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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Money Supply vs. Liquidity. What’s the Difference? – Frank Shostak
27 oktober
In a market economy, a major service that money provides is that of the medium of exchange. Producers exchange their goods for money and then exchange money for other goods. As the production of goods and services increases, this results in a greater demand for the services of the medium of exchange (the service that money provides). Conversely, as economic activity slows down the demand for the services of money follows suit.
The demand for the services of the medium of exchange is also affected by changes in prices. An increase in the prices of goods and services leads to an increase in the demand for the medium of exchange. People now demand more money to facilitate more expensive goods and services. A fall in the prices of goods and services results in a decline in the demand for the medium of exchange.
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Central bank digital currencies: Drivers, approaches, and technologies – Raphael Auer, Giulio Cornelli, Jon Frost
28 Oktober
Central bank digital currencies are in the limelight. Yet the motives for issuance and, relatedly, the policy approaches and designs differ. This column surveys the drivers, policy approaches and technical designs, based on a comprehensive and publicly available database. It finds that all Central bank digital currency projects aim to complement cash rather than replace it. Many projects would allow for an important role of the private sector in the payment system.
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The Fed’s Balance Sheet May Be Headed to $40–$50 Trillion – Doug French
30 oktober
President Trump has said often that he had “created the greatest economy the world has ever seen, until the China virus came.” Maybe some people believe that, but if the economy was so great why did the Fed keep interest rates at zero and its balance sheet at $4 trillion?
The president is bragging about the third quarter GDP bump; however, as David Rosenberg tweeted, “Even with the Q3 GDP snapback, a snapback that is now stalling, 2020 likely goes down with a –4% print, by far the worst year for the economy in the post-WWII era.”
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IMF, BIS, expanded mandates, climate and inequality – John H. Cochrane
26 oktober
Last week I was pretty critical of the ECB’s move to expand its mandate to take on climate policy. The ECB is not alone however. The Bank of England started down this direction. The IMF has also been a proponent, and the BIS is nodding assent.
In short, the move that central banks, financial regulators, and their club of international institutions should to expand to general macroeconomic and financial dirigisme, and then take on climate, inequality, and other social causes far beyond their institutional mandates is widespread. The ECB is not alone, and in this context their wish to join the movement makes more sense.
I adapt here some comments I made last March at the end of the Homer Jones talk I gave at the Federal Reserve Bank of St. Louis (video, written version). For that reason my links and sources stop around then. All of that was quickly overshadowed by covid, but perhaps it’s time to revive the question.
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What’s Happened To Bitcoin Since Its Whitepaper Appeared 12 Years Ago? – Robert Stevens
31 oktober
In brief
On October 31, 2008, Satoshi Nakamoto published the Bitcoin whitepaper.
Since then, Bitcoin’s journey has taken in highs and lows, from the Mt. Gox hack to an all-time high price of $20,000.
In 2020, it’s seen renewed growth in the face of the coronavirus pandemic, as institutional investors take a growing interest in the cryptocurrency.
Today marks the 12th birthday of the Bitcoin whitepaper. There will be no party, no cake: Bitcoin’s friendship network is decentralized, and its creator anonymous. Yet, since its release, the whitepaper has had a profound impact on the world.
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Crowding-out bank loans: The effects of the Fed bond market stimulus on firms – Olivier Darmouni, Kerry Siani
29 Oktober
With the spread of COVID-19 and its economic consequences, many firms were in need of increased liquidity. This column documents that instead of relying on bank loans, firms preferred to issue corporate bonds on capital markets. Over 40% of bond issuers left their credit line untouched, and a large share of bond issuance was used to repay existing bank loans. Bond issuance was also used to increase holdings of liquid assets rather than for real investment. This suggests that the V-shaped recovery of bond markets is unlikely to lead to a V-shaped recovery in real activity.
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Do We Really Need More Stimulus to Print More Millionaires & Billionaires, Enrich Fraudsters, Balloon the Trade Deficit? Consumer Data Says, “No We Don’t” – Wolf Richter
30 oktober
People who need support, should get support. As for the rest? On my soapbox, wildly wagging consumer income and spending data.
Weirdest economy ever, powered by stimulus money, and the now expired extra unemployment money, and money from rents-and-mortgage-payments-not-made, and money from cash-out mortgage refis of at record low interest rates. And folks “in aggregate” – all mixed together, with all inequalities papered over – are spending record amounts on goods, a lot of which are imported, but they’re not spending on services – not because they don’t have the money but because they have Pandemic-reasons for not buying those services.
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***How Systems Collapse: Reaping What We’ve Sown – Charles Hugh Smith27 oktober
Don’t expect healthcare or any other hollowed-out, heavily optimized system to function as it once did.
A great many Americans will be shocked when our healthcare systems start failing because they believed the PR that “we have the finest healthcare system in the world.” The ability to deliver the finest care to a few does not translate into an ability to deliver the finest care to the many, nor does it mean the system is robust enough to withstand a tsunami.
As I have endeavored to explain in recent posts, systems optimized for narrow envelopes fail when they slip outside that envelope. One analogy is an airliner that is optimized in terms of fuel efficiency to fly above 30,000 feet at around 540 miles per hour.
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***Understanding the Proper Meaning of “Equality” – Ludwig von Mises
29 oktober
[A Selection from Liberalism: In the Classical Tradition.]
Nowhere is the difference between the reasoning of the older liberalism and that of neoliberalism clearer and easier to demonstrate than in their treatment of the problem of equality. The liberals of the eighteenth century, guided by the ideas of natural law and of the Enlightenment, demanded for everyone equality of political and civil rights because they assumed that all men are equal. God created all men equal, endowing them with fundamentally the same capabilities and talents, breathing into all of them the breath of His spirit. All distinctions between men are only artificial, the product of social, human — that is to say, transitory — institutions. What is imperishable in man — his spirit — is undoubtedly the same in rich and poor, noble and commoner, white and colored.
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Financial shock transmission in a production network – Banu Demir, Beata Javorcik, Tomasz K. Michalski, Evren Örs
29 Oktober
Firm-level interconnections have important implications for the propagation of economic shocks and the effectiveness of government policy. This column analyses the effect of a tax policy change on firm-level production chains and performance. Using granular administrative data, it shows that unexpected and non-localised supply shocks propagate downstream through production networks, affecting sales, input usage, and buyer and supplier linkages. In addition, it shows that the effects are amplified in firms facing financial constraints, highlighting the importance of liquidity in the resilience to shocks.
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Why There is No Such Thing as an Exploitative Monopoly in a Free Market – Per Bylund
26 oktober
What’s a telltale sign of economic illiteracy?
I’m starting to believe the worst is the claim that markets lead to monopoly and the accumulation of wealth in a few hands. Why? Because it makes no sense at all on the face of it and has no logical explanation, so it is indicative
of fundamental confusion and misunderstanding.
Granted, many great thinkers have been deluded by this, including Joseph Schumpeter (the old pessimist, not the young optimist). It is nevertheless a fundamental error. This error lies not in the fact that some, or even many, businessmen strive for empire, that businesses and businessmen would like and may wish for monopoly, or that they seek as much profit as possible, but in mistaking the aims of individual actors for the mechanism that they collectively comprise. This is like figuring the function of money in the economy by studying a dollar bill.
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I’m in Awe of How Fast Rents Plunge in San Francisco, New York, Boston, Los Angeles, Other Expensive Cities. Rents Decline Even in Houston & Dallas. National Average Turns Negative – Wolf Richter
30 oktober
Work-from-anywhere, unemployment crisis, oil bust, people chasing a cheaper less crowded place to live, the land rush to buy homes.
There was even a story on NPR: People from big, densely populated, expensive cities showing up in small towns in beautiful rural areas for a few weeks to get away and then getting stuck, now that they can work remotely, and buying homes and sending their kids to local schools. These are just stories, and there are now millions of them. But it’s showing up in asking rents in those big expensive markets, where vacancies are rising and landlords have to compete with each other to fill their units, and tenants are moving within the city in order to get a nicer place for less money – the free upgrade they’ve been waiting for, after years of costly downgrades.
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Macro-financial crises: Impeding the rush for the exit – Patrick Honohan
30 Oktober
With the knock-on financial impact of the Covid pandemic, it is likely that several countries could soon face macro-financial crises, with investors rushing for the exit (as in Lebanon, where a crisis is already well underway). Currency devaluation, capital controls, and bail-in are the main tools available to national financial authorities, but there is no universally agreed playbook. This column contrasts the post-Global Crisis recovery experiences of Cyprus, Iceland, and Ireland – each of them over-banked like Lebanon – and shows how different the mixture of these tools used in handling such country crises have been.
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***Flying Blind: Clueless about Risk, We’re Speeding Toward Systemic Failure – Charles Hugh Smith
28 Oktober
For all these reasons, the risks of systemic collapse are much higher than commonly anticipated.
There’s an irony in discussing risk: since we all have an instinctive reaction to visible risk, we think we understand it. But alas, we don’t, especially when the risk is invisible and systemic.
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Chile Won’t Become a Developed Country If It Doesn’t Change Course – Victor Espinosa
24 oktober
For many years, Chile was the exception in Latin America, with an unprecedented model of sustained economic development. Contrary to populism and demagoguery, the Chilean recipe for the last forty-five years was respect for private property and entrepreneurial freedom. Indeed, the phrase “Chilean miracle” was even used by economist Milton Friedman to describe the Chilean economy’s reorientation in the 1980s from socialism to a free market economy. Many other commentators looking at Chile’s remarkable growth in recent decades have come to a similar conclusion. Twenty years ago, it looked like Chile was well on its way to joining the world’s developed countries as the wealthiest in the world. However, this predicted path looks less and less likely as Chile’s reputation, as a country of freedom and opportunity is coming to an end.
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The enormous potential of social media to measure human culture – Klaus Desmet, Ignacio Ortuño-Ortin, Ömer Özak, Nick Obradovich, Ignacio Martín, Edmond Awad, Manuel Cebrían, Ruben Cuevas Rumin, Iyad Rahwan, Ángel Cuevas Rumin
31 Oktober
By allowing us to peer into the lives of billions of people, social media has inadvertently created the world’s largest dataset for the measurement of culture. This column argues that by providing quantitative, scalable, high-resolution, and cost-effective measures of revealed cultural distances between populations, it has enormous potential to help social scientists answer some of society’s most pressing issues. These include the persistence of ethnic conflict, the growing fragmentation of society, and the fraying of the social fabric. Cultural distances are also essential to our understanding of trade, migration, and investment flows.
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***High Times in the Plague Year: Booze & Cannabis Retailers Shine – John McNellis
30 oktober
Landlords already know this: People are getting more toasted than Wonder Bread.
Happy Hour starts at 3 o’clock. Tenants selling reality-relief are killing it. I called a number of retailers to double-check my desultory anecdotal evidence. One, the owner of a first-rate supermarket chain, said his alcohol sales are up 25 percent since March. That came as no surprise, but the identity of his best-selling beer — Corona — did.
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A (very) short history of the idea of ending poverty – Martin Ravallion
26 Oktober
At times, ‘ending poverty’ may seem to be nothing more than a ‘symbolic’ goal, with little done to achieve the aim. This column provides a short history of the idea of ending poverty as a ‘motivational’ goal, from the intellectual germ of the modern idea of distributive justice in the late 18th century to the UN’s first Sustainable Development Goal of ending “extreme poverty” globally by 2030. It argues that the path to attaining SDG1 calls for some combination of economic growth, especially when fuelled by pro-poor technical progress, and pro-poor redistribution, but huge challenges lie ahead in how to manage the likely tradeoffs between the ‘social’
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“Capitalism” Is No Longer Attractive to Capitalists – Charles Hugh Smith
30 Oktober
This “capitalism” is only attractive to parasites, predators, kleptocrats, legalized looters, embezzlers, fraudsters and all those insiders whose palms get greased along the way.
Back of the envelope definition of classical capitalism:
1. Transparency in markets, including pricing, information on quality and reliability of products, sellers and buyers, and of rules of conduct and rights governing all participants;
2. Risk is tightly bound to reward, i.e. everyone has skin in the game, those who lose are forced to absorb the entire loss.
2. Open competition, i.e. no monopolies or cartels limiting supply or setting prices;
3. Free flow of capital and labor;
4. Everyone pays the same rates of taxes, duties and fees on every transaction.
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10 “Big” Things For Stocks In The Coming Decade – Tyler Durden
31 oktober
In his latest weekly Flow Show, and the last such report before what may be the most important election in history, Bank of America CIO Michael Hartnett writes that according to the latest EPFR data, investors allocated $6.7Bn into bonds, and $0.1Bn into gold, while pulling $2.1Bn out of equities, and $1.5Bn out of cash.
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Globalisation and the value of domestic highway infrastructure – Taylor Jaworski, Carl Kitchens, Sergey Nigai
1 November
The interaction between domestic transportation networks, market integration, and globalisation is important for understanding the value of domestic infrastructure investment and weighing these against the substantial costs of building and maintaining domestic roads. Using an endogenous specification of domestic and international trade costs that takes into account the availability of the road network and congestion levels, this column estimates that the total value of the entire US highway system was $619 billion in 2012 dollars, which accounts for 3.9% of US aggregate GDP in 2012. The results suggest that decisions on how much to invest in domestic infrastructure should be made in conjunction with considering how improvements in the domestic transportation networks would affect domestic and international trade as well as distributional consequences for different locations within a country.
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The Fed Will Monetize All Of The Debt Issuance – Lance Roberts
30 oktober
There has been a rising concern as of late about surging inflation as the Government injects more stimulus into the economy. While it seems logical, the reality will be quite different as weak economic growth rates force the Fed to monetize the entirety of future debt issuances.
To fully explain why the Fed is now trapped, we must start with the inflation premise. The consensus expectation is the massive increases in monetary stimulus will spark inflationary pressures. Using the money supply as a proxy, we can compare the money supply changes to inflation.
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Stephanie Kelton On MMT & Blurring The Lines Between Debt And Money – Tyler Durden
31 oktober
Thanks to the public fascination with MMT, Stephanie Kelton has become one of a handful of rockstar economists, known for her frequent appearances on cable news on behalf of the Bernie Sanders campaign (she served as one of the campaign’s top economic advisers), Kelton is also the author of “the Deficit Myth”, a bestselling book arguing, essentially, that the US government can run perennial deficits, then order the Fed to simply vacuum up excess debt, leaving plenty for the global dollar-based financial system. In such a system, taxation would be fine-tuned by Congress to carefully stave off inflation, preventing the dollar from devaluing like the Argentine peso, or worse, the Venezuelan bolivar.
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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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