The article argues that the Federal Reserve's recent rate hike decision, while justifiable on inflation grounds, highlights a critical lack of an underlying, transparent policy framework. The core problem is that the Fed's decisions appear discretionary, leading to market uncertainty because the committee's judgment, rather than clear data, dictates policy shifts. The author proposes that the Fed adopt a formal monetary policy rule—an algebraic formula linking the target rate to indicators like inflation and unemployment—to replace subjective guidance. Implementing such a rule would provide market predictability, enhance transparency, and shield the Fed from political attacks by making deviations from the standard easily quantifiable.
Will the new world order put the brake on trade?
English Summary
The article argues that the shift toward domestic-focused economic policies and the decline of U.S.-led 'hegemonic stability' are creating a precarious environment for global trade. Drawing on historical precedents like the Pax Britannica and Pax Americana, it suggests that trade growth flourishes when a dominant power fosters international policy alignment, which is now fracturing. Consequently, rising protectionism threatens to trigger a vicious cycle of economic decline, disproportionately harming emerging and developing nations that rely on open market integration.
中文摘要
本文指出，轉向以國內為中心的經濟政策，以及美國領導的「霸權穩定」衰退，正在為全球貿易創造一個動盪的環境。借鑒大英帝國和平（Pax Britannica）與美國和平（Pax Americana）等歷史先例，文章認為，當主導大國促進國際政策協調時，貿易增長便能蓬勃發展，而這種局面目前正在瓦解。因此，日益抬頭的保護主義威脅著要引發經濟衰退的惡性循環，這對依賴開放市場整合的新興及發展中國家造成的損害尤為嚴重。
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