Skript3 GDP

Gross Domestic Product

• primary indicator for the condition of the countrys economy, economical performance

• size of economy, dynamic (in time comparison)

• GDP nominal - inflation rate = GDP real

• total value of all products and services produced over a specific time period

  • mainly from privat sector (consuming and investing)

• common measuring (expenditure) method:

  • total consumption + investments + government spendings + net exports

• state doesnt earn, they only spend tax money, if it would be different, it would be a planned economy in which marketing is not needed, therefore there are no improvements in product quality

• economic cycle is the upward and downward movements of levels of GDP

• Refers to periods of expansion and contraction in the level of economic activities

• cyle has been flattened more, less contractions because of fewer crisis

Technology:

• Key driver for GDP growth

• technological innovation initiates growth and higher living standards and wealth

• Industialization is important, before industralization China was the biggest economy, afterwards it was replaced by Europe

• Made in Germany as a sign of quality led to economic success of Germany

Society

• technology

• labor: less human capital is required (critizised) but because of technological demanding labor qualified workers are necessary but less unqualified workers

• substitution with AI in qualified workforce: medicine (difficult to enforce in Germany because of a cost-efficient system), advisory

Output / Input

• Base rate is the interest rate that the Central Bank will charge to lend money to commercial banks

• Interest rate trends to be derived from base rate

• Interest rate is an instrument to encourage or discourage spending depending on state of the economy

• Interest rate = Zinssatz

• Base rate = Leitzins

• interest rate cycle has been closely related to the economic cycle

• if economy grows strongly, central bank will increase interest rates to slow down the economy and prevent inflation

• if ecoonomy enters recession with rising unemployment, central bank will cut interest rates to provide an economic stimulus to increase economic growth and investments

• BUT: Politics tend to keep the base rate and interest rate more and more on a constantly low or zero level

• prevent significant contraction of economic cycle GDP (election)

• hugh increase of public debts dont allow interest rates to increase

• result of debt is a flattened economic cycle

• real estate bubble: high increase of real estate market and stock market

• lead to misallocation

• stock markets at an all time high

• further increase of depts

• disrupted supply chains, decrease of industry production and sales by global lockdown

• greenflation (EU)

• Inflation by money printing/quantitative easing, low/negative interest rates

• Energiewende in Germany focusing on gas as key fossil energy to cover instability of sustainable energy sources

• Ukraine war: sanctions against Russia, supply crisis for gas in EU/Germany

• Fed (Federal reserve system) increased base rate, european central bank followed too late

• stagflation, recession, depression?

• financial crisis coming up?

• US inflation is more demand driven do to rise in consumer spending during the pandemic

• Wage inflation has had a significant impact due to the competition for workers (data suggests wage inflation is easing in the US, real wages started to decline in the face of higher prices)

• Due to high inflation rate, Fed ended their policy of quantitative easing and low interest rate, instead started with quantitative tightening and gradual increase of interest rates since september 2021

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• higher energy costs are a much larger component of inflation numbers

• fuel prices have risen a lot in the past year from a higher base than in the US

• kursverluste von Anleihen wegen Leitzinserhöhungen waren maßgeblich für Pleite der Silicon Valley Bank und vielen weiteren Banken, deren Bilanzen ins wanken kommen könnten

• Verluste gelten als unrealisiert weil der Wert der Anleihen im Depot der Banken zwar stark gesunken ist, aber nur auf Papier existiert, solange die Banken die Anleihen nicht zum geringeren Kurs verkaufen

• Mögliche Auswirkung: global financial crisis

• ECB continued with quantitative easing and negative interest rate, still neglecting the increasing inflation rate in Europe

• ECB insisted that the high inflation rate was short lived and ended its policy of monetary expansion in june 2022

phasing out fossil and nuclear energy replacing them by sustainable/renewable energy sources (wind, solar)

Intention behind has been the reduction of CO2 emission by fossil energy as one major reason for climate change

No, not possible today as electricity can only be stored to a limited extent, definitely not in large quantities

Therefore electricity produced by wind and solar plants can not provide consistent and secure power supply

• Gas price and electricity prices are sky rocketing

• despite price increases and a risk of blackout, the Green party still insists on shutting down the last 3 nuclear energy plants