From Breakingviews - Securonomics is fuzzy new lodestar for investors
A "love lock" hangs on a metal fence near the canal of Port Said, Egypt December 12, 2022. REUTERS/Mohamed Abd El Ghanylast week in Washington by Rachel Reeves, the UK Labour Party’s shadow Chancellor of the Exchequer, is the simplest summary of what has happened to the framework that has governed global economic policy for the past three decades.
Domestically, industrial policy is back. The state will explicitly subsidise “specific sectors that are foundational to economic growth strategic from a national security perspective,” Sullivan explained. That principle underpins the Biden administration’s two main pieces of economic legislation of the past twelve months, the CHIPS and Science Act and the Inflation Reduction Act, which aim to bolster the United States’ semiconductor and green energy industries, respectively.
Yet today’s global economy faces challenges Colbert or Hamilton would hardly recognize. One especially obvious question is whether prioritising national security is consistent with the other big economic policy shift of the past two years: the attempt by central banks to normalise monetary policy after more than a decade of ultra-low interest rates.
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