Wealth Creation and Destruction Under the 2% Regime

Abstract

This chapter examines whether it is possible to use skill in the diagnosis of monetary inflation in asset markets to better manage wealth under the 2% inflation regime. The good news is that the diagnosis can identify patterns or stages through which asset inflation passes and that these broadly hold in all episodes. The unwelcome news is that the timing of stages is notoriously difficult. The speculative narratives which emerge and become central to the propagation of asset inflation have some real foundations, but the depth of these and the extent of hyperbole above vary between cycles. The conclusion here is generally supportive of asset price inflation analysis being useful to wealth managers, but talent in this is not a necessary or sufficient condition for investment genius.