Capitalism – or in fact any economy, if an alternative exists – should grow constantly, although not necessarily in quantity. It’s not so much about making a larger amount of exactly the same products and services, but about innovating and producing new goods and services at a lower cost.
Articles by Miguel Navascués
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How solid a banking system is is such a cloudy issue that it’s difficult to make a valuation without doubts or ambiguities. For example, in Italy it’s vox populi that the banking sector is very weak, but what about in Spain?
In the US and other parts of the world a phenomenon has occurred which partly explains the differences in income: the different levels of success which different companies have. But it seems that companies were more uniform in the past. The salary differential happened within a company and could be translated into expectations of promotion or a better job like in the age of the “American dream”.
Recently there’s again been talk of a two-speed Europe. During the mini-summit two weeks ago, Merkel, Hollande, Italy, Rajoy, gave the green light to this latest spin. The Spanish PM has said the country would be at the nucleus of this.
There’s a new monetary theory doing the rounds here which claims to be revolutionary: the Modern Monetary Theory (MMT. Not to be confused with the Market Monetary Theory). I agree with some of its points. But when some of its supporters say the state deficit and debt are not important – that they don’t have damaging consequences – the theory becomes a huge deliberate fallacy.
I believe central banks don’t control long-term rates – which are decisive for investment – and that they can influence them in what we would call normal circumstances, namely when GDP is expanding and inflation is at its optimum level. The central bank trys to control the private market’s expectations, but it doesn’t always succeed.
Is gold really the best hedge against risk and should we go back to the gold standard? Gold has been stable for a century, but in the last 50 years it has appreciated a lot, seeing a lot of volatility.
I don’t have the slightest doubt that Draghi is going to do the impossible to keep the euro, but it doesn’t depend on him. The euro is a false project which should have happened when things were more settled, in other words, as Draghi says, “when there was a single market.”
As the global outlook improves, many people ask what’s happened to Larry Summer’s hypothesis of Secular Stagnation, which says there are clear signs that the economic world has been “cooling down” for decades. And currently, everything seems to make us think that the recovery we have on our doorstep is not going to be strong or long-lasting.
Without its own demography and without immigration, it’s impossible for the Trump administration’s forecast for annual US GDP growth of 3.5% over the next years to be met.