I query myself

Genevieve Signoret

(Hay una versión traducida al español aquí.)

In launching a New Year by relaunching this blog, I interview myself, posing four questions—three that look back, a fourth facing forward.

What surprised you the most in 2020?

Not the fact that the market rebounded but how rapidly it did.

What 2020 event or trend confirmed for you a previously held view?

Two things. First, observing the United States, I confirmed that a country’s customs and norms bear as much weight in a democracy as its legal framework.

Second, I observed and thus confirmed my view that nearly everyone everywhere is unscientific. Not only unschooled folks who see dirt in clean elections and more peril in a vaccine than in a killer bug, but also holders of advanced degrees, folks purportedly trained in the scientific method.

Few show self-doubt or revise a view. In economics, many, after over a decade of evidence assaulting their view that in aliquidity trap[1] massive monetary stimulus will prove inflationary, today, with our economies again sunken, warn of imminent blowups in goods prices and bond rates both.

Now, I do not mean to sound holier than they; I fret about my own thinking too. And hereby resolve for 2021 to wonder over and over whether I’m wrong, explore opposite opinions openly, and keep wide open eyes to evidence erosive of them.

What are the best books you read in 2020?

1. The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes, by Zachary D. Carter. Loping lucid prose tricks you into learning.
2. A Tract on Monetary Reform, by John Maynard Keynes. Are you a macroeconomist? Read it to see why Brad de Long calls it “the best book on monetary theory” and why Milton Friedman claimed that “We are all Keynesians now.” And to be reminded of this: hardly ever is a concept in current vogue truly new.
3. Back in my early twenties, My Name is Asher Lev, by Chaim Potok, was among my favorite novels. Dusting it off, I worried it would not hold up. It holds up (it exalts)!  An ultra-sensitive Hasidic genius boy in the 1950s grows in Brooklyn into an artist. Courage, tenacity, and a love of learning learned at home and in his faith community lead our painter to reluctantly quit both—almost. Albeit in radical rebellion, our compulsive artist is anchored always—in ritual and love.

What do you aspire to understand better about the world or markets in 2021?

How fast can an economy such as Mexico’s, which entered the pandemic stagnant and whose government provided practically no relief, rebound?

Is AMLO silently plotting to take a sharp turn to the left at the midpoint of his term?

Will American polarization and partisanship render Biden practically powerless on domestic policy?

How long, if ever, will it take the United States to recover the trust it has lost abroad? The respect? How can I improve for my clients as a teacher on markets and investing?

[1] “If the market clearing rate is lower but unachievable, then, at the zero rate, the supply of savings will be excessive. This is a liquidity trap.” (Genevieve  Signoret – Timón Económico. Krugman at Cambridge on Keynes). Alternatively, you can think of a liquidity trap as “a situation in which conventional monetary policy — open-market purchases of short-term government debt — has lost effectiveness. Period. End of story. Now, if you prefer a different definition of a liquidity trap, OK; call our current situation a banana, instead.” (Paul Krugman – New York Times Blog. What’s in a name?)