Investors Are Flying Blind Into the ‘Golden Age’

Ten years ago I praised a book by Mervyn King, former governor of the Bank of England, on the subject of “radical uncertainty.” Back then, I agreed with King that radical uncertainty – the kind that statistical analysis can’t deal with – was a pressing issue for financial regulators. After the extraordinary year just ending, the challenge is no longer so confined.

Over the past 12 months, the US has seen even every norm of economic policy – trade policy, fiscal policy, monetary policy – blithely tossed aside. At the same time, the US economy stands at the bleeding edge of what might be as consequential an economic revolution as the transition from farming to manufacturing, or from manufacturing to services – except that the AI revolution could happen much faster. I’ve been writing about economic policy for more decades than I care to remember. Never have I witnessed anything remotely like this past year’s surge of disruption.