Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
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  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
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  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
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Upside of Inequality Oxford Unintended Consequences

AI Summary. A European think tank notes that 30-year government bond yields in the US, Germany, France, Italy, the UK, and Japan all rose by 45-79 basis points over six months, with the US in the middle at 58. The article argues this reflects surging demand for funds from an AI-driven information technology spending boom rather than policy.

Paul Krugman Krugman Wonks Out
Date Posted:

Noting long-term yields have risen across advanced economies, Krugman argues increased yields over the last 6 months “may not have much to do with policy at all,” but are more likely due to “the surge in demand for funds as a result of the AI boom.”

Is a technology investment boom driving long-term bond yields higher?

Core argument: Bruegel notes that US, German, French, Italian, UK, and Japanese 30-year yields all rose by 45–79 basis points in the six months to August 28, with the US in the middle at 58 basis points.

What [has been] driving interest rates higher [in the six months to August 28]? The European think tank Bruegel notes “US, German, French, Italian, UK, and Japanese 30-year yields [all] rose by 45-79 basis points in the six months to 28 August, with the US in the middle at 58bp.” It may not have much to do with policy at all, [but is instead due to] the surge in demand for funds as a result of the AI boom. We are in the midst of a surge in spending on IT that is on track to be even bigger than the boom of the late 1990s, [when] long-term rates were even higher then than they are now, even though inflation was low and we had a budget surplus.

Takeaways by Macro Roundup® AI

  1. Bruegel notes that US, German, French, Italian, UK, and Japanese 30-year yields all rose by 45–79 basis points in the six months to August 28, with the US in the middle at 58 basis points.
  2. The rise in long-term yields may have little to do with policy and instead reflect the surge in demand for funds generated by the AI boom.
  3. IT spending is on track to exceed the late-1990s boom, when long-term rates were higher than they are now despite low inflation and a US budget surplus.

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  • Rising Bond Yields Are Good, Actually — Interest rates remain low relative to reasonable expectations of inflation and growth, with incomes and spending rising about 7% a year in dollar terms. Absent idle workers, machines, and materials, higher rates can help shift resources toward business equipment and nonresidential construction by discouraging consumer spending and housing or attracting foreign goods and services today.
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