Stagflation: a demand or supply side story?

The semi-annual meetings of the IMF and World Bank start today where finance ministers and central bankers will meet in slimmed-down but in-person gatherings in Washington.  This meeting is likely to be overshadowed by the scandal involving the IMF chief Kristalina Georgieva, who may well have been forced to resign as I write after a

The Fed, interest rates and stagflation

“The economy has made progress toward employment and inflation goals and if progress continues broadly as expected, a moderation in the pace of asset purchases may soon be warranted”, the US Federal Reserve officials said in their September monetary policy statement. The Fed also signalled interest-rate increases may follow more quickly than expected, with 9

Deflation, inflation or stagflation?

During the year of the COVID, global consumer and producer prices inflation dropped. In some manufacturing-based economies, there was even a fall in price levels (deflation) eg the Euro area, Japan and China). US inflation rate (annual %) “Effective demand” as Keynesians like to call it, plummeted, with business investment and household consumption dropping sharply. 

The crisis of democratic capitalism

In his latest book, FT columnist and Keynesian guru Martin Wolf, starts from the premise that capitalism and democracy go together like a hand in a glove.  But he is worried.  “We are living in an age when economic failings have shaken faith in global capitalism. Some now argue that capitalism is better without democracy;

Davos 23: going pear-shaped

This week, the jamboree of the rich global elite of the World Economic Forum (WEF) has started again after the COVID interregnum.  Top political and business leaders have flown in on their private jets to discuss climate change and global warming, as well as the impending global economic slump, the cost of living crisis and

Can global capitalism endure?

Can global capitalism endure?  William Robinson tries to answer this question in his book entitled with the same question. Robinson is professor of sociology at the University of California, Santa Barbara. In a fast-moving account, Robinson covers a lot of ground in offering the reader a vision of the global capitalist crisis and the accompanying

Will global inflation subside?

Is the global inflationary spiral peaking?  And if it is and inflation is set to fall over the next year, then has the inflation scare been just a momentary blip and now things will start to turn back to the previously low pace of inflation in the prices of goods and services? That seems to

Europe: caught in a trap

The major economies are moving closer to recession, if they are not already there; and yet inflation rates continue to rise (for now).  The latest surveys of business activity, called Purchasing Managers Indexes (PMIs), show that both the Euro area and the US are now in contraction territory (i.e. any level below 50).  The composite

A tightening world

It’s been a big week for the major central banks. First, the European Central Bank (ECB) called an emergency meeting because government bond yields were rising sharply in the more indebted Eurozone economies like Italy and Spain.  That threatens to deliver a new sovereign debt crisis as happened after the Great Recession from 2010-2014, leading

The scissors of slump

Last week, US Treasury Secretary Janet Yellen told the US Congress that “We now are entering a period of transition from one of historic recovery to one that can be marked by stable and steady growth. Making this shift is a central piece of the President’s plan to get inflation under control without sacrificing the