Kevin Warsh has much to gain from studying the real interest rate record of his predecessors. Bottom line: Avoid being Arthur Burns, avoid the “new paradigm” pitfalls of Alan Greenspan, and stay clear of the never-ending emergencies of Ben Bernanke. Study Volcker as a hero of political independence.

“American Exceptionalism” has long been taken for granted. To the extent that leadership is an important aspect of such perceived supremacy, Donald Trump appears to be a disqualifying consideration. How exceptional are we now — especially compared with another country, another system, like China?

Donald Trump is heading to Davos having just threatened 8 European countries with coercive tariffs for their reluctance endorse his ridiculous land grab of Greenland. Does Europe have the spine to resist, when the American power structure has rolled over with gratuitous compliance?

Jerome Powell’s willingness to take on Donald Trump is an extraordinary act of political courage. It stands in sharp contrast to my personal experience with Arthur Burns in the early 1970s when a politically compliant Fed ushered in the Great Inflation.

Contrary to widespread views by China hawks — which include almost everyone these days — America’s snatch of Maduro is unlikely to trigger a copycat operation by China in Taiwan. The most important of the three reasons I cite is strategy, which dates back to to Sun Tzu in the fifth century.

Although diplomacy has long been at the forefront of Sino-American engagement, the rise of politically constrained, egocentric leaders has rendered it ineffective. It is not too soon to start considering a new architecture of engagement for the post-Trump era.

People are getting more upbeat on China. The IMF just nudged up its f’cst for 2026. Yet the data flow is weak, especially the consumer, capex, and an exploding current account surplus. This increases pressure on consumer-led rebalancing to avoid a further protracted shortfall in the Chinese economy

The liar-in-chief has gone too far in blaming Biden for the record inflation he inherited. His claims have no basis in fact, especially as compared to the Great Inflation of the 1970s and early 1980s. Equally culpable is his so-called team of expert economic advisors — Bessent, Lutnick, and Hassett.

While the sign at Hong Kong’s Airport still says “Welcome to Asia’s World City,” that reputation has been increasingly compromised by China’s stifling influence on the city’s governance and economic vitality. The “one country, two systems” model morphed increasingly into “one country, one system.”

NVIDIA’s blowout 3Q earnings doesn’t validate an AI boom. It provides a signal of derived demand, driven by expectations of a $3-5 trln capex boom in data center construction between now and 2030. NVIDIA’s expected earnings trajectory is tied to the AI capex bubble it feeds off.

Like Biden, Trump has an affordability problem. Unlike Biden=>Harris, Trump’s claim that affordability is a political hoax fails to make the distinction between inflation and the price level. On November 4, US voters understood the basic economics of that distinction better than their President.

In May 1930, over 1000 leading economists wrote an open letter to President Hoover urging him not to sign the Smoot Hawley Tariff Act. In October 2025 an Amicus Brief was filed before the Supreme Court by 44 distinguished economists urging rejection of Trump’s tariffs. Will SCOTUS do “a Hoover” ?

Just back from two weeks in China. My take on what Beijing thinks of the Trump-Xi “deal.” Unsurprisingly, a very different take than the US view as per Trump.

I document America’s mounting loss of leading Chinese scientists returning to the Mainland since the US presidential election in Nov 2024. This trend, in conjunction with efforts to slash Federal support for basic research, reinforces the destructive anti-science, anti-expert mindset of Trump 2.0.

More detail on the macro drivers of Chinese consumer-led rebalancing: Relative to OECD norms — a good proxy for Xi Jinping’s 2049 goal of a “moderately well-off society” — China has more to gain from reducing precautionary saving than from boosting labor income. Both are needed, however.

As a follow up to my earlier proposal that China needs to set an explicit target of 50% for the household consumption share of GDP by 2035, the piece below quantifies what it would take. My answer: 7% consumption growth between now and 2035 versus 3.3% for the remainder of the Chinese economy.

A striking disconnect between ongoing services developement and lagging household consumption underscores China’s incomplete rebalancing. This paradox can best be resolved through a combination of social safety net reforms and a 50% target for the consumption share of Chinese GDP by 2035.

As China puts the final touches on its upcoming Five-Year Plan (2026-30), America has neither a plan nor a strategy. Trumponomics is based largely on the whims of one man, in sharp contrast to China’s comprehensive “all-of-government” approach.

Following a Chinese ban of Nvidia purchases, Huawei has just rolled out a new strategy for indigenous AI innovation while China just cracked the Top 10 on the Global Innovation Index. America’s efforts to contain Chinese innovation have backfired.

Project Sydicate asked five of us to consider whether Trumponomics represents a rejection of neoliberalism or its natural progression, and how might it reshape the US economy? My answer, along with summaries of the others, follows.

The new focus of Chinese policy — involution — is yet another attempt to micromanage the supply side, this time focusing on the deflationary consequences of “overly-aggressive, disruptive” competition. By failing to tackle chronic problems of underconsumption, this campaign could well be stymied.

Xi Jinping’s recent emphasis on China’s “unstoppable rejuvenation” signals that his political calculus has changed. With Chinese economic growth likely to fall short of the 2049 targets of the “Chinese Dream,” a large rejuvenation deficit has opened up. A shift from economic to military priorities.

The AI spending binge on data centers is a bubble. Reminiscent of services sector restructuring in the 1990s, a massive overhang of low-value, fixed cost LLM search processing will dilute the variable cost functionality and returns of large Mag 7-like AI companies. Hyper-scale data centers benefit.

Jerome Powell’s recent speech at Jackson Hole was a courageous, Volcker-like act in support of Fed independence. Staying on mission, when the Fed is under extraordinary political pressure, is an inspiration for Lisa Cook and the rest of us. Powell deserves a place in the Pantheon of central banking.

ChinaFile asked five China watchers whether President Trump has changed his view on China. My take is that he will do whatever it takes to put another big notch in his deal belt. China and Harvard are two trophy deals that would enshrine his self-proclaimed legacy as deal maker-in-chief.

The contentious March 2021 Anchorage summit between the US and China offers some important hints on what to expect this Friday between Trump and Putin. A deal focused Trump has lowered the bar on what to expect from this “listening exercise.” Trump’s congenital softness toward Putin is the wildcard

The legend of Zhao Gao, the most famous and powerful eunuch of the early Qin dynasty. The ancient roots of Chinese mendacity and loyalty tests as a prototype for the two Trump Administrations— from Sean Spicer to Kellyann Conway to Scott Bessent yesterday on MSNBC.

Trump’s July 31 executive order details the Liberation Day 2.0 shock for 69 countries — the largest single-year increase in US tariffs since 1815. A subsequent spike in the Trade Policy Uncertainty Index is a strong hint of more carnage to come as the US economy veers ever closer to recession.

Trump’s firing of BLS Commissioner McEntarfer is beyond appalling. Data repression borrows a page from the classic playbook of autocracy. Trump’s bogus claims of data manipulation don’t mask underlying weakness of the US economy. Shooting the messenger disgraces the office of the presidency.

Liberation Day, take two, is at hand. While not as extreme as the April 2 folly, average effective tariff rates are now back to at least 18.4%, last seen in 1933. Myopic markets are betting that worst of the trade war is over. That is likely to be wishful thinking.

Sino-American conflict resolution is stymied by toxic political pressures. It is time to start thinking in terms of a Project 2029 – a post-Trump agenda featuring people-to-people engagement, focus on shared mutual problems (climate, health, and AI), and an end to the blame game of codependency.

The US just released an AI Action Plan fully eight years after China issued its own plan. With the Trump Administration slashing government support to basic research and still wedded to Biden’s chips blocking strategy, China is increasingly well positioned to prevail in AI over the long haul.

Government support of R&D for basic research is the holy grail of innovation & prosperity. Reflecting draconian cuts in science and education under Trump 2.0, the US has abdicated its long held leadership position in basic research to China. What lies behind this grievous act of national suicide?

Amid the uproar over China’s AI ascendancy, the “Global Innovation Index” offers a framework-based assessment of cross-country innovation. China has made dramatic progress on the input side of the GII innovation equation over the past five years. So much for the small yard, high fence of the US.

In Part III of “Imagining Engagement,” I outline a transition plan for a new architecture for US-China engagement. It emphasizes an oversight function for pre-existing working groups. It also stresses the need for full-time operability of working groups. It draws on existing political capital.

Second of a three-part effort to make the wildly unpopular case for US-China reengagement. Focus here is on benefits — economic (via trade), institutional catalysts, collaborative approach to global problems, innovation, and detente. The perils of decoupling in an already unstable world.

The twin shocks of the Israeli-US attack on Iran and Trump’s tariff war come as global growth continues to slow precipitously. Given that it doesn’t take much to tip an economy nearing its “stall speed” into recession, the confluence of these two shocks is setting the stage for a worldwide downturn.

There is NO constituency in the US favoring engagement with China. This is the first of a two-part series making that case, focused on what a durable engagement might look like. Five key ingredients: Goals, common ground, policy priorities, people-to-people exchange, and verification.

Hong Kong is not over as I wrote 16 months ago in the FT. Its stock market has benefited from the US-China conflict but the city continues to suffer from an erosion in governance and tight linkages to a weak Chinese economy. HK is now just another big Chinese city. Latest in the FT.

First Geneva, now London, US and Chinese negotiators have yet to strike a meaningful trade deal. Sanctions relief was the main focus — esp Chinese rare earths — while no shift on tariffs. Meanwhile, Appeals Court extended the challenge to Trump’s global tariffs. A boost to Trump’s global trade war.

The US Court of Int’l Trade has called Trump’s bluff on the emergency justification for tariffs. However its 28 May ruling suggests an alternative path to the same endgame — relying on Sections 232 and 301 of existing trade legislation. Still a treacherous outcome for the US and global economy.

Two court decisions in 24 hours adds even more confusion to the debate on Trump’s trade policies. Looking through the noise and clarifying/ updating my views on tariffs, policy uncertainty, and America’s twin deficits.

While a stunning Court ruling has struck down a large swath of Trump’s misdirected tarrifs purportedly aimed at the trade deficit, thanks to the fiscal excesses of the “One Big Beautiful Bill,” America’s twin deficit problem is about to go from bad to worse. Tough verdict for financial markets.

The combination of a 10% global tariff floor and a China penalty amplifies stagflationary risks. It creates a new round of trade diversion to foreign producers whose effective tariff rate will be over five times that of the previous 30 years. Far worse than Smoot Hawley days.

Trade policy uncertainty metrics — in unprecedented territory for the US and back to 2018-19 highs in China —should remain sharply elevated after the current pause in Trump’s tariff war. This will freeze business decision making and discredit Scott Bessent who conflates chaos with strategy.

open.substack.com/pub/stephenr... Progress on process but not much else. US tariffs on China will remain sharply elevated even after Geneva rollback, and US 10% tariffs on the rest of the world up more than 5x from 1995 to 2024. Deals are not strategy.

The art of the deal is more spin than substance. That is true of the just announced US-UK “framework deal” as well as the likely outcome of this weekend’s US-China meeting in Switzerland. Meanwhile, soft data are flashing amber, with hard data about to follow suit. Don’t fall for art of the spin.

Next month marks the 95th anniversary of the Smoot-Hawley Tariff Act, which sparked a global trade war. Trump’s tariffs could be more disruptive: the GDP share of goods imports is nearly three times larger today, and the supply chains amplify the impacts. Huge risk for the global economy.

Despite IMF revisions to its global outlook, three reasons for further cuts: an imminent contraction in global trade, forecasts of Europe, Japan, and LatAm not well aligned with cuts to US and China, and risks of further financial shocks. Risks of a full-blown global recession are high and rising.