The UK economy faces a few paradoxes. Low Growth – High Inflation. Firstly, after a deep recession the economic recovery is weak. In theory, high unemployment and low growth should lead to low inflation. However, due to rising energy and food prices, we have inflation above target. This presents a conundrum for the Bank of …
Readers Question: Where is the US economy headed? Is it inflation or depression? Recently, Goldman Sachs predicted a rough year ahead for the US Dollar. They forecast the dollar may fall against Pound Sterling to $1.85 in 12 months. Against the Euro, they forsee it to fall to $1.55 in a year’s time. Exchange rates …
Bill Gates and Warren Buffet are two of the richest men in the world. Does the concept of scarcity apply to them? Wealth of Bill Gates In 2011, the wealth of Bill Gates is estimated at $56 billion. This comes from a variety of sources, but his 6% share in Microsoft provides the bulk of …
There is speculation about how long interest rates will stay at zero. – See: – How long will interest rates stay at zero? Another issue is the limitations of zero interest rates. There is much hope / expectations that fiscal austerity can be offset by loose monetary policy – i.e. if we cut government spending …
There is often much discussion about the impact of tax and benefits on the distribution of income. This is an interesting graph which shows the impact of different taxes and benefits on income distribution. As expected, direct taxes (like income tax) are progressive – i.e. they take a bigger % of income from high earners. …
If you are studying for exams, you will hopefully, be learning that the value of a currency is generally influenced by factors such as: Interest rates – low interest rates lead to hot money flows out of economy and a weaker exchange rate. Relative inflation rates – Higher inflation makes a countries exports uncompetitive and …
A crucial issue at the moment is the state of the Chinese currency. Many feel that the Chinese government are manipulating the Currency to keep it undervalued. To keep the Renminbi undervalued the Chinese are selling their currency and buying dollar assets. The weaker Renminbi is good for Chinese exporters. It makes Chinese exports more …
To many people’s surprise, UK house prices have risen quite strongly in the past 12 months. If we look at the experience of Japan, United States, Ireland or Spain, it seems the experience of Britain is unusual. Countries like Japan and the US had a boom and bust in house prices, similar to the UK. …