Warsh Says the Old Economic Playbook Is Obsolete

“Well, times sure have changed. We’ve come to a hinge point in history.”

That was Kevin Warsh at Jackson Hole on Friday, immediately after dispensing with the economic pessimism that dominated the years following the financial crisis: secular stagnation, the global saving glut, too much capital chasing too few worthwhile investments, and the suspicion that maybe all the really important stuff had already been invented.

He repeated a shorter version of this point at the opening session of the G20 on Monday.

Most people probably missed the literal footnote to Warsh’s Jackson Hole speech. Warsh told us in the footnote that he borrowed the phrase “hinge point” from George Shultz, the former Reagan Secretary of State, Treasury Secretary, economist, and longtime Hoover Institution eminence who was also an important intellectual influence on Warsh. People close to Warsh describe Shultz as a kind of mentor to Warsh.

In his 2020 book A Hinge of History, written with James Timbie, Shultz argued that the world had reached an inflection point comparable in importance to the years immediately after World War II. Technology was advancing rapidly, demographics were changing radically, and institutions designed for the old world were increasingly ill-suited to the new one. “The near future is not going to be like the near past,” Shultz said in explaining the book.