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Albert Edwards: ‘This Is Exactly What The Ice Age End-Game Always Was’
"This is exactly what the Ice Age end-game always was", Albert Edwards writes, in his latest weekly missive.
If Edwards has been "early" over the course of his career, he's been right on time when it comes to the world's decisive pivot to overt (as opposed to covert) debt monetization.
Back in February, Edwards said “The Ice Age” (his long-standing thesis describing western markets’ date with deflation) was near its end. We are, he said, on the verge of transitioning to “The Great Melt
You must’ve been pretty happy about the call out by Edward’s at the end of his note.
Really good Post H………Edwards is so intuitively logical… The disconnect (even after two readings) comes from the fact that we are in a box canyon and the alternatives are appearing unworkable… I think these scenarios have occurred in History before and the World didn’t come to an end so I conclude it is workable….by default that is !?
However Cooperation is anything but in the lexicon of the right wing of our country. If no cooperation, what then?
Additionally Japan’s manupulations are not done in a vacuum. What happens different if the largest economy heads down an equivalent path? Is the outcome the same?
Some questions I suggest cannot be answered.
I really like this thought provoking article. It exercises my neurons.
What he foresees and what MMT advocate seem congruent. D Price makes a good point, can it be equivalent to Japan. I have been telling people for years we are turning Japanese, but can we remain reserve currency also.
May not matter.
I suspect that we remain the reserve currency as long as we are the ones with globe spanning military power projection capabilities and a navy which dominates the oceans. In many ways the USD reserve status is just fancy Tribute payments to the empire who maintains sufficient order for commerce. Once that goes away the status gets a lot less stable but keep it in place and I am guessing MMT will just be the path everyone takes.
Recent military action in Libya which scales were tipped by Turkish hardware is one data point indicating major changes in military hardware are a coming and may tip balance away from major economies much like the AK-47 has.
Congratulations, Heisenberg! Great shout-out by Edwards to you there.
Congrats indeed. Congrats also on quoting a quote of yourself
This is really not such new stuff. Keynes argued that the most effective use of monetary policy was when it was combined with government spending/fiscal deficits to stimulate the economy out of a depression. And Edwards’ posts see things correctly- if this is done correctly, it should make nominal growth pick up. If nominal growth takes off, and employment and incomes grow faster than the accumulation of debt down the road, Debt/GDP declines. This happened after WW2. It can happen again. But the burden is really on the fiscal side of things. Will the Congress and President backstop low and moderate income folks with progressive programs such as univeral health care, aid to states and localities, increased aid to education, infrastructure spending and increased minimum wages and earned income credits? Not likely right now but there is always Novermber – maybe? Low to moderate income folks spend their aid- upper income save more of it. Most bang for the fiscal buck this way, and this will address the poor income distribution currently around.
congrats on the well deserved acknowledgement !
Very impressive, Prof H
the “only effective transmission mechanism for QE to stimulate the economy” is through driving down one’s own currency. In that regard, he suggests that to the extent yield-curve control (YCC) actually ends up entailing less in the way of asset purchases (e.g., the “stealth taper” in Japan), implementing YCC could amount to shooting oneself in the foot.
I wonder how the above paragraph squares with Ray Dalio’s earlier account of how YCC helped tame debt after WW2 in conjunction with inflation?
Albert Edwards is 100% right, the Heisenberg Report is a must read, come Ice Age or Melt Down.
The great melt will not be kind to long duration assets………..
It is all just a giant ponzi scheme.
We never address the core problems.
Albert Edwards can get to the point without a lot of crap getting in the way. What a relief…..
Sooo… what does it mean for asset prices?
Like, as many commentators point out, direct monetization sounds an awful lot like MMT. Which means, the one limit is inflation. The old butter and gun variety.
And while I would welcome infrastructure upgrade, etc, I also would like to point out that inequality has been trending down for a good few years now. It’s still too high but it has been reversing. Somewhere, we should acknowledge that and the fact that, maybe, we aren’t on the road to neo feudalism… ’till the AIs arrive at least.
This article’s four years old. I have no idea why it’s “trending” on the site today.
Arg! My bad. Thanks, H.