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 Importance of Economic Theory in Understanding Historical Data – Frank Shostak
8 juni
It is a common belief that sound economics must be based on facts and not on theoretical reasoning as such. Some commentators are dismissive of economic analysis that is not derived from the true data, since it is not describing the facts of reality as depicted by historical data. The use of the free market economy framework, without the central bank and government intervention and with businesses as a foundation to derive valid conclusions, is dismissed as nonsensical. After all, we don’t have a free market economy without a central bank and without government intervention. In order to be practical, it is held, economists should stick to the facts.
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Central Banks Bailed Out Markets To Avoid Trillions In Pension Losses – Tyler Durden
13 juni
The Organization for Economic Co-operation and Development (OECD) recently published a report showing how pension funds in OECD countries recorded a massive loss of approximately $2.5 trillion during the stock market meltdown in February through late March. Shortly, after that, central banks intervened with monetary cannons to rescue stock markets and other financial assets to avoid pension returns from going negative.
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Inflation after the pandemic: Theory and practice – Charles Goodhart
13 Juni
The correlation between monetary growth and inflation has an historic pedigree as long as your arm. This column argues that rejecting the likelihood of (eventually) rising velocity following the current massive monetary expansion requires an alternative theory of inflation that has successfully eluded all of us thus far. Ignoring the potential inflationary dangers is the equivalent to an ostrich putting its head in the sand, and while the path towards disinflation may be well known, it simply isn’t available today.
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The Quantity Theory of Money and the Equation of Exchange – Kristoffer Mousten Hansen
13 juni
One of the first things that the student of economics is liable to be tortured with when he turns to monetary theory is the equation of exchange. Based on a mechanistic understanding of the quantity theory of money, the equation purports to show the relation between the supply of money and the prices of goods. It is one of the foundational fallacies of modern economics.
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MMT Is An “Ephemeral Cult” Symptomatic Of “Peak Macroeconomics” – Aladair Macleod
11 juni
The doyenne of MMT, Stephanie Kelton, has published a book this week explaining modern monetary theory. This article examines the foundations of MMT which Kelton explained in an earlier video released last year.[i]
Macroeconomics has become so far removed from reality that its practitioners cannot understand what is happening in the real economy. Never has this been more obvious than today. While they claim to be economically literate, macroeconomists are in thrall to their paymasters; a combination of government, quasi-government and financial institutions with a vested interest in not looking too closely at the full consequences of government economic and monetary policies. From this neo-Keynesian macro world, the latest spinoff is modern monetary theory, which is little more than a logical extension of Keynesianism —justifying intervention by the state and the use of fiat currency being expanded limitlessly. MMT is the end of the line for arguments based on macroeconomic fallacies that have their origin in Keynes.
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A Bounce Is Not A Recovery – Daniel Lacalle
7 juni
The recent improvement in global PMIs and especially in employment in the United States have created a strong optimism in markets about the recovery. However, it is important to be cautious about a V-shaped recovery when the leading indicators remain weak.
Eurozone PMIs (Purchasing Managers’ Index) came slightly above expectations in May, but remained in deep contractions both at the composite, manufacturing and services level. We must remember that a bounce like the one we have seen only means that the rate of deterioration is slowing down, not that there is a recovery. All sectors remained deep in contraction in May, but almost with slower rates of decline.
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Savings Are Critical to a Prosperous Economy – Frank Shostak
12 juni
It is held by most mainstream economists that spending is the heart of economic activity. Economic activity is depicted as a circular flow of money. Spending by one individual becomes part of the earnings of another individual, and vice versa. In contrast saving is viewed negatively as it weakens the potential demand for goods and services.
If, however, people have become less confident about the future, it is held that they will cut back on their outlays and hoard more money. Therefore, once an individual spends less, this worsens the situation of some other individual, who in turn also cuts his spending.
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Unconventional fiscal policy to exit the COVID-19 crisis – Francesco D’Acunto, Daniel Hoang, Michael Weber
8 Juni
The German administration has just released their €130 billion economic stimulus package, the most prominent measure of which is an unconventional fiscal policy in the form of a sudden drop in VAT. The aim is to create a future path of increasing sales taxes by increasing prices and hence stimulating inflation expectations and aggregate demand today. This column argues that earlier episodes have shown that unconventional policy is effective because it is easily understood by non-expert households and households react to it strongly. Alternative unconventional measures, instead, such as forward guidance, are largely ineffective in part because households do not understand what such policies imply for their consumption.
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***The Path To Average Equity Returns In The 2020s Is Challenged – Bryce Coward
13 juni
The returns of the 2009-2020 bull market were nothing short of extraordinary. From the 2009 low in the S&P 500 to the 2020 high, stocks gained a massive 488%, or nearly 18% on an annualized basis. This compares to an average nominal price return for US stocks of about 5.5% annualized going all the way back to 1896, or 6.7% in the post-war period. So, the recent bull market produced average annual returns more than 3x that of normal. Even if we measure the S&P 500’s full cycle performance from the low in 2009 through the low in 2020, that still gives us an annualized return of 14.5%, or nearly three times the annual average return through history.
Going forward, can this type of high return environment be replicated? To answer that question it helps to understand the sources of equity appreciation from the previous cycle and ask whether those things are likely to be repeated during this cycle.
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Next Generation EU: A recovery plan for Europe – Maarten Verwey, Sven Langedijk, Robert Kuenzel
9 Juni
As Member States start to ease restrictions linked to the COVID-19 pandemic on citizens and businesses, EU leaders and institutions have turned their attention towards the medium-term recovery of their economies. In late May, the Commission presented its proposals for a recovery plan. This column provides a brief overview of the economic rationale for collective action and an assessment of the expected impact of the recovery plan proposed by the Commission.
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The Great Divide Between Stocks & The Economy – Lance Roberts
12 juni
“There is a ‘Great Divide’ happening between the near ‘depressionary’ economy versus a surging bull market in stocks. Given the relationship between the two, they both can’t be right.” – May 12th.
The optimistic view currently is that stocks have it right. Such was a point made in a recent CNBC interview with Ed Yardeni:
“The market has been a ray of sunshine. Basically investors are convinced that we’ll get out of this, and the economy will recover along with earnings. So far, that forecast seems to be working out pretty well. The economy may very well be catching up with the stock market rather than the stock market going off on its own.”
I want to come back to this point in a moment, but we need some historical context.
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Central Bankers Gone Wild: It’s a New Era at the Fed – Robert P. Murphy
8 juni
Editor’s Note: We keep hearing from the Fed’s defenders that the current spate of new stimulus and bailouts from the central bank are really not a big deal and are all very prudent and moderate. I asked Senior Fellow Bob Murphy to provide some much needed perspective.
Ryan McMaken: We’re in a very odd situation right now in terms of evaluating the state of the economy. We can see that there is rising unemployment, and there is likely to be a wave of missed mortgage and rent payments. Is this all just due to the government-mandated “shutdowns” or are there deeper economic issues here?
Robert P. Murphy: In economics there are no controlled experiments, so partisans on a policy dispute can both continue to claim that the evidence is on their side. That’s why Keynesians and Austrians still disagree about the “lessons” of the 1930s, or whether the Obama stimulus package created or destroyed jobs.
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***Our Wile E. Coyote Economy: Nothing But Financial Engineering – Charles Hugh Smith
11 juni
Ours is a Wile E. Coyote economy, and now we’re hanging in mid-air, realizing there is nothing solid beneath our feet.
The story we’re told about how our “capitalist” economy works is outdated. The story goes like this: companies produce goods and services for a competitive marketplace and earn a profit from this production. These profits are income streams for investors, who buy companies’ stocks based on these profits. As profits rise, so do stock valuations.
It’s all win-win: consumers get competitively priced goods and services, workers have jobs producing goods and services and investors earn a return on their capital.
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COVID-19 and UK public finances – Ethan Ilzetzki
11 Juni
Public debt has risen to unprecedented p
eacetime levels, due to policies put into place to address the economic fallout from COVID-19. Nevertheless, as this column reveals, the Centre for Macroeconomics panel was nearly unanimous that the Treasury should not take any action to decrease the deficit in the upcoming budget. The panel is split on when it would be wise to publicly announce long-run plans to address the deficit and the debt. The majority of the panel supports a mix of financing options when action is taken, with tax increases receiving strong support and not a single panellist supporting public spending cuts.
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Tsunami of “Unsustainable” Business Loans to Hit Banks, City of London Grandees Warn – Nick Corbishley
10 juni
“Consideration may need to be given” to free money from taxpayers “to meet solvency or liquidity requirements,” but only “at the extreme end,” whatever that means.
Many struggling businesses in the UK, both large and small, will soon be sitting on debt piles they won’t be able to service as the emergency loans they’ve taken out to survive the lockdown and its aftermath begin to fall due. That’s the stark warning of an “interim report” by the Recapitalisation Group (RCG), a task force assembled by The CityUK, one of the UK’s most powerful financial lobby groups, at the “encouragement” of the Bank of England, to explore ways of recapitalizing small and medium-size enterprises (SMEs) when the inevitable debt defaults begin.
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Insights into post-COVID-19 fiscal policies – Sebastian Barnes, Eddie Casey
9 Juni
The Covid-19 crisis has highlighted the role of fiscal policy and transformed the outlook for public finances. This column explores economic and fiscal scenarios for a small euro area country to 2025. Due to the high uncertainty, it argues for a state-contingent approach to policy. Low interest rates, if maintained, along with ‘high-altitude’ debt dynamics could create substantial headroom for the fiscal response and make future adjustments to put the debt ratio on a downward path more manageable.
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A Word About the Chaos in the Unemployment Data: Week 12 of the U.S. Labor Market Collapse – Wolf Richter
11 juni
No one was prepared for a collapse like this. The data are all over the place. Two government agencies differ by 9 million unemployed. The jobs crisis bottomed in May. But “over 30 million” people remain without work. Making sense of the chaos.
Even Fed chairman Jerome Powell, in his FOMC-meeting news conference yesterday, expressed his bafflement with the chaos in the unemployment data being reported by two government agencies that differ by give-or-take 9 million unemployed
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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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