Tag: inflation

GeopoliticsLeave a comment

War in the Middle East takes hold of the global economy

Colin Henderson

Venezuela, Greenland, tariffs, the Supreme Court, and now fresh instability in the Middle East. 2026 has been developing at warp speed so far, and it’s hard to keep up. Still, in this fast-moving environment, questions are – understandably – arising over what the economic implications of the US-Israeli war with Iran will be. The honest answer would be a typical economist’s response: it all depends. It all depends on how long the war will last, whether some semblance of political stability can emerge in Iran, and, most importantly, how long the Strait of Hormuz will be disrupted.  In our base … Continue reading War in the Middle East takes hold of the global economy

banking, Economics, sociology

Ancient Rome Survived High Inflation – Bloomberg

Colin Henderson

I came across this wonderful piece on inflation and beating it. Nothing is new in the world. Source: Bloomberg 2024 – Bloomberg membership required. _________________________________________________________ Ancient Rome Survived High Inflation. We Can, Too There was more to life in the empire than gore, sex and succession. The economic challenges look similar to our own — with a big dose of brutality.  July 2, 2024 at 3:00 PM EDT By Daniel Moss Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously, he was executive editor for economics at Bloomberg News. Worried that inflation is coming down too gradually? The Romans had a … Continue reading Ancient Rome Survived High Inflation – Bloomberg

AI, AI_research, Economics

The paper “Transformative AI, existential risk, and real interest rates” by Trevor Chow, Basil Halperin, and J. Zachary Mazlish (August 2025)

Colin Henderson

Summary of Key Argument The core thesis of the paper is that macro-financial indicators—specifically, long-term real interest rates—can serve as a market-based “outside view” for forecasting the likelihood and timing of transformative AI (TAI, roughly equivalent to AGI or “superintelligence”) development. The mechanism underpinning this association is straightforward economic theory: Empirically, the authors find—contrary to some prior literature—a robust positive relationship between long-term growth expectations and real interest rates, using: Key Findings and Contributions Topic Paper’s Position & Evidence Interest rates as a forecasting tool Theoretically, both AI-driven rapid growth and existential risk should increase long-term real rates. Empirical evidence … Continue reading The paper “Transformative AI, existential risk, and real interest rates” by Trevor Chow, Basil Halperin, and J. Zachary Mazlish (August 2025)

Economy, Growth, US

Monetary Policy 5 Yr Fed Framework Review

Colin Henderson

August 22, 2025 Chair Jerome H. Powell At “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy,” an economic symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, WyomingWatch Live Over the course of this year, the U.S. economy has shown resilience in a context of sweeping changes in economic policy. In terms of the Fed’s dual-mandate goals, the labor market remains near maximum employment, and inflation, though still somewhat elevated, has come down a great deal from its post-pandemic highs. At the same time, the balance of risks appears to be shifting. In my remarks today, … Continue reading Monetary Policy 5 Yr Fed Framework Review

Economics, Economy, Growth

Federal Reserve Consensus Review – August 2025

Colin Henderson

Source: perplexity.ai Key Outcomes of the 2025 Policy Framework Review Interest Rate Policy and Immediate Outlook Economic Context Strategic Shifts Consensus Summary Table Aspect 2025 Review Outcomefederalreserve+2 Rate Policy Expectationsforbes+3 Framework Philosophy Flexible inflation targeting, balanced dual mandate, anchored expectations Early signals for 1-2 cuts (25bp each) in H2 2025 Inflation Target Remains at 2%, no change June: 2.7% headline, 2.9% core Employment Target No numeric goal; balanced approach Rate cuts contingent on labor weakness Current Rate Not addressed in review 4.50% (August 2025) Consensus Forecast Strong chance of September cut, possible December follow-up Rates trend to 3.75% in 2026, … Continue reading Federal Reserve Consensus Review – August 2025

Uncategorized

Inflation or no inflaton coming | Econobrowser

Colin Henderson

James at Econobrowser always offers insightful views on the economy. This post deals with the prospect for the current hot topic, of inflation or not. My read is that earlier inflation is the more likely prospect, given sectoral imbalances are more likely than not. Will stimulating nominal aggregate demand solve our problems? My personal view is that real-world unemployment arises from the interaction of sectoral imbalances with frictions in the wage and price structure of the sort documented by Truman Bewley and Alan Blinder. The key empirical test, in my opinion, is at what point inflationary pressures begin to pick … Continue reading Inflation or no inflaton coming | Econobrowser

Economy, US1 Comment

No consumer driven economy in US | Geithner in China

Colin Henderson

Some important messages within Geithners speech in China today that paint a very different next few years compared to the last 10, and as the ‘G2’ move to manage a transition the American economy into one that is very different, yet stable.  And all this to be managed against the backdrop of  the fear of eventual inflation, which would devalue foreign holdings in US T-Bills, something China is acutely aware of. These macro factors will play a large role in US banks and credit unions strategy design for the next 5 years. no consumer purchase driven economy in US – … Continue reading No consumer driven economy in US | Geithner in China

Uncategorized2 Comments

Inflation will follow the recession and the law of untended conseqeunces

Colin Henderson

Something that has been niggling at me here and here is the law of unintended consequences.  The people architecting the financial stimuli today are first politicians and second relatively young living their maturity post the late 70’s early 80’s. The key statement in this article is at the end, and it was quoted by Geithner today too – that this borrowing is temporary and will be repaid as soon as things are back to normal.  Please stand up if you know: when normal is expected to resume that we will be able to repay the debt at that time?  [ … Continue reading Inflation will follow the recession and the law of untended conseqeunces

Innovation, Uncategorized1 Comment

Bailout or buy some time while industrial disruption occurs for auto, banks and telco sectors

Colin Henderson

I have found myself reading more economics blogs over the last couple of years, trying to understand better what is going on and the impacts of the banking crisis. This blog, StumblingandMumbling is worth the subscription. It is insightful, and contrary enough to provoke thinking. It also happens to articulate things that I cannot help thinking about. Recession or Inflation targeting 2. The cost of recession isn’t just unemployment hitting a few hundred thousand, but the fear of unemployment hitting millions. But this fear exists even in normal times, because the job destruction rate is so high. The 25,000 jobs … Continue reading Bailout or buy some time while industrial disruption occurs for auto, banks and telco sectors