Heiner Flassbeck and I look at the interest rate hike by the ECB on 2 February 2023. Read an english version of our comment.
Kategorie: Englisch
Globalisation à la carte?
(first published in German in “Freitag”, 20 January)
Globalisation has become the talk of the town. People no longer want to be so dependent, many say. In future, one cannot simply rely on the efficiency gains of globalisation, say others. It must be possible to produce all important products at home, most believe. Only in the case of raw materials that we do not have, politicians in industrialized countries argue, we would like to keep the markets open at all costs.
Globalisation à la carte, so to speak, is what people and politics in the industrialised countries want. After the total globalisation that the global North offered the global South in the 1990s, now selective globalisation, in which everyone is careful not to become too dependent.
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Terra and Luna – or how the moon destroyed the earth
Can there be a better business in this world? One claims to be a computer genius and to have understood that the currencies of this world issued by the states are unstable, inflation-prone and in general threatened with extinction because they are far too inflexible with their national limitations on the one hand and too centralistic on the other. Consequently, they would create a currency themselves that would be available to everyone and could be used globally at any time. Because something like this already exists in the form of Bitcoin, whose wild fluctuations do not exactly distinguish it as a “currency,” they claim to have created a cryptocurrency that has a fixed exchange rate to the U.S. dollar.
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Prices and the Market Economy
Inflation continues to be on everyone’s lips. At 7.4 per cent, a rate was reached in April this year that is almost unique in the history of the Federal Republic of Germany. Only in the early summer of 1973, around the turn of the year 1973/1974 and in October 1981 was the rate of increase in the consumer price index higher than at present. The pressure on the ECB to respond with interest rate hikes is growing daily. At the same time, the proponents of a tighter monetary policy fail to provide a plausible explanation as to how and with what macroeconomic consequences interest rate hikes can bring the current price increases for imported commodities to a halt.
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Eastern Europe and Russia – The economic disaster we created is forgotten
Robert Habeck’s first annual economic report: Manipulation is not yet economic policy
Sometimes 13 does bring bad luck. At any rate, for Robert Habeck, Federal Minister for Economic Affairs and Climate Protection, Chart 13 in the Federal Government’s Annual Economic Report for 2022, which he has just presented to the press, is not a stroke of luck, to say the least. It shows that the BMWK, as he calls himself, is making the climate his big issue, but is unmistakably walking on the shaky wooden paths of his predecessors when it comes to the economy. What the BMWK does not (yet) understand: Those who cannot master the economy will also fail in climate protection.
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Saluting the ECB
Just imagine that the European Monetary Union (EMU) had never existed, the European Central Bank (ECB) had never been founded, Germany was still directed by the Deutsche Bundesbank in monetary matters, and there were the same post-pandemic shortages and the same speculation-induced price increases for individual products as at present. What a disaster that would be!
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Eastern Europe: The Forgotten and Misunderstood European Hinterland
Eastern Europe has become the talk of the political town. While it was hoped in Western Europe that the region would become a new power house in Europe after the Great Reunification in the early 1990s, from which the West would then also benefit, disappointment now prevails. The region is characterized by the emigration of many workers, the dominance of Western companies and enormous political instability, even open turning away from Europe. What has happened?
Eastern Europe: The Forgotten and Misunderstood European Hinterland weiterlesenHas the debt brake proven its flexibility?
English version of our article:
https://www.flassbeck-economics.com/has-the-debt-brake-proven-its-flexibility
Light and shadow – the new goal of European monetary policy
The realignment of the European Central Bank’s (ECB) monetary policy target resembles a revolution: After twenty years, the Central Bank Council has changed the target figure on which monetary policy is based and against which it wants to be measured. From now on, the inflation rate targeted for the euro zone will no longer be „below but close to two percent“, but two percent in the medium term. And it has done so in such a way that deviations from this target rate, both upward and downward, are equally undesirable, as the statement on the ECB’s monetary policy strategy puts it. This means that if the actual inflation rate in the euro area is below the target rate, this is considered just as negative as if the inflation rate is above the target rate.
Light and shadow – the new goal of European monetary policy weiterlesen