Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Inflation’

No, Inflation Doesn’t Erode the Burden of Debts

Posted by hkarner - 11. August 2015

Posted on August 10, 2015 by , Naked Capitalism

By Nathan Tankus, a writer from New York City. Follow him on Twitter at @NathanTankus

It is commonly argued that inflation erodes debts. However, the usual defenses amount to little more then circular logic. Take this for example from Paul Krugman

In major economies, very few debtors have received a break. And far from being inflated away, the burden of debt has been aggravated by falling inflation, which is running well below target in America and near zero in Europe.

The source of the confusion here is that it is popular do divide key economic variables by abstract measures of the prices across the economy (such as the Consumer Price Index). This makes sense sometimes but in other situations become nonsensical. Debt is one such example. In the United States most people have debts denominated in U.S. Dollars. A useful proxy for the burden of debt is the ratio between an individual’s or sector’s nominal debt to its nominal income. Den Rest des Beitrags lesen »

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EZB-Chefökonom: “Niedrige Zinsen sind nur kurzfristige Belastung”

Posted by hkarner - 14. Juni 2015

Interview | András Szigetvari, derstandard.at, 13. Juni 2015, 08:00

Praet ccLangfristig sind die derzeitigen Niedrigzinsen für alle ein Gewinn, sagt EZB-Chefökonom Peter Praet, auch für Sparer

STANDARD: Die EZB mischt sich seit Krisenausbruch intensiv in politische Debatten ein, schreibt Ländern vor, was sie tun sollen. Überschreiten Sie nicht Ihr Mandat?

Praet: Die EZB trifft geldpolitische Entscheidungen, um ihr Ziel, die Gewährleistung von Preisstabilität, zu erreichen. Wir äußern uns hörbar zu Strukturreformen, wenn dies im Rahmen unseres vertraglich festgeschriebenen Mandats für notwendig gehalten wird. In dieser Hinsicht unterscheiden wir uns beispielsweise von der Federal Reserve in den USA, die sich nie an solchen Debatten beteiligen würde.

STANDARD: Das ist für viele ein Problem.

Praet: Oft wird uns geraten, uns allein auf Geldpolitik zu konzentrieren. Aber in einer Währungsunion haben die Länder die Flexibilität verloren, die ein eigener Wechselkurs bietet. Solide Governance und effektive Institutionen sind also von zentraler Bedeutung. Das gilt für die Arbeits- und Gütermärkte, die Justiz und für die Verwaltungsbehörden. Das ist notwendig für eine wirksamere Geldpolitik in einer Währungsunion, und deshalb sagen wir den Regierungen, dass strukturelle Reformen wichtig sind. Dabei ist es für uns nicht von Interesse, wie Länder die Reformen durchführen. Das ist ihnen überlassen. Uns interessiert, ob sie erfolgreich sind. Allerdings möchte ich selbstkritisch anmerken, dass unsere Botschaften in der Vergangenheit zu sehr wie ein Mantra klangen. Den Rest des Beitrags lesen »

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The QE Placebo

Posted by hkarner - 11. Juni 2015

Date: 10-06-2015
Source: Project Syndicate

Daniel Gros is Director of the Brussels-based Center for European Policy Studies. He has worked for the International Monetary Fund, and served as an economic adviser to the European Commission, the European Parliament, and the French prime minister and finance minister. He is the editor of Economie Internationale and International Finance.

BRUSSELS – It has now been nearly half a year since the European Central Bank declared its intention to buy some €1.1 trillion ($1.3 trillion) worth of eurozone bonds. When it first announced the so-called “extended asset-purchase program” in January, the ECB emphasized that it was only expanding an existing program, under which it had been buying modest quantities of private-sector bonds, to cover government paper. But this pretense of continuity was just that: a pretense.

In reality, by purchasing large volumes of government bonds, the ECB was crossing the Rubicon; after all, it is explicitly prohibited from financing governments. The ECB’s defense was that that the program was the only way to move inflation closer to its target of approximately 2%. Moreover, it pointed out, it was merely following the example of other major central banks, including the Bank of England, the Bank of Japan, and especially the US Federal Reserve, whose program of quantitative easing (QE) entailed the purchase of more than $2 trillion worth of long-term securities from 2008 to 2012. Den Rest des Beitrags lesen »

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Inflation expectations spur consumption

Posted by hkarner - 10. Juni 2015

Francesco D’Acunto, Daniel Hoang, Michael Weber 09 June 2015, voxeu

From the Great Recession to the present day, policymakers around the world have been arguing about which policies may increase aggregate demand and bring the economy back to its steady-state growth path. The major problem is that conventional policies – such as lowering nominal interest rates – are not in the policy toolbox because rates have hit the zero lower bound (Bernanke 2010, Blanchard et al. 2010). Macroeconomic theory suggests that managing inflation expectations may be a useful policy measure: higher inflation expectations would lower the real interest rates in times of fixed nominal rates (the Fisher equation), and lower real rates would stimulate consumption (the Euler equation). Surprisingly, there has been no evidence in micro data thus far that these intuitive channels may indeed spur the readiness of households to spend. If anything, the current literature suggests no effect of inflation expectations on readiness to consume (Bachmann et al. 2015). Den Rest des Beitrags lesen »

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Inflation Returned to Eurozone in May

Posted by hkarner - 3. Juni 2015

Date: 02-06-2015
Source: The Wall Street Journal

Eurozone consumer prices rose for the first time in six months, averting a slide into deflation

The Mall of Berlin shopping center. There was some evidence that strengthening consumer demand is helping to raise the prices of goods and services.

Eurozone consumer prices rose for the first time in six months during May, a significant victory for the European Central Bank in its campaign to avert a slide into deflation that could have derailed the currency area’s fragile economic recovery. Den Rest des Beitrags lesen »

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The Inflation Puzzle

Posted by hkarner - 1. Juni 2015

Unfortunately, Mr. Feldstein, the world has changed faster than the intelligence of the economics profession! (hfk) 

Date: 30-05-2015
Source: Project Syndicate


Martin Feldstein, Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research, chaired President Ronald Reagan’s Council of Economic Advisers from 1982 to 1984. In 2006, he was appointed to President Bush’s Foreign Intelligence Advisory Board, and, in 2009, was appointed to President Obama’s Economic Recovery Advisory Board. Currently, he is on the board of directors of the Council on Foreign Relations, the Trilateral Commission, and the Group of 30, a non-profit, international body that seeks greater understanding of global economic issues.

CAMBRIDGE – The low rate of inflation in the United States is a puzzle, especially to economists who focus on the relationship between inflation and changes in the monetary base. After all, in the past, increases and decreases in the growth rate of the monetary base (currency in circulation plus commercial banks’ reserves held at the central bank) produced – or at least were accompanied by – rises and falls in the inflation rate. And, because the monetary base is controlled directly by the central bank, and is not created by commercial banks, many believe that it is the best measure of the impact of monetary policy.

For example, the US monetary base rose at an annual rate of 9% from 1985 to 1995, and then slowed to 6% in the next decade. This decelerating monetary growth was accompanied by a slowdown in the pace of inflation. The consumer price index (CPI) rose at a 3.5% rate from 1985 to 1995, and then slowed to just 2.5% in the decade to 2005. Den Rest des Beitrags lesen »

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Partying Like It’s 1995

Posted by hkarner - 10. März 2015

Date: 09-03-2015

Source: Paul Krugman

Six years ago, Paul Ryan, who has since become the chairman of the House Ways and Means Committee and the G.O.P.’s leading voice on matters economic, had an Op-Ed article published in The Times. Under the headline “Thirty Years Later, a Return to Stagflation,” he warned that the efforts of the Obama administration and the Federal Reserve to fight the effects of financial crisis would bring back the woes of the 1970s, with both inflation and unemployment high.

True, not all Republicans agreed with his assessment. Many asserted that we were heading for Weimar-style hyperinflation instead.

Needless to say, those warnings proved totally wrong. Soaring inflation never materialized. Job creation was sluggish at first, but more recently has accelerated dramatically. Far from seeing a rerun of that ’70s show, what we’re now looking at is an economy that in important respects resembles that of the 1990s. Den Rest des Beitrags lesen »

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Für das globale Pyramidenspiel gibt es nur Wachstum oder Kollaps

Posted by hkarner - 9. März 2015

… und weil wir in der Post-Wachstumsökonomie leben, bleibt also nur …? (hfk)

08.03.2015 | 18:34 | Nikolaus Jilch (Die Presse)

Die EZB beginnt heute mit dem Kauf von Staatsanleihen. Ein Schritt, der bei der Euro-Einführung 1999 als absolut undenkbar galt. Mit gutem Grund.

Berta Bundesrepublik und Otto Österreicher wollen von ihrer Währung nur eines: Stabilität. Auch wenn sie zu jung sind, um es selbst miterlebt zu haben: Die Tragödien vergangener Geldentwertungen haben sich tief ins kollektive Gedächtnis ihrer Länder eingebrannt. Aber sie sind nicht alleine. Ihre Freunde aus Italien, Spanien und Frankreich – aus Osteuropa und sogar die Bekannten aus Griechenland kennen die Nachteile der Inflation nur zu gut.

Jahrzehntelang haben sich die jeweiligen Machthaber dieser Länder immer und immer wieder der Inflation bedient – und die Währung entwertet, statt notwendige Reformen durchzuführen. Jahrzehntelang? Ach was. Jahrhundertelang! Der Aufstieg und Fall von Nationen und Imperien war nicht nur stets von Krieg begleitet – sondern auch vom Aufstieg und Fall ihrer jeweiligen Währungen.

Ohne Ausnahme waren es dabei die Mächtigen, die „Währungshüter“ ihrer Zeit, die das Geld am Ende zerstört haben – und die finanzielle Existenz ihrer Untergeben gleich mit. Die Bürger und Bürgerinnen hatten da nie etwas mit zu reden, den meisten muss diese bewusste Inflations-Politik sogar wie eine unvermeidliche Naturkatastrophe vorgekommen sein. Den Rest des Beitrags lesen »

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Race to the bottom

Posted by hkarner - 26. Februar 2015

Date: 25-02-2015
Source: The Economist

Consumer prices IndiaINFLATION rates around the world have been sinking over the last three years. Pervasive economic weakness in the rich world and a slowdown in Chinese growth drove the initial decline. Lately tumbling oil prices have helped to push inflation into negative territory across much of the euro area. America, Britain and China, where inflation rates have dropped below 1%, may soon join Europe in deflation. Falling prices for things like petrol have been “unambiguously good” for consumers, in the words of Mark Carney, the governor of the Bank of England. But broad and persistent deflation is not a healthy thing for a modern economy. It will make big debts harder for households and governments to repay, and it could hinder central banks looking to perk up slumping economies.

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Rethinking the Global Currency System

Posted by hkarner - 9. Februar 2015

Author: David Nowakowski  ·  February 6th, 2015  ·  RGE EconoMonitor

From a talk by Professor Kenneth Rogoff; January 15th 2015.rogoff

All of the views are Rogoff’s (as best I could jot them down and interpret them), except where [bracketed], which are my comments.

[Rogoff talked to a powerpoint on the above topic a few weeks ago, which was more about individual monetary regimes in today’s world than a global monetary system or  arrangement of exchange rates, as the title might suggest. Of course, there is no such framework whatsoever.  –DN]


To begin with, the current state of affairs has turned the monetary world upside down. Central banks in Advanced Economies face problems they have never before faced, and don’t understand. QE is being used, but is not a great tool and we don’t fully grasp it [its effects, benefits, risks, or how to calibrate].

Over modern history, paper currency has always produced inflation over the longer term, even in the absence of large gold discoveries. Examples: Den Rest des Beitrags lesen »

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