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2022-05-02

“The unlikely thing happened,”

In a 2014 paper, Ricardo Reis, a professor at the London School of Economics, and other economists found that investors were pricing in a less than 1 in 2,000 chance that an unexpected burst of inflation would lower U.S. public debt by 5.5 percentage points.

“The unlikely thing happened,” 

In Greece, where the large public debt sparked a crisis that almost broke up the eurozone, public debt is forecast to decline to its 2019 level of 185% of GDP this year, down from 212% of GDP in 2020, according to IMF data.

After World War II, the U.S. government used a similar situation to reduce its debt to GDP ratio from 120% to 40% over two decades—to the detriment of bondholders. 

In the 1970s, the U.S. inflated away some of its debt again. But...

WSJ 1 May 2022

https://www.wsj.com/articles/as-inflation-eases-public-debt-load-economists-sound-cautionary-note-11651397401


ECB issues mea culpa for poor inflation forecasts

Inflation has consistently risen faster than the ECB predicted for the past year, hitting a eurozone record of 7.4 per cent in March.

The ECB made its worst ever inflation forecast in December when it predicted eurozone consumer price growth would fall to 4.1 per cent in the first quarter of this year. Instead it shot up to 6.1 per cent

The ECB’s inflation target is 2 per cent.

FT 28 April 2022

https://www.ft.com/content/58d45527-8d57-43c3-b2b0-d77a19d101b8


Is the Fed Doing Enough to Control Inflation? - Bloomberg


The IMF Has Finally Dumped a Damaging Orthodoxy

It’s official: Foreign money isn’t always and only good for developing nations.

https://www.bloomberg.com/opinion/articles/2022-04-28/the-imf-has-finally-dumped-a-damaging-orthodoxy





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