Why the Fed should not prevent a US recession

By: Paul de Grauwe, K. U. Leuven

The US needs a higher savings rate. There is no way around it.

Is US inflation at 8%?

By: Wolfgang Münchau

Some estimates suggest that we are consistently underestimating the rate of US inflation. While I am largely agnostic on this particular issue, I strongly believe that we need a debate about how we measure prices. (Note to readers: The guestbook entries are working again.)

Some notes on the source of global imbalances

The two prevalent theories of the sources of excess global liquidity have very different implications on the near-time outlook for financial markets.

The rise in long term bond yields comes at a good time for the euro area

We always thought that the ECB will probably not have to go all the way 4.5% or even higher because the required monetary tightening would come from other sources - the exchange rate and higher bond yields.

How to read the ECB latest comments

We are looking at rates of 4.25% sometime in the autumn, but no more this year. What also lends support to our dovish view is our perception that the ECB's governing council is no longer as unanimous as it used to be.

Our position revisited - The case for raising interest rates beyond 4%

Unexpectedly strong economic growth in the euro area during Q2 - likely to persist into Q3 - justifies a rate rise beyond 4%. There are no indications of significant cost-push inflation, but capacity constraints are building up in some sectors.

Some notes on the return of inflation

Jim O'Neill of Goldman Sachs last week argued why there will be no return of global inflation. We disagree with him.