And the dollar has been getting a whole lot stronger through the back half of 2022 as the Federal Reserve has enacted historically large interest-rate hikes to fight inflation. The rally has placed central banks around the world in a race to see who can lift interest rates — and, by extension, the value of their money — faster to keep up.
On the other hand, moving forward with aggressive tightening would help curb soaring prices in the States, but it also slams the brakes even harder on economic growth. That would raise the risk of a recession in the US, complete with widespread layoffs, weak wage growth, and plunging investment balances.On September 21, Fed Chair Jerome Powell reiterated that the central bank won't stop raising rates until".
In the UK, the new Conservative government cooked up a tax-cutting plan meant to juice the economy amid fears of an imminent slowdown. But the proposal clashed so violently with the economic consensus thatagainst the dollar and prices on gilts — the UK government's bonds — also nosedived as investors grew increasingly fearful of a ballooning deficit.
As prices soar higher across the UK, the country will creep ever closer to a severe recession. High inflation tends to curb demand as households cut back to preserve their finances. Weaker spending tends to lead to lower revenues, which in turn sparks layoffs and kicks off a vicious cycle of economic decline.
Everything is connected
Local behavioral economics game theory on a global stage.
The average lifespan of a reserve currency is 94 yrs (80-110). Where is the US$ in the reserve currency lifecycle? When will the global chaos move into the accelerate phase?
Multiple epic mistakes on the horizon. US inflation is not like European inflation therefore central bank interest rates can diverge without hurting the dollar. But that would take actual courage from the FED the same for US prime rate raising it would be a generational blunder.
Powell's like most politicians, just too advanced in age for the level of duty. His economic model is from the 1970's, in essence, the interest rate must exceed the inflation rate ...remember the word transitory ...
Like it or not, unfettered capitalism gotta go! The oligarchs induced inflation cycles hurting the middle class and the working poor can be erased permanently with system change.
That’s what they want , they don’t care about Americans.