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Global Inflation Shock | Quick Take | GZERO Media

Global inflation shock

Ian Bremmer's Quick Take: Going to talk about inflation. Why inflation? Well, because I posted something on Twitter that sort of exploded over the course of the last couple of days, which means people are clearly interested. And I'll tell you what the tweet was, I'll show you a little post here. It said, "US: left government, high inflation. UK: right government, high inflation. Germany: centrist government, high inflation. Italy: everyone in government, high inflation. Wild guess, it's not the government." Now of course, it is government in part, but it's not the government, which is the point. In other words, no matter who you decide to elect, if it was Trump, or Biden, or Merkel, or Scholz, or Johnson, or Starmer, or Bolsonaro, or Lula, you are getting high inflation, you're getting high inflation globally. I'll talk about why that is.

Now, a lot of people went nuts and said, "How can you call the US government left?" And certainly, from a global perspective, the entire US political spectrum is kind of on the right. And from the European perspective, you wouldn't call Biden a leftist, you'd call him a centrist. You might even call him center-right? Of course, Fox News on Primetime calls Biden and the Democrats a bunch of socialists. And if I said that the US was a left government, I mean a right government, then everybody in the US explodes, so it just shows how divided and screwed up everybody generally is anyway. But leaving that all aside, the point is the point. And it's an important point, which is that we are so divided in the United States and globally that when something that really upsets us happens that we haven't seen in over a generation, which is persistent levels of very high inflation, we get really angry, and we want to blame the government and blame the government hard.

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Chair Jerome Powell faces reporters after the Fed's meeting in Washington, DC.

REUTERS/Elizabeth Frantz

What We’re Watching: Fed ups rates, zero-COVID shenanigans in China, Pakistan’s energy crunch, Russian Davos

Central banks unite vs. inflation

On Wednesday, the US Federal Reserve raised interest rates by 75 basis points — the biggest hike since 1994 — as it scrambled to contain runaway inflation. What's more, new projections show that the Fed plans to hike rates by an additional 1.75 percentage points until the end of the year — the most aggressive pace since Paul Volcker engineered a recession with double-digit interest rates to tame sky-high inflation in the early 1980s. Just hours before the Fed concluded its meeting, the European Central Bank unveiled a new bond-buying tool to protect the Eurozone's weakest economies from higher borrowing costs, as the ECB gets ready to fight inflation by jacking up interest rates next month for the first time in 11 years. In recent days, rising premiums on Italian and Spanish bonds compared to German ones had rung alarm bells throughout the Eurozone, with painful memories of its debt crisis in the early 2010s. The twin announcements sent shockwaves through global financial markets, with investors already panicking that a recession might be unavoidable to ease out-of-control prices due to a combination of the war in Ukraine, pandemic-related supply chain snarls, and massive stimulus spending on both sides of the Atlantic.

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S3 Episode 4: Is now the time to buy? Real estate dynamics in 2022

Listen: As the global pandemic surged in the US, so too did home sales and home prices. On the flip side of things, commercial real estate took a hit as workers increasingly worked from home. As interest rates rise, we look to see what markets are still hot, which are cooling, and what impact this important sector has on the larger economy.

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Paige Fusco

The Graphic Truth: 40 years of the Fed's damage control

In a bid to curb inflation, the Federal Reserve is likely to raise US interest rates by 0.5% at its May meeting. Chairman Jerome Powell also hinted that further rate hikes would follow. The May rise coupled with the quarter percentage point increase last month would be the first time since 2006 that the Fed has hiked the interest rate in consecutive meetings. Criticized by analysts for being slow to tackle inflation, the Fed has said it will begin reducing its $9 trillion asset portfolio by summer — a further effort to reduce stimulus and prices that have hit a four-decade high. We look back at those 40 years of the Fed’s efforts to battle inflation through rate hikes.

The Graphic Truth: Americans sour on economy

According to several indicators, the US economy is doing fine. Joblessness, for instance, is way down, with fewer Americans collecting unemployment benefits than at any time since the 1970s. Still, inflation has caused the cost of food and fuel in the US to soar to a 40-year high. Polling shows that Americans’ sense of financial security and economic stability is waning – a massive problem for President Joe Biden ahead of the midterm elections. Biden says American companies should help tackle inflation by lowering costs, not wages. But Fed Chair Jerome Powell signaled plans to take action this week, raising expectations of an interest rate hike in May. We take a look at US consumer confidence, which reflects general sentiment about the state of the economy, since 2000.

Positive Changes Expected to Help Shift the US in 2022 | US Politics In :60 | GZERO Media

US in 2022: Smarter social media, more housing & living with COVID

Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, discusses social media, US housing market, and learning to live with COVID-19:

What are three profound changes that you would foresee that will shift the nation in a good way?

Well, it's kind of hard to be optimistic when you spend too much time looking at US politics, but I'll give you three things I think would help. One, and that will help, one, Americans are going to get smarter about social media. A quiet storyline this year has been an ongoing investigation in Congress into the harm that can be caused by unfettered access to social media platforms. A whistleblower came forward with some evidence from some of the tech companies suggesting that too much time on social media can be harmful, particularly for teen girls. And I think parents are going to start to get smarter about this issue. There won't be legislation, and this will be a slow process. While unfettered 24-7 human contact has been great in many ways, it also has a dark side, and these kinds of congressional investigations will help give parents new tools to help deal with that.

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Russian president Vladimir Putin met Chinese president Xi Jinping in a virtual call on Wednesday Dec 15, 2021.

REUTERS

What We’re Watching: Putin-Xi heart each other, Boris survives Tory revolt, Fed may raise US interest rates

No new friends — Putin and Xi. The leaders of Russia and China held a conspicuously chummy video conference on Wednesday at a time when both are getting an earful from “the West.” Putin told his “dear friend” Xi that he will absolutely attend the Beijing Winter Olympics next February despite a US-led diplomatic boycott over China’s human rights abuses, and that China is right to be worried about Western military maneuvering in the Pacific. Xi, meanwhile, told his “old friend” Putin that China supports Russia’s demands for security guarantees from NATO. Both men reportedly discussed developing alternative financial structures in order to evade Western sanctions — the US and EU have threatened to shut Russia out of SWIFT if the Kremlin invades Ukraine (again). Russia-China relations have always been tricky — they have clashed over borders in the past and Moscow is perennially worried about being dwarfed economically by its more populous neighbor. But as the US gears up for a push against authoritarian countries, the two most influential important ones are closing ranks.

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Ari Winkleman

The Graphic Truth: 50 years of US inflation vs interest rates

Inflation in the US remains at its highest monthly level since the 2008 financial crisis. Right now most economists agree that rising prices are being driven by pandemic-related supply chain disruptions, which the government can do little about. This has given some oxygen to supporters of the Biden administration's big-spending agenda, who now insist that inflation will ease up once supply chain disruptions resolve. Deficit hawks, for their part, still say that the Federal Reserve is overheating the US economy by keeping interest rates low because it hopes inflation will be short-lived. We compare US inflation and interest rates over the past half century, a period in which America has suffered double-digit inflation figures more than once.

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