Name: Donald Trump Isnt Sounding Like Himself @PKrugman
Uploaded: 2026-09-22T08:17:00-05:00
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Donald Trump Isnt Sounding Like Himself

Paul Krugman 2026-09-22 | Donald Trump Isnt Sounding Like Himself

Will Crypto Crush the Blue Wave?

Paul Krugman 2026-09-22 | ---

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

Crypto: Tiny use, huge political clout #substack #shorts

Paul Krugman 2026-09-22 | This is a clip from paulkrugman.substack.com/p/will-crypto-crash-the-blue-wave?utm_source=youtube_shorts

See the full video: youtube.com/watch?v=D9XcitkEXlQ

#shorts #substack

Will Crypto Crash the Blue Wave?

Paul Krugman 2026-09-22 | AI gets the attention, but the Big Scam is still spending big

paulkrugman.substack.com/p/will-crypto-crash-the-blue-wave?utm_source=youtube

Will Crypto Crash the Blue Wave?

Paul Krugman 2026-09-22 | Transcript

Will crypto crash the blue wave? Probably not a question you’ve been asking, but you should.

Paul Krugman here with a video update for September 22nd. I want to talk about something that was a very big deal in the way we talked about the 2024 election, which was the role of the cryptocurrency industry.

We’re talking about it a lot less this time, I think largely because AI has stolen the limelight. But crypto is still out there. And while it has not succeeded in creating a viable business in the normal sense, it has been extraordinarily successful at buying political influence. And they’re set to do it again.

Now, the background here is, as I record this, the midterm elections look, based upon polling, based upon just impressions, looks like a big blue wave. Elliot Morris gives the Democrats a 97% chance of taking the House and two-to-one odds of taking the Senate.

But there’s still a few weeks to go and it looks like there’s a big wave of right-wing money that’s going to come crashing in. We don’t know how effective that will be. The role of money in politics, particularly of last-minute advertising blitzes, is somewhat unclear.

But it is coming and crypto is going to be a pretty big part of it. Based on Open Secrets, which tracks campaign financing, it appears that the crypto industry, which spent big in 2024, is going to spend even bigger in 2026, which is unusual because midterms are usually lower stakes than presidential years: They don’t usually involve as much spending.

But this industry is going to go all in. The crypto political strategy has been to knock out candidates that it considers hostile. And that is a strategy that was very effective in the last election cycle. They spent money in primaries knocking out Democrats, because Democrats were by no means united in their skepticism about crypto, but in some cases in favor. They knocked out Democrats in favor of other Democrats in primaries. And then in the general election, they spent quite a lot, not entirely on Republicans, but there were some big cases. And then Ohio spending was a particular success story.

And in general, crypto became seen in Washington as a force to be afraid of.

Not a force that has actually managed to get anywhere in the economy. It’s nothing like AI, which is everywhere. Crypto is still barely used for legitimate transactions. According to the Federal Reserve, only 2% of Americans have actually used crypto to buy something other than assets. So basically non-speculative crypto use remains trivial. And that’s after many years of trying to market this stuff.

But the political effectiveness has been huge, and it has intimidated a lot of politicians. Back in February, Chuck Schumer warned his colleagues not to do too much to offend Fairshake, the big crypto lobbying group.

Crypto has also, in addition to campaign contributions, done a lot of what in the old days, we would call bribery. There’s a lot of money that flows from the crypto industry to politicians and their relatives, and not just Trump. I don’t really want to ask too much about why there’s a lot of money going into a firm founded by Senator Gillibrand’s son. So there’s a big financial issue.

Now, the Clarity Act posed as “we’re going to establish a sound regulatory framework, especially for stablecoins” — cryptocurrencies that supposedly have a guaranteed value in dollars. Why exactly did Democrats turn on it? I mean, on the merits, they were right to be against this because whatever one may say, the purpose of the Clarity Act was to kind of legitimize cryptocurrency in the economy and particularly to legitimize stablecoins, which are, once you cut through the jargon and all of that, essentially poorly regulated banks.

It would essentially be posing new threats to the stability of the financial system and undermining banking regulation, which is something, of course, that the Trump administration and its allies are trying to do anyway, but this would have been another step in that direction. Presumably many of the Democrats who voted against this, and there were some Republicans as well, but presumably many of the senators who voted against this thing were genuinely concerned.

But I also think that there’s some spillover. For analytical purposes, cryptocurrency and AI are quite different things, and they are actually playing a very different role in the economy. Companies are really investing in AI, rightly or wrongly, but they are really trying to put it to use. And cryptocurrency is being used only for, pretty much only for, criminal activities, including, by the way, Iranian efforts to bypass U.S. sanctions. But in the public mind, it’s all tech. It’s all fancy jargon. It’s all doing stuff we don’t quite understand. Sounds fancy.

AI turned out to have an interesting political trajectory. It really is impressive. I mean, it really is impressive what it can do. Who would have thought that matrix algebra with a ...

Policy Makers and Risk Assessments

Paul Krugman 2026-09-18 | Henry Farrell and Abe Newman on Weaponized Interdependence
SWIFT, the Strait, and a world of economic confrontation

Watch or read our full conversation here: paulkrugman.substack.com/p/henry-farrell-and-abe-newman-on-weaponized

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

The EU Is a Powerful Interventionist

Choke Points and IP Weaponization

A Terrible Way of Doing Things

Paul Krugman 2026-09-17 | Henry Farrell and Abe Newman on Weaponized Interdependence
SWIFT, the Strait, and a world of economic confrontation

Watch or read our full conversation here: paulkrugman.substack.com/p/henry-farrell-and-abe-newman-on-weaponized

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

Policy Makers Don’t Know What They’re Doing

The European Union and Canada

Bad Actors Doing Bad Things

Paul Krugman 2026-09-15 | Henry Farrell and Abe Newman on Weaponized Interdependence
SWIFT, the Strait, and a world of economic confrontation

Watch or read our full conversation here: paulkrugman.substack.com/p/henry-farrell-and-abe-newman-on-weaponized

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

U.S. History of Weaponized Interdependence

Henry Farrell and Abe Newman on Weaponized Interdependence

Paul Krugman 2026-09-12 | SWIFT, the Strait, and a world of economic confrontation

paulkrugman.substack.com/p/henry-farrell-and-abe-newman-on-weaponized?utm_source=youtube

Henry Farrell and Abe Newman on Weaponized Interdependence

Paul Krugman 2026-09-12 | . . .

TRANSCRIPT: Paul Krugman in Conversation with Henry Farrell and Abraham Newman

(recorded 9/10/26)

Paul Krugman: So, it’s a world full of choke points. Weaponized interdependence is a term I think coined by Henry Farrell (henryfarrell.net) and Abe Newman (https://abrahamnewman.georgetown.domains/about/) . Certainly I learned it from them. And there’s a big conference—not including them for some reason—taking place at the European Central Bank a few days after we record this. And so I thought I would talk again with my two favorite international relations people (although now I’m thinking of some friends who will be upset by my saying that.) But anyway, hi guys.

Both: It’s great to be here.

Paul Krugman: There was a seminal 2019 paper (https://direct.mit.edu/isec/article/44/1/42/12237/Weaponized-Interdependence-How-Global-Economic) by the two of you, and then a book called Underground Empire (us.macmillan.com/books/9781250840554/undergroundempire) . Anybody want to tell me what you meant by that? And let’s talk about the history, and then this weirdly more weaponized moment than anyone expected that we’re living in.

Henry Farrell: Maybe I’ll take a first stab at it.

So really, where this came from was that we had finished a long book looking at fights between the United States and European Union over privacy. And as part of that, one of the things we had looked at was the SWIFT system, which is a system which you use when you’re making bank transfers. It’s a messaging system that makes sure that the money gets to the right place, and that everything gets reconciled properly at the end of the day.

And so Abe pointed out after we had finished this, he said, “Well, nobody’s written anything about SWIFT, and there’s something interesting and important with geopolitics going on.” And I was working with a statistical physicist who does a lot of work on networks and network dynamics, and so he thought that we could come up with something on this.

And so we began to write. And we began to figure out that there was something really going on, which I think had been going on in plain sight for a number of years, but which nobody had really been able to put their finger on in such a way that they could actually sort of crystallize what the phenomenon was. And this was what we called “weaponized interdependence.” And the idea behind it was very straightforward. You know, we’ve been living for decades in a highly interdependent global economy, and the ways in which both political economy people in international relations and, I think, most economists had thought about it was in terms of the enormous efficiency advantages that flow from this. Because, if you think about interdependence in terms of trade theory, even in terms of the simple benefits of specialization that Adam Smith talked about a couple of centuries ago, the more interdependence you’re able to use, the better you’re able to achieve various outcomes collectively.

But we began to think about the ways in which this relied upon all of these really boring-seeming networks, such as SWIFT, and the ways in which these networks had increasingly and quietly become a target of international coercion, especially at that stage coming from the United States.

So we argued that if you had two conditions—one, a network which had some degree of centralization, so that there were some kinds of choke points in the network; and secondly, you had some great power which had a means of putting pressure on the actors that were in charge of those choke points—that you would begin to get the conditions where a weaponized interdependence could begin to happen. That is, that that great power could begin to weaponize that choke point against others.

And then our argument was that this could also set a longer dynamic in train, because our fundamental sense was that this was not an equilibrium. This was not something that was sticky and was static unless the weaponizing power was extremely careful, and that the more that a power like the United States sought to weaponize choke points against its adversaries—and here the U.S. used a dollar clearing system as a means of cutting Iran and other countries out of the global banking system; it began increasingly to use other forms of technology and also semiconductor supply chains after our work began—the more that we saw a power doing that, the more that other powers were likely either to look to defend themselves or to retaliate against us. And this, we think, is a world that has come into being.

Krugman: So if you were looking at SWIFT, that’s an interesting case, among other things, because the bureaucracy is formally based in Belgium. But that doesn’t really matter, right?

Abraham Newman: No. I mean, with many of these things, there are Americans that sit on the corporate board, and often that’s the way that the U.S. or anybody that’s weaponizing—they look for, li...

Where’s the Beef (Coming From)?

Paul Krugman 2026-09-08 | Meat and freedom!

paulkrugman.substack.com/p/wheres-the-beef-coming-from?utm_source=youtube

Where’s the Beef (Coming From)?

Paul Krugman 2026-09-08 | Transcript

“Mary had a little lamb, but when she saw it sicken, she sent it off to Packingtown, and now it’s labeled chicken.”

Hi, Paul Krugman here. That’s a little ditty that was circulating, I can’t find any original source, around 1905, when Upton Sinclair published “The Jungle” — about the meatpacking industry, one of the sort of founding documents of the progressive movement.

The topic today is Donald Trump and beef, because here we are back in Upton Sinclair territory.

So you may have seen that last month Trump announced, given that we have high beef prices, that he was going to allow the tariff-free import of 300,000 tons of ground beef.

Rather oddly, he didn’t say from where and wouldn’t say from where for a while. And then eventually said, well, from Argentina, Brazil, and other places.

There has been a substantial uproar over these imports of ground beef because of concerns about safety. You know, if he won’t even say where it’s coming from or whether the countries involved are going to be practicing food safety, that is kind of an issue. And it turns out it’s not just, you know, not just woke liberal types but ranchers, lawmakers and food safety experts who were very concerned about the plan and were not reassured when Trump said the meat is “very clean and very good.”

Okay, little by little details are coming out about how all of this happened. It turns out that the initial plan to allow the beef imports was announced the day after a closed door meeting between Trump and a Brazilian meat packing billionaire who is a major donor to Trump.

And they went right ahead and announced the plan, although again without details. There doesn’t seem to have been much discussion of how this would work, of the concerns. After some initial blowback — even ranchers are concerned that people might become worried about the safety of U.S. beef — Trump announced that he was going to also allow farmers and ranchers to process their own beef rather than having to go through the regular meatpacking companies. But it turned out that the ranchers hate that too, because what they want is for people to believe that beef is safe. They want to be assured that there are quality standards being upheld.

And now that we have at least some information about the origins of the beef, we are even less reassured. In fact, just the other day, the European Union banned beef imports from Brazil because Brazil was not adhering to EU standards on the use of antibiotics. So there are, in fact, real concerns here about safety.

Okay, this is quite a story, and beef is not that trivial a product, but there’s a lot of secondary implications here. The first is that this is a very Trumpian story. It’s got this sort of characteristic combination of raw corruption and raw incompetence. Raw might not have been the best word to use here, but anyway.

The corruption: Obviously, this was a decision made because somebody who has given Trump’s campaign and possibly Trump himself money had a meeting with him and got an immediate policy change. So this certainly looks like undue influence. We don’t know exactly how it happened because it was a closed-door meeting.

Also, shouldn’t somebody have been in the room to or at least passed on this before it was announced to say, you know, is this a good idea? Shouldn’t there have been somebody from the Agriculture Department, somebody from the U.S. Trade Representative’s Office, but certainly someone from food safety to pass judgment or give some warning?

In a normal administration, any kind of decision like this involves a process in which multiple agencies get a chance to weigh in and in which somebody who knows something gets to say, look, there are real problems with this idea. But obviously that didn’t happen here. And basically it doesn’t happen in this administration.

This is an administration that does not like experts. Does not listen to expertise. That’s not just a result of particular personnel decisions that Trump made. That is just a defining characteristic. At a fundamental level, they’re just hostile to the idea of expertise in any domain, in pretty much every agency where there’s something to know, where there’s technical stuff that you need to know to make good decisions.

The people who actually know things, or the people who are willing to speak up about what they know, have been silenced, purged. That’s across the board. Basically, it’s Hegseths all the way down in this administration.

And so in this case, nobody was there apparently to say, this is really not a very good idea.

And I think it’s really striking that even Trump thought, well, okay, I can fix this. At least I can mend fences with the ranchers by giving them more leeway to be unregulated themselves. But it turns out that the ranchers want regulation. They want customers to know that the beef that they buy is safe. So just raw incompetence on top of the raw corruption.

There’s an even lar...

What Keeps You Awake at Night?

Paul Krugman 2026-09-04 | Talking Interest Rates with Ricardo Caballero: Are U.S. bonds still the ultimate safe asset?

I’m spending a lot of time thinking about high interest rates, both for obvious reasons and because I’m reconsidering some of my own long-held views. So I thought I’d have a long talk with someone who has really studied these issues and now, I believe, may have been more right than I was. This may be even wonkier than usual, but trust me, it’s important.

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

The Damage of Financial Drifts

Paul Krugman 2026-09-03 | Talking Interest Rates with Ricardo Caballero: Are U.S. bonds still the ultimate safe asset?

I’m spending a lot of time thinking about high interest rates, both for obvious reasons and because I’m reconsidering some of my own long-held views. So I thought I’d have a long talk with someone who has really studied these issues and now, I believe, may have been more right than I was. This may be even wonkier than usual, but trust me, it’s important.

Subscribe to Paul Krugman on Substack here: paulkrugman.substack.com/subscribe

Find Paul on Bluesky here: https://bsky.app/profile/pkrugman.bsky.social

Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

The Loss of Debt Confidence

Caballero’s Safety Premium Calculation

Financial Dutch Disease

Paul Krugman 2026-09-02 | Talking Interest Rates with Ricardo Caballero: Are U.S. bonds still the ultimate safe asset?

I’m spending a lot of time thinking about high interest rates, both for obvious reasons and because I’m reconsidering some of my own long-held views. So I thought I’d have a long talk with someone who has really studied these issues and now, I believe, may have been more right than I was. This may be even wonkier than usual, but trust me, it’s important.

Subscribe to Paul Krugman on Substack here: paulkrugman.substack.com/subscribe

Find Paul on Bluesky here: https://bsky.app/profile/pkrugman.bsky.social

Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

Nothing Substitutes a U.S. Treasury Bond

Paul Krugman 2026-09-01 | Talking Interest Rates with Ricardo Caballero: Are U.S. bonds still the ultimate safe asset?

I’m spending a lot of time thinking about high interest rates, both for obvious reasons and because I’m reconsidering some of my own long-held views. So I thought I’d have a long talk with someone who has really studied these issues and now, I believe, may have been more right than I was. This may be even wonkier than usual, but trust me, it’s important.

Subscribe to Paul Krugman on Substack here: paulkrugman.substack.com/subscribe

Find Paul on Bluesky here: https://bsky.app/profile/pkrugman.bsky.social

Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

Are People Losing Faith in Debt Safety?

Changing Composition of Safe Assets

Cheats, Please!

Paul Krugman 2026-08-31 | ---

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

The ‘Invisible Hand’ Is off the Hook

From Kakistocracy to Cheatistocracy

Paul Krugman 2026-08-31 | Transcript

At this point, it’s almost a commonplace to say that under DonaldTrump, America has become a kakistocracy, ruled by the worst. But I don’tthink it’s fully appreciated the extent to which we’ve also become a cheatistocracy, ruled by the most corrupt.

Today’s commentary is a follow-upon yesterday’s primer, which was about the role of tax evasion both in leading to or contributing to our downward spiral into oligarchy and also as a surprisingly large factor in the budget deficit and therefore in America’s debt problem.

Before I get to tax evasion, let me say something about where I’ve been going in my kind of intellectual journey into understanding oligarchy. As an economist, normally my instinct is to think about the invisible hand, to think about market forces, about technology as driving what happens to society. And even now there’s at least some extent to which the rise of kind of garden variety inequality, the rise of the top quintile at the expense of the middle, may be partially explained by the bias of technology towards higher formal skills, although that may be ending now with AI and all of that.

But as I began to focus on oligarchy, on the very small number of people who have enormous wealth, enormous income, but the wealth is an even bigger factor — there are a really handful of people who have come to play such a large role.In our society, in our economy, and above all, of course, in our politics— I was forced more or less by the numbers to say this is not about the invisible hand. This is not about market forces. It isn’t even mostly about technology.

Yeah, some technologies create winner-take-all markets that make people int he right place extremely wealthy. But the really big factor that’s driven us from the relatively equal society that we were 50 years ago — not obviously anywhere close to truly equal, but nothing like the dominance of a tiny elite that we have now — the really important factor is policy and above all tax policy.

We basically stopped imposing progressive taxes that limited the growth of enormous fortunes. And sure enough, as the tax barriers to accumulation of excessive wealth went away, excessive wealth began to concentrate.

This is, in many ways, the fundamental story. We got rid of, we ended the Gilded Age with its dominance by, as FDR said, the power of organized money, largely by taxing a lot of that organized money away. And we got back to something which in many ways is worse than the Gilded Age by taking away those taxes and allowing vast fortunes to snowball and buy themselves enormous political power, which allows them to snowball even further.

One factor in all of that is the rise of simply not paying taxes that you’re supposed to pay. A lot of it is reductionist statutory tax rates. We tax corporate profits at a far lower rate than we did In the 1950s, we tax top incomes at a much, much lower rate than we did in the 1950s. But what’s also true is that we simply allow people to get away with not paying taxes to an enormous extent, to almost surely a much greater extent than used to be the case.

The numbers are big, and in the primer I go through the tax gap. The money owed but not in fact collected is certainly north of $600 billion a year. It is something like 40% or more of the U.S. federal budget deficit. It is a major contributing factor to the accumulation of vast fortunes.

What is striking is that far from really making an effort to rein in that tax gap, for the most part politically our system has moved to let it rip, has basically tried to make America safe for tax cheats.

This is something that overwhelmingly benefits people with high incomes and large wealth because people with really big incomes, people who are extremely wealthy, for one thing, they just have much more complicated income. It’s much, much harder to track down and audit someone who has multiple businesses, some of which are dummy businesses, some of which may be real, but nonetheless are conduits through which money can move. And only the very wealthy can maintain offshore accounts that enable them to hide income and so on.

So tax evasion is something that overwhelmingly benefits people with very high wealth and income. Not all! Not every billionaire is a tax cheat. There are levels and levels. There are some people who just feel that’s not something I want to do.People who feel that it would be wrong. Morality does exist. There are people who feel that their personal losses, should they be caught out cheating heavily on their taxes, would be large. So they care about their reputation.

And then there are those who don’t.

What’s astonishing is that we have, especially since 2010, especially since the hard right Republicans took control of the House of Representatives, we have moved to largely eviscerate any attempt to control that type of tax evasion.

The numbers are really startling, and the IRS has actually put out very useful informat...

They Prefer Cheaters #substack #shorts

Paul Krugman 2026-08-31 | This is a clip from paulkrugman.substack.com/p/from-kakistocracy-to-cheatistocracy?utm_source=youtube_shorts

See the full video: youtube.com/watch?v=VUU6jUZKkm0

#shorts #substack

From Kakistocracy to Cheatistocracy

Paul Krugman 2026-08-31 | Rewarding the most dishonest

paulkrugman.substack.com/p/from-kakistocracy-to-cheatistocracy?utm_source=youtube

Financial Dutch Disease Explained #substack #shorts

Paul Krugman 2026-08-29 | This is a clip from paulkrugman.substack.com/p/talking-interest-rates-with-ricardo?utm_source=youtube_shorts

See the full video: youtube.com/watch?v=y8-wXBy9TBw

#shorts #substack

How March 2020 Almost Broke Markets #substack #shorts

The Fragile AI Boom #substack #shorts

Fools Paradise of Cheap Government Debt #substack #shorts

Talking Interest Rates with Ricardo Caballero

Paul Krugman 2026-08-29 | Are U.S. bonds still the ultimate safe asset?

paulkrugman.substack.com/p/talking-interest-rates-with-ricardo?utm_source=youtube

Talking Interest Rates with Ricardo Caballero

Paul Krugman 2026-08-29 | For all my interviews and more, subscribe on YouTube (youtube.com/@PKrugman) .

I’m spending a lot of time thinking about high interest rates, both for obvious reasons and because I’m reconsidering some of my own long-held views. So I thought I’d have a long talk with someone who has really studied these issues and now, I believe, may have been more right than I was. This may be even wonkier than usual, but trust me, it’s important.

. . .

TRANSCRIPT: Paul Krugman in Conversation with Ricardo Caballero

(recorded 8/25/26)

Paul Krugman: I’m talking today with a very, very serious economist, Ricardo Caballero (https://economics.mit.edu/people/faculty/ricardo-caballero) , who is one of the most important macroeconomic thinkers of modern times. I was going to say of my generation, but actually, I’m an older generation—but of the currently, still vital creative generation. We’ve had discussions about a lot of events over the past 25 years that have involved some disputes that I hope we can get into in a way that people understand. And recent events, including the rise in long-term interest rates, have really brought all of those issues to the fore. So I thought I’d talk with Ricardo, who is the Ford International Professor of Economics at MIT, a position I once held. But anyway, hi.

Ricardo Caballero: Hi, Paul. So wonderful to see you again. We still miss you at MIT.

Krugman: Well, I miss the days when actually getting at the truth was what mattered, as opposed to dealing with all of the obvious lies. But anyway, I guess there are different stages in one’s life. But so, I will want to get into recent events. But one thing that really struck me is that there’s this long-running discussion basically around interest rates and international movements of capital where there are kind of, as I see it, two rival ways of thinking about it. It could be some of both—but one was about returns to capital and investment opportunities, and one was about people looking for safety and security in assets. And for the most part, I was on one side of that and you were on the other. And I’m starting to think that you were probably right. So, first off, how would you portray this discussion? And maybe we can go back and forth.

Caballero: I don’t know whether they’re really different views because, you know, my view at least was always, when I say “a shortage of a store-of-value,” if you will, investment opportunities create those store-of-value opportunities and so on. So I never saw it as very contradictory. I thought there was an imbalance: lots of needs for savings, in particular in a very specific kind of saving—safe saving. And the productive structure wasn’t able to generate enough assets, especially safe assets. And that’s, I think, what led to the sort of “shortage of safe assets” type of literature, and that naturally depresses safe interest rates. If you look at the return on capital, actually, it was fairly stable. It was all absorbed by the opportunity risk premium, if you will. And so you can see returns both on safe and risky capital sort of declining in tandem since 2000, or earlier than that. And then somewhere around 2000, you can see that the safe interest rate keeps coming down, while the return to capital is sort of paralyzed. And what starts widening is the equity risk premium.

Krugman: So let me just break in here. A kind of crude, simplistic view—probably my view at a certain point—was that there’s capital and then there are returns on capital. And when we start to see interest rates get really low circa 2000, that’s telling you that returns to capital are going down. And if we see a lot of money coming to the United States, it’s because, well, America had faster population growth than other rich countries, and we were leading the technology revolution. But you’re saying there’s a really big difference between buying stock—corporate investment—and buying U.S. government debt, which is safe. And that the United States was sort of better than the rest of the world at supplying these safe assets.

Caballero: Absolutely.

Krugman: And just going way back—the financial crisis, which seems to me like yesterday, but was in fact almost 20 years ago—involved all of these exotic financial instruments, the asset-backed mortgage-backed securities, which you interpreted as a response, to a large extent; not just fraudulent, but a response to a real demand. Right?

Caballero: Absolutely. I thought there was a shortage of ultra-safe assets. So financial engineering got to work and they created sort of “synthetic safe assets.” Now, they were safe assets from the point of view of idiosyncratic shocks, but they weren’t from the point of view of systemic shocks. And to me, that was quite important in generating the financial crisis.

Krugman: Yeah. And so idiosyncratic shocks are like, well, okay: a particular housing development turns out to be a bust, but a co...

Public Enemy Number One

Paul Krugman 2026-08-28 | Talking with Jared Bernstein, former chief economist, head of the Council of Economic Advisers under Joe Biden. Now a policy fellow at the Stanford Institute for Economic Policy Research and at the Center for American Progress.

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

Will Debt Be the Next President’s Mess?

Paul Krugman 2026-08-27 | Talking with Jared Bernstein, former chief economist, head of the Council of Economic Advisers under Joe Biden. Now a policy fellow at the Stanford Institute for Economic Policy Research and at the Center for American Progress.

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

Termites, Not Tornadoes

Paul Krugman 2026-08-26 | Talking with Jared Bernstein, former chief economist, head of the Council of Economic Advisers under Joe Biden. Now a policy fellow at the Stanford Institute for Economic Policy Research and at the Center for American Progress.

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

Lake ... America?

Paul Krugman 2026-08-26 | ---

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

A Global Problem

Der Untergang

Paul Krugman 2026-08-26 | How badly will Trump punish America?

paulkrugman.substack.com/p/der-untergang?utm_source=youtube

Der Untergang

Paul Krugman 2026-08-26 | For all my interviews and more, subscribe on YouTube (youtube.com/@PKrugman) .

Note: After I recorded this it was reported that Trump officials are threatening to demolish the Kennedy Center if it can’t be renovated to Trump’s taste (and presumably with his name added). Matches my argument exactly.

Der Untergang naht.

Pardon my German pronunciation. I’m going to take a break today from wonky economic analysis and talk about, well, Donald Trump, but in a slightly different way from what I think most people are saying. Not positive, obviously.

Just before recording this, I saw that Trump wants to rename Lake Ontario Lake America. Which is silly, would be funny, except that this guy is the President of the United States. And it’s really kind of troublesome that someone in that position is that out of it, that petty, disconnected from reality.

And look, it’s not news to anybody that Trump is ego-driven, disconnected from reality, and at the same time, somehow commands a level of deference and obedience from the entire machinery of the federal government that no president has ever had before. So this is really quite serious.

What I don’t think people are fully aware of is just how bad it can get, given that Trump is so obviously dissociating, decompensating, that he’s not all there.

Obviously, he was already a very problematic personality, which was doing a great deal of damage to the United States. I don’t think even now people fully appreciate the amount of damage that has been done. Even before the Iran War, Trump’s provocations, insults, his trade wars, really destroyed the world’s trust in America.

America became a country that could not be trusted to honor agreements. It was a country that constantly tried to bully other countries. Our word was worth nothing. Our sanity was not to be taken for granted. And then, of course, along comes Iran, where in addition to showing that we’re not to be trusted, that we’re not going to be relied upon., we also showed that we were far weaker than people imagined.

If there’s one thing people thought it was, well, America has a powerful military. It turns out, well, not as powerful and not nearly as competent as people thought. How much of that is the result of Trump and Hegseth degrading it and how much of it was there to begin with is an interesting question. But anyway, at this point, we are not loved, we are not respected, and we aren’t even feared.

And we’re not getting that back. Even if Trump is succeeded by someone decent —God help us if he isn’t— but even if we have a more or less rational, well-intentioned government that follows, the world now knows that we are capable of putting someone like Trump in a position of unprecedented, almost absolute power and that it can happen again.

And the world also knows that we’re just not as fearsome as we seem to be. That we can be defied much more successfully even by smallish countries than anyone really imagined.

And we’re not getting that back. I anxiously wait for the days when we’re no longer a Trump-ruled country, but this is my country, and what will be left of us, what will be left of our role in the world, even once he’s gone?

Okay, the title I gave, the way that I opened this talk was Der Untergang, which is the German title of the movie Downfall, about the last days of Adolf Hitler. I hope that nobody is going to complain about my using the German, right? We’re long past the point where it’s considered unthinkable and incredibly rude to make Nazi parallels. There’s a lot of people in this administration or close to this administration who are effectively Nazis, in some cases explicitly Nazis. America is not yet Germany under Hitler. But the reason we don’t have a functioning Gestapo in this country is not for lack of desire to have one. It’s because these people, at least so far, don’t have the juice. So all of the stuff, all of the parallels seem appropriate.

And the parallels are there. I mean, the parallels are there even in seemingly small things. Hitler was obsessed with building a gigantic gaudy ballroom. So there’s just a lot of parallels in there.

Now the main message of the movie Der Untergang is that it’s about Hitler in his final days who knew that he was losing. He knew that defeat was looming. He knew that his power was collapsing. And his reaction was, among other things, to take it out on his own country.

Hitler never accepted that he had failed Germany. He felt that Germany had failed him. And so he had a plan, often called the Nero Decree, which was to destroy as much as possible of Germany’s infrastructure. Supposedly to deny it to the victorious allies, but in large part to punish Germany.

Well, Trump knows. He may deny it, he may have his moments when he actually believes that the polls are all fake and all of that, but in many ways he is behaving like somebody who knows that his days of supreme power are about to end. He, of course,...

Why Have Interest Rates Gone Up So Much?

Paul Krugman 2026-08-25 | Talking with Jared Bernstein, former chief economist, head of the Council of Economic Advisers under Joe Biden. Now a policy fellow at the Stanford Institute for Economic Policy Research and at the Center for American Progress.

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

Estimating the Deficits

Tax Cuts: Public Enemy One #substack #shorts

Paul Krugman 2026-08-22 | This is a clip from paulkrugman.substack.com/p/jared-bernstein-on-debt?utm_source=youtube_shorts

See the full video: youtube.com/watch?v=XnHxzDcfmw4

#shorts #substack

Jared Bernstein on Debt

Paul Krugman 2026-08-22 | How worried should we be?

paulkrugman.substack.com/p/jared-bernstein-on-debt?utm_source=youtube

Jared Bernstein on Debt (Reposted with better transcript)

Paul Krugman 2026-08-22 | For all my interviews and more, subscribe on YouTube (youtube.com/@PKrugman) .

Better transcript!

. . .

TRANSCRIPT: Paul Krugman in Conversation with Jared Bernstein

(recorded 8/20/26)

Paul Krugman: Hi everyone. Paul Krugman talking with Jared Bernstein (en.wikipedia.org/wiki/Jared_Bernstein) , former chief economist, head of the Council of Economic Advisers under Joe Biden. Now a policy fellow at the Stanford Institute for Economic Policy Research and at the Center for American Progress, which is in DC.

Jared Bernstein: And I speak to you from Alexandria.

Krugman: Yeah, and the reason I want to talk with you is, you know, there’s a lot of headlines now about debt. Interest rates, particularly at the long end, are way up. You and I have both been Substacking about it (econjared.substack.com) . I think we mostly are on the same wavelength, but I’d like to go back and forth, and I want to talk about some work that you’ve done, particularly with Bobby Kogan. But what’s your take right now? I mean, we had all these headlines about forty trillion dollars of debt. This is very different from the way we were talking about debt a few years ago, so what’s your take?

Bernstein: Well, Paul, like you, for many years I was pushing back on those whose hair was on fire about the urgency of the federal debt. I thought that that overheating was overheated, and that as long as the growth rate surpassed the interest rate and we sort of kept our deficits within kind of a normal range, we could service our debt without breaking a sweat. But a few years ago, I began to become more hawkish and less dovish for a couple of reasons. One, the budget math became less favorable; the growth rate looked a lot closer to the interest rate, and that was before this recent bump up in bond yields. But also, you know, I’ve been in government a lot lately, and it looked to me like neither side really cared much at all. The reaction function, as we say these days, seemed to have been kind of dead in a way that I thought was problematic.

Now, this is not a pox on both houses. And by the way, here’s an area where you and I may have slightly different views. The Republicans’ tax cuts—and Bobby and I have done a lot of work on this—are public enemy number one here. Exhibit A, in terms of why we’re in the mess we’re in. But you know, Democrats have largely endorsed those tax cuts and, in my view, have done some irresponsible stuff, too. So that’s kind of my first take.

Krugman: Okay. You’re talking about r-g, but that’s kind of an important point, right? Why do we think about interest and growth and debt? Lots of people are out there saying, “Look, the interest on the debt is now so huge,” but that’s not quite the whole story, but it’s closer to the story. Anyway, your version of it...

Bernstein: Yeah. For me, a lot of this comes from paying attention to Olivier Blanchard (en.wikipedia.org/wiki/Olivier_Blanchard) ‘s work. He has kind of wedged into a lot of our heads this notion that when the growth rate surpasses the rate of interest, it is possible to keep rolling over that debt and not get into a kind of debt spiral because you’re generating enough growth and revenues and incomes to sustain the debt or to roll it over. Meaning, you know, replace some old debt with new debt without worrying about the debt getting on an unsustainable trajectory. As soon as r is bigger than g, that’s when you have the threat of a debt spiral.

That’s not all the math. It depends on the size of your deficits as well. But broadly speaking, for many years we had pretty good growth and pretty low interest rates. We can talk about how that growth was distributed—a lot of it didn’t reach working-class people—but the fact that g, the growth rate, was higher than the interest rate was one reason why I was less wound up about all this.

Krugman: Yeah, one of my favorite things is talking about the question of “How did we pay off the debt from World War II?” And the answer is we didn’t. The debt when John F. Kennedy was elected was about the same as it had been on V-J Day in dollar terms, but it was just vastly smaller as a share of the economy because we outgrew it. As long as debt doesn’t rise relative to GDP, it’s not a problem. That means if the economy is growing and interest rates are not too high, not only don’t you have to pay off the debt, you can actually keep it growing as long as it just doesn’t grow too fast, right?

Bernstein: Exactly. So the problem we face is when our debt grows faster than our economy, when the debt ratio, or the debt-to-GDP, just keeps going up and up and up.

Krugman: Basically for much of the period when everybody was going on and on about debt, the arithmetic there was actually pretty favorable, right?

Bernstein: This is precisely why I kind of did a bit of a flip. I have an Op-ed in the (https://www.nytimes.com/2025/07/09/opinion/...

I Am Reporting for Duty

Paul Krugman 2026-08-22 | Subscribe to Paul Krugman on Substack here: paulkrugman.substack.com/subscribe

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Paul Krugman is a Nobel Prize–winning economist and former New York Times columnist of 25 years, recognized worldwide for his groundbreaking work on international trade and his influential voice on the economic issues of our time.

Defending the Bonds

Paul Krugman 2026-08-21 | I am reporting for duty

paulkrugman.substack.com/p/defending-the-bonds?utm_source=youtube

Defending the Bonds

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