Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “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
  • “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
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “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
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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
Upside of Inequality Oxford Unintended Consequences

Robin Brooks Robin Brooks Substack
Date Posted:

Brooks argues rising yields in advanced economies this year are driven by market’s “high alert” regarding debt. The highest cumulative rise in yields this year is in high-debt countries, and yields have risen on days with debt-related bad news.

Markets are on high alert, which they wouldn’t be if they weren’t worried about debt. Markets are aggressively differentiating between high- and low-debt countries as global yields rise. The lowest cumulative rise in yields this year (relative to a global average) is in Switzerland, Norway, Sweden, New Zealand and Australia. High-frequency price action tells us exactly what markets think and they’re clearly agitated about deficits and debt. When Japan’s Takaichi said in January that she was done with “excessive” fiscal austerity, long-term yields spiked sharply. In fact, that spike was so big that it caused global contagion, with the NY Fed doing its infamous “rate check” a few days later to keep the Yen from collapsing. Then there's the US Treasury's surprise buyback announcement on August 19, which tanked the Dollar as precious metals rose.

Related Articles:

  • Global Debt Report 2026 — Across the OECD last year, $13.5T of governmental debt needed refinancing, 70% ($9.5T) of which was US debt, up from 57% in 2020. The US and Japan were…
  • The Coming Great Repression? — Higher public debt is historically associated with lower, not higher, government bond returns, as financial repression forces banks to hold low-yield bonds and cheap reserves, suppressing borrowing costs. This mechanism reduced British public debt by ~91% of GDP in 1945–55, dwarfing the contributions from inflation or budget surpluses.
  • Rising Bond Yields Are Good, Actually — Higher interest rates remain low relative to nominal income and spending growth of ~7% annually, making current rate levels benign rather than restrictive. Elevated rates help reallocate spending away from consumption and housing toward productive investment, or attract foreign capital to fund that shift.

AI Summary. The Current Population Survey systematically understates income receipt, with nearly half of measured variables showing downward bias of 40% or more when benchmarked against administrative tax and program records. Bias is modest for Social Security programs (under 15%) but exceeds 40% for pensions, unemployment insurance, and food stamps.

Bruce Meyer, Nikolas Mittag, Derek Wu, Anthony Tatarka, et al. National Bureau of Economic Research
Date Posted:

CPS reports of receipts in dollar terms are 40–60% below administrative benchmarks for income sources such as SNAP and pensions. Linked records show most of the gap comes from recipients reporting no receipt at all, not underestimating amounts.

Does survey data systematically undercount household income sources?

To directly measure bias in survey estimates, we calculate the difference between the weighted survey estimate and the survey target constructed from published totals [TSE or total survey error], using public-data adjustments for intentional coverage differences for average dollars received and the recipient share of the population across our income sources. Figures 1 and 2 summarize TSE in the CPS from 1984 to 2022, expressed as a share of the survey target for our measures of recipients (seven income sources) and dollars (eight income sources). In levels, TSE is almost always negative for both recipients and dollars (with SSI dollars an exception in recent years), indicating that survey means are systematically biased downward. For nearly half of the variables the bias is 40% or more. Yet, there is substantial heterogeneity across income sources. TSE tends to be more modest for SSA programs (specifically OASDI and OASI, for which the net bias is below 15% for recipients and dollars), while it is much larger for income sources such as pensions, UI, and SNAP (for which the net understatement exceeds 40%).

Related Articles:

AI Summary. 54 percentage point yield increase since 2022. The shift reflects reduced Federal Reserve absorption of long-duration debt, forcing private investors to demand greater compensation for interest rate risk.

Hanno Lustig The Two Cents
Date Posted:
Is Database:
Database

Lustig presents a decomposition that attributes 156bp of the 254bp rise in the 10-year yield since March 2022 to an increase in the term premium, which he associates with the additional duration risk borne by investors as the Fed reduced its balance sheet.

Does reduced Fed demand for long-duration debt explain rising Treasury yields?

Core argument: Term premium accounts for 1.56 percentage points — nearly two-thirds — of the 2.54-point rise in the 10-year Treasury yield since March 2022, dwarfing the 98-basis-point contribution from rising expected short rates.

I plot a decomposition of the increase in the 10-year yield into a term premium component and a future short rate component. According to this measure, a big chunk —1.56 pps (or nearly 2/3 rds)— of the 2.54 pps increase in the 10-year yield since March 2022 is actually due to an increase in the term premium. That premium (the red line in the figure) turned negative around 2015, and [when] it bottomed out in 2020, yields (black line) were trading 135 bps below the path of future short rates (blue line). That’s not entirely surprising: The Fed was absorbing a large share of Treasury issuance at the long end of the yield curve —as well as MBS issuance— effectively removing a great deal of interest rate risk from the market.

Takeaways by Macro Roundup® AI

  1. Term premium accounts for 1.56 percentage points — nearly two-thirds — of the 2.54-point rise in the 10-year Treasury yield since March 2022, dwarfing the 98-basis-point contribution from rising expected short rates.
  2. The term premium bottomed at -1.355% in 2020, when Fed absorption of long-end Treasury and MBS issuance stripped duration risk from the market and pushed yields 135 basis points below the expected path of short rates.
  3. The term premium’s steady climb since 2022 signals that investors now demand compensation for bearing interest rate risk rather than paying for the privilege, reversing a multi-year structural distortion created by quantitative easing.

Related Articles:

  • What Are Bond Markets Telling Us? — U.S. bond market indicators, including long-term inflation expectations and default insurance prices, show no meaningful rise in concern about government insolvency or debt sustainability.
  • What Are US Treasury Markets Really Telling Us? Part I — Lusting agrees with Krugman that low CDS prices on Treasurys argue against default panic, but finds them a weak signal. Constructing synthetic Treasuries from…
  • America’s Risky Debt: What Markets See That Policymakers Don’t — The safety premium that investors historically paid for US government bonds over equivalent alternatives has compressed toward zero and, at longer maturities, reversed — with global investors now pricing foreign government bonds as safer than US Treasurys.

AI Summary. The 10-year Treasury yield has risen above 4.75% as higher oil prices reinforce expectations of Federal Reserve rate hikes. The 30-year yield also climbed to near 5.26%, though Treasury buybacks in that sector have kept it below recent multiyear highs.

Elizabeth Stanton Bloomberg
Date Posted:

The US 10-year yield hit 4.75% for the first time since January 2025. The 30-year yield also climbed, rising 5 bps to ~5.26%.

Does higher oil inflation force the Fed to abandon rate cuts?

Core argument: The U.S. 10-year Treasury yield surpassed 4.75%—its highest since January 2025—as rising oil prices reinforced market expectations of further Federal Reserve rate hikes.

The US 10-year yield topped 4.75% for the first time since January 2025 as rising oil prices bolstered expectations that the Federal Reserve will hike interest rates. While 30-year yields also climbed Monday, rising five basis points to near 5.26%, they remained well below their mid-August multiyear highs, having retreated after the Treasury Department said earlier this month it would increase its buybacks of debt in the sector to bolster its market value.

Takeaways by Macro Roundup® AI

  1. The U.S. 10-year Treasury yield surpassed 4.75%—its highest since January 2025—as rising oil prices reinforced market expectations of further Federal Reserve rate hikes.
  2. The 30-year Treasury yield rose five basis points to near 5.26% but remained well below its mid-August multiyear highs, after the Treasury Department expanded long-dated debt buybacks to support market value.

Related Articles:

  • America’s Risky Debt: What Markets See That Policymakers Don’t — The safety premium that investors historically paid for US government bonds over equivalent alternatives has compressed toward zero and, at longer maturities, reversed — with global investors now pricing foreign government bonds as safer than US Treasurys.
  • Let the Bond Market Speak — Treasury intervention in a functioning bond market suppresses the price signal that transmits collective market information to decision makers, removing the mechanism by which orderly volatility performs its intended economic function.
  • Don’t Draw The Wrong Conclusion From Treasury Yields — Rising long-term bond yields reflect higher expected short-term interest rates over the next decade, not concerns about government debt sustainability, as both inflation expectations and the risk premium for holding long-term bonds have remained stable.

AI Summary. The gap between long-term government bond yields and equivalent swap rates has narrowed to its smallest in months, reflecting increased investor willingness to hold long-dated government debt following expanded buybacks of longer-dated bonds.

Greg Ritchie and Elizabeth Stanton Bloomberg
Date Posted:
Is Database:
Database

Modest compression of the spreads between Treasury yields and synthetic “swap” securities (~5.5bp for the 30 year and ~3bp for the 10 year) suggest Bessent’s Treasury purchase program has had a degree of success at lowering long-term government yields.

Are investors returning to long-term government bonds?

Core argument: The 30-year Treasury-swap spread narrowed to its smallest since February following Bessent’s announcement, as Treasuries outperformed equivalent-maturity swaps and benchmark yields drifted lower.

Since Bessent’s announcement, Treasuries have outperformed equivalent-maturity swaps, narrowing the 30-year spread to the smallest since February. Swaps are popular with some investors as an alternative to owning bonds; the gap between [swap rates] and US government yields [gauges] how willing [investors] are to hold Treasuries instead. The 10-year swap spread has compressed too, with the gap three basis points smaller at around 38 basis points. Still, the recent drop has only dented a years-long rise in long-term US government borrowing costs. The 10-year US yield inched up 3bp to 4.66% after touching 4.75% last week. “While conducting buybacks at the long end of the yield curve may technically decrease yields, higher structural US budget deficits, which [require] a significant supply of Treasuries to finance the US debt, [are] not changing anytime soon,” said Libby Cantrill, head of public policy at Pimco.

Takeaways by Macro Roundup® AI

  1. The 30-year Treasury-swap spread narrowed to its smallest since February following Bessent’s announcement, as Treasuries outperformed equivalent-maturity swaps and benchmark yields drifted lower.
  2. The Treasury’s plan to at least double longer-dated bond buybacks drove the repricing.
  3. the swap-yield gap—a direct gauge of investor preference for Treasuries over derivatives—compressed in response.

Related Articles:

  • Let the Bond Market Speak — Treasury intervention in a functioning bond market suppresses the price signal that transmits collective market information to decision makers, removing the mechanism by which orderly volatility performs its intended economic function.
  • US 30-Year Bonds Erase Gains From Treasury’s Buyback Surprise — US government bond yields have returned to near two-decade highs despite a buyback program targeting long-dated debt, indicating that investor concern over rising government borrowing remains unresolved.
  • America’s Risky Debt: What Markets See That Policymakers Don’t — The safety premium that investors historically paid for US government bonds over equivalent alternatives has compressed toward zero and, at longer maturities, reversed — with global investors now pricing foreign government bonds as safer than US Treasurys.

AI Summary. Treasury intervention in a functioning bond market suppresses the price signal that transmits collective market information to decision makers, removing the mechanism by which orderly volatility performs its intended economic function.

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.”

Core argument: The long-term Treasury yield is the world’s most consequential price signal.

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 world’s most consequential price signal.
  2. unwarranted official intervention corrupts the market-aggregated information that no policy committee independently possesses.

Related Articles:

AI Summary. Artificial yield caps in high-debt economies trigger currency devaluation and drive markets toward safe-haven assets, as investors price in debt monetization and currency debasement.

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.”

Are yield caps forcing investors to abandon high-debt currencies?

Core argument: Gold has surged 7% since the U.S. Treasury’s buyback announcement, signaling that markets are actively pricing in debt monetization risk and rotating into debasement hedges.

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 has surged 7% since the U.S. Treasury’s buyback announcement, signaling that markets are actively pricing in debt monetization risk and rotating into debasement hedges.
  2. Artificial yield caps are currency negative: Japan’s experience shows that suppressing bond yields triggers devaluation spirals that erode purchasing power faster than the caps contain borrowing costs.
  3. High-debt sovereigns that resort to yield curve control cede bond-market credibility, accelerating capital flight into safe-haven assets and compounding fiscal deterioration.

Related Articles:

  • The Global Fiscal Train Wreck — Rising long-term government bond yields are a global phenomenon driven by the surge in public debt accumulated during the pandemic, not a problem unique to any single country. Markets appear to be pricing in a structural shift toward fiscal deterioration, reflected in strong demand for inflation-resistant assets like precious metals.
  • The Coming Great Repression? — Higher public debt is historically associated with lower, not higher, government bond returns, as financial repression forces banks to hold low-yield bonds and cheap reserves, suppressing borrowing costs. This mechanism reduced British public debt by ~91% of GDP in 1945–55, dwarfing the contributions from inflation or budget surpluses.
  • Global Debt Report 2026 — Across the OECD last year, $13.5T of governmental debt needed refinancing, 70% ($9.5T) of which was US debt, up from 57% in 2020. The US and Japan were…

Hanno Lustig The Two Cents
Date Posted:
Is Database:
Database

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.”

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.

Related Articles:

  • What Are Bond Markets Telling Us? — U.S. bond market indicators, including long-term inflation expectations and default insurance prices, show no meaningful rise in concern about government insolvency or debt sustainability.
  • America’s Risky Debt: What Markets See That Policymakers Don’t — The safety premium that investors historically paid for US government bonds over equivalent alternatives has compressed toward zero and, at longer maturities, reversed — with global investors now pricing foreign government bonds as safer than US Treasurys.
  • The United States Capital Structure — Government bondholders hold the riskiest position in the U.S. fiscal structure, absorbing adverse shocks through inflation or financial repression, while entitlement recipients function as senior claimants whose payments are politically protected.