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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More Money Creation Won’t Create More Economic Growth – Frank Shostak
13 januari
The view that more money can revive an economy is based on the belief that money transmits its stimulatory effect through aggregate expenditure. With more money in their pockets, people will be able to spend more and the rest will follow suit. Money, in this way of thinking, is a means of payment and funding.
Money, however, is not a means of payment but a medium of exchange. It only enables one producer to exchange his produce with another producer. The means of payment are always real goods and services, which pay for other goods and services. All that money does is facilitate these payments. It makes the payments for goods and services possible.
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***Instability Rising: Why 2020 Will Be Different – Charles Hugh Smith
14 januari
In 2020, increasing monetary and fiscal stimulus will be the equivalent of spraying gasoline on a fire to extinguish it.
Economically, the 11 years since the Global Financial Crisis of 2008-09 have been one relatively coherent era of modest growth, rising wealth/income inequality and coordinated central bank stimulus every time a crisis threatened to disrupt the domestic or global economy.
This era will draw to a close in 2020 and a new era of destabilization and uncertainty begins.
Why will all the policies that have worked so well for 11 years stop working in 2020?
All the monetary/fiscal policies of the past decade were simply extreme versions of tried-and-true policies that central banks and governments have used for the past 75 years to restore growth in a recession or financial crisis: lower interest rates, increase credit/liquidity, and ramp up government spending (i.e. deficit spending) to compensate for declining private-sector spending.
These policies were designed to be short-term stimulus programs to jump-start the economy out of a slowdown (recession), which typically lasted between 9 and 18 months.
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China’s Gold Hoarding: Will It Cause the Price of Gold to Rise? – Jan Nieuwenhuis
17 januari
There are reasons to think that the gold price will rise faster than expected.
China’s Gold Hoarding: Will It Cause the Price of Gold to Rise?
Since 2009 China has withdrawn 12,000 tonnes of gold from the rest of the world, where the short and medium-term gold price is set. For reasons I will explain, a tighter market outside of China can make the price of gold price rise faster than many expect. I believe the gold price will rise, because of excessive debt levels around the world, and incessant money printing by central banks. Central banks will try and resolve the debt burden through currency depreciation (inflation). China has been preparing for this scenario by buying gold.
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Now, Everyone Pays The Piper: The End Of China’s Economic Miracle – Brett Redmayne-Titley
17 januari
In emulating the American economic raison d’etre, China has attempted to develop its unique capitalist model while ignoring that it too will soon suffer the same fate for the same reason: Unsustainable debt. When examining the recent realities of Chinese banking and finance over the past year it seems the steam that president Xi Jinping touts as powering the engine of his purported economic miracle of a master-planned economy is only a mirage, now almost completely evaporated before his eyes.
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Nutty Bond Wonderland in Europe Just Reached New Heights of Madness – Nick Corbishley
15 januari
Not even the “bankruptcy” word hanging over super-troubled Italian infrastructure giants Atlantia and Autostrade, whose bridge collapsed last year, can get their bonds to reflect any kind of serious risk.
On Monday, Standard & Poor’s slashed Italian infrastructure giant Atlantia SpA’s credit rating by three notches, from investment-grade BBB- to BB- (“junk”) amid concerns the Italian government could revoke its all-important road concessions business in Italy in response to the collapse of the Morandi bridge in Genoa in 2018. This downgrade affects Atlantia’s roughly €36 billion of debt that is now considered “junk.”
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***Subprime Loans Will Be Back with a Vengeance in 2020 – Andrew Moran
14 januari
One of the lasting legacies of the economic collapse a decade ago is subprime. After lying dormant for several years in the aftermath of the Great Recession, the subprime market has returned with a vengeance. Everything is subprime nowadays, as banks, finance companies, and unconventional lenders are less averse to risk and are willing to extend credit to consumers with low FICO scores and inadequate incomes. As the great Yogi Berra used to say, “It’s déjà vu all over again.”
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Living On Borrowed Time – MN Gordon
17 januari
Practically the entirety of Congress now believes that the ability to pay should not limit the ability to promise people whatever they want. There’s no poll of members of Congress to support this assertion. We base it on what they’ve communicated by real, material actions.
Remember, per the Constitution, Congress – and in particular, the House of Representatives – is vested with the “power of the purse.” They retain the authority to tax and spend public money for the federal government. Over the last 50 years Congress has demonstrated they give less than half a rip about the government’s ability to pay.
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Monetary policy for commodity booms and busts – Thomas Drechsel, Michael McLeay, Silvana Tenreyro
16 januari
Macroeconomic volatility in commodity-exporting economies is closely tied to fluctuations in international commodity prices. This column studies optimal policy for commodity exporters in a small open economy framework that includes a key role for financial conditions. A positive commodity price shock leads to an inefficient boom, with inflation rising and output increasing relative to its efficient level. The optimal policy lets the exchange rate appreciate and raises interest rates, with a larger appreciation required the greater the loosening in borrowing conditions. The model suggests that exchange-rate pegs are highly suboptimal for commodity exporters, exacerbating inefficient swings in commodity production. Given the prevalence of managed exchange-rate regimes in emerging and developing commodity-exporting economies, the authors discuss the practical challenges that might justify such frameworks.
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How Do We Calculate Value? – Ludwig von Mises
14 januari
[From Socialism: An Economic and Sociological Analysis, by Ludwig von Mises, pp. 113–22.]
All human action, so far as it is rational, appears as the exchange of one condition for another. Men apply economic goods and personal time and labour in the direction which, under the given circumstances, promises the highest degree of satisfaction, and they forego the satisfaction of lesser needs so as to satisfy the more urgent needs. This is the essence of economic activity — the carrying out of acts of exchange.
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EQT, Largest US Natural Gas Producer, Takes $1.8 Billion Write-Down, Admits it Can’t Succeed in Low-Price Shale-Gas Environment – Nick Cunningham
14 januari
The largest natural gas driller in the United States just announced a massive write-down for its assets, offering more evidence that the shale sector faces fundamental problems with profitability.
In a regulatory filing on Monday, Pittsburgh-based EQT took a $1.8 billion impairment for the fourth quarter, as the natural gas market continues to sour. EQT said that the write down comes as a result of the “changes to our development strategy and renewed focus on a refined core operating footprint,” which is a jargon-y way of saying that some of its assets are now worth much less.
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A new EU level playing field instrument: Potential goals and design – Thorsten Kaeseberg
15 januari
EU competition policy appears not sufficiently equipped to deal with the challenges recently raised by Chinese state capitalism. This column discusses some of the gaps in the EU’s economic toolbox, and identifies several strategic issues that will need to be addressed as the Commission looks to close these gaps with the introduction of a ‘level playing field instrument’.
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Oil Weakness and Stagnation Risks – Daniël Lacalle
18 januari
The oil market has changed substantially over the past ten years.
The most important factor that explains the lower volatility and price impact in the face of geopolitical risks is that the United States no longer depends on OPEC. At the end of 2019, the United States reached a record in oil production, more than 12 million barrels a day, above Russia, 10.8 million barrels a day, and Saydu Arabia, 10.3 million barrels a day. The United States’ dependence on foreign oil purchases is the lowest ever, and if we consider North America (Canada. US and Mexico), the region is almost self-sufficient.
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No Matter How Much Money the Fed Prints, We Still Can’t Afford Nice Things – Charles Hugh Smith
15 januari
When will the American wage-earner finally tire of the skims, scams, fraud and lies that are now the foundations of everyday life?
You’d think that with the Federal Reserve printing trillions of dollars since 2008, we’d all be able to afford nice things. But you’d be wrong: after 11 years of Fed money-printing, nice things are even more out of reach for all but the favored few who’ve received the Fed’s bounty of freshly created currency.
The Fed’s trillions were supposed to trickle down into the real economy, but they never did. All those trillions boosted asset prices and the wealth of the $100 million yachts and private jets elite.
Instead costs have soared while wages have stagnated. If this widening gap between wages and costs were accurately presented, there would a political revolt against the Fed and those few who have benefited so immensely from Fed money-printing: the banks, financiers, corporations buying back their own shares, the owners of high-frequency trading computers, etc.
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What Free Market Money Would Look Like – Kristoffer Mousten Hansen
18 januari
Monetary affairs have always been subject to government intervention of one kind or another. In ancient times, these interventions were made to raise funds for public spending; by debasing the coinage, kings and other rulers could raise taxes without having to abide by constitutional rules and without raising popular anger at their spending. Increasingly, through legal tender laws and the creation of central banks, government took more and more control over monetary affairs in order to shape the economy, to the point that monetary mandarins can nowadays seriously discuss regulating how much money each individual person should have in his bank account by imposing negative interest rates. In this environment, the idea that money might be free from all government intervention is almost inconceivable to most people.
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***Brick-and-Mortar Melts Down in the UK, Worst Decline Since 2009, as Big Retailers Collapsed, 14,500 Stores Closed – Wolf Richter & Nick Corbishley
18 januari
But even red-hot online sales cooled off late in the year as consumers turned sour.
Consumers in the UK, generally a hardy bunch when it comes to borrowing and shopping, were not in a shopping mood before the holidays. Retail sales in December at non-food brick-and-mortar stores – ranging from specialty stores to department stores – fell 1.6% compared to December last year, seasonally adjusted, according to the UK’s Office for National Statistics (ONS).
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Central banks and climate change – Markus K Brunnermeier, Jean-Pierre Landau
15 januari
Central banks have been called on to contribute to fighting climate change. This column presents a framework for thinking about the issue and identifies some major trade-offs and choices. It argues that climate should be a major part of risk assessments and that capital ratios could be used in a proactive way by applying favourable regimes to ‘green’ loans and investments. It also suggests that central banks may want to take several climate change-related aspects into account when designing and implementing monetary policies. However, the central bank should retain absolute discretion to interrupt any action if its first-priority objective – price stability – were to be compromised.
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What Will It Take to Get the Public to Embrace Sound Money? – Brendan Brown
16 januari
In the last decade, the combination of virulent asset price inflation and low reported consumer price inflation crippled sound money as a political force in the US and globally. In the new decade, a different balance between monetary inflation’s “terrible twins” — asset inflation and goods inflation — will create an opportunity for that force to regain strength. Crucial, however, will be how sound money advocacy evolves in the world of ideas and its success in forming an alliance with other causes that could win elections.
It is very likely that the deflationary nonmonetary influences of globalization and digitalization, which camouflaged the activity of the goods-inflation twin during the past decade, are already dissipating.
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The impact of CEOs in the public sector: Evidence from the English NHS – Katharina Janke, Carol Propper, Raffaella Sadun
17 januari
Studies have shown that in the private sector, top managers and CEOs can make a difference in the performance of their organisations and have a ‘style’ that is portable across firms. This column uses the setting of hospitals in the English National Health Service to examine whether CEOs can make a difference in large and complex public sector organisations. The findings suggest that the CEOs of large public hospitals do not have a significant impact on performance, casting doubt on the ‘turnaround CEO’ approach to management in the public sector.
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The Bank of England’s Governor Fears a Liquidity Trap – Frank Shostak
17 januari
The global economy is heading towards a “liquidity trap” that could undermine central banks’ efforts to avoid a future recession according to Mark Carney, governor of the Bank of England. In a wide-ranging interview with the Financial Times (January 8, 2020), the outgoing governor warned that central banks were running out of ammunition to combat a downturn:
If there were to be a deeper downturn, more than a conventional recession, then it’s not clear that monetary policy would have sufficient space.
He is of the view that aggressive monetary and fiscal policies will be required to lift the aggregate demand.
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