Is the U.S. in a recession now? The U.S. economy could experience a sharp recession next year because of the lack of growth in the M2 monetary amount (cash and all deposits), according to Steve Hankey, professor of applied economics at Johns Hopkins University.
“We’re going to have a recession because of five months of zero growth in the M2 money supply, and the Fed is not paying attention,” he told CNBC. – We’re going to have a monster recession in 2023.”
What happens in a recession in the United States?
M2 is often used to measure the amount of money in circulation. The figure has been broadly unchanged in the U.S. since February 2022, though it had been rising strongly for two years before then amid monetary and fiscal stimulus during the coronavirus pandemic, MarketWatch notes.
“There hasn’t been a case in world history where unprecedented growth in the money supply, like what we’ve seen since February 2020, hasn’t caused sustained high inflation, above 2% for about two years,” Hankey said. – “So we’re seeing high inflation now, and so high inflation will continue throughout 2023 and will probably affect parts of 2024.
The expert estimates that U.S. inflation will be about 6 to 8 percent at the end of 2022 and about 5 percent at the end of 2023.
“The main problem is that the Fed chairman doesn’t understand, even now, what the reasons for high inflation were and are,” Hankey said. – He still keeps talking about supply-side problems. He never told us that inflation is always the result of an excessive increase in the money supply, that is the work of the printing press.”
Earlier, we reported that Biden’s plan to write off education loans would cost the U.S. budget $1 trillion.
Costs of electricity in Italy rose by more than 76% in August
Costs of electricity in Italy rose by 76.4% in August, compared with an average of 51.9% in the euro area. La Repubblica writes about it, citing the estimates of Italy’s Confartigianato, an association of small and medium-sized businesses.
“Italy has structural problems. Here the cost of gas and electricity has always been very high because of the nature of production and the fact that there has never been an appropriate energy plan. Therefore, the average electricity bill in Italy will continue to rise,” said the head of Confartigianato, Bruno Pannier.
According to him, now Italy can concentrate on the production of energy from renewable sources. In this matter, the country is in a better position than other countries of the European Union, in particular due to the climate.
The newspaper said that in July electricity and gas prices in France jumped by 23.8%; in Germany – by 46% and in Spain – 54.3%, while in Italy the increase was 59.1%.
Earlier we reported that Nord Streams was almost completely out of service due to malfunctions.
The situation in Europe is worsening. Rising food and energy prices are becoming a growing problem
The situation with rising food and energy prices in the EU soon will only get worse. This follows from the statement of the head of the European Central Bank Christine Lagarde.
British residents have already spent more than half of their savings. According to The Times, monthly expenditures on British energy prices are growing by a record £145. The pound itself reached a historic low against the dollar and almost equaled it. The sharp decline occurred after the decision of the British government to reduce taxes in the country.
Against this backdrop, Parliament began to prepare a vote of no confidence in the new Prime Minister, Liz Truss, who proposed new economic measures. The situation in Germany is also difficult. As German Finance Minister Christian Lindner admitted, he does not yet know how to fight gas prices.
“We are working in parallel with the commission on gas prices, which was created by the federal government. And so we will be looking for ways in which we can put price control into practice. I have an idea of what direction to think, but I don’t really want to go into all the details,” Ridus said.
Earlier, we reported that cryptocurrencies and the dollar began a showdown for the title of most profitable asset.
Nord stream sabotage? “Nord Streams” is almost completely out of order due to malfunctions
The Nord Stream and Nord Stream 2 gas pipelines are almost completely out of service due to various faults. Many are voicing opinions about sabotage on Nord Stream.
Both gas supply routes to Europe via the Baltic Sea bed are out of service. First there was the Nord Stream 2 accident, where the pressure on one of the lines dropped drastically. The cause of the leakage is currently being investigated. Then pressure dropped in both strings of Nord Stream, but the reason for the drop in pressure is still unknown. There are serious reasons to assume a Nord Stream attack.
The publication noted that the German authorities have already started working with the Danish authorities and local law enforcement agencies to find out the reason for the pressure drop in Nord Stream-2. However, it is not clear how the pipeline will be repaired, as it is under U.S. sanctions and bankruptcy proceedings, although it has been postponed until January 2023.
At the moment it is impossible to name the exact cause of the malfunctions that have occurred. However, the sudden drop in pressure may indicate not just a leak, but a much more serious problem. Also, this accident could have certain consequences for the entire gas market, and repairs could take quite a long time.
Earlier we reported that British banks had begun stopping some mortgage deals because of the pound falling against the dollar.
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