The key lessons
Banks may deliver poor LT investment returns but their interaction with the wider economy provides important insights for corporate strategy, investment returns and asset allocation (#1).
Starting from a simple understanding of core banking services, we can build a quantifiable, objective and logical analytical framework linking all domestic sectors with each other and with the rest of the world (#2).
This framework allows us to challenge official UK forecasts that assume unprecedented behaviour and dynamism from UK households and corporates in support of unsustainable outcomes (#3).
It also allows us to debunk EA myths and identify the key factors that will determine the shape of any recovery in Europe and investment returns in 2021 (#4).
The messages from the UK and EA money sectors during the pandemic have been very similar, albeit with the UK demonstrating higher gearing to current dynamics, including any return to normality (#5).
They also contrast sharply with the messages associated with previous periods of monetary expansion (#6).
Finally, humility and a willingness to unlearn the so-called lessons of the past is important, especially in relation to banking and macroeconomics. The outlook for 2021 will depend, largely, on whether policy makers are willing to challenge orthodox fiscal thinking (#7).
Will 2020-21 be a watershed moment?