Posted on 10/04/2022 10:26:00 AM PDT by EBH
The United Nations Conference on Trade and Development (UNCTAD) has warned that the U.S. Federal Reserve’s interest rate hikes and the slew of other central banks raising rates, could pose harm to the global economy. UNCTAD calculated that for every Fed basis point rise, the economic output of wealthy countries declines by 0.5%, and for poorer countries, the value of all sales of goods and services is reduced by 0.8% for a duration of three years.
UNCTAD Report Criticizes Central Bank Rate Hikes During Global Economic Downturn
Monetary tightening measures may not be a good idea according to the United Nations (U.N.) agency UNCTAD. The entity, created in 1964, is an intergovernmental organization created to help developing nations enhance global trade. UNCTAD notes in an annual report that the recent interest rate hikes by the U.S. Federal Reserve and numerous central banks worldwide will reduce the economic output of both wealthy and poor countries between 0.5% and 0.8% over a three-year period.
“The world is headed towards a global recession and prolonged stagnation unless we quickly change the current policy course of monetary and fiscal tightening in advanced economies,” UNCTAD’s report notes. “UNCTAD projects that world economic growth will slow to 2.5% in 2022 and drop to 2.2% in 2023. The global slowdown would leave real GDP still below its pre-pandemic trend, costing the world more than $17 trillion — close to 20% of the world’s income.”
The annual report immediately digs into central banks raising benchmark lending rates and creating tougher monetary policy. UNCTAD blames the world’s economic hardships on “supply-side shocks, waning consumer and investor confidence,” and the Ukraine-Russia war. “Despite this, leading central banks are raising interest rates sharply, threatening to cut off growth altogether and making life much harder for heavily indebted firms, households, and governments,” the U.N. agency’s report explains.
UN Agency Urges Governments to Increase Public Spending and Enforce Price Controls on Energy and Food
The report, authored by UNCTAD’s secretary-general Rebeca Grynspan, says that Latin American countries and specific regions in Africa may “suffer [from] some of the sharpest slowdowns this year.” “The average growth rate for developing economies is projected to drop below 3% — a pace that is insufficient for sustainable development and will further squeeze public and private finances and damage employment prospects,” Grynspan details. UNCTAD’s call on the Fed and the rest of the world’s central banks is quite similar to the complaint written by U.S. Senator Elizabeth Warren (D-Mass).
Warren complained about the Fed raising the federal funds rate after it hiked the rate by 75 basis points (bps) on July 27. Using the news outlet the Wall Street Journal (WSJ), Warren published an opinion editorial that said the U.S. central bank could trigger “a devastating recession.” Warren further talked about the subject again on CNN’s State of the Union weeks later, after Fed chair Jerome Powell presented his economic outlook at the 2022 Jackson Hole Economic Symposium. Grynspan’s report is in kindred spirit, and it details that “interest rate hikes by advanced economies are hitting the most vulnerable hardest.”
The UNCTAD report adds:
Some 90 developing countries have seen their currencies weaken against the dollar this year – over a third of them by more than 10%.
UNCTAD’s report concludes by highlighting a few ways global leaders can address the problem and one of them is to “increase public spending.” The agency also urges governments to enforce “strategic price controls to directly target energy, food and other vital areas.” The U.N. agency calls on public and private executives to direct more funds toward green energy research and development. Lastly, the agency wants to see global leaders get behind the Black Sea Grain Initiative. The U.N.-led initiative would allow massive volumes of food and fertilizer exports from Odesa, Chornomorsk, and Yuzhny in Ukraine.
There was an emergency meeting of the Fed governors on Monday. I have seen nothing about what happened. It was speculated that an interest drop of up to 1% was in the works because of the Pound Sterling collapse and Credit Suisse problems. anyone heard anything?
The UN begging the PRIVATE BANK- the Federal Reserve Bank— chartered by Congress in 1913 to manage our “currency” among their pal banks.... a charter with Obamaumao the First renewed by is signature on another 100 year charter voted on and approved by Congress(!) no less. Obamaumao the First signed this piece of crap scam foisted on our markets our working people and our US native businesses— signed in December 2013 (with little to NO media coverage).
For another freaking 100 years! No— And we should all say NO to the “stability” wrought by these a@@holes with 10 years of “Quantitative Easing” of a FAKE stock market. Fake money- globalist crap and... leading to globalist wrought war under the Socialist World Economic Forum. Nazis— return in the highest levels-— a world war over the scraps caused by Leftist bankers. Very profitable to them.
They truly are MAD! (Insane)
Don’t those effette snobs have some champagne and caviar climate change conference to jet off to?
You are wrong. 0.005 is the same as 0.5% I don’t know how to make it any clearer.
Crickets.
spot on. demand will increase drastically under this idea and economic collapse would be close behind. When Biden starts doing this shit you can expect the US to fall within months. The people here will not put up with being unable to get products they want. If nothing else causes a revolution, the entitled attitude that most americans have will.
21 January 2021
Well that settles it...we definitely need more rate hikes.
Fun ain’t we got fun!
There was a time when there were great economic minds on FR too.
Rebeca Grynspan, socialist flunkie from Costa Rica. No wonder she hates free market economies,
You bet. 300 x 0.5% is 150%
Find a calculator, it will make your error more obvious.
“You are wrong. 0.005 is the same as 0.5% I don’t know how to make it any clearer.”
Actually, you are wrong. You are making your error by converting a percentage to a decimal equivalent and then multiplying, but then are not converting back to a percentage.
To get the decimal equivalent of 0.5%, you divide by 100, which gives you .005. You then multiplied by 300, which gave you 1.5. What you forgot is that to convert that back to a percentage, you have to multiply by 100, which gives you 150%.
So you deny the basic principle that .005 of something is the same as 0.5% of something ?
Let’s make this so simple:
50% of 100 is 50
.5 x 100 is 50.
You see that I don’t need to convert a second time to get 50%. It’s not 5000%, which is what I would get with your double conversion suggestion by multiplying again by 100.
The numbers are the same. And 300 x 0.5% is 150%.
50% x 3 = 150%
5% x 30 = 150%
0.5% x 300 = 150%
We already are. They just haven’t told anyone yet. That is why they don’t care about the Constitution anymore.
They stole the country totally in 2020 and it doesn’t look good that we will get it back.
Mathematically speaking, GDP wont go below 0 if that’s what you’re getting at with your 150% decline comment.
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