US President Trump has stated that tariffs on imports from Europe to the US will be announced “very soon,” claiming that Europe “takes almost nothing from us, and we take everything from them.” I believe it is important to clarify some basic facts. International trade involves both goods and services, yet Trump refers only to goods. If one were to consider only services, Europeans could just as easily argue that “the US takes almost nothing from us (Europe), and we take almost every...| Rangvid’s Blog
There are striking similarities between US inflation developments today and in the early 1970s. If inflation continues to develop as it did back then, inflation should be normalized in one and a half years, that is in summer 2024. I doubt this will happen, though, because inflationary pressures are more widespread today. Consequently, the Fed should keep interest rates elevated for at least another year.| Rangvid’s Blog
Exciting news for those who read Danish or Simplified Chinese! 😊 The Danish edition of my book was released this week, and this blog post is all about it. Also this, I learned that the book will be translated into Simplified Chinese for the Mainland China market! —————————————————————— Here’s the abstract of today’s analysis: My […]| Rangvid’s Blog
From time to time, I dust off – that is, update – my chart comparing the inflation surge of the 1970s with the recent post-pandemic spike. Compared with the 1970s, we are now at a fascinating inflection point: it was precisely at this stage that the second wave of inflation began back then. Will we also see another flare-up this time?| Rangvid’s Blog
How will this recession play out and how will the recovery look? Will we get a short recession with a fast rebound (V), will we get a longer recession before the recovery (U), will we get a new lockdown in autumn resulting from a second wave of the Corona virus (W), or will economies remain depressed for a long time (L)? | Rangvid’s Blog
What will happen to future interest rates? Will they fall back to pre-pandemic lows, will they stay more or less at current levels or will they rise? Many people say: “Just see what the market expects”. So let’s do that. The market expects interest rates in the future to stay roughly where they are now. But is that a good prediction?| Rangvid’s Blog
Heads-up for my Danish-speaking readers: The Danish edition of my book How Low Interest Rates Change the World will be released in just over two weeks: https://djoefforlag.dk/products/rentefald. Naturally, I’ll share the key takeaways with you once it’s out.| Rangvid’s Blog
President Trump has made no secret of his dislike for Federal Reserve Chair Jerome Powell, repeatedly using sharp, disparaging nicknames such as “Mr. Too Late,” “Numbskull,” and “Knucklehead,” and even branding him “grossly incompetent.” His irritation stems from the Fed’s refusal to heed his calls for US interest rates to be cut to euro-area levels. Yet Trump overlooks a crucial point: US rates have long been higher than those in the euro area because of fundamentally diffe...| Rangvid’s Blog
Most economists expect US President Trump’s tariffs to push up prices in the US. However, despite significant tariff hikes months ago, inflation remained surprisingly stable, until now. I see three main reasons—at least two of them suggesting that US inflation is likely to rise even further.| Rangvid’s Blog
Monetary policy is a primary lever for stimulating consumption and economic growth. However, when central banks hit their limits—whether it’s the lower bound on interest rates, political constraints, or other barriers—fiscal policy must often assume a greater role. But how much fiscal stimulus is needed to offset reduced monetary accommodation? In new research (link), co-authors […]| Rangvid’s Blog
Even Denmark’s top-notch pension system can be improved. The backbone of the system—that you work one extra year for every extra year you’re expected to live—means future generations will spend a considerably smaller share of their adult lives in retirement than current generations. This is not inter-generationally fair. Also, keeping pension contribution rates the same […]| Rangvid’s Blog
The Danish parliament recently decided to raise the retirement age in Denmark to 70, effective from 2040. This decision attracted significant international attention. In this post, I will explain why the decision was made, the benefits it offers, and why, overall, the Danish pension system is strong—arguably among the best in the world. That said, it is not without its challenges. In my next post, I will explore the issues facing the Danish system and discuss potential solutions.| Rangvid’s Blog
After many quarters of healthy expansion, US economic activity abruptly contracted in the first quarter of 2025—President Trump’s first quarter in office. How did a strong economy begin to falter so quickly? Many, if not most, commentators attributed the decline to a surge in imports dragging down GDP. In truth, however, imports have no direct effect on GDP. Because of its popularity, it is important to debunk the myth that imports reduce GDP.| Rangvid’s Blog
Before diving into today’s topic on how President Trump’s policies are undermining trust in the US as a credible borrower, let me start with some good news—especially for those who understand Danish. My new book, How Low Interest Rates Change the World, will soon be published in Danish! Even better, the Danish version will be priced far more accessibly—likely just 25–30% of the price of the global version. And there’s more: I’ll be adding a couple of new chapters exploring the s...| Rangvid’s Blog
In record time, US President Trump has transformed a strong economy into one on the brink of recession and a booming stock market into a collapsing one. This week, we came perilously close to a full-scale financial crisis—one that may have been narrowly avoided when Trump partly conceded defeat. Yet the danger is far from over, and the damage will be long-lasting. How did we get here?| Rangvid’s Blog
Why is inflation so high? How much of it is due to demand and how much to supply? And how much is temporary and how much persistent? These are arguably some of the most important economic questions these days. In this analysis, I present my views. I argue there are four main reasons why inflation is high, some of them transitory but others not, meaning it will be costly and take time to bring inflation back to target.| Rangvid’s Blog
Since the 2007 financial crisis, the US has borrowed significantly more than Europe to fund higher public spending, which has contributed to faster economic growth in the US. But what about the future? Will the US continue to outpace Europe in borrowing?| Rangvid’s Blog
There is a great deal of euro-bashing circulating these days. The central argument is that Europe has been lagging the US economically, with an equally bleak outlook for the future. However, one often-overlooked factor is the significant role of massive borrowing—expansionary fiscal policy—in driving stronger US growth. When this is accounted for, the US’s apparent economic outperformance becomes less impressive.| Rangvid’s Blog
The US economy has proved remarkably resilient during this period of monetary tightening. One important reason is that households had large savings left over from the pandemic when the tightening began. I analyse why household savings accumulated during the pandemic and when they will be depleted. When this happens, households will be less resilient, which may have a negative impact on consumption and economic activity. I also analyse how excess savings are related to the flare-up and subsequ...| Rangvid’s Blog
