In Liz We Truss

vimothy

yurp
across the globe central banks are tightening in response to inflation caused in the main by energy and food price shocks, which cannot be ameliorate by raising interest rates. this tightening is causing a massive appreciation in the dollar and a global sell-off of non-dollar assets in response, the end state of which - assuming nobody blinks first - is a 2008 style financial crisis and a deep global recession.
 

vimothy

yurp
i think it goes without saying but the tax cuts for bankers are unjustifiable and heinous and the truss govt is about as tone def as it's possible to be, however, unfortunately, we have bigger problems
 

vimothy

yurp
this insane global ping pong between too loose and too tight has to end. monetary policy alone cant solve the inflation problem when the cause isnt excess demand but supply bottle-necks in the energy market, so stop yanking on the lever like a crazy person
 

vimothy

yurp
also due to "exorbitant privilege" we need some kind of coordination bw central banks, current set up is a recipe for disaster
 

luka

Well-known member
what are interest rates? what happens when you raise them? what happens when the fed in particular raises them?
 

vimothy

yurp
they're the relative return on a particular currency. when the fed raises rates, they raise the relative return on the dollar making it v attractive vs other currencies, hence why the dollar is appreciating vs every other currency, which is a problem when your financial system is financed with dollars
 
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