Funding an ecological transition in Europe via ‘green money’ bonds would be economically justifiable.
By Paul De Grauwe – To what extent can the money created by the central bank be used to finance investments in the environment?
This is a question often asked today. The green activists respond with enthusiasm that the central bank—and, in particular, the European Central Bank (ECB)—should stimulate the financing of environmental investments through the printing of money.
The ECB has created €2,600 billion of new money since 2015 in the context of its quantitative easing (QE) program. All that money has gone to financial institutions which have done very little with it. Why can’t the ECB inject the money into environmental investments instead of pouring it into the financial sector?
Most traditional economists react with horror.
Who is right? It is good to recall the basics of money creation by the ECB (or any modern central bank). Money is created when that institution buys financial assets in the market. The suppliers of these assets are financial institutions. These then obtain a deposit in euro at the ECB, in exchange for relinquishing these financial assets. That is the moment when money is created. This money (deposits) can then be used as their reserve base by the financial institutions to extend loans to companies and households.
There is no limit to the amount of financial assets the ECB can buy.
In principle, it could purchase all existing financial assets (all bonds and shares, for example), but that would increase the money supply in such a way that inflation would increase dramatically. In other words, the value of the money issued by the ECB would fall sharply. To avoid this, the bank has set a limit: it promises not to let inflation rise above 2 per cent. That imposes a constraint on the amount of money which the ECB can create. So far, it has been successful in remaining within the 2 per cent inflation target. more>
Posted in Banking, Business, Economic development, Economy, Education, History, How to
Tagged Business improvement, Capital, Credit, Fiat money, Monetary policy
By Steve Denning – The judicial review of multiple ethics complaints against Justice Kavanaugh continued on its Gilbert-And-Sullivan trajectory with a 6-1 decision by the 10th Circuit last Friday that that court does not have jurisdiction to consider the complaints, even though Chief Justice Roberts explicitly requested the 10th Circuit to assess them.
Some 83 ethics complaints had been filed against Judge Kavanaugh alleging not only false statements under oath during hearings on his nominations to the U.S. Court of Appeals for the D.C. Circuit in 2004 and 2006, but also, more flagrantly, misconduct at the nomination hearing for the U.S. Supreme Court itself in 2018, including making inappropriate partisan statements and treating senators with disrespect.
The complaints were not made without legal basis. More than 2,400 law professors concluded that during the Senate confirmation hearings, Kavanaugh has “displayed a lack of judicial temperament that would be disqualifying for any court.” Unlike the allegations of lying about events that happened many years ago, there was no question of fact as to whether Kavanaugh’s conduct at the Senate hearings actually took place: it was visible for the whole country to see on national television.
Former Supreme Court Justice John Paul Stevens also stated that Judge Kavanaugh has demonstrated bias and is “not fit for the Supreme Court.” Former Justice Stevens, in remarks to retirees in Boca Raton, Fla, declared that Kavanaugh’s statements on September 27 revealed prejudices that would make it impossible for him to do the court’s work. “They suggest that he has demonstrated a potential bias involving enough potential litigants before the court that he would not be able to perform his full responsibilities.” more>
Posted in Business, CONGRESS WATCH, Economy, Education, History, Leadership, Media
Tagged Business improvement, Congress Watch, Donald Trump, Government, Leadership, United States
By Steve Denning – This is an abrupt change for the Trump administration.
Just last night, the Acting Administrator of the FAA, Daniel K. Elwell, had doubled down on keeping the Boeing 737 MAX 8 in the air, stating that his agency’s extensive review of “aggregate safety performance from operators and pilots of the Boeing 737 MAX… shows no systemic performance issues and provides no basis to order grounding the aircraft.” Boeing’s CEO, Dennis Muilenburg, after a call with President Trump, had also declared his complete faith in the plane’s safety.
Trust in a crisis depends on truth-telling—something the current administration is not renowned for, with almost 10,000 false or misleading statements from the president alone.
In this case, the FAA statement last night did not disclose that five pilots had already raised serious concerns about the 737 MAX 8 in the federal database where pilots can voluntarily report about aviation incidents without fear of repercussions.
Instead, the FAA statement said, “Other nations’ civil-aviation authorities had not provided data to us that would warrant action.” Yet Elwell didn’t have to look to foreign civil aviation authorities for such evidence. There was such evidence, right here at home, as reported in the Dallas Morning News.
The FAA statement also did not disclose that Boeing had already issued an emergency airworthiness directive about the Boeing 737 Max 8 in response to the crash of Lion Air Flight 610 in Indonesia. The directive “was prompted by analysis performed by the manufacturer showing that if an erroneously high single angle of attack (AOA) sensor input is received by the flight control system, there is a potential for repeated nose-down trim commands of the horizontal stabilizer.”
Nor did the FAA statement disclose that Boeing and the FAA had been working together for some months to deal with the possibility that the Indonesia crash was caused by a malfunction of its stabilization system.
While it is reassuring the U.S. has finally taken action to ground the Boeing 737 MAX 8 and MAX 9, the sequence of events points to institutional issues in aviation safety generally. more>
Posted in Business, Economy, History, How to, Leadership, Media, Technology, Transportation
Tagged Boeing, Business improvement, Government, Leadership, Safety, Technology, United States