Trump's Tariffs and a Broader Definition of Global Liquidity, Part 3

So how does this help us understand Trump's tariffs?

You don’t need to read them for this post, but here are links to:

Part 1 (Macroeconomist Maurice Obstfeld’s “global savings glut to trade war” critique).

Part 2 (Salomon Brothers investment bank’s broader definition of “global liquidity”).

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No, I don’t think Donald Trump’s trade policies are “incoherent” like most of my fellow progressives. Treasury Secretary Scott Bessent is more focused on the bond market than Wall Street. Biden had a similar plan to combat China’s rise (using tariffs). This is about long-term historical trends (rising Chinese labor costs) driving U.S. Presidents, not Presidents driving history (as most believe). There is a real way to critique Trump’s policy though, but it requires understanding the broader global liquidity that drives the national accounts. There is a huge risk of a global liquidity crunch, which is far far worse than a recession in the “real” economy.

Before I get to what I think CrossBorder Capital’s broader vision of “global liquidity” implies about Trump’s tariffs I need to take a detour. You can skip this if you want to get to Trump in the next section. My write up for Part 2 took my thinking in a direction I did not expect. That’s always the best kind of writing. Here is what I discovered: I think Howell and CrossBorder Capital’s vision of the “financial economy” is correct, however:

I also think its missing an important piece of the “real economy” side.

Howell and Henry Kaufman were contrarian investment bankers writing about the way that the true financial economy (i.e. gross capital flows) determines the real economy. The “real economy” in this set up is the one proffered by the macroeconomists, which is the current account balance (savings vs. investment). Savings are the profits that are either retained in a bank account or used for handing out share buybacks. Investment is taking those profits and actually getting into capital improvements (e.g. research and development, better machinery, better marketing, better product designs) that push firms to want to hire (and raise wages to attract workers) so they can expand the output of better products that are fetching higher prices. It isn’t that macroeconomist ignores the “financial economy.” They simply think that the financial economy works to smooth out imbalances between savings and investment; that it is just the credit intermediary between household depositors and producers borrowers. So that’s they focus on the interest rate; when it goes down firms are incentivized to borrow (because the premium on financing is down) and invest in capital. Smart central bankers are thought to be setting those interest rates. As we saw in Part 2, the Salomon Brothers research department was flipping this on its head by saying that interest rates are affects of gross capital flows, not the reverse.

What I realized by the end of my writing was that while I agree that Howell’s gross capital flows are the true version of the financial economy, I actually have a different vision of the TRUE “real economy” than the macroeconomists .

The “real” economy, for me, is the prices/rates of raw materials (energy and minerals), labor, comparative advantage, and taxes.

The price/rate movements of these categories certainly have a financial channel, but they also have important endogenous origins:

• Raw material prices are related to exploration/new supply, infrastructure/transportation choke points, new demand (e.g. EV’s and Offshore wind farms), and political closure/opening (i.e. Soviet Union, OPEC).

• Wages are related to demography (e.g. Chinese birth rates) and political closure/opening (unions, labor rules that make life easier or harder on workers).

• Comparative advantage is related to which country has the companies that own the brands at the top of the global value chain. And those countries ability to enforce their companies control over property rights regimes.

• Corporate effective taxes are related to politics and have a significant effect on the profit rate.

In order to fully understand these true “real” economy dynamics I need to turn to another contrarian investment firm. These are the folks at Horizon Kinetics that have been in the business since the 90s. They were putting money into inflation hedges in the 2010s long before Covid-19. These were bets on things like land royalties that would only start beating the ETF/S&P500 indexation game with the return of global inflation. Keep in mind this was at time (2010s) when macroeconomists were openly debating in major media outlets if inflation was a thing of our economic past.

I bring this up because I think I need to write a history of the past five decades (1973-present) that pieces together the puzzle of the true “financial” economy and the true “real” economy. Long story short, I think that gross capital flows that Howell describes are one of five big changes that occurred in the past five decades. Those developments are the reason that the financial economy has driven the real economy.

I believe that four of them are rapidly changing as we speak (cheap labor in Asia, raw materials supply and demand, the growth of the internet, and lower corporates effective taxes) and that’s why we are in turbulent times. It is the financial channel that is holding the world economy together on a knife’s edge.

To do this I need to marry CrossBorder Capital’s theory with Horizon Kinetics theories. Fun stuff.

So that’s coming.

But for the rest of this part three, however, I need to finish the loop and tie what we learned from Capital Wars to Obsfeld’s discussion of the “savings glut to trade war” story. I think its important and it implies a lot about what is going to happen with the economy in the time of Trump’s administration.

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The Left-of-Center Macroeconomist Logic that Only Sees Global Savings

On the passage of Trump’s tariffs two weeks ago I’ve been keeping my eye on mainstream academic macroeconomists. Most of these folks are liberals and believe everyone needs to stop trying to find the logic in the Trump administration’s economic policies because its giving him too much credit.

You can see Brad Delong (former advisor in Clinton Administration, and my colleague at Berkeley) rage against “sanewashing” Donald Trump here. Adam Tooze does the same and links to all the mainstream talking heads raging against it here. These folks have been sending around this Bloomberg piece about the simple and wrong proof the White House said it’s using to motivate its trade rebalancing act. Delong thinks the proof was generated with ChatGPT.

The objections from Delong and the others are the following:

1. Trade imbalances are not mere outcomes of bilateral trade agreements or simple capital inflows (that force a country to import). They insist that if the point of this policy is to reverse America’s trade deficit then this tariff plan is pointless (hint: I don’t think this is the point of this policy at all).

2. The White House math assumes a two country world, not the complex global economic system we live in.

3. The stock market is going to take a huge hit and Trump has said he looks at the stock market very closely so he is going to lash out and change his mind on tariffs (he sort of did already, maybe). This uncertainty is spooking manufacturers into paralysis.

4. The administration seems to be discounting the fact that other countries will start trading with each other more than they do with the U.S. And since global trade for the U.S. has led to tremendous growth that means other places will get to benefit from it more than the U.S. does.

5. The U.S. economy was growing like gangbusters since Covid, it’s been the envy of Europe and this is going to throw all that off. Trump (the individual person) is the reason we are about to get inflation, a faltering stock market, and a recession (I disagree with this BIG TIME, more below).

6. The reciprocal tariffs are going to cause the global economy to falter, and why would anyone want that??

Yes, the American economy was growing a lot more than Europe since Covid (not enough to offset the long term slowdown though). However, most of the extra U.S. GDP growth since Covid was due the “Great Resignation” and some secret liquidity injections from the Fed in 2023. The Fed did a secret “not-QE, not YCC, QE/YCC” and they ramped it down at the end of 2024, so we will feel this soon. The Great Resignation basically got workers into better suited jobs and provided a huge productivity boost as a result. This was triggered by the huge QE companies got that allowed them to hire and the checks the U.S. gov cut its citizens that gave them some breathing room to seek out new jobs. Europe didn’t do that. What people like that macroeconomist in that last link don’t seem to realize is that the Great Resignation was a one-time, historical input into the economy. You don’t get to just duplicate getting a ton of workers into the right jobs all together at once again. That happened and its run its course. That’s why having a solid grasp of the role of “history” in economics is important.

For me the fundamental flaw in this mainstream left-of-center economic view is that it believes its possible to get back to 2019 when the Fab 7 tech stocks were growing 20% year over year, inflation was 2%, and interest rates were basically ZERO. That such a lifeworld is the “norm” and a return to it is possible. I think that’s extremely naïve.

I will get back to this in a bit but just to tease: cheap labor in China went away in 2010 and the rapid growth of internet connections (which was the real driving force of something like 30% of the S&P 500) finally started to stall in 2018. Admitting the America economy has been in a historical structural transformation since Covid is the first step to understanding the present moment.

As an aside, I think it is absolutely intellectually lazy to call trump’s plan incoherent. Pretending Trump has no logic or has “no process” is just an excuse to avoid having to offer a viable alternative to the American people. Just calling him crazy over and over and expecting the working-class to fall in line behind you is what’s crazy. You can see the far-left make that criticism of liberals for awhile now (See Keeanga-Yamahtta Taylor make this argument [here])

The Trump/Bessent Logic with a Narrow Global Liquidity

Here are the steps to properly understanding what is going on with Trump’s economic policy and how to truly understand what is at stake here:

1. The point of the policy is not to rebalance the trade deficit. That’s the political cover and a possible side benefit. They care about renegotiating the U.S. Federal debt on better terms and funding their tax cuts.

2. Scott Bessent cares about the the bond market more than the stock market. Why? Because something like 30% of U.S. federal debt is about to need refinancing and the price of that new debt really REALLY matters. The bond market is the way the Federal government takes out debt to pay its bills and run its operations. If cumulative interest debt payments get too high its going to crowd out discretionary spending and that REALLY matters to the state of the American economy (not to mention social welfare and reelections). I mean take a second to calculate out just a 1% increase on interest debt payments and the resultant GDP drag on the American economy. The American public has not been properly educated on this. My guess the reason for that lack of education is that widespread knowledge of it threatens the prestige of the US's ability to keep making payments.

3. If they care about the U.S. debt why are they trying to extend the TRUMP 1.0 humungous tax cuts? The answer is somewhere between personal grift/helping rich friends and these are the "profits" that U.S. firms use for stock buybacks and ideological belief that this is how economies grow.

4. SO… they need to keep the yields down (the amount the Fed gov pays out to the people who buy its debt) and the price up (the amount people who buy the debt pay to get the debt). That means the demand for U.S. debt needs to be high or its supply from the gov needs to be low. I’m simplifying it but that’s the name of the game.

   

5. So how do you fund tax cuts and keep the yield on U.S. Treasuries down? The answer is you need more foreign liquidity to come in and buy it. This is the same thing that Reagan did in the 1980s when his administration accidentally discovered Japanese liquidity to buy Treasuries.

6. How do you get more global liquidity to try and buy U.S. treasuries? Well one way to do it is to spark a U.S. recession and a worldwide GDP slowdown. Yes, I'm not making this up, this is what they are implying in media outlets and there is a logic to it. As we learned in part 2, when the rest of the world needs to do its own domestic money creation it needs collateral upon which to do it. And the only collateral that *has* counted in the past five decades are U.S. safe assets (U.S. 10-year treasuries, bonds of Western cyclical firms, cash). As a result, when there is economic slowdown -- and I'm here to tell you that the worldwide GDP has been in a freefall since mid-December (a few months ago) -- global liquidity traditionally seeks out the safest store of asset and those assets are U.S. treasuries. What that means is: world wide recession = lower bond yields because the demand for the U.S. treasuries is up, which allows trump to fund tax cuts and fund the debt recycling of the government.

7. So how do you spark a worldwide recession? One way to do that is to place tariffs on imports to the biggest and highest paying importer in the world. And then to expect retaliatory tariffs. So that means all the other countries that depend on U.S. machinery will suffer too even if they decide to send their exports elsewhere. Remember how in part 1 Obstfeld showed that its a misnomer to think that U.S. exports have gone down in the past three decades? They haven't. THEY’VE GONE UP! We just import way more than the amount our exports have grown. The world is heavily interconnected and dependent on U.S.’s buying and selling (using our golden debt).

8. A U.S. recession will also cause the dollar to decline as the economy slows. That is good for Trump’s plan as well. A weaker dollar has historically meant more dollar borrowing by other nations. And that means MORE global liquidity in the world. MORE global liquidity means more money chasing U.S. safe assets and, possibly, risk assets (stocks, real estate, bitcoin). Trump may be counting on this to save the stock market eventually. A falling USD is already happening as of last week but is probably due to the slowdown of the U.S. economy before the tariffs.

9. If U.S. manufacturers quickly adjust and start onshoring I think that would be a bonus to Trump's plan. I don't see it as the first-order priority. U.S. firms are nimble, but uncertainty for firms is a huge problem on this second-order priority.

However, I don’t believe Bessent and Trump have fully understood the way that global liquidity has changed since 2020. The rules of the game have now changed from the way they have operated from 1979 (the year China opened its markets to FDI) to 2021 (the year the West finally got inflation).

Taking a Broader Vision of Global Liquidity (that includes geopolitics, history, and financial crises..)

So here is the thing, geopolitics matter, historical evolution of the “real” economy matters, and a coming global liquidity crunch in Q4 of 2025 matters too.

First, geopolitics.

The People’s Bank of China does not want the global economy to slow down. Europe is figuring out how to throw tons of debt onto the bond market because its busy rearming. (btw, Europe rearming was an ongoing process that Trump also accelerated with the Ukraine pullback, all this stuff is connected). Those are things other countries want to do and they have central banks that are big and bad enough to produce non-trivial counter force to what the U.S. does. Those countries throwing lobs of debt onto the world matters because it means the U.S. will be competing for bond yields and there is increased liquidity to counter the U.S. created global recession.

CrossBorder Capital’s analysis strongly suggests that U.S. bond yields now track with world bond yields. What that means is that the U.S. Treasury competes in the global bond market for buyers and can no longer assume automatic demand the way it has in the past. You will begin to hear reports in the news soon in which talking heads are shocked at the possible end of U.S. exceptionalism. There are now other legitimate sellers of safe assets that could compete for investors seeking refuge in the global economic crisis created by the U.S. administration. All world governments are feeling the pressure that investors may be rushing to gold (or something else) instead of their bonds, so the yields will have to rise (the amount of interest governments are paying people to buy their debt). That’s a real threat to the Trump/Bessent plan.

What you need to keep your eye on is: are U.S. bond yields rising (meaning there is less demand to buy U.S. gov debt during a global recession, in which case the U.S. is really really in a bad place) or are they falling (global investors are rushing to buy U.S. debt as a safe haven, which means Trump gets to fund his tax cuts and renegotiate the Fed debt, and probably take credit for a good economy and win another election).

Second, History.

Many people are trying to figure out why Trump paused the tariffs last week. They think its because he’s spooked about the collapse of the stock market or wanted to game the system for stock market friends. I don’t think those are it at all. As I said, they are looking at the bond market, not the stock market. Two things are going on:

One, early returns are that the U.S. bond yields are going up because the U.S. is no longer the only game in town. This is spooking the trump/bessent plan. If that hold’s up (and there are things the Fed and Treasury can do) everything is off the table in terms of what people think the economic rules of the game are. (btw, It’s hard not to think that political polarization that led to Trump 1.0 and 2.0 all the way from Sarah Palin to January 6th 2021 has nothing to do with falling confidence in U.S. Safe Assets. But then again, maybe that polarization is the product of falling U.S. productivity. Chicken and the egg?).

Two, this is about a deeper change in the “real” economy. A historical one. I’m hoping to publish on the New York Times on this soon.

And that deeper change is the evolution of the economic relationship between China and the United States:

That chart is the relative labor cost between China and the United States. Very few people understand that they have essentially been equal since 2010. Multinational firms are aware. This doesn’t mean that China’s workers get paid the same amount as U.S. workers, it is an indicator of the cost of doing business and getting things from one place to another.

This single change — which is about demographic supply of workers born in 1990s China, Chinese currency appreciation in 2006, and some labor unrest in the mid-2000s — ended China’s ability to experience rapid GDP growth from being the low-cost producer of Western goods. For 40 years the U.S. and Asia benefited from a great relationship: labor arbitrage of a billion rural workers entering global labor market depressing wages all over the world, provided cheap imports to the West, and major productivity growth in the East. (btw: The end of cheap labor in the East is the real reason there is persistent inflation in the west. I’ll write more about that soon).

Most economists view “globalization” as having rewritten the economic rules of the real economy. That’s total B.S. The labor arbitrage between the East and West was a one-time, historically contingent development that has come to an end.

The result of this change is that China realized it had to do something different. It could no longer rely on being a sweatshop for the West anymore. The move they have made is to try and stimulate their way up the global value chain. Their government started squashing low-end manufacturing and funding high-tech, high-end brands/markets in the mid-2010s. In the U.S. we call this authoritarianism, in China it is industrial planning. They also have completely flipped from an economy reliant on exports to one reliant on a domestic consumption economy. See below:

It also experienced a reversal of Foreign Direct Investment from inflows to OUTFLOWS during this time. That is a historic shift. Think about it for five seconds how monumental that is. China wants to try and become the competitor of Western brands and inculcate domestic demand for those products. It no longer wants to make Iphones for Apple, it want’s to own a brand that can outcompete Apple. Those are the real profits in the global economic game. The trouble is this hurts U.S. companies and U.S. profit making, of course.

It doesn’t matter if China is successful in this attempt or not. What matters is the relationship between China and the U.S. the undergirded the global economy for 40 years has changed.

This single switch — i.e. China’s attempt to escape it’s middle income trap in the 2010s — is the thing that started America’s tariffs in 2018. Think about this: after 40 years of free market moralizing, the United States immediately switched to protectionism the moment its firms saw a smidgen of legit market share competition in the late 2010s. DeepSeek, the EV stuff, chips are just the latest examples. A lesser well known one is pharmaceuticals. This is the driving force behind all this.

Biden had this same plan to combat China’s growing high-end market share with tarrif’s too. This is really changing long-term historical trends driving presidents, not the other way around.

So tariffs were already here before Trump and they should be understood as trying to prop up American firms that are threatened with losing comparative advantage in the global economy. There is another way to deal with this of course: that is for American firms to actually use their profits for R/D to develop products that might outcompete China fair and square. To stop relying on tax cuts and low cost of corporates debt to prop up their over hyped stock values with stock buy backs and just get serious about actually innovating. That is what makes me progressive on this in my view. Just my 2 cents.

The trade deficit didn’t matter for America so long as American brands had the highest profits at the top of the value-chain hierarchy. Once that was threatened the trade deficit does actually start to matter for the American people. Obama did not understand that.

Big Tech is confused about the tariffs because they haven’t yet figured out a way to disentangle from higher cost Chinese labor. The tariffs are meant to protect them from rising Chinese competition (i.e. the actual high-end brands) but the American brands still get their stuff made in China. They have wanted to get out for a decade but other countries (like Vietnam) do not offer the economies of scale or infrastructure (i.e. big time ports) that China does. Or they just source all their stuff from China anyways (India). Here is an Apple person talking to the Financial Times:

Below is a picture of Tim Cook apple CEO talking to the White House about this problem in 2022. This is structural crisis. Labor costs rose in China 2010, China has to escape its middle income trap and so it is trying to compete directly with Western brands, the West responds with tariffs and we get inflation as a result. There is a real threat of a trade war turns into a real war in 2027 (the year the Presidents of both countries go up for reelection and both militaries finish their 10-year plans to restructure for a war in the Pacific). Mark that down as a prediction for war.

In any case, this is the world we live in and it was a long time coming. With or without Trump.

Third, a Global Liquidity Crunch, not a Recession is the Real Threat

The real threat to Trump’s plan isn’t a recession or that the trade rebalance fails, the real threat is a financial crisis.

As we learned in Part 2, most financial crises in this post-1973 era were triggered by debt refinancing shortages after the build up of asset prices during a bubble. CrossBorder capital publishes a figure (see below) that traces out advanced economies’ debt as a percentage of domestic liquidity stock (it’s adjusted for when debts mature and become due (maturities are often bunched)). This is distinct from debt/gdp, which many correctly see as not very useful predictor of crises. The reason it is not very useful, however, is because most observers do not understand that global liquidity (which surpass world GDP by 2.5-3 times) is the capacity of non-bank financial markets to provide credit to roll over existing obligations. This figure is showing the amount of debt that exists (that needs to be rolled over and paid with new debt) and the available credit that is circulating out there in the world to make that happen.

The lows in that figure are moments when the amount of debt out there in need of rolling over is low relative to the amount of liquidity available to roll it over. That means investors will be more willing to take risks and asset prices are going to go up. Remember, most assets (stocks, real estate, even bitcoin) are just purchased with leverage (i.e debt). The highs are when the debts start pushing up against the available liquidity to refinance it. Investors get desperate for new credit and when they realize there is less of it to go around they rush out of risky assets and into safe assets because liquidity can not keep the bubble growing.

The wild thing about the modern “financial” economy is that U.S. debt provides the collateral for the world to create new credit, but in turn U.S. debt needs that global credit/liquidity to keep driving its demand.

As we learned from CrossBorder capital in part 2, global liquidity has 5-6 year cycles. And we are coming up on a negative low point at the end of this year. By the end of the year the world may be credit starved. The Fed will have to act. Is the Fed aware of this problem? I’m not sure and neither is CrossBorder capital.

The piece of the puzzle here is whether the Fed is going to come in with liquidity injections. That’s not the interest rate, I’m talking QE and secret QE’s. They can outright expand their balance sheet and buy treasuries. But when are they going to expand their balance sheets and just straight up create money in the market. I would think the hold up is the risk of true monetary inflation as the West cannot count on cheap imports anymore to keep prices low. So far they stopped their not-so-secrete QE in 2023 and there is no reversal in sight.

So yeah, war risks by 2027/28 and financial crisis 2025/26. Huzzah. This is why investors are looking for safety in places other than government bonds. Seems obvious to me.

Appendix

Exchange Rates are Outcomes of Global Liquidity Quality

The figure below is taken from Capital Wars. It is saying that as private sector liquidity (importantly, not central bank liquidity) grows so will the U.S. exchange rate. US forex risk index is just CrossBorder’s measure of global liquidity less central bank liquidity. Remember from Part 2, when it comes to currency values, central bank liquidity is bad liquidity and private sector liquidity is good.

Below is the chart in of the growth of safe assets (the thing that allows global liquidity to increase or not).

This brings us to part 1 and Obstfeld discussion of the “global savings glut to trade war” story. He was quite clear that American currency values have been in long term decline and U.S. exports have been up over recent decades. This is what people miss about the “trade deficit.” His issue was that the U.S. was throwing lobs of debt onto the world and this allowed it to fund imports at a level that far exceeded its growing exports.

There have been temporary increases in the U.S. dollar and, in my view, these are historical events not economic rules. You can quite clearly see in the figures above the reason for the dollars increasing value between 1998-2002. Safe assets from the U.S. are up in 1998 and drooping a bit in 1998 but still high, which causes a growth in private sector liquidity. You can see the gross inflow of liquidity into U.S. assets during this time in line 66 of the chart below. This would cause a rise in the dollar.

What happened at this time? In my mind what happened was that Western gross capital **outflows** (FDI, portfolio, etc) where chasing high-risk investments in Eastern Europe and Asia. Capital was flowing east starting in 1979 (I’ll get back to that in a future post). But by 1995-1997 it found emulator assets among the “Asian Tigers.” Real returns were being made in China, but in those countries Western capital was chasing the _idea_ of high-returns.

Two things changed:

A sudden reversal of the supply of safe assets from the U.S., which caused a fall in the availability of balance sheet capacity to roll over debt. In other words, a global liquidity crunch. Hence the Asian Financial Crisis of 1997.

The appearance of a real, honest to god labor augmenting innovation in the world: the sale of internet IP addresses to the rich world. I’m not talking about the the latest social media app, iPhone release, or website with the word “.com” in it (Krugman’s “Big Meh”). I’m talking about the INTERNET. All the infrastructure it takes to set up a broadband link, all potential new ordering stuff and shipping that stuff the world gets when everything is on a computer etc. etc.. The expansion of the internet (the sale of IP addresses and cell phone plans) grew 18 times between 1999-2019. That is called market growth, and high-growth market share. That is a pace that exceeded the growth of the personal car. Growing from 248 million to nearly 4.5 billion internet users.

The sure bets were (for a time, AOL, Yahoo, Amazon) got lots of funding. But there was so much liquidity chasing too few assets that pseudo-safe assets started getting made (e.g. pets.com, drugstore.com) and hucksters started making stuff up (e.g. Enron claiming it was going to create online trading infrastructure). Liquidity drove retail banks to underwrite IPOs for these dubious companies that had no chance of ever bringing products to market. Those assets got rehypothecated, which needed to be rolled over continuously. A market device was needed to make people think these dubious companies had real sales potential and that device was the financial advisors appearing on CNN telling everyone Pets.com was going to be the next General Motors. Those people were actually making fees from the banks underwriting the IPOs. You can see that story in the Frontline doc. The business of bringing these companies to IPO was so profitable everyone got tied into doing it.

As gross private sector liquidity inflow is increasing during the Dot.com bubble so to does the U.S. Dollar. But the second half of 2000 the bubble pops and capital inflows fall. The real safe assets and liquidity are down in 2000 and 2001, so too is the dollar.

In my mind, the period between 2002-2007 is when the basic structure of long term U.S. productivity decline to currency appreciation shows its face. The gross capital inflows cannot cover for this. Again, this requires thinking about economic developments as historical events, not economic rules. The foreign deficit was really that large during this time.

Safe assets and liquidity supply go back up in 2002-2007 which accompanies the growth of the housing bubble. However, there is a reversal, a drop in safe assets (especially non-u.s. assets, which is likely cause by a pull back from the People’s Bank of China) and liquidity in 2008, hence the crisis.

The uptick in the dollar since 2013 is a feature of a slowdown in global private sector liquidity growth after the financial crisis. There just isn’t enough credit being created to roll over debt. As a result, U.S. Safe Assets have been in high demand. That is, until after the post-Covid moment when U.S. Treasuries started competing with other stores of value. We are in a new moment indeed.