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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Calculating GDP Correctly – Mark Brandly
12 augustus
While gross domestic product is considered by many to be the most important statistic regarding our economic well-being, Austrian and non-Austrian economists alike have criticized it as being an unsound representation of the health of an economy. Readers of mises.org are probably familiar with these arguments and I am not going to rehash these critiques.
However, some of the criticisms of this statistic misrepresent how the statistic is determined. I think it would be instructive to explain how GDP is calculated.
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Euro area bank bailout policies after the global financial crisis sowed seeds of the next crisis – Viral Acharya, Lea Borchert, Maximilian Jager, Sascha Steffen
10 Augustus
During the 2008/09 global financial crisis, European governments bailed out a large number of banks that were severely affected by the crisis. This column documents how the design of the bailout policy was determined by the fiscal capacity of the respective country. Fiscally weak countries recapitalised banks insufficiently, causing undercapitalised banks to shift their assets from loans to risky sovereign debt and engage in zombie lending, resulting in weaker overall credit supply, elevated risk in the banking sector, and, eventually, greater reliance on liquidity support from the ECB. Kicking the can down the road in 2008/09 thus sowed the seeds of the future banking crisis. These results have potential implications for the ongoing COVID-19 pandemic as, if the economic situation further deterioriates, banking sector stability is likely to be adversely affected.
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China To Begin Major Expansion Of Digital Currency Testing – Tyler Durden
15 augustus
China’s Commerce Ministry released new details Friday of a pilot program for the country’s central bank digital currency (CBDC) to be expanded to several metropolitan areas, including Guangdong-Hong Kong-Macao Greater Bay Area, Beijing-Tianjin-Hebei region, and Yangtze River Delta region.
The Commerce Ministry is currently running pilot tests in four cities: Xiong’an New Area, Shenzhen, Suzhou, and Chengdu. The People’s Bank of China (PBoC), the country’s central bank, is supervising the rollout of the CBDC pilot program on a city by city basis.
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The Debt-Inflation Spiral Is Driving up the Demand for Gold – Alasdair Macleod
15 augustus
Measured in dollars, the current bull market for gold started in December 2015, since which its price in dollars has almost doubled. Other than the odd headline when gold exceeded its previous September 2011 high of $1,920, only gold bugs seem to be excited. But in our modern macroeconomic world of government-issued currencies, which has moved on from the days when gold operated as a monetary standard, it is viewed as an anachronism—a pet rock, as Jason Zweig of the Wall Street Journal called it in 2015, only a few months before this bull market commenced.
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Dollar’s Purchasing Power Drops to Lowest Ever. Inflation Heats Up, as Fed Wants, After Simultaneous Supply & Demand Shocks – Wolf Richter
12 augustus
“We’re not even thinking about thinking about” slowing the decline of the dollar’s purchasing power — and thereby labor’s purchasing power.
A supply shock and a demand shock came together during the Pandemic, and it produced chaos in the pricing environment. There was a sudden collapse in demand in some segments of the economy – restaurants, gasoline, jet fuel, for example – and a surge in demand in other segments, such as eating at home, and anything to do with ecommerce, including transportation services focused on it.
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Here’s Why the “Impossible” Economic Collapse Is Unavoidable – Charles Hugh Smith
14 Augustus
This is why denormalization is an extinction event for much of our high-cost, high-complexity, heavily regulated economy.
A collapse of major chunks of the economy is widely viewed as “impossible” because the federal government can borrow and spend unlimited amounts of money because the Federal Reserve can create unlimited amounts of money: the government borrows $1 trillion by selling $1 trillion in Treasury bonds, the Fed prints $1 trillion dollars to buy the bonds. Rinse and repeat to near-infinity.
With this cheery wind at their backs, conventional pundits are predicting super-rebounds in auto sales and other consumption as consumers weary of Covid-19 and anxious to blow their recent savings borrow and spend like no tomorrow.
As for the 30+ million unemployed–they don’t matter. Conventional analysts write them off because they weren’t big drivers of “growth” anyways–they didn’t have big, secure salaries and ample wealth/credit lines.
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Online mortgage platforms can allow small banks to improve their inter-regional diversification – Christoph Basten, Steven Ongena
15 Augustus
Recently, the debate around potential changes to financial intermediation with the introduction of new technology or FinTech has gained pace. Using data on bank responses to household mortgage applications through a Swiss web platform, this column contributes to the debate by showing how online platforms can allow smaller banks to expand to areas beyond their branch network. It finds enormous potential for web platforms to shake up local lending competition, open up new ways for geographical diversification, and facilitate automation of lending decisions.
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Chart Of The Day: Is China About To Unleash An Inflationary Tsunami In The US – Tyler Durden
14 augustus
Two months ago we said that “the most important question in finance today” is whether what comes next after the historic liquidity tsunami which will see global central bank balance sheets hit $28 trillion next year…
… is inflation or deflation, a question which is even more critical and urgent today, yet which provokes even more market confusion, which can easily be seen in the record divergence between real rates (inflation adjusted current rates) which are at all time record lows, and breakevens (inflation expectations), which have been soaring for the past 3 months, a topic which we addressed earlier this week in “What’s Behind The Bizzare Break Between Breakevens And Crashing Real Rates.”
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A Brief History of the Gold Standard, with a Focus on the United States – Robert P. Murphy
14 augustus
To fully understand our current global monetary system, in which all of the major powers issue unbacked fiat money, it is helpful to learn how today’s system emerged from its earlier form. Before fiat money, all major currencies were tied (often with interruptions due to war or financial crises) to one or both of the precious metals, gold and silver. This international system of commodity-based money reached its zenith under the so-called classical gold standard, which characterized the global economy from the 1870s through the start of World War I in 1914.
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Superstar firms and the comparative advantage of countries – Cecile Gaubert, Oleg Itskhoki
14 Augustus
Large firms play a pivotal role in international trade, shaping, at least in parts, the export patterns of their home countries This column studies the role of such individual superstar firms and their specific know-how and managerial talent in determining a country’s comparative advantage. Guided by a framework it finds that in France, sectors with more superstar firms export more compared to average sectors. The contribution of superstar firms to exports is particularly pronounced in the most export-intensive sectors. However, over the medium to long run, exports of such sectors tend to fall faster and reverse to the mean.
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Are Negative Rates a Natural Historical Development? – Pascal Hügli
12 augustus
Negative interest rates have long since become a reality. But we are not talking about negative real interest rates. This is the case when the return on an investment is lower than the officially stated inflation rate. In today’s context, negative interest rates are rather negative nominal interest rates; that is, the nominal interest rate is below 0 percent.
This type of negative interest rate already existed once in the 1970s. At that time, Switzerland introduced a “commission” of 2 percent per quarter on bank deposits at Swiss banks. This was intended to inhibit the inflow of new capital into Switzerland. The fixed exchange rates of the Bretton Woods system still prevented the Swiss franc from appreciating at that time, but the money supply expanded sharply from 2.1 percent in 1966 to 10.9 percent in 1968. This increased inflationary pressure on Switzerland. Negative interest rates were imposed in 1972, but they were declared ineffective and abolished after 1978.
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Throwing Printed Money at This Problem Won’t Make It Go Away – Bryce McBride
10 augustus
If while driving your car you suddenly noticed that you were heading straight for a cliff edge, of course the sensible thing to do would be to apply the brakes and sharply turn the wheel.
If, however, rather than traveling by yourself you were instead driving a carload of children holding bowls of hot soup, you might choose to maintain your speed and direction while opening a newspaper up in front of you. For the next few moments, by keeping the car stable and the children unaware of any pressing danger, you have made it unlikely that they will spill hot soup on themselves and suffer burns.
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Corporate Bond & Junk Bond Markets Driven into Foaming-at-the-Mouth Exuberance by Fed Jawboning about Huge Purchases. But it Actually Bought Just Tiny Amounts – Wolf Richter
11 augustus
The Fed disclosed yesterday afternoon the amounts and names of the corporate bonds and corporate bond-ETFs that it bought in July. The Fed started buying corporate bonds for the first time ever in June, after having started buying bond-ETFs in May. The amounts are small – measured in millions and single-digit billions – and disappear as rounding errors on the Fed’s overall balance sheet measured in hundreds of billions and trillions.
Corporate bond purchases and holdings.
Over the month of July, the Fed purchased $1.8 billion in corporate bonds. This brought its total holdings of corporate bonds at the end of July to $3.55 billion. Of these holdings, 2.9% were BB-rated junk bonds, or about $110 million (with an M). The rest were investment-grade: 41.8% rated A, AA, or AAA; and 55.3% rated BBB.
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Electronics lead concerns over the EU’s declining share in global manufacturing value chains – David Martínez Turégano, Robert Marschinski
11 Augustus
The EU’s falling share in global manufacturing has fuelled concerns about an overall loss of competitiveness. However, sectoral idiosyncrasies are strong and advise against a ‘one-size-fits-all’ policy intervention. This column uses the World Input-Output Tables to decompose the value added for manufacturing value chains and study the drivers of EU’s relative decline. Competitiveness concerns are most warranted for electronics, a key sector for productivity and innovation. The EU’s global share in electronics has fallen even more than in total manufacturing, without evidence that specialisation in other segments of this value chain could significantly mitigate the trend.
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US Bankruptcies Are Already At 10-Year High As Pandemic Takes Its Toll – Tyler Durden
4 augustus
Gold and silver sold off when Russia announced that it had an effective vaccine for coronavirus. This plays into the myth that a cure for COVID-19 will cure the economy. But, as SchiffGold.com notes, there is plenty of evidence suggesting the damage to the economy is deep and will likely have long-lasting impacts even when the pandemic is in the rearview mirror.
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***Why We Need Entrpreneurs and Market Prices for a Healthy Economy – Fabrizio Ferrari
11 augustus
Among the many insights Mises provides in his magnum opus, Human Action, there are crystal-clear considerations about the price mechanism, the role entrepreneurs play in fostering efficient resource allocation, and how socialism is detrimental to the economy, insofar as it disrupts the smooth interplay of prices, entrepreneurship, and resources’ allocation.
Prices and Subjective Value
In an unhampered market economy, the price mechanism is the tool conducive to the most efficient—i.e., desired by consumers—allocation of resources. Why? Because prices stem from the different subjective values human beings attach to the various consumer goods and services available in the economy.
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***The Economy Is Mortally Wounded – Charles Hugh Smith
10 Augustus
A fully financialized, totally debt and speculation-dependent economy is terminal once leverage and debt stop expanding exponentially.
We all know the movie scene in which the character is wounded but dismisses it as no big deal, and then lurches into the closing sequence where we discover the wound was not inconsequential, it was mortal, and the character expires.
That’s a fair depiction of the economy–both the U.S. and the global economy. The rapt audience is assured it’s just a flesh wound and the character will soldier on, teeth nobly gritted, and that sets up our surprise when he/she tragically expires in the climatic scene.
Financial-political authorities and their paid cheerleaders are sparing no expense in assuring us the pandemic-triggered Greater Depression is a mere bump in the road and the recovery will be record-breaking, and they lavish excessive optimism on the triggers of this astounding recovery that’s just waiting in the wings: a covid-19 vaccine, a covid-19 treatment, herd immunity, etc.
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New Sound Money Caucus Launched On Capitol Hill – JP Cortez
14 augustus
As the political and central banking establishment in Washington continues to bail out the economy and markets by creating trillions of unbacked pieces of paper and electronic digits, a handful of Congressmen hope to shine a new spotlight on the devastating effects of this runaway financial profligacy.
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Managing capital flows to emerging markets – Bilge Erten, Anton Korinek, José Antonio Ocampo
11 Augustus
Recent market volatility has underlined how fickle international capital flows can be, and how important it is for emerging economies to have an adequate system of macroprudential policies in place. Capital controls that protect recipient countries from excessively risky types of flows are a crucial ingredient of such a system. This column motivates capital controls theoretically based on the existence of externalities from capital flows, describes recent empirical evidence on their use, and summarises the surrounding policy debate.
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