A tour of the key Scylla/Charybdis Dilemmas facing major policymakers on the world stage. As you will see, the policy choices in most cases are between BAD and BADDER — a true BATTLE OF THE BADS.
Great post Michael. For readers, like eating and digesting a 7 course meal :).
A few of the Bad OR Badder choices could be Both, And…
Thinking about Capital Controls, consider also the lite versions of Coercions to do the patriotic thing, ie. Japan repatriation, and for US banks zero margin incentives to buy and hold more USTs, etc… country specific coercions.
As to “houses are for living in, not for speculation” that’s actually very good advice more Americans should seriously think about especially more so after Covid era Shelter Asset Mania so prominent in certain zip codes. Two 2 Sigma Events within 15 years (2007-2022) Price is what you pay, value is what you get. Financial markets suffer from chronic memory deficit disorder :).
Wow, what a ride through Bad and Badder. A few times you wrote: "...putting geopolitics aside..." I wonder if we really can. It's probably not anything fast and in need of quick reactions but I would submit that there appears to be a bad and badder for all the countries (approx. 150) around the globe that see: total hypocrisy by G7 comparing Russia versus Israel. Risk of being treated by G7 group same as Russia without having the resistance Russia has shown, nationalism, isolationism, and protectionism under the guise of national security risks by G7. If I take all these together I wonder how long it will take for Africa and South America togther with part of Asia to come to the conclusion that they have to chose between Bad and Badder standing for G7 support or BRICS+ support, maybe even a form of membership. That new bi-polar world would probably drift apart economically and technically much faster than most people think and could bear the question: will people on the G7 side have an option to go to the other side? I guess Elon would say: "If you don't like either side, by the time this is relevant, just emigrate to Mars."
Amazing read Michael. One point I can't wrap my head around is the structural inflation part where the steelman of the deflation argument I've heard seems to argue for factors greater in magnitude of effect. Decreasing demand via decreasing population is an obvious one but there's many more. I would be very interested to see an attempt to quantify the medium-long term arguments for both sides. Have you come across such work or would you care to take a stab?
Fascinating post from PauloMacro regarding his convo with Louis Vincent Gave regarding the possibility of the yuan not actually devaluing, but rather strengthening. Interesting points in case you are interested:
Great post Michael. For readers, like eating and digesting a 7 course meal :).
A few of the Bad OR Badder choices could be Both, And…
Thinking about Capital Controls, consider also the lite versions of Coercions to do the patriotic thing, ie. Japan repatriation, and for US banks zero margin incentives to buy and hold more USTs, etc… country specific coercions.
As to “houses are for living in, not for speculation” that’s actually very good advice more Americans should seriously think about especially more so after Covid era Shelter Asset Mania so prominent in certain zip codes. Two 2 Sigma Events within 15 years (2007-2022) Price is what you pay, value is what you get. Financial markets suffer from chronic memory deficit disorder :).
Thanks for the excellent post. "You BAD."
Amazing read
Fantastic article, you bring magic to macro!
Wow, what a ride through Bad and Badder. A few times you wrote: "...putting geopolitics aside..." I wonder if we really can. It's probably not anything fast and in need of quick reactions but I would submit that there appears to be a bad and badder for all the countries (approx. 150) around the globe that see: total hypocrisy by G7 comparing Russia versus Israel. Risk of being treated by G7 group same as Russia without having the resistance Russia has shown, nationalism, isolationism, and protectionism under the guise of national security risks by G7. If I take all these together I wonder how long it will take for Africa and South America togther with part of Asia to come to the conclusion that they have to chose between Bad and Badder standing for G7 support or BRICS+ support, maybe even a form of membership. That new bi-polar world would probably drift apart economically and technically much faster than most people think and could bear the question: will people on the G7 side have an option to go to the other side? I guess Elon would say: "If you don't like either side, by the time this is relevant, just emigrate to Mars."
Excellect analysis
Epic article Michael. Thanks.
Amazing read Michael. One point I can't wrap my head around is the structural inflation part where the steelman of the deflation argument I've heard seems to argue for factors greater in magnitude of effect. Decreasing demand via decreasing population is an obvious one but there's many more. I would be very interested to see an attempt to quantify the medium-long term arguments for both sides. Have you come across such work or would you care to take a stab?
Dude. You absolutely nailed this. Bravo!
And thank you for posting for us plebs who are small fry investors / non paid bozos!
I almost can’t forward it to anyone because so few are up to speed enough!
PS the political theater has truly gone full Kayfabe!
And we're just waiting for the Hammer to Fall. Another banger Michael.
Baddass!
This article made me late for an appointment it was that good
Hi Michael,
Regarding Contestant #2:
Fascinating post from PauloMacro regarding his convo with Louis Vincent Gave regarding the possibility of the yuan not actually devaluing, but rather strengthening. Interesting points in case you are interested:
https://pracap.com/on-china-why-the-real-risk-is-cny-5-not-9/?utm_medium=email&_hsmi=303658204&utm_content=303658204&utm_source=hs_email