Economische aanraders: Veren of Lood biedt u op zondag wekelijks een inkijkje in (minstens) 10 belangrijke of informatieve artikelen en interviews die 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.

Sinds december 2015 nemen we 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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QE Party Over, even by the Bank of Japan – Wolf Richter
5 januari
First decline in its colossal balance sheet since 2012.
An amazing – or on second thought, given how central banks operate, not so amazing – thing is happening.
On one hand…
Bank of Japan Governor Haruhiko Kuroda keeps saying that the BOJ would “patiently” maintain its ultra-easy monetary policy, so too in his first speech of 2018 in Tokyo, on January 3, when he said the BOJ must continue “patiently” with this monetary policy, though the economy is expanding steadily. The deflationary mindset is not disappearing easily, he said.
On December 20, following the decision by the BOJ to keep its short-term interest-rate target at negative -0.1% and the 10-year bond yield target just above 0%, he’d brushed off criticism that this prolonged easing could destabilize Japan’s banking system. “Our most important goal is to achieve our 2% inflation target at the earliest date possible,” he said.
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Why the Financial System Will Break: You Can’t “Normalize” Markets that Depend on Extreme Monetary Stimulus – Charles Hugh Smith
3 januari
Central banks are now trapped.
In a nutshell, central banks are promising to “normalize” their monetary policy extremes in 2018. Nice, but there’s a problem: you can’t “normalize” markets that are now entirely dependent on extremes of monetary stimulus. Attempts to “normalize” will break the markets and the financial system.
Let’s start with the core dynamic of the global economy and nosebleed-valuation markets: credit.
Modern finance has many complex moving parts, and this complexity masks its inner simplicity.
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Mars or Mercury? The geopolitics of international currency choice – Barry Eichengreen, Arnaud Mehl, Livia Chiţu
2 januari
Economists have provided detailed analyses of the economic basis of international currency status, but they have paid less attention to the geopolitical underpinnings. This column sheds light on the geopolitical premium enjoyed by the US thanks to its security alliances and ‘dollar diplomacy’.
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***Can We Afford Renewable Energy? – Erico Matias Tavares
3 januari
Over a decade ago we got involved in the development of the biofuels industry in Europe, when it began to take off in earnest there.
At that time estimated profits from biodiesel production created considerable enthusiasm, which at one point turned euphoric with new production facilities being announced almost on a weekly basis.
What was not to like? Europeans would get to drive their cars using green, very low-carbon, seemingly affordable fuels, saving the environment in the process. And investors would make a ton of money.
However, reality turned out to be rather more complicated than that, much to the chagrin of those investors. Production margins were quite volatile and very difficult to hedge into the future. All that new demand ended up spiking the prices of vegetable oils – the key biodiesel production input – way above those of fossil fuels. Entire domestic production complexes went bust as a result, prompting governments across Europe to eventually implement a range of support measures to make biofuels part of the fuel mix.
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What To Do While Waiting to End the Fed – John P. Cochran
[Originally published February 25, 2015.]
There is a sliver of good news on the central banking front. Given the Fed’s poor performance before and after the 2007–08 financial crisis and Great Recession, and its now recognized 100 year history of failure, at least some members of Congress, even without Ron Paul, are now willing to consider major reform. Many libertarians who recognize that the correct long-run reform is to “End the Fed” — or essentially eliminate central banking (see here or here) — have focused most on the Audit the Fed Bill. On the other hand, non-Austrian economists have been more focused on the Federal Reserve Accountability and Transparency Act and its aimed reform: a rules based policy rather than current Fed discretionary policy which is counter-productive, if not destructive of prosperity.
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The European Union Must Think Local To Address Global Challenges – Daniel Lacalle
3 januari
The recent elections in the Eurozone have shown that the risks to the European project remain. In Germany, an insufficient victory from Merkel, the collapse of the social democrats and the rise of the alternative right and extreme left have surprised many.
However, it was predictable. The relief rally in the Euro versus its trading currencies and the bullish tone of equity and bond markets after the French elections and the victory of Macron were, in many ways, based on a very optimistic view of strengthening of the current European model. Markets quickly forgot that almost 40% of the voters in France decided to support radical anti-EU parties at both sides of the political spectrum. The German elections showed that this bullish perception was a mirage. In Germany, almost 30% of the vote went to radicals.
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2018 In Crypto – 11 Predictions – Hackernoon Collective
30 december
Cryptocurrency market observers will remember 2017 as the year of the ICO boom, bitcoin’s hard fork(s), cryptokitties, a few major hacks, and the time when every single dinner party swayed towards talking about the price of bitcoin at some point or another. Instead of looking at what just passed, today we’re looking at the year that awaits us.
As we reflect on the past year, we see a number possible trends that will affect the market in 2018.
Here are our predictions for the year to come:
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Is Inflation Driven more by “Expectations” than by the Money Supply? – Frank Shostak
3 januari
For most economic commentators the underlying driving force of inflation is inflationary expectations1. For instance, if there is a sharp increase in the price of oil, individuals may form higher inflationary expectations that could set in motion spiraling price inflation. Or so it is held.
If expectations could somehow be made less responsive to various price shocks, then over time this would mitigate the effect of a price shock on price inflation, it is argued.
Once we accept that inflation expectations are the driving force of the inflationary process, the next step is to discover a way — using central-bank policies — to make these expectations less sensitive to various price shocks. Once this happens, then expectations have become “anchored,” and various price shocks such as sharp increases in oil or food prices are likely to be of a transitory nature. This means that over time price shocks are unlikely to have much effect on the rate of inflation.
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US Dollar Refuses to Die as Top Global Reserve Currency – Wolf Richter
1 januari
Central banks are leery of the newly arrived Chinese yuan.
Over the decades, there have been a number of efforts to deflate the dollar’s hegemony as a global reserve currency, which it has maintained since World War II. Some of these efforts – such as the creation of the euro – have made a visible dent into the dollar’s status. Other efforts have essentially passed unnoticed. Now there’s a new contender: the Chinese yuan.
On December 31, the IMF released its report on the Currency Composition of Official Foreign Exchange Reserves (COFER) for Q3 2017. So how has the US dollar fared as the top world reserve currency, now that the Chinese yuan has also been anointed as one, and that the euro has emerged from its debt crisis?
First things, first. The IMF doesn’t really disclose all that much. The COFER data for the individual countries – the level of their reserve currencies and how they allocate them – is “strictly confidential,” it says. So what we get to look at is the global allocation by currency.
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The sources of export success – Stephen Redding, David Weinstein
2 januari
Existing research on export heterogeneity between countries has typically focused on the importance of individual factors. This column presents a unified framework for understanding these contributions in concert. Using US and Chilean data, it demonstrates that products within firms, firms within sectors, and sectors in aggregate are indeed imperfect substitutes. It further shows that models that assume no quality shifts and no changes in variety perform poorly on trade data.
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It’s Not About Democracy: Control Fraud Is the Core of our Political System – Charles Hugh Smith
4 januari
The many are finally calling out the abusers of power because there’s no longer any need to pay the corrupting costs of centralization.
If we strip away the pretense of democracy, what is the core of our political System? Answer: control fraud, which I define as those with control/ power in centralized institutions enriching themselves at the expense of the citizenry by selectively modifying what’s permissible, and doing so in a fully legally compliant process, i.e. within the letter of the law if not the intent of the law.
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Selling Out Argentina’s Future—Again – Alan Cibils, Mariano Arana
3 januari
In Argentina’s 2015 presidential run-off election, the neoliberal right-wing coalition “Cambiemos” (literally, “lets change”), headed by Mauricio Macri, defeated the populist Kirchnerista candidate by just two percentage points. Macri’s triumph heralded a return to the neoliberal policies of the 1990s and ended twelve years of heterodox economic policies that prioritized income redistribution and the internal market. The ruling coalition also performed well in the October 2017 mid-term elections and has since begun implementing a draconian set of fiscal, labor, and social security reforms.
One of the hallmarks of the Cambiemos government so far has been a fast and furious return to international credit markets and a very substantial increase in new public debt. Indeed, since Macri came to power in 2015, Argentina has issued debt worth more than $100 billion. This marks a clear contrast to the Kirchner administrations, during which the emphasis was debt reduction.
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***Russia’s Grip on European Natural Gas Markets Tightens – Nick Cunningham
2 januari
US LNG has been billed as a game changer, threatening to end Russia’s control of the European market.
By Nick Cunningham of Oilprice.com:
Despite years of effort from the EU, Russia’s grip over natural gas supplies in Europe is tightening, not waning.
Gazprom shipped 190 billion cubic meters of natural gas to Europe in 2017—a record high, according to Bloomberg. In 2018, that figure is expected to dip slightly to 180 billion cubic meters, which will still be the second most on record.
The higher reliance on Russian gas may come as a surprise, not least because of the ongoing tension between Russia and some European countries on a variety of issues. Russia’s intervention in Ukraine and its annexation of Crimea in 2014 led to a standoff between Russia and the West—but Europe’s imports of Russian gas are up more than 25 percent since then, despite a lot of rhetoric in Brussels about diversification.
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The Wage-Gap Debate Is Based on Junk Science – Mateusz Machaj
2 januari
Nowadays, rarely a week goes by free from news about the so-called gender pay gap. There is even now a “wage-gap day” on November 10. This is the day when women allegedly start to work for free for the rest of the year. The remaining 51 days are 14% of the year — a figure corresponding to the wage gap between women and men.
One can hardly find more mindless approach to this issue, however, as the idea behind the “working for free” narrative is an affront to any serious study of the of the wage-gap issue.
It is usually asserted that the gap is a product of discrimination and sexism. But any scientific approach to the issue requires that if we’re going to make such an assertion, but we must take into account other variables that affect wages, such as the self-sorting by employees, total work experience (including working time), and education. Once we correct for such variables the adjusted wage gap is generated, which is significantly smaller. It is closer to the 2-5% range, depending on the study. Without such adjustments one is obviously comparing apples and oranges. We could as well say that a truck driver earning 12-times less than a banker is working for free since February, almost for the whole year.
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The rate of return on everything – Òscar Jordà, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, Alan Taylor
2 januari
The rate of return on capital plays a pivotal role in shaping current macroeconomic debates. This column presents findings from a new dataset covering returns of major asset classes in the advanced economies over the last 150 years. The data offer new insights on several long-standing puzzles in economics, and uncover new relationships that seem at odds with some fundamental economic tenets.
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