The Rise of Inflation & the Great Demographic Reversal | Charles Goodhart

In Episode 272 of Hidden Forces, Demetri Kofinas speaks with economist and author Charles Goodhart. Professor Goodhart is widely recognized for his contributions to the fields of monetary economics and central bank policy and is famously associated with what we commonly refer to as “Goodhart's Law,” the stipulation that any observed statistical regularity ceases to function as an objective or accurate measure the moment that it becomes a target of public policy.

Both professor Goodhart and his co-author and former colleague Manoj Pradhan recently coauthored a book titled “The Great Demographic Reversal,” which puts forward a compelling and controversial argument about the long-term effects of an aging society on inflation, interest rates, investment, savings, and consumption, as well as economic growth and public policy decisions related to things like taxes and government spending—all of which are discussed in today’s episode.

The main argument put forward by both authors is that the inevitable decline in dependency ratios caused by aging demographics will lead to structural, long-term increases in interest rates and inflation that will strain government finances and jeopardize the policy-making independence of central banks as their mandates to control inflation come increasingly into conflict with the objectives of politicians and national governments. 

The objective of today’s episode is to more fully explore the arguments and assumptions that Charles Goodhart and his co-author make in their book, the evidence in support of their conclusions, and the implications of their findings and projections for the economy, investors, and governments.

You can access the full episode, transcript, and intelligence report to this week’s conversation by going directly to the episode page at HiddenForces.io and clicking on "premium extras." All subscribers gain access to our premium feed, which can be easily added to your favorite podcast application.

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Producer & Host: Demetri Kofinas

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Episode Recorded on 09/14/2022