This is what the head of the US Federal Reserve is doing. This is what the Council of Wise Men in Germany does. Lloyd Blankfein, the former head of Goldman Sachs, also did the weekend. Everyone warns of the impending recession, which Blankfein says is “very, very likely.”
The reasons for the collective gloom are obvious: the war in Europe, global inflation and, in part, the still disrupted supply chains following the corona pandemic.
An interesting question is how to avoid a perfect storm
More apocalypse can be easily added, from the tangible effects of the climate catastrophe to the looming famine in Africa. But the interesting and therefore intellectually demanding question is, how can this perfect storm be avoided? What needs to happen to prevent the disaster from happening?
Mankind does not break into the path of self-destruction that has invaded the earth, as in Friedrich Dürrenmatt’s dystopian story The Tunnel. There really was no escape: “She’s still racing,” the twenty-four-year-old said, pointing to the speedometer.
“One hundred and fifty. Has the car ever driven one hundred and fifty?” “A maximum of one hundred and five,” the conductor replied. “Exactly,” the young man said. “It simply came to our notice then. The speed is increasing. Now the knife shows one hundred and fifty-eight. We are falling. “
Restrictive monetary policy should dampen inflation
So here are six thoughts to help you avoid free fall and do what is rarely done in modern politics, which is to think at best:
1. Inflation has its roots too much money. Therefore, the cost of money should also increase, ie, interest rates should be dosed In Europe start immediately. A return to restrictive monetary policy now that the effects of a miraculous increase in money are being felt by all may not have to defeat inflation overnight, but may have a dampening effect.
2. Collective bargaining partners, ie employers and trade unions, could make a significant contribution to reducing prices on the front in the coming months. Long-term collective agreements and lump sums for lower collective bargaining groups can prevent wage and price spirals.
NATO should initiate negotiations on a new European security architecture
3. Sanctions regime of NATO countries in front of Moscow threatens global food security. The war between Russia and Ukraine is further disrupting already disrupted food flows. In 2021, Russia was the world’s largest exporter of wheat, exporting a total of about 33 million tons. The West should change its mind here, from the relentless fight against Putin to the fight against hunger. The people of Africa and the world economy would be grateful to those involved.
4. The world economy and world peace It would also be more beneficial if NATO did not do so now to Sweden, Finland and Ukraine and thus expand into their eastern and northern flanks of Europe, but under Turkish I am looking for a moderator to talk about a new security architecture in Europe. Erdoğan, who in any case refuses to accept the Western sanctions regime, offered his mediation services. Olaf Scholz is also supporting a conversation with Putin, which has been harshly criticized at home and could be useful in this particular situation.
5. Instead of emir from Qatar to make kiper fuel from fossil fuels in Russia Middle East to change it, the state would now have to redouble its efforts to push forward the country’s decarbonisation. New funding programs and a Marshall Plan to cut red tape in Germany and Europe will offset the recession.
There is no good reason for central bank governors and heads of government to be timid
6. The threat of betting between the United States and China, which leads to the politicization of trade relations and is obliged to worry an exporting country such as Germany, could be replaced by a new free trade agreement. The simultaneous war in Ukraine, NATO enlargement and the deliberate initiation of a conflict with China pose a risk of explosion that could be mitigated on the Western and Chinese fronts for mutual benefit.
Conclusion: There are reasons, but not good ones, for the current frustration of central bank governors and heads of government. The spontaneous words of the seventies want to shout to the frightened of all countries: Prosperity is …