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Economische aanraders 01-03-2020

economische aanraders 0

Economische aanraders: Veren of Lood biedt u op zondag wekelijks een inkijkje in (minstens) 15 belangrijke of informatieve artikelen en interviews die vooral de voorafgaande 7 dagen op economisch terrein verschenen op onafhankelijke sites.

De kop is de link naar het oorspronkelijke artikel, waarvan de samenvatting of de eerste (twee) alinea’s hier gegeven worden. Er zijn in deze rubriek altijd verschillende economische scholen vertegenwoordigd, en we streven er naar die diversiteit te handhaven.

We nemen wekelijks ook een paar extra links op naar artikelen die minder specialistische kennis vereisen. Deze met *** gemerkte artikelen zijn ons inziens ook interessant voor lezers met weinig basiskennis van economie.

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How Fractional Reserve Lending Makes Money Disappear – Frank Shostak
24 februari

According to the popular way of thinking, it is held that banks are responsible for the expansion of lending also known as credit, and given that economic prosperity is associated with an increase in credit, they are seen as crucial to the economic well-being. But are banks the true source of credit?
For instance, take farmer Joe, who produced two kilograms of potatoes. He requires one kilogram for his own consumption. The rest he decides to lend for one year to farmer Bob. The unconsumed one kilogram of potatoes that Joe agrees to lend is his real savings.
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Why A Bear Market Will Lead To A Dollar Collapse – Alasdair Macleod
29 februari

Falling equity markets this week are likely to signal the onset of a bear market, responding to a combination of the coronavirus spreading beyond China and persistent indications of a developing recession.
This has provoked a flight into US Treasuries, with the ten-year yield falling to an all-time low of 1.1141%. This will prove to be a mistake, given US price inflation which on independent estimates is running close to ten per cent, exposing US Treasuries as badly overpriced.
After this short-term response, much higher US Treasury yields are inevitable. Foreigners, who possess more dollars and dollar investments than the entire US GDP will almost certainly sell, driving bond yields up and the dollar down, leaving the Fed the only real buyer of US Treasuries.
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Globalisation: What’s at stake for central banks – Simone Arrigoni, Roland Beck, Michele Ca’ Zorzi, Livio Stracca
24 februari

Governments are increasingly confronted with the task of preserving the positive effects of increased global integration while also managing their manifold side effects. This column looks at the effects of globalisation on inflation and financial stability and the role for central banks. It concludes that central banks are far from immune from the forces of globalisation and should continue to evolve and reassess their role and instruments in a changing world.
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Global Demographic Fact Vs. Central Bank Sorcery – Chris Hamilton
29 februari

The annual growth of the working-age population is the organic baseline for growth in national, regional, and global consumption.
However, since World War II, interest rate policy has moved inversely of annual working-age population growth, to incent ever more debt as working-age population growth has decelerated to nothing.
Interestingly, total annual change in energy consumption has mirrored annual working-age population growth.except where synthetic growth has been temporarily substituted to maintain the appearance of growth (aka, China).
Eventually, the inorganically rising consumption and asset prices will return to their organic baseline.and that will be a very rude new dawn for those who believed in infinite growth.
The 1st world economy lives within a fractional reserve banking system. In a fractional reserve system, one persons debt is the systems new money, as money is lent into existence. At a progressive rate since 1980, it has been the combination of decelerating working-age population growth, declining interest rates, and ramping utilization of privately loaned debt that has simultaneously been the basis for increasing consumption and the creation of new money. As borrowers undertook new loans prior to 2008, this borrowing was the primary means of monetary growth. However, the changing demography since 2008 has changed everything as population growth has shifted from young to old…and federal governments and central banks have taken over money creation via monetization resulting in asset inflation.
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Fed-Driven Asset Price Inflation Means You Can Now Buy Less House Than You Could Before – Thorsten Polleit
27 februari

Wherever you look, prices for consumer goods, real estate, stocks, and bonds are on the rise. That means that the purchasing power of money is on the decline. For if, say, stock prices go up, your money unit can buy fewer stocks. What it also means is that although people holding assets, whose prices increase, become “richer,” people holding money get “poorer.”
You may say: why bother? Some people are smarter than others. They cleverly go into “real assets” and refrain from holding money, while others are just too lazy and miss out on their fair chance to profit. One major problem with this kind of thinking, however, is that it ignores the objectionable root cause of generally rising prices: the fiat money system.
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***The Elephant’s family – John H. Cochrane
25 februari

David Brooks essay in the Atlantic “The nuclear family was a mistake” has a lot of interesting ideas. We used to (1800s) largely live with extended family. In the mid 20th century we moved to mom, dad and kids, the nuclear family that David thinks is a mistake. Now we increasingly live the widely parodied Life of Julia (Taranto scathing review at WSJ, guide to parodies at Atlantic), individuals whose main relationship in life is to the federal government.
One aspect, tangential to the main theme, struck me. In all our economic discussions about inequality, when we stop shouting at each other, we come down to a commonsense middle ground:
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Monetary policy and bank stability: The analytical toolbox reviewed – Ugo Albertazzi, Francesca Barbiero, David Marques-Ibanez, Alexander Popov, Costanza Rodriguez d’Acri, Thomas Vlassopoulos
25 februari

The response of major central banks to the Global Crisis has rekindled the debate on the interactions between monetary policy and financial stability. This column reviews empirical evidence on how monetary policy affects bank stability, focusing on unconventional monetary policy measures deployed by the ECB during the crisis. It argues that by stabilising the economy and averting a systemic crisis, these measures helped shore up stability, with the positive effects outweighing the adverse spillovers on banks’ intermediation capacity and risk-taking. However, such measures may need to be complemented with counterbalancing actions that go beyond monetary policy.
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“Nothing Goes to Heck in a Straight Line,” Not Even Stocks Today – Wolf Richter
28 februari

Wow, what a day, what a week, what a 15-minute spike at the end!
OK, all kinds of things were going on today. First, in mid-plunge this afternoon, the Fed came out and said it’s going to print antibodies or something. To soothe the rattled nerves of the Wall Street crybabies on TV, as the worst weekly sell-off in stocks since 2008 was heating up, Fed Chair Jerome Powell released a one-paragraph Fed-speak statement Friday afternoon (in full):
“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”
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***Why East Germans are not taking advantage of the large wage gap between East and West Germany – Sebastian Heise, Tommaso Porzio
29 februari

Thirty years after reunification, a stark and persistent wage gap between East Germany and West Germany remains. This column studies why East Germans do not migrate to the West to take advantage of the higher real wages there. Analysing data from more than 1 million establishments and almost 2 million individuals over 25 years, it suggests that moving people across space is difficult and costly. Reallocating workers to better jobs at their current location could be a more cost-effective avenue to increase aggregate wages, and even accelerate regional convergence.
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2020 Crash – Complacency Came Before The Fall – Sven Henrich
29 februari

Complacency came before the fall. All of 2019 market participants ignored the non existent earnings growth. Too strong was the now pavlovian reflex to chase easy central bank money. Too trusting in central banks to again produce a reflation scenario that would make all the troubles go away.
Everything was ignored and markets and stocks were relentless chased higher into some of the highest market valuations ever. Even the coronavirus was ignored. A dip to buy in January they said. AAPL warning? Let’s ignore it and buy AAPL to new all time highs again.
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The US’s “Free Trade” Isn’t Very Free – Ryan McMaken
27 februari

The false notion that the US has eliminated virtually all of its barriers to foreign imports has been repeated more and more in recent years. The claim is made both by advocates for free trade and by its critics. For instance, Patrick Buchanan has claimed that only American elites “are beneficiaries to free trade,” implying that the US either has free trade or something close to it. Rather than insulate US companies from global competition, Buchanan insists, the US practices “globalism” and has all but erased the US border when it comes to foreign goods.
Meanwhile, in many articles on tariffs, readers may encounter a graph like this one, which suggests that trade barriers have almost vanished:
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The Brexit vote, productivity growth and macroeconomic adjustments in the UK – Ben Broadbent, Federico Di Pace, Thomas Drechsel, Richard Harrison, Silvana Tenreyro
26 februari

The UK economy has experienced significant macroeconomic adjustments following the 2016 referendum on its withdrawal from the EU. This column documents these macroeconomic adjustments systematically and demonstrates that the effects of the referendum result on the UK economy can be conceptualised as news about a future slowdown in tradable productivity growth.
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Opportunity To Reform – Steven Guinness,
29 februari

A couple of years ago I posted an article that gave a brief overview of the Trilateral Commission, quoting directly from numerous former members of the institution and how their overarching goal was for the integration of nation states at the expense of self determination.
It was in the article where I argued that the prevailing model for globalists dating back to at least the First World War has been to use crisis as an opportunity, first by instigating periods of chaos before presenting themselves as the order to the ensuing turmoil. Four of the world’s largest global institutions – The Bank for International Settlements, the International Monetary Fund, the World Bank and the United Nations – were founded on this principle. Without a series of crises there would have been no rationale for them to exist.
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Hong Kong’s Real Estate – Housing, Office & Retail Properties – Face “Tsunami-Like Shocks” – Nick Corbishley
24 februari

At first the protests and now the coronavirus collide with the World’s Most Expensive Property Market.
The world’s most expensive housing market in terms of affordability for a median-income household is in Hong Kong, which also happens to boast the highest ratio of financial assets to GDP on the planet. That market is under huge strain as it reels from months of virtually non-stop political protest, the ongoing trade war between its two largest trading partners, China, and the U.S., and now the recent arrival of the novel coronavirus.
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Mises and the “New Economics” – Jeff Deist
24 februari

[This article is excerpted from a talk delivered on February 22, 2020 at the Austrian Student Scholars Conference, hosted by Grove City College in Pennsylvania.]
I. Introduction
What a wonderful gathering of students today, on this impressive and beautiful campus. We can see why Hans Sennholz loved this place, and why Drs. Herbener and Ritenour so enjoy living and teaching here. You are all too young to serve as the “remnant,” so we will consider you the vanguard instead. I’m always impressed by young people with an interest in serious scholarship and ideas, who have the intellect to read 900-page books. We are told nobody reads anymore, and certainly not dense tomes about economic theory, but this raises a question: are the rare people who do read such books likely to be more important or less important in the future? I suspect the former.
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No, The Fed Will Not “Save the Market”–Here’s Why – Charles Hugh Smith
24 februari

The greater the excesses, speculative euphoria and moral hazard, the greater the reversal.
A very convenient conviction is rising in the panicked financial netherworld that the Federal Reserve and its fellow dark lords will “save the market” from COVID-19 collapse. They won’t. I already explained why in The Fed Has Created a Monster Bubble It Can No Longer Control (February 16, 2020) but it bears repeating.
Contrary to naive expectations, the Fed’s primary job isn’t inflating stock market and housing bubbles, though punters are forgiven for assuming that, given the Fed has inflated three gargantuan bubbles in a row, each of which burst (1999-2000, 2007-08 and now 2019-2020).
The Fed’s real job is protecting the banking/financial sector from a richly deserved and long overdue implosion. Blowing speculative asset bubbles is a two-fer, enabling rapacious, parasitic financiers and banks to profit from debt-serfs borrowing and gambling in rigged casinos (take your pick: student loan casino, housing casino, stock market casino, commodities casino, currency casino, etc.).
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Shocks, frictions, and inequality in US business cycles – Christian Bayer, Benjamin Born, Ralph Luetticke
26 februari

How much does inequality matter for the business cycle and vice versa? This column explores the two-way relationship using a heterogeneous agent New Keynesian model estimated on both the macro and micro data. Although adding data on wealth and income inequality may not materially change the estimated shocks driving the US business cycle, the estimated business cycle shocks themselves are useful for explaining the evolution of US wealth and income inequality from the 1950s to today.
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Unicorns & Non-Unicorns Hung Out to Dry: As SoftBank Licks its Wounds, Startup Funding Fizzles, Shutdowns & Layoffs Spread – Wolf Richter
25 februari

The out-of-money moment is here. The party is over. But it sure was fund, so to speak, while it lasted.
It’s now a near daily litany: Startups, once assured to be fed endless cash to burn, are laying off people or are shutting down entirely as funding for them dries up, and as exits for investors get tough after the recent IPO fiascos, including Casper, Lyft, and Uber, and the messily scuttled IPO of WeWork that has pulled the rug out from under SoftBank.
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Outside directors, firm behaviour, and performance: Evidence from a quasi-natural experiment in Japan – Masayuki Morikawa
27 februari

Japanese listed companies are recruiting many more outside directors to their boards in response to changes in corporate law and governance codes. The column uses data on firm performance to show that these changes have had no impact yet on the risk-taking behaviour or performance of firms. One-size-fits-all regulation may not be in the best interests of all firms.
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***Four Reasons Inequality Isn’t What You Think It Is – Antonis Giannakopoulos
26 februari

One of the defining characteristics of advocates for socialism is an obsession with equality. According to this line of thinking, inequality is the central problem of the modern world, and it demands a centralized solution. Thus, socialists—and more mild social democrats—push to use the power of the state to force the transfer of wealth from the productive and successful to those who are less so. This is the way to achieve social justice, they contend.
But inequality is not the societal plague that socialists allege it to be.
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Disclaimer: De VoL-redactie selecteert deze artikelen op interessante inzichten, of naar wij denken nuttige informatie. Wij kunnen echter geen enkele aansprakelijkheid aanvaarden voor de gevolgen van beslissingen die op grond hiervan door lezers zijn genomen, zakelijk zomin als privé.

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