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Hedge Fund CIO: There Are Just Two Ways To Fix Today s Imbalances - An Economic Depression Or Soaring Inflation
by Tyler Durden
As excerpted from the latest letter by Eric Peters, CIO of One River Asset Management
Late and Awkward: “The March 2020 downturn resembled a natural disaster rather than a recession that cleansed imbalances,” said Marcel, our head of research, discussing economic cycles. “This was most evident in the goods sector. The global PMI survey fell from 50.3 in Jan 2020 to 39.6 in April, then fully recovered by July. It is equally evident in the finer details of today’s global good sector.
by Tyler Durden
By Eric Peters, CIO of One River Asset Management
For nearly a century, gold had been pegged at roughly $20.67/oz. Then in 1934, FDR banned private holdings, confiscated people’s gold, and set the value at $35/oz for use in international trade/settlement. It remained anchored at that price for decades. But fiscal pressures of the Vietnam war and Johnson’s Great Society project stressed the pegged system. Johnson’s war on poverty, Medicare, Medicaid, urban renewal programs and so many others were costly
. As they stressed America’s finances, the system’s circuit breakers were overwhelmed.
On August 15, 1971, Nixon abandoned the gold standard, froze wages and prices for 90-days, and imposed a 10% import surcharge. Unemployment was a painful 6.1%, inflation was 4.6% and 10yr yields were 6.58%. All sorts of unique things were happening in the world economy. They always are. Which is why no time is the same. Back then, the Bretton Woods system that had serve
by Tyler Durden
By Eric Peters, CIO of One River Asset Management
Dusted off an anecdote from 2016 that explores the meaning of money.
It is worth considering after a quarter in which the US dollar declined by more than 50% versus the dominant digital assets and the S&P 500 closed at an all-time high.
“People work in order to convert their time into a unit of account,” he said.
“We call that money, and it’s an invention that allows us to store time.”
Most people have stored little or none. So when they receive money, they quickly purchase necessities; food, shelter, health care.