It’s our 16th birthday – and the chemical industry remains the best leading indicator for the global economy

The newsletter has now been running for 16 years since the first post was written from Thailand at the end of June 2007.  And quite a lot has happened since then:

The past few years have been very difficult for most people. And unfortunately, all the signs are that things will likely get worse, rather than better.

One key issue is that most policymakers and commentators prefer to focus on their computer models. They don’t look out of the window to see what is happening in the real world.

As a result, they allowed inflation to get out of control as the Bloomberg chart shows.

Wars are always inflationary, as production has to be diverted “to make guns instead of butter”.  And the Ukraine war is the first major war on the European continent since 1945.

The war also highlights how the real world can often be a very messy place. Issues such as geopolitics and demographics aren’t easy to understand. It can be hard to understand the detail of how key industries and markets are operating.

So it’s no surprise that most policymakers have preferred to stay in the world of theory.

But the legacy of their theory is shown in the chart. They have built up a mountain of debt, now >$70tn, which can never be repaid.

And all this debt, in the end, will be deflationary. The reason is that debt, by definition, brings forward demand from the future.

Debt makes sense if you are a young couple buying a home for the first time. You can be optimistic that your income will be enough to pay back the mortgage over the next 25 years.

But it makes no sense at all for the ageing G7 countries and China to create so much debt.

It would have been much better if policymakers and commentators had instead focused on the real-world evidence highlighted here each week from the chemical industry.

It is a great privilege to write the newsletter, and to be able to meet many readers at speaking events and conferences around the world – both virtually and in person.   Thank you for all your support.