The world’s central banks are no match for the global economy

delicate balance of a world shifting from unipolarity to pluralism.

The Gulf countries, as emerging economies, are being proactive in identifying and analysing the features of the international system’s transitional phase. They are trying to position themselves in ways that can protect and preserve their interests, while other actors are fighting over influence and hegemony.

For Israel, the agreement between Iran and Saudi Arabia to normalise ties under the auspices of the Chinese government will come at a strategic price, with regional and international dimensions. It limits Israel’s regional influence and eliminates the notion of an Arab-Israeli alliance against Iran. While Israel has sought to strengthen ties with countries such as Italy, Germany, the united Kingdom, and France in an effort to build an international and regional anti-Iran axis, it knows that international players are not convinced such a project could work without decisive American force.

Moreover, disruptions to oil, gas and grain exports resulting from the ukraine war would hamstring europe from carrying out any military actions that could exacerbate the energy crisis. It was thus not surprising that the european union quickly welcomed the Saudi-Iran deal, viewing it as vital to regional stability and conflict resolution.

At the same time, the Saudi-Iran deal could put an end to Israel’s nuclear monopoly, opening the door for other countries in the region to acquire nuclear capabilities.

According to American media, Saudi Arabia is seeking Washington’s approval to develop a civilian nuclear programme as part of its price for potentially normalising relations with Israel. Other countries in the Levant and North Africa, such as egypt, may look to do the same.

This would degrade the effectiveness of Israel’s most important deterrent force in the long term, threatening its regional influence and potentially limiting the overall effectiveness of the Abraham Accords.

DELICATE BALANCE: The possibility that the Saudi-Iran agreement might lead to forging diplomatic relations between Saudi Arabia and Israel cannot be ruled out. But the future context for such deals will be different, given that Israel is no longer viewed as a security umbrella to protect the Gulf, nor is it a substitute for the uS. In the regional equation that is currently being shaped, Israel is neither crucial nor a security necessity.

under Riyadh’s new vision, Saudi Arabia is seeking a leading role for itself at both the regional and international levels, driven by its economic power and influence. It is capable of negotiating the

At the same time, Israel fears that the Beijing agreement could pave the way for a resolution to the war in yemen. This conflict has presented a great opportunity for Israel to increase its influence in the Red Sea and the Arabian Sea, and the deal risks hindering its efforts to establish a military foothold in the region.

Another concern for Israel is a potential new Taif agreement in Lebanon, whose two parties would be Saudi Arabia and Iran, guaranteeing the stability of the Lebanese regime and economy. Lebanon’s collapse has always been in Israel’s interests.

Indeed, Israel’s international crisis is today so deep that it has spurred backand-forth accusations between the Netanyahu government and its predecessor regime, that of yair Lapid and Naftali Bennett, over who bears the responsibility for this strategic failure.

CHANGING STRATEGIES: The restoration of Saudi-Iranian ties, which were cut in 2016, is yet more proof that the notion “the road to Washington passes through Tel Aviv” no longer applies. A strategy founded upon the approval of Washington and Tel Aviv cannot preserve the security and stability of the region, but rather risks undermining them.

Indeed, to guarantee the success of the Beijing agreement and to build on it, Arab leaders need to re-examine their strategies towards influential powers, both regionally and internationally. Arab national interests require a careful reconsideration of Israel’s position in the regional equation, and a curtailment of its influence.

For Palestinians, on the other hand, the Saudi-Iran agreement constitutes an opportunity, opening up new horizons in their struggle to obtain their legitimate rights.

As the extremists leading Israel today face a major crisis, the ongoing changes to the structure of the international system require the active participation of regional Arab states, which can work to establish new mechanisms to block Israeli expansionism, extremism and racism.

Ameer Makhoul is a leading Palestinian activist and writer in the 48 Palestinians community. He is the former director of Ittijah, a Palestinian NGO in Israel. He was detained by Israel for ten years.

Forbes JohN TaMNy

WRITING in his newsletter last week, the great George Gilder quipped that the world’s central bankers are apparently “demoralized over their inability to drive the world into recession.” Gilder was referencing a front page Wall Street Journal story focused on the strength of the global economy, and how the latter may persuade “central bankers that they need to raise key interest rates further” to pour “cold water on an economy that is still running a little too hot.” Books. Could. Be. Written. And they have been.

For now, all readers need to know in order to confirm the truth about the title of this writeup is to read what central bankers think to be true. They quite literally believe against all logic and empirical reality that economic growth causes prices to rise and that rising prices are inflation. They’re stupendously wrong twice about basic economics, which is why we know their power is theoretical rather than real. If individuals actually had the power to foist their obnoxious, central planning conceit on the global economy, it would be too wrecked for anyone to have the time and resources to write about.

The simple truth is that investment is the driver of economic growth despite what economists and central bankers say about consumption as the instigator. And the purpose of investment is to produce more and more goods and services with fewer and fewer “hands.”

Translated, the surest sign of a growing economy is falling prices. Basic stuff.

Inflation? That’s a decline in the unit of measure. In our case, the dollar. except that there’s been no notable decline in the dollar in recent years, thus calling into question the whole “inflation” narrative. There have been higher prices, but to say higher prices cause inflation is like saying heat is what makes the sun so bright. Causation is reversed. We once again have higher prices, but are they any surprise in the aftermath of the 2020 lockdowns? Figure that political panic over the virus surely put a damper on investment, after which people working together around the world are the path to ever-declining prices. Starting in March of 2020, this global cooperation was fractured and broken to varying degrees. That production wouldn’t be as efficient and cheap after a wrench was thrown into the global production machine reads as a blinding glimpse of the obvious, as would the higher prices be obvious. Is this inflation? No.

Inflation is a currency devaluation phenomenon. Nothing else.

Bringing this back to the world’s central bankers, they’ve mistaken higher prices born of command-and-control for inflation, only to compound their confusion with the assumption that the fix for today’s higher prices is global economic contraction. you can’t make this up! you see, governments already tried global economic contraction in 2020, only for higher prices to logically emerge from the carnage. The path to lower prices is copious investment combined with global cooperation, all instigated by a lack of government intervention. Central bankers believe business failure and unemployment are the path to lower prices. To say they’re a bit confused brings new meaning to understatement.

Which is why we should be so relieved by their lack of power. Again, if they were actually capable of doing the damage that their loser economic models call for, the global economy would be rather broken.

That it’s not is a happy sign that as central bankers fiddle, the actually productive work around them. And they’re able to work around them thanks to global capital flows that take place without regard to what central planners are doing inside central banks. More evidence supporting what is obvious is British semiconductor “unicorn” Arm. Funny about the Cambridge-based company is that on the day that the Wall Street Journal gave front page space to the aforementioned frustrations of central bankers, it similarly ran a story on the same front page about how Arm would list its shares in New york instead of London. “Closed” global economy meets hapless central bankers.

While central banks mis-understand and mis-define inflation on the way to fruitless attempts to contract credit, the global economy continues to function. As one would expect. A bureaucrat is a bureaucrat is a bureaucrat. Remember this about central bankers. As they vainly search for a purpose, real economic activity will happily continue without regard to central bank economic illiteracy.

John Tamny is the Vice President of FreedomWorks, editor of RealClearMarkets and a senior fellow at the Market Institute.