<
https://www.theguardian.com/business/2022/dec/09/raising-interest-rates-inflation-central-banks-recession>
"Central banks’ unwavering determination to increase interest rates is truly
remarkable. In the name of taming inflation, they have deliberately set
themselves on a path to cause a recession – or to worsen it if it comes anyway.
Moreover, they openly acknowledge the pain their policies will cause, even if
they don’t emphasise that it is the poor and marginalised, not their friends on
Wall Street, who will bear the brunt of it. And in the US, this pain will
disproportionately befall people of colour.
As a new Roosevelt Institute report that I co-authored shows, any benefits from
the extra interest rate-driven reduction in inflation will be minimal, compared
with what would have happened anyway. Inflation already appears to be easing.
It may be moderating more slowly than optimists hoped a year ago – before
Russia’s war in Ukraine – but it is moderating nonetheless, and for the same
reasons that optimists had outlined. For example, high auto prices, caused by a
shortage of computer chips, would come down as the bottlenecks were resolved.
That has been happening, and car inventories have indeed been rising.
Optimists also expected oil prices to decrease, rather than continuing to
increase; that, too, is precisely what has happened. In fact, the declining
cost of renewables implies that the long-run price of oil will fall even lower
than today’s price. It is a shame that we didn’t move to renewables earlier. We
would have been much better insulated from the vagaries of fossil fuel prices,
and far less vulnerable to the whims of petrostate dictators such as the
Russian president, Vladimir Putin, and Saudi Arabia’s own leader, Crown Prince
Mohammed bin Salman (widely known as MBS). We should be thankful that both men
failed in their apparent attempt to influence the US 2022 midterm election by
sharply cutting oil production in early October."
Via Murshed Zaheed and Kevin O'Brien.
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
