Tesco
Market Macro Myths
Report

Market Macro Myths

Debts, Deficits, and Delusions

James Montier
GMO, 2016
Get the Report

Read or listen offline

áudio gerado automaticamente
  • 0.5×
  • 0.75×
  • 1×
  • 1.25×
  • 1.5×
  • 1.75×
1×
áudio gerado automaticamente

Editorial Rating

9

Qualities

  • Innovative
  • Eye Opening
  • Background

Recommendation

Notable “sound finance” proponents such as Warren Buffett, Angela Merkel and Barack Obama argue that a balanced government budget and economic health go hand-in-hand. Adherents to a philosophy known as “functional finance,” on the other hand, believe that governments should tailor policy to foster price stabilization and full employment. With that latter viewpoint in mind, investment expert James Montier deconstructs and demolishes some well-worn “myths” about fiscal policy in this engaging, thought-provoking article. getAbstract recommends his paper to anyone interested in a nontraditional view of fiscal and economic policy.

Take-Aways

  • “Functional finance” advocates for government policy that enables full employment and price stability in an economy.
  • The private sector’s accumulation of excessive debt may be unsound, but “monetarily sovereign” countries can’t become insolvent.
  • Little historical evidence suggests that inflation and deficits are convincingly correlated, except in postwar periods. In the United States and Japan, higher government debt and deficits have tended to correspond to lower interest rates.

About the Author

James Montier is on GMO’s asset allocation team and has written several books on investing.

Comment on this summary or Iniciar a Discussão