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Economische aanraders 13-10-2019

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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The Repo Market Incident May Be The Tip Of The Iceberg – Daniel Lacalle
6 oktober

The Repo Market Incident May Be The Tip Of The IcebergThe Federal Reserve has injected $278 billion into the securities repurchase market for the first time. Numerous justifications have been provided to explain why this has happened and, more importantly, why it lasted for various days. The first explanation was quite simplistic: an unexpected tax payment. This made no sense. If there is ample liquidity and investors are happy to take financing positions at negative rates all over the world, the abrupt rise in repo rates would simply vanish in a few hours.
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Economic Growth Does Not Cause Price Inflation – Frank Shostak
7 oktober

Some commentators are of the view that whenever the economy gains strength it should be the role of the Federal Reserve to step in at some stage and introduce a tighter stance in order to prevent a general increase in the prices of goods getting out of control. However why should economic growth be positively associated with a general increases in the prices of goods and services?
When we talk about economic growth, what we mean by this is an increase in the production of goods and services that people require to support their life and wellbeing. Since the price of a good is the amount of dollars paid per unit of this good, then obviously for a given amount of money an increase in economic growth (i.e., an increase in the amount of goods and services), must lead to a decline and not to an increase in the prices of goods and services in general. (We now have more goods for an unchanged amount of dollars).
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Can A Policy Recession Occur When The Fed Is Easing? – Joseph Crason
12 oktober

Is it possible for a policy recession to occur when successive rounds of policy-stimulus have worked to extend the economic cycle and the policy-fuel runs out or cannot be provided in the same scale? We may soon find out.
The current stance of monetary and fiscal policies is at odds with the economic cycle. The economic cycle is the longest in the post war period, running now for 123 months. Long cycles, with dwindling amounts of resources as is evident with the jobless rate at 3.5% the lowest in 50 years, have been associated with no policy support.
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Recessions and size of the middle class – Joan Costa-i-Font, Alberto Batinti
13 Oktober

A sizeable middle class is essential to protect societies against socioeconomic and political instability. This column examines the effect of economic recessions on the size of the middle class using different income-based and self-perception definitions. It finds that anticipated recessions do not produce an overall middle-class squeeze, but unanticipated shocks such as the Great Recession do. It also finds that recessions increase the share of the population that regards itself as middle class.
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Government Meddling Is the Reason You’re “Underpaid” – Gary Galles
7 oktober

People frequently allege that, under capitalism, people aren’t paid what they are worth to employers. As a measure of how frequently that gets repeated, a Google search of “underpaid” I just did turned up 1,770,000 hits. And there is one sense in which that allegation may be true. But the commonly-drawn implication that state coercion will improve things is false.
The competitive market process does not guarantee that your payment equals your value to your employer. It guarantees you are paid at least as much (adjusted for a host of other circumstances and preferences) as your next-best known alternative.
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Strong economy, strong currency – Ric Colacito, Steven Riddiough, Lucio Sarno
10 oktober

While it is common to read in the press about linkages between the economic performance of a country and the evolution of its currency, the scientific literature suggests that exchange rates are disconnected from the state of the economy, and that macro variables that characterise the business cycle cannot explain asset prices. This column shares evidence of a robust link between currency returns and the relative strength of the business cycle in the cross-section of countries. A strategy that buys currencies of strong economies and sells currencies of weak economies generates high returns both in the cross section and over time.
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Quantitative Easing Is Back – Daniel Lacalle
9 October

The Federal Reserve, through its president Jerome Powell, has indicated that it is preparing to increase its balance “organically”. The effort to separate this latest monetary policy change of course from a full-blown new QE (quantitative easing) is, at the very least, amusing. If we look at what is being discussed, it has nothing to do with organic expansion and looks a lot like a new repurchase program.
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Herd behaviour in asset markets: The role of monetary policy – Stefano Micossi
8 oktober

One important conclusion of Robert Shiller’s influential 2015 book, Irrational Exuberance, is that bubbles are random exogenous phenomena that cannot be foreseen and do not depend on macroeconomic policies. This column introduces a new CEPR Policy Insight which throws light on the root causes of speculative fevers in asset markets and related financial booms and busts. It shows empirical evidence indicating that Shiller may have overlooked the role that lax monetary policy played in triggering financial bubbles in the 2000s by offering investors a perverse promise of ever-increasing asset prices.
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The Hidden Costs of a Universal Basic Income – Arkadiusz Sieroń
10 oktober

The universal basic income (UBI) is gaining popularity as the alternative to the current welfare system. The idea is to give each citizen the same amount of money, no matter if he or she works or not. Therefore, unlike traditional welfare systems, the UBI has no means test, nor willingness-to-work test. Nobody would be then left without a livelihood even if there is no work for him. Doesn’t that sound great?
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Retail Investors Are Acting As If A Financial Crisis Is Just Around The Corner – Tyler Durden
12 oktober

While algos continue to zig and zag, daytraing the barrage of optimistic and pessimistic US-China trade deal headlines, and stock buybacks are set for another record, with a recent report finding that cumulative buybacks YTD are already up +20% YoY compared to 2018 which was already a record year for stock buybacks…
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Sticker Shock & Thorny Question: How Much Have Car Prices Really Risen over Three Decades? – Wolf Richter
7 oktober

Wages rose with inflation, but not nearly enough to pay for “quality improvements,” which is why working people feel increasingly impoverished.
There are two ways to answer the thorny question: One way, as measured by the official CPI for new vehicles. And the other way, as measured by retail prices. So here are the retail prices, as measured by base MSRP, for one of the bestselling four-door sedans in the US, the Toyota Camry LE, going back to 1990. And in a moment, we’re going to compare this to the official CPI for new vehicles.
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Can Monetary Or Fiscal Stimulus Turnaround The Next Recession? – Patrick Hill
12 oktober

A recession is emerging with interest rate curves inverted, the end of the business cycle at hand, world trade falling, and consumers and businesses beginning to pull back on spending. The question is: will monetary or fiscal stimulus turn around a recession?
In this post, we find both stimulus alternatives likely to be too weak to have the necessary economic impact to lift the economy out of a recession. Finally, we will identify the key characteristics of a coming recession and the implications for investors.
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What’s Holding Up the Market? – Charles Hugh Smith
7 oktober

The Fed’s nearly free money for financiers policies in support of the Super-Rich do not exist in a vacuum–the disastrous consequences are already baked in.
What’s holding up the U.S. stock market? The facile answer is the Federal Reserve (“the Fed has our back,” “don’t fight the Fed,” etc.) but this doesn’t actually describe the mechanisms in play or the consequences of a market that levitates ever higher on the promise of more Fed money-for-nothing injected into the diseased veins of the financial system.
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Our Time/Labor Is Finite, But Money Is Infinite – Charles Hugh Smith
8 oktober

Once we understand this mechanism, we understand that labor can never get ahead.
I’ve been pondering a comment longtime correspondent Drew P. emailed me in response to my post, What’s Holding Up the Market?: “Our time/labor is finite, but money is infinite.” Drew explained that creating new fiat currency and injecting it into a closed system (our financial system) controls and restrains the value of our time and labor, past, present and future.
This is a profound insight into why our financial system is inherently exploitive and why it is unsustainable.
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Getting Real About Green Energy, An honest analysis of what it CAN’T promise – Chris Martenson
4 oktober

But there’s virtually no chance of the world transitioning gently to an alternative energy-powered future.
These Are The ‘Good Old Days’
I’m often asked where I stand on wind, solar and other alternative energy sources.
My answer is: I love them. But they’re incapable of enabling our society to smoothly slip over to powering itself by other means.
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***Scabs: The social suppression of labour supply – Emily Breza, Supreet Kaur, Nandita Krishnaswamy
12 oktober

Enforcing collective action through social norms and social sanctions can be particularly relevant in poor countries, where local social networks are often key in risk sharing and information diffusion. This column uses two experimental exercises to test whether social norms shape aggregate labour supply in informal markets for casual daily agricultural labour in India. It finds that social norms help sustain wage floors, with workers taking jobs at wage cuts in private but rejecting them in public due to fear of sanctions.
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When Was Peak-Insanity of the Unicorn-Startup Bubble That’s Now Imploding? – Wolf Richter
8 oktober

WeWork was just late to the defenestration party.
Everyone – including infamously me – has been trying to pinpoint the exact moment when the magnificent startup-unicorn-bubble broke, and I mean not just broke but imploded spectacularly. All of the biggest upcoming IPOs were cancelled. All the biggest ones that got out the IPO window this year crashed and burned. And the $47-billion WeWork unicorn is now awaiting dismemberment or a bailout from Softbank after its IPO hopes were annihilated by a catastrophic event, called “market conditions,” when some sort of rationality starts to reinsert itself in tiny baby steps into the market.
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Socialism Is the Greatest Threat to the Environment – Daniel Lacalle
6 oktober

If we want a true alternative to fossil fuels that improves the environment, reduces emissions, and strengthens global welfare, it will only come from the free market.
Historical evidence and economic incentives show us that interventionism and socialism never protects the environment; they only use it as a subterfuge to increase control of the economy while subsidizing polluters under the excuse of “employment” using the term “strategic sectors.”
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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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