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The economic crisis in Turkey in 2022 wiped out half of the value of the lira. Inflation surged. The war in Ukraine hurt Turkey as it is dependent on Ukraine for grain supplies. The surge in fuel prices and the weaker currency meant higher inflation and more of its scarce foreign reserves going to imports of oil and gas. Net foreign reserves dropped to $6 billion in July, coming back up to $26 billion by December 2022.  President Erdogan maintained close relations with Russia to have access to  Russian oil and gas. Turkey has increased exports to Russia by 45% including clothing, household appliances and electronics. Russia is considering postponement of $20 billion owed for natural gas imports. And Russia transferred $5 billion to Turkey in July for a nuclear plant, with $10 billion expected later on. This helps cover the more than $100 billion the Turkish central bank used in 2022 to support the currency Lira. Erdogan's foreign policy has been to act as an intermediary in a UN negotiation for opening the Black Sea shipments of grain from Ukraine and fertilizer exports from Russia. This helps Arab countries in North Africa including Egypt which depend on Ukraine for vital grain supplies.  Everything Erdogan does says a former foreign minister is designed to push up his poll ratings which have risen about 5 percentage points from a low of about 39% in January of 2022 to about 44%. Inflation at 57% in Jan 2023 is still hurting ordinary people in Turkey and the outcome of the May 2023 election after 20 years of Erdogan in power is uncertain.  ...

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This analysis by Mackintosh in WSJ points out that the low to negative interest  policy of the ECB has hurt savers, bank profits, and makes the ECB unpopular, yet it has shown tangible signs of success in creating jobs. This is true even though unemployment in the EU is still over 10% in some countries. He says that the unemployment is back to where it was in Nov. 1998 before the euro. There are 7.5 million jobs created in EU since beginning of 2014, the point at which ECB went to ultra low interest rates. This is above the 6.3 million created in the U.S. upto 1st quarter 2016. Big difference now is that companies and households are borrowing as rates fell. Inflation at 0.2% in August 2016 for EU is a weak spot, but considering where the EU was just 2-3 years before in 2013, the change is a largely positive one.

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Prof. Calomiris of Columbia University, says the U.S. Federal Reserve should increase the cash reserve requirement for U.S. banks to prevent a surge in inflation. He points out that excesss reserves at banks stand at about $1.5 trillion. He suggests the Fed should take early action to prevent a jump in lending and credit creation- a pattern seen in the past after several years of dampened credit and lending.

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Inflation is eroding African economies with about 28% in Ghana, and over 70% in Nigeria. The value of African currencies is declining against a strong dollar reducing imports of manufactured goods.

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Bernanke in reflections on his policies for quantitative easing in response to the 2008 financial crisis, says the policies were intended to protect Main Street and the average American, even though this is not readily apparent. He says the policies did not lead to inflation as critics have stated, and one has only to look at today's inflation statistics to know this- referring critics to the government CPI report in Jan 2014 that consumer prices went up by 1.5% in 2013 and less than 2% for 2012. Bernanke says he hopes he took the right actions, and still retains the conviction that the American economy will recover losses from the 2008 financial crisis- even though the answers to this questions won't be seen for some time.

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Japan's central bank, the Bank of Japan, is under pressure from the government to do more to address deflation and the appreciation of the yen. The central bank increased purchase of government bonds to 10 trillion yen ($124.7 billion) in February 2012, and set a goal of 1% inflation. A senior cabinet ofice official attending the central bank policy meetings of April 9-10, stated that the government expects the Bank of Japan to "promptly" achieve the inflation rate of 1%.

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Alan Meltzer is a respected voice on US Federal Reserve policies since the time Paul Volcker was Fed chairman He says the Bernanke Fed is making some serious policy mistakes. The first is concentrating on near term events, such as business response to Obama administration policies, over which it has little influence, while neglecting the long term consequences of its policies. The second is its effort to tackle unemployment by interpreting its mandate as a dual mandate of tackling both unemployment and inflation. By tackling one at a time, he says, the Fed is likely to fail totally. The US is unlikely to not feel the inflation that is going on around the world. By ignoring the changes in money supply growth the Fed is making another mistake. His advice is for the Fed to increase interest rates it controls to 1%, to signal that it is aware of inflation risks. Second, the Fed should annonce a specific, detailed plan explaining how it will reduce $900 billon of the $1 trillion banks continue to hold in excess of the legally required reserves. Third, the Fed should end QE II, the most recent round of treasury bond purchases. Meltzer says if the Fed waited for two more months in Nov 2010, it would have found that a double dip recession was not about to occcur and it could have held off from pursuing QE II. Meltzer emphasizes that slow growth and unemployment is not a monetary problem, because of the ample liquidity already in the financial system. Uncertainty about government policy and the future direction has been clarified by the election which will help put the economy back on track. Philadelphia Fed chairman expresses similiar views in other articles and an interview with O'Grady of WSJ....

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With continued job growth the US Fed is planning to continue its sequential interest rate increases. The Fed raised interest rates 0.75% at each of the last 3 Fed meetings and a fourth 0.75 rate increase is expected when it meets on November 1-2, 2022. This is the most rapid rate of increases since the 1980's and it is designed to bring inflation under control.

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India has managed to keep inflation down to 4.5% compared to US at 7.5%, Sitharaman tells parliament in the Budget session., The Budget is seen as a far sighted document meant to concentrate India's capital investment resources on the infrastructure and other projects that will accelerate India's progress into an advanced industrial nation by 2042. It is also meant to increase employment in every way possible getting industry to do its part in Team India effort.

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The Fed's action will help retirees and savers after two decades of low interest rates were introduced to counteract the abuses of the financial market actors in 2009 and in prior crises. It hurts borrowers who had benefitted from such policies and as the situation returns to a more normal 5-6% interest rates that have prevailed for most of the postwar period, the situation is better for most Americans and the American economy. Not only is the Fed fighting inflation, it is also ending an abnormal period for interest rates which hurt American savings and older Americans saving for retirement. When combined with the Biden administration's spirited action to invest in American manufacturing, in science and technology advancement, in infrastructure and education, this creates a resilient economy with low unemployment and moderate inflation.

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How Chinese policy now focuses on inflation and lets the currency appreciate. The Tibet riots were partly due to discontent for the rising prices of cooking oil and meat and inflation partly caused the discontent leading to the 1989 demonstrations in Beijing.

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All sectors of the U.S. economy see an increase in hiring, including retail, transportation, healthcare and manufacturing, as the economy adds 288,000 jobs in June, according to the Labor Department. Manufacturing added 16,000 jobs, transportation 17,000 and the public sector increased jobs by 26,000. Hiring also picked up for high school graduates compared to the poor record in 2013. In 2013 one Barclays economist says the jobs for high school graduates at this point were declining by 16,000 a month on yearly basis. He says employers are now adding 29,000 jobs for high school graduates a month in 2014. The unemployment for high school graduates declined to 5.8% in June 2014, for persons with some college education or an associate degree 5.0%, for college graduates 3.3%. Barclay's estimate is that the U.S. added an average of 231,000 jobs a month for the first half of 2014. The inflation rate remains at about 2%, giving the U.S. Fed more flexibility in setting rates to support jobs growth. The lower unemployment rate of 6.1% understates the underemployment, as a more accurate measure of employment which includes people working part time because they cannot find jobs is at 12.1%. The proportion of Americans in the labor force is also at a 36 year low of 62.8%. These two indicators for unemployment, unemployment including people working parttime, and the proportion of Americans in the labor force, combined with inflation, are the main indicators Fed chairmam Yellen is looking at....

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The Russian central bank under Elvira Nabiullina raises interest rates by 3.5% to 12%. In the first 5 months of 2023 the Russian government spent 50% more in rubles than in the same period in 2022. The increase in spending meant increase in wages and more hiring for production of goods including production for the war effort. The policy was to carry on the war effort without the effects of the war being felt by ordinary Russian citizens. The result has been higher inflation at 7.6%. Nabiullina faces a unique set of challenges to control inflation, maintain the economy even as Russia continues the war effort in Ukraine. 

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The People's Bank of China's decision to reduce the reserve requirement for deposits at banks by 0.5% is not likely to have much impact, as banks already have enough money to lend. The problem is more a lack of demand for loans as the economy slows. Inflation fears restrict the use of growth tools such as lowering interest rates and the housing bubble limits the use of construction spending to increase growth. Political uncertainty with a leadership transition, and economc uncertainty in Europe also limit options.

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U.S. Federal Reserve minutes for Sept. 16-17, 2014 released October 8, show the mood shifting away from raising interest rates, as a stronger dollar and weak overseas growth are likely to lower U.S. economic growth, A stronger dollar is likely to keep inflation down. Fed officals showed serious concern about slowing economies of Europe, Japan and China lower U.S. exports. A former Fed adviser Jon Faust, director of the Center for Financial Economics at John Hopkins University, says even with no action from the Fed on interest rates, the stronger dollar makes financial conditions more restrictive, and acts as a tightening. The Fed minutes are before the crisis in Hong Kong which created geopolitical tensions and affects foreign investment climate for China, reducing Chinese growth even further.

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Lahart says adjusting for inflation the DJIA average in early March 2013 would be about 12,900 instead of 14,254, much less than it was in Oct 9, 2007 peak. If dividends are reinvested the Dow would be at 16,600. With inflation and dividends taken together the Dow would be around 15,000. Lahart does not cite his source. Browning in a separate piece says the DJIA adjusted for dividends, inflation and taxes, according to Bespoke Investment calculations is still below the 2000 level in 1994 dollars, and provides a different view.

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Immigration is an important issue, it also is middle of the pack voting issue, says this report in the Washingon Post. Chicago Council poll shows that what matters a great deal is- economy in general (58 percent), inflation (53 percent), abortion and immigration both at 43 percent,  crime 39 percent, Ukraine 19 percent, Gaza 17 percent. This is also true for Independents at 41 percent, protecting democracy 51 percent, inflation 48 percent. A majority of Americans say about undocumented immigrants that they should be allowed to stay and 6 out of 10 say immigrants from other cultures have "a positive effect" and interestingly 7 out of 10 of all Americans say "immigrants mostly take jobs that nobody wants."

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Feldstein wants to see a stronger dollar, that is less inflation eroding the value or purchasing power of the dollar at home. Abroad he wants to see a weaker dollar in relation to Europe, Japan and Canada where about half of US imports originate. And a weaker dollar in relation to lower wage Asian countries to improve America's trade balance. Better to do this now than to wait a few years when the adjustments needed would be greater. America needs to export more and import less to improve the trade balance. A competitive dollar in relation to trading partners in Europe and Asia would provide the improvement in the trade balance that the U.S. needs for keeping economic growth. With the risks to the economy from declining housing prices improving the trade balance becomes important. During the 1985-1988 period the dollar declined in value significantly, falling 37%, but the inflation rate averaged 3.1%,says Feldstein. This is what he means by having astrong dollar at home, which is to say not eroding its purchasing value, while at the same time increasing exports and reducing imports. During this period merchandise exports increased by 40% while imports increased at half that pace. A repeat of that experience is possible and necessary to maintain growth, according to Feldstein. See the link to McKinnon, at Stanford, The Yuan and the Greenback, WSJ, August 29, 2006, which cautions against anything but a very gradual and carefully managed appreciation of the yuan, giving importance to inflation and interest rate differentials between the US and China. One point to note narrowing of interest rate differentials between the US and China is seen as backdrop for dollar weakening on exchange rate basis. McKinnon appears to consider a smaller interest rate differential as a cue for an even lower appreciation of the yuan, see his example of 2% inflation in the US and 3% interest rates. Interestingly the two approaches may complement each other. Offering a perspective of China maintaining its growth and not risking deflation or slowdown, and of the US maintaining its growth and not risking a slowdown from the housing market collapse, by strong domestic investment and exports. How to keep both economies going may be the policymakers challenge for strong global economic growth....

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Stock funds in the US which suffered decline of 18% in 2022 staged a recovery of 7.8% in January 2023. The Fed's ability to bring down inflation and the health of the economy, improving economic conditions in Europe, China, and India, provided supportive conditions.

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Republicans pursuit of infrastructure dollars in California is a good thing, a rising tide lifts all boats, and infrastructure spending is even higher under Biden's Inflation Reduction Act in states in the south and southwest.

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A big change and a rare combination of events is causing labor costs to rise. China's new labor law makes it more difficult for employers to reduce wage costs by methods used in amarket environent without an enforeable code of conduct. The costs of certain raw materials like plastics have gone up significantly. Environmental laws are taken more seriously. And just when wage and raw material costs are rising the government in response to international pressure on the trade surplus is phasing out tax rebates on the less sophisticated products like toys, apparel, leather etc with the intention of moving into more sophisticated products like electronics and cars. As a result after years of falling prices in 2006 prices of Chinese goods in the US went up by 2.4%. And China is putting pressure on commodity prices worldwide through its growing use. All this contributed to USA inflation going up 4.1% in 2007 from 2.5% in 2006. How will this change in 2008 and the years ahead just when the USA is entering a recession and period of sluggish growth? About 7.5% of American spending on consumer goods come from China. With the weaker dollar in relation to the yuan, Chinese factories get fewer yuan for their exports to the USA, the depreciation of the dollar being about 7.6% in 2007 with more depreication ahead in 2008 and 2009. Factory wages have gone up by 80 % in the last few years and the lowest factory wage is about $125 according to experts. Chinese factories have already factored all this into their new pricing asking for price increases of 20, 30, 40 or 50 % according to the American Apparel and Footwear Association. What to expect then on the retail shelves of stores in the USA? Expect a price increase of 10% on Chinese goods. This means from now on Chinese goods instead of lowering inflation in the USA will actually add to inflationand the area of cheap goods coming to a close. As it takes time to move production to places elsewhere in Asia like Vietnam and India its going to be some time before another country takes the place of China....

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The St. Louis Fed President, James Bullard, argues in a paper, that the keeping of target interest rates near zero as promised by Ben Bernanke at the Federal Reserve, sets up a situation similiar to Japan of a "deflation trap." He said that core annual inflation of only 0.9% in May 2010 suggests that there is a risk that the nominal inerest rate and inflation end up being at an unintended steady state which is dangerously low. He also said that the market's interpretation of the Fed's extended period of low interests language had a perverse effect of stretching out the period before things normalize. He suggests as an appropriate step "quantitative easing"- a policy of buying monetary debt with longer dates. But for this to be effective, the action has to be credible.

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Faced with low eurozone inflation of annualized 0.7% in October 2013, and low growth, the ECB lowers interest rates in the eurozone by 0.25%. The risk from deflationary pressures is high in Oct 2013. Weakening the euro from $1.38 in Oct. 2013 to $1.34 following the rate cut helps increase inflation through higher price for imports and helps boost exports. This brings rates close to zero and the ECB having to resort to quantitative easing in future efforts.