In Shifting Vol Landscape, One Thing Never Changes

In Shifting Vol Landscape, One Thing Never Changes

A persistent theme in these pages is the notion that monetary policy can never be truly "normalized." The best expression of that idea and how it relates to fiscal policy was probably last year's "Yen And The Art Of Bridge Maintenance," but I've written almost ceaselessly about it since. In "The Lollipop Emoji," I wrote that, At every turn, serious investors are compelled to consider the price of money, the risk-free rate and liquidity when assessing valuations, the relative attractiveness of
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5 thoughts on “In Shifting Vol Landscape, One Thing Never Changes

  1. The evolving market structure and dynamics described above will lead, eventually, to disaster — if not economically, then for sure politically. And who’s willing to put themselves in front of that train? Apparently, no one.

  2. Sometimes you have to step back from the fray and look at the underlying political economy. This is applicable to most of the developed world. No matter how much monetary stimulus you embark on there are binding constraints on you as a central banker. Population growth and particularly growth in prime working age folks is low- chalk it up to slow overall birth rates, low immigration, and in the US the thin safety net and poor education and infrastructure investment made in and for the median worker in the last 40 years. With low interest rates and the world’s key currency it should be an absolute no brainer for investment in these things and an increase in legal immigration- forget DACA- give these young folks DACA treatment now and legal status and if in 7 years they pay taxes and keep their noses clean, offer full citizenship. Increase legal immigration- for any illegals who have settled here- give them a way to achieve legal status. And give out more green cards to folks that want to come here. Do it for humanitarian reasons and also have a program to offer immigration for scarce occupations too. Once the demographics improve, you won’t have to obsess about slow growth. There will be other challenges of course. Worrying about the FOMC should be farther down on our list. It is not a quick fix, but it will show benefits over time.

    1. Ria

      In the gilded age you would have been called a leftist communist. The alternative to what you propose is a recreation of the late 20s and 30s in this country. Albert Edwards ice age by a different set of terminology.

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