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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Central Banks Can’t Taper in This Slowdown – Daniel Lacalle
1 september
Recent macroeconomic data from the United States should worry us. Amid the reopening and the biggest fiscal and monetary stimulus in recent history, and with all the possible tailwinds from policy decisions, consumer confidence has plummeted to the lowest level since 2016.
Retail sales have fallen sharply again in July, and the employment or industrial production data are far more than disappointing considering the level of stimulus and that GDP has returned to prepandemic level.
The use of industrial capacity, at 76 percent, is 4 percent below the average for the 1972–2020 period, and the labor participation rate, at 61.6 percent, has been stagnant for ten months and at 1980 levels.
The total savings rate as a percentage of disposable income has almost vanished from 33.8 percent to 9.4 percent.
Let’s put it in the context of a reopening that has been in place for more than a year, a fiscal stimulus equivalent to three trillion dollars, and a monetary stimulus of 1.7 trillion dollars in 2021. The United States would go into a severe recession if it were not “doping ” the economy.
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Labour adjustment and productivity dynamics: Cross-country evidence and policy implications – Maarten Dossche, Andrea Giovanni Gazzani, Vivien Lewis
30 Augustus
Labour productivity is more procyclical in OECD countries with lower employment volatility. To capture this new stylised fact, this column proposes a business cycle model with employment adjustment costs, variable hours, and labour effort. In the model with variable effort, it shows that greater labour market frictions are associated with procyclical labour productivity as well as stable employment. In contrast, the constant-effort model fails to replicate the observed cross-country pattern in the data. Labour market deregulation has a greater effect on labour productivity cyclicality and employment volatility when effort can vary.
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***Magical Thinking About Green Energy – Charles Hugh Smith
1 September
The incentives must change from “waste is growth” to hyper-efficiency, conservation, right to repair and manufactured objects engineered to last a generation or longer and be recyclable at scale.
Humans like novelty but don’t like change. It’s easy to confuse the two. When we say, “I need a change,” what we mean is “I’d like to be refreshed by some novelty,” not “I want all the uncertainty, ambiguity and potential for errors and losses that come with change.”
Humans like a new model of truck (novelty) but don’t like their truck is taken away (change).
Since life is change, we all some experience with it. Some changes happen to us, others are the result of conscious choices we make.
Every individual has a mix of aptitudes, strategies and experiences with both kinds of change. Some of us are better at handling one kind or the other, some don’t handle either very well, some handle all change remarkably well.
Very few of us say, “I sure would like to have a health crisis.” We don’t choose the health crisis, but we do choose our response.
Like many of you, I’ve had accidents (health crises), major career changes and multiple moves to different locales.
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This Is a Sign that Price Inflation Will Soon Get Worse – Connor Mortell
3 september
Recently here on Mises Wire, Sammy Cartagena wrote a brilliant article demonstrating that Two Percent Inflation Is a Lot Worse Than You Think. In it, he demonstrates that the manageable 2 percent inflation year over year we all have gotten used to is a whole lot less manageable than we tend to think. But in it, he also cited explaining that “over 23 percent of all dollars in existence were created in 2020 alone.” From that he explains that while future inflation is important, he is focused on past inflation for the sake of his article, which is where these two articles diverge because this will be questioning future inflation. Anyone paying attention has seen that there has obviously been inflation this past year whether through price increases or more subtle ways to sneak inflation into the economy. However, when we look at the massive spending bills and the aforementioned fact that over 23% of dollars have just recently been ushered into existence, it leaves many asking why has there not been proportionally drastic inflation?
The major piece that is holding back even more inflation than we’ve already seen is a public expectation of a return to normal. The economy is exceedingly complicated and there are countless causal factors effecting this so I cannot say this is the only reason, but we can turn to The Mystery of Banking where we see Murray Rothbard go as far as claiming that “Public expectation of future price levels” is far and away the most important determinant of the demand for money. Rothbard goes on to cite his intellectual predecessor – Ludwig von Mises – to explain just how strongly expectations played a role in the German hyperinflation in 1923
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The Great Deflation Of 2022 – Michel Pento
3 september
It is not very surprising to me that nearly every talking head on Wall Street is convinced inflation has now become entrenched as a permanent feature in the U.S. economy. This is because most mainstream economists have no clue what is the progenitor of inflation. They have been inculcated to believe inflation is the result of a wage-price spiral caused by a low rate of unemployment.
In truth, inflation is all about the destruction of confidence in a fiat currency’s purchasing power. And there is no better way to do that than for the government to massively increase the supply of money and place it directly into the hands of its citizenry. That is exactly what occurred in the wake of the global COVID-19 pandemic. The U.S. government handed out the equivalent of $50,000 to every American family in various forms of loans, grants, stimulus checks, enhanced unemployment, tax rebates, and debt forbearance measures. In other words, helicopter money and Modern Monetary Theory (MMT) were deployed—and in a big way. The result was the largest increase of inflation in 40 years.
We’ve had some of the highest GDP growth rates in U.S. history over the past few months and the greatest increase in monetary largess since the creation of the Fed. But this is mostly all in the rearview mirror now. Consumer Price Inflation is all about the handing of money directly to consumers that has been monetized by the Fed. It is not so much about low-interest rates and Quantitative Easings—that is more of an inflation phenomenon for Wall Street and the very wealthy.
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Global weather disruptions, food commodity prices, and economic activity: A global warning for advanced countries – Jasmien De Winne, Gert Peersman
29 Augustus
The world is expected to see a significant rise in the frequency, duration, and intensity of extreme weather events. This column examines the macroeconomic effects of global food commodity price increases that are caused by global harvest and weather disruptions, and finds that the decline in economic activity is substantial and greater in advanced than in low-income countries. The findings suggest that the consequences of climate change for advanced countries may be greater than previously thought, and the strong rise in food prices since the outbreak of COVID-19 could seriously impede the recovery.
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The Wheels Come Off: As Economic Growth Craters, NY Fed Suspends Its GDP Tracking Model – Tyler Durden
3 september
It’s official: while Q2 was the best quarter for the economy in decades, in Q3 it is now widely accepted that as we wrote a month ago, the wheels came off as a result of a “sudden negative change.”
One doesn’t have to look too hard to find out why: between today’s catastrophic jobs report, the near record plunge in consumer confidence, the troubling contraction in retail sales where reports have missed expectations for 3 months in a row, whether it is due to the end of stimmies or the recent restrictions from the Delta variant, one bank after another took a machete, or in the case of Morgan Stanley, a nuke to their GDP Q3 forecast, with Goldman now expecting GDP to grow just by 3.5% this quarter, its second downgrade in a month (it was 8.5% just one month ago) while Morgan Stanley yesterday cut its Q3 GDP to just 2.9% from 6.5% previously.
And while banks were as usual well behind the curve, only catching up to what our readers already knew one month ago, the regional Fed were dead last, with the Atlanta Fed’s GDPNow model yesterday cut to just 3.7% fron 5.3% on Sept.1
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We Don’t Need a Central Bank to Deal with Changes in the “Demand for Money” – Frank Shostak
4 september
Historically, many different goods have been used as money. On this, Ludwig von Mises observed that, over time,
. . . there would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be one by one rejected until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money.1
Similarly, Murray Rothbard wrote in “What Has Government Done to Our Money,”
Just as in nature, there is a great variety of skills and resources, so there is a variety in the marketability of goods. Some goods are more widely demanded than others, some are more divisible into smaller units without loss of value, some more durable over long periods of time, some more transportable over large distances. All of these advantages make for greater marketability. It is clear that in every society, the most marketable goods will be gradually selected as the media for exchange. As they are more and more selected as media, the demand for them increases because of this use, and so they become even more marketable. The result is a reinforcing spiral: more marketability causes wider use as a medium, which causes more marketability, etc. Eventually, one or two commodities are used as general media-in almost all exchanges-and these are called money.
Through the ongoing process of selection, people settled on gold as their preferred medium of exchange. Some commentators, cast doubt that gold can fulfill the role of money in the modern world. It is held that, relative to the growing demand for money because of growing economies, the supply of gold is not growing fast enough.
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The Economics Of Disaster Capitalism – Chris Macintosh
3 september
If we look at what is taking place, what seems glaringly obvious to me is that there is a coordinated demolition of entire countries, their business sectors, and with this financial ruin a top-down approach to “fixing” the ruin is being enacted.
Step no 1: Ruin small businesses and individuals’ financial situation.
Step no 2: Offer them handouts/loans (UBI for individuals) and loans for corporates. This does two things. For individuals, it enslaves them like an animal that was wild and hunted for its food and survival (self-sufficient) to one which no longer hunts for its food but rather paces in a cage awaiting its daily rations.
Step no 3: Entire nations fall into the same trap. A debt trap. It is no surprise that the IMF, World Bank, and UN are acting as the pointy end of this same strategy. Making loans (unpayable) in return for locking down (Belarus affair highlighted this). Anyone can see that if you take a loan with the promise to destroy your business in order to obtain the loan, then you’ll be indebted forever. And yet that’s what entire countries have done and are doing.
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Gold Gains As Confidence Collapses – Martin Armstrong
2 september
Let me explain something. What I have pointed out about gold is that it DOES NOT rally merely because of inflation or the rise in debt.
It will rally when we are looking at the collapse in confidence. The central banks have no desire to raise for their own budget will blow apart. The Fed is restrained by the ECB and the rest of the central banks pleading with the Fed on their knees NOT to raise rates.
Do not get confused about comments from the central banks that they will not raise rates. CBs only can regulate the short-term. The long-term rates are set by the market. That is why they even do Quantitative Easing – they buy in the long-term debt trying to reduce those rates because they cannot control them.
Therefore, it really does not matter what they say. That is the Press spinning it because they have nothing else to say and they have always promoted propaganda with the markets relative to interest rates. They kept preaching the market would decline because the Fed was raising rates. Well, step back and close your ears to what the press says and the talking heads you hear on TV who do not know the first thing about markets. Interest rates ran up from 2016 throughout Trump’s 4 years. They only dropped like a stone due to the COVID manipulation.
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Huarong Finally Got Its State-Backed Bailout, But Future Chinese Firms May Not Be So Lucky – Tyler Durden
3 september
Distressed Chinese asset manager China Huarong Asset Management is getting its bailout.
Citic Group, in conjunction with China’s Ministry of Finance, has stepped in at the urging of the state to prevent the asset manager from becoming a massive Lehman-style blowup in China for the time being. Defaults have been avoided, according to a new Bloomberg article. While bondholders can breathe a sigh of relief, equity holders likely won’t be as lucky.
The rescue of the company was announced on August 18th after months of the state trying to pin down exactly who would step in, where, to help the distressed entity.
“Beijing didn’t allow a systemically important financial institution directly owned by the central government to default on its debt, an event that had the potential to upend debt markets and possibly precipitate a financial crisis,” The Wall Street Journal wrote earlier this month.
The bailout took the form of a “recapitalization” with government funding, Forbes noted, calling it “a financial infusion (unspecified in form or amount) from a group of Chinese state-owned enterprises. It is a straight bailout, as per precedent (although many had feared precedent might not hold).”
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In States that Ended the Extra $300/Week Unemployment Benefits, People Returned to Work at Over Twice the Rate than in the Other States: Data from the Labor Department – Wolf Richter
2 september
Data about the “Labor Shortage” pile up.
The weekly unemployment insurance claims data from the Labor Department — the latest batch was released on Thursday – has been making it relentlessly clearer by the week: In the 27 states that have ended the extra $300 a week in federal unemployment benefits (the Enders), people returned to work at a vastly faster rate than in states that retained the extra $300 a week (the Keepers).
This is based on continued unemployment insurance (UI) claims by state, reported weekly by the Department of Labor, and it is not survey based. Today’s “continued claims” reflect the number of people that have claimed UI for at least one week. A drop in continued claims would indicate that they have started working again.
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Even the Fed Thinks Current Debt Levels Are Unsustainable – Enrique Briega
31 augustus
A few months ago US national debt exceeded $28 trillion. This number is certainly the one economists usually work with, but does this figure capture a long-term perspective?
In March 2021, the Department of the Treasury published the 2020 Financial Report of the United States Government. In the initial message, Secretary Janet L. Yellen writes: “This Financial Report discusses not only current financial results but also important, long-term trends affecting our critical social insurance programs and fiscal health.” The report not only discloses the current debt level, but also projects the cost of the government’s future obligations to its citizens. It notes that citizens will have the right to demand benefits from the state in the future.
The United States is one of the few countries whose treasury, in an act of transparency and with rigorous analysis, has warned its government of the unsustainability of the country’s public finances.
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Millions To Lose Benefits As Pandemic Jobless Aid Expires – Tyler Durden
3 september
When Congress passed the American Rescue Plan in March, extending pandemic-related unemployment aid until Labor Day, millions of Americans breathed a sigh of relief.
Back then, almost 14 million people depended on the emergency programs (and job openings continued to soar).
And while the labor market situation has improved significantly since then, Statista’s Felix Richter notes that the new cut-off date is almost here, leaving millions in doubt of what is possibly their only income.
Infographic: Millions to Lose Benefits As Pandemic Jobless Aid Expires | Statista
You will find more infographics at Statista
In addition to the $300 weekly supplement to state unemployment benefits, both the Pandemic Unemployment Assistance program, which is available to individuals who are self-employed or who otherwise would not qualify for regular unemployment compensation, and the Pandemic Emergency Unemployment Compensation program, which extends benefits by up to 24 weeks for those who have exhausted regular unemployment aid, are due to expire on September 6.
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The Elites’ Battle for the Future America – Charles Hugh Smith
30 August
No nation can produce less of lesser quality, and squander more on infinitely greedy and corrupt elites, all funded by issuing trillions of new units of currency, and imagine that this asymmetry will never have consequences.
As I have often noted, historian Michael Grant identified profound political disunity in the ruling class as a key cause of the dissolution of the Roman Empire. Grant described this dynamic in his excellent account The Fall of the Roman Empire, a book I have been recommending since 2009.
I’ve been writing about the fractures in America’s ruling elites for many years, as well as the erosion of the foundations of society that lead to systemic collapse, for example, Collapse, Part 2: The Nine Dynamics of Decay (June 2015), Going to War with the Political Elite You Have (May 14, 2007) and The Conflict within the Deep State Just Broke into Open Warfare (March 10, 2017)
America’s elites are fracturing along multiple tectonic fissures: while the conventional media focuses on the ginned-up bread and circuses of Red and Blue political games (i.e., The Purple Empire), the real conflicts are within the camps running the Red and Blue games, the Imperial Project of global hegemony (a.k.a. The Deep State), the New Nobility of Big Tech attempting to overthrow the Old Nobility, the Nationalists versus the Globalists and the Financial Gamesters versus The New Foundation.
These are my informal acronyms, of course, but the conflicts are real and intensifying as extreme policies reach new extremes and the risks of breakdown increase.
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Preserving Capital through Bankruptcy – Doug French
1 september
The New York Times recently published a piece entitled “When Kmart Moved Out, Churches and Flea Markets Moved In.” The article, penned by Kevin Williams, provides an instructive subtitle: “The retailer’s former stores are being used by tenants that might not typically get a crack at such a large haul of commercial space at an affordable price.”
“When it merged with Sears in 2005, Kmart had 2,085 locations. With the abrupt closing of the Astor Place Kmart in Manhattan last month, the number of open Kmart stores is down to 17,” Williams writes.
Sears filed for bankruptcy in 2018, with the assets sold to hedge fund manager Edward Lambert’s Transformco. But while bankruptcy has a negative connotation in the business world, as Jörg Guido Hülsmann wrote in The Ethics of Money Production, “Bankruptcy fulfills the crucially important social function of preserving the available stock of capital. And it plays this role in all conceivable scenarios: when it results from fraud, when it results from insolvency, and when it results from illiquidity.”
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Efficiency and equity in a socially embedded economy – Marc Fleurbaey, Ravi Kanbur, Dennis Snower
3 September
There has been a spate of critiques of mainstream, neoclassical economics in the last few years. This column argues that this is partly the result of a core general model that is too narrow. Instead, the authors propose a base model that includes not just the economy but also the socioeconomic system. The model encompasses many specific themes in the literature such as the interplay between economic inequality and efficiency, but it also takes us well beyond the conventional economic resource allocation-based perspective on inequality.
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“Nudging” Policy Is about Control, Not Freedom – John Staddon
2 september
The July/August 2021 Cato Policy Report hosted a friendly debate between Cass Sunstein and Mario Rizzo. Sunstein is a Harvard Law professor, a onetime member of the Obama administration, and coauthor of Nudge and other books advocating public policy applications of behavioral economics. Rizzo is an economist at New York University. Sunstein argues that modifying the “choice architecture” available to consumers so as to “nudge” them toward the correct choice is a libertarian position perfectly compatible with Friedrich Hayek’s The Constitution of Liberty. Rizzo disagreed, arguing that behavioral economics does not solve Hayek’s knowledge problem, quoting psychologist Jerome Kagan’s 2012 book: “Few psychological concepts intended to represent a person’s tendency to react in a certain way apply across diverse settings.” In other words, we do not know enough psychology to know how people will react in every choice situation. Kagan did not write about behavioral economics, but, as we will see, his reservation applies there with special force.
The “knowledge problem” manifests itself in many places in this short debate; I will mention just one: Sunstein’s frequent use of the undefined term “epistemically favorable conditions,” which seems to mean conditions under which people will act “rationally”—which of course presupposes the kind of knowledge that Kagan and Hayek dispute. We cannot in general know what epistemically favorable conditions are. Much more could be said along these lines, but here I simply want to point out a couple of serious flaws in behavioral economics.
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Semiconductor Shortages amid Record Semiconductor Sales? It’s a Mess Out There – Wolf Richter
30 augustus
The explosion of demand that cannot be filled in the most monstrously overstimulated economy and markets ever.
The “semiconductor shortage” is a composite of blistering demand from all sides that got further tripped up by the shutdown of four semiconductor plants.
On the demand side: Since last year, there has been red-hot demand for specialized chips that go into crypto-mining rigs as crypto prices started skyrocketing in March 2020. There was the shift to working-from-home and learning-from-home, triggering from one day to the next an explosion of global demand for laptops, particularly low-end laptops, networking equipment, and other electronic devices, such as printers. There was the broad boom in consumer electronics, particularly smartphones and game consoles on which consumers, stuffed with fiscal and monetary stimulus, spent loads of money. There was the boom in cloud computing and the hardware that it is based on.
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***The Illusion of Stability, the Inevitability of Collapse – Charles Hugh Smith
3 September
Beneath the illusory stability of rising GDP, the extremes of debt, leverage, stimulus and speculative frenzy required to keep the ‘phantom wealth bubble’ from imploding are all rising parabolically.
Imagine being at a party celebrating the vast wealth generated in the last ten months in stocks, cryptocurrencies, real estate and just about every other asset class. The lights flicker briefly but the host assures the crowd the generator powering the party is working perfectly.
Being a skeptic, you slip out on the excuse of bringing in more champagne and pay a visit to the generator room. To your horror, you find the entire arrangement held together with duct tape and rotted 2X4s, the electrical panel is an acrid-smelling mess of haphazard frayed wire and the generator is over-heated and vibrating off its foundation bolts. Whatever governor the engine once had is gone, it clearly won’t last the night.
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The ECB strategy: The 2021 review and its future – Lucrezia Reichlin, Klaus Adam, Warwick J. McKibbin, Michael McMahon, Ricardo Reis, Giovanni Ricco, Beatrice Weder di Mauro
1 September
The ECB signalled an historic shift in its 2020 strategy review. This column introduces a new CEPR report which argues that the review has moved the ECB in the right direction but leaves some key issues unaddressed. The report focuses on the definition of the ECB’s inflation target, its operational framework, fiscal and monetary policy interactions, and the implications for monetary policy of climate change and related mitigation initiatives. The authors identify topics to be addressed in future strategic reviews and provide a framework as a basis for this ongoing analysis.
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Fears of Stagflation Loom as Job Growth Stalls – Ryan McMaken
4 september
Job growth numbers on Friday failed to impress. Economists had predicted job growth in the area of 720,000, but according to the Department of Labor’s estimates, jobs growth for August was only a third of that: 235,000.
Commentators on CNBC called it “terrible news” and the word “stagflation” has started to appear more and more in the media and investor narratives.
For example, Desmond Lachman writes in The Hill:
Today, with inflation rising to levels last seen 30 years ago and with unemployment remaining stubbornly high amid the COVID-19 pandemic despite massive policy stimulus, we may again be entering a prolonged period of stagflation…”
A Barron’s headline reads: “A Weak Jobs Report Puts Fed in a Bind as It Stares at Stagflation.” The Street has advised investors to “embrace stagflation” and BofA warned of “the potential for stagflation.”
And there are good reasons to fear that stagflation may be on the horizon.
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***Enter GreedCare, where the White Coat is Supplanted by the Grey Pinstripe of Corporate Conglomerates – Michael Gorback, M.D
1 september
The first in my series of articles about how healthcare has become hellcare.
It’s been a long time since I wrote an article for Wolf Street. Wolf and I go back to the Testosterone Pit days and some of the old timers here might recall my pieces. In 2016 I ran into a series of personal setbacks and stopped participating here. Wolf pinged me about it. A few months ago, we finally met in person over dinner in SF to “consummate” our long-term virtual friendship. I agreed to try to crank up the engine. The initial plan was too ambitious. I wanted to spill everything I know about how healthcare had become hellcare.
That was ambitious and unrealistic. The landscape changes so fast and the system is so unstable that it’s like trying to drink from a fire hose during an earthquake. After several discussions with Wolf, I decided to adopt the philosophy of “If you’re going to eat an elephant take small bites.” Wolf suggested that I draw upon my personal experiences. He’s a smart mofo, Wolf.
My approach is going to be a series of vignettes based on my personal experiences seen through the lens of over 4 decades in medicine. I hope you enjoy and learn from reading about my adventures and misadventures.
Here we go.
I had the same family doctor for 20 years. I picked him because as a member of the medical community I not only had firsthand knowledge of his reputation for quality of care but I had seen his patients and could evaluate his style.
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