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.

——————————————————————————————————
The Only Long-Term Solution to a Bust Is to Rebuild Savings – Frank Shostak
25 juli
Once an economy falls into a recession some commentators express concern that as a result there is now nonutilized capital and labor. Resources that can be used are now made unemployed. It is held that the key issue behind this is insufficient demand for goods and services.
Once it is accepted that the key factor is insufficient demand, these commentators are of the view that what is required is somehow to boost the overall demand in the economy. With a stronger demand, it is held, idle resources will be employed again. Hence, what is recommended is for the central bank to embark on very loose monetary stance to strengthen the overall demand for goods and services. If individuals are reluctant to increase their demand for goods and services, then the government and the central bank must step in to boost the demand to revive the economy. (Note that in this way of thinking spending by one individual becomes the income of another.)
——————————————————————————————————
The euro needs sound and pragmatic long-term policies more than ever – Heikki Oksanen
20 juli
One of the many reasons for slow progress with reforming the euro has been a lack of understanding of the links between the fiscal and monetary domains. This column argues that the Covid-19 shock necessitates a significant extension of the time horizon for fiscal policy. Sound public finances means long-term sustainability of government finances, which is required for refunding public debt at acceptable interest rates. Bonds issued by the solvent governments are needed for the operations of the Eurosystem in setting the monetary stance and in acting as the lender of last resort for euro area governments, which is necessary for preventing liquidity shortages from developing into a general financial crisis.
——————————————————————————————————
New Opportunities for Marxists: Climate Change and Coronavirus – Thorsten Polleit
22 juli
In The Communist Manifesto (1848) Karl Marx (1818–83) and Friedrich Engels (1820–95) predicted that capitalism would lead to the impoverishment of the laboring class. Why? Well, to raise profit on capital invested, Marx and Engels argued, entrepreneurs (the capitalists) would exploit the workers. They would reduce wages and worsen working conditions by, say, increasing working hours. From that viewpoint, Marx and Engels put forward an immiseration theory of capitalism.
——————————————————————————————————
Why Central Bank Policies Are Fundamentally Destructive – Alasdair Macleod
23 juli
Explaining The Credit Cycle
This article summarises why the credit cycle leads to alternate booms and slumps. It is only with this in mind that they can be properly understood as current economic conditions evolve.
The reader is taken through three monetary models: a fixed money economy, one governed by changes in bank credit, and finally the consequences of central bank intervention.
——————————————————————————————————
Technological progress and hollowing-out of the middle-skilled labour share of income – Mai Dao, Mitali Das, Zsoka Koczan
20 juli
The declining labour share of income is a global phenomenon that has affected primarily low-skilled and middle-skilled workers. This column examines the effects of trade and technology on the labour shares of different skill groups using a new dataset covering both advanced and developing economies. Both trade and technology have contributed to the declining labour share of middle-skilled workers but have had little effect on low-skilled and high-skilled labour. Policies should be designed with the goal of spreading the benefits of globalisation to the entire labour force.
——————————————————————————————————
***Work-from-Home Unleashes Nightmare for Office Landlords & Surrounding Businesses. Global Banks at the Forefront – Nick Corbishley
22 juli
“There will be a long-term adjustment in how we think about our location strategy…the notion of putting 7,000 people in a building may be a thing of the past”: Barclays CEO. And companies are following through.
This appears to be an increasingly global phenomenon. Roughly 60% of bank executives in the US said they don’t expect all of their employees to return to the office. And over 40% said they plan to reduce their real estate footprint in response to the coronavirus pandemic, according to a survey of US bank executives by Accenture Plc.
——————————————————————————————————
Monetary easing explains the coincidence of leveraged payouts and lack of real investments – Viral Acharya, Guillaume Plantin
22 juli
In the aftermath of the 2008 Global Crisis, ultra-low US policy rates have been coincident with significantly large positive shareholder payouts by US firms while investment growth has failed to keep pace with firm assets, leading to assertions of a causal link between the two trends. This column uses a parsimonious model to explain how a socially undesirable yet shareholder value-maximising crowding out of business investment by payouts can arise as an unintended consequence of aggressive monetary easing.
——————————————————————————————————
The Recovery Has Reversed: What Goldman’s Real-Time Indicators Reveal About The State Of The US Economy – Tyler Durden
25 juli
In its latest weekly activity update, Goldman – which on Friday saw tentative signs on hope in the spread of the covid pandemic finding “downward pressure on case growth” – looked at real-time economy indicator focusing on consumer and export activity, the labor market and inflation, and found that while the overall state of the economy is far stronger than where it was in March, the upward momentum has reversed and worse, signs of permanent scarring are beginning to emerge.
——————————————————————————————————
A Rising Demand for Money Won’t Save Us from Inflation – Frank Shostak
20 juli
According to popular thinking, not every increase in the supply of money will have an effect on the production of goods. For instance, if an increase in the supply is matched by a corresponding increase in the demand for money, then there will be no effect on the economy. The increase in the supply of money is neutralized, so to speak, by an increase in the demand for money or the willingness to hold a greater amount of money than before.
What do we mean by demand for money? In addition, how does this demand differ from the demand for goods and services?
——————————————————————————————————
The old and the new of fintech – Arnoud Boot, Peter Hoffmann, Luc Laeven, Lev Ratnovski
21 juli
Technological change in the financial industry is accelerating. Recent developments include new innovations and improvements on past trends. This column distinguishes between the information and communication channels of financial innovation and analyses their implications for financial intermediation. It suggests that innovations in these two dimensions may lead to big changes in the traditional bank business model. New policy priorities should focus on accurately assessing the operational risks and ensuring the robustness of these technologies.
——————————————————————————————————
The Numbers Tell Us The “Economic Recovery” Is Dead And Businesses Are Failing At A Staggering Pace – Michael Snyder
23 juli
Even though economic conditions were absolutely awful, during the month of June the mainstream media kept insisting that the U.S. economy was “recovering” and the stock market kept surging on every hint of good news.
But now the “economic recovery” narrative is completely dead, because the numbers clearly show that the U.S. economy is rapidly moving in the wrong direction. On Thursday, the Labor Department announced that another 1.416 million Americans filed new claims for unemployment benefits last week. Prior to this year, the all-time record for a single week was just 695,000, and so we are talking about a level of unemployment that is absolutely catastrophic. But what is really alarming many analysts is that the number for last week was quite a bit higher than the number for the week before.
——————————————————————————————————
***Are Universities Finished? – Llewellyn H. Rockwell Jr.
25 juli
Higher education in America today is in a crisis. The diversity thought police pounce on anyone who offers the slightest resistance to them. Here are a few examples “Students at pricey Marymount Manhattan College are demanding a veteran professor be fired for allegedly falling asleep during an anti-racism Zoom meeting. Students at the Upper East Side school claim Patricia Simon, a theater arts associate professor, took a snooze during the virtual town hall last month, and have collected 1,800 petition signatures. Petition organizer Caitlin Gagnon said ‘action has only capitalized on a pattern of negligence and disrespect that Patricia Simon has exhibited over and over again.’ Gagnon included a photo of the 30-year prof, and also accused her of enabling ‘sizeist’ staffers.” A “sizeist,” by the way, is someone who discriminates against people because of their physical size, e.g., requiring an obese person to pay for two seats. Of course, it doesn’t matter if the heavy person occupies two seats. If you charge more, you are still a sizeist.
——————————————————————————————————
Unintended consequences to education for all: India’s Right to Education Act – Chirantan Chatterjee, Eric Hanushek, Shreekanth Mahendiran
23 juli
Expanding access to schools has been an important goal of development policy. This column studies the 2009 Right to Education Act in India intended to mandate compulsory and free access to schools for all children aged 6 to 14. It finds that the act led to an increase in the number of private tuition centres which partly crowded out the goal of more equal access to education as only children from wealthier households can afford private tuition.
——————————————————————————————————
Update on the WTF-Collapse of Consumption of Gasoline, Jet Fuel & Diesel – Wolf Richter
23 juli
Folks started driving again – including those who used to take mass-transit. But jet fuel demand is still in collapse-mode. And overall consumption remains way down.
Ridership on San Francisco’s Bay Area Rapid Transit (BART) trains was still down 89% in June, compared to June last year, according to BART. Not because the Bay Area economy has collapsed by 89% — it has not — but because many people are working from home, and those people who do go to work are driving to avoid the infection risks associated with riding on a commuter train. Driving-instead-of-taking-mass-transit is playing out across the US. And we’re seeing some of that in gasoline demand. But jet fuel consumption is still in collapse mode. And diesel consumption has been down sharply for over a year.
——————————————————————————————————
Inflation/Deflation: The Economy Is an Elephant – Charles Hugh Smith
22 juli
This is the key dynamic of the economy going forward: defaults on debt, declining wealth as assets are relentlessly repriced lower and sharp declines in income due to layoffs and debt defaults.
The economy is like an elephant surrounded by blindfolded economists and pundits: what each blindfolded person reports about the elephant depends on what part they happen to touch.
This is why aggregate measures such as gross domestic product (GDP) and the consumer price index (CPI) will be misleading and therefore useless going forward: different parts of the economy might experience sharp deflation while other parts are experiencing rapid inflation. What each household and enterprise will experience depends on their exposure to these cross-currents.
——————————————————————————————————
Yes, QE Creates Wealth Effects – Robert Blumen
24 juli
QE (quantitative easing) is the primary means that the Fed uses to cause asset price inflation. “The Ben Bernank,” Fed governor at the time, later chair, in an October 2003 speech endorsed the use of monetary policy to create wealth effects.
——————————————————————————————————
Shift from Condos to Houses and from Big Cities to Suburbs? New House Sales Rose 6.9% fr. June Last Year, to Highest Level since July 2007 – Wolf Richter
24 juli
The evidence keeps piling up.
Sales of new single-family houses (based on signed contracts) rose 6.9% in June, compared to June last year, to a seasonally adjusted annual rate of sales of 776,000 houses, according to the Commerce Department this morning. It was a hair above January’s 774,000, having recovered all of the plunge during February, March, and April — thereby making it the highest rate of sales since July 2007
——————————————————————————————————
The Real Unemployment Rate is 21%–and Heading Higher – Charles Hugh Smith
20 juli
As businesses, agencies and organizations recalibrate to the reality that the V-shaped recovery was nothing but a brief fantasy, 6 million additional jobs lost may be a best-case scenario rather than the worst-case scenario.
It is somewhat less than reassuring that the “official” unemployment rate of around 12% is roughly half of the “real-world” unemployment rate. As always in the wonderful world of statistics, especially politically potent ones, it depends on what you measure, what you don’t measure / act as if it doesn’t exist, and how you measure what you do measure.
Everyone who digs beneath the headline numbers of employment / unemployment soon discovers a number of jarring anomalies in what the media presents as “factual statistics.”
——————————————————————————————————
GDP, Free Trade, and Prosperity – Matthew Tanous
23 juli
In my recent social media discussions on the subject of free trade, a certain thread of argument related to GDP has become more common. The argument, such as it goes, asserts that international trade is not very important as a component of GDP. The net impact of trade is a small impact on GDP, with imports and exports generally “balancing” each other out, leaving just a few percentage points either way. Trade (and immigration) restrictions seem like a small price to pay, economically, according to this framework.
Despite its superficial validity, this is a wholly erroneous way to look at the problem of generating prosperity and rests primarily on two economic fallacies. The first is the use of the GDP aggregate as a viable measure of national prosperity, which has been heavily criticized in other contexts.
——————————————————————————————————
Obama’s Top Economist Warns Of Catastrophic Risk To Economy If Stimulus Lapses – Tyler Durden
25 juli
Ex US Treasury Secretary and Obama’s National Economic Council director Larry Summers says he’s never seen a more uncertain recovery – particularly if Congress doesn’t act “strongly and quickly” to keep stimulus flowing during the pandemic.
Amazingly, this puts Summers on the same side of the fence as GOP lawmakers, who are currently pushing to extend enhanced unemployment benefits which lapsed on Friday – albeit to a lesser extent than the $600 per week granted under the CARES Act.
——————————————————————————————————
Leaning against the wind: An empirical cost-benefit analysis – Luis Brandao-Marques, Gaston Gelos, Machiko Narita, Erlend Nier
24 juli
There is no consensus in the literature on the optimal use of macroprudential policy to ‘lean against’ financial vulnerabilities. This column introduces a new empirical approach to study the effects of both macroprudential and monetary policies in response to looser financial conditions. It finds that tighter macroprudential policies can be very effective in mitigating emerging vulnerabilities, mainly by reducing the future volatility of output. In addition, such tightening is best accompanied by looser, not tighter, monetary policy.
——————————————————————————————————
Gundlach Says “Classic Bear Market Rally” Reminds Him Of 1999 – Tyler Durden
25 juli
Jeffrey Gundlach, the billionaire chief investment officer of DoubleLine Capital, was quoted by Reuters on Friday as saying the stock market’s parabolic move in the last couple of months reminds him of the days right before the Dot Com bust.
Gundlach, who oversees a $138 billion fund that is primarily invested in fixed income assets, was troubled by the rapid surge in government debt that has propped up the ailing economy.
——————————————————————————————————
Gorging on Debt to Survive the COVID-19 Economy – Andrew Moran
22 juli
Because the country could not stop for debt, he kindly stopped for the nation.
You venture to your mailbox to find a statement notifying you that you have maxed out your credit card. Instead of making sacrifices and cutting back on your spending, you choose to get another piece of plastic to pay off your old debt. You claim you are debt-free. That is, until you receive the next credit card statement the following month. Does this sound crazy? Well, JPMorgan Chase believes that this could be the panacea to stave off the inevitable decay of the US and global economy, absorbing even more debt than it already has since the fallout of the Great Recession. With the world nearly $200 trillion in debt, what is a few trillion more at this point?
——————————————————————————————————

Disclaimer: De VoL-redactie selecteert deze artikelen op interessante inzichten, of naar wij denken nuttige informatie. Wij kunnen echter geen enkele aansprakelijkheid aanvaarden voor de gevolgen van beslissingen die op grond hiervan door lezers zijn genomen, zakelijk zomin als privé.

Eerdere afleveringen van dit wekelijkse overzicht vindt u hier.