U.S. Treasurys aren't selling like they used to
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Why is the share of U.S. debt held by foreign countries declining?
You know what we need right now? A little macroeconomic analysis. That's what we need right now. From American Public Media, this is Market Flash. In Los Angeles, I'm Kyle Rizdahl. It is Wednesday. Today, this one is the 8th of April. Good as always to have you along, everybody. Well, here we are, the day after. A moment, despite all of the continuing unknowns of both the known and unknown variety, to perhaps take stock of where things stand. To do that, we've gotten Mohamed El-Erian on the phone. He's a professor at the Wharton School at the University of Pennsylvania, also the chief economic advisor at Allianz. Professor El-Aryan, welcome back to the program, sir. Thanks for having me on. The answer to this question will obviously be different than it would have been yesterday at this time.
How does the shrinking foreign investment impact American consumers?
But I wonder, given the events of the day, the week, the month, your short-term, medium-term thoughts on the global economy.
Wow, that's a really difficult question because there's so much uncertainty about the war. But let me think in terms of the four phases. And we are now, the U.S. in phase two and phase three elsewhere. While we started the year well, we got a massive shock in the shape of the war. We had the first phase, which is done, and we are living with it, higher energy prices than would have been otherwise and higher interest rates than would have been otherwise. We then got phase two, which is more inflation in the pipeline. That's where the U.S. is now as the largest economy. Parts of Asia, unfortunately, have moved to phase three, which is not only do you get phase one and phase two, but you also get demand destruction.
So you start worrying about economic growth. And of course, phase four, which I hope we never get to, would be financial instability undermining the economy. So we are looking at a world in which the U.S.
What are the implications of Delta Airlines' recent earnings report?
outperforms the rest of the world. And parts of the rest of the world, Asia in particular, parts of Europe, risk recession.
A word here about the United States doing better than most of the rest of the world. You wrote the other day a piece, the headline of which was, America should beware of economic hubris. And setting aside for a second the fact that hubris is basically American government policy now in virtually all areas, what do you mean by that?
So Americans are proud, and rightly so, that we are energy independent. As such, we don't have to worry about physical supplies. But this sort of shock, Kai, hits virtually every single country. So the warning I was trying to send out is don't think that relative matters as much as absolute. Yes, the U.S. will outperform other countries, But in absolute terms, there will be higher inflation, there'll be a bigger affordability crisis, and some segments of the population are going to feel income insecure. So let's not celebrate too much our relative outperformance, because ultimately, it's the absolute performance that matters to people, especially people in the low-income segments of the household.
Step back for a minute then and talk to me about America's place in this global economy, because it certainly seems self-evident. And there are those who will disagree when they hear this.
How do rising jet fuel prices affect airline operations?
But America's place in the global economy has been intentionally lessened by the Trump administration through its policies, tariffs specifically, but also. at least incidentally, by this war and how it's been conducted and what it has done to the global economy. So what are we looking at now in a global economy where the American position is lessened at best?
The U.S. is still at the core of the system. Well, that wall is being eroded. It started in 2008 and when the global financial crisis originated in the U.S., it has continued with the weaponization of tariffs and investment sanctions, and this war is eroding it further. Now, the good news for us is there's no one to replace us. You cannot replace something with nothing. Europe can't step in. China can't step in. However, what's happening is that countries are slowly building little pipes, Guy, around the core, which is the U.S.,
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Chapters
8 chapters
1
Why is the share of U.S. debt held by foreign countries declining?
0:02–1:01
2
How does the shrinking foreign investment impact American consumers?
1:01–2:12
3
What are the implications of Delta Airlines' recent earnings report?
2:12–3:42
4
How do rising jet fuel prices affect airline operations?
3:42–4:53
5
What is the difference between PCE and CPI in measuring inflation?
4:53–6:11
6
Why is the U.S. Treasury borrowing more domestically?
6:11–7:05
7
How does increased domestic borrowing affect interest rates for consumers?
7:05–8:38
8
What role does sync music play in the current music industry?
8:38–25:20