Edward Conard

Top Ten New York Times Bestselling Author

  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “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
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, December 17, 2025

AI Summary. Modern economies apart from Japan almost never experience outright deflation: Greece's slump with 28% unemployment brought only a few percent decline in prices, and the 2007-2009 U.S. recession slowed inflation without reversing it. Policymakers who promise to lower the overall price level cannot deliver and will face political backlash.

Paul Krugman Krugman Wonks Out
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Noting that even in post-crisis Greece, when unemployment hit 28%, the CPI fell by only a few percentage points, Krugman warns that “policymakers shouldn’t promise to bring the overall level of prices down; they won’t be able to deliver.”

Can policymakers deliver on promises to lower the overall price level?

Core argument: Greece's early-2010s slump pushed unemployment to 28% while prices fell only a few percent, illustrating that even depression-level downturns produce little deflation in modern economies.

With the unique and complicated exception of Japan, modern economies almost never experience deflation — overall falling prices. We may sometimes see price declines for commodities like eggs and falling prices for goods like computer equipment experiencing rapid technological progress. But the broad basket of consumer goods considered in the Consumer Price Index and similar measures doesn’t fall unless the economy is deeply depressed, and even then doesn’t fall by much. To see what I mean, consider the example of Greece, which experienced a Great Depression-level slump in the early 2010s. Unemployment rose to 28%, and prices did fall a bit — but only by a few percent: In the U.S., the Great Recession of 2007-2009, the worst slump since the Great Depression, led to slower inflation — prices rising more slowly than before. But it didn’t cause deflation. So would-be policymakers shouldn’t promise to bring the overall level of prices down. They won’t be able to deliver and will face a political backlash.

Takeaways by Macro Roundup® AI

  1. Greece's early-2010s slump pushed unemployment to 28% while prices fell only a few percent, illustrating that even depression-level downturns produce little deflation in modern economies.
  2. The 2007–2009 Great Recession, the worst U.S. slump since the Great Depression, slowed inflation but did not cause deflation in the overall price level.
  3. Price declines in modern economies are generally confined to commodities like eggs and technologically advancing goods like computer equipment rather than the broad Consumer Price Index basket, with Japan a unique and complicated exception.

Related Articles:

  • Affordability, Part I — Conventional data show wages have outpaced inflation for most workers, contradicting the narrative that prices have outrun incomes; the Consumer Price Index used to calculate real wages excludes borrowing costs. Many Americans rely on credit for homes and cars, and the ability of young Americans to buy first homes has deteriorated substantially.
  • The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly — Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.
  • The Middle Class Is Buckling Under Almost Five Years of Persistent Inflation — US prices for goods and services are 25% above 2020 levels, and 44% of middle-income respondents in the University of Michigan consumer sentiment survey said their finances were worse than a year earlier versus 23% who said better, with most citing higher prices. Retailers report middle-income customers pulling back on discretionary spending.

AI Summary. The recent jobs trajectory sits in the upper tail of historical month-to-month variation and closer to the range typically seen around past recessions, based on a comparison with paths beginning at the onset of prior recessions.

Ben Glasner Agglomerations
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Btw September and November, the share of workers working part-time for economic reasons increased by ~20%. Ben Glasner argues this is an ill wind for the economy, as moves of this size are typically associated with rapid cooling of the labor market.

Does the recent jobs path resemble trajectories seen around past recessions?

Core argument: The path indexed to April 2025 ("Liberation Day") has risen into the upper tail of historical month-to-month variation, moving closer to the range typically observed around past recessions.

In the figure, the recent increase pushes the current path into the upper tail of historical variation and closer to the range typically observed around past recessions. The thin grey lines show trajectories that begin at the onset of past recessions. The shaded bands summarize the distribution of all historical month-to-month paths at each relative month, with the middle band capturing the 20th–80th percentile and the outer bands capturing the 5th–20th and 80th–95th percentiles. The highlighted line uses April 2025 (“Liberation Day”) as the base month for comparison.

Takeaways by Macro Roundup® AI

  1. The path indexed to April 2025 ("Liberation Day") has risen into the upper tail of historical month-to-month variation, moving closer to the range typically observed around past recessions.
  2. The chart's shaded bands summarize the distribution of all historical month-to-month paths at each relative month, with the middle band spanning the 20th–80th percentile and the outer bands the 5th–20th and 80th–95th percentiles.
  3. Thin grey lines in the figure trace trajectories that begin at the onset of past recessions.

Related Articles:

  • Jobless Growth — Labor demand growth may be too weak to keep pace with even modest labor supply growth: the labor market is somewhat weaker than before the pandemic, job growth has turned negative outside healthcare, and firms are focused on using AI to cut labor costs. Economists estimate most employment losses in routine manual occupations since the 1970s occurred during recessions.
  • OECD Economic Outlook, Volume 2025 Issue 2: Resilient Growth but with Increasing Fragilities — U.S. real GDP grew at a 1.1% annualized rate over the first half of 2025, but excluding booming AI-related investment output contracted 0.1%, with non-AI investment weakening. The OECD identifies a correction in equity markets lifted by expectations of high AI returns as a key downside risk to its projections.
  • Millions of Workers Are Left Out of the ‘Low-Hire, Low-Fire’ US Job Market — Economists expect anemic payroll growth with unemployment holding at 4.3%, a relatively low rate that masks workers stuck in unwanted jobs or underemployed. Goldman Sachs economists say labor market churn—the flow into and out of jobs—has fallen well below pre-Covid levels, and unemployment among 16-to-24-year-olds reached 10.5%.

AI Summary. White men's share of positions across US culture and technology industries declined markedly over roughly a decade: from 48% to 11.9% of lower-level TV writers, 39% to 18% of Harvard humanities tenure-track posts, nearly half to under a third of Google's workforce, and 55.8% to 33.8% of mid-level Amazon managers.

Jacob Savage Compact Magazine
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Jacob Savage argues that the widespread discrimination against young white men in “high-status” sectors such as media and tech during the 2010s is a key driver of contemporary political dynamics among young men.

How much has white men's share of culture and tech jobs fallen?

Core argument: White men fell from 48% of lower-level TV writers in 2011 to 11.9% in 2024, and from 39% of Harvard humanities tenure-track positions in 2014 to 18% in 2023.

In 2011, the year I moved to Los Angeles, white men were 48% of lower-level TV writers; by 2024, they accounted for just 11.9%. The Atlantic’s editorial staff went from 53% male and 89% white in 2013 to 36% male and 66% white in 2024. White men fell from 39% of tenure-track positions in the humanities at Harvard in 2014 to 18% in 2023. The white men shut out of the culture industries didn’t surge into other high-status fields. At Google, white men went from nearly half the workforce in 2014 to less than a third by 2024—a 34% decline. In 2014, at Amazon, entry-level “professionals”—college graduates just starting out—were 42.3% white male. These were the employees who, if they’d advanced normally over the next decade, would be the mid-level managers of today. But mid-level Amazon managers fell from 55.8% white male in 2014 to just 33.8% in 2024—a decline of nearly 40%. In retrospect, 2014 was the hinge, the year DEI became institutionalized across American life.

Takeaways by Macro Roundup® AI

  1. White men fell from 48% of lower-level TV writers in 2011 to 11.9% in 2024, and from 39% of Harvard humanities tenure-track positions in 2014 to 18% in 2023.
  2. Mid-level Amazon managers went from 55.8% white male in 2014 to 33.8% in 2024, a decline of nearly 40%, while entry-level Amazon professionals were 42.3% white male in 2014.
  3. At Google, white men fell from nearly half the workforce in 2014 to under a third by 2024, a 34% decline, part of the author's case that 2014 was the hinge year when DEI became institutionalized.

Related Articles:

  • Do Adults Have the Skills They Need to Thrive in a Changing World? — An international assessment of adult skills describes numeracy proficiency levels ranging from counting objects and adding small whole numbers at the lowest level, to extracting information from tables and graphs and performing basic arithmetic with money and percentages at Level 1, up to analysing complex mathematical information and critically evaluating whether data support a claim at Level 5.
  • Military Officer Quality in the All-Volunteer Force — The authors find a steady decline in U.S. Marine Corps officers' General Classification Test scores, which is statistically associated with the expansion of college attendance and explains 96% of the measured change. They also find a positive association between African American officers and mean test scores, arguing affirmative action has not lowered officer quality.
  • US PISA Results By Subpopulation — On the international PISA student assessments, American Asian and White students ranked at the top, American Hispanic students outscored Hispanic students elsewhere, and American Black students performed well. In reading, American Asian students placed first and American White students third.

AI Summary. Precious metals prices for gold, silver, platinum and palladium have rallied following Federal Reserve meetings, with silver's gains spilling over into platinum and palladium. The author argues the rally reflects retail investors chasing a price spike rather than emerging-market central bank gold buying, occurring while the dollar is stable against other major currencies.

Robin Brooks Robin Brooks Substack
Date Posted:

Since Powell’s Jackson Hole speech, silver has risen ~70% and gold is almost back to its October high. The dollar has remained stable against G10 currencies, in a broad “debasement” of advanced economies’ currencies relative to precious metals.

Are retail investors, not central banks, driving the precious metals rally?

Core argument: The December 10 Federal Reserve meeting acted as a catalyst for precious metals prices to rise, echoing the move that followed Jackson Hole on August 22, according to the author's chart of gold, silver, platinum and palladium.

The chart shows precious metals prices for gold (black line), silver (red line), platinum (orange line) and palladium (pink line). It also shows a trade-weighted index for the Dollar against its G10 peers (blue line). A couple of points are worth noting: (i) the latest Fed meeting on December 10 has - once again - been a catalyst for precious metals to rise, just like Jackson Hole on Aug. 22; (ii) much like the gold rally in the run-up to the IMF/WB meetings, the silver rally now is spilling over into other stuff and pulling up things like platinum and palladium; (iii) the fact that this latest rally isn’t centered around gold should put to rest all the rumors that this is about EM central banks buying gold - the precious metals rally is about retail money chasing a price spike (like every other bubble in the past); and (iv) all this is happening while USD is stable against its G10 peers, so the story here isn’t about a loss of confidence in the Dollar but about a broader loss of confidence in fiat currencies.

Takeaways by Macro Roundup® AI

  1. The December 10 Federal Reserve meeting acted as a catalyst for precious metals prices to rise, echoing the move that followed Jackson Hole on August 22, according to the author's chart of gold, silver, platinum and palladium.
  2. The silver rally is spilling over into platinum and palladium rather than being centered on gold, which the author argues counters claims that emerging-market central bank gold buying drives the move and instead points to retail money chasing a price spike.
  3. The dollar has been stable against its G10 peers during the precious metals rally, which the author reads as a broader loss of confidence in fiat currencies rather than in the dollar specifically.

Related Articles:

  • What We Know About The Debasement Trade — Markets are front-running what they see as inevitable debt monetization and fleeing into safe-haven assets, a "debasement trade" reflected in rapidly rising long-term government bond yields and a rally in precious metals. This reflects a broad loss of confidence in fiat currencies rather than a flight from the dollar alone.
  • Across The Rich World, Fiscal Crises Loom — An analysis estimates most rich countries could keep debt stable as a share of their economies with only small primary surpluses—Britain's required surplus is 0.3% of GDP—even if all debt were refinanced immediately at current rates, but the tightening needed to stabilize debt ratios exceeds 2% of GDP in Britain and America and 3% in France.
  • 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. The US life expectancy gap between people with and without a college degree widened from 2.6 years to 6.3 years over roughly three decades, while mortality inequality across counties rose 30%. Using county- and state-level data, the authors attribute a key role to smoking rates, with secondary roles for income, other health behaviors, and state policies.

Christopher Foote, Ellen Meara, Jonathan Skinner, and Luke Stewart National Bureau of Economic Research
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The college/non-college life expectancy gap widened from 2.6–6.3 years btw 1992 and 2019, while county mortality inequality jumped 30% to the detriment of rural areas. Smoking by state predicts ~300 extra deaths per 100k for non-college grads, 0 for grads.

What explains the widening life expectancy gap by education?

Core argument: The US life expectancy gap between adults with and without a college degree widened from 2.6 years in 1992 to 6.3 years in 2019, while mortality inequality across counties rose 30%, accompanied by an increasing rural health penalty.

The education-mortality gradient has increased sharply in the last three decades, with the life expectancy gap btw people with and without a college degree widening from 2.6 years in 1992 to 6.3 years in 2019. During the same period, mortality inequality across counties rose 30%, accompanied by an increasing rural health penalty. Using county- and state-level data from the 1992–2019 period, we demonstrate that these three trends arose due to a fundamental shift in the geographic patterns of mortality among college and non-college populations. First, we find a sharp decline in both mortality rates and geographic inequality for college graduates. Second, the reverse was true for people without a college degree; spatial inequality became amplified. Third, we find that rates of smoking play a key role in explaining all three empirical puzzles, with secondary roles attributed to income, other health behaviors, and state policies. [An objection is that] the non-college smoking rate declined by somewhat more than the college rate from 1992 to 2019. [The resolution is that] college populations gave up smoking decades before non-college populations did. [The key] college/non-college comparison [is] among 55–64 year-olds, the age group for which the smoking mortality penalty is greatest.

Takeaways by Macro Roundup® AI

  1. The US life expectancy gap between adults with and without a college degree widened from 2.6 years in 1992 to 6.3 years in 2019, while mortality inequality across counties rose 30%, accompanied by an increasing rural health penalty.
  2. Using county- and state-level data for 1992–2019, the authors find mortality rates and geographic inequality fell sharply for college graduates, while spatial inequality in mortality became amplified among people without a college degree.
  3. The authors attribute a key role in all three mortality trends to smoking rates, with secondary roles for income, other health behaviors, and state policies, noting that college populations gave up smoking decades before non-college populations did.

Related Articles:

AI Summary. About 300mm of China's 1.4bn people smoke — nearly half of adult men versus under 2% of women — and they consume 40% of the world's tobacco. The World Health Organization reports Chinese tobacco consumption fell just 4% since 2000 versus 13% globally, with up to 2.6mm smoking-related early deaths a year, 23% of all deaths.

Economist Staff The Economist
Date Posted:

21% of Chinese smoke cigarettes, consuming 40% of the world’s tobacco annually. Just under half of Chinese men smoke relative to ~2% of women.

Why does smoking remain so widespread in China?

Core argument: China has roughly 300mm smokers out of a population of 1.4B, and they consume 40% of the world's tobacco.

In a population of 1.4B, some 300mm are smokers. Most are male: nearly half of adult Chinese men smoke compared with just under 2% of women. Together they get through 40% of the world’s tobacco. According to the WHO, Chinese consumption of it has declined by just 4% since 2000, compared with 13% globally. The habit exacts a heavy toll. Every year, as many as 2.6mm Chinese die early from smoking-related illnesses (roughly as many as inhabitants of Chicago). They account for 23% of all annual deaths; in America the comparable figure is 10%.

Takeaways by Macro Roundup® AI

  1. China has roughly 300mm smokers out of a population of 1.4B, and they consume 40% of the world's tobacco.
  2. Nearly half of adult Chinese men smoke, compared with just under 2% of Chinese women.
  3. As many as 2.6mm Chinese die early each year from smoking-related illnesses, 23% of all annual deaths, versus 10% in America, while the WHO reports Chinese tobacco consumption has fallen just 4% since 2000 against 13% globally.

Related Articles:

  • China’s Alarming Sex Imbalance — An analysis of UN population projections and China's 2020 census projects the ratio of men to women at prime marriage ages will peak at 119 men per 100 women by 2027, implying 22.5m more men than women in those cohorts, and remain high for decades. The share of unmarried men aged 25-39 rose from 13% to 30%.
  • East Asia’s Coming Population Collapse — United Nations projections show China's population falling 8%, Japan's 18%, South Korea's 12%, and Taiwan's 8% between 2020 and 2050, while the US population rises 12%. Working-age people per person over 65 are projected to drop to about 1.8 in China and 1.2 in Japan and South Korea.

Thursday, December 18, 2025

AI Summary. Using tax-return income, the authors estimate that a third of people in the top 1% drop out within a year and two-thirds within a decade, with three-quarters of the top 0.1% exiting over a decade. Measuring income over two decades rather than one year lowers top 1% income shares by an average of 15%, and top 0.001% shares by 40%.

David Splinter and Jeff Larrimore Working Paper
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One third of top 1% US income earners as indicated by tax returns fall out a year later and ⅔ are absent a decade later. Over two decades, income variability reduces the top .01% income share by 30% (20% using retained earnings in place of volatile capital gains).

How much does income mobility reduce measured top income shares?

Core argument: On average, one-third of those in the top 1% of fiscal income fall out of that group by the following year, two-thirds are out after a decade, and three-quarters of the top 0.1% are no longer in that group after a decade.

Using income from tax returns (“fiscal income”), [we find that] on average, one-third of those who are in the top 1% fall out of the top by the following year. Two-thirds are no longer in the top 1% a decade later. Exit rates are even higher at the very top of the distribution: three-quarters of those in the top 0.1% are no longer in that top group after a decade. This mobility is higher than in other countries and affects income inequality levels. Relative to single-year measures of income, multi-year measures that account for long-run income variability over two decades decrease top 1% income shares by an average of 15%. Two-decade mobility decreases top 0.1% shares by over 20%, top 0.01% shares by 30%, and top 0.001% shares by 40%. Adding important sources missing from fiscal income reduces the effect of variability on top income shares - [mostly by] replacing volatile capital gains realizations with more stable corporate retained earnings. Variability lowers top 1% broad income shares: an average of 0.7pp over five years, 1.3pp over one decade, and 2.1pp over two decades. This is about two-thirds the variability of fiscal income, which has average variabilities of 1, 2, and 2.7pp. Top 0.1% variabilities for broad income are also about two-thirds those of fiscal income.

Takeaways by Macro Roundup® AI

  1. On average, one-third of those in the top 1% of fiscal income fall out of that group by the following year, two-thirds are out after a decade, and three-quarters of the top 0.1% are no longer in that group after a decade.
  2. Multi-year income measures accounting for long-run variability over two decades reduce top 1% income shares by an average of 15%, top 0.1% shares by over 20%, top 0.01% by 30%, and top 0.001% by 40%.
  3. Adding sources missing from fiscal income, mostly replacing volatile capital gains realizations with more stable corporate retained earnings, cuts variability's effect to about two-thirds, lowering top 1% broad income shares by 0.7pp over five years, 1.3pp over a decade, and 2.1pp over two decades.

Related Articles:

AI Summary. Because government benefits aren't counted as income, a single parent with two children earning $11,000 is officially in poverty yet can receive $53,128 in benefits—tax credits, food stamps, housing and utility aid, Medicaid, school meals, and cash assistance—for a total of $64,128, or 254% of the poverty level.

Phil Gramm and John Early Wall Street Journal
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Counting non-cash benefits as income would reduce the 19.8mm US households defined as poor by 90%. If the $1.4T in annual Federal poverty spending, including non-cash benefits, were distributed in cash to those households, each would receive $70,000.

Does excluding government benefits from income overstate poverty?

Core argument: A single parent with two school-age children earning $11,000 from part-time work is counted as in poverty because household income falls below $25,273, yet would qualify for $53,128 in benefits, bringing total income to $64,128, or 254% of the poverty level.

The government’s failure to count its largess as recipients’ income allows welfare households to blow past the income level above which a working family no longer qualifies for government help. Take a single parent with two school-age children who earns $11,000 annually from part-time work. The government considers this household in poverty because its income is below $25,273. But this family would qualify for benefits worth $53,128. It would receive Treasury checks of $3,400 in refundable child tax credits and $4,400 in refundable earned-income tax credits. The family would also receive Food Stamp debit cards worth $9,216 a year, $9,476 in housing subsidies, $877 of government payments for utility bills, $16,033 to fund Medicaid, $3,102 in free meals at school and $6,624 in Temporary Assistance for Needy Families. All this puts the family’s income at $64,128, or 254% of the poverty level. A hardworking family earning anything like $64,128 in salary wouldn’t be eligible for any of these welfare benefits in four-fifths of the states. Meanwhile, the welfare family would be eligible for another 90 small federal benefits and sundry state and local welfare programs.

Takeaways by Macro Roundup® AI

  1. A single parent with two school-age children earning $11,000 from part-time work is counted as in poverty because household income falls below $25,273, yet would qualify for $53,128 in benefits, bringing total income to $64,128, or 254% of the poverty level.
  2. The $53,128 benefit package includes $16,033 for Medicaid, $9,476 in housing subsidies, $9,216 in Food Stamps, $6,624 in Temporary Assistance for Needy Families, $4,400 in refundable earned-income tax credits, $3,400 in refundable child tax credits, $3,102 in school meals and $877 for utilities.
  3. A family earning about $64,128 in salary would be ineligible for any of these welfare benefits in four-fifths of the states, while the welfare household would remain eligible for another 90 small federal benefits plus state and local programs.

Related Articles:

  • Stranded by the Safety Net: How to Fix the Benefit Cliff Problem — A simulation of safety-net benefits for a single mother with two children in North Carolina shows net income rising faster than earnings below $30,000 a year, then dropping abruptly as benefits phase out. She would need to earn $70,000 to exceed the net income available at $30,000.
  • Mitigating Benefits Cliffs for Low-Income Families: District of Columbia Career Mobility Action Plan as a Case Study — The authors estimate that a hypothetical low-income family with children receives $68,686 in government support at an income of $11,000 but only $22,709 at $65,000, while its tax liability rises from $842 to $12,835. The lost assistance plus higher taxes fully offsets the $54,000 income gain.
  • Welfare Is What’s Eating the Budget — The U.S. redistributes 29.4% of its gross domestic product through transfers and taxes, a larger share than any developed country except France at 30.1%. Counting transfers as income and taxes as income lost and adjusting for household size, average households in the bottom, second, and middle income fifths have roughly equal incomes despite large differences in work effort.

AI Summary. Weakness in the Japanese Yen is masking dollar declines against other major currencies such as the Swedish Krona and Swiss Franc, so a trade-weighted dollar index excluding the Yen sits below the standard measure. The author argues this reflects a broader "debasement trade," with investors seeking safe havens including precious metals and other currencies.

Robin Brooks Robin Brooks Substack
Date Posted:

The dollar’s recent stability against G10 currencies trade weighted has been driven by the Yen’s depreciation; absent the yen, the dollar has slightly weakened against advanced economies’ currencies. Brooks expects further dollar weakness.

Is one weak currency obscuring the dollar's broader decline?

Core argument: The DXY index and a version stripped of the Japanese Yen differ by only one percent, a gap the author expects to widen as the Yen depreciates, leaving the Dollar weaker than it looks.

The Japanese Yen has been tanking against the Dollar, offsetting strength in all kinds of other currencies like the Swedish Krona or Swiss Franc. This means that the exodus from the Dollar into precious metals is in fact accompanied by a similar exodus into safe haven currencies. This is just being obscured by the fact that the Japanese Yen is in even more trouble than the Dollar. All this is a symptom of the “debasement trade,” of which the precious metals rally is just one manifestation. Markets are looking for any and all safe havens from debt monetization. The chart shows what all this boils down to. The black line is the DXY index, which measures the trade-weighted Dollar against the G10. The blue line is the DXY index when I strip out the Japanese Yen. At this point, the difference between these two lines is only one percent, but the gap is growing as the Yen keeps depreciating. I expect this gap to keep widening as Japan’s debt overhang keeps dragging the Yen lower. This also means that the Dollar is weaker than it looks, a problem that will keep getting worse.

Takeaways by Macro Roundup® AI

  1. The DXY index and a version stripped of the Japanese Yen differ by only one percent, a gap the author expects to widen as the Yen depreciates, leaving the Dollar weaker than it looks.
  2. The Yen's decline against the Dollar has offset strength in currencies such as the Swedish Krona and Swiss Franc, obscuring an exodus from the Dollar into safe-haven currencies alongside precious metals.
  3. The author attributes the moves to a "debasement trade," in which markets seek safe havens from debt monetization and the precious metals rally is one manifestation, and expects Japan's debt overhang to drag the Yen lower.

Related Articles:

  • Dollar Dominance and Dollar Depreciation — Moving On Different Tracks — 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.
  • 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.
  • Across The Rich World, Fiscal Crises Loom — An analysis estimates most rich countries could keep debt stable as a share of their economies with only small primary surpluses—Britain's required surplus is 0.3% of GDP—even if all debt were refinanced immediately at current rates, but the tightening needed to stabilize debt ratios exceeds 2% of GDP in Britain and America and 3% in France.

AI Summary. Amazon, Alphabet, Microsoft, Meta, and Oracle have shifted from asset-light business models to a capital-intensive approach, while investors continue to value them as though nothing material has changed. Valuing their property, plant, and equipment at cost and applying a 10x price-to-book multiple to the rest would put their market values at roughly half current levels.

Jason Thomas Carlyle
Date Posted:

Jason Thomas notes that returns on physical assets “rarely” exhibit scale-free growth. Valuing hyperscalers’ PP&E at cost and assigning a 10x price to book multiple to the rest implies a reduction in their market caps by ~ 50%.

Are big tech valuations ignoring the shift to capital-intensive business models?

Core argument: Valuing the property, plant, and equipment of Amazon, Alphabet, Microsoft, Meta, and Oracle at cost and applying a 10x price-to-book multiple to the remainder would put their market caps at roughly half current levels.

Since the end of 2023, five companies at the center of the “asset-light” revolution—Amazon, Alphabet (GOOG), Microsoft, Meta, and Oracle—have effectively abandoned their old business models in favor of a new capital-intensive approach. Investors continue to value these businesses as though nothing material has changed. If we assume that the PP&E on [their] balance sheet should be valued at cost and assign a 10x P/B multiple to the rest, these companies’ market caps would be roughly half of what they are today. Returns on physical assets rarely exhibit the sort of scale-free growth common to software and digital platforms. There’s nothing inconsistent about bullishness on AI and skepticism about the valuations of companies operating at the technology’s frontier.

Takeaways by Macro Roundup® AI

  1. Valuing the property, plant, and equipment of Amazon, Alphabet, Microsoft, Meta, and Oracle at cost and applying a 10x price-to-book multiple to the remainder would put their market caps at roughly half current levels.
  2. Since the end of 2023, Amazon, Alphabet, Microsoft, Meta, and Oracle have effectively abandoned their asset-light business models for a capital-intensive approach, while investors continue to value them as though nothing material has changed.
  3. Returns on physical assets rarely exhibit the scale-free growth common to software and digital platforms, so bullishness on AI is consistent with skepticism about the valuations of companies operating at the technology's frontier.

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  • Google’s Gemini 3 Means AI’s “Resource Grab” Phase Is On — Google's Gemini 3, trained entirely on Google's own tensor processing unit chips, is the best-performing AI model across nearly all dimensions except possibly coding, leaving OpenAI without a leading model for the first time in three years. Google's vertically integrated stack from chips to data centers likely gives it the cheapest access to computing power among leading AI labs.
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AI Summary. Some rent-stabilized New York City apartments sit vacant and in disrepair because renovation costs far exceed what the regulated rents can recoup; a unit needing a $100,000 remodel may qualify for a maximum rent increase of only $347 a month.

Adam Lehodey City Journal
Date Posted:

There are ~50,000 apartments in New York City that are not in the market either because “their operating costs exceed legal rents or because they require considerable renovations” that could not be recouped due to rent control.

Do rent caps leave apartments vacant when renovation costs exceed allowed rents?

Core argument: Two rent-stabilized one-bedrooms in an East 6th Street building rent below $900 per month while one-bedrooms in the same building average $3,500, and both stabilized units have fallen into disrepair because restoration costs exceed the rent they would generate.

Take a building on East 6th Street as an example. One-bedroom units in the building average $3,500— except two of them, subject to the city’s rent-stabilization laws, which hold rents below $900 per month. As a result, both units have been allowed to fall into disrepair, because the cost of restoring them to habitability is greater than what they’d generate in rent. “We’re talking a minimum of $100,000 for [the studio we first visited], which requires a complete remodeling,” Michael Johnson, a vice president at the New York Apartment Association, explained. In order to afford to renovate the two units at the building on East 6th Street, the owner could request a rent increase from New York’s Division of Housing and Community Renewal. But the maximum rent increase allowed would be $347, bringing rents to $955 and $1,211, respectively. Any bank could see that the $100,000 investment would never be paid back.

Takeaways by Macro Roundup® AI

  1. Two rent-stabilized one-bedrooms in an East 6th Street building rent below $900 per month while one-bedrooms in the same building average $3,500, and both stabilized units have fallen into disrepair because restoration costs exceed the rent they would generate.
  2. Restoring the studio would cost a minimum of $100,000 for a complete remodeling, according to Michael Johnson, a vice president at the New York Apartment Association.
  3. A rent increase requested from New York's Division of Housing and Community Renewal would be capped at $347, lifting the two East 6th Street units to $955 and $1,211, leaving a $100,000 investment unrecoverable.

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  • The Clock Now Ticks on Zohran Mamdani — New York City's share of the nation's millionaires has fallen 30% since 2010 and major banks have expanded in Dallas and Atlanta as finance's share of city employment shrank. The author argues a proposed city tax plan would leave remaining high earners paying 60% of taxes.
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