The Opinion Exchange. One of our primary goals with this newsletter is to provide our readers with a wide range of viewpoints. As noted previously, the risk with this is that we don’t convey a clear idea of our actual views. Yet, we’ve always felt that’s a chance worth taking, particularly since we try to subsequently clear up any ambiguities.
It is odd how a single event can cause some notable leopards to change their spots. In this case, the election of Donald Trump has caused reverberations throughout the financial world, and some apparent self-reflection by several of the world’s leading thinkers.
Legend has it that Richard Nixon once said: “We’re all Keynesians now.” In reality—and most ironically—those words were actually uttered years earlier by the ultimate anti-Keynesian economist, Milton Friedman. However, former President Nixon did riff off of this when he declared, after removing the US from the gold standard in 1971, “I’m now a Keynesian in economics.” Unsurprisingly, this turned out to be bad news for the American public as Mr. Nixon’s conversion unleashed a decade of stagnation and inflation. As a result, this wrenching experience produced a new term that the disciples of Keynes had previously believed was impossible: stagflation.
“Anyone who isn’t confused, clearly doesn’t understand the situation.”
-EDWARD R. MURROW, journalist and war correspondent.
In the cross-hairs of cross-currents. One of our main objectives in publishing the Evergreen Virtual Advisor (EVA) is to offer readers both our views and those that contradict them.
“Would higher inflation lead to stronger equity market returns? Here the answer is a simple no. History has shown time and again that accelerating inflation leads to lower P/Es, and vice versa.”
-LOUIS GAVE, founder Gavekal Research.
KJR. For younger Seattleites,