After a questionable government budget of tax cuts, the pound sterling went into free fall against the US dollar. That, in turn, caused a rout in the bond market that has then delivered even bigger losses in market-to-market derivatives — because the value of the pound relative to the dollar is so low.
Although the war began in February, supply chain disruption is hitting home now, as are many other knock-on effects from Russia’s invasion of Ukraine.
Inflation is a policy. It’s a tax. Like all taxes, it lands on some harder than others. And the farther you go down the wealth mountain, the harder it falls.
We are at a moment of extreme fear — sentiment is at lows. Which begs the question: Is this as bad as it gets? At least for now?
The randomly selected 2% is the Holy Grail our (clueless) inflation warriors so covet…and slavishly pursue. Belief in this target is now so absolute, no one in the economics profession or financial industry asks the question ‘why do we have this target?’.
Larry Summers, ex US Secretary of the Treasury, went way out on a limb on Wednesday, Fox News was there: ‘Former Treasury Secretary Larry Summers predicts there will “almost certainly” be a “downturn in the economy”’:
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