Links on the Chinese reaction to tariffs, economic problems in Italy, the dangers of monetary offset for shares, and the importance of voter turnout for the midterm US elections.
Albert Edwards says the Fed will tighten more aggressively. The increase in interest rates will be a stimulant at first. But eventually, the higher rates will catch up with debtors.
With the Fed already on notice about inflation because of “low, low unemployment”, massive amounts of new deficit spending will only move up their timetable. And bond rates will rise as a result.
When defaults begin to rise and the economy begins to slow, we will find out whether deficits really drive rates higher or cause inflation to rise and remain high.
The working economic model in North America and Europe is one in which the central bank and the fiscal agents are working at cross-purposes, with the central bank doing the heavy lifting if stimulus is desired.
While the UK economy did better than predicted in 2016 in the immediate aftermath of the referendum vote on leaving the European Union, growth has since stalled and inflation has risen. Beginning in January, I have been saying that risks…