Steen's Chronicle: The old and the new economic order

On a day where everyone wants to read the tea leaves from Jackson Hole I have put a finishing touch to my new economic theory. Some of you know I have been very disappointed not to be considered with my "Triangle of economics" so here comes the new version:

 

The first model describes the world and its parameters:

 

We live in FIAT economy where growth is fueled by debt, and less and less from productivity & demographics. It happens in a closed circuit with US$ as the reserve currency.

 

The problem now is that the "models Black box" the economy can not get restared without changes to one or several parameters…..

 

 

The banking system is moving from 20-30x leverage to maximum 10x

 

Input costs is rising….

 

Cost of capital been rising since September last year….

Unit labor cost is about to rise significantly due to in-equality, social tension and simple shortage of qualified workers….

 

Output is falling..

 

Profit has been flat to lower…..

Job been….. relative to population is at best unchanged at worst falling…

 

The new business model is to adjust to slower if not unchanged growth – getting bigger market share via better products or service, something which has totally been forgotten in the new world of "digitalization" where the D stands for "dumbing down" in my opinion…

 

New models:

 

 

 

Of course above will be explained and detailed more, but I felt/fell it explains well how and why the US$ leads everything…….

 

Safe travels,

 

Steen

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
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