Capital Allocators – Inside the Institutional Investment Industry James Aitken – Opportunities and Risks from Monetary Policy (EP.326)
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Jul 10, 2023 
James Aitken, Founder of Aitken Advisors, shares his expertise on macroeconomic trends impacting global capital. He delves into the intertwined dynamics of fiscal and monetary policy post-COVID, spotlighting investment opportunities in the U.S. industrial sector and UK assets. Aitken warns of risks like volatility targeting and the challenges in Australia’s economy. He also discusses how technology and AI are reshaping consultancy, making insights more accessible to clients. Tune in for a rich exploration of navigating current economic uncertainties!
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Monetary vs. Fiscal Policy
- For 20 years, monetary policy dominated because fiscal policy was inactive.
- Now, monetary policy still dominates because fiscal policy is overactive and can't be turned off.
Real Policy Rates and Disinflation
- Disinflations typically occur with positive real policy rates, not negative ones.
- Current real policy rates are negative, suggesting we haven't reached sufficient monetary restriction.
Consumer Elasticity and Fiscal Stimulus
- Unlike previous crises, US households have largely termed out their debt, reducing their sensitivity to rising rates.
- This, combined with persistent fiscal stimulus, requires a more aggressive and persistent Fed response.