Debt Avalanche Ahead: BlackRock CEO Sounds the Alarm on U.S. Economy

Larry Fink, CEO of BlackRock, has issued a dire warning about the U.S. debt crisis, stating it's more urgent now than ever. Fink emphasized that neither taxes nor spending cuts alone could solve the problem, likening the potential future to Japan's economic stagnation in the late '90s. He highlighted the danger of rising debt servicing costs, making it tough to combat inflation. Fink calls for economic growth through infrastructure investments, particularly in energy, to avoid a looming debt catastrophe.

Read more ...

Fed’s Operating Losses Grew to Record $114.3 Billion in 2023

In 2023, the Federal Reserve reported an unprecedented operating loss of $114.3 billion, halting its payments to the Treasury due to high interest rates. The Fed's interest expenses surged to $281.1 billion, driven by costs related to reverse repo operations, while its income from assets was $163.8 billion. Typically, profits from the Fed's securities go to the Treasury, reducing the federal deficit. The shortfall since late 2022 led to a deferred asset for the Treasury, increasing to $133.3 billion, yet affecting neither the federal budget nor monetary policy strategies.

Read more ...

Inflation Reporting's Blind Spot: The Cumulative Impact

Traditional inflation reports, focused on the past 12 months, overlook the broader, cumulative impact of inflation since the start of the Covid period in January 2020. This period, marked by significant monetary expansion and near-zero interest rates to combat the recession, has led to a 20% cumulative inflation rate. This means a dollar now holds only 83 cents of its January 2020 value, highlighting the sustained loss in purchasing power. This overlook in reporting fails to account for the lasting financial strain on those whose incomes have not kept pace, exacerbating financial disparities.

Read more ...

Nigeria's Central Bank Raises Interest Rate to Tackle Inflation

The Central Bank of Nigeria has increased its key interest rate by 200 basis points to 24.75%, aiming to combat the country's severe inflation and currency devaluation. Following a 400 basis point hike in February, this marks the second consecutive increase, underscoring the central bank's aggressive approach to inflation, which stood at 31.7% year-on-year in February. Governor Olayemi Cardoso emphasized the necessity of this action to manage inflation expectations and support the naira, which has shown some recovery after a significant drop. Experts anticipate further hikes but expect the policy to stabilize towards the year's end.

Read more ...

Bank of Canada Highlights Investment Need to Combat Inflation

The Bank of Canada emphasizes the urgent need for businesses to increase investments in productivity to combat inflation. Senior Deputy Governor Carolyn Rogers described the situation as critical for economic protection against inflation without depending solely on higher interest rates. Despite high rates, it's premature to discuss reductions. Canada's productivity struggle, marked by minimal investment and underutilized newcomer skills, could exacerbate inflation as globalization benefits diminish. Recent data shows a pressing need for reversing the trend of declining productivity.

Read more ...