The Overshoot

Arbitrary U.S. Tariffs Are Gone. What's Next?

The Supreme Court has ruled that the President cannot use "emergency" authority to impose tariffs at will. Inflation is still going to be a problem.

Feb 20 • Matthew C. Klein

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Australia Is Raising Rates. Why Not the Fed?

The U.S. economy is accelerating, yet policymakers are still unreasonably concerned about downside risks.

Feb 13 • Matthew C. Klein

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Russian War Spending May be Maxed Out

The official budget deficit surged last year, as did off-balance sheet military spending via the banking system and unpaid bills. That might be tough to…

Feb 3 • Matthew C. Klein

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January 2026

Is the Market Underpricing the Risk of Fed Hikes?

The incoming data are undermining the case for lowering rates, which means that the 0% implied probability of hikes may be too low. And that is before…

Jan 20 • Matthew C. Klein

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Is Japan "Normal" Again?

After decades of trying, it looks as if inflation and nominal income growth have finally reset to a new, faster baseline. That explains the actions in…

Jan 12 • Matthew C. Klein

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December 2025

U.S. Wages Still Rising Briskly, Employment Holding Up, and Inflation Still Sticky (Probably)

Look through the noise attributable to the government shutdown, and little has changed over the past six months.

Dec 19, 2025 • Matthew C. Klein

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The Fed Submits?

America's central bankers have, in the aggregate, lowered the "appropriate" path for interest rates despite an improved growth outlook and a worsening…

Dec 12, 2025 • Matthew C. Klein

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Waking the Sleeping European Giant

Coordination and mobilization of existing resources would transform the continent into a superpower. The ongoing failure to do so is largely the fault…

Dec 3, 2025 • Matthew C. Klein

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November 2025

The "Sell America Trade", QT, and Foreign Banks

"Foreign-related institutions" have shed ~$400 billion in dollar deposits at the Fed since July while reducing their overall U.S. exposure. That has…

Nov 18, 2025 • Matthew C. Klein

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October 2025

Inside America's Consumption Recovery

High earners monetizing asset price gains are always important, but they are far from single-handedly keeping America out of a downturn.

Oct 30, 2025 • Matthew C. Klein

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The Latest Argentina Bailout will (Probably) Fail

The U.S. Treasury's interventions on behalf of Argentina are unlikely to succeed as long as the country's fiscal probity fails to offset monetary laxity…

Oct 20, 2025 • Matthew C. Klein

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Guest Post: Dear IMF, It's Not *Only* Fiscal

IMF veteran Christopher Marsh explains how the balance of payments, the domestic financial system, and the fiscal accounts should be linked together…

Oct 10, 2025 • Chris Marsh

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