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2021-06-08

Remember: the Volcker shock triggered the Latin American debt crisis


US federal deficits of 16.7 per cent of GDP this fiscal year and 7.8 per cent next year. 

Meanwhile, most members of the Federal Reserve’s board expect interest rates to stay near zero even until the end of 2023. 


By the time the economy finally reaches the point when the Fed starts to tighten, it will be smoking hot (at “maximum employment”) and, inevitably, getting hotter. That is what happened in the 1970s.


Remember: the Volcker shock triggered the Latin American debt crisis. This time, there is much more debt around almost everywhere. A severe monetary tightening would create even more devastation than then.


Martin Wolf 8 June 2021


https://www.ft.com/content/6f23cf87-0e66-4b6b-bf36-8c73f1bfbd9d



Kaletsky menar att det var Paul Volcker som ledde återgången till "demand management".


- In the United States, the return to demand management began as early as the summer of 1982, when a three-year recession and the bankruptcy of the Mexican government persuaded the Fed that its experiment with monetarism had gone too far.



Vad var det som hände fredagen den 13 augusti, som satte fart på världens aktiebörser. 


Jo, det som hände den dagen var att Mexiko förklarade att man inte längre kunde betala sin utlandsskulder. 


https://englundmacro.blogspot.com/2014/04/volcker-startade-sedelpressarna-inte.html



Latin American debt crisis 80´s

https://www.internetional.se/ldc.html




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