Economic poverty from loop to loop and to currency crises
(A ChatGPT-created image) Since the onset of the US war in Iran in early May, this year, almost all developing countries have commenced raising interest rates competitively by citing inflationary pressures as the single reason. However, all country authorities are well-aware of non-availability of any magical power of interest rates to control inflation. It is not secret that they only raise interest rates to survive the modern poverty loop linked to foreign hot capital flows as nobody has alternative policy options to escape the loop despite the fact that it is the core structural economic problem confronted by these countries. The present poverty loop is its open economy version evolved from its closed economy version of low income-low savings-low investment-low productivity-low income, etc., also known as vicious cycle of poverty exhibited by old development economists. Development economics and old poverty loop Under the Bretton Woods agreement in 1944, the world moneta...
