Today's Outside the Box is from an old friend, but one who is new to my readers. Jason Hsu is a partner at Research Affiliates and helped create the Fundamental Indexes with Rob Arnott. Starting at Cal Tech, he went on to a PhD in economics, and is now a professor at UCLA and teaches in China and Taiwan. Wins all sorts of awards and has won the Rising Star of Hedge Funds award. In short, he is really smart.
He sent me this piece last week, and I asked if I could use it. He graciously acceded. It is on what Jason and Rob call "the 3-D Hurricane of Debt, Deficits and Demographics."
"Whether deficit spending truly has any significant impact on subsequent growth is rather irrelevant to the discussion; voters and politicians alike would simply misinterpret the economic literature and assume more consumption today will drive more growth tomorrow. In other words, and as scientific as one can put it ñ the Boomers have screwed Generation X."
As the hurricane season approaches, this is not a forecast for fair weather, but it's one we need to prepare for. This is a thoughtful piece with a lot of red meat, so let's jump in.
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