economics

It made no sense for them to target capital investment at thin-slab casting, positioned as it was in the least-profitable, most price-competitive and commodity-like end of their business.

Right now, there are two important policy changes that have come out in 2025. The first is DOGE aimed at eliminating waste, fraud and abuse in the government. The second is tariffs aimed at making global trade more fair

Which matters more?

The chart today looks at each in terms of their size relative to the GDP of the US. The scales are different to

expanding the monetary base is very different than expanding the broad money supply. Many people think that QE alone is inflationary, but it’s not. At most, QE alone is anti-deflationary, or inflationary for asset prices in particular. On its own, QE doesn’t result in more money in peoples’ pockets chasing more goods, or higher commodity prices.

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This dominance helped sustain global demand for dollar reserve assets. On the one hand, this has allowed the US to borrow more and at lower cost, generating sizable excess returns on external claims relative to external liabilities (the “exorbitant privilege” of the dollar). But it has also increased the exposure of the US external position to

Bonds have a tendency to peak about midway through an economic expansion and hit bottom about midway through a contraction.

The Balance Sheet Economy is static; it measures what we own , not what we are doing*.* Its metrics are expressed as stocks of assets that exist at a moment in time. For example, on December 31, 2022 there were 142 million existing homes in the U.S.

In the manufacturing sector, one notable development was that China increased the value of its exports of automotive products in Q1 2022 by 30% year on year, using its strong position in the production of lithium-ion batteries to become the world’s second-biggest exporter of electric motor vehicles after the European Union.

Capital cycle analysis, however, focuses on supply rather than demand. Supply prospects are far less uncertain than demand, and thus easier to forecast.

Emerging markets are responsible for the majority of marginal economic growth and commodity demand growth in the world, since they collectively have a larger population and have far less per-capita commodity usage as a starting point compared to developed markets. Emerging markets also have a lot of dollar-denominated debt, which is lent to them