Publications: Notes at the Margin

It's the IMO, Not OPEC+ (October 17, 2022)


Former UK Chancellor of the Exchequer Kwasi Kwarteng and US Treasury Secretary Janet Yellen share a common trait: incompetence. Kwarteng served as the United Kingdom’s finance minister for just a month. In that time, he may have ruptured investor confidence in the UK’s financial system for years and gravely damaged the country’s economy to the point where only a severe, prolonged recession will repair it.


Yellen has served almost two years and shows no sign of departing. She, too, has grievously hurt her country’s finances. The initial harm came from her support for the excessive stimulus package enacted shortly after Joe Biden’s inauguration. That legislation has been roundly and correctly criticized as inflationary by numerous mainstream economists, including former Secretary of the Treasury Larry Summers.


Historians, however, may conclude that Yellen’s greatest injury to the US economy resulted from destroying our relationship with oil producers, particularly Saudi Arabia. As readers likely know, President Biden and his administration have been berating oil-exporting countries after their recent announcement of a two-million-barrel-per-day production cut.


According to the hard oil market data, that reduction has had little impact, although the exporting countries have, without question, kicked sand in the faces of the United States and other nations attempting to deal with Russia’s undeclared war on Ukraine. Their decision in Vienna was stupid. The truth, though, is that the hardships inflicted by petroleum markets on consuming countries stemmed from the latter’s actions, not those of crude producers.


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