Last chance: A proposal for fiscal and nominal stability in the US
What the US Treasury and the Federal Reserve should announce: 1) The fiscal house needs to be put in order right now: a) Introduction of a federal VAT at a rate of 10%.b) Social Security: the...
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Desperation is setting in at the US Treasury
The US Treasury said this afternoon (European time), in a press release, that it will at least double the size of its liquidity support buybacks of long-dated government bonds. In the two long...
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“A resource curse”: the Trump administration is renouncing the dollar’s...
US vice president JD Vance has said in public that he does not think the dollar’s reserve currency status is good for the United States. Back in 2023 JD Vance said this: “I am not sure that I think...
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Burgernomics at forty: what four decades of hamburger prices tell us about...
A couple of days ago, on 1 August, Brad Setser posted that The Economist had picked a good week for a currency cover, and that the Big Mac index agreed with his own work in putting the yuan around 30%...
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Warsh, you are way behind the curve
Second-quarter GDP figures arrived this week for both the US and the euro area, and the coverage has been almost entirely about a single number. US real GDP grew at an annualised rate of 1.5% in the...
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Warsh > Musk > Trump
If you look at the financial markets, you can “read” what investors are thinking about the economic outlook – are the shocks positive or negative, and are they supply or demand shocks? Over the past...
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Alan Greenspan, 1926-2026: The Rule Behind the Maestro
“If he’s alive or dead it doesn’t matter. If he’s dead, just prop him up and put some dark glasses on him like, like ‘Weekend at Bernie’s.’” That was John McCain on Alan Greenspan in 2007, about a...
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A Regime Decision, Not a Rate Decision
Kevin Warsh’s first press conference as Fed chairman was far better than I expected. The statement is shorter, forward guidance is gone, and the Committee has promised to deliver price stability. That...
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Powell’s last meeting
Trump says Powell has been too tight. The data says the opposite. Powell has run the easiest monetary policy in modern Fed history, and the credibility cost is what makes the institution so vulnerable...
View ArticleThe Prophets of Silicon Valley
The chief executives of the world’s most powerful artificial intelligence companies have been saying remarkable things about the future of work. Dario Amodei of Anthropic has warned, in multiple...
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A new service: Expert Briefings with Lars Christensen
Regular readers of this blog will know that most of what I do here is explain, analyse, and argue about macroeconomics, monetary policy, and increasingly artificial intelligence. That work is public...
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The Blue Owl in The Coal Mine – Private Credit: The New Subprime?
Blue Owl is one of Wall Street’s big names in private credit – a manager of nearly $300 billion in assets. The company’s logo is an owl: the animal that, according to legend, can see everything, even...
View ArticleNo, AI Will Not Take Your Job Within the next Two Years
Two weeks ago, Microsoft’s AI chief Mustafa Suleyman told the Financial Times that most white-collar work will be fully automated within 12 to 18 months. Lawyers, accountants, project managers,...
View ArticleToo Big to Save: Fannie and Freddie’s Dangerous Tech Bet
On Friday, Bill Pulte (Director of the Federal Housing Finance Agency and chairman of both Fannie Mae and Freddie Mac) announced that America’s two government sponsored housing finance giants are...
View ArticleInvesting in a Time of Crisis: When Three Storms Converge on Global Markets
The Paradox of Preppers Who Want Stock Tips I’ve had some rather paradoxical conversations in recent weeks. One second, I’m standing there talking to people about prepping—buying water, hand-crank...
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Measuring Political Violence in America: A Language Model Experiment
Another day, another politically motivated attack in the United States. This morning’s shooting at a Dallas ICE detention facility – where a sniper killed two detainees and wounded another before...
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ARGENTINA FIRST: MAKING BAIL OUTS GREAT AGAIN
The Argentine markets took a beating last week, but US Treasury Secretary Scott Bessent has rushed to the rescue with a remarkable promise: America will provide what amounts to unlimited support to...
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The Fed’s Drifting Anchor
The Federal Reserve cut rates by 25 basis points yesterday, bringing the fed funds rate to 4.00-4.25%, exactly as markets had expected. Stephen Miran – Trump’s recently appointed member to the FOMC-...
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US inflation acceleration – a lot faster than you might think
Many economists and market observers have expressed surprise at the apparent absence of inflationary effects from President Trump’s economic policies. I find this a bit puzzling, as I believe the...
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The Giltquake: Are you ready for a UK sovereign debt crisis?
Long-term British government bond yields are now at their highest level in almost 30 years. What is even more concerning is that the UK economy is actually slowing down, which means that nominal GDP...
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