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,
“There’s a huge layer of the economy unseen in the official data and…unaccounted for on the income statements and balance sheets of most companies. Free digital goods, the sharing economy, and changes in our relationship have already had big effects on our well-being.”
-ERIK BRYNJOLFSSON and ANDREW MCAFEE,
“To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about.”
-Economist FREDERICH HAYEK, as relayed by William White in his Adam Smith prize acceptance speech last month.