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pieter jongejan

I am an economist born 8-5-1947. I worked in the department of economics at the University of Amsterdam (1977-1986) as well as at the Technical Universities of Delft and Eindhoven teaching building economics.
In 1986 I left the universities and started as head of research of Wereldhave, a diversified real estate company registered at the Amsterdam Stock Exchange. My main task was to research and make pronoses of real estate markets and financial markets (interest rates and exchange rates). At the moment I am working on a study of the relations between the real rate of interest, saving, investment and economic growth. In my opinion real interest rates should be stabilized at about 2,5% in the long run. Today's real interest rates seem far too low. As a result saving rates, investment rates and economic growth rates seem far too low too, while the financial sector seems too big.

Recent comments by pieter jongejan

  • The Long Mystery of Low Interest Rates

    Rising debt rates result in lower real interest rates and lower real interest rates result in lower profit rates and lower investment ratios. Lower investment ratios result in lower economic growth and even higher debt ratios. Low real interest rates and stagnating economic growth are here to stay due to the cheap money policies of central banks. Tyler Cowen should rewrite his ebook about low economic growth.

  • America’s New Progressive Era?

    The biggest mistake was the deregulation of the financial sector. The fast growth of the financial sector was followed by articial low interest rates and artificial low economic growth rates. The first task should be te reduce the present seize of the financial sector from 30%+ to a more sustainable 20-25%. (booming South Korea has 20%) The best way to do this by raising the real long interest rate from the present 0% to the normal 2,5% of the past 200 years. (South Korea has 2%). The problem is that higher interest rate will result in higher deficits in the short run. Therefore politicians from the left and the right dislike higher interest rates too. Without higher real interest rates the saving rate will remain low and the investment rate even lower.

  • Alternative Fiscal Medicine?

    According to Jean Pisani Ferry there are three alternatives available to combat the fiscal mountain: structural reforms, inflation and debt restructuring. If structural reforms are difficult to implement the best alternatives are not inflation and debt restructuring. The best alternative is to devaluate its currency in order to become competitive again within a short period of time. High inflation is not an attractibe alternative as we all know from the stagflation in the seventies. The USA and Japan try to devaluate their currencies as nuch as possible in order to stimulate their exports. Why is this alternative not good enough for Greece, Spain, Portugal, Italy and also France? Can someone explain why these countries are less equal than Japan, the USA and the UK?
    Why should Northern Europe pensionners (pension funds) pay for the pension bills of Southern Europe (pay as you go)? France and Brussels are creating war in Europe.

  • Shinzo Abe’s Monetary-Policy Delusions

    Central banks are no longer serving the general interests, but the short term interests of the financial sector, the political sector and the criminal sector. In the short run these sectors are benefitting most from almost zero interest rates. In the long run low interst rates will lead to a low profit rate (due to high real estate prices) and low investment an thus low economic growth and high unemployment. The winners in the long run are in my opinion the criminal sector and the populists.
    They benefit from increased poverty due to stagnant economic growth.

  • Why Germany Should Lead or Leave

    Mister Soros makes a comparison between the debt crisis of 1982 and the present debt crisis. The big difference between these two debt crises is that in 1982 the real interest rate was raised from 0% to 4,5%, while today real interest rates are kept at 0%. I understand that mr. Soros and all other hedgefund managers want to keep real interest rate sas low as possible for as long as possible. If they and the FED and the ECB succeed at that we will be sure that economic growth will not recover and unemployment will not come down. In 1982 (after raising real interest rates to 4,5%) economic growth recoverdd soon and unemployment rates came down quite sectectuarly. So why should the FED and the ECB help Wall Street at the cost of Main street?
    Then we have France. this country does not like free markets, but likes administrative prices, bureaucracy, Brussels and the ECB in order to survive at the costs of other Western countries. France has the largest financial sector of all European countries and the smallest industrial sector. Why should northern Europe work and France (and Southern Europe) like Mr Soros be subsidized by letting the ECN keep real interst rates at zero? Zero real interest rates imply that the profit rate is low too. Companies will lower their investments, economic growth will decline and unemployment will go up. The sooner real interest rates are back at their equilibrium level of 2,5-3% the better. If banks or countries go bankrupt so what? Why should banks and countries be more equal than construction companies?

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