Guest Contribution: “Get Ready for ‘Reverse Currency Wars'”

Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy  School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate.

May 26, 2022  — The value of the US dollar is up 14 % against the euro, over the last year from 1.21 $/€ in May 2021.  At 1.05 $/€, it is approaching one-to-one parity for the first time.  If you think that prices for oil and other commodities are now high in terms of dollars, you should see what they look like in terms of euros! Get ready for “reverse currency wars.”

The regular sort of currency wars were characterized by countries feeling aggrieved that their trading partners were deliberately pursuing policies to weaken their own currencies.  The feared motive would be gaining unfair advantage in international trade.  The original phrase “currency wars” was a colorful description of what international economists had more informatively long called “competitive devaluations” or, when exchange rates float, “competitive depreciation” .

A reverse currency war, then, is the symmetric situation of “competitive appreciation,” in which countries feel aggrieved that their trading partners are deliberately pursuing policies to strengthen the values of their currencies. The motive would be putting downward pressure on their CPIs.

Competitive depreciation arises in a context where everyone’s main macroeconomic goals, in addition to maximizing growth in GDP and employment, include also boosting their trade balances.  This generally describes the last few decades in the world economy.  Competitive appreciation arises in a context where everyone’s main macroeconomic goals, in addition to maximizing growth, include also disinflation, that is, reducing their inflation rates (without hurting growth, to the extent possible).  This context could describe the period that began in 2021, when inflation has returned as a serious problem in most countries.   The global inflation problem, a return to the 1970s, is likely to persist for some time.

In both cases, competitive depreciation and competitive appreciation, it is of course impossible for everyone to achieve their goals — because it is, by definition, impossible for everybody to move their exchange rates in the same direction.  Both cases represent circumstances often perceived as a lack of international cooperation to achieve exchange rates stability, sometimes leading to calls for a new Bretton Woods.

The IMF Articles of Agreement, agreed in 1944 at Bretton Woods, New Hampshire, were written to avoid the competitive devaluations of the 1930s. As amended in 1976, Article IV(1) iii bans each country from “manipulating exchange rates…to gain an unfair competitive advantage over other members…”.

The US has been quick to allege that other currencies are unfairly undervalued.  Congress has since 1988 required the Treasury to send semi-annual reports on whether major trading partners are manipulating their currencies.  China and other Asian countries are the most frequent targets. But Switzerland has also been under suspicion, notwithstanding that the Swiss franc is by far the most expensive major currency in the world by other criteria.

In February 2013, the US Treasury spearheaded an agreement among G7 countries that they would refrain from taking steps to depreciate their currencies.  The 2013 agreement is little known; but it worked, in the sense that the members over the last decade have refrained from intervening to sell their own currencies on the foreign exchange market.

China, not a member of the G7, does intervene.  But since 2014 it has intervened to slow RMB depreciation, not to encourage it.

The phrase “currency wars” was coined by Brazilian leaders in 2010, while  complaining about the monetary policies of the US, Japan, and other countries. The accusation this time was not explicit devaluation of the dollar or yen, nor even intervention in the foreign exchange market to drive down the prices of these currencies. The allegation was, rather, that the Fed, Bank of Japan, and other central banks had adopted excessively loose monetary policies, which began by cutting their interest rates to zero and then went further with Quantitative Easing, and that it had the deliberate intent of depreciating their currencies, boosting their net exports, and exporting unemployment to their neighbors.

Similarly, nobody today accuses the US authorities of using foreign exchange intervention to strengthen the dollar. The allegation of 2022, rather, is that, the Fed’s current upward interest rate path attracts a capital inflow and appreciates the dollar.  Thus, an alternative perspective on reverse currency wars is that (in today’s non-cooperative equilibrium), the Fed is forcing up interest rates internationally and so holding back global growth from where it could be.

There is ample historical precedent for fears of competitive devaluation, most notably the 1930s, when major powers in sequence each devalued against gold and thereby against each other.  Is there historical precedent for competitive appreciation?

It has been argued that the early 1980s were such an example.  When the Fed, under Chair Paul Volcker, raised interest rates sharply to fight inflation, it knew that it would be aided by an appreciation of the dollar.  But the corresponding depreciation of trading partners’ currencies worsened their inflation rates and forced them to raise interest rates as well.  The worry was that the world ended up with higher interest rates than were desirable.  The 1985 Plaza agreement to bring down the dollar ended this period of competitive appreciation.

Today, the most likely victims of a strengthening dollar are not other major Advanced Economies, but rather Emerging Market and Developing Economies. Many of them have substantial dollar-denominated debts (exacerbated by the fiscal spending necessary to fight the pandemic in 2020-21). When the dollar appreciates[1], the cost of servicing their debts goes up in terms of their own currencies. This “balance sheet effect” is contractionary for the economy. The combination of rising interest rates and a rising dollar can trigger debt crises, as it did in Mexico in 1982 and 1994.

Not all fears of competitive appreciation are justified (just as not all fears of competitive depreciation in the past have been justified) or merit a reform of the international currency system.  Unlike most central banks, the Bank of Japan has kept its monetary policy very loose into 2022, in a continued attempt to raise inflation, which is running at approximately 1 % per annum, up to the elusive 2 % target  Its interest rates are still below zero (negative 0.1%, for the policy rate). This, at a time when the US is raising interest rates in its attempt to reduce inflation.   As one would predict from the widening US-Japan interest differential, the yen has depreciated 14 % over the last year against the dollar from 109 yen/$ in May 2021, to 126 now.

Is this big change in the exchange rate a problem?  Not really, on net.  The movement has allowed upward pressure on Japanese inflation, at the same time that it has allowed downward pressure on US Inflation.  That is what both countries want, given their respective current cyclical positions.  In this light, floating currencies serve the useful purpose of allowing each country to pursue the monetary policy that suits its own circumstances.

[1] On a comprehensive trade-weighted basis, the dollar has appreciated  5 % since May 2021.

 

This post written by Jeffrey Frankel.

 

 

80 thoughts on “Guest Contribution: “Get Ready for ‘Reverse Currency Wars'””

  1. pgl

    Under floating rates – monetary policy is especially powerful in its effects on aggregate demand since it impacts both investment and net export demand in the same direction. The Volcker monetary policies to bring down inflation in the early 1980’s is an example of how tight monetary policy can create a large recession even in the face of fiscal stimulus. I just hope the current FED is aware of this and avoids the 1982 mistake.

    1. Moses Herzog

      Democrats are setting up a bear trap for themselves, and Republicans are more than happy to play along with the stupidity when it means large gains going into 2024. If there’s a way to shoot themselves in the foot Democrats will find it. DNC headquarters: “Easier to find work?? High growth rates?? Oh Gaaaewwwd!!! What have we done!?!?!?!?!? Quick, let’s repeat verbatim Republican talking points!!!! Inflation!!!! Inflation!!! Inflation!!!! We’re all gonna die from inflation!!!!” Sure you are. None of you even know how to shop anymore. I’ve misplaced my last grocery receipt. I bet most of you would faint if you saw how much I can get for under $200. I don’t drop $10 on a single meal. I see people getting in wrecks out here, T-boning each other while they’re driving to places, to do what?? And they all think they’re “behind the Joneses” if they can’t buy a car every 3 years and buy SUVs with under 20mpg. Ever heard of taking care of the damned car, changing the oil, rotating tires, using tires worth a cr*p (Continental, Michelin etc.). Hell, even just learning how to drive. George Carlin Joked about 30 years ago the only reason Americans use turn signals is to tell you which lane they just left. Stopping behind the crosswalk, making a complete turn at the intersection. NO, that way, we’re not throwing two tons of metal and plastic into the garbage heap. That’s no fun. And if American housewives don’t have 30 pounds of food already rotting in the refrig before garbage collection day, they feel “deprived”. I’ve been to other people’s houses, I swear they think it’s a spiritual experience hearing the thud of 5 pounds of unused food hitting the garbage bin.

      1. Barkley Rosser

        Moses,

        I agree that it is frustrating that American voters seem not to be pleased by the good job market and express unhappiness over the higher inflation rate we are also having. But it is not because somehow some foolish people at DNC HQ are pushing this. It is because that is what American voters say they are concerned about.

        BTW, it still looks like Alan Blinder was right in his famous JPE paper that “The Phillips Curve of Japan Looks like Japan.”

        2. GREGORY BOTT

          Who knows what they are concerned about. With the plunge in % change in money supply, inflation is a lagging indicator and indeed, price freezes and reversals are happening. My guess by September, your line won’t work and Herzog will be in retreat.

      2. Anonymous

        moses,

        in boston msrp using a turn signal is a sign of weakness.

        “why do they care to know where i am going!”

        1. Barkley Rosser

          A.,

          Boston is notorious for its bad drivers. I personally know two people who were hospitalized after being hit by cars while walking on the sidewalk in Boston.

        2. Moses Herzog

          @ Anon So you’re telling me Jackie Rohr would not be into using turn signals?? Even if he was rushing to drop a girl off at the entrance to the ER??

      3. AndrewG

        People aren’t stupid. They just happen to not like a slow drip of the erosion of their purchasing power. I don’t understand how that’s even controversial. Inflation is unpopular for perfectly good reasons.

        1. Barkley Rosser

          AndrewG,

          It is not as obvious as you think it is. Watch the economy go into a recession with unemployment going up and do not be surprised if that replaces inflation as the biggest concern. Back when we had stagflation at its worst it was more often than not the stagnation part that had people upset than the inflation part, except when we had the worst of the gasoline price spikes at the end of 1973 and in 1979. People were much more tolerant of pretty high inflation than they are now.

          I think part of it is that people have not seen such high inflation for such a long time, with many never having seen such high inflation, and with it also rising pretty sharply. So, the combination of it being higher than people expected and higher than they have seen, with especially high spikes in sensitive gasoline and food prices, is why people are so especially worked up about it. But that they are remains not remotely due to anything the politicians at the White House or Dem Party HQ are doing or saying.

          1. AndrewG

            Very good points. But as to recessions due to Fed action, it depends on how things go. It seems like a soft-ish landing is still possible.

            Moreover, the lesson I take from all of this is that the Fed should have acted sooner, and if it did, it would have started to signal normalization earlier and been able to spread out the rate increases, lowering the chances of a Fed recession.

  3. ltr

    https://news.cgtn.com/news/2022-05-28/Chinese-mainland-records-96-new-confirmed-COVID-19-cases-1aozBSd76yk/index.html

    May 28, 2022

    Chinese mainland records 96 new confirmed COVID-19 cases

    The Chinese mainland recorded 96 confirmed COVID-19 cases on Friday, with 71 linked to local transmissions and 25 from overseas, data from the National Health Commission showed on Saturday.

    A total of 266 asymptomatic cases were also recorded on Friday, and 17,552 asymptomatic patients remain under medical observation.

    The cumulative number of confirmed cases on the Chinese mainland is 223,933, with the death toll from COVID-19 standing at 5,226.

    Chinese mainland new locally transmitted cases

    https://news.cgtn.com/news/2022-05-28/Chinese-mainland-records-96-new-confirmed-COVID-19-cases-1aozBSd76yk/img/c4e85db7cf504bdea893f7f0f7661bee/c4e85db7cf504bdea893f7f0f7661bee.jpeg

    Chinese mainland new imported cases

    https://news.cgtn.com/news/2022-05-28/Chinese-mainland-records-96-new-confirmed-COVID-19-cases-1aozBSd76yk/img/53f8c4bb727245a58e17fe0a2270f0f1/53f8c4bb727245a58e17fe0a2270f0f1.jpeg

    Chinese mainland new asymptomatic cases

    https://news.cgtn.com/news/2022-05-28/Chinese-mainland-records-96-new-confirmed-COVID-19-cases-1aozBSd76yk/img/31af3a5b532743cdacdde62d48a23552/31af3a5b532743cdacdde62d48a23552.jpeg

    2. ltr

      https://news.cgtn.com/news/2022-05-29/Chinese-mainland-records-82-new-confirmed-COVID-19-cases-1aqeUQp8gko/index.html

      May 29, 2022

      Chinese mainland records 82 new confirmed COVID-19 cases

      The Chinese mainland recorded 82 confirmed COVID-19 cases on Saturday, with 54 linked to local transmissions and 28 from overseas, data from the National Health Commission showed on Sunday.

      A total of 211 asymptomatic cases were also recorded on Saturday, and 16,181 asymptomatic patients remain under medical observation.

      The cumulative number of confirmed cases on the Chinese mainland is 224,015, with the death toll from COVID-19 standing at 5,226.

      Chinese mainland new locally transmitted cases

      https://news.cgtn.com/news/2022-05-29/Chinese-mainland-records-82-new-confirmed-COVID-19-cases-1aqeUQp8gko/img/8cd3cb60a67046c08b31a4d093038cca/8cd3cb60a67046c08b31a4d093038cca.jpeg

      Chinese mainland new imported cases

      https://news.cgtn.com/news/2022-05-29/Chinese-mainland-records-82-new-confirmed-COVID-19-cases-1aqeUQp8gko/img/f819147ef99c4f82809213579c8d225f/f819147ef99c4f82809213579c8d225f.jpeg

      Chinese mainland new asymptomatic cases

      https://news.cgtn.com/news/2022-05-29/Chinese-mainland-records-82-new-confirmed-COVID-19-cases-1aqeUQp8gko/img/979a8fa0101d4df4aaa91633882d40c5/979a8fa0101d4df4aaa91633882d40c5.jpeg

  4. joseph

    “Is this big change in the exchange rate a problem? Not really, on net. The movement has allowed upward pressure on Japanese inflation, at the same time that it has allowed downward pressure on US Inflation.”

    Maybe good for Japan. Not so good for the Euro zone.

  5. ltr

    https://english.news.cn/20220528/b261ef7e46fb4f7d9afa342653e94339/c.html

    May 28, 2022

    China-built road creates good fortune for Malagasy poultry farmers

    ANTANANARIVO — In the rural commune of Antanetibe-Mahazaza, 50 km north of Antananarivo, the Malagasy capital, Anja, 29, supported by his wife Seheno, has been investing in the poultry sector for five years. Their farm now includes 40,000 hens, which lay tens of thousands of eggs per week sold to the capital’s egg market.

    This poultry farmer has doubled the size of his business since he started five years ago. He has built a new shed that can accommodate 10,000 new laying hens.

    “The Chinese government has given us a wonderful gift (…) and we are very grateful,” says Anja, confident in the prospects of his farm.

    This “wonderful gift” in his words is a 19 km road called the “egg road.” This secondary road was renovated between August 2018 and January 2022 by the Zhongmei Construction Group as part of China’s proposed Belt and Road Initiative (BRI).

    Antanetibe-Mahazaza is a mega “egg village.” Like Anja, between 200 and 250 small and large breeders are involved in poultry farming. According to Firmin Rakotonomenjanahary, head of Antanetibe-Mahazaza, the commune’s current production represents 30 percent to 40 percent of the total national production. “Our eggs go all over Madagascar. Most of them go to Antananarivo,” he says.

    The official recalls that before the Chinese renovated the road, local poultry farmers used to complain about egg breakage during delivery. “When there was mud during the rainy season, it was a pain to get the eggs everywhere,” he says.

    “At the time, 10 percent to 20 percent of the eggs were broken (…) because of the state of the road,” recalls Anja, adding that he would travel the 50 km from his village to the capital for three to four hours. He and his family had to leave at 1 a.m. to ensure that the eggs arrived on the shelves in Antananarivo by 5 a.m.

    Wu Yong, deputy executive director of the “Egg Road” project and general manager of Zhongmei’s Madagascar office, noted that after the renovation was completed, this secondary road was transformed into a smooth and wider asphalt road. The landlocked rural commune of Antanetibe-Mahazaza is now directly connected to the national road N4.

    “The construction of this road has really changed our lives,” says Anja, who now leaves his house with his wife at around 4 a.m. to deliver the eggs….

    1. ltr

      Here is an immediate sample of Belt and Road investment. There are many such infrastructure investments in developing countries such as Madagascar and more to come and more sorely needed. A disturbing occurrence, however, is that there is a persistent effort to undermine Chinese Belt and Road investments coming from the American state department. The undermining effort appears to have begun with Mike Pompeo as Secretary of State, and persists. Lately, Cameroon and Zimbabwe and Ethiopia…

    2. ltr

      https://english.news.cn/20220529/357f00d402cc4a8fb841b5aa2ff3ed14/c.html

      May 29, 2022

      BRI injects impetus, stability to francophone Africa, experts say
      China’s Belt and Road Initiative (BRI) is building an open platform of cooperation and injecting growing impetus and stability into development of French-speaking African countries, experts said during a three-day international colloquium in Cameroon capital city of Yaounde.

      YAOUNDE — China’s Belt and Road Initiative (BRI) is building an open platform of cooperation and injecting growing impetus and stability into development of French-speaking African countries, experts said during a three-day international colloquium in Cameroon capital city of Yaounde.

      The conference on BRI in Francophone Africa gathered hundreds of attendees including politicians, scholars, representatives of Chinese companies and college students.

      Wang Dong, counselor of the Chinese Embassy in Cameroon, said at the opening speech that the BRI aims to strengthen the global connectivity, to enhance the level of trade and investment cooperation and to promote the international cooperation in production capacities and equipment manufacturing.

      Jimmy Yab, president of the China-Africa Francophone Observatory, a think tank on relations between China and Francophone Africa that organized the colloquium, said that joint efforts and win-win cooperation are the main traits of the BRI.

      Leaders in French-speaking African countries should take advantage of the initiative to enhance development of the continent, he said, adding that BRI was a veritable win-win cooperation.

      “This mode of partnership is not what we have seen before. The BRI is not development aid, it is cooperation between two partners, Africa and China, where partners sit on the same table. China attaches particular importance to infrastructure because it is development, as we say in our region ‘when the road passes, development follows’,” Yab said during the colloquium….

  6. macroduck

    In reality, there are trade-offs. In politics, you pretend there are no trade-offs and blame the other guy for wnatever policy choice (s)he makes when other guy is in power. When you are in power, you try to put the blame on other countries.

    Policy coordination is an attempt to optimize policy by distributing policy costs where they can best be shouldered, policy benefits where they are most needed.

    Domestic opponents pretend that whatever trade-off was chosen was he wrong one, or even that no trade-off was needed. Domestic and foreign blame-fixing is the environment in which policy coordination takes place. Lots of luck, folks.

    1. Moses Herzog

      Speaking of politics and policy, wonder if we can cajole Menzie to put his 2 cents up on the blog about this. Shall we file this under “GOP Commissioner Takes Baby Steps Away from Insanity”??
      https://www.wpr.org/elections-commissioner-dean-knudson-abruptly-resigns-citing-deep-desire-republicans-he-not-chair

      I’m gonna take a wild guess on what’s REALLY going on here~~~Knudson has been denied sex from his wife for the last 6 months with the ultimatum “Quit hanging around these MAGA losers!!!!” and Knudson finally gave in.

      1. Moses Herzog

        My favorite line in the comments section of the Wisconsin Public Radio link:
        “Knudson is like the worker in the outhouse whose congestion suddenly cleared up.”

      2. AndrewG

        I’m not sure if that’s such a great thing. I’d rather have more non-MAGAs on that commission than less, for sure.

        1. Moses Herzog

          Sometimes people have to have the car crash before they decide to become better drivers. Let the Republicans have it their way and see how that goes. They certainly imply there were some interesting facial expressions at the meeting where Knudson in essence told them to stick it in their Netherlands. Knudson told them he wasn’t going to be their whipping boy anymore, and now they’re looking around to see who wants to play the fool. Kind of reminds of when donald trump was on his 5th Secretary of Defense. He still got Mattis and YESper to show up for his Bible “show and tell” didn’t he??~~after tear gassing and beating the crap out of D.C. Blacks so he could hold up a Bible he hasn’t spent 2 minutes of his entire life reading.

          NO worries though, the Wisconsin GOP will find their version of trump’s Chris Miller to take over for Knudson. No worries.

  8. Moses Herzog

    Consumer spending~~strong

    Core inflation~~peaked

    Google mobility metric and restaurant activity~~rising

    goods deficit—narrowing by $20billion in April

    Capital investment~~sturdy

    Inventory rundown~~~looks to improve in 2nd Quarter

    What’s the bad news?? The extremely bad news is, Jim Nabors is gone, and nobody will ever sing “Back Home Again in Indiana” as great as Nabors did ever again
    https://youtu.be/MGUzk987HEE?t=28

    You wanna go back to an orange colored monster telling you to drink bleach as a tonic for Covid-19?? As our good friend Macroduck said, “Lots of luck folks”

    1. AndrewG

      People hate inflation. That’s not crazy in any way. That’s entirely, perfectly sensible, and it’s a fact that Democrats should learn rather than pretend is not the case. This is especially true when so much is on the line with each election because the inmates control the asylum over at the GOP.

      1. Barkley Rosser

        AG,

        Folllowing up on what I wrote further above in reply to you, it is a much observed phenomenon in economics that goes under a lot of names that people get more upset about losing something than they are pleased by gaining the same thing. So we tend to get upset about things that are getting worse.

        Recently that has been inflation while the job market has gotten better. But people take the latter for granted while getting upset about worsening inflation, alhtough it may be that it has peaked, or at least the core part of it. But let things go the other way and we see unemployment rising while inflation falls, and, well, people will get upset about the rise in unemployment.

        1. AndrewG

          Again, good points.

          One thing about unemployment: If it’s rising, that’s not necessarily about loss aversion, since the increase will be due in part to people coming off the sidelines but not getting new jobs – basically a lag in the signals to the labor market. It’s also not necessarily about mass layoffs, as most of the rise in unemployment is a reduction in jobs offered and a reduction in people leaving their jobs for new ones. The churn grinds to a halt, but there are still people on the sidelines wanting to get jobs because as Keynes famously noted, wages are sticky in the downward direction.

          Mass layoffs, of course, are a whole different ballgame. Hopefully it doesn’t come to that, and there are hopeful signs.

        2. AndrewG

          There’s another point I forgot to mention:

          Sufficiently high inflation affects just about everyone. Unemployment doesn’t, even if it’s much worse for those affected.

  10. pgl

    VP Harris calls for an assault weapons ban and the restoration of what we used to call the Brady bill (registration):

    https://www.msn.com/en-us/news/world/kamala-harris-calls-for-assault-weapons-ban-we-are-not-sitting-around-waiting/ar-AAXPH5c?ocid=msedgdhp&pc=U531&cvid=6f36a794a63b47a2be814494424ff63e

    We had these laws back in the 1990’s and they were working. But we stopped trying. I’m sorry but half baked measures such as Red Flag laws are not sufficient. I get that the Senate as constructed buries any effective measures so let’s campaign on this issue and get those who work for the NRA out of office.

    1. Anonymous

      has the ny press investigated who in nys complied with the laws?

      and list who enforced them?

  11. Moses Herzog

    Great story by WSJ—showing you the depths that humans will sink. Funding, underwriting, and sponsoring the deaths of hundreds of thousands of innocent people, for a quick dollar:
    https://www.wsj.com/articles/little-known-commodity-traders-help-russia-sell-oil-11653643583

    “The ability of firms such as Paramount to ship oil is crucial for Mr. Putin. Oil-and-gas sales accounted for 45% of Russia’s federal budget last year, according to the International Energy Agency. High prices for energy, driven in part by the war, are plumping up the Kremlin’s coffers.
    ‘Putin could carry on for a very long time because of this flow of cash and he will,’ said Bill Browder, chief executive of Hermitage Capital Management, a longtime opponent of Mr. Putin and previously a big investor in Russia.”

    Earlier in the same article:
    “Moscow needs traders to sell the roughly 3.6 million barrels of oil it is exporting by sea each day, a volume that has fallen from 3.8 million in
    April, according to Kpler. Paramount is a little-known Geneva-based firm trading an average of 163,000 barrels a day since the invasion, says Petro-Logistics data. The company is bolstering its presence in Dubai to avoid European sanctions, according to a person familiar with the firm.”

    The story also mentions that one of the suppliers (Concept Oil Services Ltd.) to Paramount is…… wait for it…… wait for it…… wait for it…….. domiciled in Hong Kong.

    Story by Anna Hirtenstein and Joe Wallace of The Wall Street Journal.

    1. pgl

      Hong Kong has always been a center for illicit trade and tax evasion. And then there is:

      Paramount Energy & Commodities SA is a privately held energy and commodity trading company established in Geneva, Switzerland. The key management has been active in various positions in the energy and commodity trading industry since the early 1990’s.

      Ah yes – Switzerland is also known for trading and tax evasion.

  12. Willem

    “The movement has allowed upward pressure on Japanese inflation”. So far the depreciation of the yen since 2021 has had only modest effects on the Japanese PPI and CPI.

  13. GREGORY BOTT

    Global oil production is picking up. Not a good sign for future inflation or Putin.

  14. JohnH

    “ EU unity on Russian sanctions ‘starting to crumble’, German minister says.”
    https://www.reuters.com/world/europe/eu-unity-russian-sanctions-starting-crumble-german-minister-says-2022-05-29/

    It’s what happens when oblivious elites try to get people to shoot themselves in the foot for geopolitical gamesmanship. Of course, exactly the same is true of economists who blithely advocate increasing the cost of energy to save the planet without bothering to think about how to make the increased costs palatable to the public.

    1. pgl

      Gee – you have combined cheerleading for Big Oil with cheerleading for Putin’s war crimes. OK the competition for most disgusting troll has gotten intense but he seems you still have the lead.

    2. Barkley Rosser

      JohnH,

      Ah yes, resisting an illegal invasion that has killed thousands of civilians is “geopolitical gamesmanship.” You really have a way of trying to justify mass murder, don’t you, nauseating Putin troll?

      1. JohnH

        I’m not justifying mass murder. But I am pointing out that for Russia and NATO, geopolitics reign supreme. Remember the killing of hundreds of thousands in Iraq, an illegal war that 77 Senators voted for, including Biden and Hillary? And, to add insult to injury, US government propaganda tried to sell it as being for humanitarian reasons!!!

        If NATO really cared about Ukrainian lives, they would incessantly be trying to arrange peace talks, something that is remarkably missing. Ukrainians dying in drovesis fine, as long as it serves to weaken Russia. And Madeleine Albright thought that 5000,000 deaths of Iraqi children was “worth it.”

        1. Barkley Rosser

          Yes you are, you worthless lying piece of s, JohnH.

          I opposed the war in Iraq all along from before it started. The admin lied about it, which was what led a lot of those senators to vote for it, with many of them changing their minds later when they realized what a disaster it turned into and that they have been lied to.

          You just keep supporting Putin’s lies and murders with one bs line after another no matter what. You are truly disgusting and nauseating.

        2. pgl

          I’m not justifying mass murder.

          Oh yes you are. Each and everyone of your sick comments makes Putin happy.

      2. Anonymous

        luhansk/donetz operations look more like civil war, with dpr and lpr forces allied with russians.

        and usa giving mlrs which seed cbu’s is a war crime.

        russia is doing for the donbas what the confederacy begged england to do, except the south would have paid.

        and the john h is remiss in not stating that high energy costs from prohibiting or otherwise making difficult investment in petroleum energy is bad because bankrupting the citizenry won’t make any of the green whims effective nor suitable. sooner if ever!

        1. Barkley Rosser

          Anonymous,

          In contrast with JohnH, you are being merely fooloish. LPR and DPR are fake places created by Russian troops who took over the governments there and then installed locals who agree with them. But those troops have been drafted.

          Your claim that giving Ukrainians MLRS is a “war crime” is ludicrous given that we have yet to see you recognize that Russian mass killing of civilians, Russian speaking ones at that they are supposedly “saving” from nonexistent “Nazis” is a war crime. You do understand that the MLRS will be used against military targets, do you not, Anonmyous? Or are you just completely stupid?

          Your third claim is just complete gibbetrish. Um, the Confedracy requested Britain to diplimatically recognize them, not to engage in an invasion of the US North, although maybe they would have liked that. How out of it are you?

          And your final point where you attempt to critiicize JOhnH also falls on its face. You seem unable to make a single valid point here.

        2. Ulenspiegel

          “and usa giving mlrs which seed cbu’s is a war crime.”

          Don’t drink and post. The bar is set by Russian and Chinese actions during the Korean and Vietnam war, try to understand what happend back then, even Russian soldiers operated Northern Vietnamese AA systems or flew “Korean” fighters.

          The delivery of uncritical conventional artillery systems is BAU, even if simpltons like you do not like it.

    1. Barkley Rosser

      pgl,

      I do not have inside info on it, but I am skeptical of all these Putin-cancer stories. However, what is worrisome is that there has been a major change in the last week or so in the media in Russia. It seems that this is no longer a “special operation,” but the beginning of “World War III.” There are not only people calling for the invasion of UK, but the outright “destruction” of the US and also the ouright killing of up to 2 million Ukrainians, claimed to be necessary to enforce the conquest of all of Ukraine. This is MSM people, not just some fringe nut cases, and they do not have others on their shows pushing back but rather applauding them.

      Putin can shut this stuff off at any time, if he wants or when he wants. But for now, this is a disturbing development. The Ukrainians really need to halt current slow advance in Donbas somewhere, which may happen with them still holding some of Donetsk oblast, but probably not any of Luhansk, soon to be fully Lugansk again, assuming that Severodonetsk falls as seems likely soon.

  16. pgl

    https://www.msn.com/en-us/foodanddrink/foodnews/marjorie-taylor-greene-goes-viral-for-saying-peach-tree-instead-of-petri/ar-AAXT6qN?ocid=msedgdhp&pc=U531&cvid=9ea539fe18b243b7bc7ee11542388dba

    How insane is Marjorie Taylor Greene? In her latest – she is saying the government wants to know when you eat. whether you are eating a cheeseburger, and what happens when you go to the bathroom. She also thinks Bill Gates wants to ban those cheeseburgers and make us eat meat grown in a peach tree dish.

    Wait – she represents the Peach State so maybe Mr. Gates is just trying to increase the demand for Georgia farm products. Come on Marjorie – why do you hate the farmers in your own state? After all – a classic Allman Brothers Band album was Eat a Peach!

  17. Moses Herzog

    Amy Crews Cutts was quoted in the weekend edition of WSJ. Hahahahahahahaha!!!!! In case you missed it kids, sometimes Uncle Moses is very easily entertained. Hahahahahaha!! “…… said Amy Crews Cutts” Baaaaaahahahahahahaaha!!!!!

  18. ltr

    Paul Krugman argues interestingly that inflation in Europe parallels that in America, and that both are a consequence of low or relatively low unemployment levels rather than structurally produced or in the case of America a result of too strong a fiscal push:

    https://fred.stlouisfed.org/graph/?g=qKl6

    January 15, 2018

    Unemployment Rate for Euro Area and United States, 2007-2022

    https://fred.stlouisfed.org/graph/?g=qKla

    January 15, 2018

    Unemployment Rate for Euro Area and United States, 2007-2022

    (Indexed to 2007)

  19. Moses Herzog

    WSJ has some very good journalism that I have pointed out recently. My personal peeve with WSJ has nearly always been its editorial pages, which are so badly written and tilted to right-wing extremism. But every once in awhile there are some exceptions to that and I find a rare rare rare thing in WSJ “Opinion” pages that I like and enjoy and learn something from. This one by Tunku Varadarajan would be one of those exceptions. Really great stuff here:
    https://www.wsj.com/articles/big-cities-will-suffer-if-workers-stay-home-remote-labor-young-old-finance-college-11653664888

    1. AndrewG

      Only very few WSJ opinion pieces are worth a non-MAGA person’s time. This one’s a nice one, though. Ed Glaeser is great.

  20. Moses Herzog

    Learn something new everyday, did you guys know Menzie worked together with an Army guy that did a 13 month “tour” in Iraq?? Wild.

    1. Barkley Rosser

      No, but his former coauthor, Peter Navarro, has now been subpoenaed by a criminal grand jury investigation.

      1. Moses Herzog

        Did Menzie secretly sprinkle extra methylmercury into Navarro’s food before he went mad?? The mystery continues…….

  21. Moses Herzog

    I think I figured out why Bruce Hall has been even more snowflake than usual about energy policy lately. Anyone want to take a guess?? HINT It has nothing to do with LNG supplies in Germany and Europe.

    1. Moses Herzog

      Sometimes Democrats DO shoot themselves in the foot, here I’m left wondering, where is the “win” here for Democrats?? The phrase “throwing out the baby with the bathwater” comes to mind:
      https://www.wsj.com/articles/why-electricity-blackouts-are-coming-to-michigan-nuclear-power-plant-green-energy-renewable-climate-11653685521

      “On May 20, the plant shut down, taking with it 6.5% of the state’s electricity and 15% of the state’s clean energy. This leaves Michiganders with less reliable electricity and higher prices.”
      ……
      “That’s an especially important message for the union members who broadly support nuclear energy. The unionized Palisades plant alone employed 600 people, each representing a potentially pivotal vote in a swing state.”
      ……
      “Now Michigan will have to deal with the sudden loss of the more than seven million megawatt hours of electricity the plant produced in 2021.”
      ……
      “Operating existing coal and nuclear plants is on average 2 to 3 times less expensive than building new wind and solar, but Michigan’s utilities are still choosing the latter, more expensive and less reliable option.”

      I’m frankly surprised Bruce Hall hasn’t specifically discussed this case of the Palisades Generating Station, because I’m not sure this isn’t a very dumb tact by green energy folks, and Democrats, who cut off their own nose by losing Union members’ votes, when labor Unions can see Democrats are going to leave them “walking the plank” (no disrespect to Jack Sparrow)

  22. Moses Herzog

    Interesting reading:
    https://www.ft.com/content/216866e7-cecb-4650-aea5-b9dedc7d7c7c

    If individual investors and 401K holders knew how much and how often this occurs, they’d be offended, angry, and wondering why “the rules don’t apply” for certain parties. Interesting how important the “market mechanism” and “contract law” are to large banks when it’s their neck on the guillotine. “of course” the banks and revolving door regulators/clearing houses have to “protect the system” so the “smaller players” aren’t “injured”. All the caring and concern by large bankers/brokers/dealers to the working man is heart-warming. Excuse me, I’m having one of my Amber Heard crying moments now and need a tissue.

  25. pgl

    Trump toadie John Durham went after Michael Sussmann in a purely motivated abuse of prosecutional discretion. Durham of course was following Trump’s desire to get any Democrats who dared held Trump to account. Thankfully the jury saw through this abuse of power and acquitted Sussman on all charges after only 6 hours of deliberations:

    https://www.msn.com/en-us/news/politics/sussmann-acquitted-on-charge-brought-by-special-counsel-durham/ar-AAXVzcz?ocid=msedgntp&cvid=ac67dfab6a064cbeb0a802e4587d71be

    Now – where do we go to have Durham disbarred?

  26. ltr

    https://www.chinadaily.com.cn/a/202205/30/WS62945d2aa310fd2b29e5fca7.html

    May 30, 2022

    Maternal, infant mortality rates in China drop to historic low

    BEIJING — China’s maternal and infant mortality rates have both dropped to a historic low, the National Health Commission said Monday.

    In 2021, China recorded a maternal mortality rate of 16.1 per 100,000, said Song Li, head of the commission’s department of maternal and child health. At the same time, the mortality rates of infants and children under five have decreased to 5 per thousand and 7.1 per thousand, respectively, both dropping to a record low.

    Compared to 10 years ago, maternal mortality rate, the mortality rates of infants and children under five have dropped by 38 percent, 58 percent and 54 percent, respectively, Song said.

    Song noted that the country has made notable achievements in building healthcare mechanisms for women and children, improving related health services, and ensuring equal access to these services….

    2. AndrewG

      While that’s great news, it shouldn’t be surprising. It’s called development, and it’s not unique to China.

      For example, here are maternal mortality estimates for Taiwan: https://pubmed.ncbi.nlm.nih.gov/26237411/

      I wonder what the underreporting rates in China are? The Taiwanese authors estimate it to be about 60% in Taiwan in the last decade.

    3. Barkley Rosser

      ltr,

      I agree that China is to be applauded for continuing to have its infant mortality rate decline as has been going on for a long time and which has also been going on for a long time in most other nations, although not particularly in the US. However, there is no particular reason why at this particular moment the latest news of the continuation at basically the same rate of an ongoing trend deserves to be described in a headline as “historic.” This is just same old same old, although a good same old same old, even if not obviously especially “historic” at this time.

    1. Moses Herzog

      I don’t know, maybe this says something horrible about me personally, but I just can’t take this stuff seriously. It seems like the 4th grade kid who needs to seek counseling because he has two spitwads thrown at him. You’re a public figure, searching out celebrity, uuuuhh “grow a pair” or become a horticulturist. Try going to another country, near bipolar to your home country in terms of culture, where your race/nationality is 0.0000000000001% of the population, none of “you”/”us” are citizens, and because you’re dating one of “their” girls you have people throw large glass beer bottles at your feet more than once in restaurants and six of them physically threaten you as you leave an evening club, and cop a physically threatening attitude nearly everywhere to the person you’re dating, A jackass downtown intentionally opens a SUV car door in your face on a public sidewalk, etc etc etc. and on and on and on….. Trust me, Menzie doesn’t have a blog big enough for me to “itemize”. You know how I dealt with it?? Told 3–5 Chinese friends who some of which thought it would make me feel better by telling me it was “Chinese really aren’t that bad, you’re misunderstanding the interactions”. When Little Miss Muffet playing Sci-Fi troopers for 6-7 figures a year tries something like that Then tell me how rough it is.

      Oh my, a 12 year old Gamergate boy said something mean to you on Twitter. Gawsh…… and Disney/LucasFilms doesn’t have security for these issues. How will your life “go on”?? Pffffft!!!!!

    2. AndrewG

      Think they’ve forgotten about television’s interracial kiss? If not, they’re in for a fun, racist ride!

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