We are currently living with a Schrödinger’s cat economy. It exists in a state of quantum uncertainty. It won’t last forever, but right now we can’t quite see if we are alive or dead.
In quantum mechanics, Schrödinger’s cat is a thought experiment that illustrates a paradox of quantum superposition. In the thought experiment, a hypothetical cat may be considered simultaneously both alive and dead as a result of its fate being linked to a random subatomic event that may or may not occur. https://en.wikipedia.org/wiki/Schr%C3%B6dinger%27s_cat
One possible state is “Regime Change!” A future path battling persistent inflation, possible financial crisis, and austerity-through-high-interest rates.
The other possible state is “Back to 2018 (more or less)” A future path battling deflation, possible financial crisis, and austerity-through-sluggish-demand.
Neither path is all that thrilling. The sluggish on-the-ground reality won’t be too different. The main difference will be in real and nominal interest rates. Either rates end up high (to battle inflation) or low (to battle deflation).
Those two states are, for now, as much a matter of belief as facts. “The numbers” point down both paths. Your belief in the likely path is just that – belief. What numbers you choose to weigh most.
So that’s where we stand. This is what I was expecting to be blogging about 6 months ago before Ukraine exploded. Figured I might as well explore here now (with the occasional digression as always).