Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…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 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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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 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 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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

AI Summary. Cumulative US borrowing from the rest of the world has reached 118% of GDP since 2000 as domestic savings fell short of investment, with growing global trade volumes boosting foreign demand for Treasuries and holding down US borrowing costs. The author argues stagnating trade and narrowing deficits shrink that funding subsidy.

Jason Thomas Carlyle
Date Posted:
Is Database:
Database

US cumulative foreign borrowing since 2000 has reached 118% of GDP, but the US has earned more on foreign assets than foreigners earned on US liabilities. Carlyle speculates that this “exorbitant privilege” could erode if globalization unwinds.

Does shrinking global trade raise US borrowing costs?

Core argument: Cumulative US borrowing from the rest of the world has reached 118% of GDP since 2000, as domestic savings consistently fell short of domestic investment, with effective US net borrowing costs below zero until recently.

The size of the implicit US borrowing subsidy rose with global trade volumes. The growth in trade during the period of “globalization” was driven by the rise of globally-interconnected production networks, with production processes sliced into stages and distributed across borders. Businesses at each stage of the process would both invoice and get invoiced in dollars. This [plausibly] boosted demand for Treasuries to meet dollar payment obligations and backstop foreign banking systems, which placed downward pressure on Treasury yields and cheapened broader dollar funding costs.

Takeaways by Macro Roundup® AI

  1. Cumulative US borrowing from the rest of the world has reached 118% of GDP since 2000, as domestic savings consistently fell short of domestic investment, with effective US net borrowing costs below zero until recently.
  2. The implicit US borrowing subsidy grew with global trade volumes, as foreign demand for Treasuries to meet dollar payment obligations and backstop foreign banking systems pressed Treasury yields down and cheapened broader dollar funding costs.
  3. Policies that scale back US external commitments, narrow the goods trade deficit, and restrict foreign adversaries’ access to dollar clearing further reduce the foreign savings available and willing to be recycled into low-yielding US assets.

Related Articles:

  • 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.
  • Honey, Who Shrunk the U.S. Income Surplus? — Foreign holdings of U.S. financial assets are valued at $69tn versus $41tn of U.S. holdings abroad, a gap that has been mounting for decades. With the net liability position in interest-bearing assets at -$15tn, a 1 percentage point rise in interest rates would subtract $150bn from the U.S. net investment income balance.
  • https://www.edwardconard.com/2025/04/01/without-spending-cuts-brace-for-slow-growth/ — My Wall Street Journal Op-Ed: Without Spending Cuts, Brace for Slow Growth
Showing 890 database articles primarily about either GDP, Business Cycle, Financial Markets, Growth, Housing, Inflation, Savings Glut/Trade Deficit, or Trade (not deficits)