Is the dollar overvalued? Larry Summers feeling good. Gold & the price of a Rolex & The Rise and Fall of the Italian economy.
Great links, images, and reading from Chartbook Newsletter by Adam Tooze
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Martin Kippenberger, “Die Mutter von Joseph Beuys”, signed with the artist's monogram and dated 84. Source: Sotheby’s
Is the dollar overvalued?
Whether you think the dollar is overvalued is one of the basic questions in analyzing the current economic moment. The case of the new economic nationalists in the US and those advocating taxes on capital imports depends crucially on this claim. Bank of America’s analysis shows the real effective exchange rate, i.e. adjusted for relative inflation, at levels not seen since the 1960s.
By their estimate the dollar is overvalued by more than 20 percent.
Source: Wall Street Journal
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Larry Summers had some optimism to share today — accompanied by a bit of gloom.
“Here’s the big thing. I've been doing this for 45 years now. There hasn’t been a moment when the technological possibilities ahead of the world have been as bright as they are today.”
Source: Bloomberg
The famous billion-dollar loan fund at Biden’s Department of Energy only really opened up AFTER Bidenomics failed!
Source: Financial Times
Martin Kippenberger, “Ego (Selbstporträt)” (1996), colored pencil, ink on paper, 11 3/4 x 8 5/8 inches. Source: Hyperallergic
How gold inflation is driving up the price of Rolex watches
Rolex hiked the prices on some of its most popular watches after gold values surged in 2024. Rolex typically raises prices once a year on Jan. 1. Price increases can be indicative of overall demand for luxury products, the cost of materials, labor and inflation. Gold recorded its biggest annual price increase in 14 years in 2024, soaring 27%. This year’s increases on timepieces are larger than last year’s.
Source: Bloomberg
The Rise and Fall of the Italian Economy. Carlo Bastasin and Gianni Toniolo, (Cambridge: Cambridge University Press, 2023.
The authors seem to be mostly interested in explaining the ‘fall’ in the ‘Rise and Fall of the Italian Economy’. They devote much attention to the lack of political vision and responsibility during the Golden Age that allowed for the disproportionate expansion of public spending. This would eventually become unsustainable during the global economic crisis of the 1970s and the political crisis of the early 1990s. Excessive spending and the lack of reforms are seen as the causes of the missed modernization of both the economy and society, and the political class is to blame. The book also provides an extensive discussion on the consequences of the 1992 political and economic crisis, showing how it represented a fundamental turning point for the country, negatively affecting the relationship between citizens and the State and undermining the financial credibility of the country.
Source: Review by Anna Missiaia in Economic History Review
Polycentric stabilization at work!
Turkey brokered a deal that could ease tensions between Ethiopia and Somalia, with the latter nation considering reversing a decision to exclude Ethiopian troops from a multinational force battling Islamist insurgents. Ethiopia has been one of the main contributors to the United Nations-backed force that’s been fighting al-Qaeda-linked militants in neighboring Somalia for almost two decades. Mogadishu objected to Addis Ababa’s future participation in the mission after a yearlong dispute over Ethiopia’s offer to recognize Somaliland.
Fascinating post this by Brad DeLong on the teaching of economic history in the Berkeley economics department.
Kippenberger, “Kellner Des” (1991)
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