Saturday, September 30, 2023

The West doesn’t know how to stop the economic debacle

As Federal Reserve Chairman Jerome Powel considers raising interest rates further, a report from Nomura warns that the institution has lost its power against inflation. Meanwhile, the President of the European Central Bank, Christine Lagarde, admits that she was unable to assess inflation and underestimated its dynamics.

Jerome Powell recently said: “We stand ready to raise interest rates further if necessary, and we intend to keep monetary policy at a restrictive level until we are confident that inflation is moving sustainably towards our target.”

In this sense, the latest Nomura report notes that the Federal Reserve’s (Fed) most powerful weapon against inflation is rusty, warning that this financial institution has “lost its power against inflation” and therefore expects many more rate hikes.

“It is doubtful whether the measures applied are really restrictive. It is true that interest rates have increased, but they are below the rate of inflation. Now they are more or less at the level of inflation, but of course at the federal level.” “Reserve interest rates of 5% with inflation of 5% are real zero interest rates (0%),” notes the president of Ekai Center Consulting, Adrián Zelaia.

“We are in a really objective situation where these measures have not been really aggressive in fighting inflation,” emphasizes the analyst.

“Given the level of over-indebtedness we have (in the West), small interest rate increases can cause serious problems for all those companies that are over-indebted, families that are over-indebted and governments that are over-indebted.”

Meanwhile, European Central Bank President Christine Lagarde has admitted that Europe is facing “unique” inflation that not even the institution under her authority has been able to assess.

“It is important for us to recognize that, like other central banks, we underestimate both the dynamics of inflation and its persistence,” said the banker this Monday during her participation in the Distinguished Speakers Seminar organized by the European Economic and Financial Center became. , which takes place in London.

Did they want independence?

In this context, the European Union boasts of being almost completely independent of Russia’s energy resources, which was confirmed in a recent Eurostat report. But what they do not say with the same ease from Brussels is, in the truest sense of the word, the price that citizens pay and the prospects that this whole panorama offers.

The report published by Eurostat indicates that the amount of Russian oil imported by the countries of the Community bloc fell from 29.2% in 2021 to 2.3% at the end of June this year, while the amount of gas fell from 38% is. 5 to 12.9% in the same period.

“Europe has suffered major price shocks. Let’s remember that a year ago the cost of gas in the EU was 2,000 euros or more. It turns out that the price of ‘eliminating dependency’ is around a trillion euros. This is it “This independence from Russian energy sources comes at a cost,” said the director of the Russian Energy Development Fund, Sergei Pikin.

“The guidelines developed last year (in Europe) are absolutely absurd. This is particularly surprising when it comes to measures that immediately, a month or two months after their adoption, turned out not to meet expectations. “Their targets are theorists who harm the Russian economy,” said Adrián Zelaia .

“In practice, this resulted in minor damage being done to the Russian economy, enormous damage to the European economy, and great benefits to the North American economy. These measures were not corrected, but maintained and supplemented by other new measures.” had the same effects. And we’ve been in this crazy dynamic for a year and a half now,” he concluded.

Nation World News Desk
Nation World News Desk
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