Featured
The New York Times logo

The First Global Deflation Has Begun, and It’s Unclear Just How Painful It Will Be

Around the world, rapid economic recovery from the Covid shock unleashed the largest wave of inflation we have seen since the early 1980s. In response, in the summer of 2021, central banks began raising interest rates. Brazil led the way. In early 2022, the Federal Reserve joined in, unleashing a bandwagon effect: Once the Fed moves and the dollar strengthens, other countries either raise their interest rates or face a sharp devaluation, which further stokes inflation. The outline of this pattern is familiar. But the breadth is new. We now find ourselves in the midst of the most comprehensive tightening of monetary policy the world has seen. While the interest rate increases are not as steep as those pushed through by Paul Volcker as Fed chair after 1979, today’s involve far more central banks. There are moments when history-making creeps up on you. This is one of those moments. As far as the advanced economies have been concerned, the era of globalization since the 1990s has been one of disinflation and monetary expansion by central

Read More »
The Guardian Logo

What is Kwasi Kwarteng really up to? One answer: this is a reckless gamble to shrink the state

In the US they call it ‘starving the beast’ – cut taxes and, as revenue decreases, you create irresistible pressure for austerity Markets have delivered a devastating judgment on Kwasi Kwarteng’s tax-cutting mini-budget. The pound has collapsed to historic lows. And investors have sold UK government debt, driving the price of bonds down and the effective interest upwards at a rate not seen since the currency crises of the 1950s. The combination of the two is particularly worrying because it signals what some fear could become a comprehensive loss of confidence in the pound and UK assets. You might ask how it could be otherwise. How did the government expect the markets to react when it followed a giant energy crisis-fighting package, roughly costed at £150bn, with a further £45bn in tax cuts that primarily benefit the rich? It also delivered this news at a time when inflation is running faster than at any point since the 1970s and flouted the need for vetting by the Office for Budget Responsibility. What did it expect? Astonishingly,

Read More »
Foreign Policy Logo 'FP'

The United States Is Fighting Inflation With History

Fed chief Jerome Powell wants the world to understand his present decisions are guided by past traumas. At the annual gathering of central bankers and economists in Jackson Hole, Wyoming, this year, all eyes were on U.S. Federal Reserve Chair Jerome Powell. Last year at the Jackson Hole conference, Powell had announced a new era in economic policy. This was premised on the assumption that we were in an era of low inflation. The Fed would, in the future, target average inflation, offsetting periods of low inflation below 2 percent per year with periods of more rapid price increase. Today, that world seems very remote. Inflation in the United States is running at more than 8 percent, the most rapid rate since the 1970s. Given this extraordinary turnaround, Powell needed to signal that the Fed was serious about stopping inflation. How to make the case? Jackson Hole is a meeting of central bankers and economists. But in making his stand, Powell invoked neither economic theory nor econometrics. Instead, he summoned history. He gave a speech

Read More »
Ones&Tooze Logo Green background with Adam wearing headphones

Ones & Tooze: Britain’s Economic Freefall

The economic news from Britain could hardly be worse. In the weeks since Liz Truss became prime minister, the British pound has fallen to historic lows, financial markets lost $500 billion, and the IMF has issued warnings. Adam and Cameron explain what happened and where things go from here. Also: India’s economy is surging but why hasn’t New Delhi been able to match Beijing’s economic

Read More »
Foreign Policy Logo 'FP'

The World Is Seeing How the Dollar Really Works

By raising interest rates, the Federal Reserve strengthened the U.S. currency—and revealed its centrality to global order. 2022 has been a year of dollar power—power that manifests itself in both overt and subtler forms. In the spring, the financial sanctions slapped on Russia’s Central Bank following Russian President Vladimir Putin’s invasion of Ukraine demonstrated the extent of U.S. financial sway, especially when it is exerted

Read More »
Foreign Policy Logo 'FP'

The 1970s Weren’t What You Think

Yes, fiscal and monetary policy seemed stuck for too long in expansionary mode. But the era also saw the rebalancing of the world economy. Some historical analogies are playful. Some require elaborate academic justification. Others are native to our world. The lessons learned from them are so ubiquitous as to be part of our intellectual furniture. They are built into our very institutions. The European

Read More »

Chartbook

Sign up below for Adam’s newsletter, which includes economic data, images, & stories that matter.

At the Mic
on bookshelves

Look out for Adam’s next book, Carbon, out in 2023.

on air

Discussion with Wolfgang Schäuble

WEF 2020: Why Protests Are An Integral Part Of Democracy

GZERO World with Ian Bremmer – Is a 2nd Great Depression Coming?

on record
on the blog
Journalism & Interviews

Chartbook

Sign up below for Adam’s bi-weekly newsletter, which includes economic data, images, & stories that matter.

at the mic
on bookshelves

Look out for Adam’s next book, Carbon, out in 2023.

on air

Discussion with Wolfgang Schäuble

WEF 2020: Why Protests Are An Integral Part Of Democracy

GZERO World with Ian Bremmer – Is a 2nd Great Depression Coming?

on record
on the blog