Hyperinflation, Dollarization and the Giant Growth of the Turkish Economy

Turkish President Recep Tayyip Erdogan has fired three governors of the Turkish Central Bank since mid-2019 and is fighting high interest rates in every possible way, insisting on applying low interest rates to the Turkish economy to boost growth and investment. Its purpose is to avoid a giant tsunami of bankruptcies for both businesses and …

The Era of Expensive Money

Central banks around the world are beginning to gradually implement a tapering policy in which they reduce their purchases on bonds by effectively reducing the liquidity cannula in economies. This is due to the gradual improvement of economic indicators and the rapid rise in inflation. Τhe FED, the Bank of England, the Norges Bank and …

When Real Interest Rates Are Lower Than Growth Rates Help Reduce Public Debt

After the end of World War II, short-term interest rates in the US were less than 1%, while T-Bond bonds with 10-year maturity yielded about 2% (https://www.govinfo.gov/content/pkg/ERP-2012/pdf/ERP-2012-table73.pdf) with the US Federal Reserve, the Fed directly purchases Federal Government bonds from the US Treasury Department. At that time (1946) the US national debt reached 119% of …

Inflation, Rising Interest Rates or Both Together?

At the hearing before Congress on Thursday, March 25, 2021, Fed Governor Jerome Powell was adamant that any resurgence of inflation in the US would be temporary (inflation above 2% for 2021), transitional and would in no way affect the Fed’s target of average inflation of 2%. But rising Federal Reserve bond yields point to …

Why Stocks are Still Cheaper in Relation to Bonds?

It is a fact that U.S. stock prices are at their highest historical level. But for someone to decide whether to keep their shares in their portfolio in the new year, it will be the wrong strategy to look at how high their share prices can go. What matters to the investor is that the …

The Inequality of Borrowing Cost Rates in the Eurozone

The European Central Bank (ECB) recently published data on the borrowing rates of households, businesses and the overall long-term borrowing costs respectively for both the Euro area and each of its member countries (Source: ECB, https://data.europa.eu/euodp/en/data/publisher/ecb). What continues to trouble us from the graphs below is the fact that a Eurozone of different speeds appears …

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