Trouble in Swiss Employment
This story from Switzerland will be ignored, lest it generate cognitive dissonance. The mainstream looks at a few carefully curated statistics. I encourage you to do a Google search on “marginal productivity of debt”. My articles are all over the first page of results. This is not because I am such a prominent economist. Nor is it because this is a term I coined (e.g. “yield purchasing power”).
It is because marginal productivity of debt does not sell the Narrative. The economy is booming. Stocks are up, which is the main thing. Also GDP and employment.
The headline says it all: Older People Marginalised on Swiss Labor Market. That is not what you’d expect from the mainstream macro statistics. For that, you need to be armed with a theory of interest rates that is not from the Medieval era.
Swiss interest rates are negative from one-day maturity all the way out to the 10-year bond. How soft must be demand for credit? Soft demand for credit belies the story told by the mainstream stats.
The net present value of a wage (which is a stream of payments into perpetuity) is very high. How do you even calculate net present value when interest is negative? That means the burden of paying wages is commensurately high. Employers will feel this intuitively, even if their accountants can’t measure it.
Employers may not be laying off workers (in part, this could be due to lack of labor flexibility). Yet. But the curious fact remains. Whatever the unemployment number may be (2.4% is the July figure), clearly new employers are not eager to hire old employees who leave other firms. Demand for credit is not the only thing soft in the Swiss economy. So is demand for the marginal worker.
Everything is booming, yet 86% of people over 50 who lose their jobs never find stable work again.
Counterfeit Gold Bonds in Turkey
As you might imagine, I read everything I can find regarding gold bonds and interest on gold. So I was fascinated by this story from Turkey.
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