Finance, Currency, Debt, National Budgets & Interest Rates

October 4, 2022—For years, the policy wonks and heads of government departments told the public that the U.S. national debt didn't matter because borrowing costs were so low. Now, as the Federal Reserve leads central banks in raising interest rates, the price of debt suddenly matters. For the first time, the U.S. debt topped $31 trillion, U.S. Treasury reports. That's up from $16 trillion in 10 years. Moreover, that figure is set to rise. For one, Congress keeps spending more than it is taking in with revenues. By August, the government ran a budget deficit of $944 billion during the first 11 months of the fiscal year, the Congressional Budget Office reported. Here's a look at the FY2022 budget. Source: Treasury, August Monthly Statement Rising Costs of Deficits and Debt ...

Once Dismissive Of Inflation, Fed Chair Draws Lessons About Economy From the 1970s September 13, 2022--One might guess that a fraction of a number like 0.1 would have little impact on the global economy. But that guess would be wrong. Today, the U.S. markets took a nose dive, and it was a fall unlike any other since June 2020. The S&P 500 fell 4.3 percent, while the tech-heavy NASDAQ fell 5.16 percent. It all came in response to inflation figures for August, and that's where the figure 0.1 matters. Inflation Holding Strong Economists had expected the inflation figure to drop by 0.1 percent for August. Instead, it rose by 0.1 percent. That means all items the Bureau of Labor Statistics tracks rose 8.3 percent for the year. According to the BLS release, food, shelter, and medica...

Central Bank To Leave Some Interest Rates Unchanged While Raising Others By 0.25 Photo by Pixabay on Pexels.com With worsening supply-chain disruptions and inflation in Europe rising to 8.1 percent, the European Central Bank is planning to taper its massive monetary stimulus policies. On July 1, the ECB plans to raise its set of interest rates by 25 basis points. ECB President Christine Lagarde signaled the bank would do so again in September if needed. The bank will also stop net asset purchases. The bank said its approach is one of "gradualism." "I think in times of great uncertainty, gradualism is probably appropriate, more so than if the path is clear, well-identified and we all understand where we are heading," Lagarde said. In line with that, the bank is leaving some ...

Fund Is Likely To Make A 'Significant' Downgrade For Global Growth Photo by Burak Kebaber on Pexels.com June 8, 2022—Less than two months after adjusting its economic forecast downward due to global fragmentation, the International Monetary Fund is poised to make another reduction when it releases its forecast next month. Moreover, the fund expects to make a "significant" downgrade for global growth, Gita Gopinath, IMF's first deputy managing director, said today. Her comments came during a conversation with the Financial Times's Martin Wolf at that paper's Global Boardroom conference. 'Very Risky' Times In contrast to an analysis by the World Bank, the IMF is not envisioning 1970s-like stagflation as a central possibility. However, negative growth rates in Europe is possibl...

No Curveballs Or Surprises In Fed's March Meeting March 16, 2022—For the first time in three years, the U.S. Federal Reserve raised its Fed Funds Rate. The 0.25 percent change is the minimal increase it could take. Moreover, it comes as no surprise to the public or to financial markets, That's because the Fed previously announced its plans to begin increasing rates. Since the U.S. economy emerged from the pandemic with strong growth, many analysts criticized the Fed for moving too slow to raise rates as the U.S. prices rose. As the economy reopened from the pandemic, the inflation rate increased steadily to nearly 8 percent a year. "The time for rate increases has clearly come," Fed Chair Jerome Powell said in his video meeting with reporters today. "We have to restore price stabi...

March 10, 2022--The Consumer Price Index increased to 0.8 percent in February, bringing the annualized inflation rate to 7.9 percent, the Labor Department reported today. The goods with the highest price increases include gasoline, shelter and food. Gas prices rose 6.6 percent in February alone and are continuing to rise. They increased 38 percent for the year. Meanwhile, energy services, such as electricity and utility, rose 43 percent over a 12-month period. Also, the index for food prices experienced the largest monthly jump of 2.3 percent since March 2010. The inflation figures are likely to factor into the Federal Reserve's decision-making meeting on March 15-16. The next release date for inflation figures is April 12.