Thursday, April 25, 2024

Economics: Are Interest Rates Really Too High?

 


(Drivebycuriosity) - There is a lot ado about the Federal Reserve interest rates. Many claim that they are too high and might cause the next recession. Are the critics right?.

According to the textbooks high interest rates slow the economy because they discourage borrowing and investing. Do they? This post uses statistics by the Federal Reserve Bank of St. Louis ( fred.stlouisfed).

 

 

On top of this post you can see the growth of the money supply in the recent years. Money growth ended April 2022 and the money supply dropped in the following months, partly as a response to the interest rate hikes of the Federal Reserve (image above this paragraph). It bottomed October 2023 - since then the money supply is rising again - and the rise is accelerating! (image below).

 



 ( source)

The Federal Reserve also reports that the volume of bank credits jumped in the recent months, in spite of the "high" interest rates (image below). The borrowed money lands on the accounts of the bank customers and adds to the money supply (the sum of currency in circulation and short term accounts at public banks).

 


 ( source)

Credit card loans are also climbing swiftly, withstanding the interest rates. These payments land on the bank accounts of sellers who accept credit cards and are driving monetary growth as well (image below).

 


 ( source)

These numbers fit to other solid economic data, like the steady growth of the job market and the continuous rise of the GDP. The numbers may also explain the stubbornly high inflation rates.

The Fed rates are much higher than in the recent past - and they feel too high. But none of the economic indicators signal tight money - rather the contrary.

Sunday, April 21, 2024

Contemporary Art: Emotional Moonscapes @ Gallery Perrotin New York

 


(
Drivebycuriosity) - The French/American Perrotin on Orchard Street belongs to my favorite art galleries (perrotin ). I often spot amazing shows there. Recently I reported about their show with works by GaHee Park ( driveby).

 



This post is about a show with works by Oslo based artist Jason Boyd Kinsella, called "Emotional Moonscapes" ( leaflet). The images are called "psychological portraits".  






To be continued

Wednesday, April 17, 2024

Science Fiction: Tales Of Pirx The Pilot By Stanlislaw Lem

 


(Drivebycuriosity) - Stanislaw Lem is maybe the most underrated science fiction author. Most might only know his novel "Solaris" from the film adaptions by Andrei Tarkovsky (1972 imdb) & Steven Soderbergh (2002 imdb). His oeuvre covers - beyond scifi - futurology (no fiction), philosophy, psychology, crime novels, satyrical works and much more.

Lem´s "Tales of Pirx the Pilot" contains 5 short stories & novellas which follow a young man, named Pirx (amazon ). The protagonist is a dreamer, full of hopes & ideas, but has a weak self esteem and is not well regarded by his superiors. On the other side he is mentally strong, cunning and he never gives up. So he survives very challenging situations caused by technical problems, physical phenomena and other calamities.

Lem interwove physics, engineering and cosmology into thrilling adventure stories, spiced with humor, psychology and a bit of philosophy. Highly recommended.




Thursday, April 11, 2024

Economics: Why Is Inflation So Stubbornly High?


  (Drivebycuriosity) - The inflation numbers are disappointing. The swift drop from the peak of 9.1% ended summer 2023, since then the numbers are fluctuating above 3% (cnbc ). There are several explanations for the sticky inflation. Since December 2023 the price of oil price climbed about 20%, lifting the gasoline prices on US pumps and so the costs for many products & services.

But Inflation less food & energy - the so-called core-inflation - also stays elevated. The numbers are partly magnified by the "shelter costs", a mix of rents & house prices, which count for about 40% of the core-inflation and 27% of the headline inflation! Unfortunately the statisticians base their calculations on rent payments from the past, therefore the "shelter" component has a time lag of 12-18 months! (marketwatch aier  cato). The actual reported inflation numbers are a view into the rear window.

 

 


 ( source)

 

But there is a more important explanation. The image above shows the growth of the money supply M2 in the recent years, the main reason of the actual inflation.

In 2020 & 2021 the US government flooded the economy with stimulus checks in the value of trillions of dollars (American Rescue Plan), supported by massive bond purchases by the Federal Reserve. The government money landed directly on the bank accounts of the Americans, blowing up the money volume M2 (bank notes & coins & deposits at banks). Milton Friedman described this as helicopter money (cato ).

As a result in 2020 & 2021 the US money supply M2, the engine of the inflation, jumped 40%. The money deluge met a constrained supply of goods & services partly - because of Covid19. "Inflation is caused by too much money chasing too few goods and services", noticed the economists at fisherinvestments. "

 

                     Causal Connection

The causal connection between money and inflation is known since the 16th century at least. Nicolaus Copernicus described already in the year 1522 how "too much money" causes inflation. Copernicus` "quantity theory of money" is based on observations: 

Early in the 16th century Spain conquered today`s Latin America and looted the silver stocks. The Spaniards send the precious metal to Europe where is was printed into coins and used as money.

As a result the European money supply jumped, meeting a restrained supply of goods (agriculture, hand works) &  services. The flood of money raised suddenly the demand for scarce goods & services and caused a jump of the price level.

Elaborated studies by Milton Friedman, Karl Brunner, Allan Meltzer and many other economists (known as Monetarists) described already in the 1960s how and why the inflation rate follows the growth rate of money with a time lag (causal connection).

Fortunately the monetary growth already peaked in February 2021 (with plus 27%). Since then the monetary growth rates have been falling and turned negative in December 2022. In the recent months the money supply has been shrinking! In February M2 dropped 1.7% YoY ( ycharts).

 


(source )

Unfortunately the money flood from 2021/22 is not yet digested. As the image above shows there is still a surplus above the long term trend. This surplus works like hot steam in a boiler, keeping the inflation engine still running.

 


But the slow down of the money growth (image above) since summer 2022 is taking the pressure out of the inflationary steam boiler - albeit slowly - and inflation rates will drop again in the run of this year.

Sunday, April 7, 2024

Books: Mick Jagger By Philip Norman


(Drivebycuriosity) - 
A long time ago I read an interview with Mick Jagger. I knew that he had studied at the London School of Economics and I expected something better than the usual bragging by a rock star, but I was still impressed by his smart answers and his broad knowledge. That intensified my interest in a musician who`s early songs I still love. Philip Norman´s biography "Mick Jagger" gives a good introduction into the complexity of giant of 20th century culture (amazon ).

Mick Jagger had a rather conservative start into his professinonal life. After finishing school he thought about studying art or science. Finally he decided for economics, which "seemed about halfway in between", and started to study at London School of Economics. In his leisure time he collected and played albums by Amerian Blues musicians. While waiting for the tram he met Keith Richards, whom he knew from school times. They discovered that they both love American Blues songs, which inspired them to start a rock band. 

On July 12 1962 at London`s Marquee Club Mick sang with the Rolling Stones for the very fist time. Soon the Stones became popular as a cover band who replayed their beloved American blues & soul songs. Mick Jagger`s somewhat metallic voice, his stretched Cockney slang pronunciations, plus the rough riffs of Keith Richards, made their cover versions special. They also benefited from the explosive success of the Beatles, who drew attention to the whole rock genre and created a veritable market

Rather hesitantly Jagger & Richards started their own compositions. Their song "As Tears go by" was first used by Marianne Faithfull, which made her famous (1964). "The Last Time", the band's first original song, was recorded January 1965. "Aftermath", recorded December 1965 and March 1966, was their first album to consist entirely of original compositions, including "Paint it Black (US version), "Lady Jane" & "Under My Thumb". Then "Satisfaction", released June 1965, and  "Sympathy for the Devil" (1968 ) catapulted them into the rock Olympus.

Founding member Brian Jones, presented himself in the early days as leader of the band, but had not much influence on their music, besides playing exotic instruments on some pieces (but there is a different version on wikipedia). Because of his erratic behavior and his drug issues he had to leave the band in 1969. Shortly after his leave he drowned in his pool.

Even though Jagger was smart, well educated and had a controlling nature, he & Richards behaved naively and gave their manager Allen Klein the rights of most of their 60s hits. Much later they filed immense law suits against Klein to receive some of their money.

Norman dedicates a chapter on the arrest of Mick Jagger & Keith Richard in February 1967. The detention was orchestrated by a powerful and ruthlessness tabloid, "The News of the World", which had a personal feud with Jagger. The magazine planted an informant into Richards home, who initiated a massive drug raid, leading to the arrest. The British law system needed a victim, the loud long-haired Stones, where perfect for that. But friends in high place got them released soon.

In the 1970s rock music got defined by Pink Floyd, Black Sabbath, David Bowie, Jimmy Hendrix, Sex Pistols and many others, but the Stones` popularity continued to climb because they learned to cater the taste of the masses (disco music, reggae and other popular styles) and to control the rights of their songs - and they became filthy rich.

 

                          Massive Courage

Another chapter describes painstakingly the infamous Altamont concert that happened north of Los Angeles in December 1969. The event was initiated by the hillbilly band Grateful Dead "in a haze of hippie idealism". Apparently there was no organization and the show  went out of control, partly because someone hired the local highly violent Hells Angels - of all people - as security. The beloved "Deads" left the event without playing and let others, including Jefferson Airplane, alone with the mess. The Stones, who performed as last band and at the peak of the turmoils, got later blamed for the mess and that the Hell Angels killed one of the spectators. But one visitor reported that Mick "showed massive, massive courage at the terrible moment" and added "to have stayed on that stage and carried on performing need the balls of a lion".

Jagger tried also a career on film, with less success. The movie "Performance", directed by Donald Cammell & Nicolas Roeg, was the only respectable production, but the film was called pornographic and got not immediately released. Other projects failed, partly Mick was not much interested, and he was turned down for the role of Mozart (!) in Amadeus and Dr. Frank N. Furter in the Rocky Horror Show. Maybe in some alternate universe Mick really played as Amadeus, what a show!

In the 1980, ageing 40 something, Mick Jagger prepared extensively for the stress of hours of extensive shows. He began a program of intense weight training, karate, squash and daily seven-mile runs. After a couple of weeks he was down to just 125 pound and a waist measurement of twenty-seven inches.

After the year 2000 he maintained a strenuous fitness regimen under the famous Norwegian fitness trainer Torje Eike, with daily running, swimming, cycling, gym work, yoga and Pilates, combined with a diet of whole-grain bread, rice, beans, pasta, chicken & fish.

Jagger also was a good cook, more patient and painstaking in the kitchen than anywhere else except music, and might spend a whole afternoon cycling from shop to shop to find every last correct ingredients for a Japanese recipe that appealed to him.

It goes without a saying that the most beautiful women buzzed around the mega-rock star like flies, how could he resist? Was he really "predatory", as one of wives later claimed? Or were the women predatory, who took other´s lover, husband, father of children away without any scruple? Sleeping with Mick made them famous and gave them access to a lot of money.

It is surprising that the biography ignores the early rivalry between the Stones and The Kinks. The latter group started also as a cover band and played US blues songs as well. But their first album - released 1964 - had already four self composed song, including the Ray Davies composition "You Really Me", which become a number one hit int the UK, about a year before the Stones released "Satisfaction". In the US Stones, Beatles & Kinks together were called the English invasion.


                        Feminine Qualities

 


 

 


There were rumors that Mick joined a menage a trois with David Bowie and Bowie´s wife Angie Barnett. Angie claimed that she had discovered Mick & David together in bed. Mick dismissed the rumors as "total rubbish". But Marianne Faithfull wrote in her memoirs that she "realized in some part of my mind that Mick was bisexual". She added that his more feminine qualities of sensitivity and intuition were part of his appeal.

The journalist Lesley-Ann Jones claims in her book "The Stone Age: Sixty Years of the Rolling Stones" that Mick was bisexual and suggests Jagger had affairs with bandmates Keith Richards, Mick Taylor and others (advocate ).

There is no proof, but Jagger´s performances in the late sixties where often androgynous and there a lot of drag images. Maybe he played with the trans image or not, but he was certainly not afraid of that.

Anyway, Mick Jagger helped to shape the popular culture in the 20th century and his & Richards` songs, at least the early ones, are still important and beloved. 

 




Saturday, March 30, 2024

Economics: Antitrust - Why Does The Government Punish Success?


 (Drivebycuriosity) - America´s economy was based on success. Entrepreneurs like Henry Ford or the steel magnates Andrew Carnegie & Cornelius Vanderbilt did not only get super-rich, they created America´s superior industry and wealth. They were admired and the hope to be very successful inspired many inventors, entrepreneurs & investors, fueling America`s rise. 

Not anymore. The Biden administration punishes success and harasses corporations which are exceptionally successful. Two mighty government agencies, the Department of Justice and the Federal Trade Commission (FTC), are suing three very successful companies: Amazon, Google & Apple. The administrations claim that these corporations are monopolies in their markets.

Amazon became a behemoth by being very efficient and being obsessed with cost cutting and delivering goods cheap, fast & reliably. They have been constructing a network of huge fulfillment centers which are very efficient and save a lot of costs. Amazon`s huge size also helps to keep costs low (efficiencies  of scale). The competition with Amazon forces Walmart, Target and many other retailers to be efficient and curb their prices as well. Today also Shopify, Wayfair and many other e-commerce companies, who are competing with Amazon, have to sell at relatively low prices. This way Amazon´s efficiency  & success benefits even consumers who shop elsewhere.

Apple became a giant because people love their services & products. Apple´s late Steve Jobs gave the world a powerful supercomputer for the pocket and created a new economy based on Internet applications. Apple products are bestsellers because they are cool and very functional. What is wrong with that?

Google pioneered Internet search engines in the late 1990s and invested tons of money to develop them further. The continuous innovations raised the quality of their services, which are free, and made Google market leader in the US and many other countries. I have been using Google`s free search & maps for two decades because their American competitors Bing (owned by Microsoft), DuckDuckGo and others are inferior. What right does the government have to restrict these services?

None of the sued corporations is a monopolist. Amazon is competing against Walmart, Target, Ebay, Shopify and aggressive newcomers like the shopping apps Temu and Shein (driveby). Nobody is forced to buy Apple`s iPhones, iPads, iMacs, MacBooks and services. Customers can purchase similar products & services from Microsoft, Google, Samsung, Huawei and a lot of other technology companies. And customers can choose between Apple´s iOS and Google`s Android. Nobody needs to use Google´s services like search & maps. There are other search engines like Microsoft`s Bing, DuckDuck Go & WolframAlpha and people also can use maps by Apple, Microsoft and other providers. Why does the US government side with inferior competitors, including foreign companies like Russia´s Xandex or Chinese apps like Temu?

Amazon, Apple & Google want to make profits, as all entrepreneurs do, and they are successful. Profit seeking is the engine of America´s success. These firms are investing ever-increasing amounts on research and development to innovate new products and stay competitive.

But the government tries to stop that.
 

Biden´s mighty bureaucrats hate Big Business; they want to replace it by Big Government. The government follows China´s leader Xi Jinping, who has curtailed successful corporations like Alibaba, Tencent & Baidu, because he does not accept other gods beside him and he is turning China´s economy back to a rigorous socialist system.

The real purpose of the law suits is to gain control over America´s largest corporations and to be in charge of their business ( driveby). Biden protege Khan tries to expand her already extensive might. She argued - in an article for a Marxist paper - that antitrust must be reconfigured toward the redistribution of economic and political power and away from concerns regarding price (lpeproject  realclearpolicy). According to former FTC-Commissioner Christine S. Wilson Khan`s FTC represents a Marxist ideology and tries to replace the market process of supply and demand by a continuously regulated environment (ftc.gov ).  

Although neither Khan nor Kanter are democratically elected, they have the power to throw a lot sand into the gears of successful companies, which are the engines of the US economy. The law suits reduce Big Tech`s abilities to further innovate, even if Khan & Kanter will lose. The law suits are occupying management capacities and are slowing decision processes - making business more complicated and costly. Innovators and startups are getting discouraged when they know that strong growth will get punished.

If the crusade against Big Tech succeeds it will not only reduce competition (by harming the market leader), it also will lead to waste, corruption and nepotism. If corporations get punished for being efficient and for keeping costs low, it will slow economic growth, raise price level and reduce living standards of low income households who depend on purchasing cheap goods. 

Why trying to create a very successful company when success will get punished?  

 


 
 

 

Friday, March 29, 2024

Contemporary Art: Fun And Games @ Gallery Perrotin New York


(Drivebycuriosity) - Manhattan`s Lower East Side is slowly degenerating into a party district with a legion of fast food places & other dives. But there are still some fine art galleries, albeit fewer than some years ago. The French/American Gallery Perrotin on Orchard Street is my favorite (perrotin ). I often see amazing shows there.

Recently I spotted a show with works by GaHee Park (leaflet ). The artist is born in Korea and lives in Canada. I love her funny paintings which remind me of René Magritte`s surreal images.




Above you can see "Marine Dreams" (224, oil on linen) followed by "Fun and Games" (2023, oil on canvas).

 



Above this paragraph follow "Under Cover" and another surreal image.

 


last but not least: "World of Tails".

 

To be continued