Economics Nerd Central/ The Global Inflation Thread

How bad boy

Full Member
The E.U. continuing to let the U.S. take the lead and do all the heavy lifting on global inflation but Americans are now spending 5% more than pre-C-19 as sales rise.
I hope I'm wrong, but it very much appears that the ECB are delaying on inflicting inevitable pain, making it more likely the problem will go from chronic to acute.

I think most people don't realise how weird the current interest rates are:
MM17_U.S._Interest_Rate_Shareable-2-1000x600.jpg


It's almost certainly what's driving insane property prices, folks tend to be pretty terrible at looking out too far in the future. a €500,000 mortgage only accumulates €10k in interest at 2% interest, which is generally fine for most people.
For almost all of the 70s, 80s and into the 90s, interest rates in Ireland were well above 10%, which is racks up €50k a year in extra interest costs on that €500,000.


Not saying interest rates are about to go above 10%, but applying the Taylor Rule, they really should be well over that mark by now. Giving Ireland a long term trend GDP of 4%, using the Taylor Rule, interest rates should be 14.25%*




*r = p + 0.5y + 0.5(p - 2) + 2
Where:
  • r = nominal fed funds rate
  • p = the rate of inflation
  • y = the percent deviation between current real GDP and the long-term linear trend in GDP

r= 9.1 + 0.5 * (4-4.8) + 0.5 * (9.1 - 2) + 2
 

How bad boy

Full Member


As expected, Bank of England rate up by 0.5%, I fully expect it to keep going up for at least the next 6 months, inflation to hit 13% this autumn.

They're predicting an absolute shitstorm:
The longest recession since 2008 would begin by the end of this year, it added, with the economy contracting throughout 2023. The prolonged downturn is expected to push the unemployment rate from 3.8% to 5.5% by 2024, and will feature a record fall in living standards next year.

In a blow to the next prime minister’s ambitions to grow the economy, the Bank said gross domestic product would contract by 2.1% over five consecutive quarters to leave the UK growth rate negative in both 2023 and 2024.
...
In a review of the economy, the Bank said the UK would emerge from recession before the next election in 2024. But that by then living standards would have fallen by 5%, the biggest decline since records began in the 1960s, the Bank said.



Liz Truss bocht :(

2136219a179577f40515f8d149d56c20_w200.gif
 


As expected, Bank of England rate up by 0.5%, I fully expect it to keep going up for at least the next 6 months, inflation to hit 13% this autumn.

They're predicting an absolute shitstorm:
The longest recession since 2008 would begin by the end of this year, it added, with the economy contracting throughout 2023. The prolonged downturn is expected to push the unemployment rate from 3.8% to 5.5% by 2024, and will feature a record fall in living standards next year.

In a blow to the next prime minister’s ambitions to grow the economy, the Bank said gross domestic product would contract by 2.1% over five consecutive quarters to leave the UK growth rate negative in both 2023 and 2024.
...
In a review of the economy, the Bank said the UK would emerge from recession before the next election in 2024. But that by then living standards would have fallen by 5%, the biggest decline since records began in the 1960s, the Bank said.



Liz Truss bocht :(

2136219a179577f40515f8d149d56c20_w200.gif
Average income levels going back to almost 20 years ago.
1659628555160.png


The Tories will probably just blame the Bank of England and promise to dismantle it.
 
Current Mortgage boycott in China has all the hallmarks of the 2008 crash. People paying for mortgages of unfinished properties is madness with the promise of the property would increase in price. Ponzi scheme.
 

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