By Simon Kerr
At one time Hugh Hendry, manager of the Eclectica Fund, used to write monthly commentary and distribute a full attribution for fund returns at the same time. Now he writes manager letters of some length periodically, but still informs his investors about risks assumed and how the P&L has been shaped on a monthly cycle. This month he has returned to his great theme of the last few years in writing about the Great Debt Deflation he sees. Whilst a substantial minority of the manager commentary is on Japan, this extract is about the situations elsewhere.
Goethe apparently wrote that Hamlet was a man asked to do something that seemed impossible for him to accomplish. The Fed’s mission seems equally intolerable. They have printed $2trn and yet the US is close to outright deflation on the core CPI measure. Does this institution truly have the mandate to print the necessary quantum of money necessary to change the course of prices?
This extract appears with the kind permission of the author.