A great quote (I won’t try to attribute it out of risk of embarrassment) is bad generals plan to fight the last war again rather than the next one. We saw Joe Biden “learning the lesson” of having not supplied enough stimulus in the Obama era after the last financial crash, pumping huge stimulus into the US economic system after COVID. In hindsight that magnitude was not only unnecessary, but it fuelled an impending inflation crisis.
Looking forward from where we are now, we risk looking for historical economic precedent to inform on what’s coming next, like comparing now to the 1970’s. We’ve never had a great resignation (cause debatable), continued Chinese COVID lockdowns and the world’s bread baskets at war in a globalised economy before. We’re pioneering on finding a way out of these crises, so our analysis needs to fit our unique set of circumstances we face today rather than looking to by-gone eras I think.
In my opinion, the reasons markets are not pricing in big future interest rate hikes is because of the high levels of indebtedness. It wouldn’t take much of a rise in interest rates to dampen growth in the eurozone and bring inflation back down.
I see the crux of the inflation issue as how long will it take Moscow and Beijing to make the right political decisions on abandoning the war and zero COVID policies respectfully. Political pride is at stake. Russia is struggling to maintain the war and China is seeing riots in Shanghai. They need to change course. The longer they take, the more inflation spills into wage demands and services costs in western economies and then it becomes embedded.
If a solution come to the Chinese supply-chain issue in particular, then I think we will still have the deflationary pressures we saw before COVID in globalisation and automation, and the inflation uncertainties could rapidly calm down.
Would it be possible for you to discuss the stagflation in the 1970’s at some point?? It would be interesting to hear more about this from both of you, as you experienced it first hand, but also to compare it to our current situation – how similar are they? Also, would be interesting to hear your opinions on the actions of the US administration and how they may/may not have contributed (Nixon administration effectively ending the gold standard, import tariffs, OPEC) and how it was eventually balanced. In any case, thanks a mill for the great content!
Thanks Mark. Your words are very much appreciated. In the time allowed I wasn’t able to say much about the environment but had to focus on the economics (and ethics). Of course, we should eliminate hydrocarbons altogether, as fast as possible. Another reason for a massive expansion of alternative energy sources and investment in efficiency & all sorts of energy saving measures. I’ll read those links with interest.
Whats your thinking on Robert Watt
I think it demonstrates how the permanent government believes it is above the democratic process. Stephen Donnelly should feel very pissed off
Welcome back
Thanks. Much appreciated
Welcome back - you were missed
Thanks! Much appreciated
Thank you
Great to have ye back lads. Missed the podcast and getting the weekly updates from ye.
Many thanks Steve.
Great to have you back lads!
A great quote (I won’t try to attribute it out of risk of embarrassment) is bad generals plan to fight the last war again rather than the next one. We saw Joe Biden “learning the lesson” of having not supplied enough stimulus in the Obama era after the last financial crash, pumping huge stimulus into the US economic system after COVID. In hindsight that magnitude was not only unnecessary, but it fuelled an impending inflation crisis.
Looking forward from where we are now, we risk looking for historical economic precedent to inform on what’s coming next, like comparing now to the 1970’s. We’ve never had a great resignation (cause debatable), continued Chinese COVID lockdowns and the world’s bread baskets at war in a globalised economy before. We’re pioneering on finding a way out of these crises, so our analysis needs to fit our unique set of circumstances we face today rather than looking to by-gone eras I think.
In my opinion, the reasons markets are not pricing in big future interest rate hikes is because of the high levels of indebtedness. It wouldn’t take much of a rise in interest rates to dampen growth in the eurozone and bring inflation back down.
I see the crux of the inflation issue as how long will it take Moscow and Beijing to make the right political decisions on abandoning the war and zero COVID policies respectfully. Political pride is at stake. Russia is struggling to maintain the war and China is seeing riots in Shanghai. They need to change course. The longer they take, the more inflation spills into wage demands and services costs in western economies and then it becomes embedded.
If a solution come to the Chinese supply-chain issue in particular, then I think we will still have the deflationary pressures we saw before COVID in globalisation and automation, and the inflation uncertainties could rapidly calm down.
Thanks very much for the response in your latest podcast. Very much appreciated.
Welcome back!
Would it be possible for you to discuss the stagflation in the 1970’s at some point?? It would be interesting to hear more about this from both of you, as you experienced it first hand, but also to compare it to our current situation – how similar are they? Also, would be interesting to hear your opinions on the actions of the US administration and how they may/may not have contributed (Nixon administration effectively ending the gold standard, import tariffs, OPEC) and how it was eventually balanced. In any case, thanks a mill for the great content!
Thanks Mark. Your words are very much appreciated. In the time allowed I wasn’t able to say much about the environment but had to focus on the economics (and ethics). Of course, we should eliminate hydrocarbons altogether, as fast as possible. Another reason for a massive expansion of alternative energy sources and investment in efficiency & all sorts of energy saving measures. I’ll read those links with interest.