In the past few years, he has written extensively about new technologies and long-wave cycles, the financial market implications of low inflation and trends in corporate profitability. The key symptoms of excess supply are falling returns on capital and downward pressure on traded goods prices. This creates a deflationary environment that is very bearish for corporate earnings. There are several other imbalances in the world economy. The United States has a negative personal savings rate, a large current account deficit and massive household exposure to an extremely overvalued stock market.
Barnes detects the possible end of a financial era as the millennium looms.
This extraordinary financial era, largely driven by declining inflation and falling interest rates, is drawing to a close. A decline in financial returns to more normal levels will probably trigger a major consolidation in the financial services sector. Counterpoint 'Money makes the world go round', said the song from the Threepenny Opera - and it does. But the theory of money is often misunderstood. Many of us think of money as a thing, as a constant, as capital, as something that can be preserved.