Old Man Biden? Roaring '20s
"The clearest marker of this new dawn came [last] week, as incoming US President Joe Biden nominated Janet Yellen, who preceded Jerome Powell as head of the Federal Reserve, for the post of Treasury Secretary."
"That is incredibly significant. For about a decade now, central bankers have been complaining that they can only achieve so much with monetary policy. They need governments to help by directing the spending of all the money they have been printing. This complaint has only grown louder amid the economic damage wrought by lockdown. Now the former head of the world's most powerful central bank will be running the fiscal policy of the world's most important economy. Congress might be gridlocked, but it's hard to believe that Yellen won't have the clout to drive through at least moderately ambitious spending plans."
"Where will the money go? There are lots of ideas out there (politicians can be very creative with other people's money) but the overarching theme across all corners of the globe is that of a 'green' infrastructure boom. Unlike many forms of debt relief (which we may eventually get too), it's uncontroversial – try opposing efforts to tackle climate change and see where it gets you – and so it's the perfect excuse for governments to spend."
"There really is a new kind of recognition that you've got a society where capitalism is beginning to run amok and needs to be readjusted in order to make sure that what we're doing is sustainable and the benefits of growth are widely shared in ways they haven't been."
"This will bring its own problems – financial repression, the policy of holding interest rates below inflation, will squeeze a lot of portfolios. But in the meantime, growth will heat up, and assets that lost out in recent years will see their fortunes reverse...One beneficiary from a Roaring '20s should be the commodities market. Put simply...demand is set to spike due to infrastructure spending."