Deutsche Bank Chief Economist “Scared” At Lack Of Economic Concern Amid Historical Oddities

24-Jun (ValueWalk) — What is scary to David Folkerts-Landau, Deutsche Bank AG’s chief economist, is not “we are living through one of the most unusual economic and financial periods ever.” This isn’t the primary concern. “The scary thing to me is how rarely anyone seems to acknowledge this fact,” he wrote in a recent research piece.

Kicking off the Konzept publication, “Reflections on unusual times— negative rates, buybacks and changing corporate governance,” the Deutsche Bank economist introduction paints a picture of the illogical as it benchmarks a unique point in economic history. After spending his academic and professional career at Harvard, Princeton and the University of Chicago, then a professional career at the International Monetary Fund and now one of the world’s largest banks, you might think Folkerts-Landau has seen it all, but think again. The current malaise among the investing class is historic.

Investors, journalists and traders “pick apart” minutia such as “quarterly data releases or the tiniest details of a central banker’s speech. Economists deal everyday in trifles such as: Where are Janet’s dots? Is a weak euro helping growth? Did core inflation rise a smidgeon in Japan? Yet the answers to such questions are immaterial next to $8tn-worth of quantitative easing (and rising) since the financial crisis.”

…”Just stop and think about that for a minute,” he muses. “Heavens, twenty generations have never seen interest rates at these levels!”

But what is more concerning is the dopamine pumping pleasurable stimulus into every economic orfus has dulled the normally sharp observations of economists and market watchers. “Economists discuss the current situation using the same old language and theories. Investors watch their screens as if nothing out of the ordinary is going on. The collective denial is unnerving.”

With such odd economic behavior, why is everyone fixated on meaningless details and not taking a step back and looking at the broader landscape? Financial commentary is so happy to dig through the weeds to keep a positive face on economic news that it is not “stepping back to gasp in awe at arguably the biggest monetary experiments in history.”

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PG View: Despite talk of “normalization,” I think there may be a broad underlying acknowledgement that this is the “new normal”.