ZERO EQUILIBRIUM

“Sound money can become paradoxical when the stability it promises suppresses the credit that growth requires” - By Chinedu Okoye   1.0 Austrians Monetary Theory: Austrians abhor fiduciary credit creation, and fractional reserve banking, preferring a full reserve banking without the ability fo banks to extend credit beyond the reserves they hold. To them [Mises and Hayek] fiduciary credit expansion distorts the structure of production, leading to unsustainable nooms, and central banks, the reason for inflationary pressures overtime, as the credit expansion the enable, pushes interest rates below it's natural rate (the rate it would otherwise be if determined solely by the market and the monetary authorities do not intervene), causing malinvestment from cheap more accessible credit, and accompanied by inflation. 2.0 The Cantillon Redistribution : The same Austrian logic (F. Hayek) states that when new money is injected into the system, it doesn't spread evenly, and f...

- By Chinedu Okoye  1.0 Introduction: Production Possibility Frontier. In elementary economics, one of the most powerful conceptual tools used to illustrate a nation's productive capacity is the Production Possibility Curve or Frontier as I prefer (PPF). The PPF represents the maximum combination of goods and services an economy can produce when all resources are efficiently utilized. The concept of the Production Possibility Frontier, introduced by Gottfried Haberler (1936), provides a graphical representation of the trade-offs an economy faces in allocating scarce resources. Haberler introduced the PPF, because prior trade theory relied heavily on David Ricardo’s model of Comparative Advantage, which was expressed using the labour theory of value and based on the idea that countries should focus on goods the can produce more efficiently. With no thought to opportunity cost. Haberler improved the framework by replacing labour values with opportunity cost, which is the ...

- By Chinedu Okoye  Introductory Note: The Iran–Israel war (from late February 2026) has shattered market calm. Oil prices spiked (oil breached $110/barrel, driving a global risk-off mood. Investors rushed to cash and near cash assets with money-market funds (near cash) seeing record inflows and safe-haven flows to the US dollar (cash), while stock and bond markets tumble.   In Asia, MSCI’s emerging-market equity index plunged about 6% in the past week. This sent foreign capital fleeing EM assets, raising currency volatility and deepening the central-bank dilemma: cut rates to support growth, or hold/raise to defend currencies and tame inflation.  Emerging-market equities saw heavy losses in early March 2026. Equity funds focused on South Asia and Latin America were among the worst performers as the Iran–Israel conflict intensifies. The effect of the middle eastern conflict on markets and possible effects on Central Bank decisions is reviewed below, in light o...

By Chinedu Okoye  Synopsis: • This week is markets have been characterized by escalationofnthe Iranian - Israeli conflict, which has led to the blockade of the Straits of Hormuz, the channel where most Middle Eastern Oil passes through to their intended destinations. • The conflict which has taken Crude Oil prices to the $90s levels with a tightened spread at $2.34/barrel (the difference between BRENT and WTI Crude benchmarks). • Brent initially outpaced WTI at the beginning of the trading week, but the katte caught up as market demand spilled over to the cheaper WTI. Precious metals were negative on the week, but held above support levels, while crude returned double-digit gains. • Equities fell across developed markets and economically advanced EM, with Europe taking the largest hit. • The US Dollar gained against it's major peers, as the DXY hit the 99 before settling at 98.5 levels. However, the other traditional safe haven assets - Treasuries- also saw declines in...

By Chinedu Okoye  Market Snapshot: The past week has seen emerging market currencies weaken against the U.S. dollar as geopolitical tensions intensified across the Middle East. Risk-sensitive assets have retreated, with the MSCI Emerging Market Currency Index closing mid-week in negative territory, reversing part of the rally seen over the past several months. At the same time, global markets have witnessed an unusual alignment of asset price movements: the U.S. dollar strengthened, gold prices firmed as investors sought safe havens, and BRENT crude rose toward the $80–$83 range This coordinated movement across currencies, commodities and safe-haven assets is seen as a risk-off repositioning in global markets rather than a fundamental deterioration in emerging market economic conditions. The Macro Catalyst: The current volatility is largely driven by geopolitical risk premiums entering energy markets. Ad, historically, geopolitical conflicts involving key oil-producing ...

By Chinedu Okoye  The Net FX Reserves Surge: Nigeria’s gross external reserves recently hit about $50.45 billion as of mid-February 2026, a 13‑year high, which alone is remarkable however even more striking, net reserves jumped from roughly $3.99 billion at end‑2023 to $34.80 billion by end‑2025, a 770+% increase in two years.  This extraordinary two-year rise is attributable mainly to the data-driven policies and a combination of bold exchange rate reforms (Naira float) and favorable external conditions. Lower developed market sovereign Bond yields, increasing the yield differential, thereby attracting foreign investors participation.  (Source CBN Database) Other factors are only just recently coming into to play as the CBN Governor credits the rise in FX reserves to stronger oil earnings, improved transparency, and booming remittances. Indeed, by late Feb 2026 Nigeria could cover almost 9.7 months of imports with these buffers.  ...

By Chinedu Okoye Summary: • Nigeria’s economy used to be dependent on Oil receipts for foreign-exchange (FX) inflows. • Over the past decade, diaspora remittances have become the single largest FX source outside oil, accounting for roughly 10%-12% of GDP. • We recognize the benefits and risks associated with this development, and profer possible fiscal and monetary policy solutions to help mitigate these risks, as Nigeria's foreign reserves hit a high.  Improvements in FX Inflows from Diasporan Remittances:   Official figures show Nigeria received about US$19.5 billion in remittances in 2023 and this was a 2.9% decline from 2022. By mid-2024 and early 2025, remittances rose to record highs, hitting $553 million in July 2024 and $5.3 billion in Q2 2025, after the Cardoso led CBN's liberalization FX markets. A vast majority of these flows originate from Europe and North America, and mostly  from three countries, the US, UK, Canada. Switzerland and Italy are oth...