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Hedge Fund CIO: “Generational Conflict Will Be The Top Theme Of The Coming Decades: Enter MMT”


Submitted by Eric Peters, CIO of One River Asset Management

While our ageing central bankers gradually come to terms with the fact they do not understand the complexity of the system that they themselves created, our global youth are forming a new vision of their future. And while it’s notoriously difficult to predict the behavior of such complex systems, it seems a fair bet to expect a global green new deal, funded by bonds, bought by bankers.

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Climate change and generational conflict are the most important themes that will unfold in coming years/decades, he thought.

Of course, central bank impotence is a critical theme too, and the growing admission by our monetary magicians that they need politicians to pull the fiscal levers signals its arrival. But the intersection of climate and youth is something truly new. Climate issues concern global youth far more than matters of money. And for decades, the adult obsession has been on GDP, debt, productivity, interest rates, profit margins, taxes.

Japan’s bubble burst in 1989 and its adults chose economic stability over creative destruction. The cost was endless stagnation. Parents got the deflation they wanted. Kids forfeited hopes for a dynamic future. And now we fear the same fate for Europe, China, the US.

But as the global youth organizes around a plan to address a changing climate that their parents seem content to mostly ignore, they will find they have more economic and political issues in common with one another than with their parents. And they will reject the Japanese bargain.

One thing certain in a fiat currency system is that money’s value diminishes over time, he thought. Japan is the exception proving the rule, but even there, stability will pass.

And so, if the youth care more for the environment than they do about money, and if ageing parents care about their money more than they do about their children, then generational looms. However, one possible way to defer this clash involves the oldest trick in the book. And that is more money for everyone; for the GND, for Medicare, Medicaid, Soc Sec, tax cuts. Enter MMT.

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