Conference Presentation, Panel, Fireside Chat
When Past Performance Is a Guide: Using History to Make Sense of the Post-Crisis World
Milken InstituteDaniel Arbess, Ben Funnell, Mitchell Julis, Peter Thiel, Niall Ferguson, Mitch Julis
- If the fracking revolution validates its proponents and monetary policies succeed, commodity prices may remain constrained and austerity measures proven wrong; conversely, if the fracking narrative is exaggerated, a third economic bubble could collapse within three decades.
- Without sufficient technological tailwinds to offset money printing, a crisis is predicted to persist rather than resolving via a repetition of 1930s patterns, while persistent structural regulatory constraints and rising infrastructure costs could prevent fiscal or monetary stimulus from generating necessary growth.
- Ben Funnell forecasts that a stable Euro system will likely drive Germany into a period of negative real bond yields and real asset inflation, whereas demographic shifts and incentive structures in developed nations are expected to reduce labor force participation and growth drivers.
- Dan Arbus anticipates a slower employment recovery and deeper labor drawdown due to balance sheet recession, projecting that the vast majority will remain left behind until the $5 trillion housing wealth hole is filled and home prices recover.
- Concerns regarding quantitative easing limits include anemic money supply increases and funds remaining idle at the Fed, prompting suggestions that overt monetary finance with strict inflation targets could be utilized, though data delays make precise policy prediction difficult.
- Peter Thiel notes that real interest rates suggest investors are earning approximately -0.6% real returns, rendering high-return strategies without volatility impossible, while demographics alone could lower U.S. GDP growth from 2% to 0.8% over the next 10 to 15 years.
- To achieve significantly better living standards in 20 to 30 years, developed nations like the U.S. and Western Europe require new dramatic technologies to avoid Malthusian stagnation or a "stationary state" similar to Japan's predicament.
- Dan Arbus predicts China will face massive challenges rebalancing its economy, limiting its contribution to global growth, while European expansion remains constrained by a lack of central bank independence and political integration needs.
- The "great divergence" of wealth within wealthy nations is expected to fuel political polarization, though the "great reconvergence" of per capita GDP between the West and emerging markets may continue, potentially lowering the U.S.-to-China ratio to below two-to-one by the mid-century.
- U.S. energy innovation and a healthy housing market recovery are expected to propel the U.S. into a leading position, while Mitch Julis anticipates baby boomers will transfer accumulated wealth over the coming 20 years toward legacy projects in higher education, medical research, and business clusters.
- A loss of the future as an animating idea, with 80% of Americans expecting the next generation to be worse off, risks a substitution of leisure for work, while the trend of prioritizing immediate liquidity over long-term investment horizons (over two years or a decade) poses challenges for venture capital and capital redeployment.
- Investors are advised to prioritize capital preservation alongside returns and to consider actions with relevance over 20 to 30 years, as precise prediction of policy levers remains impossible due to time delays in data collection and macroeconomic feedback loops.