Home > Uncategorized > Links. Luther, loans and capital. And: Italian central bank discovers old truth.
Links. Luther, loans and capital. And: Italian central bank discovers old truth.
- The explosive influence of mister Luther. The European 16th century reformation is resurfacing as a political and economic watershed. Jeremiah (of all names…) Ditmar and Skipper Seabold show how fast (we knew that already) and, especially how much (that’s new: epic) Luther’s 95 theses, hammered to the door of an obscure church in an obscure place, influenced the content of printing and how fast this led to new rules and laws.
- Ravi Kanbur and Joseph Stiglitz discover than, when we talk about wealth, balance sheets have two sides, one side (liabilities) which basically is about ownership rights and power and another which is the value of real and financial assets. Quote: “what Piketty and others measure as wealth ‘W’ is a measure of control over resources, not a measure of capital K, in the sense that that is used in the context of a production function.“. To estimate this ‘production function capital’ the value of financial capital has of course to be subtracted from total wealth, while inflationary increases of house prices wreak havoc with the idea of ‘one kind of production function capital’. The good thing: the acknowledge the importance of (control over) ‘land’ and other unproduced capital. Aside – if I remember well, debts (liabilities) are used to pressure Greece to sell harbours and railways and the airports and the like (real, land related assets).
- The Bank of Italy discovers that: “the weakness of aggregate demand was contributing significantly to the decline in inflation“, while this weakness also influences inflation expectations’. The point: this means that, contrary to Lucas and Sargent inspired ideas in the Trichet era, the central bank is not the sole and only institution which governs inflation expectations while governing expectations is not enough to control inflation. Draghi is ++smarter than that, but it is good to see that the fight against the Lucas/Sargent paradigm is joined by the Italian central bank. Lucas/Sargent kind of ideas are by the way tempting to the ego of central bankers and therewith dangerous by nature.
- Eurozone small and medium sized enterprises as well as small and medium sized banks still have a hard time when it comes to financing. Small and medium sized enterprises in the Netherlands (which has no small banks left) do especially bad.
- About how bullying Iceland and Greece led to suboptimal negotiations.