The Overshoot

The Overshoot

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May 2025

This is What Normalization Looks Like (Mostly)
Long-end interest rates are rising after a prolonged period of being unusually low relative to short-end rates. Even the moves in Japan look less scary…
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Matthew C. Klein
7
Exorbitant Privileges, Burdens, etc. and the Implications for Fiscal Policy
The U.S. dollar is widely used outside the United States. That has implications for Americans that need to be managed, creating a tradeoff between…
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Matthew C. Klein
3
China's Edge in the "Trade Struggle" is More Theoretical than Real
It *should* be easier to replace lost demand than lost supply, but there are good reasons to wonder whether it is actually possible for the party-state…
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Matthew C. Klein
5

April 2025

Thoughts from the Past Two Weeks
The limits of U.S.-China decoupling, the principled case for an American industrial renaissance, and the scope for (desirability of?) capital flight…
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Matthew C. Klein
2
How to Think About the Tariffs
This is bad policy, executed thoughtlessly. But it is worth thinking through exactly *why* it is bad.
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Matthew C. Klein
3
Trying to Parse the pre-"Liberation Day" Wage/Inflation Dynamics
Goods inflation was already accelerating while job churn had stopped falling. Also: watch out for upward revisions to healthcare inflation.
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Matthew C. Klein

March 2025

The Fed Tries to Thread the Stagflation Needle
By doing exactly what they were planning to do before, at least for now.
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Matthew C. Klein
2
Inside the BTFP Subsidy
Banks and credit unions earned free money by borrowing from the Fed's "emergency" program and then lending it back to the Fed (or other banks) at higher…
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Matthew C. Klein
The Atlanta Fed's Nowcast Is Broken (For Now)
Imports of gold bars turn out to be surprisingly important. Plus: some thoughts on the February jobs numbers.
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Matthew C. Klein
1
The U.S. Chooses Stagflation
Policy choices over the past six weeks risk pushing a previously strong economy into a world of faster inflation and slower real growth.
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Matthew C. Klein
The Europeans Should Give Russia's Reserves to Ukraine Now
An accounting gimmick that is appropriate for the seriousness and stupidity of the times.
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Matthew C. Klein
3
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