Contemporary Art: Iconophilia By Colleen Barry @ Half Gallery New York

 (Drivebycuriosity) - I am fascinated by art, classic and contemporary. But I get the impression that much of the presented art in galleries is mediocre - "just another Rothko .." - what explains that many art sellers are going otu of business. But there are exceptions that keep my love of contemporary art alive. At Half Gallery at Manhattan`s East Village I discovered a fascinated show with works by New York based artist Colleen Barry ( halfgallery).

 

The exhibition is called "Iconophilia". The press release explains: "The Protestant Reformation, the French Revolution, the demise of the Bamiyan Buddhas: all are examples of iconoclasm, the destruction of imagery with political or religious undertones. While Colleen Barry was doing research in this area, she thought to Google the opposite of the term and discovered its iconophilia, the worshiping of pictures".

 

I show her just some of my favorites, a very subjective selection as usual.

 

Enjoy! 

Economics: Revisiting Milton Friedman´s Price Theory

 (Drivebycuriosity) - Milton Friedman belongs to the most influential economists of the last 100 years. He was the leading monetarist; preaching the classic quantity theory of money and the insight that "inflation is always and everywhere a monetary phenomenon". But he was much more. Friedman had an enormous influence as a classical liberal and fought for a philosophy of freedom and was an advocate of individual rights, free markets and trade and limited government. Friedman´s economic views are based on his insight that the unregulated movement of prices create the best economic outcome for everyone. A long time ago, when I began to study economics, I read Friedman`s  "Price Theory", based on his lectures at the University of Chicago. This book influenced my thinking till today. Recently I had the pleasure rereading it (amazon ).

Friedman describes how prices respond when producers (the supply) of goods & services want to produce more or less and when consumers, corporations and others (the demand) intend to buy more or less. He also shows how supply & demand respond to price changes, spiced with real-world examples, including the impact of government policies and union actions. 

Friedman`s Price Theory introduced me to the tools of economics. I learned for instance the concept of elasticity that describes how much price changes influence supply & demand. If for instance the demand curve is inelastic every change in quantity supplied will bring about relatively greater changes in price per unit of product. In addition, every increase in quantity supplied means a reduction in total revenue.

I learned how to use indifference and transformation curves, the difference between monopolies and competition and much more. 

 

 

Books: The Eagle And the Hart By Helen Castor

 (Drivebycuriosity) - Power corrupts. Helen Castor`s double biography of Richard of Bordeaux and Henry of Bolingbroke, two cousins, who became successive England´s kings Richard II and then Henry IV in the 14th century, is another confirmation of this truth ( amazon). 

The book, based on historical documents, reads like a farce. Richard of Bordeaux became England´s king in the tender age of 10 and the country was ruled for a while by a snotty kid, suffering its wilful adolescent decisions. When Richard grew up, he did not become better. The king saw himself as the human incarnation in the two kingdoms of God’s authority on earth. He divided his subjects into two categories: "His favored servants on whom he lavished boundless rewards; and the rest, whose suspect loyalty he intended to compel with endless punishments". 

Even being king of England, Richard corresponded with his cousin Charles, the King of France, and England´s enemy, who was in war with England, to support him against the English, his subjects! 

"Extravagance, corruption, and mismanagement lay at the heart of England’s problems" -  "Richard was irredeemable; had conclusively shown the danger he posed to his people. There was an alarming amount of evidence to support their position. Time and again, the king had proved that he understood his kingship as a matter of rights, but not responsibilities; that he saw any attempt to constrain his will as unlawful, even treasonable; that he would not learn from either adverse experience or unpalatable advice; that his word could not be trusted".   

Richard´s paranoia, the ongoing search for enemies within, was becoming the standard operational mode of Richard’s state. Three of England’s greatest nobles had been destroyed, one executed, one imprisoned, one murdered, for offenses that had already been pardoned. Richard’s authority was volatile, threatening, and apparently impossible to resist. 

Eventually Richard´s kingdom turned into chaos and his regency imploded. His cousin Henry of Bolingbroke took advantage of Richard`s mess and turned himself into King Henry I. Even though he saved England from the chaos he met resistance and his right to rule by heritage (both had the same grandfather King Edward III) had been contested from the start. Henry`s enemies called the legitimacy of his kingship questionable, what exposed his regime to repeated attack from inside and out. 

Economics: Does The Federal Reserve Risk A Recession?

 (Drivebycuriosity) - Last week the Federal Reserve postponed the due interest rate cut even though the US economy is cooling. This was a mistake because the Iran war and the exploding oil price cause another headwind for the already stressed US economy and could lead to a recession.

There is some historical precedent for Oil spikes contributing to a downturn in the economy writes the bilello.blog.

1973-74: Arab Oil embargo led to a spike in Oil prices, and the US economy fell into recession from 1973-75.
 

1979-80: Iranian Revolution led to a spike in Oil prices, and the US economy experienced a double-dip recession (1980, 1981-82).
 

1990-91: Gulf War led to a spike in Oil prices, and the US economy fell into recession (1990-91).
 

2000: Oil prices spiked near the dot-com bubble peak and the US fell into recession in 2001.
 

2007-08: Global demand pushed the price of Crude Oil up to a record $147/barrel, and the US economy experienced its worst recession since the Great Depression

The 2007-08 oil price explosion was caused by the notorious Iran sanctions and the fear that Tehran will close the Strait of Hormuz, blocking the oil transports from the Arabian suppliers (I describe it here). And pundits like Goldman Sachs predicted that the price of oil could jump to $200.

From summer 2007 through July 2008 the price of oil spiraled from about $50 to $147! A study by Prof. James Hamilton (University of California, San Diego) shows that this oil price shock turned an already happening economic slowdown into a severe recession (econbrowser): "The oil price increase over 2007:H2-2008:H1 should be regarded as a key development that turned the slowdown in growth into a recession" (archives).

Other researchers came to the same results: "Oil prices played a role in eventually bursting the US subprime bubble....In 2003, the average suburban household spent $1,422 a year on gasoline, which rose to $3,196 in 2008 (oilprice).

 

                           Wrong Focus

Today the US economy is already cooling and stressed by the ongoing trade war and the sharp tariff hikes. In the fourth quarter US economic growth (GDP) already slowed to 0.7%. The weak job market is another signal of distress. Sharply rising oil prices create another headwind. When corporations and households have to spend more money for gasoline & other oil products they have less money for other expenses and need to reduce their purchases of goods & services. In 2008 for instance some households stopped servicing their mortgages and other debts in order to pay for their gasoline bill. 

Unfortunately the Fed is oblivious to the recession danger and focuses on the alleged inflation risk. Fed chair Powell & Co. don´t understand that the high inflation of the recent years was caused by a deluge of money at the begin of the decade ( I explain it here). Fortunately the money flood - the engine of the inflation - has already ended and the growth rate of the money supply M2 slowed to moderate 4.9% y-o-y and gives not much leeway for inflation (macromicro ). 

If the US turns into a recession in the coming months, blame it to the Fed.

 

 

 

Economics: The Iran War Is A Reason To Cut Interest Rates A.S.A.P

 (Drivebycuriosity) - The Israeli-American war on Iran causes a lot turmoil on the financial markets. The price of oil, that had hovered awhile around the $60 mark, jumped and touched temporarily the $120 mark. The pundits claim that the oil price explosion will hike the US inflation rate and prevent the Federal Reserve from lowering her interest rates in the next time.

I beg to differ. I agree that higher oil prices will lift the price level a bit, but the rise will be just temporarily. Even if inflation will be higher for a while, the Fed needs to cut her interest rates immediately in order to the cushion the oil price shock.

Today´s dilemma reminds of the oil price shocks in the past, especially the crisis in the year 2008 (I explained the 2008 crisis here). From summer 2007 through July 2008 the price of oil spiraled from about $50 to $147! A study by Prof. James Hamilton (University of California, San Diego) shows that this oil price shock turned an already happening economic slowdown into a severe recession (econbrowser): "The oil price increase over 2007:H2-2008:H1 should be regarded as a key development that turned the slowdown in growth into a recession" (archives).

Other researchers came to the same results: "Oil prices played a role in eventually bursting the US subprime bubble....In 2003, the average suburban household spent $1,422 a year on gasoline, which rose to $3,196 in 2008 (oilprice). 

It seems we are in the same trap as in 2008. The weakening economy would afford interest rate cuts, but the Federal Reserve could be flocused on the exploding oil price and the fear of rising inflation. But, postponing the interest rate cut would be a mistake.

 

 

The scope for inflation is already limited by the modest growth of the US money supply M2 (image above macromicro  ). As I had explained in a recent post, the high inflation in the recent years was caused by a deluge of money at the begin of the decade ( drivebycuriosity). The money flood - the engine of the inflation - has already ended. 

Today the US economy is already cooling and stressed by the ongoing trade war and the sharp tariff hikes. In the fourth quarter US economic growth (GDP) already slowed to 0.7%. The weak job market is another signal of distress. Sharply rising oil prices create another headwind. When corporations and households have to spend more money for gasoline & other oil products they have less money for other expenses and need to reduce their purchases of goods & services. In 2008 for instance some households stopped servicing their mortgages and other debts in order to pay for their gasoline bill. 

If the Fed postpones the necessary interest rate cuts the negative impulse for the US economy will get even more severe and might start the next recession.

Economics: Why Tariffs Don´t Heat Up Inflation

 (Drivebycuriosity) - There is a lot ado about Trump`s tariffs. Many pundits claimed that the tariffs will heat up US inflation and push the inflation rate above 3% again. They were wrong. In February the inflation rate stayed at 2.4% - as in the month before. 

“Inflation is always and everywhere a monetary phenomenon”, declared Milton Friedman. The money volume, the amount of money available in the whole economy, restricts how much people can spend. If they - for in instance - pay higher prices for imported goods, then they purchase fewer of them or they spend less for other goods & services.

                        Helicopter Money 

Friedman got forgotten in the recent decades but the recent inflation wave confirms him again. The hot inflation at the begin of this decades was caused by a deluge of money in the years 2020 & 2021. Then the Biden administration flooded the economy with stimulus checks in the value of trillions of dollars to fight the Covid19 recession (American Rescue Plan). The government checks got financed by massive bond purchases by the Federal Reserve (Quantitative Easing, known as QE1,QE2 & QE3).

The government money landed directly on the bank accounts of the Americans, blowing up the money volume M2 (bank notes & coins & short term deposits at banks). Milton Friedman described this as helicopter money (cato ). As a result in 2021 & 2022 the US money supply M2, the engine of the inflation, jumped 40%. Unfortunately the money deluge met a constrained supply of goods & services partly - partly because of Covid19. So the price level inevitably had to jump and the inflation rate (first derivation) went up.

                         Causal Relationship

The causal relationship between the money supply and inflation was already recognized by Nicolaus Copernicus! The astronomer explained in the year 1517 why "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 it was printed into coins and used as money.

As a result the European money supply jumped, but the supply of goods & services did not change much. 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) confirmed Copernicus & the quantity theory of money. They described in the 1960s elaborately how and why the inflation rate follows the growth rate of money with a time lag (causal connection).

 

 

(source )

                   Constrained by M2

The US inflation is constrained by the slowly growing US money supply. M2 advanced in February just 4.2%, about 2 percentage points above the growth of the real economy (GDP  google). There is not much range for inflation.

Contemporary Art: Prometheus and Pietà @ The Hole New York

(Drivebycuriosity) -  Manhattan`s Bowery is a magnet for tourists. But you also could find one ambitious art gallery at least: The Hole. Recently I spotted there a show by the South Korean artist Lee Gihun ( thehole). The exhibition is called "Prometheus and Pietà". I enjoyed his powerful & surreal phantasies and display here my favorites, a very subjective selection as usual.

 

According to the press release “Lee creates dark post-industrial landscapes populated by animals and hybrid beings, merging painting and drawing in each work with acrylic and oil pastel on canvases that reach up to eight feet in scale”.

 

Enjoy!