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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This Is How Savings and Investment Pave the Way for an Advanced Economy – Frank Shostak
14 augustus
To maintain his life and well-being, an individual must have at his disposal an adequate amount of consumer goods. These goods, however, are not readily available. Without tools at his disposal and by means of his bare hands, the individual can only obtain from nature very few goods for his survival.
For instance, take an individual John, stranded in a forest. In order to stay alive, he can only pick up some apples from an apple tree. Apples are the only good available to him that can sustain him. Let us say that by working twenty hours a day, he manages to secure twenty apples, which keep him alive. The twenty apples that John has secured from nature is his subsistence fund, which sustains him (see also on this Rothbard)[1].
John realizes that if he had a special stick this would allow him to become more productive. His daily production of apples could be forty apples (i.e., double his current production). The problem, however, is that the stick is not available—it must be made. To make the special stick requires two days of work. If John were to decide to make the stick, he would have a problem. By spending his time on making the stick, he would not be able to pick up the apples that are required to keep him alive.
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Dear Fed: Are You Insane? – Charles Hugh Smith
11 Augustus
So sorry, America, but your central bank is certifiably insane, and it’s not going to magically work out.
History definitively shows that speculative bubbles always pop–always. Every speculative bubble mania, regardless of its supposed uniqueness–“it’s different this time”–pops. No speculative bubble has ever “reached a permanently high plateau” and then remained on the plateau for years.
So what does the Federal Reserve do? It inflates the biggest speculative bubble in modern history and then implicitly promises it will never pop. Dear Fed, are you insane? You might as well make a public pronouncement that stocks have “reached a permanently high plateau” that will be followed by a permanent ascent to ever-higher plateaus, as that is the implicit message you’ve been sending punters and pundits.
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The Problem With Climate-Change Politics – Alasdair Macleod
12 augustus
Climate change bears all the hallmarks of a state-sponsored crisis, useful to shift attention from other political failures. But the absence of financial accountability which characterises government actions also introduces behavioural errors.
The absence of a profit motive in any state action exposes the relationship between governments and their electors to psychological factors. We all know that governments use propaganda and other tools to manage crowd psychology and influence their electorates. What is less understood is that governments themselves are misled by a crowd psychology in its own ranks which contributes to policy failure.
This article does not question the climate change debate itself. Instead, it examines the debate in the context of the psychology driving it. The release of government-sponsored propaganda on climate change in the form of a unanimous IPCC report predicting the end of the world as we know it is the latest example of a political and bureaucratic phenomenon, making the timing of this article apposite.
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Money flow networks: Evidence from Japan – Yoshi Fujiwara, Hiroyasu Inoue, Takayuki Yamaguchi, Hideaki Aoyama, Takuma Tanaka, Kentaro Kikuchi
9 Augustus
The way money flows among firms can tell us about their economic activities and responses to economic shocks such as the one caused by Covid-19. This column uses data on remittances among in a regional bank in Japan to demonstrate how the three parts of the network structure of the flow of money – upstream, downstream, and circulation of flow – reflect characteristics of supplier-customer relationships. As well as helping with the prediction of occurrences following an economic shock, the findings also have implications for banks’ management of credit risk.
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Dollar’s Purchasing Power Plunged at Constant Speed – Wolf Richter
11 augustus
Now it’s new vehicles, restaurants, energy. Game of Whac-A-Mole as some price spikes slow while others begin. But it’s a lot worse than it seems.
The Consumer Price Index (CPI) jumped 0.5% in July from June, after having jumped 0.9% in June, 0.6% in May, for a three-month annualized rate – the three-month momentum – of 8.1%. Year-over-year, CPI jumped 5.4%, same pace as in June, and the fastest since June 2008 (5.6%), all of which had been the fastest since January 1991, according to data released by the Bureau of Labor Statistics today.
The CPI without the volatile food and energy components (“core CPI”) rose by 0.3% for the month and by 4.3% year-over-year.
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The Crime of ’71: When Nixon Ended the Dollar’s Last Connection to Gold – Thorsten Polleit
13 augustus
Almost fifty years ago, on August 15, 1971, the US administration under President Richard Nixon (1913–94) abolished the gold redeemability of the US dollar. It was through this unilateral decision that the world’s major currencies were turned into irredeemable money: money that is no longer backed by physical gold. This surprise coup put an end to the system of Bretton Woods, which had been adopted in 1944.
From July 1 to 22 of that year, 730 delegates from forty-four nations met in the village of Bretton Woods in the US state of New Hampshire to determine the global monetary order for the period after the Second World War. Here it was agreed to give the US dollar the status of the world reserve currency. Thirty-five US dollars corresponded to one troy ounce of gold (i.e., 31.10347 … grams). All other currencies (the French franc, British pound, Swiss franc, etc.) were linked to the greenback at a fixed exchange rate, and they could be converted into greenbacks at any time. In this way they too were—at least indirectly—tied to physical gold.
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Recovering from pandemics: Policies and structural features matter – Juan Pablo Cuesta, Swarnali Ahmed Hannan 12 August 2021
12 augustus
Covid-19 has had a staggering adverse impact on lives and livelihoods, disproportionately affecting the poor and the vulnerable. To shed light on possible scarring effects, this column studies the effect of five past pandemics on output, unemployment, poverty, and inequality in the near and medium term. The findings reveal significant negative effects, although countries that provided relatively large fiscal support experienced limited output declines. Historically, increases in unemployment, poverty, and inequality were lower for countries with greater fiscal support and relatively stronger initial conditions, which included higher formality, family benefits, and health spending.
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Unlike The Fed, Brazil Central Bank Vows To Do Whatever It Takes To Tame Soaring Inflation – Tyler Durden14 augustus
Just days after Brazil’s central bank hiked rates last Wednesday by a whopping 100bps, to 5.25% and up 325bps since March, with market consensus for much more tightening to come, Brazilian policy markets vowed to do what the Fed won’t – or can’t – do, and will do whatever it takes to bring inflation expectations back to target despite a perceived deterioration in the country’s fiscal outlook .
Speaking at a Thursday online event organized by the national association of bars and restaurants, Campos Neto said “keeping inflation anchored is key at this moment, when we are facing consecutive inflationary shocks and it’s becoming difficult to model inflation.”
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Pandemics, Infection, and Libertarianism – Fabrizio Ferrari
11 augustus
Western countries will adopt (or consider adopting) state-mandated “medical passports”—so-called green passes—meant to prevent covid-19’s spread. They will compel private individuals to carry such passports if they want access to certain facilities or events (restaurants, theaters, concert arenas, etc.), I often hear libertarians—or people just sympathetic to libertarianism—supporting such state interventions with the following argument: “The green pass is compatible with libertarianism, because it directly stems from the nonaggression principle; in fact, if you do not have the green pass—and hence are (potentially) infectious—by infecting other people, you would be aggressing against them.”
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“A Sudden Negative Change In The Economy”: Consumer Spending Slides As Majority Now Expect A New Slowdown – Tyler Durden
13 augustus
Today’s UMich Consumer Sentiment report was a painful eye-opener: as we noted earlier, following UMich’s sentiment slump in July, analysts expected a further (modest) slide in Americans’ confidence in preliminary August data this morning but they were very wrong as sentiment crashed in early August data according to UMich Sentiment survey with the headline plunging from 81.2 to 70.0 – that is weaker than the April 2020 COVID crisis lows, while expectations collapsed too.
As UMich economist Richard Curtin observed over the past half century the Sentiment Index has only recorded larger losses in six other surveys, all connected to sudden negative changes in the economy: the only larger declines in the Sentiment Index occurred during the economy’s shutdown in April 2020 (-19.4%) and at the depths of the Great Recession in October 2008 (-18.1%).
Furthermore, the sentiment shift wasn’t confined to just one demographic: the losses in early August were widespread across income, age, and education subgroups and observed across all regions. Moreover, the loses covered all aspects of the economy, from personal finances to prospects for the economy, including inflation and unemployment.
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The State of the Small Business: Hiring Problems, Inventory Shortages, and Big Price Increases – Wolf Richter
10 augustus
In the current era of Stimulus Good Times, with its huge kinks.
Small businesses are tough. Many disappear quietly. Hiring is an issue. Due to the limited resources, small businesses have trouble competing with large corporations in terms of pay, benefits, glitzy workplaces, and LinkedIn glamor. But in the current era of the Stimulus Good Times with its huge kinks, labor issues hit records – the weird phenomenon of 13 million people claiming unemployment compensation while companies are having trouble hiring.
In addition to a slew of labor issues, small businesses face inventory shortages. And they responded to the challenges where everything costs more – including their labor – by raising prices in record numbers, according to data from the NFIB, the largest trade organization in the US for small businesses.
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Rickards: What’s Happening With Gold? – James Rickards
11 augustus
The gold market — at least the paper gold market — has seen a lot of volatility recently. Gold lost about $80 between August 5 and August 8 before rebounding. Gold gained over $22 today, by the way, to close at $1,753.
Many gold investors are panicked after the recent mini-crash. But today, I want to show you why the case for gold is still intact and why the recent tumble is just a bump in the road.
You shouldn’t let the mini-crash obscure a broader reality. You need to focus on the big picture, not the short-term fluctuations.
Gold has mostly moved sideways for almost a full year.
Gold prices reached an all-time peak of $2,069 per ounce on August 6, 2020. From there, gold moved back under $1,900 per ounce on September 22, 2020.
With the exceptions of three brief spikes (November 6, 2020, January 5, 2021, and June 2, 2021) and two brief dips (March 8, 2021, and March 30, 2021), gold has remained in a range between $1,700 and $1,900 per ounce.
The central tendency is $1,800.
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Don’t Be Fooled by the Latest Employment Report – Jon Wolfenbarger
13 augustus
The Biden administration, the Fed, and Wall Street all cheered the July employment report on Friday, which stated that total nonfarm payrolls rose by 943,000—8.4 percent better than expectations of 870,000—and the unemployment rate fell 0.5 percent to 5.4 percent in July. They also upwardly revised the prior two months by 119,000 jobs.
Rising employment is certainly good news for the economy and living standards, but there is much more to this story that is concerning for the economy.
In this article, we will make these five key points about the current employment situation:
Employment is a lagging economic indicator, so it is not particularly useful in determining the future direction of the economy or financial markets.
Money supply growth drives the business cycle and employment.
Money supply and employment growth are both slowing now.
Overall employment levels remain very weak and are still in recessionary territory.
Federal unemployment benefits have been subsidizing unemployment, but that will change next month.
Employment Lags, Money Supply Leads
Employment growth is a lagging economic indicator, as it usually bottoms after a recession has ended. Money supply growth is a leading economic indicator (and actually drives the business cycle), as it usually bottoms before a recession begins.
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Debt Ceiling Kicks in, Treasury General Account Plunges: Let’s See How Close to Zero it Gets Before Congress Ends this Farce – Wolf Richter
12 augustus
OK, that was suddenly very fast.
The balance in the Treasury General Account (TGA), the checking account of the US government at the Federal Reserve Bank of New York, plunged by $116 billion in the latest week, to $390 billion, according to the Fed’s balance sheet, released this afternoon. Since mid-July, the balance has plunged by nearly half.
In the spring 2020, the Treasury Department issued $3 trillion in new debt to fund the stimulus and bailout programs, but didn’t spend it all. By July 2020, the TGA had $1.8 trillion sitting in it, up from around $300 billion before the pandemic.
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The Value Of Gold And What It Is Worth In Today’s Market – Bruce Wilds
14 augustus
While reflecting on the distorted world in which we live and thinking about the woes of owning real estate which weather and time have a way of ravishing I started to think about value. Owning any tangible object seems to have its drawbacks, especially if it has no utility value. Still, they do have at least one thing going for them, they are real. Liquidity is also an issue and unless you can sell an item safely and without a lot of bother, it is difficult to argue it is liquid.
The recent pullback in the price of gold brings front and center the reality no investment is free of risk. When leveraging a position by using borrowed money this risk grows substantially. There is also the issue of where to store it, and even whether what you have purchased is real. Nobody wants to be made a fool of, and that is what a person becomes when they spend their money on what they think is gold only to find out later the item purchased is a fake.
People may claim there is huge demand, that a commodity is rare, and that the cost of producing it is soaring but that does not mean its value is destined to rise. Supply and demand remain king when it comes to valuing a commodity, and gold’s role in our future has yet to be determined.
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Climate change and central banks: The case for violating neutrality – Luke Bartholomew, Paul Diggle
12 Augustus
Central banks are increasingly considering their role in meeting climate objectives. Often, they justify this by arguing that climate considerations directly impact on their primary objectives of price and financial stability. This column argues that a stronger case is that the urgency of climate risks is such that standard neutrality-based objections to central bank involvement in economic allocation are obviated. Indeed, neutrality-based arguments look especially weak when it is realised that neutrality is essentially impossible for central banks to achieve.
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Social Security COLA for 2022 Could Be Biggest since 2009 or even 1982, But Won’t Cover Cost Increases for Many Retirees – Wolf Richter
11 augustus
It’s based on CPI-W for the third quarter. July came in at 6.0%.
One of the inflation measures released today, in addition to the regular Consumer Price Index data, was the CPI-W which is used to figure the Cost of Living Adjustment (COLA) for Social Security benefits.
The COLA is based on the average percentage increase of CPI-W in the third quarter compared to the same period in the prior year. So today’s report for July, figured by the Bureau of Labor Statistics and released by the Social Security Administration, covers the first month of the three months that will determine the Social Security COLA applied to benefits paid in the year starting in January 2022.
The CPI-W for July jumped by 6.0% year-over-year, following the June increase of 6.1%. Both were the biggest since July 2008 (6.2%). All three of them were the biggest since November 1990 (6.3%).
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