Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, September 25, 2025

AI Summary. A capital-market equilibrium model estimates that the steady-state safe natural rate of interest across advanced economies has fallen from about 5% to about 0%, driven by slower growth, demographics, higher mark-ups, and rising risk premia. The author estimates that artificial-intelligence-driven growth and heightened inflation risk could each raise it by about 1 percentage point.

Lukasz Rachel Brookings Papers On Economic Activity
Date Posted:

In a base model, steady state r* is still ~0, suggesting that “secular stagnation” may not be a thing of the past. AI expansion and inflation risk could each raise r* by 100 bps. Remilitarization and unfunded social spending may also push up r*.

Why has the natural rate of interest fallen to zero?

Core argument: In a capital-market equilibrium framework, the model-implied steady-state safe r* across advanced economies falls from roughly 5% in the 1970 steady state to about 0% in the new long-run steady state, reflecting shifts in capital demand and especially capital supply.

I develop and quantify a capital-market equilibrium framework to study the joint evolution of r∗ and wealth across advanced economies. This bloc [saw] shifts in capital demand and especially in capital supply. As a result, the model-implied steady state safe r∗ has fallen from ~ 5% in the 1970 steady state to ~0% in the new long-run steady state. A decomposition of the dynamics of r∗ shows the role of the growth slowdown and demographics [as well as] the rise in mark-ups, which temporarily depress r∗ before pushing it up, and of the rising risk premia, which push down on safe r∗ close to 1-to-1. Decomposition of the rise in the wealth-to-GDP ratio [which ~doubled from 3 to 6], [shows] longer expected retirement and slower growth [but not risk premia] as dominant. [Finally, because] current long-term real yields stand above the baseline r∗ estimate, I consider the possibility that new shifts in the environment have acted to raise the natural rate sharply higher∗. I find that AI and inflation risk scenarios are most powerful quantitatively, each raising r∗ by circa 1 percentage point. The heightened inflation risk raises the safe rate very quickly, while the effects of AI-driven growth boom build up over several years.

Takeaways by Macro Roundup® AI

  1. In a capital-market equilibrium framework, the model-implied steady-state safe r* across advanced economies falls from roughly 5% in the 1970 steady state to about 0% in the new long-run steady state, reflecting shifts in capital demand and especially capital supply.
  2. A decomposition of r* dynamics points to the growth slowdown and demographics, to rising mark-ups that temporarily depress r* before pushing it up, and to rising risk premia that push down safe r* close to one-for-one.
  3. The wealth-to-GDP ratio roughly doubled from 3 to 6, with longer expected retirement and slower growth dominant and risk premia not contributing.

Related Articles:

  • Data Update 4 for 2025: Interest Rates, Inflation and Central Banks! — Interest rates are ultimately driven by macroeconomic fundamentals, with an "intrinsic risk-free rate" defined as the sum of the inflation rate and real GDP growth tracking the observed 10-year Treasury bond yield closely. On this view, central banks' influence comes from preferential access to data on those fundamentals, their capacity to alter them, and their credibility.
  • The Race Between Asset Supply and Asset Demand — The authors estimate that demand for assets has outpaced supply by roughly 400% of GDP versus 100%, making rising asset demand the leading contributor to falling interest rates. They project that debt sustainability requires fiscal consolidation exceeding 10% of GDP, though debt could reach 250% of GDP without raising interest rates.
  • Demographics, Wealth, and Global Imbalances in the Twenty-First Century — Because the elderly hold much more wealth than the young and on average do not draw it down much as they age, the authors' model projects no "great demographic reversal": population aging is estimated to push global rates of return down by about 1.07pp and raise global wealth from 456% to 498% of world GDP.

AI Summary. Rising longer-term bond yields, outperformance of safe-haven assets like gold, and a stable US Dollar against other major currencies together suggest markets are pricing debasement across many developed-market currencies, not just the Dollar. Market-implied real 10-year yields remain higher in emerging markets, but the divide is blurring, with Chile already below New Zealand.

Robin Brooks Robin Brooks Substack
Date Posted:

Noting that “the dividing line between EM and G10 [yields] is already getting blurred,” Brooks argues advanced economies are beginning to resemble EMs with “simplistic populism, reckless fiscal policy, and fiscal dominance of their central banks.”

Are markets pricing currency debasement across developed economies, not just the Dollar?

Core argument: Rising longer-term bond yields, outperformance of safe havens like gold, and a US Dollar stable against its G10 peers share a common factor, in the author's reading: markets pricing debasement of many G10 currencies, not just the Dollar.

My [recent] posts have documented an alarming confluence of things: (i) a global rise in longer-term bond yields; (ii) drastic outperformance of safe haven assets like gold; and (iii) a US Dollar that’s been remarkably stable against its G10 peers. The common factor in all these moves is that markets seem to be trading debasement of many G10 currencies - not just the Dollar - as countries across the G10 succumb to simplistic populism, reckless fiscal policy and fiscal dominance of their central banks. The two charts show market-implied real 10-year yields across the G10 and EM. The left chart shows the evolution over time of these real yields, while the right chart shows a cross-section of these yields as of yesterday. Real yields in EM are a lot higher than in the G10, so we’re still in the early stages of this process. But the dividing line between EM and G10 is already getting blurred. Take the example of Chile (CL) that already has a lower real yield than New Zealand (NZ). As markets start to price more and more G10 dysfunction, these kinds of cross-overs will become more frequent.In recent weeks.

Takeaways by Macro Roundup® AI

  1. Rising longer-term bond yields, outperformance of safe havens like gold, and a US Dollar stable against its G10 peers share a common factor, in the author's reading: markets pricing debasement of many G10 currencies, not just the Dollar.
  2. The author attributes the G10 currency debasement trade to simplistic populism, reckless fiscal policy, and fiscal dominance of central banks across the G10.
  3. Market-implied real 10-year yields remain far higher in emerging markets than in the G10, but the dividing line is blurring, with Chile already carrying a lower real yield than New Zealand.

Related Articles:

  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.
  • How A Global Debt Crisis Starts — Far-forward government bond yields — what markets price for the 10-year yield 10 and 20 years ahead — have risen in Japan, the UK, France and Germany, with Japan's 10-year yield 20 years forward at 4.5%. The US 10y20y forward yield has fallen slightly, which the author attributes to safe-haven inflows.
  • French Companies’ Borrowing Costs Fall Below Government’s As Debt Fears Intensify — Bond yields for French companies including L'Oréal, Airbus and Axa have fallen below those on French government debt of similar maturity, with 10 French firms trading at a negative spread to the sovereign — the most in data going back to 2006, according to Goldman Sachs. Sovereign yields typically set a baseline for corporate bonds.

AI Summary. Gold broke above its $3,200–$3,400 range to a record high above $3,600, with the near-term catalyst identified as threats to Federal Reserve independence driving US investor demand. Chinese total gold demand bottomed near $9bn and nearly doubled to $16bn before moderating to about $13bn as private-sector buying partially normalized.

Martin Lynge Rasmussen Money: Inside and Out
Date Posted:

Chinese demand is underlying the gold rally; since January 2024, China has imported a cumulative ~$170B in gold.

What is driving gold to record highs?

Core argument: Gold broke out of its $3,200–$3,400 May–August range in late August to reach an all-time high above $3,600, after surging in January–April.

After surging during January-April, gold spent most of May-August stuck in the $3,200-$3,400 range. In late August, however, gold decisively broke out of the range to hit a new all-time high of >$3,600. The near-term catalyst for gold has been the ongoing threats to Fed independence, which has led to an increase in US investors’ demand for gold. But while US flows have been crucial for gold recently, China likely still holds the key to medium-term trends. We provide an overview of recent developments in Chinese gold demand. Chinese total gold demand bottomed out at around $9bn in March, but nearly doubled to $16bn by June. There has probably been a moderation towards $13bn by August, however, as a pickup in undisclosed official buying has been more than offset by a partial normalization in private sector demand.

Takeaways by Macro Roundup® AI

  1. Gold broke out of its $3,200–$3,400 May–August range in late August to reach an all-time high above $3,600, after surging in January–April.
  2. The near-term catalyst for gold has been ongoing threats to Fed independence, which raised US investors' demand for gold.
  3. Chinese total gold demand bottomed near $9bn in March and nearly doubled to $16bn by June, with a probable moderation toward $13bn by August as a pickup in undisclosed official buying was more than offset by partial normalization in private sector demand.

Related Articles:

  • Taking Stock: Dollar Assets, Gold, and Official Foreign Exchange Reserves — Gold accounts for about 10% of aggregate official foreign exchange reserves, roughly its level in the early 2000s. International Monetary Fund country data indicate most added official gold holdings came from a few central banks, with over half of reported accumulation from China and Russia and about a quarter from several emerging markets.
  • De-Dollarization? Diversification? Exploring Central Bank Gold Purchases and the Dollar’s Role in International Reserves — Central banks' gold accumulation is generally not associated with reducing the dollar's share of international reserves at the country level, apart from a few prominent cases, and is more consistent with modest overall diversification. Gold's role as an official-sector store of value has grown, but its use as a unit of account and medium of exchange remains limited.
  • The Gold Rally and Fiat Debasement — Long-term government bond yields have risen in the US and globally, while the dollar has stayed broadly stable against other major currencies even as gold prices rise. The authors argue this pattern signals debasement of fiat currencies against gold, driven by a crisis of confidence as high government debt and deficits raise incentives to inflate away obligations.

AI Summary. Americans averaged 35 minutes a day socializing in person in 2024, down from 38 minutes in 2019, and social time among 15- to 25-year-olds is the lowest in the 21-year history of the survey, 26 minutes a day below 2003. Adults 50 and older now socialize in person slightly more than teens and young adults.

Jean Twenge Generation Tech
Date Posted:

BLS’s American Time Use Survey shows that 15 to 25-year-olds spend 26 fewer minutes a day socializing than they did in 2003. For the first time ever, adults 50 and older spent more time socializing in person than teens and young adults.

Are Americans, especially young people, spending less time socializing in person?

Core argument: Americans aged 15–25 spend 26 fewer minutes a day socializing in person than in 2003, amounting to three hours a week, 13 hours a month, and 158 hours a year less time with friends.

The average American spent 38 minutes a day socializing in 2019 and 35 minutes in 2024. In 2024, for the first time, adults 50 and older spent (very slightly) more time socializing in person than teens and young adults. Young people’s social time is at an all-time low in the 21-year history of the survey. Fifteen- to 25-year-olds spend 26 fewer minutes a day socializing in person than they did in 2003. That’s three hours a week, 13 hours a month, and 158 hours a year less getting together with friends, having a face-to-face conversation, meeting for dinner, or chatting before seeing a movie together. No wonder so many more teens now describe themselves as lonely.

Takeaways by Macro Roundup® AI

  1. Americans aged 15–25 spend 26 fewer minutes a day socializing in person than in 2003, amounting to three hours a week, 13 hours a month, and 158 hours a year less time with friends.
  2. The average American spent 35 minutes a day socializing in 2024, down from 38 minutes in 2019, with young people's social time at an all-time low in the survey's 21-year history.
  3. Adults 50 and older spent slightly more time socializing in person than teens and young adults in 2024, the first time that has occurred in the survey.

Related Articles:

  • The Anti-Social Century — Americans spend less time with other people than in any period with reliable data back to 1965, with in-person socializing down more than 20% from 2003 to 2023 according to the Bureau of Labor Statistics' American Time Use Survey. Among unmarried men and people under 25, the decline exceeded 35%.
  • America’s Cultural Crossroads: Enduring Discontent, Rising Disconnection, and an Uncertain Future — Americans with more close friends express greater confidence that others behave fairly: 59% of those with no close friends say most people would take advantage of them, versus 29% of those with at least six close friends.
  • Disconnected: The Growing Class Divide in American Civic Life — 17% of Americans report having no close friends, and survey data show a wide educational gap: 24% of those with a high school education or less have no close friends versus 10% of college graduates. Three decades ago, Americans with less formal education reported social circles at least as large.

AI Summary. An analysis of H-1B visa registration and wage data finds a proposed wage-level-weighted lottery would not prioritize the best-paid workers, since wage levels measure seniority within an occupation rather than actual pay. The author estimates outsourcing firms would gain 8% more visas while median H-1B salary rises just 3%.

Jeremy Neufeld Institute for Progress
Date Posted:

Jeremy Neufeld argues that DHS’s H-1B proposal is “ill-equipped to rank workers” because its “F-1” criterion measures age and seniority rather than actual wages, and will penalize “genuinely high-wage, high-skill talent, especially students trained in the US.”

Would ranking skilled-visa applicants by wage level actually select higher-paid workers?

Core argument: Using FOIA data on all H-1B registrations and petitions from FY2021–2024 linked to Department of Labor Wage Level data, the author finds the proposed weighted lottery would raise the median H-1B salary by just 3%, from $92,000 to $95,000.

Using recently released FOIA data on all H-1B registrations and petitions filed from FY2021–2024, linked with Department of Labor data showing those individual workers’ Wage Levels, I show that the proposed system would not prioritize the highest-skilled or best-paid workers, [because] the Wage Level framework was never designed to compare wages across occupations because it measures relative seniority within a job category, not actual pay. Instead, it would have three surprising consequences: 1) A windfall for outsourcers. Large IT outsourcing firms would actually gain under the rule, receiving 8% more visas, because they systematically register mid-career workers classified at higher Wage Levels despite paying comparatively low salaries. 2) A setback for US-educated talent. International students graduating from American universities earn higher salaries on average than other H-1B workers, but because they are early-career, they are overwhelmingly classified at the lowest Wage Levels. 3) Minimal skill gains. DHS justifies the rule as raising skill levels, but the effect is trivial: the weighted lottery would lift the median H-1B salary by just 3% (from $92,000 to $95,000).

Takeaways by Macro Roundup® AI

  1. Using FOIA data on all H-1B registrations and petitions from FY2021–2024 linked to Department of Labor Wage Level data, the author finds the proposed weighted lottery would raise the median H-1B salary by just 3%, from $92,000 to $95,000.
  2. Large IT outsourcing firms would receive 8% more H-1B visas under the proposed rule because they systematically register mid-career workers classified at higher Wage Levels while paying comparatively low salaries.
  3. International students graduating from US universities earn higher average salaries than other H-1B workers but are overwhelmingly classified at the lowest Wage Levels because they are early-career, as the Wage Level framework measures relative seniority within a job category rather than actual pay.

Related Articles:

  • The Extreme Shortage of High IQ Workers — Semiconductor manufacturing requires workers of above-average intelligence, with the most demanding roles needing IQs in the top 1 in 1,000 — a pool of about 164,000 people in the US, of whom perhaps 100,000 can be placed in such professions. The author argues this scarcity explains reliance on high-IQ workers abroad and on smarter tools and non-human intelligence.
  • Third-Country Effects of U.S. Immigration Policy — U.S. H-1B visa denial rates rose from about 6% to 16%, and the authors estimate a 10 percentage point rise in denials increases Canadian applications by 30%, roughly one Canadian application per four forgone visas. More exposed Canadian firms increased sales and hired about 0.5 native workers per immigrant.
  • Top Talent, Elite Colleges, and Migration: Evidence from the Indian Institutes of Technology — Among top scorers on India's Joint Entrance Exam for the Indian Institutes of Technology, 62% of the top 100 and 36% of the top 1,000 migrated abroad within eight years, primarily to the U.S. for graduate school. The authors argue elite schools shape migration by signaling ability and providing access to networks.

AI Summary. The US government has held talks with the developer of the Thacker Pass lithium mine in Nevada that may lead to it taking an equity stake, sending the company's shares more than 90% higher. The negotiations, which also involve General Motors, centre on a $2.3bn government loan approved to develop the project.

Camilla Hodgson Financial Times
Date Posted:

The US Government is in negotiations with Lithium Americas to take an equity stake in the mining company in exchange for an extension of a $2.3B DoE loan.

Is the US government taking equity stakes in lithium miners?

Core argument: Lithium Americas shares rose more than 90% after the company said the Trump administration had held talks that may lead to the US government taking a stake in the business.

The Trump administration has held talks with the developer of a giant lithium mine in Nevada that may lead to it taking a stake in the business, sending the company’s shares more than 90% higher. Lithium Americas said on Wednesday that it was in negotiations with the US Department of Energy and carmaker General Motors, one of its investors, about financing support for the Thacker Pass project, which aims to become a top US producer of lithium to be used in electric vehicles. The talks centre on the $2.3bn loan that Joe Biden’s government approved to help the Canada-based company develop Thacker Pass, which is expected to produce enough lithium to supply 800,000 electric vehicles per year when it comes online.

Takeaways by Macro Roundup® AI

  1. Lithium Americas shares rose more than 90% after the company said the Trump administration had held talks that may lead to the US government taking a stake in the business.
  2. Lithium Americas is negotiating with the US Department of Energy and General Motors, one of its investors, over financing support for the Thacker Pass lithium project in Nevada.
  3. The talks centre on the $2.3bn loan approved under Joe Biden's government for Thacker Pass, which is expected to produce enough lithium to supply 800,000 electric vehicles per year once it comes online.

Related Articles:

  • Pentagon to Take Stake in Rare-Earth Company, Challenging China’s Control — Under a deal with the largest U.S. rare earths miner, the Defense Department will take a 15% stake, commit billions of dollars to investment and output purchases, and guarantee a price floor for rare earth minerals and magnets. The agreement calls for a new magnet factory, expected online in 2028, at a scale far exceeding current U.S. magnet production.
  • Why Every Country Needs To Master The Electric Tech Stack — Drones are the foundation of hard power in the early 21st century, so a country unable to produce them domestically is at a disadvantage. As electric motors overtake combustion engines as the core technology that makes machines move, the same supply chains and production processes used for electronics can also produce cars, drones, robots, and appliances.
  • Trump, Intel Agree to 10% U.S. Stake as President Promises More Deals — The U.S. government is taking a 10% stake in Intel, becoming the chip maker's largest shareholder, by converting $8.9bn in awarded but unpaid grants from the 2022 Chips Act into equity. The government could receive additional stock depending on the performance of Intel's chip manufacturing business.

Friday, September 26, 2025

AI Summary. The dollar is projected to depreciate as less exceptional US economic and market performance makes it harder to attract unhedged capital flows to fund a large current account and fiscal deficit, leaving a high currency valuation to correct further. A softening US labor market supports that view.

Kamakshya Trivedi and Stuart Jenkins Goldman Sachs
Date Posted:

A broad dollar trade-weighted index has depreciated by ~ 7% this year, and Goldman argues it remains 14% overvalued on a trade-weighted basis, as macroeconomic policies make it harder for the US to attract unhedged capital flows.

Will the dollar keep depreciating as US performance looks less exceptional?

Core argument: The authors expect the Dollar to depreciate because US economic and market performance is less exceptional than before, leaving the US finding it harder to attract unhedged capital flows to fund its large current account and underlying fiscal deficit.

We expect the Dollar to depreciate largely because US economic and market performance is less exceptional than before; so the US is finding it harder to attract unhedged capital flows to fund its large current account (and underlying fiscal deficit), and the currency’s high valuation needs to correct further. We think that the softening in the US labor market is providing support to that view, and our read of both the incoming data and latest Fed speak is consistent with our baseline expectation of some further room to run in front-end rates. And we expect the Dollar can continue to underperform its typical relationship with other cyclical assets against the backdrop of a more globally balanced economic outlook and portfolio flows.

Takeaways by Macro Roundup® AI

  1. The authors expect the Dollar to depreciate because US economic and market performance is less exceptional than before, leaving the US finding it harder to attract unhedged capital flows to fund its large current account and underlying fiscal deficit.
  2. The authors see softening in the US labor market as supporting their depreciation view, and read incoming data and recent Fed commentary as consistent with their baseline expectation of some further room to run in front-end rates.
  3. The authors expect the Dollar to keep underperforming its typical relationship with other cyclical assets, given a more globally balanced economic outlook and portfolio flows, and see its high valuation needing to correct further.

Related Articles:

  • ‘Hedge America’ Trade Fuels Global Rush Into Short-Dollar Wagers — Global investors are continuing to buy US stocks and bonds while purchasing derivatives that hedge against further dollar declines, with Deutsche Bank reporting that flows into dollar-hedged exchange-traded funds holding US assets have outpaced unhedged funds for the first time this decade. Foreign investors own roughly $20tn of US stocks and about $14tn of US debt.
  • American Unexceptionalism — The S&P 500 has outperformed other developed-market equities by a cumulative 150% over the past fifteen years, but the authors attribute about 80% of that gap to a strengthening dollar and expanding relative valuations rather than fundamentals such as dividends, buybacks, and organic growth. U.S. valuations sit around the 90th percentile on price-to-earnings measures.
  • The International Role of the U.S. Dollar – 2025 Edition — The US dollar accounted for 58% of disclosed global official foreign reserves, versus 20% for the euro and 2% for China's renminbi, and roughly 50% of international payments made through the SWIFT messaging system. About 55% of international claims and 60% of liabilities are denominated in dollars, a share relatively stable since 2000.

AI Summary. Unlike International Monetary Fund programs, whose conditionality and stigma push borrowing countries to reform quickly, the euro system's internal cross-border payment imbalances carry neither and have persisted far longer. The author argues their persistence is evidence that the European Central Bank's de facto yield caps keep high-debt countries' borrowing costs artificially low.

Robin Brooks Robin Brooks Substack
Date Posted:

Loans from the Bundesbank and other north European central banks prevented a sudden stop in southern Europe during the Euro Crisis. Now the same TARGET2 balances are growing as the French fiscal situation deteriorates, reducing pressure on French yields.

Do persistent payment imbalances show central bank yield caps suppress borrowing costs?

Core argument: The author argues that persistent TARGET2 balances are evidence the ECB is keeping periphery yields artificially low, since without de facto yield caps private markets would replace official loans while demanding much higher yields.

In emerging markets, this kind of “official” flow comes in the form of an IMF program that has conditionality. This conditionality is key because it ensures there’s stigma (countries want to rid themselves of the IMF as quickly as possible), which incentivizes them to reform. There’s no conditionality (or stigma) associated with TARGET2 balances and - as a result - they’ve persisted way longer than any IMF program ever would. It’s the lack of stigma that - indirectly - is also responsible for France (red) slowly slipping into debtor status. If there were stigma, French politicians would make needed reforms to get their fiscal house in order, instead of being locked in an indefinite stand-off. Persistent TARGET2 balances are a symptom of artificially low yields for high debt countries. After all, if there weren’t de facto ECB yield caps, private markets would take the place of official loans, only that they’d demand much higher yields. The fact that TARGET2 imbalances persist - after all this time - is just one more piece of evidence that periphery yields are being kept artificially low by the ECB.

Takeaways by Macro Roundup® AI

  1. The author argues that persistent TARGET2 balances are evidence the ECB is keeping periphery yields artificially low, since without de facto yield caps private markets would replace official loans while demanding much higher yields.
  2. Unlike IMF programs, TARGET2 balances carry no conditionality or stigma, which the author argues explains why they have persisted far longer than any IMF program would and removes the incentive to reform.
  3. The author attributes France's slow slide into debtor status to this absence of stigma, contending that French politicians would undertake fiscal reforms rather than remain in an indefinite stand-off if stigma existed.

Related Articles:

  • The Gold Rally and Fiat Debasement — Long-term government bond yields have risen in the US and globally, while the dollar has stayed broadly stable against other major currencies even as gold prices rise. The authors argue this pattern signals debasement of fiat currencies against gold, driven by a crisis of confidence as high government debt and deficits raise incentives to inflate away obligations.
  • French Companies’ Borrowing Costs Fall Below Government’s As Debt Fears Intensify — Bond yields for French companies including L'Oréal, Airbus and Axa have fallen below those on French government debt of similar maturity, with 10 French firms trading at a negative spread to the sovereign — the most in data going back to 2006, according to Goldman Sachs. Sovereign yields typically set a baseline for corporate bonds.
  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.

AI Summary. Right-wing populist parties across Europe, including the Sweden Democrats, Austria's Freedom Party, Germany's Alternative for Germany and France's National Rally, have shifted from small-government, low-tax, free-trade platforms toward calls for higher welfare benefits, subsidies and protectionism, often alongside pro-market positions.

Bertrand Benoit Wall Street Journal
Date Posted:

Le Pen’s National Rally is campaigning on rolling back recent rises in the retirement age, despite a 5.4% deficit and rising yields, in an example of how right-leaning parties across Europe are embracing leftist economic policies.

Are Europe's right-wing populist parties shifting toward bigger government economics?

Core argument: Right-wing populist parties from Sweden to Greece and Austria that long favored a small state, low taxes, free trade and deregulation are now calling for higher welfare benefits, subsidies and protectionism, often alongside pro-market positions.

Right-wing populists have a new strategy to woo European voters frustrated with cash-strapped governments: Veer left. From Sweden to Greece and Austria, parties that for years favored a small state, low taxes, free trade and deregulation are now calling for higher welfare benefits, subsidies and protectionism—often alongside pro-market positions. The right-wing Sweden Democrats party and Austria’s Freedom Party have seen their poll ratings rise in recent years as they promised more state spending on citizens. Germany’s right-wing Alternative for Germany, or AfD, has maintained many of its pro-market positions but now stresses its welfare credentials too, campaigning this year on raising state pensions. In France, the right-wing National Rally, long a practitioner of economic eclecticism, has talked about rolling back a recent rise in the retirement age and introducing import controls.

Takeaways by Macro Roundup® AI

  1. Right-wing populist parties from Sweden to Greece and Austria that long favored a small state, low taxes, free trade and deregulation are now calling for higher welfare benefits, subsidies and protectionism, often alongside pro-market positions.
  2. The Sweden Democrats and Austria's Freedom Party have seen their poll ratings rise in recent years as they promised more state spending on citizens.
  3. Germany's Alternative for Germany has kept many pro-market positions while campaigning on raising state pensions, and France's National Rally has talked about rolling back a recent retirement-age increase and introducing import controls.

Related Articles:

  • The Global Race to the Bottom — Rising longer-term bond yields, outperformance of safe-haven assets like gold, and a stable US Dollar against other major currencies together suggest markets are pricing debasement across many developed-market currencies, not just the Dollar. Market-implied real 10-year yields remain higher in emerging markets, but the divide is blurring, with Chile already below New Zealand.
  • French Companies’ Borrowing Costs Fall Below Government’s As Debt Fears Intensify — Bond yields for French companies including L'Oréal, Airbus and Axa have fallen below those on French government debt of similar maturity, with 10 French firms trading at a negative spread to the sovereign — the most in data going back to 2006, according to Goldman Sachs. Sovereign yields typically set a baseline for corporate bonds.
  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.

AI Summary. An analysis finds that voters and mainstream politicians have long been broadly aligned on economic issues such as tax and spending, but diverge widely on sociocultural issues like immigration and criminal justice, with publics favoring more order and cultural integration while politicians lean toward more inclusive, permissive approaches.

John Burn-Murdoch Financial Times
Date Posted:
Is Database:
Database

John Burn-Murdoch argues Guenther’s “representation gap” theory is “visible in the US,” where the mean voter’s preferences on immigration are “far more conservative than those of Democratic party elites,” and closer to those of Republican politicians.

Do voters and mainstream politicians diverge on culture but not economics?

Core argument: Guenther's analysis finds voters and mainstream politicians broadly aligned on economic issues such as tax and spend or public ownership, but divided by a yawning gulf on sociocultural issues like immigration and criminal justice.

Guenther’s analysis shows that voters and mainstream politicians have long been broadly aligned on economic issues like tax and spend or public ownership. But on sociocultural issues such as immigration and criminal justice there is a yawning gulf. Western publics have long desired greater emphasis on order, control and cultural integration. Their politicians have tilted in the opposite direction, favouring more inclusive and permissive approaches. Extending Guenther’s European analysis to include more recent data and a wider set of countries, I find the thesis aligns well with several recent developments. First, the same pattern is visible in the US, where the average voter’s preferences on immigration are close to those of Republican politicians, but far more conservative than those of Democratic party elites.

Takeaways by Macro Roundup® AI

  1. Guenther's analysis finds voters and mainstream politicians broadly aligned on economic issues such as tax and spend or public ownership, but divided by a yawning gulf on sociocultural issues like immigration and criminal justice.
  2. Western publics have long desired greater emphasis on order, control and cultural integration, while their politicians have tilted toward more inclusive and permissive approaches, according to Guenther's analysis.
  3. Extending Guenther's European analysis to more recent data and a wider set of countries, the author finds the same pattern in the US, where the average voter's immigration preferences sit close to Republican politicians' and far more conservative than Democratic party elites'.

Related Articles:

  • Political Representation Gaps and Populism — A study comparing survey responses of citizens and parliamentarians across 27 European countries finds that policymaking reflects voters' economic attitudes well, but the average parliamentarian is about one standard deviation more culturally liberal than the national mean voter. The author finds this cultural gap spans nearly all issues, countries, and established parties, and that right-wing populists fill it.
  • America’s Immigration Mess: An Illustrated Guide — Current Population Survey estimates indicate America's foreign-born population surpassed 50m for the first time and exceeded 15% of the national population, above the prior peak of 14.8% recorded in 1890. Mass immigration during that earlier wave was associated in contemporary opinion with widening income and wealth gaps and depressed wages for less-skilled native-born men, and sweeping national restrictions followed.
  • Changing Sub-Saharan Africa’s Growth Trajectory — Sub-Saharan Africa's working-age population is growing nearly 3% a year, versus close to zero in much of the world, and is projected to exceed China's within about a decade and reach a quarter of the global total. With modest productivity growth near 2%, the region is likely among the world's fastest-growing.

AI Summary. A US ownership deal for TikTok's American operations values the app at $14bn, with Oracle, Silver Lake Management and Abu Dhabi-based MGX in talks to invest and take board seats. The US entity would lease a copy of ByteDance's algorithm and retrain it under Oracle's oversight, which some US lawmakers doubt satisfies the divestment law.

Alexandra Levine and Kate Sullivan Bloomberg
Date Posted:

President Trump signed an executive order declaring the spinoff of TikTok’s US operations to American investors for $14B compliant with current law. Congress may remain skeptical that the deal taking shape meets the 2024 law’s terms.

Does leasing and retraining a foreign algorithm satisfy divestment requirements?

Core argument: President Trump signed an order on a TikTok deal valuing the US app at $14 billion, with key elements including the composition of the buyers group still unclear.

Key elements of the deal remain unclear, including the composition of the buyers group. Oracle, Silver Lake Management LLC, and the Abu Dhabi-based investment company MGX are in talks to invest in TikTok US and receive board seats in the new venture, according to people familiar with the discussions who cautioned that the talks remain fluid. Under the deal, owners of the US-based TikTok would lease a copy of the algorithm from ByteDance that would then be retrained “from the ground up” with Oracle’s oversight, according to a US official. Oracle would inspect the retrained algorithm, and how it’s feeding content to users, to help the US entity ensure it’s not being used for malicious purposes or otherwise influenced. The president’s move sets up a potential confrontation with US lawmakers who remain skeptical that the deal taking shape meets the terms of the 2024 law.

Takeaways by Macro Roundup® AI

  1. President Trump signed an order on a TikTok deal valuing the US app at $14 billion, with key elements including the composition of the buyers group still unclear.
  2. Oracle, Silver Lake Management LLC, and Abu Dhabi-based MGX are in talks to invest in TikTok US and receive board seats in the new venture, according to people familiar with the discussions, who cautioned the talks remain fluid.
  3. Owners of the US-based TikTok would lease a copy of ByteDance's algorithm and retrain it "from the ground up" under Oracle's oversight, with Oracle inspecting the retrained algorithm and how it feeds content to users, according to a US official.

Related Articles:

  • Beijing Says TikTok’s US App Will Use Chinese Algorithm — China's cyber security regulator says the US spin-off of TikTok, to be sold to American investors, will license parent company ByteDance's Chinese algorithm and other intellectual property, with ByteDance entrusting the operation of TikTok's US user data and content security. The US Treasury says the app will be controlled by American investors while preserving some "Chinese characteristics".
  • China Orders Apple to Remove Popular Messaging Apps — Chinese authorities ordered Apple to remove WhatsApp, Threads, Signal and Telegram from its App Store in China, citing national security concerns. The apps, which together have roughly 3bn users globally, were already accessible in China only through virtual private networks but remained commonly used.
  • Why the TikTok Era Spells Trouble For The Establishment — Video-first platforms like TikTok and Instagram reward charisma, energy and delivery over being first with news, a shift that favors political outsiders and upstart media outlets less tied to establishment politicians and freer to publish what mainstream outlets would not. Research finds the newest class of news influencers lean slightly right, and even those with other politics are anti-establishment.