Daily update
Daily update
- Recent events emphasized that the fourth industrial revolution is revolutionary. Social media has meant that any company’s reputation and brand has become exponentially more important. This emphasizes the importance of a strong corporate culture—having the right person, in the right job, at the right time—requiring employment free from prejudice.
- The fourth industrial revolution increases efficiency—one reason GDP is increasingly obsolete. Efficiency is a great outcome for sustainability. It also means that people can withdraw deposits from the banking system with the speed and fervor with which they try and buy Taylor Swift concert tickets. In the future, inefficiencies may need to be built back in.
- Banking system volatility increases liquidity demand. It is reasonable for central banks to supply that liquidity while tightening monetary policy for economic reasons. The international liquidity offered by extended dollar swap lines is a standard play (and demonstrates that the dollar faces no credible rival as global reserve currency).
- Longer term, if the existing tightening of lending standards accelerates, economic policy will have to change. Disinflation could emerge quickly—weaker demand naturally slows profit margin-led inflation, and consumers are less likely to accept the stories companies tell to raise. Central banks have better lending standards information, earlier than investors do.
