Ken Rogoff is just a brilliant guy. First of all, he is an International Grandmaster in chess and in the 1970s won the U.S. Under 21 Championship when he was only 16. After getting his Ph.D. in Economics from M.I.T., he served as the chief economist at the International Monetary Fund, where he had to deal with systemic banking failures in a number of nations. He and Carmen Reinhart have written insightfully on the banking crisis in the past. Mr. Rogoff might know more about how to solve banking crises than anyone, and certainly more than Congress or their lobbyists.
His latest piece is important reading. He concludes “within a few years, western governments will have to sharply raise taxes, inflate, partially default, or some combination of all three.” Possibly like the rest of us, he sees little prospect that Congress will ever actually cut spending.
Most western nations, and certainly the U.S., have not been in that position in the recent past. If Mr. Rogoff’s scenario comes to pass, having a Global Macro-type portfolio could be a lifesaver. The only way to protect hard-earned capital might be to have investment access to a wide range of asset classes around the globe.
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