowdowns in the European Union’s largest economies dragged on gross domestic product (GDP).
The Eurozone economy, which covers the 15 nations that share the euro currency, contracted 0.2% in the second quarter, as a 0.5% decline in Germany and a 0.3% decline in France offset gains in the smaller economies of Austria, Portugal and Spain, Eurostat, the European Union’s official statistics office, announced yesterday (Thursday).
The decline marks the Eurozone’s first contraction since 1996, when the euro was introduced and Eurostat began tracking the data.
While declining to speculate on…
15Aug2008 | Money Morning | Comments Off | ContinuedA Tale of Two Countries
The world of Round Hill consists of two distinct countries with two distinct economies separated by one gigantic ocean. The sun rises on the Independent Republic of Hamlin in the east and sets on the Democratic Nation of Stuart in the west. For more than 200 years, free trade, low taxes, open markets, stable currencies and minimal government intervention benefited all. The citizens of Stuart and Hamlin prospered.
One day, a fertile iron mine in the heart of Stuart runs out of ore. So Hancock Steel, the nation’s largest integrated steel producer, must turn to other sources. Unfortunately, the next great domestic…
12Jun2008 | Whiskey and Gunpowder | Comments Off | ContinuedBetter Than Expected Economic Reports Signal the Economy Could Be Ready for a Fed on Pause
The U.S. economy shed 20,000 in April, the Department of Labor announced in its monthly employment summary, bringing total unemployment up to 5% from 5.1% last month.
“We are in a recession, this report doesn’t change that,” Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, told Bloomberg News. Zentner had forecast a payrolls cut of 25,000. “What it does is support the idea that the downturn will be mild. Consumer spending isn’t going to tank.”
Compared to the 240,000 jobs the domestic labor market shed in the first three months of the year, 20,000 is a marked…
5May2008 | Money Morning | Comments Off | ContinuedWith a Rate Decision, GDP Report Due Today, the Fed Walks the High Wire Again
If U.S. Federal Reserve policymakers make the expected quarter-point rate cut at the end of their meeting today (Wednesday), the impact will be felt well beyond U.S. borders.
Indeed, the interest-rate reduction could set in motion a series of diverse global events that will impact such seemingly unrelated areas as European inflation, global food prices, the U.S. dollar, American exports, and the already chilly relationship between the European Central Bank (ECB) and the government of France.
For any of this to happen, however, the Fed first has to act. Most observers believe the U.S. central bank’s policymaking Federal Open Market Committee (FOMC) will…
30Apr2008 | Money Morning | Comments Off | Continued
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