Since the pandemic and geopolitical tensions have led to greater macroeconomic developments, Paris is surpassing new obstacles to “normalcy” in all areas. While acknowledging the inconvenience, we will raise the risk of erroneous juiciness and policy errors at all levels of society.
CAMBRIDGE – During the start of 2022, the sensation of dissension will be announced. Not only in governments, but also in challenges related to health, the economy, geopolitics and, in some cases, national security and finance … the hogares and a great variety of companies also the sinten. All of them are driven by normalcy, or if the impediment approaches it, during much the time of the desperate.
The Covid-19 is a relevant factor, for the most part, but there are a number of significant additional issues: since the increase in geopolitical tensions and inflation has increased the vulnerability to finance the high, the rise of poverty and volatility in the markets.
The omicron variant has levels of Covid-19 contact that are considered very pleasing with the dominant anterior variants such as alpha or delta. Fortunately, the variant ominous result is less serious and it is much less likely that the new cases will require hospitalization or its fatalities. Hecho, many hope that the omicron variant will allow the transition to alleviate this pandemic, without prejudice during the last two years. In this scenario the coronavirus is endemic, but relatively manageable, especially if we adjust the manner in which we do something.
Of all forms, the omnipresent variant is considered to be an important source of malnutrition at the moment: only many people are obliged to listen to it when confirming the contagion – these are the problems in the labor market and the provision, and reduce the incomes of the most vulnerable segments of society, including the countries adopting different strategies for managing Covid-19, amplifying the lack of coordination they have around the world.
Vacancy desiguality is seen as a particularly serious problem because it has opened its doors to the emergence of new varieties until the global population in general is vacated. Similarly, Chinese policy on “Covid-19 cero” could bring new series of issues to the supply chain and increase it even more in the interim.
These interruptions increase the pressure on the subject of just prices when inflation is converted into the main public concern in the United States. That for many starts with a limited impact on the prices happens to be much more generalized. For this reason, the sentiment of the empire consumers and the vulnerability of the hogares is increasing, especially in the segments of the population that are suffering from difficulties.
The failure of mano de obra is derrama in both directions. Although contributing to inflationary pressures has increased as companies move labor costs to consumers, it has also helped raise wages after decades of real-time erosion. This second effect is especially important for women who are in the lower extremity of the distribution of income, and wage earners are already leading the way in increasing productivity over many years.
Another source of malice is the volatility of the markets. As of this year, an increase has been pronounced in the destabilizing variations of asset prices, debit and that the preoccupations with geopolitical and economic issues are multiplied by the amount of knowledge that the central banks are in the process of implementing in its politicians. When it comes to extending massive assistance during the years to the prices of assets and committing a major error in insisting that by the end of November 2021, inflation was “transient”, the Federal Reserve of the United States is obliged to make sudden changes a less favorable policy. Now I have to react with breezes in front of the high inflation that has been able to understand and solve before, and that has been installed more deeply than this.
This abandonment of accommodative monetary policies – which include very limited interest rates and a record level of monthly liquidity injections during the 2021 part – will increase the risk of a considerable adjustment to what has been converted into a financial situation. flexibility without precedents. The risks that can be generated by the form in which the person is going to live will be specifically pronounced if the Fed is obliged, by way of retrospect, to implement an excessively contractionary policy.
This case involves an email containing three components mediating the Fed, in a very brief period, not only endorsing the monthly asset purchases, but also raising interest rates and commenting on its gigantic positions. It tends to lie after a period during which the Fed supports in an exceptional manner the prices of the assets, as directly as indirectly, continuously suppressing volatility and increasing appetite for risk.
Another tropic in its political responsibilities could cause a recession that would otherwise be inevitable, and society would have the double impact of a higher inflation and lower incomes.
Finally, we have the additional cause caused by geopolitics. Tensions between Russia and Ukraine have risen sharply over the past decade and inflationary pressures. Following the majority of the analysis, no security can be predicted and a military conflict will be declared or a diplomatic solution will be held, and many will be caught in the middle of a confusing situation. Some seem to agree with the quino-estadounidense relationship, albeit in a minor degree.
Each of these situations causes a considerable amount of incidence during the day. Juntas he created a deep and amplified malestar, which increased the probability of cometer equations and calculation errors at all levels of society. Although most of the current problems can be solved individually, it is difficult to recover from a large combination of them.
In the past, it was fundamentally a solid combination of resilience, agility and diversity of options to make sensational decisions in increasingly troubled situations. We will debug and insure, at the same time, to better protect the most vulnerable segments of our companies.
The author
President of the Queens’ College of the University of Cambridge, Professor at the Wharton School of the University of Pennsylvania and author of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.
Copyright: Project Syndicate, 2020
Reference-www.eleconomista.com.mx