What we’re reading (7/5)
“Cryptoverse: The Bonfire Of The NFTs” (Reuters). “The market shone gloriously last year as crypto-rich speculators spent billions of dollars on the risky assets, pumping up prices and profits. Now, six months into 2022, it's looking ugly. Monthly sales volume on the largest NFT marketplace, OpenSea, plunged to $700 million in June, down from $2.6 billion in May and a far cry from January's peak of nearly $5 billion.”
“Crypto Crashed. Wall Street Won.” (DealBook). “Unlike in the 2008 crisis, the fortunes of Wall Street and Main Street have diverged. Plunging digital asset prices have left some retail investors with large losses. Lured by the promise of quick returns and astronomical wealth, many individuals bought new digital currencies or stakes in funds that held these assets. That’s not the case for most banks, which generally don’t own crypto or run funds that invest in it. Nor have they lent much into the emerging market for new money.”
“Euro Slides To 20-Year Low Against The Dollar As Recession Fears Build” (CNBC). “The euro fell to its lowest level in two decades on Tuesday as fears of a recession in the euro zone ramped up, with gas prices soaring and the Ukraine war showing no signs of abating. The euro shed around 1.3% for the session to hit $1.029 by mid-afternoon in Europe, having earlier been as low as $1.028.”
“Why Consumers’ Inflation Psychology Is Stoking Anxiety At The Fed” (Wall Street Journal). “Recessions are painful because millions of people lose their jobs. But central bankers, scarred by the experience of the 1970s, think high inflation is worse because it distorts economic behavior and is likely to lead to a more severe downturn later. High inflation became entrenched in the 1970s after high inflation expectations took hold. In the early 1980s, the Fed delivered shock therapy with punishing rate increases that brought down inflation but triggered recessions that featured the highest unemployment rates since the Great Depression.”
“How much do interest rates help?” (John Cochrane, The Grumpy Economist). “inducing recessions is not particularly effective at lowering inflation…[p]erhaps counting on the Fed to stop inflation all by itself is not such a great idea…[a] few Twitter commenters say that we really don't get much out of ‘normal times’ and we have to look to big ‘regime shifts.’ 1980 is an example, and the results with and without 1980 are telling. But that is perhaps the point. If so, then it will take a ‘regime shift’ to tame inflation not the usual ‘tools.’”
