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Nor Rubini.
No, it joins these wonderful books, all that he's done for me over the years, going way way back pre crisis is well, let me just get bitcoined out of the way. I don't always time on it. We've had not one but two of our guests emphatically stayed Rubini's right, it's going to ten thousand. It's a bit dark going down from sixty thousand to ten thousand.
I think it doesn't matter. I don't make predictions. It could go significantly low, where could stay where it is. But the point is that you know Bitcoin is down from his peak by fifty percent. The other top ten cryptocurrences are down between sixty to ninety percent. You know, millennia coin and the trump coiner are down ninety seven ninety nine percent, even worse than fart Coin is done only ninety five.
Mean, well, you know it's a traded currency, so.
And you know the NFT index is down ninety five percent from the peak. So it was a bubble as burst. Whether it be Coong goes much lower and out. Who cares?
You were saying that you've just come off three weeks of travel A where were you and B what did you learn?
Well?
I spent a good amount of time between Saudi Arabia, Israel, Dubai, and Abu Dhabi. I would say that foremost on people's mind was the question of whether there will be another conflict between Israel, US on one side, and Iran, debated in Israel, in Saudi, throughout the Gulf. We don't know the negotiations. I would say the Israeli view is that probably it's not just a niche about nuclear bomb but also about the missiles, but stick missiles and the original proxies.
While Trump may just cut the deal on the on the nuclear bomb alone, that will live israally in a weaker position. But we'll see what are going to be the results of those negotiations.
Other than geopolitics, there's been a move just kind of feeling that the US maybe has lost a little bit of its exceptionalism. There are other opportunities to invest outside of the US. We've seen that over the last six to twelve months. Is that something you sense in your travels?
Oh? Yes or no?
What I feel is people say we don't like the US in public, and then they invest in the US. I mean throughout the Gulf, whether it's Saudis or Emiratis or Kataris, there's an alternative to the United States.
And I think for a good reason.
You know, I've argued that, actually I'm a techno optimist that US potential growth but at the end of this decade is going to be four percent, not two. And if you had American exceptionalism when growth was two percent and the SMP was returning to twelve percent including the dividends for twenty years and as like sixteen percent, if growth is even only three litt alone three and a half and four, then returns have to be even higher. So yeah, and the short term there is now volatility,
but that's short time volatility. If you look in the medium term with three four percent growth and will be there because of technology in US is number one together with China in all of the indices of the future. It's not just say either about fifteen other ones. Then American exceptionally is not over actually is going to be reinforced over time. And there is no other place to invest in the United States because China is risky and uninvestable for a lot of good reasons.
Nor Robini. I'm with this fossed bulletproof academics. Whatever your political view is, it's truly outstanding international economics. Nor Robini On tariffs, I'm reading the Morgan one volume, and William McKinley Trump is fixated on the gilded Age and the benefits of tariffs. I don't buy it for a minute. And I'm looking for McKinley's buffalo pivot where politicians walk
back the talk. Are we going to see in twenty twenty six tariff reduction by the president in some manner like a buffalo pivot?
Oh, it already happened in twenty and twenty five, and it's going to be more of it in twenty twenty six. You know, on April second, he announced average effective tariffs of thirty percent, as opposed to the pre April psycond liberation they three percent. But I said right away that market discipline is going to force him to check it out and back down. And two weeks into that announcement,
NASDAK was done. Twenty percent, s MP fifteen ten, new treasure yieldware up eighty business points III spread up one hundred and fifty.
The dollars had to go free fall and he.
Panicked, and he panic it started to do trade deal, and he gave the job to Scott Besson. And guess what the average US started right now is not thirty percent. It's fourteen and falling. Because there is an inflation affordability crisis, and every day they cut back the tariffs on aluminum, on.
Coffee, in hoko and whatever.
They're desperate and therefore they already chickened out in twenty five because the market forced them do more of it this year because that of course mid them election and they need to try to boost the economy and reduced inflation, so taffies are going down, not up.
Has the whole terror of discussion in ourial maybe permanently or at least an intermediate term negatively impact just trade the US between various partners or is this something that everybody can just get past?
Do you think you.
Know there's been some short and volatility, there's been some shrinkages of our inputs from the rest of the world. My view is actually the US trade and current account deficit, regardless of tariffs, it's going to widen because from a macro point of view, the trade balance is not Experts MANUS imports, it's savings MANUS investment in US is in the middle of an investment boom driven by I in
techologes of the future. It's like an emerging market. Ifan oil or something where you have an investment boom and your domestic private and public savings are lower, then you have a current round deficit. So our current investment is going to become larger, not smaller. Even if you had thirty percent tariffs, that's a microvill and it doesn't matter because the info capital equity investment to finance it, FDIBC, startups, you name it, porfol investment is going to finance that.
So not only American exception is not over. The exorbitant privilege of the US dollar is not over, and even the weakness of the dollar is only short term. Over the midium time we four percent growth, the dollar's going to be much stronger and the uros going to be much weaker.
Are you predicting an advancing dollar from here? Does it have to weaken down and then we get a bit on the.
Dollar listen in the next few months, weekend more depending on relative market policy. But I'm asking myself, I suppose you are twenty thirty. At the end of this decade, the US grow the four and euroson is stuck at one percent real interest rates real it depends on real growth rates just because the time the US to be well below party.
This questionnaire was brilliant and I got this in Are we stealing investment from other parts of American enterprise with all this money going into aichechedlogy and data centers?
No, I don't think so.
I don't think so, because, first of all, to bel all AI data centers, there's supply chains of construction, of equipment of everything, cooling, heating system, you name it, the chips, supply chains and so on, and you know, and these booming capex is maintaining economic growth strong, and that's going to be good for the economy and for many other sectors. And secondly, it's not just the hyper skilled mark seven
and doing investment AI. If you have any SMP five hundred firm today and you don't have an AI strategy, you're dead because you could be disrupted by a competitor, or by tech firm, or by whatever. So everybody's trying to play with AI. Now we're not yet seeing the significant increases in productivity growth. We see them at the macro level, by the way, but we don't see them.
For every firm.
But profit margins for every SMP five underd firm has increased. The real revenues for all SMP five hundred firms have gone up since ACTIVET has been launched by fifteen percent, so five percent per year. So there are these signs that there is this increasing productivity growth across the economy. So everybody has to have an AI strategy. So everybody's doing capecs. It's not just a mayoproscalar story.
No real can this economy grow at four percent as you suggest, with no immigration?
Do we need an immigration policy that allows population growth?
Well, we need it because we have a bottleneck of skill labor. You know, TSMC is building a factory in Arizona. I spoke with people in Taiwana. I said, we don't have the skilled worker in Arizona. So that hundreds or thousands of engineers of TSMC going there initially for a few months.
Now they left to be there for a few years.
So you need a more intelligent immigration policy with more H one B visa so that skill workers can work in the United States. But even if we had net migration that was closed to zero. I think they increases in productivity growth driven. But the clouds of the future, and AI is one of the fifteen of them. Everybody's obsessed with. AII is just one piece of the story. That are fifteen other sectors where there's a PRODUCTI growth
because of the technology of the future. So that's going to lead to an increasing producty growth regardless of job grades. That's why there is a gap between GDP and jobs because there's a booming productivity growth. So that's what's already happening. We don't have the workers who are cutting back on that migration. We are deporting people, and growth is actually accelerating rather than necelerating.
Nor Rabini with the folks who welcome all of you across the nation, we welcome you worldwide as well, from Istanbul to Tehran to Tel Aviv and then on Italy, which is normal. Rubini out of a suitcase in his childhood, you have a perspective over world new world like no one I know because of your tumultuous childhood, and you're superior, brilliant academics and Piconian.
And others.
How do you see America after this second term of President Trump, do we go back to the processes for example you had serving in the White House with Bill Clinton? Do we go on to a new populism? How do you see us after Trump?
You know, I think that Trump is going to be more a temporary exception rather than a radical change of the US. Yes, there is a little bit more popularism because there are plenty of people left behind. Some of them vote for the Progressive, some of them vote MAGA, but there'll be the strong increasing growth. I think that after midimal election, if the GOP loses the House, Trump
is going to be a lim duck. Anybody from Jed Evans to Marco Rubio to a bunch of others going to say, I want to run, great job president for two terms, even in Supreme Court. It's not going to allow him to run for a third term. And therefore, you know, is it going to be lin duck and we're going to whoever is going to be elected, maybe the exception of Jed Evans, but even a Mark Ruby is going to be somehow in between the traditional you know, George Bush publican party and more populous one. So and
we have stronger economic growth. I think some of these backlash against liberal democracy and free market is gonna shrink. There will be some of the backlash, but I think we've hired growth. Some of these concerns about in a quality and other things are going to be lessened over time.
Nauria, with all your travels and all your contacts around the world. Is the US leadership position, which it's held generally interrupted since the end of World War two?
Is that changed?
Is that done?
Is that.
Is that framework no longer in place?
Do you think, well, you know, even our friends and allies in Europe, in the Middle East, in Asia are unhappy because the US is behaving like a bully, but your NATO is still there. We're going to find deals on trade and other things. And think about the Europeans. Do they really want to use the fans tag of China and AI of China and being the Chinese or a bit of course not, so they have a non option and they have to essentially spend more on the fence,
be part of NATO, buy even more American weapons. And there are going to be two technological stacks are going to be completely the risk because there's the a US stack and a Chinese stack. And if you are friends of life the US. They don't to be subject to the spying and being within the firewall of China. So you have Europe and friends and analyies have no choice. They have to go with our technology. We are defens we're on system, we are economic channels. They'll do some trade
with China, but not stuff that is really sensitive. They have an option by going with the US.
Nora Rabini and Richard Clareday have sat in this chair and imposing sat in the chair and others to discuss the next chairman of the FED. Are you comfortable with mister warrisher? Are you particularly comfortable with him that he doesn't have the academics say of Richard Clareda, he wouldn't know DSGE theory over the.
Head and that doesn't bother me as much. And he wasn't a fat before and even powerless done well while being a lawyer. I'm more concerned about these views. The view that you can because of AI reduce the FED funds or it is wrong because even if AI will eventually reduce inflation, is going to increase potential growth. So the equilibrium real our star is higher, while the nominal because of inflation could be lower. And it's going to be a wash between the two. So on one side,
the real growth implies high real rates. On the other side, lower inflation implies lower nominal and it's a wash between the two. So that doesn't justify it or fed function.
Once you included the dynamics here, I asked, do we need two our stars because we got an American and Oriel flat in their back. There's not part of this AI productivity experiment. Are we living to our stars right now?
Well, we live in what everybody refers to as a case shaped economy. The top ten twenty percent is doing very well. About on fifty percent struggles from paycheck to paycheck. Even if we were at full employment, at least people have jobs. But even if you were to cut policy rate in an economy is near full employment, you're going to fuel only inflation and if it is gonna hold more the working class than otherwise. So the solution is
not going to be reducing the policy rate. If you're worried about inequality, you have to do stuff like providing educational skills and retraining and all the things we're not doing to make sure that those were left behind are not left The band it's not the job of monetary body.
Your PhD advisor Jeff Say exited the book fifteen years ago, folks predicting all of this educational failure in America. I got twenty seconds.
When's the next Rubini book?
I usually write one every decade. Crisis Economics was twenty ten, Mega Tread was twenty twenty two. So maybe something on AI and how the world is going to change. But it's going to be by the end of the decade, not anytime soon.