Two very sharp people.
We happen to think highly of both of them. Here's an introduction to a post by Chancellor in 2020:
Edward Chancellor: «Prudent Investing is Impossible These Days»
We like Edward Chancellor.
May 2016
Lessons From the Mississippi Bubble--Edward Chancellor
Whenever emerging markets felt a little too frothy this last decade we'd trot out a bit of Chancellor profundity:
And from The Market.ch, September 11:....
Bernstein after the jump. Here's the headline story from the CFA Institute's Enterprising Investor blog, June 23:
Book Review: The Price of Time
By William J. Bernstein
Few areas of macroeconomic policy are as important and generate as much heat as monetary policy.
Were a freshman economics major to inquire about the subject, I would tell them to start with the marvelously entertaining video called “Fear the Boom and Bust: The Original Keynes vs. Hayek Rap Battle.” I’d then hand the student a copy of Edward Chancellor’s The Price of Time.
It is no secret that productivity growth is slowing worldwide; for example, in the United States, it fell from 2.8% per year between 1947 and 1973 to 1.2% after 2010. Things are worse in Europe and Japan, with productivity growing at less than 1% per year for a generation.
Most famously, Robert Gordon of Northwestern University primarily blames the slowing pace of technological innovation. Professor Gordon and I must be exposed to different versions of the scientific literature, which to my reading bursts at the seams with evidence of technological progress. One unsexy, unremarked, but nonetheless momentous example: The Bosch–Haber process supplies most of the world’s fertilizer. This high-temperature chemical reaction consumes enormous amounts of fossil fuel, but the past decade has seen enormous advances in low-temperature catalysis that promise to both increase agricultural productivity and cut down on greenhouse gas emissions.
Larry Summers (and before him, Alvin Hansen), however, blames “secular stagnation,” which ascribes falling productivity to an aging and thus less vigorous and intellectually nimble workforce. The problem with this explanation is that it does not fit the demographic data. Anecdotally, for example, the Roaring Twenties followed a long period of slowing population growth, and more systemic data show no relationship between population growth and the economic variety of growth.
Chancellor provides a different, more compelling, and more frightening explanation of the world’s slowing economies: central banks’ now decades-long love affair with artificially low interest rates.
He starts by discussing Swedish economist Knut Wicksell’s concept of the natural rate of interest, r* (r-star), below which inflation results and above which deflation occurs. While a skeptic might point out that r* is unobservable, it has been eminently clear for the past two decades that we are in monetary terra nova with prevailing rates well below r*.
Chancellor’s central thesis, buttressed by extensive academic research, particularly from the Bank for International Settlements’ Claudi Borio, is that interest rates below r* promote a number of macroeconomic evils. Call them the “Four Horsemen of Cheap Money.”
The first horseman is malinvestment. Rates below r* drive capital into projects with lower-than-normal expected returns; in other words, cheap money decreases the natural “hurdle rate” for investment. Think about the billions in investor cash that trained an entire generation of millennials that a crosstown ride should cost about $10 or, more generally, about the overinvestment in real estate, one of the least productive sectors of the economy....
....MUCH MORE
Here's something on Bernstein, there are many more for the interested reader, use the 'search blog' box upper left, keywords Bernstein or Efficient Frontier:
"Zvi Bodie and the Keynes’ Paradox of Thrift"
First though, our introduction to a 2010 piece that referenced Bodie v. Bernstein:
I think it was Boston University's Zvi Bodie* who, shrugging off the restraints of his MIT PhD, pointed out to the "expected return" crowd that if it were true that the risk of negative returns decreases as the time frame increases, the cost of long-term puts should decrease the farther out you go.From double-Doc. William Bernstein's Efficient Frontier back in 2003....
Kind of an Emperor has no clothes thing to say....
****William Bernstein (No slouch either, M.D. Neurologist, PhD. Chemistry, dabbler in Modern Portfolio Theory, Bestselling Author, etc.) in one of his Efficient Frontier pieces, "Zvi Bodie and the Keynes’ Paradox of Thrift" described the professor as "Academician, raconteur, and all-around good guy Zvi Bodie...".
Then he rips his lungs out. Very typical in the academy:
