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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Money Isn’t Neutral: Why Economic Stabilization Schemes Are Counterproductive – Frank Shostak
24 maart
For most commentators economic stability refers to an absence of excessive fluctuations in key economic data such as real gross domestic product (GDP) and the consumer price index (CPI).
An economy with constant output growth and low and stable price inflation is likely to be regarded as stable. An economy with frequent boom-bust cycles and variable price inflation would be considered as unstable.
According to popular thinking stable economic environment in terms of stable price inflation and a stable output growth acts as a buffer against various shocks. This makes it much easier for businesses to plan. In this way of thinking in particular, price level stability is the key for economic stability.
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‘Dash for cash’ versus ‘dash for collateral’: Market liquidity of European sovereign bonds during the Covid-19 crisis – Emanuel Moench, Loriana Pelizzon, Michael Schneider
23 maart
In March 2020, a ‘dash for cash’ driven by the Covid-19 crisis affected the liquidity of the US Treasury bonds market as well as numerous other financial markets around the globe. This column investigates how euro area sovereign bond markets fared during the same period. While deteriorations in sovereign debt market liquidity are evident, these appear to be driven by a ‘dash for collateral’ in euro-denominated safe assets. This suggests some differences from the US experience, as well as variations across European countries.
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***Do We Really Think a Band-Aid Will Heal a Tumor? – Charles Hugh Smith
24 maart
Borrowing a quarter of the nation’s entire economic output every year to prop up an ineffective, corrupt status quo is putting a Band-Aid over a tumor.
If we misdiagnose the disease, our treatment won’t work. We’re all familiar with medical misdiagnoses, which lead to procedures and prescriptions that can’t possibly fix the patient’s illness because the source has been missed or misinterpreted.
Medical diagnoses are often tricky, as many general symptoms can arise from a variety of sources.
Social and economic ills can also be tricky to diagnose, and the diagnosis is hindered by political polarization and sacrosanct orthodoxies which make it difficult to have a rational discussion in public about many difficult issues.
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Climate change and central banks: Introducing the expectations channel – Alexander Dietrich, Gernot Müller, Raphael Schoenle
22 maart
Climate change has emerged as a major challenge for central banks, although its extent and the immediate consequences are highly uncertain. This column uses a survey of over 10,000 US consumers to show that irrespective of when and how climate change actually plays out, what matters for monetary policy is how people expect it to play out. Central bankers ignore the expectations channel of climate change at their peril.
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Defining inequality so it can’t be fixed – John H. Cochrane
24 maart
In one of their series of excellent WSJ essays, Phil Gramm and John Early notice that conventional income inequality numbers report the distribution of income before taxes and transfers. After taxes and transfers, income inequality is flat or decreasing, depending on your starting point.
Source: Phil Gramm and John Early in the Wall Street Journal
If your game is to argue for more taxes and transfers to fix income inequality, that is a dandy subterfuge as no amount of taxing and transferring can ever improve the measured problem!
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New central banking calls for a European Credit Council – Eric Monnet
26 maart
Since 2008, a new central banking model has emerged. Monetary authorities increasingly engage in targeted lending, hold large amounts of public debt, and focus on climate change. This column argues that the new practices of central banks call for an updated institutional framework in order to maintain democratic legitimacy. It proposes the creation of a European Credit Council, which would provide impartial assessments of the ECB’s decisions, particularly those with large distributional consequences. In addition, it would develop proposals for coordinating monetary policy with other EU policies and reinforce the role of the European Parliament.
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There’s A Serious Flaw To The Team Powell-Yellen Inflation Scheme – MN Gordon
26 maart
If you’re a wage earner, retiree, or a lowly saver, your wealth is in imminent danger.
A lifetime of schlepping and saving could be rapidly vaporized over the next several years. In fact, the forces towards this end have already been set in motion.
Indeed, there are many forces at work. But at the moment, the force above all forces is the extreme levels of money printing being jointly carried out by the Federal Reserve and the U.S. Treasury.
Fed Chairman Jay Powell and Treasury Secretary Janet Yellen have linked arms to crank up the printing presses in tandem.
This is what’s driving markets to price things – from copper to digital NFT art – in strange and shocking ways. But what’s behind the money printing?
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If Deficits Don’t Matter, Why Bother with Taxes? – Peter St. Onge
25 maart
On March 18, Joe Wiesenthal of Bloomberg Markets had MMT economist Stephanie Kelton on the show. If you’re not familiar with modern monetary theory, they think governments should print more money because deficits aren’t a big deal. At one point in the show, Wiesenthal asked, “If we don’t need to worry about deficits, why do we have taxes?” Kelton’s response was illuminating.
Now, the traditional excuse for taxes is, paraphrasing Oliver Wendell Holmes, that they are the “price of civilization.” Skeptics point out that, historically, societies with very low taxes were often far more civilized—think the Dutch Golden Age, Islamic Golden Age, Victorian England, the pejoratively named “Gilded Age” in American history—that thirty-year golden age when almost everything useful was invented. And, yet, throughout that period, federal receipts were one-fifth what they are today.
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***We Don’t Need The Great Reset, We Need The Great Rebalancing – Charles Hugh Smith
22 maart
Perhaps we have collectively “lost our mind.” Perhaps what we need is not a new technology but a new way of living that uses existing technologies to echo “old ways” that worked rather well on much lower energy consumption.
The Great Reset is much in the news–the proposed top-down plan for combating climate change designed by the global elites, who then as now will be jetting around in private aircraft while dictating exactly how the rest of us will reduce our carbon footprints.
My CLIME proposal takes a much different approach: change the way money is created and people are paid to create a new incentive structure that lets people and communities decide how best to reduce energy consumption and waste and address scarcities. (CLIME is described in my books A Radically Beneficial World: Automation, Technology and Creating Jobs for All and A Hacker’s Teleology: Sharing the Wealth of Our Shrinking Planet.)
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***What’s Behind the Stunning Spike in Used Vehicle Auction Prices? That Consumers Aren’t on Buyers Strike Shows Something Big about Inflation Has Changed – Wolf Richter
27 maart
Need a used pickup truck? Forget it, or pay out of your nose for it. But even spurned mid-sized cars are seeing stunning price increases.
Prices of used cars and trucks of up to eight years old that were sold at wholesale auctions during the week ended March 21 jumped by 3.1% from the prior week, according to data by J.D. Power on Friday. Over the past four weeks, prices have spiked by 8.3%. Compared to early March 2020, just before the end of the Good Times, prices have spiked by 19.5%
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The invisible burden: How arrears could unleash a banking crisis – Erica Bosio, Rita Ramalho, Carmen Reinhart
22 Maart
In sub-Saharan Africa, the government is one of the biggest purchasers of works and services in the economy. Countries in sub-Saharan Africa are also the least efficient when it comes to paying outstanding invoices. This column estimates that the size of government arrears in sub-Saharan Africa was 4.26% of GDP in 2019, and likely increased by an average of 1.92 percentage points of GDP across the region in 2020. Financing the COVID relief and recovery programmes by delaying payments is negatively affecting suppliers and contractors at a time when liquidity is crucial for firm survival, which in turn burdens the banking sector and increases the likelihood of a banking crisis.
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The Crisis of Venture Capital: America’s Broken Start-up System – Jeffrey Funk
24 maart
Unicorn startups are even more unprofitable than those that did not achieve Unicorn status.
About 90% of America’s Unicorn startups, ones privately valued at $1 Billion or more, were losing money in 2019 or 2020. According to my recent article in American Affairs, only 6 of 73 were profitable in 2019 and 7 of 69 in the first two or three quarters of 2020 despite most being founded more than 10 years ago.
The six profitable start-ups in 2019 included three fintech (GreenSky, Oportun, and Square) and one startup each in e-commerce (Etsy), video communications (Zoom), and solar energy installation (Sunrun). For the first few quarters of 2020, three of these firms became unprofitable (Oportun, Square, and Sunrun), and four others became profitable: three e-commerce companies (Peloton, Purple Innovation, and Wayfair) and one cloud storage service (Dropbox).
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Rising temperatures, melting ratings – Patrycja Klusak, Matthew Agarwala, Matt Burke, Moritz Kraemer, Kamiar Mohaddes
25 maart
Enthusiasm for ‘greening the financial system’ is welcome, but does the explosion of ‘green’ finance indicators reflect the science? This column reports research that uses artificial intelligence to construct the world’s first ‘climate smart’ sovereign credit rating. The results warn of climate-driven downgrades as early as 2030.
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Why Beijing Wants a Digital Yuan – Joseph Solis-Mullen
26 maart
In his 2011 book On Russia, former US secretary of state Henry Kissinger used the ancient Chinese game of Weiqi, or Go, as it is also commonly known, as an extended metaphor to conceptualize and explain the decisions of the Chinese regime in both foreign and domestic policy. A game of strategic domination akin to chess, Go is won by building and maintaining key positions around the board, rather than by any strategy of outright attrition. Understood as one of the stones placed upon the board, the digital yuan joins the Belt and Road Initiative (BRI), the Regional Comprehensive Economic Partnership (RCEP), and militarization of the South China Sea as part of a strategy for squeezing US positions both internationally and domestically.
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Global pricing of carbon-transition risk – Patrick Bolton, Marcin Kacperczyk
24 maart
A company’s carbon-transition risk – associated with curbing carbon emissions within a relatively short period of time – is proportional to the size and growth rate of the company’s carbon emissions. This column asks whether companies with different carbon emissions have different stock returns. The total level of a company’s CO2 emissions and the year-by-year growth in emissions significantly affect its stock returns in most geographic areas of the world. The increasing cost of equity for companies with higher emissions can be a form of carbon pricing by investors seeking compensation for carbon-transition risk.
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As “Rent Spreads” Shrink, Exodus Ends? Rents in San Francisco & Silicon Valley at Multiyear Lows, but Soar in Sacramento, Fresno, Lake Tahoe Area – Wolf Richter
26 maart
At what point does the shrinking difference no longer justify the move? But wait… the Exodus for the Sierra Nevada isn’t driven by savings.
People’s reaction to the changing work environment during the Pandemic, particularly to the sudden explosion of unemployment and the switch by major companies and government entities to working from home, have thrown the apartment market into total turmoil, with people leaving large expensive city centers and moving to distant locations, or just moving further afield into smaller towns or the mountains. This shows up in plunging rents in those expensive cities and in soaring rents in the move-to areas. This is precisely the scenario in the San Francisco Bay Area, where a massive shift in rents has played out.
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Supply chains and the economic effects of lockdowns – Hiroyasu Inoue, Yohsuke Murase, Yasuyuki Todo
25 maart
The economic benefit from lifting lockdowns may depend significantly on the lockdown strategies of other regions and countries due to supply chain links. This column analyses the importance of supply chain links in this context by conducting a simulation analysis applying rich firm-level data from Japan to an agent-based model of production. It finds that the production of two regions can attain greater recovery by lifting their lockdowns together when they are closely linked through supply chains in either direction. These results point to the need for policy coordination among regions when regional governments impose or lift lockdowns.
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Economic Prosperity Is a Prerequisite for All Other Kinds of Prosperity – Brian Carus
25 maart
Recently, while reading Liberalism: In the Classical Tradition, written by Ludwig von Mises in the year 1927, I noted a striking passage, right in the beginning on page 4:
All that social policy can do is to remove the outer causes of pain and suffering; it can further a system that feeds the hungry, clothes the naked, and houses the homeless. Happiness and contentment do not depend on food, clothing, and shelter, but, above all, on what a man cherishes within himself. It is not from a disdain of spiritual goods that liberalism concerns itself exclusively with man’s material well-being, but from a conviction that what is highest and deepest in man cannot be touched by any outward regulation. It seeks to produce only outer well-being because it knows that inner, spiritual riches cannot come to man from without, but only from within his own heart. It does not aim at creating anything but the outward preconditions for the development of the inner life. And there can be no doubt that the relatively prosperous individual of the twentieth century can more readily satisfy his spiritual needs than, say, the individual of the tenth century, who was given no respite from anxiety over the problem of eking out barely enough for survival or from the dangers that threatened him from his enemies.
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***Firms and labour markets in times of violence: Evidence from the Mexican Drug War – Hâle Utar
28 Maart
The Mexican Drug War, including the ostentatious killings and the targeting of civillians, has been amply covered in the media. What is less known are the economic impacts of the violence, particularly at the firm level. This column presents evidence from Mexican firms, focusing on the differing experiences of ‘blue-collar’ and ‘white-collar’ organisations. The results suggest that violence can cause a negative labour supply shock, particularly in sectors that more frequently employ lower-skilled female workers.
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Central Planning by Business Is Not the Same as Central Planning by Government – Antony Sammeroff
24 maart
Advocates of capitalism say: “CENTRAL PLANING DOESN’T WORK!”
Also advocates of capitalism: “CORPORATIONS DO WORK!”
Sensible socialist: “Uhhh … aren’t corporations all centrally planned?”
This is a relatively new, and even imaginative critique of markets which has recently been circulating the meme-o-sphere. It looks like a pretty clever point at first glance, but it completely misses the mark on how and why markets work and why we advocate for them. There are several key differences between a so-called central plan issued by the CEO of a company and those issued by a commissar, or even a democratically elected senate or parliament.
Do the people whom services are produced for actually like the product? How can we tell? Well, on the free market people have limited resources and they need to make choices on what to spend those on. There is a tendency for them to buy the things they value the most first, and to get the stuff they could make do without if they have enough left over. This means that businesses have the feedback mechanism of profit and loss to let them know if, when it comes to the crunch, people value what they are selling enough to buy it at the expense of everything else they could possibly buy instead. This lets them know if their “plan” is any good or not. The government has to tax people and then make a wild guess.
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