mmg presentation israel september 2014

A Member of the Morgan & Morgan Group

Israel

Dr Frank Shostak MMG Economics & Research Ltd.

Dr. Frank ShostakMMG Economics & Research Ltd.

Apr 9, 2023

September 2014

1

A Member of the Morgan & Morgan Group

Disclaimer

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Apr 9, 2023 2

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Apr 9, 2023 3

Economic Framework

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The foundation of the creation of wealth

4

PURPOSEFUL ACTIVITIES

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5

Means Ends

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6

Production

Demand

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7

SavingsConsumption

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Consumption Savings

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Expansion in real wealth

10

Production

Consumption Savings

INVEST IN NEW OVEN

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Life Sustenance

POOL OF FUNDING

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Economy

Pool of Real Funding

Economy

Pool of Real Funding

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Wealth creation

13

Pool of Real Funding

(Wealth)

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Introducing money (medium of exchange)

14

Something

Production

Something

Consumption

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Nothing

No production

Something

Consumption

The effect of printing money

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The money supply and its effects

16

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Monetary pumping diverts pool of funding away from wealth producers

17

Money

Pool of Real Funding

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Money

Pool of Real Funding

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Inflation

19

MoneyMone

yMoney

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The essence of prices

20

Price

Real stuff

Money

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21

Money

Pool of Real Funding

The meaning of economic bust

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Case of depression

22

Money

Pool of Real Funding

Unemployment

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Deflation

23

MoneyMone

y Money

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USA

Apr 9, 2023 24

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USA AMS

Apr 9, 2023 25

0

2

4

6

8

10

12

14

16

2008:01 2010:01 2012:01 2014:01

%CHNG US AMS (YOY)

MONTHLY

%

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Federal Reserve Balance Sheet

Apr 9, 2023 26

-40

0

40

80

120

160

2008:01 2010:01 2012:01 2014:01

%CHNG FED BALANCE SHEET (YOY)

MONTHLY

%

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US Industrial Production

Apr 9, 2023 27

-3

-2

-1

0

1

2

3

4

5

2012:01 2013:01 2014:01 2015:01

%CHNG US INDUSTRIAL PRODUCTION (YOY)

MONTHLY

%Forecast

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US CPI

Apr 9, 2023 28

0.8

1.2

1.6

2.0

2.4

2.8

3.2

2012:01 2013:01 2014:01 2015:01

%CHNG US CPI (YOY)

MONTHLY

%

Forecast

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Fed Funds Target Rate

Apr 9, 2023 29

0

1

2

3

4

5

6

7

2000:01 2005:01 2010:01 2015:01

FEDERAL FUNDS RATE TARGET

MONTHLY

%

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S&P500

Apr 9, 2023 30

2,100

2,000

1,900

1,800

1,700

1,600

1,500

1,400

1,3002012:01 2013:01 2014:01 2015:01

S&P500

MONTHLY

IND

EX

Forecast

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ISRAEL

Apr 9, 2023 31

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Bank of Israel Balance Sheet

Apr 9, 2023 32

-40

-20

0

20

40

60

80

2008:01 2010:01 2012:01 2014:01

%CHNG BANK OF ISRAEL BALANCE SHEET (YOY)

MONTHLY

%

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Israel AMS

Apr 9, 2023 33

-20

-10

0

10

20

30

40

50

60

70

2006:01 2008:01 2010:01 2012:01 2014:01

%CHNG ISRAEL AMS (YOY)

MONTHLY

%

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House Prices

Apr 9, 2023 34

360

320

280

240

200

1602000:01 2005:01 2010:01 2015:01

ISRAEL HOUSE PRICE INDEX

MONTHLY

IND

EX

199

3=10

0

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Housing Starts

Apr 9, 2023 35

-30

-20

-10

0

10

20

30

2008:1 2010:1 2012:1 2014:1

%CHNG ISRAEL HOUSING STARTS RESIDENTIALS (YOY)

QUARTERLY

%

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Real GDP

Apr 9, 2023 36

1

2

3

4

5

6

7

8

9

10

2008:1 2010:1 2012:1 2014:1

%CHNG ISRAEL GDP (YOY)

QUARTERLY

%

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Manufacturing

Apr 9, 2023 37

25

30

35

40

45

50

55

60

65

2006:01 2008:01 2010:01 2012:01 2014:01

ISRAEL MANUFACTURING PMI

MONTHLY

IND

EX

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Unemployment

Apr 9, 2023 38

5.0

5.5

6.0

6.5

7.0

7.5

8.0

2008:1 2010:1 2012:1 2014:1

ISRAEL UNEMPLOYMENT RATE

QUARTERLY

%

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CPI

Apr 9, 2023 39

-2

-1

0

1

2

3

4

5

6

2006:01 2008:01 2010:01 2012:01 2014:01

%CHNG ISRAEL CPI (YOY)

MONTHLY

%

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BoI Policy Interest Rate

Apr 9, 2023 40

0

1

2

3

4

5

2008:01 2010:01 2012:01 2014:01

ISRAEL POLICY INTEREST RATE

MONTHLY

%

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Long-term bond yields

Apr 9, 2023 41

2.4

2.8

3.2

3.6

4.0

4.4

4.8

5.2

5.6

6.0

6.4

2008:01 2010:01 2012:01 2014:01

YIELDS ISRAEL GOV. 10YR BOND

MONTHLY

%

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AMS differential – Israel v USA

Apr 9, 2023 42

-20

-10

0

10

20

30

40

50

60

2008:01 2010:01 2012:01 2014:01

AMS YOY%CHNG DIFFERENTIAL:ISRAEL VS US

MONTHLY

%

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Shekel

Apr 9, 2023 43

4.1

4.0

3.9

3.8

3.7

3.6

3.5

3.42012:01 2013:01 2014:01 2015:01

US$/SHEKEL

MONTHLY

SH

EK

ELS

PE

R U

S$

Forecast

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Government Debt-GDP ratio

Apr 9, 2023 44

.64

.65

.66

.67

.68

.69

.70

.71

.72

.73

2008:1 2010:1 2012:1 2014:1

ISRAEL GOV.DEBT TO GDP RATIO

QUARTERLY

RA

TIO

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Industrial Production

Apr 9, 2023 45

-15

-10

-5

0

5

10

15

2012:01 2013:01 2014:01 2015:01

%CHNG ISRAEL INDUSTRIAL PRODUCTION (YOY)

MONTHLY

%

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Equities

Apr 9, 2023 46

1,600

1,400

1,200

1,000

800

6002008:01 2010:01 2012:01 2014:01

TEL AVIV STOCK EXCHANGE TA 25

MONTHLY

IND

EX

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Government Expenditure

Apr 9, 2023 47

-1

0

1

2

3

4

5

6

2008:1 2010:1 2012:1 2014:1

%CHNG ISRAEL GOVERNMENT EXPENDITURE (YOY)

QUARTERLY

%

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Government Spending-GDP ratio

Apr 9, 2023 48

21

22

23

24

25

26

27

28

1995:1 2000:1 2005:1 2010:1 2015:1

ISRAEL GOVERNMENT SPENDING TO GDP

QUARTERLY

%

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