Englund

  Jason Furman, who chaired the White House Council of Economic Advisers under Barack Obama and now teaches at Harvard, recently published a thoughtful critique of former President Joe Biden’s economic policy.  https://www.foreignaffairs.com/united-states/post-neoliberal-delusion The American Recovery and Reinvestment Act, signed in 2009, cost more than $800 billion,  but some economists argued at the time (and still believe) that it should have been bigger, saying it helped make the recovery from the 2008 recession needlessly slow. ---  Stephanie Kelton  berättar om att Obamas rådgivare ville ha ett stimulanspaket på minst 1,3 trillion för att undvika en utdragen recession.  Andra rådgivare ansåg, förmodligen med rätta, att ingenting som slutade på “trillion” skulle gå igenom i kongressen. ” In the end, Obama lost his nerv”, skrev hon. Det blev 787 miljoner i stimulanser – och en långvarig recession.  https://englundmacro.blogspot.com/2020/10/guldet-e...

  Why speculators are still running wild when money is no longer free https://englundmacro.blogspot.com/2025/02/why-speculators-are-still-running-wild.html Storföretagen passade på att låna när de kunde göra det nästan gratis. Jag letar statistik om detta och QE. Mattias Svensson tar i dag upp en viktig fråga. Det gäller förståelsen av vad pengar är och kommer ifrån. Antingen är det en fast storhet, som i Joakim von Ankas Penningbingar, eller något som stiger och sjunker, som monetarister och Keynesianer anser. Denna serie, Monetary Creation and Destruction, är mina tankar om varför tillgångspriserna skenar och varför ekonomin i USA inte har högre inflation trots Bidens enorma stimulanser. Det borde vara värre än det är. Bidenomics, "pop-akademiska modeteorier som MMT", eller vad? Nu över till Mattias. Att låta staten låna och spendera blev ingen framgångsrik strategi för Joe Biden. Den kostade honom sannolikt valet. Inflation hade ingen sett på årtionden  (om man som de fles...

  The blogger who helped spark Nvidia’s $600 billion stock collapse and a panic in Silicon Valley  Jeffrey Emanuel says Wall Street banks that are bullish on Nvidia ‘have absolutely no idea what they’re talking about’ Last Friday afternoon, Jeffrey Emanuel sat down in his Brooklyn apartment and started writing a blog post. For hours, he pounded away on his keyboard while his wife kept their young children occupied and brought him food.  Emanuel worked late into the night, and by early Saturday morning he had written nearly 12,000 words. Emanuel’s manifesto made the case for shorting the hottest company in the stock market. MarketWatch 1 February 2025 https://www.marketwatch.com/story/the-blogger-who-helped-spark-nvidias-600-billion-stock-collapse-and-a-panic-in-silicon-valley-52aba340 Whatever AI’s “Sputnik moment” ultimately means for stocks, the boost to labor productivity may come sooner than expected. In a post on Substack on Monday, Stony Brook University Professor o...

  Sveriges efterlängtade återhämtning hänger på en skör tråd. Även en försiktig general som Erik Thedéen borde rimligtvis leka med tanken att mer räntelättnad under våren vore att föredra Nils Åkesson DI 29 januari 2025  https://www.di.se/analys/riksbankens-rantebana-aldras-snabbt/ Nordeas chefsanalytiker Torbjörn Isaksson kallar dagens besked för ”mer hökaktigt än väntat”. En som riktar skarp kritik mot Riksbankens kommunikation är Avanzas privatekonom Felicia Schön.  Hon lyfter fram att Konjunkturinstitutet och storbankerna har en betydligt mer duvaktig hållning, vilket skapar osäkerhet för svenska hushåll. SvD 29 januari 2025 https://www.svd.se/a/VzLKBl/09-30-riksbanken-ger-nytt-rantebesked https://www.compricer.se/experter/felicia-schon/ Vad säger Frida Bratt? Kommentar RE: Kan verkligen 0,25 procent lägre ränta sätta fart på Sveriges ekonomi? Den stimulansen kommer i huvudsak att öka köpkraften hos högt belånade bostadsägare.  De får lägre månadskostnad och känn...

  Tooze is an economic historian at Columbia University, co-hosts the podcast “Ones and Tooze,” writes the brilliant Chartbook blog and is the author of “Crashed,” the single best history of the 2008 financial crisis.  He’s now out with a new book, “Shutdown: How Covid Shook the World’s Economy,” which tells the story of the unprecedented global economic response to the pandemic. “The world discovered that John Maynard Keynes was right when he declared during World War II that ‘anything we can actually do, we can afford,’” writes Adam Tooze.  “Budget constraints don’t seem to exist; money is a mere technicality. The hard limits of financial sustainability, policed, we used to think, by ferocious bond markets, were blurred by the 2008 financial crisis. In 2020, they were erased.” Ezra Klein New York Times 17 September 2021 https://www.nytimes.com/2021/09/17/opinion/ezra-klein-podcast-adam-tooze.html Covid Showed Us What Keynes Always Knew - Adam Tooze https://englundmacro....

  I morse, i tillståndet mellan dröm och vakenhet, fick jag en storartad tanke, tyckte jag då. Som regel brukar sådana planer raskt falla samman. Men jag gör ett försök. Planen är att skapa begreppet Monetary Creation and Destruction - MCD, på svenska ungefär Att skapa och förinta pengar. Kunde Stephanie Kelton blir världsberömd med MMT kanske jag kan bli berömd i Sverige med MCD. https://englundmacro.blogspot.com/2020/10/guldet-euron-och-budgetunderskottet.html En grundläggande tanke är att monetaristerna, till skillnad från Tea-Party-människorna, har rätt i insikten att mängden pengar kan både öka och minska. Jag inbillar mig inte att ha kommit på något nytt. Keynes och Klas Eklund har säkert förstått och formulerat detta bättre för länge sedan. Precis som att Stephanie Kelton ingalunda är den första som förstått att statens budget inte är som en hushållsbudget. Här några artiklar som kan ge en snabb bakgrund Hur riksbanken får räntan att bli som riksbanken vill. Det räcker ...

America’s sovereign-debt spiral has been building since Washington embarked on large budget deficits in the 1980s. As securities issued at interest rates as low as 0.5% mature, the principal is being rolled into the higher rates of the spot market, at the moment 3.7 percentage points higher.  Higher interest expenses feed into deeper deficits, sparking more borrowing, driving heavier debt loads. This is how the debt spiral spirals—unless, that is, lower rates are engineered by the Federal Reserve, which would cause inflation.  There will be no road left to kick the can down. Let’s run the numbers. Projections to 2034 from the Congressional Budget Office (CBO) assume no recessions, an average primary deficit of 2.6% of GDP, plus 3.6% from debt expense (the latter assuming an effective interest rate on government debt of 3.5%).  In the next ten years, under those assumptions, America’s debt-to-GDP ratio would rise from 99% to 122%. When external pressure at last forces Amer...

Not the only number that matters. Good Debt? Bad Debt? There’s No Such Thing US continues to add to its public debt, which has tripled in the last two decades to almost $36 trillion. Perhaps policy makers believed low rates were the new normal and would last a long time. If so, it was bad risk management. No market condition lasts forever, and good risk management accounts for that. Debt enthusiasts Book Review: The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy by Stephanie Kelton https://blogs.lse.ac.uk/lsereviewofbooks/2020/06/22/book-review-the-deficit-myth-modern-monetary-theory-and-the-birth-of-the-peoples-economy-by-stephanie-kelton/ like to argue that, when it comes to taking on debt, you can’t compare the government to a household: Governments can print their own money to pay their bills.  Allison Schrager Bloomberg 24 December 2024 https://www.bloomberg.com/opinion/articles/2024-12-24/what-is-good-debt-vs-bad-debt-that-s-not-the-right-question ...

Richard J Murphy YouTube 2024 https://www.youtube.com/watch?v=1_vNAY2Nrm0 Highly Recommended Leaders of Rich Nations Are Deeply Unpopular https://englundmacro.blogspot.com/2024/12/leaders-of-rich-nations-are-deeply.html Something has to explain why politicians are now so bad https://www.youtube.com/watch?v=B0osc88WDZ0 Tillbaka till Rolfs länktips 14-15 december 2024 https://englundmacro.blogspot.com/2024/12/rolfs-lanktips-14-15-december-2024.html

MMT-anhängarna fortsätter med sina trollkonster. Om staten vill använda reala resurser (konsumtion, investeringar och transfereringar som har ett realt värde) måste den tillskansa sig dessa genom skatt, lån eller utgivning av pengar.  Ger man ut mycket nya pengar kan det bli inflation  Under vissa perioder då privat sektor vill spara mycket kan staten ge ut mycket pengar och/eller ta upp lån utan att det blir inflation. Men det finns en gräns när det blir knapphet på reala resurser i ekonomin. Om staten då ökar sin användning av reala resurser måste någon annan minska sin användning.  Jesper Hansson, senior ekonom på Swedbank DI 1 november 2024 https://www.di.se/debatt/replik-sluta-med-trollkonsterna/ Stephanie Kelton och andra MMT-ekonomer anser att finanspolitiken är det bästa sättet att stabilisera ekonomin – Begränsningen bör vara inflationen, inte om statsbudgeten går med plus eller minus https://englundmacro.blogspot.com/2024/04/a-radical-theory-is-spreading-as.html...

  Never before has the US entered an economic downturn with a combined federal, state, and local budget deficit anywhere near 8pc of GDP. It is a global accident waiting to happen. The public accounts should be near balance at this stage of the cycle, years into a long economic expansion. Chronic debt issuance on this scale would strain the world’s appetite for US Treasuries, blunting the ability of the US government to fight a prolonged slump with countercyclical stimulus. America will keep spending money like a drunken sailor until the world stops funding it Washington’s unchecked borrowing is evidence of a decadent society that has lost all self-discipline “Markets could at some point question fiscal sustainability. We know from experience that things look sustainable until, suddenly, they no longer do,”  said Claudio Borio, veteran economist at the Bank for International Settlements. He was too tactful to single out the US but we can guess who he was talking about. Ambrose...

The US government’s finances keep looking worse. The latest Congressional Budget Office projections suggest that it will need to borrow an added $400 billion this year to cover its budget deficit — and trillions more over the next decade. Investors have plenty of legitimate reasons to worry about this trend.  The immediate effect on money markets isn’t one of them.  Fed is being very careful to ensure that banks have ample reserves to meet their liquidity needs, precisely to avoid a repeat of the 2019 turmoil. The US is taking a big risk by running large and chronic fiscal deficits. The more it borrows, the greater the chance it’ll end up in a vicious cycle, in which government debt and interest rates drive one another inexorably upward. It's impossible to know when investors will decide that such risks are too much to bear, as the bond vigilantes famously did in the 1990s. When it happens, it tends to be sudden and brutal.  This is the concern that should be paramount. B...

I think the answer is December 19, 2029. (Please note, sarcastic humor and not a forecast.) The CBO now projects federal debt will reach $50.7 trillion in 2034 which will, if their other economic assumptions are correct, equal 122% of GDP. I expect our political heroes to keep kicking the can down the road until the road gets too steep, as it will at some point. The limits are real. Private investors can’t and won’t buy government debt whose repayment is doubtful in real inflation-adjusted terms—or will demand such high rates the debt will explode even higher. This came to mind as I was thinking about the magisterial 2009 book This Time Is Different by Carmen Reinhart and Ken Rogoff.  - Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang!, confidence collapses, lenders disappear, and a crisis hits. - There is no way to know when it will happen. There is no magic debt level, no magic drop in currencies, no percen...

Michael Ohlrogge Ohlrogge, an associate professor at New York University Law School, argues that when banks fail, the F.D.I.C. is not resolving them in the manner that is least costly to its Deposit Insurance Fund. If he’s right, then the F.D.I.C. is going against the explicit instructions of Congress, so this is kind of a big deal.  My impression is that F.D.I.C. staff members believe they are complying with Congress’s instructions, so this is a case of two sides looking at the same facts and drawing very different conclusions. The issue Ohlrogge raises is how the F.D.I.C. handles uninsured deposits. But in a vast majority of bank failures, the F.D.I.C. approves a resolution in which the uninsured depositors don’t lose a penny. They are treated exactly as well as insured depositors.  This is typically done by finding another bank that is willing to buy the entire failed bank, which entails purchasing all of its assets (such as loans) and assuming all of its liabilities, inclu...

Investors around the world value US equities more highly than ever before  Jamie Dimon was recently asked: “If you had to describe the US economy, how resilient is it?” His answer was unequivocal: “Basically, it's booming.”  JPMorgan is one of 17 US-based firms that make up the 20 most valuable companies in the world by stock market value, Bloomberg 2 maj 2024 https://www.bloomberg.com/opinion/articles/2024-05-02/in-jamie-dimon-s-america-the-stock-market-has-already-voted The fiscal scale of Bidenomics is larger than Roosevelt’s New Deal in the 1930s https://englundmacro.blogspot.com/2023/09/the-fiscal-scale-of-bidenomics-is.html

Min egen uppfattning är denna: Vi har budgetbalans. Staten utgifter, exklusive räntor på statsskulden är 1.000 miljarder. Så av någon anledning minskar statens inkomster med 100 miljarder (Exporten går sämre osv). Då uppstår ett budgetunderskott. Men det är inte stimulerande. Det är statens utgifter som stimulerar.  Beställningar till Bofors för kanoner stimulerar ekonomin, förutsatt att  det inte finansieras med högre skatter. Har jag uppfunnit hjulet? Nej, men jag har påmint om en sak som ofta glöms bort. Här några axplock ur debatten: For over a decade, numerous economists – primarily but not exclusively on the left – have argued that the potential benefits of using debt to finance government spending far outweigh any associated costs.  The notion that advanced economies could suffer from debt overhang was widely dismissed, and dissenting voices were often ridiculed.  Even the International Monetary Fund, traditionally a stalwart advocate of fiscal prudence, began...

What If Fed Rate Hikes Are Actually Sparking US Economic Boom? It’s an idea so radical that in mainstream academic and financial circles, it borders on heresy — the sort of thing that in the past only Turkey’s populist president, Recep Tayyip Erdogan, or the most zealous disciples of Modern Monetary Theory would dare utter publicly. But the new converts say the economic evidence is becoming impossible to ignore.  The expansion now is as strong or even stronger than it was when the Federal Reserve first began lifting rates. The jump in benchmark rates from 0% to over 5% is providing Americans with a significant stream of income from their bond investments and savings accounts for the first time in two decades. “The reality is people have more money,” These people — and companies — are in turn spending a big enough chunk of that new-found cash, the theory goes, to drive up demand and goose growth. Kevin Muir and the rest of the contrarians — Greenlight Capital’s David Einhorn is the ...

Och då främst för att stötta kommunerna och regionerna, som har det tufft. Inflationen har drivit upp kostnaderna medan den försvagade arbetsmarknaden pressar skatteintäkterna. Inflationen har sjunkit kraftigt. Konjunkturen är fortsatt svag. Argumenten för att under dessa omständigheter hålla välfärden på svältkur är svaga.  DN 2 februari 2024 https://www.dn.se/ledare/riksbanken-vantar-men-finansministern-behover-agera-redan-nu/ Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken. Rolf Englund blogg 5 december 2009 https://englundmacro.blogspot.com/2014/08/skriande-uppenbart.html Den Österrikiska skolan, med Hayek i spetsen, brukar hävda att krisen måste ha sin gång.  Man skulle kanske kunna förklara deras synsätt med Ensamma Mamman contra villaägarna.  Om uppgången före kraschen skedde genom våldsamt stegrade barnbidrag skulle de ha lett till att ensamma mamman skyndade till Lindex o...

 Germany’s government’s attempt to repurpose €60 billion /600 miljarder SEK/ in unused pandemic funds for climate spending was ruled unconstitutional in November. Germany’s predicament stems from a decision in 2009 to amend its Basic Law to include a debt brake — a stringent stipulation that net government borrowing shouldn’t exceed 0.35% of gross domestic product.   much criticized outside of Germany https://www.bloomberg.com/opinion/articles/2019-10-23/germany-s-debt-brake-is-unnecessary-drag-on-slowing-economy And the debt brake isn’t totally inflexible: It can be disregarded during emergencies such as the pandemic and the energy crisis — it has been suspended for the last four years — and provides leeway for more borrowing during an economic downturn (which must be counterbalanced during the recovery). However, it has at least one fundamental flaw: The borrowing limit fails to distinguish between current consumption expenditures (such as welfare payments) and long-ter...

Det tillkom i kris.  Per Molander, vid tiden en opolitisk tjänsteman på finansdepartementet, brukar skrivas som upphovsman  Jens Henriksson – den radikale skåningen bland Perssons alla brittiskt influerade blairiter – har sagt att han formulerade överskottsmålet med Ingemar Hansson hängande över axeln.  En gång på ett mingel ställde jag frågan om upphov till Leif Pagrotsky som genast tillkallade Lars Heikensten och Inga-Britt Ahlenius och sedan blev jag stående där i en timme. Poängen var i alla fall att ramverket fjättrade politiken.  Reglerna infördes 1996. Och sedan blev de kvar. Det är en annan sak svenskar är bra på, att hålla fast vid konsensus.  2023 Ett år när Calmfors och Kalays kom överens. Och regeringens kristdemokrater följde efter, trendkänsliga som de är. Gammal konsensus ut, ny konsensus in. Ring, klocka, ring. Torbjörn Nilsson SvD 1 januari 2023 https://www.svd.se/a/y6q9AE/nilsson-fnisset-i-starta-pressarna-borjan-pa-en-revolution "Om man har en...