Current Edge of Adair Turner’s Thinking

This video was published on Youtube a week ago and has only had 27 views. The video is of a talk Adair Turner gave in November at the Bristol Festival of Economics. It reflects his current insights.

He gives explanations for 4 big patterns developing in the global economy.

  1. Increased Inequality
  2. Rising ratio of wealth to income
  3. Rising leverage (rising debt to GDP)
  4. Falling interest rates over decades

His ideas are good. For example, one main idea is that the increased values of real estate are making our economies unstable. Most leverage is created for real estate and not capital investment. Confidence in property values then goes through intensely more volatile cycles.

His explanations of falling interest rates is based on… ex-ante savings being more than ex-ante investment plans. He explains why investment needs are going down. The result is lower interest rates which make it easier for people to compete for real estate ownership, which brings him back to his main point.

He does make mention that in the past 3 years, monetary policy should have dropped money from helicopters instead of what it did. Helicopter drops of money is actually fiscal policy. I agree with his “radical” view as he calls it, because using the IS-LM model, I see the same idea… that we should have had less monetary policy and more fiscal type policies. (Link to my post)