text: As we’ve previously warned, there’s some concern among big U.S. banks that tighter monetary conditions, rising rates, and dollar strength are causing global liquidity issues. The risk here is a global currency crisis that triggers another global financial crisis and blows up bond markets. On the other hand, if the Fed doesn’t go far enough on hiking interest rates, the risk is runaway inflation and a stagflationary environment similar to the Great Inflation. – M.R.SMART MONEYBARCLAYS BANK: 2023 TO BRING WEAKEST GLOBAL ECONOMY IN 40 YEARS: “This year’s aggressive rate hikes should hit the world economy mainly in 2023”, according to the British multinational bank Barclays. “We expect advanced economies to slip into recession, and we forecast global growth at just 1.7%, one of the weakest years for the world economy in 40 years. We recommend bonds over stocks, as well as a healthy allocation to cash.” – M.R.WALL STREET LEGEND STAN DRUCKENMILLER: “WE ARE IN DEEP TROUBLE”: Legendary hedge fund manager Stan Druckenmiller warned this week that by 2027 the interest expense alone on servicing our national debt would exceed all health care spending. By 2047 it will exceed current discretionary spending. And by 2049, it will surpass the spending on Social Security. (AC: “Druck” has previously made a case for sovereign debt defaults and has not excluded the United States from those warnings. – M.S.)GLOBAL CENTRAL BANKS STOCKPILING GOLD AT RECORD PACE: Central banks around the world are buying gold in record quantities in a bid to weather economic uncertainty and rising inflation. Demand increased 28% year-over-year in the third quarter, as central banks have now purchased more gold this year than they have since 1967. FED WATCH GEORGE: RATES SHOULD STAY ABOVE 5% WELL INTO 2024: Kansas City Fed President Esther George told CNBC, “I have raised my forecast over 5%. I see staying there for some time, again, until we get the signals that inflation is really convincingly starting to fall back toward our 2% goal.” (AC: Fed officials maintain that cuts to interest rates aren’t coming. Some traders disagree on the grounds that the Fed will be forced to cut after they “break something.” My expectation is that inflation rips again during the rate-cutting cycle. – M.S.)ST. LOUIS FED STUDY SHOWS U.S. IS NOW IN A RECESSION: A new study released by the St. Louis Fed based on the economic conditions of individual states shows the U.S. is now in a recession. The study revealed 27 states are currently experiencing negative growth. – M.R.JPM CEO JAMIE DIMON: FED MAY NEED TO GO TO 6%: JPMorgan CEO Jamie Dimon said Tuesday that the Federal Reserve may need to raise interest rates to 6% to fight inflation, which would be significantly higher than market consensus at 5%. Dimon cited concerns over the large size of remaining stimulus funding that has yet to be spent. (AC: The Fed’s next decision on interest rates will be announced on Wednesday, 01 February. Fed funds futures are pricing in a 60% plus probability of a 25-basis-points increase. If correct, that would be the smallest increase since the central bank began lifting rates last March. – M.R.) ECONOMIC WARNING