Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
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  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, August 24, 2026

AI Summary. Oxford Economics projects US corporate spending on new equipment and facilities will rise 40% in real terms over a roughly five-year span, versus 12% in the euro area, with German business investment nearly stagnant. US output per hour worked rose $14 between 2018 and 2025, compared with $2 in Europe.

Sam Fleming, Amy Borrett and Olaf Storbeck Financial Times
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Oxford Economics projects US real business investment will rise 40% over 2021–2027, ~3x the euro area’s 12%. US investment growth since 2024 has been largely information processing and software, but high US growth in GDP/hour is not “merely digital.”

Is US business investment growing far faster than Europe's?

Core argument: Oxford Economics projects US corporate spending on new equipment and facilities will rise 40% in real terms between 2021 and the end of next year, versus 12% in the euro area.

Corporate spending on new equipment and facilities in the US is projected to increase 40% in real terms between 2021 and the end of next year, according to forecasts from Oxford Economics. The US surge compared with a real-terms increase of just 12% in the euro area, while German business investment is expected to have all but stagnated over the same period. Europe also faces a large and growing productivity gap with the US. “The United States has recently pulled further ahead of Europe,” Bart van Ark, a professor at the University of Manchester, told policymakers at the ECB Forum in Sintra. GDP per hour worked increased $14 in the US between 2018 and 2025, compared with just $2 in Europe. “The gap is not only a digital sector story,” added van Ark, stressing that the US outperformance extended to other sectors, including wholesale and retail as well as professional services.

Takeaways by Macro Roundup® AI

  1. Oxford Economics projects US corporate spending on new equipment and facilities will rise 40% in real terms between 2021 and the end of next year, versus 12% in the euro area.
  2. German business investment is expected to have all but stagnated between 2021 and the end of next year, according to Oxford Economics forecasts.
  3. GDP per hour worked rose $14 in the US between 2018 and 2025 compared with $2 in Europe, with Bart van Ark telling the ECB Forum in Sintra that US outperformance extended beyond the digital sector to wholesale and retail and professional services.

Related Articles:

  • The Two Europes — The International Monetary Fund projects Eastern European economies will close much of the gap with US per capita GDP — Poland from 34% to 67%, Romania 27% to 60%, Lithuania 29% to 69% — while Western Europe slips, with France falling from 86% to 71% and Italy from 93% to 68%.
  • Ed Conard Debates Furman On “The Expected Value of Risk Taking” — A debate on U.S. fiscal policy argues that spending increases, rather than the tax increases needed to fund them, slow growth, and that higher taxes would reduce the expected value of America's innovative risk-taking. The argument holds that cutting debt below 100% of GDP is critical.
  • The Future of European Competitiveness – A Competitiveness Strategy for Europe — A European Union competitiveness report attributes the EU's labour productivity growth gap with the US largely to weaker activity in information and communications technology and large-scale digital services; excluding main ICT sectors, EU productivity was broadly at par with the US from 2000-2019. It estimates Europe's investment share must rise about 5 percentage points of GDP.

AI Summary. Comparing US Treasury yields to AAA corporate bonds combined with credit default swap insurance creates a synthetic Treasury, and the resulting spread — the convenience yield investors give up for safety and liquidity — has disappeared, suggesting investors are indifferent between the two on safety and liquidity. The author argues this is bad news for US taxpayers.

Hanno Lustig The Two Cents
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Lusting agrees with Krugman that low CDS prices on Treasurys argue against default panic, but finds them a weak signal. Constructing synthetic Treasuries from corporates, he finds AAAs nearly as safe and liquid as Treasurys, “bad news for US taxpayers.”

Have investors stopped paying a premium for Treasury safety and liquidity?

Core argument: The convenience yield on U.S. Treasuries — the yield investors forgo for safety and liquidity — has disappeared over the last couple of years, which the author calls bad news for U.S. taxpayers.

A more useful gauge of how safe investors think U.S.Treasurys are is a careful comparison of Treasuries to close substitutes, like AAA corporate bonds. Adding some additional credit insurance for those corporate bonds on CDS markets [to account for corporate default risk], we’ve essentially manufactured a synthetic U.S. Treasury from AAA corporate bonds.. The figure plots the spread over Treasuries. Economists call this the convenience yield, the yield investors are willing to forgo for the safety and liquidity of Treasuries. Over the last couple of years, the convenience yield has completely disappeared. Investors seem to be indifferent between Treasuries and AAA corporates when it comes to safety and liquidity. That’s really bad news for US taxpayers.

Takeaways by Macro Roundup® AI

  1. The convenience yield on U.S. Treasuries — the yield investors forgo for safety and liquidity — has disappeared over the last couple of years, which the author calls bad news for U.S. taxpayers.
  2. Pairing AAA corporate bonds with credit-default-swap protection against corporate default risk manufactures a synthetic U.S. Treasury, and its spread over actual Treasuries measures the convenience yield.
  3. Investors appear indifferent between Treasuries and AAA corporate bonds on safety and liquidity, according to the author's spread comparison.

Related Articles:

  • What Are Bond Markets Telling Us? — There is little evidence that fears of a Greek-style solvency crisis are driving U.S. interest rates, since long-term "breakeven" inflation expectations have changed little. Prices for credit default swaps, which insure against a U.S. government default, have also moved little.
  • America’s Risky Debt: What Markets See That Policymakers Don’t — Two market-based measures suggest the safety premium investors pay to hold US Treasuries has compressed toward zero and at times reversed: the spread between top-rated corporate bonds and Treasuries after stripping out default risk, and the gap between currency-hedged foreign G10 government yields and Treasury yields at the same maturity, where longer-maturity comparisons now favor foreign bonds.
  • The United States Capital Structure — Because Social Security and Medicare benefits are politically untouchable, retirees effectively hold the most senior claim on US government resources while Treasury bondholders hold the riskiest one. On this argument, bondholders absorb adverse fiscal shocks through surprise inflation, financial repression, or both.

AI Summary. Safe public debt is jointly produced: governments supply the promise while the financial system supplies the market-making and rollover capacity that makes it liquid. The authors argue this creates a limit beyond solvency—past a turning point, further issuance reduces both debt's contribution to demand and the equilibrium safe interest rate.

Ricardo Caballero Massachusetts Institute of Technology
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Even with a solvent fiscal authority that credibly promises to repay, safety and liquidity require market-making, warehousing, and rollover support. A sufficiently large increase in Treasury supply can be contractionary if these constraints bind.

Is there a limit to safe government debt issuance beyond solvency?

Core argument: Safe public debt is jointly produced: the fiscal authority supplies the promise, while the financial system supplies the market-making, warehousing, and rollover capacity that makes the promise liquid and safe.

Safe public debt is jointly produced. The fiscal authority supplies the promise, but the financial system supplies the market-making, warehousing, and rollover capacity that makes the promise liquid and safe. Solvency therefore leaves open a second limit to issuance: the cost of mobilizing that capacity. The safe-debt Laffer curve follows from this cost. At low debt, the wealth created by an additional claim exceeds the fiscal cost of supporting it. As rollover pressure builds, the premium rises and so does the cost of refinancing the stock. The turning point is reached when this stock-wide marginal cost exhausts the finite-horizon wealth effect. Beyond it, further issuance lowers both debt’s contribution to aggregate demand and the equilibrium safe rate, even though the claims remain safe. Maturity changes the form of the exposure. Short debt puts more of the stock through rollover; long debt reduces that flow but magnifies the price response of the claims left outstanding.

Takeaways by Macro Roundup® AI

  1. Safe public debt is jointly produced: the fiscal authority supplies the promise, while the financial system supplies the market-making, warehousing, and rollover capacity that makes the promise liquid and safe.
  2. The safe-debt Laffer curve turns when the stock-wide marginal cost of refinancing, driven by a premium that rises as rollover pressure builds, exhausts the finite-horizon wealth effect of an additional safe claim.
  3. Beyond the turning point, further issuance lowers both debt's contribution to aggregate demand and the equilibrium safe rate even though the claims remain safe, with short debt pushing more of the stock through rollover and long debt magnifying the price response of the claims left outstanding.

Related Articles:

  • America’s Risky Debt: What Markets See That Policymakers Don’t — Two market-based measures suggest the safety premium investors pay to hold US Treasuries has compressed toward zero and at times reversed: the spread between top-rated corporate bonds and Treasuries after stripping out default risk, and the gap between currency-hedged foreign G10 government yields and Treasury yields at the same maturity, where longer-maturity comparisons now favor foreign bonds.
  • The Coming Great Repression? — Across countries and over time, higher public debt burdens are associated with lower relative returns on government bonds, the opposite of standard risk-premium predictions. The authors estimate financial repression—making banks captive bond buyers and loading them with low-return reserves—contributed 90.7 percentage points of GDP to Britain's postwar debt reduction, versus 20.3 from surprise inflation.
  • The United States Capital Structure — Because Social Security and Medicare benefits are politically untouchable, retirees effectively hold the most senior claim on US government resources while Treasury bondholders hold the riskiest one. On this argument, bondholders absorb adverse fiscal shocks through surprise inflation, financial repression, or both.

AI Summary. An analysis projects that by 2030 a rapid artificial intelligence growth scenario—3.3% annualized GDP growth with a rising capital share of income—could raise US federal revenues by up to $216bn, 3.3% above the Congressional Budget Office baseline. Because capital income receives preferential tax treatment, a falling labor share of income reduces the revenue gain that output growth would otherwise produce.

John Iselin and Ryan Nunn Yale University
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Iselin and Nunn expect AI to increase output growth but to reduce labor’s share of income. “This bias in AI-induced growth reduces the revenue increase one would otherwise expect, given the preferential tax treatment afforded to capital income.”

How much would AI-driven growth raise federal tax revenues?

Core argument: In a rapid AI growth scenario of 3.3% annualized GDP growth with a growing capital share, federal revenues by 2030 could grow by up to $216 billion, a 3.3% increase on top of CBO's 2026 baseline.

The additional output growth that is often expected from AI—a clear positive for the fiscal picture —is not the only potential impact that matters. Another widely expected consequence of AI adoption is a reduction in the labor share of income. This bias in AI-induced growth reduces the revenue increase one would otherwise expect, given the preferential tax treatment afforded to capital income. Further, any labor inequality effects of AI could increase revenues (in the case of increasing inequality) or reduce them (in the case of decreasing inequality). Because these channels are of first-order importance for understanding AI effects on tax revenues, our analysis focuses on their roles. Other channels, not considered here, could also turn out to have meaningful revenue implications. We project that by 2030, in a rapid AI growth scenario (3.3% annualized GDP growth and a growing capital share), federal revenues could grow by up to $216 billion, a 3.3% increase on top of CBO’s 2026 baseline.

Takeaways by Macro Roundup® AI

  1. In a rapid AI growth scenario of 3.3% annualized GDP growth with a growing capital share, federal revenues by 2030 could grow by up to $216 billion, a 3.3% increase on top of CBO's 2026 baseline.
  2. A reduction in the labor share of income from AI adoption would blunt the revenue gains otherwise expected from faster growth, because capital income receives preferential tax treatment.
  3. AI's labor inequality effects could raise revenues if inequality increases or reduce them if inequality decreases, a channel of first-order importance alongside the shift in labor share.

Related Articles:

  • How Might Fiscal Policy Respond to the Rise of Artificial Intelligence? — The Congressional Budget Office estimates that a permanent 0.5 percentage point increase in annual productivity growth would lower publicly held federal debt after 30 years by 39% of GDP, offsetting roughly half the projected rise from 101% of GDP to 175%. Higher revenue and slower spending growth outweigh higher interest costs.
  • Can AI Avert the Impending Federal Budget Crisis? — U.S. GDP per capita, about $87,000, is projected to reach $102,000 by 2035 with 1.8% annual productivity growth, or $110,000 with 2.7% growth. Because the healthcare sector has been slow to adopt AI, health spending is projected to rise from 18.3% of GDP to 21% under slower growth and 21.7% under faster growth.
  • U.S. Treasury Investors Are Long in AI — The authors find U.S. government debt has a large positive productivity beta, because the tax code makes federal revenue highly sensitive to productivity growth while spending commitments change little, leaving bondholders implicitly long productivity growth. They argue greater market confidence in sustained productivity gains from AI could substantially reprice government debt, lowering nominal yields.

AI Summary. Spending on Anthropic's largest and priciest AI model has plateaued at about 11% of total outlay on the company's tools, according to payments data from 70,000 companies, breaking a pattern of corporate users defaulting to the most powerful models. Analysts and investors cite its high price and older models' adequacy.

George Hammond Financial Times
Date Posted:

Ramp data suggest spending on Fable 5, Anthropic’s frontier model, has plateaued at ~11% of observed customers’ outlays on Anthropic’s tools. This is seemingly a behavior change – previously, corporate users defaulted to the most powerful available models.

Are businesses turning away from the priciest AI models toward cheaper ones?

Core argument: Spending on Fable 5, Anthropic's largest and priciest model, has plateaued at about 11% of total outlay on the company's tools more than two months after release, according to Ramp data covering 70,000 companies.

Spending on Fable 5, Anthropic’s largest and priciest model, has plateaued at only about 11% of overall outlay on the company’s tools, more than two months after its release, according to spending data from 70,000 companies collected by payments group Ramp. This breaks a pattern of corporate users defaulting to the most powerful models. Analysts and investors in Anthropic said the change was primarily driven by Fable’s high price and the fact that older models are capable of handling the bulk of business demands.

Takeaways by Macro Roundup® AI

  1. Spending on Fable 5, Anthropic's largest and priciest model, has plateaued at about 11% of total outlay on the company's tools more than two months after release, according to Ramp data covering 70,000 companies.
  2. Fable 5's limited uptake breaks a pattern in which corporate users default to the most powerful available models.
  3. Analysts and Anthropic investors attribute the shift primarily to Fable's high price and the ability of older models to handle the bulk of business demands.

Related Articles:

  • The AI Price Wars and Their Consequences — Artificial intelligence models are converging in capability and price, making switching easier and margins harder to defend, with US labs cutting prices on lower- and mid-tier offerings while keeping frontier models expensive. An 80% annual price decline requires 400% unit growth just to hold revenue flat, straining firms financing enormous capital spending.
  • OpenAI and Anthropic In Price War as Chinese AI Rivals Gain Ground — OpenAI cut its GPT-5.6 Luna prices by 80% and Anthropic launched Opus 5 at half the price of its Fable 5 model while cancelling a planned Sonnet 5 price increase. Headline token prices are not directly comparable, since more capable models can finish tasks using fewer tokens or attempts.
  • The AI Trade Is Losing One of Its Key Signals — An index blending artificial intelligence token prices and usage is ambiguous when it softens, since token prices have fallen more than 90% since 2023 while total spending has roughly doubled over the past year. Allianz Research measures a nearly 46% growth gap between artificial intelligence investment and sales, wider than the 32% divergence during the 2001 telecom bust.

AI Summary. The US imposed 50% tariffs on a range of Canadian goods after bilateral talks broke down, and Canada announced one-for-one 50% retaliation. The author argues this continues a descent from an order of cooperation and open markets and will hurt investors.

John Authers Bloomberg
Date Posted:

US-Canada trade talks broke down over the weekend. Canadian Prime Minister Mark Carney announced a forthcoming domestic aid package in an effort to help the Canadian economy manage the fallout from a protracted trade war with the US.

Do matching 50% tariffs between neighbors hurt investors?

Core argument: Washington imposed 50% tariffs on a range of Canadian goods after US-Canada talks broke down, and Canada announced one-for-one retaliation with matching 50% levies.

Last week, US-Canada talks broke down, and Washington levied 50% tariffs on a range of goods. Canadian Prime Minister Mark Carney, elected last year on a platform to resist Donald Trump’s declared aim to make the country the 51st state, responded with a speech announcing truly reciprocal tariffs. There will be one-for-one retaliation with 50% levies. The world is raising its economic drawbridges. That’s profoundly negative, and continues the long descent from an order of cooperation and open markets. In the short term, we’ll see who can take the most pain. There’s no reason to expect a repetition of the Liberation Day swoon, but for investors it will still hurt.

Takeaways by Macro Roundup® AI

  1. Washington imposed 50% tariffs on a range of Canadian goods after US-Canada talks broke down, and Canada announced one-for-one retaliation with matching 50% levies.
  2. Canadian Prime Minister Mark Carney, elected last year on a platform of resisting Donald Trump's declared aim of making Canada the 51st state, announced reciprocal tariffs in a speech.
  3. The escalating tariff exchange continues a long descent from an order of cooperation and open markets, and investors will be hurt even without a repeat of the Liberation Day swoon.

Related Articles:

  • How Canada Is Responding to American Mercantilism — US tariffs as high as 35% on certain goods not compliant with the US-Mexico-Canada trade agreement have coincided with falling Canadian exports, weaker business confidence and investment, a softening labor market, and a contraction in Canadian output. Canada has responded by aiming to double non-US exports within 10 years, expanding fiscal spending and deregulation, and keeping monetary policy loose.
  • Share of Young Canadians Living with Parents Doubled, Study Says — Statistics Canada reports 16.3% of millennials aged 25 to 39 lived with their parents in 2021, compared with 8.2% of baby boomers at the same age in 1991, with the pattern most pronounced in expensive cities. Homeownership among 25-to-39-year-olds was 49.9%, down from about 56% for baby boomers and Gen Xers at that age.
  • Canada’s Population Dips for Second Straight Quarter, Leading to First Annual Fall On Record — Statistics Canada estimates the country's population fell by about 102,436 people, or 0.2%, over the course of a year to 41.47 million, its first annual decline on record, driven by a steep reduction in temporary residents. Deaths exceeded births in the latest quarter, the second consecutive quarterly population drop.

Tuesday, August 25, 2026

AI Summary. The long-term Treasury yield is the most important price in the world, and markets aggregate information no committee possesses. The author argues the Treasury's larger buyback operations were not justified as liquidity support, since trading was orderly, volatility contained, and there were no failed auctions or forced unwinds indicating dysfunction.

Stanley Druckenmiller Wall Street Journal
Date Posted:

Stan Druckenmiller cautions that there is no question that the Treasury’s efforts to cap long-term yields will fail: “Governments defending prices against fundamentals always lose. The only variable is how much they spend before conceding.”

Does intervening in a working bond market suppress its price signal?

Core argument: The long-term Treasury yield is the most important price in the world, and markets aggregate information no committee possesses, with prices serving as the channel through which that information reaches decision makers.

Markets aggregate information no committee possesses, and prices are how that information reaches decision makers. The long-term Treasury yield is the most important price in the world. Treasury’s announcement gave the game away. It justified the larger operations as liquidity support in sectors with “consistent strong sponsorship from market participants,” but strong sponsorship is the definition of a healthy, working market. There were no failed auctions, no dealer balance-sheet seizure, no forced unwinds, nothing resembling Treasurys in March 2020 or U.K. gilts in September 2022, the sort of genuine dysfunctional episodes that justify official action. Volatility was contained, and trading was orderly—not a malfunction but the machine doing its job.

Takeaways by Macro Roundup® AI

  1. The long-term Treasury yield is the most important price in the world, and markets aggregate information no committee possesses, with prices serving as the channel through which that information reaches decision makers.
  2. Treasury justified its larger operations as liquidity support in sectors with "consistent strong sponsorship from market participants," though strong sponsorship is the definition of a healthy, working market.
  3. Treasury markets showed no failed auctions, no dealer balance-sheet seizure and no forced unwinds, unlike the dysfunctional episodes of Treasurys in March 2020 and U.K. gilts in September 2022 that justify official action.

Related Articles:

  • US 30-Year Bonds Erase Gains From Treasury’s Buyback Surprise — US Treasuries erased nearly all gains that followed the Treasury Department's surprise decision to increase buybacks of longer-dated bonds, with the 30-year yield rising above 5.27% and the 10-year touching 4.71%. The reversal signals the move has done little to ease concern about surging government debt.
  • What Are US Treasury Markets Really Telling Us? Part I — Comparing US Treasury yields to AAA corporate bonds combined with credit default swap insurance creates a synthetic Treasury, and the resulting spread — the convenience yield investors give up for safety and liquidity — has disappeared, suggesting investors are indifferent between the two on safety and liquidity. The author argues this is bad news for US taxpayers.
  • America’s Risky Debt: What Markets See That Policymakers Don’t — Two market-based measures suggest the safety premium investors pay to hold US Treasuries has compressed toward zero and at times reversed: the spread between top-rated corporate bonds and Treasuries after stripping out default risk, and the gap between currency-hedged foreign G10 government yields and Treasury yields at the same maturity, where longer-maturity comparisons now favor foreign bonds.

AI Summary. Foreign ownership of US Treasury securities has shifted from official investors, who held the predominant share in 2008, toward private investors, whose holdings of $6.7tn now exceed official holdings of $3.9tn. Net issuance of Treasury securities boomed during and after the COVID pandemic, even accounting for Federal Reserve purchases that reduce net market supply.

Anusha Chari and Gian Maria Milesi-Ferretti Brookings Institution
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The composition of foreign ownership of U.S. Treasury debt has shifted sharply from official to private investors over the past two decades. Foreign private investors now hold $6.7T in Treasuries, vastly exceeding the $3.9T held by foreign official institutions.

Have private foreign investors overtaken official ones in holding Treasuries?

Core argument: Foreign private holdings of U.S. Treasury securities reached $6.7 trillion in mid-2025, including the Cayman Islands correction, exceeding official foreign holdings of $3.9 trillion.

Figure 5 shows a large shift in foreign holdings of US Treasurys: a diminishing role for official investors, who accounted for the predominant share in 2008, offset by a rising role for private investors. Figure 6 shows net issuance and purchases of U.S. Treasury securities during the past 25 years. The boom in net issuance during and after the COVID pandemic is particularly striking, even after controlling for the net purchases by the Fed which reduce net market supply. Foreign net purchases show a notable shift toward private purchases relative to the 2000s. As a result, foreign private holdings of U.S. Treasury securities in mid-2025 ($6.7 trillion, including the Cayman Islands correction) vastly exceed official holdings of $3.9 trillion.

Takeaways by Macro Roundup® AI

  1. Foreign private holdings of U.S. Treasury securities reached $6.7 trillion in mid-2025, including the Cayman Islands correction, exceeding official foreign holdings of $3.9 trillion.
  2. Foreign official investors accounted for the predominant share of foreign Treasury holdings in 2008, and their diminishing role has been offset by a rising role for private investors.
  3. Net issuance of U.S. Treasury securities boomed during and after the COVID pandemic, even after controlling for Federal Reserve net purchases that reduce net market supply, alongside a shift in foreign net purchases toward private buyers relative to the 2000s.

Related Articles:

  • Mid-Year Outlook: At the Crossroads of Stagflation—What’s Next? — Foreign investors hold roughly $18.5tn in US equities (about 20% of the market), $7tn in Treasuries and $5tn in credit (about 30% of each), and foreign participation in 30-year Treasury auctions has trended down in recent months. Combined with US fiscal challenges, the authors argue this reliance on foreign demand is a vulnerability.
  • Tariffs and “International Payments Problems” — Foreigners are accumulating more financial claims on Americans than Americans are on foreigners across direct investment, stocks, bonds, currency, deposits, and loans, and the U.S. net international investment position has moved from -20% of GDP in 2010 to -89%. Almost all of that swing reflects valuation gains on U.S. stocks rather than added borrowing.
  • Global Trade Imbalances: Actual Problems, Unlikely Solutions — Foreign capital flowing into the US is shifting from government purchases of US Treasury bonds toward private foreign investment in US stocks and other riskier assets. This means a share of future gains from US productivity-enhancing investment will flow to these foreign investors, who are likely more willing to sell and exit if returns worsen.

AI Summary. Artificial caps on government bond yields in high-debt countries are argued to be negative for the currency and capable of sparking a devaluation spiral, as Japan's experience suggests, pushing markets toward safe havens against debt monetization. The dollar has fallen sharply following a bond buyback announcement while gold is up over 7%.

Robin Brooks Robin Brooks Substack
Date Posted:

Gold has risen 7% since Treasury’s buyback announcement, and the dollar has continued to fall relative to G10 and EM currencies as investors seek safe havens from “debt monetization.”

Do artificial bond yield caps weaken a high-debt country's currency?

Core argument: Gold is up over 7% and the dollar has fallen sharply since the buyback announcement, with markets jumping on what the author calls the debasement trade.

The more high-debt countries blunder into artificial yield caps, which is where the US is heading, the more markets seek safe havens from debt monetization. The lesson from Japan is that artificial yield caps are currency negative and can spark a devaluation spiral. The Dollar has fallen sharply since last week’s buyback announcement and gold is now up over seven percent. Markets know exactly what game is being played and are happy to jump on the debasement trade.

Takeaways by Macro Roundup® AI

  1. Gold is up over 7% and the dollar has fallen sharply since the buyback announcement, with markets jumping on what the author calls the debasement trade.
  2. The author argues that as high-debt countries, including the US, blunder into artificial yield caps, markets increasingly seek safe havens from debt monetization.
  3. The author draws from Japan's experience the lesson that artificial yield caps are currency negative and can spark a devaluation spiral.

Related Articles:

  • The Global Fiscal Train Wreck — Ten-year forward yields ten years ahead have risen across major advanced economies, not just the US, a global theme the author attributes to the debt buildup during the pandemic. The author argues economies have begun shifting from a good to a bad debt equilibrium, which he sees behind the rally in precious metals prices tied to a "debasement trade.
  • The Coming Great Repression? — Across countries and over time, higher public debt burdens are associated with lower relative returns on government bonds, the opposite of standard risk-premium predictions. The authors estimate financial repression—making banks captive bond buyers and loading them with low-return reserves—contributed 90.7 percentage points of GDP to Britain's postwar debt reduction, versus 20.3 from surprise inflation.
  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.

AI Summary. The narrowing gap in unemployment rates between young college graduates and non-graduates appears driven mainly by non-graduates dropping out of the labor force rather than by diplomas losing value, since people not seeking work aren't counted as unemployed. The share of young non-graduates employed is 1.7 percentage points below pre-pandemic levels.

Justin Fox Bloomberg
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Labor force participation is rising for American college graduates aged 25–29, and is now at 89.4% – above its pre-pandemic level. Participation among non-college members of that age cohort is falling; at 78.7%, it is now below its pre-pandemic level.

Is the narrowing unemployment gap driven by non-graduates leaving the workforce?

Core argument: The employment-population ratio for young adults without college degrees is 1.7 percentage points below its pre-pandemic level and trending downward, while the ratio for young college graduates sits near its pre-pandemic level.

The narrowing of [the unemployment gap btw college and non-college workers] in recent years has lent support to narratives that college diplomas are losing their value amid the rise of large language models, the purported return of blue-collar work, and other job market changes. But while it may well be that diplomas have lost value, the recent shrinking of the young-adult education-unemployment gap seems to be driven mainly by a different phenomenon. Growing numbers of young adults without college degrees simply aren’t trying to find work and thus aren’t counted in unemployment calculations. The employment-population ratio for young college grads is not far off from where it was just before the pandemic and seems as if it might be headed upward again after a sharp drop in 2023 and 2024, for non-grads it is 1.7 percentage points lower than before the pandemic and clearly trending downward.

Takeaways by Macro Roundup® AI

  1. The employment-population ratio for young adults without college degrees is 1.7 percentage points below its pre-pandemic level and trending downward, while the ratio for young college graduates sits near its pre-pandemic level.
  2. The narrowing unemployment gap between young college and non-college workers appears driven mainly by growing numbers of non-graduates who are not seeking work and therefore are not counted as unemployed.
  3. The employment-population ratio for young college graduates fell sharply in 2023 and 2024 and appears as if it might be headed upward again.

Related Articles:

  • Labor Force Participation Is High If You Measure It Right — The headline labor force participation rate — the share of people 16 and older working or looking for work — is a limited gauge of labor market health because participation varies greatly by age. Aging baby boomers and the addition of nearly 1.7m Americans 65 and older to population estimates add distortion.
  • How Labor Force Participation Has Diverged Across Genders — Between 1976 and 2024 the trend labor force participation rate fell 10.1 percentage points for men and rose 8.2 points for women. Population aging lowered participation by about 4 points for each gender and rising education raised it (+6 for women, +3 for men), but the divergence is dominated by participation trends within age-gender groups.
  • AI, Immigration, and Collapsing Labor Force Participation — As labor force participation falls, a shrinking group of workers generates the income, taxes, and innovation supporting a growing number of non-workers, leaving the economy more fragile because labor shocks are concentrated among fewer participants. Labor scarcity raises the return on automation, robotics, and software, making growth depend on productivity rather than participation.

AI Summary. Official Spanish data show births exceeded deaths by barely 200,000 over the first quarter of the 21st century—less than 0.5% of Spain's population at the start—while immigration accounted for 98% of the country's population growth, the largest increase of any European Union member. Deaths have exceeded births since 2015.

Nicholas Eberstadt American Enterprise Institute
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Database

Btw 2000 and 2025, ~98% of Spain’s population growth was due to immigration. In 2024, about one-third of babies born in Spain had a foreign-born mother.

Has immigration accounted for nearly all of Spain's population growth?

Core argument: Immigration accounted for 98% of Spain's population growth between 2000 and 2025, according to official Spanish data.

Without immigration, Spain’s population would have stagnated in the first quarter of the 21st century. According to official Spanish data, births exceeded deaths by barely 200,000 for the 2000-2025 period (2025 numbers still provisional)—or less than one half of 1% of Spain’s 2000 population. Thanks to its robust immigration inflows, however, Spain registered more population growth than any other EU country between 2000 and 2025. Virtually all (98%) of Spain’s population growth was due to immigration during those years. And since deaths have exceeded births in Spain since 2015, any future growth would have to come entirely from additional immigration.

Takeaways by Macro Roundup® AI

  1. Immigration accounted for 98% of Spain's population growth between 2000 and 2025, according to official Spanish data.
  2. Spain's births exceeded deaths by barely 200,000 over 2000–2025, with 2025 figures still provisional, less than one half of 1% of Spain's 2000 population.
  3. Spain registered more population growth than any other EU country between 2000 and 2025 on the strength of immigration inflows, and with deaths exceeding births since 2015, any future growth would have to come entirely from additional immigration.

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  • Four Ways Europe’s Big Immigration Experiment Has Changed Spain — Spain has been the world's fastest-growing large advanced economy and, by Financial Times analysis, accounted for one in four of the 11.1mn jobs added across the European Union, with roughly 70% going to immigrants according to the think-tank Funcas. Spain's fertility rate of 1.1 births per woman is the EU's lowest after Malta.
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AI Summary. Australia has begun vaccinating at-risk bird species against H5N1 bird flu, including 5,000 little penguins in Victoria, and has confirmed its first case in a long-nosed fur seal, a species for which no vaccine is approved. The government says the disease has not reached poultry or farms and human risk remains low.

Laura Chung New York Times
Date Posted:

Australia confirmed its first case of H5N1 in June, and the virus has since rapidly spread, with at least 309 confirmed bird flu events that have killed more than 1,000 birds.

Can vaccinating wild birds contain a bird flu outbreak spreading to mammals?

Core argument: The Australian government began vaccinating at-risk bird species, including 5,000 little penguins in Victoria.

The Australian government began vaccinating at-risk bird species this month. Among those receiving the vaccination will be 5,000 little penguins in the state of Victoria. Authorities confirmed the first case of H5N1 in a long-nosed fur seal in South Australia last week. A second seal was suspected to have died from the disease on Monday. A vaccine has not yet been approved for use in Australian mammals. The disease has not been detected in poultry or on farms, according to the government, and the risk to humans remains low.

Takeaways by Macro Roundup® AI

  1. The Australian government began vaccinating at-risk bird species, including 5,000 little penguins in Victoria.
  2. Australian authorities confirmed the first H5N1 case in a long-nosed fur seal in South Australia, and a second seal was suspected of dying from the disease.
  3. No vaccine has been approved for use in Australian mammals, and the government reports H5N1 has not been detected in poultry or on farms, with the risk to humans remaining low.

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