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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The ECB’s New Inflation Plan Is Like the Old Plan. But Worse. – Brendan Brown
17 juli
Old, absurd, and unfit for purpose; how else to describe the “new” monetary framework for euro monetary policy presented by ECB Chief Lagarde amidst much fanfare on Thursday, July 8?
Why old? The “new” framework is remarkably similar to that unveiled in May 2003.
Why absurd? The main rationale put forward for the framework is to work around a problem of the “zero bound”. That problem, however, is of the ECB’s own making.
Why unfit for purpose? Chief Christine Lagarde tells us that the review has been undertaken to make sure that “our monetary policy strategy is fit for purpose both today and in the future”. But she considers no critique of that strategy and advances no rebuttal of any. She does not explain why she expects better results from a plan that so similar to the strategy that’s been pursued during the past quarter century.
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Here’s Why America’s Labor-Shortage Will Drive Inflation Higher – Charles Hugh Smith
14 juli
Great swaths of the American workforce are already on strike or slipping away from the dead-end treadmill.
America’s labor shortage is complex and doesn’t lend itself to the simplistic expectations favored by media talking heads. The Wall Street cheerleaders extol the virtues of “getting America back to work” which is Wall-Street-speak for getting back to exploiting workers to maximize corporate profits.
Long-term demographics have combined with cultural changes and Covid-Lockdown epiphanies to completely re-order America’s labor force beneath the superficial surface of “re-opening.” No one post can do justice to such a complex topic, so I’ll touch on a few of the many inter-connected (and often mutually reinforcing) dynamics.
1. Boomers are leaving the workforce in droves. The statistics are incomplete but we know that a larger percentage of Boomers have been working longer than previous generations. A Pew Research 2018 study documents this: Baby Boomers are staying in the labor force at rates not seen in generations for people their age.
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Industrialization Is the Antidote to Global Poverty. Global Warming Activists Don’t Care. – 21Eben Macdonald
16 juli
Having long ago lost the argument that capitalism can’t deliver a higher standard of living, the Left’s current anti-capitalist strategy is to claim capitalism requires environmental destruction. Yet even if one were to assume carbon emissions are the driving factor behind climate change, we must acknowledge the moral and economic necessity of industrialization. Between 1250 and 1800, world GDP per capita barely budged; in 1800, global life expectancy was a mere thirty years, infant mortality was commonplace, and eight in ten humans lived below the poverty line. Since the advent of the Industrial Revolution, that has all changed: despite the environmental impacts, global per capita income has risen fourteenfold and billions have risen from poverty—a phenomenon the economist Deidre McCloskey describes as “the Great Enrichment.”
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Monetary policy and the exchange rate under fiscal distress: Evidence from Brazil – Enrique Alberola, Carlos Cantú, Paolo Cavallino, Nikola Mirkov
12 juli
Textbook models predict that a monetary policy tightening should lift the exchange rate. Yet the empirical evidence for emerging market economies fails to support this prediction. This column uses data from Brazil to show that the exchange rate’s response to monetary policy shocks changes with the fiscal regime. A contractionary monetary surprise leads to an appreciation in normal times. By contrast, a depreciation results when fiscal fundamentals are deteriorating and markets worry about debt sustainability.
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Will the Feds Try Price Controls to “Fix” Price Inflation? – Joseph Solis-Mullen
14 juli
As it began rapidly expanding the money supply early in 2020, the Fed confidently assured the public there would be no unanticipated or serious rise in inflation. Now that their projections have failed to materialize (in fact, their forecasts were off by almost 40 percent), they assure us that this will be but a temporary spike.
But for the sake of argument, let us imagine they are wrong—something that considering their track record is not difficult to do: What then?
As policymakers continue to mine the twentieth century for mistakes to repeat—from protectionism to higher taxes, to trying to start a second Cold War technology and arms race—it seems only logical to ask how long it will be before popular discontent over the rising consumer prices generated by their mismanagement of the money supply leads them to resurrect one of the most serious and notable policy failures of the last hundred years: price controls. After all, prices are rising rapidly, right?
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Betting On The Everything Bubble: Governments Worldwide Are Testing The New Limits Of Debt – Tyler Durden
18 juli
There’s nothing quite like being an observer of what is likely going to be one of the most important case studies in monetary policy and global economics in textbooks some years from now: the everything bubble.

Among those taking stock of just how far countries around the globe have “pushed it” with the amount of debt they have taken on is the Wall Street Journal, who wrote this week about how the pandemic has inflated the everything bubble further than anyone could have imagined.

Those advocating for the debt say it could usher in global growth. Those opposing it make the obvious case that eventually the laws of economics will get the best of things and we’ll have to ‘pay the piper’.
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The $50 Trillion Plundered from Workers by America’s Aristocracy Is Trickling Back – Charles Hugh Smith
12 juli
As I often note here, when you push the pendulum to an extreme of wealth and income inequality, it will swing to the opposite extreme minus a tiny bit of friction.
The depth of America’s indoctrination can be measured by the unquestioned assumption that Capital should earn 15% every year, rain or shine, while workers are fated to lose ground every year, rain or shine. And if wages should ever start ticking upward even slightly, then the Billionaires’ Apologists are unleashed to shout that higher wages means higher inflation, which will kill the economic “recovery.”
Said another way: if wages stagnate so workers lose ground every year as inflation in essentials rises, that’s the way it should be. If wages rise so workers can keep up with inflation, then that will trigger an inflationary death spiral.
That this indoctrination is so widely accepted reveals the success of America’s Aristocracy in reshaping the narrative to make their plundering appear to be “inevitable.” But the siphoning of $50 trillion from workers to the Aristocracy, and the Nobility’s control of political power was anything but inevitable: it was engineered by policies that enriched billionaires, the top 0.01% Aristocracy, and the top 10% who own 90% of America’s productive capital.
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Bank of Canada Cuts Bond Purchases for 3rd Time, Bank of New Zealand Stops QE Cold-Turkey, Citing Housing Bubble in “Least Regrets Policy,” Following a Slew of other Central Banks – Wolf Richter
14 juli
Why is the Fed so far behind the curve? Other central banks are now making room for “persistent” inflation.
Today, the world saw announcements by two central banks about reducing or ending asset purchases: By the Bank of Canada, its third reduction, and by the Bank of New Zealand which will stop them cold turkey in 10 days – following a slew of similar announcements by other central banks, while the Fed is still fiddling as inflation burns.
The Bank of Canada announced that it would reduce its purchases of Government of Canada bonds to C$2 billion a week, from C$3 billion a week, the third reduction of the same magnitude. It cited inflation, which rose 3.6% year-over-year, a pale imitation of the US CPI jump of 5.4%.
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Why Europe’s Highly Regulated Power Market Is So Bad for Growth – Daniel Lacalle
12 juli
Despite an endless chain of monetary and fiscal stimuli, the eurozone consistently disappoints in growth and job creation. One of the reasons is demographics. No monetary and public spending stimulus can offset the impact on consumption and economic growth of an aging population, as Japan can also confirm.
However, there is an especially important factor that tends to be overlooked: the lack of competitiveness of the eurozone industry due to rising and noncompetitive power prices.
Residential electricity prices in the European Union between 2010 and 2014 averaged nearly $240 per megawatt hour (MWh), whereas the US averaged nearly $120/MWh, or less than half of EU prices. The EU average gasoline and gasoil prices were also twice as high compared with the United States.
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What Happens When The Chickens Come Home To Roost? – MN Gordon
16 juli
What happens when the chickens come home to roost?
This is today’s question. But what is the answer? In just a moment we’ll offer several thoughts and ruminations. First, however, we must take stock of the chickens…
This week, for example, the chicken counters at the Bureau of Labor Statistics reported consumer prices, as measured by the consumer price index, increased in June at a year over year rate of 5.4 percent. This marks the fastest pace of rising consumer prices since 2008. And if you exclude food and energy, prices in June rose year over year by 4.5 percent…the fastest surge since November 1991.
In reality, consumer prices have increased much higher. The ‘unofficial’ rate of consumer price inflation, as calculated using methodologies in place in 1980, is about 14 percent. This rate of inflation is exceedingly caustic to retirees, savers, and wage earners.
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***What Triggers a Crash? Just Psychology – Danielle park
15 juli
A market crash requires nothing more than a shift in investor psychology from careless speculation to even modest risk-aversion. A market crash requires nothing more than an increase in the risk premium demanded by investors, in an environment where risk premiums have become overly depressed.
At some point, enough investors stop basing their expectations for future returns on the mindless extrapolation of past returns, in a market where prices have become detached from fundamentals. At some point, investors discover a basic fact of equilibrium: it is impossible, in aggregate, for investors to “exit” the market. Every single share of stock that has been issued has to be held by some investor, at every moment in time, until it is retired.
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Investors Are on the Lookout for a Crash. But Prices Keep Going Up. – Doug French
15 juli
An insider confided to a friend that all he is doing right now is transaction work for real estate holders who are selling now before the market crashes. His clients, members of Sin City’s illuminati, once bitten by the ‘08 crash, believe they’ll beat the crowd to the sales window before the local retail and office market collapses.
Tiny capitalization rates translating into unsustainable values are being dangled in front of these folks and they are willing to absorb the tax consequences to cash out and be ready to repurchase their properties back at a discount in a couple years.
Easy peasy.
With the country just emerging from lockdown, where’s the crash already? The original grave dancer, Sam Zell, has left the cemetery and is “following the pack and spending big on something safer,” Peter Grant wrote in the Wall Street Journal.
One of Zell’s companies paid $3.4 billion for Monmouth Real Estate Investment Corp. Not all distressed, Monmouth “owns 120 industrial properties in 31 states,” Grant reported. “The sector is one of the most profitable because of high demand for fulfillment centers from e-commerce companies such as Amazon.com Inc.”
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Climate change will unevenly impact the European financial system – Paul Hiebert
13 juli
Climate change will impact those parts of the financial system most exposed to its disruptive effects. This column analyses a new financial stability risk mapping for the EU financial system, linking financial exposures of thousands of banks, insurance companies, and investment funds to millions of firms subject to climate risk. It highlights a high level of risk concentration, both in European regions subject to climate hazards as well as economic sectors with diverse carbon emission intensities. Long-term scenario analyses suggest that the risks will be best addressed through proactive policies that directly contain global temperature rises.
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Too Much Money Chasing Too Few Goods and Services – Bill Bergman
12 juli
Inflation can be considered a tax, an especially regressive one, falling harder on those with lower income and/or assets.
By Bill Bergman, Director of Research, Truth in Accounting:
As we’ve noted previously, the Federal Reserve’s “M2” monetary aggregate began growing significantly faster than the “GDP” measure of economic output in the United States beginning around 2008, amidst the 2007-2009 financial and economic crisis.
With the federal government’s massive fiscal and economic “stimulus” policies arriving together with a pandemic and government lockdowns, M2 growth has recently risen dramatically higher than GDP growth.
Earlier this week, the Bureau of Labor Statistics (within the U.S. Department of Labor) reported that the Consumer Price Index (CPI) rose in June at one of its fastest growing rates in more than a decade. Some people have been pointing to the fact that year-over-year changes in the CPI may be high recently in part because the comparisons to last year’s levels were amidst the onset of the pandemic. But in the second quarter of 2021, compared to the first quarter of 2021 and on a seasonally adjusted basis, the CPI rose at an annualized rate of more than 8 percent, which is the highest quarterly growth rate since the third quarter of 1981.
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How boards and shareholders design CEO pay – and where they disagree – Alex Edmans, Tom Gosling, Dirk Jenter
15 juli
How CEO pay is set has been studied extensively, but most theoretical models do not capture whether real-world CEOs care about, for example, their reputation, fairness, or being appreciated by directors and investors. This column explores this using a survey of over 200 non-executive directors of FTSE All-Share companies and over 150 institutional investors in UK equities. While financial incentives are relevant to motivating CEOs, both CEOs and investors view a CEO’s intrinsic motivation and personal reputation as most important. Fairness matters – CEOs believe it is fair to be recognised for a job well done.
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***Welcome to the 21st Century Sequel of the Catastrophic 1600s – Charles Hugh Smith
16 juli
As the chart below on ‘how systems collapse’ illustrates, the loss of stabilizing buffers goes unnoticed until the entire structure collapses under its own weight.
Disruptive extremes of weather: check
Rising geopolitical tensions with no diplomatic resolution: check
Multiplying scarcities in essential commodities: check
Domestic disorder accelerates as extreme positions harden into irreconcilable conflicts: check
Welcome to the 21st century sequel of the catastrophic 1600s, an extended period of mutually reinforcing crises that overturned regimes and empires from England to China and triggered unremitting misery across much of the human populace. (Global Crisis: War, Climate Change and Catastrophe in the 17th Century is a riveting overview of this complex era.)
What can we learn from the catastrophic 1600s? Leading the list: humans don’t respond well to scarcities. They get crotchety, argumentative, and prone to finding ways to become disagreeable rather than agreeable. Their derangement deepens as they form self-reinforcing echo-chambers of the like-minded, and the source of their misfortune shifts from fate to equally fixated human opponents.
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Carbon pricing and relocation: Evidence from Dutch industry – Sander Hoogendoorn, Arjan Trinks, Johannes Bollen
13 juli
Pricing carbon and placing a tax on industrial emissions could be a centrepiece of national climate policies going forward. This column uses simulations from a global trade model to show that the introduction of a substantial carbon tax for Dutch industry strongly reduces domestic emissions, while production losses remain modest. However, significant carbon leakage of up to around half of the emissions reduction achieved in the Netherlands occurs, mainly to non-European countries such as China and India.
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Americans Pay More to Get Less: Retail Sales Outrun by Inflation – Wolf Richter
16 juli
Welcome to Fed’s New World of Inflation.
Retail sales rose by 0.6% in June from May, according to the Commerce Department today. But over the same period, prices for food bought at the store rose by 0.8%; prices at restaurants, delis, cafeterias, etc. rose by 0.7%; for gasoline by 2.5%, and for durable goods such as appliances, electronics, furniture, cars, etc., by 3.5% in just one month! These are the categories that make up retail sales.
And these whopping price increases in June outran the increase in retail sales in June, and they outran retail sales for the entire second quarter, indicating that consumers paid more to get less. Welcome to the Fed’s New World of inflation.
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The Fed Says It Stabilizes the Economy. I’m Skeptical. – Bill Bergman
13 juli
Before, during, and after the 2007–09 financial crisis, the masthead of the Federal Reserve Board’s main webpage included the following assertion right below its name at the top of the page:
The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible and stable monetary and financial system.
This statement is still there today. Can we all breathe easier now? Maybe not, if we endured one of the worst financial crises ever while the Fed was championing itself as a source of stability.
Rebranding to Inspire Confidence
Curiously, the board changed the wording of the statement at the top of the main page of its website during 2007, amid the onset of the 2007–09 disaster. Back in January 2007, the internet archive Wayback Machine shows the following saying to the right of the board’s name at the top:
The Federal Reserve, the central bank of the United States, was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system.
In other words, at the beginning of the year, the assertion was an opinion of what Congress intended, not what the Federal Reserve said that it provided in reality. By the end of 2007, however, the statement had taken on the more assertive, confidence-inspiring tone it has today. The Fed has advertised itself as a sufficient condition for financial stability, period—not simply as a means by which Congress tried to promote that difficult goal.
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Retiring Boomers Are Deflationary, Right? – John Rubino
13 juli
There’s never been a generation as influential, for good or ill, as today’s Baby Boomers. So our mass retirement over the next decade should, in theory, be a big deal.
One scenario has us selling our stocks and either spending the proceeds or moving them into less risky assets like bonds and cash. This reverses the past few decades’ upward pressure on stock prices and sends them down hard. At the same time, we downsize our living arrangements, swapping multi-story McMansions for smaller one-story homes conducive to aging in place. Large house prices, as a result, plunge.
Harry Dent is a well-known proponent of the demographics-as-destiny idea. Here’s his take:
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***How Botswana Became the World’s Fastest-Growing Economy – Lipton Matthews
17 juli
From 1965 to 1995, Botswana recorded the fastest rate of economic growth in the world. The spectacular success of Botswana has baffled many analysts, because after securing independence in 1966, Botswana’s prospects were unpromising. After all, Botswana is landlocked and on average, the record of such countries is unimpressive. But geography was not Botswana’s only obstacle to development. Independent Botswana suffered from a severe shortage of human capital.
One study suggests that in 1965, 72.7 percent of Botswana’s citizens over the age of 25 had no formal schooling, 24.6 percent had benefited from primary schooling, and 0.1 percent of citizens over 25 had completed tertiary schooling. The raw figures evoke a more depressing image by articulating that only twenty-two people in the country were university graduates and one hundred had completed secondary schooling. In contrast, Zambia had ten times as many secondary school graduates and Uganda seventy times as many. Further, unlike other colonies, British investments in Botswana were marginal, and when the colonial government exited, Botswana had twelve kilometers of road.
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***Anywhere jobs and the future of work – Jeegar Kakkad, Christina Palmou, David Britto, James Browne
10 juli
The Covid pandemic has helped to loosen the binds that previously tied a job to a specific geography and created a new class of work in the UK. ‘Anywhere jobs’ are non-routine service sector jobs that can be done from anywhere in the world, potentially for cheaper. This column shows that one in five workers in the UK are in an anywhere job and, in contrast to the past when the pressure was on semi-skilled workers, it is relatively highly skilled workers in non-routine roles that are now vulnerable to the pressures of technology and globalisation.
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