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Strategies & Market Trends : Dino's Bar & Grill

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To: Goose94 who wrote (110348)	7/15/2021 3:02:52 PM
From: Goose94	Read Replies (1) of 203382

Gold: Calling The Late 1960s: The Return Of High Pressure Economics Global growth has come roaring back as economies are progressively unlocked. However, the key question is what governments will do to alter the rules of the game after economies return to full reopening. What is now abundantly clear is that the world’s ongoing thirst for government largesse will be the pandemic’s lasting legacy. Deficit shaming and austerity are dead. Now, governments have a historic opening. Will they seize on a game-changing economic agenda? Without question. The U.S. government has now spent US$5 trillion on support measures over the last year. Unfazed by any inflationary or overheating risk, the Biden administration is pushing for additional stimulus directed at public investment. It is easy to see what is happening: what is new is old here. The term “high pressure economics” has moved swiftly back into today’s lexicon. Originally popularized in the late 1960s by Arthur Okun, an economic adviser to the Lyndon Johnson administration, the concept is simple: aim to push GDP growth above its potential and unemployment below the natural rate. What should follow is that companies raise wages to attract and retain workers. To offset increased labour costs, firms would need to focus on boosting productivity. All of this should shrink income gaps, upgrade the labour force and increase innovation. That’s the theory anyway. Over the long term, it really doesn’t matter if it works (isn’t economic theory fun?). What matters is that deficits and growth will be higher over the medium term. The “new normal” period witnessed after 2008 is over. Looking ahead, that means a generally weak U.S. dollar, chronic headwinds for growth stocks and strong returns in emerging markets — the exact opposite market dynamics of the last decade. All of these reflationary trends are still spring-loaded to last for several years. Tyler Mordy on BNN.ca Market Call Thirsty July 15th @ 1200ET

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