American Consequences - September 2020


READ MORE FROM OUR CRO X This isn’t the first time we’ve talked to our Chief Risk Officer X. Read his exceptional contributions to American Consequences... because none of these risks are going away anytime soon.

An InterviewWith Chief Risk Officer X

The current understanding of the preponderance of experts seems to be that the U.S. is in a much stronger position than China to continue to grow and prosper – and to meet future challenges as we move towards new technologies, a digital economy, and a world without work.

The growth and levels of respective debt and the aging and shrinking of respective populations are

the two main pillars for this position. On the surface, these arguments are compelling – and certainly problematic for China. But on a relative basis, one can argue that the U.S. is every bit as challenged, if not more.

A Top CROWeighs In on Volatility

Investors are truly in a damned-if-they-do and damned-if-they-don’t world. Betting against the central banks’ ability to print money continuously without reducing its value has been a fool’s errand for 30 years. And those who made that bet are now no longer managing money.

At the forefront of investors’ minds is the very real fear that at some point the 30-year lowering of

rates must end. Then the effects of central bank market participation will create a rapid change in the supply and demand equation for government debt and drive rates higher and asset values lower. Investors hold stocks and bonds but are ready to react at the first whiff of a back-up in rates. This is a recipe for heightened volatility that will, absent a severe market correction, continue unabated.


September 2020

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