The era of the black-box, contextless econometric model is thankfully over. Strategically relevant analysis must give capital allocators systematic, logical explanations about the world in which they operate and help orientate them correctly in the present, armed with the appropriate lessons from the past.

Our ‘Prism’
We aim to apply a clear and consistent analytical framework (see next section). This is a ‘prism’ through which we view economies, markets, and policy that our clients can rely on and come to internalise over time.

Sound explanations, not fortune-telling
A good ‘prism’ allows for good explanations of economic reality. What is a ‘good explanation’? We think it is an explanation that is hard to vary (David Deutsche) which makes it stable over time and place, is logically consistent with first principles, realistically causal, and is easily verbalised. Good explanations confer understanding, whereas bad ones and mere correlations or extrapolations do not.

Empiricism: quantitative and qualitative
While we draw extensively on macroeconomic and market data in our analysis, data is servant, not master. As we like to say, data never speaks for itself – it is always spoken for. Economic and market data does not capture universal, forecastable absolutes like data in the natural sciences, but complex patterns of aggregated, fluid human action instead. We believe that reliance on econometric forecast techniques is profoundly misguided. To us, being truly empirical means recognising data’s many limitations and inconsistencies, and interpreting a wide range of credible qualitative and quantitative information through our prism. This helps to translate an understanding of the present into credible strategic insights.

The logical realism of human action as seen in the ‘Classical-Austrian’ tradition stands in stark contrast to the synthetic and impossible constructs that make up the patchwork of ideas of the “neoclassical consensus” which aim to subordinate complex human action to mathematical roboticness and statistical aggregates. These foundational differences result in very different conclusions about the nature of market demand itself, the causes and cures of recessions, the nature of capital and interest, the efficacy (or lack thereof) of fiscal and monetary policy, the price system, inflation, economic growth, and much else. But if one could crystallise what sets the Classical-Austrian school apart in macro analysis, it would be this: ‘Say’s Law of Markets’ is valid and recessions are not caused by a deficiency of demand but by errors in production. Someone once said, “it’s contrarian to cross the road blindfolded, but that doesn’t make it a good idea.” Contrarians don’t have to think. Heretics, by contrast, seek to revive truth where it has been buried and use it to challenge so-called established validity. Our contrarian positions don’t arise from wanting to be different, but from building on repaired foundations. This imbues in our analysis an uncommon yet logically coherent perspective of reality.

Heretical ideas and uncommon analytical conclusions need to be motivated clearly and credibly to become actionable client strategies. We place tremendous care in the written and verbal communication of our views. Yet clarity need not sacrifice analytical heart and soul. We strive to make our material and presentations engaging and inspiring. Our old adage is: boring to write is boring to read. We follow the analytical trail that is both relevant to our clients and inspires us intellectually. Beyond our commercial services, we seek to lend intellectual weight in the battle of economic ideas to the cause of free markets, justice, and peace. Mainstream economics has thrust the globe into an unstable period characterised by financial system fragility, economic stagnation, and political discontent. The antidote to this malaise is rejuvenating economic orthodoxy with sound Classical-Austrian ideas and ridding politicians of the power and pseudo-intellectual cover to play wreckless puppeteer with millions of autonomous individuals. To this end, we advocate publicly for extensive constraints on state size and power and promote radically free and just markets, private property, equality before the law, and the separation of currency and state.