The era of free money may finally be ending

Monetary “doves” will quickly point out that what matters is not inflation in the last 12 months but inflation in the next 12 months, and there’s a possibility that tighter credit conditions in the wake of the banking crisis will cause inflation to drop. Hawks, on the other hand, will point out that “core” inflation—minus volatile food and energy prices—actually rose 5.6% over the year, and the unemployment rate remains at a stunningly low 3.5%, which will continue to put upward pressure on wages.

I’ve argued here that history offers little reason to believe inflation can be tamed with real interest rates at zero or below. Perhaps this time is different. But if it is, it may only be because the banking crisis has given the Fed an assist, pushing the economy into recession.

Either way, the outcome is the same: expect the next 12 months to be a tough time for the U.S. Economy. A correction to an era of unprecedented fiscal and monetary policy is due.

More news below. And read why Warren Buffett dumped his holdings in Taiwan Semiconductor Manufacturing (TSMC) here.

Alan Murray
@alansmurray
[email protected]

TOP NEWS

What to do about A.I.

China and the U.S. Both introduced new regulations for A.I. On the same day, but with different approaches. China's rules are strict, requiring A.I. Models to undergo censorship before serving the public, while the U.S. National Telecommunications and Information Administration has called for comments on new rules to ensure A.I. Systems work safely. Coins2Day

All abroad

Many companies are responding to labor shortages and rising wages in the U.S. By outsourcing jobs overseas. Economist Nicholas Bloom estimates that 10% to 20% of service support jobs could move abroad in the next decade. Although office offshoring is not a new phenomenon, companies are now sending more highly skilled jobs abroad due to difficulty hiring and obtaining visas for foreign employees. Wall Street Journal

Seniority rules

JPMorgan is requiring its managing directors to be in the office five days a week and asking other employees to meet their “in-office attendance expectations.” Other Wall Street banks, including Goldman Sachs, have also been pushing for a five-day office return. Financial Times

AROUND THE WATERCOOLER

This founder is connecting Black women across ages and stages to help them ‘build the network to thrive’ by Marci Alboher

Billionaire mogul Barry Diller has some advice for the media about A.I.: Sue by Prarthana Prakash

NPR is done with Twitter over ‘government funded’ label as they lash out against the platform for ‘undermining our credibility’ by The Associated Press

Russia could become an ‘economic colony’ of China, according to CIA director by Tristan Bove

How much money you need to make to live comfortably in America's 10 most expensive cities by Chloe Berger

This edition of CEO Daily was edited by Jackson Fordyce.