The COVID-19 pandemic continues to wreak havoc across the globe, disrupting the globalized and interconnected world. With the vaccine rollout, some regions are finally getting a handle on both the disease and the economy.

Many world leaders believe globalization was in retreat even before the pandemic. They argue that to prepare for the post-COVID-19 era, new energy must be infused into global governance through multilateral actions.

Finding common solutions to the challenges of climate change, transitioning to clean energy, terrorism, cyber security, and emerging technologies will require much more global governance than the international community has been able to muster.

Governance advocates point to the July 1 agreement by 131 countries to establish a minimum tax rate of at least 15 percent for multinational corporations as an historic step in the right direction and that globalization of governance is becoming a reality.

Globalization is not a new concept. At some level, trade across national borders has been an important determinant of the wealth of individuals, companies, and countries throughout history. The search for trading opportunities and trade routes was a primary motivation for exploring much of the world.

The roots of today’s globalized world were put down at the end of the Second World War.  The allied nations created a rules-based system for international commerce and finance that allowed products, science, and technology to move across borders in an effort to lay the foundation for lasting peace.

In the 1990s, the world entered an era of hyper globalization, becoming more interconnected than ever before. In this era, the big new player on the scene was China, which joined the World Trade Organization in 2001. Along with the U.S., it grew to dominate global trade.

Many still question the benefits of globalization. They argue that interconnection and dependency between nations made economic and public health crises even worse for many countries.

While the globalization of governance may placate some, it hardly offers comfort to those who have lost good jobs and experienced the pain of economic globalization. For them, globalization is just another name for globaloney, although many support the concept with their wallets by shopping at firms who source their products from Chinese suppliers such as Walmart.

Others argue that the benefits of globalization are not distributed equitably. For example, many who oppose globalization of the US. economy do so on the basis that firms make manufacturing, marketing, and other strategic choices in ways that maximize profits for shareholders, often to the detriment of a firm’s other stakeholders, such as employees and the communities in which they do business.

American manufacturing has suffered severe disruption or outright collapse as a result of increased foreign competition and the outsourcing of manufacturing to countries where labor is cheaper. Globalization has become a polarizing issue in the U.S., with entire industries moving overseas and the resulting economic squeeze on the middle class.

Others believe the COVID-19 pandemic has exposed developed countries’ excessive dependence on Chinese manufacturing.  They believe that after the pandemic, countries like the U.S. must take action to gradually reduce their dependence upon China’s low-cost global supply chain.

Countries will look to build some duplication and flexibility into their global supply chains to guard against putting themselves into adverse bargaining positions.  Such actions may well push China-U.S. relations even further towards confrontation.

Even before the pandemic arrived, globalization had taken two big hits. The first was the 2008 financial crisis, when cross border investments, trade, and supply chains all contracted.

Second, a wave of populist leaders were elected across the globe, championing economic nationalism and attacking the existing global economy. Free trade went out of fashion and a trade war broke out between China and the U.S.

While the post-COVID world will not see a complete unwinding of globalization, it is likely to be more fractured and regionalized. The basic challenge will be reconciling a deglobalized world with the need for collective action to address global issues.

It’s a mug’s game to be forecasting inflation, but it’s starting to look like the Federal Reserve may have to tighten monetary policy sooner rather than later to get it under control.

Last week, the May core personal consumption expenditure price index rose 3.4 percent from a year ago, the fastest increase since April 1992. This is the key inflation indicator the Fed uses to set policy.

Though the reading could add to inflation concerns, Fed leaders, backed by an army of economists armed with models and data sets, insist the current situation will subside as economic conditions return to normal.

They continue to argue that inflation has spiked recently because of supply chain disruptions that have left manufacturers unable to keep up with the escalating demand that has accompanied economic reopening. Soaring real estate prices also have played a role, along with the natural bounce back after plummeting demand depressed prices last year.

Economist Friedrich von Hayek once likened controlling inflation to trying to catch a tiger by its tail: an impossible task with unpleasant consequences for the economy and for personal finances. Judging by the most recent inflation reading, the cat may be already out of the bag.

As William McChesney Martin, the Fed chair from 1951 to 1970, said in a 1955 speech, the job of a central banker is to “remove the punch bowl” before the party gets out of control.

This metaphor referred to a central bank’s action to stop flooding the country with easy money and ultra-low interest rates. There is no silver bullet, magic wand, or get-out-of-jail-free card when dealing with inflation.

The federal funds rate is the most important benchmark for interest rates in the U.S. economy and it also influences interest rates throughout the global economy. Raising it may impact several key economic players.

Banks will be copacetic with higher interest rates. They will see an increase in their net interest margins, an important measure of banks’ profitability. Net interest revenue refers to the difference between interest earned on loans and interest paid on deposits. They will charge more interest for their loans, while deposit rates increase more gradually.

Life insurance companies will also welcome higher interest rates. Most insurers earn substantial income from investing premiums and favor high quality bonds whose yields have plummeted in recent years in the sustained low interest rate environment.

Rising interest rates negatively impact the stock market because higher rates make it more expensive for companies to operate and borrow money. That reduces profitability, which in turn hurts the value of company stock. Also, when stocks decline, investors may move into bonds to take advantage of the higher interest rates.

Bonds are particularly sensitive to interest rate changes. When the Fed increases rates, the market price of existing bonds declines. New bonds come into the market offering investors higher interest rates, which causes existing bonds with lower coupon payments to become less valuable.

While higher interest rates are bad for borrowers, they’re great for folks with savings accounts, certificates of deposit, and money market mutual fund accounts who currently earn a hair above nothing on these accounts. Conversely, a hike in interest rates adversely impacts consumer credit such as student, auto and personal loans, lines of credit and credit cards.

As for the housing market, rising mortgage rates will hurt home prices, since higher interest rates may force borrowers to buy a cheaper house to maintain the same monthly payment. Higher mortgage rates may have the biggest impact on the lower end of the housing market.

Stepping back from the immediate issue of inflation or deflation, it is useful to recall that a consensus of British economists predicted that Margaret Thatcher’s economic policies would be disastrous. As her first chancellor of the exchequer, Geoffrey Howe, said, “an economist is a man who knows 364 ways of making love, but doesn’t know any women.”