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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Understanding Minimum Wage Mandates: Empirical Studies Aren’t Enough – Frank Shostak
9 februari
President Joe Biden has promised to raise the minimum wage from $7.25 to $15 per hour.
Some economists are of the view that the increase in the minimum wage could cause an increase in unemployment. Other economists think that the increase is unlikely to harm the labor market. Hence, they are of the view that raising the minimum wage could lift the workers’ living standards.
For example, in a study conducted in the 1990s, economists David Card and Alan Krueger examined a minimum wage rise in New Jersey by comparing fast-food restaurants there and in an adjacent part of Pennsylvania.1 They found no impact on employment.
Based on this study, many mainstream economists have pressed for an increase in the minimum wage, which they hold is going to raise workers’ living standards.
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Money markets, central bank balance sheets, and regulation – Stefano Corradin, Marie Hoerova, Glenn Schepens
12 februari
Euro area money markets have gone through substantial changes and turbulent periods over the past 15 years. These have included the global and euro area sovereign debt crises, new liquidity and leverage requirements, and the expansion of the Eurosystem balance sheet through asset purchase programmes. This column discusses the interaction between money markets, new Basel III regulations, and central bank policies. The analysis shows that money market conditions worsen when financial stress increases, or if central bank asset purchases induce scarcity effects. It outlines implications of changing money market conditions for monetary policy implementation and transmission.
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How Not to Argue against the Minimum Wage – Bradley Thomas
11 februari
Among the hotly contested list of Joe Biden’s promises is an increase of the federal minimum wage to $15 an hour.
There are plenty of sound reasons to oppose government minimum wage laws, but there is one objection making the rounds that is based on bad economics and should be avoided, and that’s the “businesses will pass on the costs to consumers” objection.
For instance, a now deleted tweet by someone claiming that a $15 minimum hourly wage will cause Taco Bell burritos to explode in cost was shot down in short order by the tweet below. Scrolling through the replies also shows hundreds of other similar responses from people in cities that already have a $15 minimum wage. Indeed, the responses were so decisive and numerous that the original poster deleted his tweet to avoid further embarrassment.
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The Foundation For Potential Price Hyperinflation Is Being Laid – Birch Gold Group
12 februari
The Federal Reserve sure seems to have a tough time finding and reporting signs of rising inflation – especially when it’s hidden in other sectors like a lack of demand for energy.
A recent example of the Fed’s “inflation blindness” comes from a speech Chairman Jerome Powell gave to the Economic Club of New York. According to a MarketWatch piece that reported on that speech:
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Trade imbalances and the rise of protectionism – Samuel Delpeuch, Etienne Fize, Philippe Martin
12 februari
How much can trade imbalances account for the rise in protectionism of the past ten years? This column reveals that both bilateral and multilateral trade imbalances are strong predictors of protectionist attacks, partly – but not entirely – driven by the US and the Trump years. Moreover, countries with more expansionary fiscal policies react to the ensuing trade imbalance by a more protectionist trade policy. A transatlantic gap in the fiscal response to the COVID crisis may therefore pave the way to renewed trade tensions.
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10-Year Treasury Yield Hit 1.21%, More than Doubling Since Aug. But Mortgage Rates Near Record Low. And Junk Bond Yields Dropped to New Record Lows – Wolf Richter
13 februari
Bond Market Smells a Rat: Inflation. So the Fed seems OK with rising long-term Treasury yields.
The bond market smells a rat, but the mortgage market and the high-yield bond market are holding their nose and plowing forward: The 10-year Treasury yield rose to 1.21% on Friday, the highest since February 26, when markets began their gyrations. This yield has more than doubled (+133%) from the historic low of 0.52% on August 4.
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Jesús Huerta de Soto’s Six Stages of the Austrian Business Cycle: Which Stage Are We in Now? – Bradley Thomas
10 februari
One reality that the unprecedented Reddit/GameStop short squeeze alerted more people to is the major disconnect between the ballooning stock market and the actual economy. A stock market bubble is a significant indicator of the boom phase of the boom-bust economic cycle that we have grown accustomed to over the past several decades.
Many, mostly on the left, blame free market capitalism for economic cycles, however, boom-and-bust cycles are not an inherent feature of a market economy. Austrian school economists have for a century convincingly argued that business cycles are a result of monetary distortions in the economy created by artificial, or fiat, money creation and the false credit expansion that results from it.
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Why Stimulus Doesn’t Lead To Organic Growth – Lance Roberts
12 februari
There is a growing consensus in Washington the only way to fix the worst economic downturn in more than 70 years is by giving out more free money. From Joe Biden, to Janet Yellen, to most members of Congress, there is a demand for more “stimulus.” However, the reason the previous programs failed is the stimulus doesn’t lead to organic growth.
Let me explain.
Joseph Carson, the former Chief Economist at Alliance Bernstein, recently noted:
“Suppose Congress passes something close to Biden’s Administration stimulus proposal of $1.9 trillion. In that case, that will lift the cumulative amount of fiscal stimulus in the past 12 months to $5 trillion—three tranches $2.2 trillion, $900 billion, and $1.9 trillion.
In the past year, nominal GDP totaled $21 trillion, so the cumulative injection of fiscal stimulus amounts to almost 25%.
Nothing in modern times comes close, especially during peace times. CBO published a report in 2010 on the military costs of significant wars. The military war costs of World War 1 amounted to 13.6% of GDP and World War 11 35.8%—-so the current spending/stimulus is in the middle of the two World Wars.”
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What Collapsed the Middle Class? – Charles Hugh Smith
10 februari
The middle class has already collapsed, but thanks to debt and bubbles, this reality has been temporarily cloaked.
What collapsed the middle class? In many ways the answer echoes an Agatha Christie mystery: rather than there being one guilty party, a number of suspects participated in the collapse of the middle class.
Can we consolidate these dynamics into a few core causal factors? I’ve made the case in the pst few posts that yes, we can: many of these causes are part of a single dynamic, the decapitalization of the middle class and the decay of the ladder of social mobility which enabled tens of millions of workers to transform their wages into productive capital via saving and investment in their own human capital, their own enterprises and assets that earn income.
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The Fed Has Handed The US Government A Blank Check – Peter Schiff
11 februari
On Wednesday, Federal Reserve Chairman Jerome Powell called for a “society-wide” commitment to reaching full employment, calling for “contributions from across government and the private sector.” He said getting people back to work would require “continued support from both near-term policy and longer-run investments.” He also dismissed concerns about debt saying the focus needs to be on the economy’s immediate needs. As Peter Schiff put it in his podcast, Powell handed the US Treasury a blank check.
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Supranational rules, national discretion: Increasing versus inflating regulatory bank capital – Reint Gropp, Thomas Mosk, Steven Ongena, Ines Simac, Carlo Wix
14 februari
The implementation of supranational regulations at the national level often provides national authorities with substantial room to engage in discretion and forbearance. Using evidence from a supranational increase in bank capital requirements, this column shows that national authorities may assist banks’ efforts to inflate their regulatory capital to pass such supranational requirements. While supranational rules should be binding in theory, national discretion may effectively undermine them in practice.
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***When the Eviction Bans End, How Many MORE Renters Face Eviction than in Good Times? How Much Worse is it Now? – by Wolf Richter
9 februari
Actual rent collection data from over 11 million apartments and 80,000 single-family rental houses, compared to a year ago.
The CDC’s federal eviction ban was re-re-extended to March 31. Some state and local eviction bans have been re-re-extended further out. A number of internet surveys of tenants attempt to estimate unpaid rents and the number of tenants facing eviction after the bans end.
An estimate by the Mortgage Bankers Association yesterday, based on an internet survey of a few thousand renters, found that in December, 7.9% of them had missed or delayed a rent payment, or had made a reduced payment. From those surveys, it concluded that 2.62 million households across the US were behind in some form, and that landlords were owed “as much as $7.2 billion” in missed rent payments.
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Crazy Days For Money – Alasdair Macleod
11 februari
This article anticipates the end of the fiat currency regime and argues why its replacement can only be gold and silver, most likely in the form of fiat money turned into gold substitutes.
It explains why the current fashion for cryptocurrencies, led by bitcoin, are unsuited as future mediums of exchange, and why unsuppressed bitcoin has responded more immediately to the current situation than gold. Furthermore, the US authorities are likely to suppress the bitcoin movement because it is a threat to the dollar and monetary policy.
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Crypto “Flash Loans” Allow Borrowing And Repayment In Seconds To Arbitrage Coin Prices – Tyler Durden
14 feburari
With the recent news that Tesla has now purchased $1.5 billion in bitcoin, there’s going to be no shortage of people that follow Elon Musk and make their first foray into crypto as well. And, since a majority of the country is broke, it seems like a great time for what is essentially crypto lending to emerge.
Enter “flash loans” – a new service where borrowers can very quickly take collateral free loans from lenders and use the proceeds for whatever they want, before quickly paying the loan back – sometimes in seconds. The most popular use for these loans has been arbitraging coin prices on different crypto exchanges, according to Bloomberg. But what makes these loans different is that they are “bundled into the same block of transactions being processed on the Ethereum digital ledger and are executed simultaneously”.
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***Europe’s trade strategy for the age of geoeconomic globalisation – Christian Bluth
10 Februari
The nature of globalisation is changing, with the US and China making increasing use of geoeconomic instruments in their big power competition. A new CEPR/RESPECT book discusses how, in its new trade strategy, the EU will have to react to this development as well as coming up with responses to the challenges posed to its trade policy by climate and demographic change, technological developments, a weakening of multilateral institutions, and an increased politicisation of trade policy. The answer must lie in a value-driven trade policy, efforts to restore the rules-based trading order, risk management, and the development of defensive geoeconomic capabilities.
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Gains Are Unreal, Losses Are Real – Charles Hugh Smith
13 februari
Why would anyone sell when further gains are guaranteed? Because the gains are unreal but the losses are real.
When markets are soaring and your portfolio is rocketing higher, the gains seem unreal. Did I really make that much in one day, week, month? Wow! With the gains higher every time you look, it would be foolish to sell because look at the flood of media reports on “the Roaring 20s” that are predicted with such certitude that it’s essentially guaranteed, the reflation that’s lifting all boats globally, the Federal Reserve printing trillions to further inflate the market, and the millions of new traders scooping fantastic gains.
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Tesla, GM, Ford Together in Ludicrous-Mode WTF Charts – Wolf Richter
10 februari
Global revenues, deliveries, market share, income, and for your amusement the WTF stock prices.
General Motors reported its results today, the last of the three US automakers to do so. Those three are GM, Ford, and Tesla. And we can compare their global revenues, global deliveries, and stock market capitalization. Chrysler no longer counts as US automaker, though it still has some plants in the US. Purchased out of bankruptcy by Fiat years ago to become Fiat Chrysler, it has now merged with Groupe PSA, which owns Peugeot, Citroën, Opel, and DS. The whole schmeer is headquartered in Amsterdam and was renamed Stellantis. So this is a foreign automaker.
GM reported today that its global revenues in the year 2020 dropped by 10.8% from 2019, to $122.5 billion, and by 16.7% from 2018, and by 21.5% from, well, 2014, because GM’s revenues have been dropping since 2014. Part of this long-term drop was a result of GM selling Opel/Vauxhall to Groupe PSA.
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The dangers of sustainability metrics – Alex Edmans
11 februari
Policymakers, investors, and stakeholders are demanding that companies report sustainability metrics so that they can be held accountable for delivering social performance. Doing so increases the total amount of information in the market and reduces the cost of capital. However, real decisions depend on not the total amount of information, but the balance between ‘hard’ (quantitative) and ‘soft’ (qualitative) information. Since sustainability metrics only contain the former, they distort this balance – skewing managers’ sustainability investments to ones with short-term payoffs.
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Why Hazlitt Opposed the Bretton Woods System – Llewellyn H. Rockwell Jr.
13 februari
The Bretton Woods plan for monetary reconstruction did not go as far as Keynes would have liked. He proposed a full-scale world central bank and a single paper currency for all nations, which he wanted to be called the “bancor,” so there could be no escaping inflation. That plan is still awaiting implementation. As it was, the Bretton Woods conferees, under pressure from the United States—which wanted the dollar to be the bancor—took a compromise position. They would create not a gold standard—though it was called that for reasons of credibility—but Instead a global gold dollar standard. Or, more precisely, a phony gold standard.
The Bretton Woods system established a gold dollar that was fixed at $35 per ounce. But it was the only currency so fixed. Every other currency could be a fiat currency based on the dollar. What this obligated the United States to do, as the main creditor nation to the world, was ship out dollars to the world while somehow maintaining the dollar’s connection to gold. It was a prescription for disaster, as should be obvious.
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Veto player theory and the governance of the Recovery and Resilience Facility – Marco Buti, Oscar Polli
11 Februari
The Recovery and Resilience Facility is at the heart of Next Generation EU, Europe’s plan to tackle the economic fall out of the pandemic crisis. Member states must prepare national plans to receive the EU contributions. These plans include the investment and reform projects as well as their implementation mechanisms. This column uses the veto players’ theory to explain and predict the governance arrangements chosen by EU countries. It shows that the institutional features of countries and the internal cohesion of governments are important determinants of the governance of Recovery and Resilience Programmes.
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Checking on the Recovery – Wolf Richter
11 februari
Watching for the EV drag on gasoline demand requires a lot of patience.
Gasoline consumption in the US during the four-week period through February 5 was down by 10.1% from a year ago to 7.89 million barrels per day (mb/d), according to EIA data. Gasoline consumption has been down in the range between 9% and 13% since mid-July, following the initial bounce-back from the collapse in March and April:
That Pandemic level of gasoline consumption below 8 mb/d was something that last occurred during the 1990s.
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