August 10, 2018
Over the past three years, an unexpected voice of caution has emerged from one of the most legendary families in finance: Lord Jacob Rothschild.
Readers may recall that as part of the RIT Capital Partners 2014 annual report commentary, the scion of Rothschild family warned that “the geopolitical situation is most dangerous since WWII.” One year later, Jacob Rothschild again warned about the outcome of “what is surely the greatest experiment in monetary policy in the history of the world“, and then again in August 2017 he cautioned that “share prices have in many cases risen to unprecedented levels at a time when economic growth is by no means assured.”
Little did he know that they were only going to keep rising, but related to that, he also made another warning which the market has so far blissfully ignored:
The period of monetary accommodation may well be coming to an end. Geopolitical problems remain widespread and are proving increasingly difficult to resolve.
Fast forward to today when in the latest half-year commentary from RIT Capital Partners, Lord Rothschild has made his latest warning to date, this time focusing on the global economic system that was established after WWII, and which he believes is now in jeopardy.
The billionaire banker pointed to the US-China trade war and the Eurozone crisis as the key problems putting economic order at risk, and the lack of a “common approach” – a reference to the gradual unwind of globalization in the wake of President Trump – that has made “co-operation today much more difficult”:
“In 9/11 and in the 2008 financial crisis, the powers of the world worked together with a common approach. Co-operation today is proving much more difficult. This puts at risk the post-war economic and security order.”
It wasn’t clear if he was referring to the post-war fiat standard…