The once-burgeoning realm of crypto and decentralized finance keeps imploding, presenting policy makers with a quandary: Should they just let it burn, or step in to address its now-obvious flaws?
The US is headed for yet another standoff over the federal debt limit. House Republicans say they won’t raise the arbitrary cap on total borrowing unless President Joe Biden agrees to budget cuts.
In some ways, the 2023 economic outlook for the US is locked in. The Federal Reserve’s goal is to push the rate of inflation back down to 2% over the next few years.
Some people are suggesting that the Federal Reserve consider a compromise in its battle with rising prices: Instead of imposing the full monetary tightening required to get inflation back down to its 2% target, why not increase the target a bit?
All financial manias have some features in common.
Federal Reserve officials have been getting an earful about the economic threat that the US central bank’s rapid monetary tightening presents to the rest of the world — complaints that will no doubt be amplified at this week’s meetings of the International Monetary Fund and the World Bank.
Could a disruptive cash crunch ensue, along the lines of what happened in money markets a few years ago?
Nearly a year ago, when US Federal Reserve Chair Jerome Powell delivered his speech at the annual economic conference in Jackson Hole, a global audience was hanging on every word for insights into the outlook for growth, inflation and monetary policy in an extremely uncertain environment.
If you’re still holding out hope that the Federal Reserve will be able to engineer a soft landing in the US economy, abandon it.
Digital finance is booming, with the value of cryptocurrencies outstanding reaching more than $2 trillion from almost nothing a decade ago – almost entirely without regulatory oversight to protect investors and the broader financial system. This is not likely to end well, unless officials intervene in a thoughtful way.
The U.S. Federal Reserve has bitten the bullet: At their policy-making meeting next week, in recognition of persistent high inflation, officials will announce a speedier tapering of asset purchases that have been supporting economic growth.
Investors are increasingly betting that the Federal Reserve will have to raise interest rates sooner than previously expected to keep inflation in check. A few months ago, futures prices implied that “liftoff” from the current near-zero level wouldn’t occur until 2023 or later; now they suggest it’ll happen near the middle of next year.