Will the 2020s be like the roaring 20s?
Contrary to the current narrative which suggests that advanced economies are heading towards a period of booming economic growth similar to the one of the 1920s, Brenda Brown paints a more pessimistic picture for the upcoming decade. She bases her opinion on the following differences between then and now:
- High government debt – In the 1920s inflation had significantly reduced the real value of outstanding debt. Today there are no clear views on how the large debt that governments have accumulated will be dealt with. This complacency does not bode well for continued prosperity;
- Technology – The Second Industrial Revolution of the roaring 20s (mass electrification, the motor assembly line, radio) introduced new technologies with broad scope for enhancing the living standards. Today’s leading technology, namely digitization, doesn’t have the potential to significantly increase living standards.
Why the 2020s Won’t Be like the Roaring 20s
By: Brendan Brown – Mises Institute
The 2021 priorities for US monetary policy
Mary Daly, President and CEO of the Federal Reserve Bank of San Francisco, in a recent speech, explains what the priorities of the Fed should be in 2021:
- Maintain an accommodative stance until the economy is back on stable footing;
- Return to full employment and sustainable 2% inflation;
- Use all the powerful tools the Fed has until a full recovery is achieved;
- Build out and strengthen the suite of monetary policy tools to further mitigate any financial risk arising in an environment of such low rates;
- Ensure that the benefits of low interest rates and rising asset valuations can spread widely throughout the economy.
2020 Lessons, 2021 Priorities
By: Mary C. Daly – Federal Reserve Bank of San Francisco
Some optimism
So, let us enter 2021 with real yet cautious optimism. Let us resolve to extend the public-health successes of the Asia-Pacific region and the new vaccines developed in the US, Europe, Russia, and China to benefit the entire world. Let us resolve to set aside the hatreds that have undermined global cooperation, and join forces to overcome the inequality, poverty, exclusion, and environmental destruction that threatens the world. Let us redouble our support for the UN, to build a future based on peace, human rights, and sustainable development. And for those in the US, let us begin to heal a wounded and divided nation.
Optimism for the New Year
By: Jeffrey D. Sachs – Columbia University
