Jim Reid: an ”age of disorder” is looming

published 21 September 2020

“Economic cycles come and go, but sitting above them are the wider structural super-cycles that shape everything from economies to asset prices, politics, and our general way of life.” The current super-cycle “has been gradually fraying at the edges over the last half-decade” and we are likely to look back on 2020 as its end.

There have been five super-cycles in modern times, reckon Reid and his team: the first era of globalisation (1860-1914), war and depression (1914-1945), the Bretton Woods agreement (1945-1971), the arrival of high inflation (1970-1980) and the second age of globalisation (1980-2020). This last era was long and favourable for investors: “The best combined asset-price growth of any era in history, with equity and bond returns very strong across the board.”

But the new era promises upheaval, driven by eight key themes: US-China tension, a make-or-break decade for Europe, the growing allure of money printing and modern monetary theory (see left) in response to high debt, less-stable inflation (whether deflation or high inflation), greater inequality, a growing intergenerational divide, the climate-change clash, and the impact of technology on how we live and what that means for our cities. This is likely to threaten current high global valuations. “Simply extrapolating past trends could be the biggest mistake you make