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The Fed has lost credibility with markets. We have heard this chorus before, but fixed income markets (among others) continue to validate it. For Barron’s, Stephen Miran explores why the Fed cannot dissuade markets from pricing in short-term rate cuts. In 2020, the Fed adopted a new policy framework that abandoned its traditional task of preempting inflation; it instead would tolerate more inflation, and the low-interest government borrowing that came with it.
As the Fed has raised rates in response to inflation, regional banks have buckled. In addition to the unquantified knock-on effects on the country’s financial system, regional bank challenges pose a threat to commercial real estate, which is typically financed by a loan from a regional bank. Meanwhile, the “return to the office” has failed to materialize
Biden Will Find That Breaking Up with China Is Hard to Do
Hal Brands | Bloomberg Opinion The essential challenge of America’s economic relationship with China is to reap the rewards of interdependence while limiting the vulnerabilities. Hal Brands shows that President Joe Biden’s strategy of decoupling has little chance of being as controlled or immaculate as the administration suggests. First, Congress gets a vote and is messaging that Biden’s strategy is too timid. Next, economic coercion is a two-way street, and China may envision a more thorough decoupling than Biden seeks. Lastly, decoupling is a dynamic process; the deteriorating economic relationship could easily take on a momentum of its own, and tensions in one part of the relationship will spill over into others. Learn more here. >>
Principles and Policies for Competition
Michael Mazza | American Enterprise Institute The United States and the People’s Republic of China (PRC) are in an adversarial relationship and strategic competition. Michael Mazza argues that this is due to the incompatibility of US and PRC visions for global order and the PRC’s rise as a global power. To secure a preponderance of power for the US-led coalition, the United States should abide by nine guidelines as it continues its rivalry with China. These guidelines include investing in American power, developing a deeper understanding of China, supporting liberalism and democratic allies, securing leadership in international organizations, and denying China the means to aggrandize its own power. Going forward, these guidelines should steer US policy throughout the adversarial relationship. Read more here. >> |
SOLZHENITSYN & HAYEK: NOBEL PRIZE; BOTH MEN DEFEATED POSITIVISM.
AuthorAn authority on Southwest Asia political economy, and international columnist. covering 'the long war'. 
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