Rent-seeking and asset-price inflation: a total-returns profile of economic polarization in America

This paper reconstructs the National Income and Product Accounts to add asset-price (‘capital’) gains to national income to derive a measure of total returns. It also treats rent-extraction as a charge against national income and GDP, not as a contribution to national output. Segregating the Finance, Insurance, and Real Estate sector from the rest of the private sector shows that most growth in wealth and income derives from rentier activities – from the dynamic of finance capitalism more than that of industrial capitalism.

Quantitative Easing in der Eurozone

Mit nur 1,3 % blieb die EA-19 HVPI-Inflation 2019 weit hinter dem 2,0 % Ziel der EZB zurück. Bisher ergriffene, unkonventionelle geldpolitische Maßnahmen wie das €2.600 Mrd. umfassende APP zeigten nicht den gewünschten Erfolg. Dieser Beitrag untersucht, inwiefern sich die EZB zwecks Stimulierung von Inflation und BIP-Wachstum an den Aktienkäufen der BoJ orientieren sollte. Erste Ergebnisse zeigen, dass diese Maßnahme lediglich zu einem Anstieg der sog. Asset Price Inflation führt, welche letztlich die Finanzstabilität und die Normalisierung der Geldpolitik gefährdete.

Effects of Monetary Asset- Price Transmission on Investment and Inflation in the Euro Area

Since the onset of the financial markets’ crisis in late 2008, the Eurozone has been subject to rather volatile headline inflation, occasionally even turning into (an admittedly modest) deflation. As eventually, conventional monetary policy seemed to be exhausted, the European Central Bank (ECB) resorted to unprece- dented unconventional measures. In 2010, it launched a first gov- ernment bond purchasing programme, which was followed by a series of different programmes, swelling its balance sheet to c. €4.7tn as per May 2019. The induced asset-price-inflation in con- junction with a continuous and persistently low HICP inflation rates inevitably raises the question how effective monetary trans- mission – particularly via asset-prices – (still) is. This contribution will investigate the effects of monetary asset- price transmission on investments and inflation. First, it analyses the reliability of stock markets as an indicator for firms’ investment, while emphasising the importance of uncertainty. Sec- ond, the paper examines how rising stock prices affected firms’ balance sheet and lending. Further, it provides an explanation as to why monetary policy failed to amplify lending in peripheral mem- ber states and why it had a comparatively low effect on borrowing costs in these regions. Third, it scrutinises the implication of an output gap, which monetary policy seeks to create, on different inflation parameters. Thus, the paper illustrates why the effects on HICP-inflation are less pronounced compared to other inflation measures.

A decade of speculation

The power of finance ensured that, other than for an initial fiscal push to salvage financial institutions, monetary measures in the form of quantitative easing, involving the infusion of large volumes of cheap liquidity, were the principal response to the 2008 global financial crisis. The effects of the generalised and prolonged dependence on such measures have been a substantial increase in vulnerability, at the centre of which is a huge build-up of private – especially corporate – debt, and unwarranted and unsustainable asset price inflation in both developed country and ‘emerging economy’ markets. A consequence of these processes is a massive increase in income and wealth inequality across the world, which limits the level of effective demand and growth. JEL Codes: E44, E52, E58, G01, G15