The Bond Market Always Gets the Final Vote
Summary
Host Jeff Schankman interviews economist Dean Baker to discuss rising bond yields and the end of the era of cheap money. They analyze how AI-driven borrowing, inflation, and geopolitical instability are driving up interest rates globally. Baker critiques Treasury Secretary Scott Bessent’s market interventions and argues that erratic political behavior, rather than debt levels, threatens economic stability.
Topics discussed
Introduction: The end of the age of cheap money
Explaining Treasury bonds, yields, and interest rates
Do budget deficits drive up interest rates?
Drivers of rates: AI, inflation, oil, and political risk
Shift in bond holders from central banks to private investors
Treasury Secretary Bessent's bond buying strategy
Fed policy, Kashkari, and the inflation vs. employment conflict
Debt sustainability and the role of economic growth
The tax gap and enforcement against high earners
AI capital spending bubble and potential recession risks
Labor market weakness and AI's impact on jobs
Global bond trends and calming market volatility
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