Links. Financialization, Post-Roman decline, Greek proposals (auch edition), dark internet trade
1) The latest from Josh Mason: Disgorge the cash. He states that, according to mainstream theory, wealth owners don’t care about the liquidity of their wealth. Money or equity in their own company, it’s all the same. In reality, however, they do. He shows that rentiers love money. And they want it now. As a consequence,
The Federal Reserve has certainly succeeded at making it cheaper for corporations to borrow, and in the postwar decades, when today’s policy consensus took shape, abundant credit would have offered strong encouragement for higher investment. In that context, it made sense to think of credit as the “gas pedal” or “thermostat” of the economy, which the central bank could raise or lower at will. But in the financialized economy, the link between credit availability and real production and job growth is much less reliable. Today, rentier-dominated firms use cheaper credit primarily to boost dividends and stock buybacks. This means there is no longer a strong link between real spending and corporate borrowing. This is a serious problem for monetary policy, since it is this real spending that boosts GDP and employment. Without a strong link between financing and investment, it is more difficult to use lower interest rates to raise employment and wages. To the extent the policy is effective, it must rely more on the few sectors of the economy where real activity remains interestsensitive — most recently, the housing sector. And the costs of responding to all demand shocks by inducing offsetting swings in housing-related borrowing are now all too apparent.
2) This weekend it was ‘peak pollen’ where I live, which meant that I had to stay indoors. As a second best I read up on a pet subject of mine, The Great Post-Roman Demographic catastrophe’. European economic history make more sense when you realize that, around 400 or so, population density in many areas must have fallen back almost to hunter-gatherer levels. Europe was rewilding and, for one thing, forests increased rapidly. Some results (mind that one of the fun thing of economic history are the sources used, like lead content in Antarctic ice cores which spiked during the heyday of the Roman empire, which used a lot of lead):
Archaeological surveys and rescue archaeology have now dated the disappearance of occupied sites in late antiquity with considerable precision, especially in the Rhône valley and northern Gaul [but also in Friesland, M.K.]. Landscape archaeology has shown a conversion from arable to pasture and reforestation during the same period. Recent studies of the climate of the first millennium show that this was also an extended period of wet and cold climate. … A preliminary suggestion made here is that since reversion from arable to pasture affected regions as far apart as Italy and Poland it cannot simply be ascribed to the political and fiscal dislocation of the ancient world, but should be understood as one effect of the climatic anomaly.
Do not underestimate the magnitude of this kladeradatsch. Time series on femur length, lead content of ice cores, ship wrecks or wooden archeological finds all show this pattern:
3) The Greek reform proposals. Dan Davies has a 1 star review, I’m afraid I’m not going to contest this. I’ve been critical (not to say derogatory) about the ‘abolishing the siesta will save the banks’ Troika proposals for Cyprus. This is comparable, but less practical. However, I indeed wouldn’t mind to have a two month holiday, paid for by the Greek state, to check out real life VAT-compliance of Greek bars and restaurants… What they should have done is totally using the language and retorica of the Cyprus MoU but changing the framing of the proposals from the ultra short ‘disgorge the cash’ term to the medium term and long term and from saving the banks to saving households and fighting corruption.
4) Dark Leviathan about libertarian traders on the ‘hidden internet’ who quickly succumbed to oppression and even murder to enforce contracts… Not a dystopian story but real life market behavior.