PUBLICATIONS - ЭIЄ Trust Economics

Why is the only deposit banking product a deposit, while everything else is an investment?

Borrowing rates may be rising, but deposit rates remain at zero, frustrating depositors who see inflation erode the value of their money. The average interest rate on new loans in the Eurozone was 3.85%. In contrast, the average deposit rate was 1.15%. Any attempts by the Central Banks of the ECB in the member countries …

Recession will solve the problem because anti-inflationary policies have reached their limits

Central banks insist they are not done raising interest rates yet, with inflation still well below the 2% target. The result is that the EKT is currently at the highest interest rates in its history and the FED is at the highest interest rates in 22 years. At the same time, various side effects of …

The Productive Issue of an Economy

In order to see if an economy has entered a long-term path of dynamic development that will inevitably result in its transformation within a few years into a structurally sound and modern economy, we should establish and investigate whether this corresponds to reality by examining its production model for to find out if there is …

What would a US bankruptcy cause?

The Biden administration has until June 1st, so that the US does not end up in default, which in turn will bring a series of “chain” reactions that will cause a global economic shock. And the reason is very simple: American banks are “loaded” with government bonds and may collapse if the debt ceiling is …

The way of estimating the Nominal value of Public Sector Expenditures

A few days ago, the IMF published a study on the impact of inflation on public finances (“The Effects of Inflation on Public Finances“, May 5, 2023). The Study is based on the data of the member countries of the Fund from 1962 to the present day and comes to two interesting findings: 1. Regarding …

The Real-estate market in turmoil and how the EU & USA is hitting Growth

Investments in real estate are traditionally made with loans, the vast majority of which have a variable interest rate. Rising interest rates increase the cost of servicing loans and consequently reduce or eliminate the profit of the companies that own the properties. Already, internationally, the first effects are being observed, with many large companies that …

Pressure on Emerging Economies from the Overvalued Dollar

The rise of the US currency depletes their limited foreign exchange reserves and stunts growth by making their exports more expensive. The strengthening of the dollar over the past year due to continued interest rate hikes by the US Federal Reserve has put severe pressure on many emerging economies, which have seen their national currencies …

Shrinkflation: Less Product but the Same Price

From bread for toast to chocolate bars, companies are hiding rising costs due to inflationary pressures by downsizing many everyday products. For companies it is a way to maintain high operating profit margins, for consumers a constant cause for concern and for statistical agencies a real headache. The reason for the phenomenon of shrinkflation, i.e. …

Loans: When is it beneficial to change the interest rate from floating to fixed?

The answer depends mostly on how close it is to expiration. Important factors are the rate of rise in interest rates, the margins on new loans and how much risk a borrower can bear. Since July, the ECB has raised interest rates by three percentage points, putting corresponding upward pressure on the benchmark floating rate, …