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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Subzero Rates Are Coming to the US and the UK – Daniel Lacalle
17 februari
Negative rates are the destruction of money, an economic aberration based on the mistakes of many central banks and some of their economists, who all start from a wrong diagnosis: the idea that economic agents do not take more credit or invest more because they choose to save too much and therefore saving must be penalized to stimulate the economy. Excuse the bluntness, but it is a ludicrous idea.
Inflation and growth are not low due to excess savings, but because of excess debt, which perpetuates overcapacity with low rates and high liquidity and zombifies the economy by subsidizing the low-productivity and highly indebted sectors and penalizing high productivity with rising and confiscatory taxation.
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Another disinflationary force vanishes: The tightening of bank equity capital regulation – Hans Gersbach
18 februari
Since the financial crisis of 2007/08, bank equity regulation has been tightened. This is one reason why broad money supply reacted only weakly to the enormous expansion of the monetary base. This column argues that the process of tightening bank equity regulation has come to an end and will not have the same disinflationary effects after the pandemic. The large reserve balances held by banks may become a greater concern and pose larger inflation risks in the years to come.
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Learning To Live With Crypto – Sean Stein Smith
19 februari
Accounting standards developed for the 20th century are not equipped to deal with 21st century crypto assets. Assuming otherwise creates inaccurate and diminished financial reporting.
Recent headlines by the likes of Tesla, Microstrategy, and BNY Mellon, as well as statements by market titans such as Ray Dalio and Jeff Gundlach illustrate one consistent point; crypto is part of the mainstream financial conversation.
Bitcoin especially has come a long way from its early days as a cypherpunk-themed movement to create an alternative financial and payment system. In the context of 2021, bitcoin and other crypto are actually starting to become somewhat boring; just another asset class and investment opportunity for institutional investors, financial institutions, and retail investors alike versus a world changing idea.
If the story ended there, well, it would all sound pretty mundane. Unfortunately, that is only the surface, and these headlines obscure an extremely important problem that remains unaddressed; the accounting for crypto as it currently stands makes no business sense. That’s right, something as under-the-radar as accounting standards are quickly becoming a significant issue as crypto adoption and investment accelerates.
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Technology Alone Won’t End Poverty. We Need Savings First – Frank Shostak
16 februari
According to some commentators such as economics Nobel Laureate Paul Romer, technical knowledge is key to economic growth. But if this is the case, why do third world economies continue to experience poverty? After all, individuals in these economies have access to the same technical knowledge as the developed world.
Careful examination, however, shows that a key driver of economic growth is the pool of consumer goods, or the subsistence fund.
Consumer Goods and Economic Growth
To maintain life and well-being, man must have at his disposal an adequate amount of final consumer goods. These goods, however, are not readily available—they have to be extracted from nature. Without tools at his disposal, man can only secure from nature minimum goods for his survival. This principle can be illustrated with a simple example.
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The Future Of Money Is Gold (Not Crypto) – Alasdair Macleod
18 februari
This article explains why the successor money to failing fiat is gold, not cryptocurrencies. Cryptos can only act as stores of value so long as fiat exists. I describe how a world transacting with monetary gold and properly constituted gold substitutes works. It explains how and why unbacked bank credit expansion, which in natural Roman law was ruled to be fraudulent 1,800 years ago, can and should be eliminated in a post-fiat world, thereby ending destructive credit cycles.
Gold exchange standards, which are comprised of gold-backed money administered by the state, worked extremely well when properly implemented, and it is the siren songs of inflationism that are at the root of the current crisis. If the transition from worthless fiat back to gold standards is handled properly, an initial recovery to fully functioning economies need not take more than a year or so.
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Who Bought the $4.5 Trillion Added in One Year to the Incredibly Spiking US National Debt, Now at $27.9 Trillion?
– Wolf Richter
17 februari
Someone had to buy every dollar of this monstrous debt. Here’s Who. The Fed isn’t the only one. But China continues to unwind its holdings.
Driven by stimulus and bailouts, and fired up by the tax cuts and by grease and pork, the Incredibly Spiking US National Debt has skyrocketed by $4.55 trillion in 12 months, to $27.86 trillion, after having already spiked by $1.4 trillion in the prior 12 months, which had been the Good Times. These trillions are all Treasury securities that form the US national debt, and someone had to buy every single one of these securities:
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Fiscal plans in Europe: No divergence but no coordination – Vincent Aussilloux, Adam Baïz, Matthieu Garrigue, Philippe Martin, Dimitris Mavridis
19 februari
The Covid-19 crisis has presented policymakers across the euro area with an unprecedented challenge, not least of all because the shock has come to both the supply side and the demand side of the economy. This column presents a preliminary analysis of different nations’ responses so far, focusing on which measures have been deployed to address each side of the economic shock and where a ‘mixed approach’ has been taken to work in tandem. At a time where coordinated action may be needed, there is a concerning level of inconsistency in strategy.
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Why Biden and Krugman Are Wrong about the $15 Minimum Wage – Robert P. Murphy
19 februari
President Biden claimed during his Super Bowl interview that “all the economics show” that if the government imposes a $15 minimum wage then “the whole economy rises.” For his part, Nobel laureate Paul Krugman has claimed for years that “[t]here’s just no evidence that raising the minimum wage costs jobs, at least when the starting point is as low as it is in modern America.” Is this really possible? Are all of the free market fans on the internet just spouting unscientific nonsense when they argue that a minimum wage hike will hurt unskilled workers?
The quick answer is no; Biden and Krugman are wrong. Although the empirical evidence regarding the minimum wage is not the slam dunk it once was, the studies that find a modest impact on employment couch their results in terms of a modest hike in the minimum wage. But the proposal to raise it from $7.25/hour to $15/hour involves a more than doubling. To my knowledge, not a single peer-reviewed econometric study has looked at the historical evidence and concluded that such a massive increase would have a negligible impact on employment.
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***Getting Artificially Intelligent in Commercial Real Estate: Using Consumers’ Smartphone Data to Negotiate Deals – John McNellis
20 februari
The fact that smartphones are perfect surveillance devices has been kicked around for a long time. And the data are immensely useful in B2B.
Wolf here: Most of the discussions center on how smartphones spy on their users in order to bombard them with the most effective ads and sell them more stuff. But there are other aspects to their spying that have been commercialized for entirely different purposes, where this user data is being used in actionable behind-the-scenes business-to-business dealings. So here is an example of how immensely useful the consumer data is in commercial real estate…
Geofence: A virtual boundary set up around a geographical location, such as a shopping center or retail space.
Owning retail has been challenging since the Great Recession. You likely know the reasons why: overbuilding, the internet, rapacious private equity, too many lackluster tenants. You also know that every move you make—every breath you take—is recorded by your mobile phone. This latter circumstance has allowed a clever company, Placer AI, to develop the most useful tool for commercial real estate since Hewlett Packard introduced the HP-12C in 1981. (A phenomenal financial calculator, the 12C has become the abacus of our time, used by a slowly dwindling number of mandarins).
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Inflation Here, There, And Everywhere – Bryce Coward
19 februari
What a week for price data! We have been writing about the possibility of higher inflation for months now, most recently here. We have also highlighted the most likely assets to benefit from higher inflation like copper, oil and energy stocks. So far so good on that front.
While inflation of some kind – be it transitory or more lasting in duration – has been a high probability scenario for awhile, we are finally starting to see it clearly in the economic stats. This week alone we were given price data from the New York Fed’s Empire State survey, economy-wide producer price data from the Bureau of Labor Stats, and price data from the Markit PMIs. All of those data points recorded large gains and handily beat market expectations.
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The High Cost of Using the Minimum Wage as a Form of Welfare – Martin Jones
19 februari
In recent years a number of economic studies have concluded that small to moderate increases in the minimum wage do not necessarily cause a discernible decline in employment. Social activists have seized on these findings to argue that there are no job losses and that it is possible to increase mandated wages by almost any amount without ill effects. The result has been a rush to raise the minimum wage to $15 in a number of states and cities and now at the national level.
The reality is that there is little consensus among economists about the effects of the minimum wage on aggregate employment. In their 2014 book What Does the Minimum Wage Do? Dale Belman and Paul Wolfson survey over two hundred minimum wage studies and conclude that moderate increases can raise the wages of low-income workers without significant employment effects. A 2019 paper by economist Jeffery Clemens is a shorter survey of many of the same studies. It concludes that the case for large increases (an increase from $7.25 to $15 would qualify) “is either mistaken or overstated” and adds that “[i]n contrast to the research emphasized by advocates, the broader body of work regularly finds that increases in minimum wages cause job losses for individuals with low skills.”
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Boosting women’s labour-force participation to lift long-term growth – Stephanie Kelly, Abigail Watt, Nancy Hardie, Jeremy Lawson
18 februari
As populations age and labour productivity slows, policy agendas that support stronger diversity and inclusion measures could provide a much needed shot in the arm for the global economy. This column describes the constraints limiting women’s full participation in the workforce across a wide sample of countries, and suggests that governments looking to maximise growth prioritise paternity leave legislation, tax wedges, and employment protections. Policies targeting gender parity must focus not only on women’s labour-supply decisions but on men’s behaviour as well.
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The Great Paper-Money Experiment – John Law – Elgin Groseclose
21 feburari
The name of that ardent Scotsman, John Law, is short. His career was likewise short: he was comptroller general of France for less than five months in the year 1720. The space of time during which he bestrode the financial world of Europe like a Colossus scarcely exceeded five years at the most. The financial mania that swept over the continent at his touch flamed and died in less than two years. His epoch is usually dismissed by historians with a short passage on the “bubble era”; and by economists, if discussed at all, it is treated as a freak in the hothouse growth of modern finance.
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The geography of innovation between 1866 and today – Mike Andrews, Alexander Whalley
20 februari
We have witnessed significant changes in economic geography over the last years. However, little is known about the spatial concentration of innovation over time. This column uses a novel dataset containing the location of all US patents between 1836 to 2016 to analyse the geography of innovation over time. It finds that while concentration was a high as it is today in the late 1860s, it has seen a substantial decline thereafter, remaining at significantly lower levels for the larger part of the 20th century. It further finds substantial turnover in the identities of top inventing places.
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Next Up: Global Depression – Charles Hugh Smith
19 februari
This madness is now global, so next up: global depression.
A few days after the Covid pandemic was officially announced last year on 1/23/20, I prepared a chart projecting the course of the pandemic. In my view it still stands, with two updates: “vaccines months away” has been updated to “mass vaccinations months away” and “Wave 2” has been updated to “Wave 4.” (see chart below)
The end-point–global depression–is up next. Very few are prepared for this eventuality because they put their faith in 1) central banks pursuing an insane folly and 2) a fragile, brittle global economy that was already teetering on the edge of destabilization before the pandemic.
Here’s the central banks’ insane folly in a nutshell: to create new enterprises and jobs, we’ll blow the world’s greatest speculative bubble into an even greater speculative bubble. So in other words, we’ll further enrich the top layer of the Financial Aristocracy who own the vast majority of the assets we’re pushing to the moon, and by some inexplicable magic, adding trillions of dollars, yuan, yen and euros to the wealth of this elite will somehow launch a thousand new thriving enterprises which will magically hire 500,000 new workers every month.
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Here’s What’s Hiding Behind the Massive Seasonal Adjustments in January Retail Sales – Wolf Richter
17 februari
In whiplash charts. For example, department store sales soared 23% “seasonally adjusted” but collapsed 42% “not seasonally adjusted.” What gives?
We had another mind-twister this morning when the media proclaimed that in January retail sales “burst higher,” after the opposite had happened in December, when the media bemoaned the third month in a row of dropping retail sales.
But these are “seasonally adjusted” retail sales, and the seasonal adjustments in December and January are always huge. “Not seasonally adjusted,” retail sales collapse by about 18% to 22% every January during the merchandise-return binge (returns are negative sales) after December’s holiday shopping binge. So I noted a month ago that the massive “seasonal adjustments” in December had gone awry and that Americans had not actually cut back but had splurged in a record manner, documenting this with charts that showed both “seasonally adjusted” and “not seasonally adjusted” retail sales.
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***The Problem with the “Robber Baron” Narrative – Antonis Giannakopoulos
18 februari
The purge of conservative and libertarian voices on social media was, as Ron Paul put it, “shocking and chilling, particularly to those of us who value free expression and the free exchange of ideas.” People from the conservative side of the aisle, but also others, have called for solutions like antitrust laws regulation of social media even to downright nationalization of Big Tech companies. Comparisons are made with the so-called robber barons in the late nineteenth and early twentieth centuries. According to popular “wisdom,” people like John D. Rockefeller, Cornelius Vanderbilt, and others made profits due to immoral and unethical competition practices that granted a monopoly status to their companies. Now, just like in the past, government needs to step in to protect the consumer, who is being exploited.
These comparisons don’t help the case for government regulation of Big Tech if we take a close and honest look at the history of antitrust laws.
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The (de-)central question: Subnational governments and the making of development in Africa – Yohan Iddawela, Neil Lee, Andrés Rodríguez-Pose
21 februari
Differences in the quality of local and regional governments and their implications for development have attracted considerable attention, especially in Europe and Asia. In Africa, the recent drive towards decentralisation has, however, neglected how variations in the quality of sub-national governments affect development prospects. This column addresses this gap in knowledge by measuring variations in subnational government quality in 22 African countries, and connecting these variations to differences in levels of development across the continent. The quality of sub-national governments is an important driver of economic development in African regions.
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The Fight over Economics Is a Fight over Culture – Ryan McMaken
15 Februari
The Left long ago figured out how to get ordinary people interested in economic policy. The strategy is two pronged. The first part is to frame the problem as a moral problem. The second part is to make the fight over economic policy into a fight over something much bigger than economics: it’s a fight between views of what it means to be a good person. The Left knows how to make the war over economics into a war over culture.
Yet when it comes to economic policy, some opponents of the Left’s economic views—views which are, of course, very wrong—don’t seem to understand the rules of the game. For example, a typical left-wing economic scheme might call for a higher minimum wage, declaring this policy to be a matter of simple decency, and by extension, the moral policy. In response to this, some defenders of laissez-faire and free markets often concentrate exclusively on bloodless clinical explanations of “efficiency” or “incentives” or demand curves. The element of moral righteousness is often omitted.
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GBOAT: Is This the Greatest Bubble of All Time? – Charles Hugh Smith
16 februari
The lifestyle you ordered in the euphoria will be out of stock in the panic.
Humans running Wetware 1.0 (which is all of us) love to gamble, and we are entranced by the thrill of victory and the agony of defeat. When there’s a market for speculation, these wild swings of emotion manifest as euphoria (I’m winning!) and fear (I’m losing).
Thus the soaring price of goats due to speculation in 1740 B.C. Babylon so vexed Hammurabi that he ordered the execution of those he deemed responsible for profiteering off their clever speculative manipulation.
Speaking of goats, let’s ask a GOAT (greatest of all time) question: what’s the greatest bubble of all time (GBOAT)? The easiest way to measure speculative bubbles is the starting price and the peak price, but that may not do justice to the question. Perhaps the number of people drawn into the speculative frenzy is a better measure of GBOAT: after all, if only a handful of speculators lose their shirts, how that can be the greatest bubble of all time?
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***Institutions and power structure: Imperial China and feudal Europe compared – Ruixue Jia, Gérard Roland, Yang Xie
21 februari
Property rights and the rule of law were weaker in Imperial China than in premodern Europe. And yet, ordinary people in Imperial China had more access to elite status than their European counterparts. This column makes sense of the seeming contradiction by employing a theory of power structures in which a more symmetric relationship between elites and ordinary people stabilizes autocratic rule. If a ruler’s power is absolute, this stabilising effect will be stronger, and the ruler’s incentive to promote such symmetry will be greater.
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