In this environment, the UK is running a historically large current account deficit. On the positive side, the deficit is funded in domestic currency and financial reforms have increased the resilience of the UK system, thereby making larger imbalances more sustainable. But the UK’s deficit has also been associated with markedly weak investment and latterly with rapid consumer credit growth. This is not an imbalance that is, as yet, funding its eventual resolution. Moreover, despite the large depreciation around the referendum, the extent to which the UK’s deficit has moved closer to sustainability remains an open question, one whose answer depends crucially on the outcome of the Brexit negotiations. Most fundamentally, the UK relies on the kindness of strangers at a time when risks to trade, investment, and financial fragmentation have increased. III. Potential Solutions The world economy has been here before. In the 1930s monetary policy was exhausted and fiscal policy was in abeyance. The trap was sealed by a wave of protectionist measures originating in the US and spreading to Europe. As current and capital accounts closed, stagnation ensued. What should be done to prevent history from rhyming? In the simple world of the economist, the prescription is straightforward. Deficit countries should loosen monetary policy and tighten fiscal policy. Surplus countries should do the reverse. roll up its sleeves, it could easily solve this economic Sudoku.
To find something profound that I might pinch for your amusement today, I pored over the sayings of the great minds through time: Plato, Socrates, Mencius, Muhammad, St. Paul and St. Augustine, Voltaire, Martin Luther, Mother Teresa … Miley Cyrus, Justin Bieber. The maxims put forward by the sages of the ages are inspiring, but you already know them or you would not be where you are today: Be disciplined; be prepared; be loyal and thrifty and brave; always question conventional wisdom; take risks; push the envelope; be true to yourself; never promise more than you can deliver; never compromise your integrity; don’t waste your talents; never forget that you have been given those talents in order to do good; never, ever, ever, ever give up the pursuit of excellence. These are all wise maxims. But, truth be told, it would save time and expedite many a graduation ceremony if organizers would forgo a commencement speaker and simply remind the graduating class to read and, throughout life, reread the Old and New Testament or the Quran or Confucius or Shakespeare – the ultimate sources of almost every graduation speech I have ever read or listened to. For example, it would tax the capacity of the most powerful search engine to pull up the countless commencement speakers who have lifted and adapted variations of Shakespeare’s lines in King Henry VI, Part 2, Act 4, Scene VII that “ignorance is the curse of God, [k]nowledge the wing wherewith we fly to heaven”.