Writing last year about the expected economic policies of a newly elected president, I thought that the Federal Reserve (aka the Fed, U.S. central bank) would have to see the direction of the fiscal policy before any new decisions on interest rates. Things, however, turned out considerably more complicated because a radical change of foreign […]

U.S. trade problems are an old story with deep roots in the international monetary system where America, serving as a banker to the world, allegedly got addicted to “deficits without tears.“ The French pinned that original “sin” to the United Nations Monetary and Financial Conference in Bretton Woods, during July 1- 22, 1944. That’s when […]

More than one-third of China’s $18.3 trillion economy is generated by its foreign trade. Although that is well below the world average of 59% of GDP, China’s exports and imports still present a policy challenge because their dynamics are mainly determined by external demand and price fluctuations on world markets for goods and services. The […]

The state of the U.S. economy will determine (a) the outcome of next year’s midterm elections on November 3, 2026, and (b) President Trump’s ability to govern effectively during the rest of his mandate. Republicans now have a thin majority of 218 seats (with two vacancies currently being filled) in the House of Representatives and […]

Washington is now where it wanted to be at the beginning of President Trump’s first term of office on January 20, 2016. Watching Obama administration’s futile “pivot to Asia” in November 2011 to contain China, and the violent government change in Ukraine in February 2014, followed by the failure of Minsk Agreement of September 2014, […]

The newly elected Japan’s Prime Minister Shinzo Abe told his first press conference in December 2012 that “China is an indispensable country for the Japanese economy to keep growing. We need to use some wisdom so that political problems will not develop and affect economic issues.” Abe thought he could have a foot in both […]

Thomas “Tip” O’Neill, a Massachusetts Democrat and a speaker of the U.S. House of Representatives from 1977 to 1987, coined a phrase that “all politics is local” to emphasize that voters are primarily interested in issues affecting their areas and communities. And in spite of different party affiliations, Mr. O’Neill had a close political and […]

While the outgoing U.S. government sounds dire warnings that the borrowing limit will be reached next Tuesday (January 21, 2025), and that the country’s financial system could experience major problems, America’s President-elect Donald Trump is reaching out to Chinese and Russian leaders to stop the bloodshed in Europe and Middle East. The road from precarious […]

The exchange of New Year greetings between the Chinese and Russian leaders points to their closer political, economic and security ties. And those were not just the usual well wishes during the festive season. Policy decisions at the highest level of state were anticipated over the last few weeks by statements of the countries’ top […]

The first task of the new U.S. administration should be to pull the world back from confrontations that are leading toward a global conflict and a nuclear Armageddon. Only active peace diplomacy – and a policy of free and fair trade – can open the space to rebuild and stabilize American economy in a more […]

There are some early signs that the incoming U.S. administration will pay more attention to the part of its economy that accounts for one-third of demand and output. In a recent discussion with the Canadian prime minister, President-elect Trump raised the question of Washington’s large and systematic trade deficits with its North American neighbors. What […]

The three largest countries of this rapidly expanding organization have accelerated their drive toward closer and more comprehensive economic, political and strategic cooperation. The ongoing consultations show their concern that vast areas of mutual relations are inadequately covered, and that their policy coordination mechanisms should be more actively used in an unfolding multipolar world. One […]

Cutting U.S. budget deficits, maintaining price stability and running a steadily growing economy is impossible under conditions of intensifying military operations in Europe, widening Middle East hostilities and dangerously rising tensions in East Asia. Europe is the best place to start untangling that Gordian knot. And in this epochal confrontation between the U.S. and its […]

Barring an inflation flareup, or an unlikely sudden weakness of the U.S. economy, the next interest rate change should wait until the meeting of the Federal Reserve’s (Fed’s) policy setting committee on March 18-19, 2025. That would give enough time to incoming legislative and executive authorities to decide on the future course of fiscal policy […]

A key currency open economy, with a third of its GDP generated in the external sector, cannot rebalance aggregate demand on a steady and sustained growth path by restricting its participation in global commerce and finance. America’s incoming administration is facing excessive budget deficits (8% of GDP), a runaway public debt ($36 trillion, 123% of […]