President Trump has made no secret of his dislike for Federal Reserve Chair Jerome Powell, repeatedly using sharp, disparaging nicknames such as “Mr. Too Late,” “Numbskull,” and “Knucklehead,” and even branding him “grossly incompetent.” His irritation stems from the Fed’s refusal to heed his calls for US interest rates to be cut to euro-area levels. Yet Trump overlooks a crucial point: US rates have long been higher than those in the euro area because of fundamentally diffe...| Rangvid’s Blog
Most economists expect US President Trump’s tariffs to push up prices in the US. However, despite significant tariff hikes months ago, inflation remained surprisingly stable, until now. I see three main reasons—at least two of them suggesting that US inflation is likely to rise even further.| Rangvid’s Blog
In November, I wrote an analysis arguing that this recession ended in April last year already. Last week, the NBER Recession Dating Committee officially determined the end of the recession. And what did they conclude: The recession ended in April 2020. This makes it the shortest recession on record.| Rangvid’s Blog
Some of the events we have seen during this crisis are so unlikely that we need tricks to calculate their probabilities. This is a journey into the world of very small probabilities and very large numbers. I admit it is somewhat surreal. But it is important as these small-probability events can have long-lasting effects on economic activity.| Rangvid’s Blog
The corona crisis is unique in many ways, not least with respect to the speed with which economies have started freefalling. Literally, from one day to the next, economies have been shut down, with grave consequences for economic activity. | Rangvid’s Blog
Given the otherwise robust US macroeconomy, the outlook for the national debt arguably is one of the most pressing challenges. Ordinarily, during an election campaign, one would expect candidates to outline how they intend to address critical issues like this. However, neither Harris nor Trump has put forward comprehensive plans to reduce the US debt. Instead, both candidates have introduced economic proposals that are likely to exacerbate the already unsustainable debt trajectory, potentiall...| Rangvid’s Blog
Monetary policy is a primary lever for stimulating consumption and economic growth. However, when central banks hit their limits—whether it’s the lower bound on interest rates, political constraints, or other barriers—fiscal policy must often assume a greater role. But how much fiscal stimulus is needed to offset reduced monetary accommodation? In new research (link), co-authors […]| Rangvid’s Blog
Even Denmark’s top-notch pension system can be improved. The backbone of the system—that you work one extra year for every extra year you’re expected to live—means future generations will spend a considerably smaller share of their adult lives in retirement than current generations. This is not inter-generationally fair. Also, keeping pension contribution rates the same […]| Rangvid’s Blog
The Danish parliament recently decided to raise the retirement age in Denmark to 70, effective from 2040. This decision attracted significant international attention. In this post, I will explain why the decision was made, the benefits it offers, and why, overall, the Danish pension system is strong—arguably among the best in the world. That said, it is not without its challenges. In my next post, I will explore the issues facing the Danish system and discuss potential solutions.| Rangvid’s Blog
After many quarters of healthy expansion, US economic activity abruptly contracted in the first quarter of 2025—President Trump’s first quarter in office. How did a strong economy begin to falter so quickly? Many, if not most, commentators attributed the decline to a surge in imports dragging down GDP. In truth, however, imports have no direct effect on GDP. Because of its popularity, it is important to debunk the myth that imports reduce GDP.| Rangvid’s Blog
Before diving into today’s topic on how President Trump’s policies are undermining trust in the US as a credible borrower, let me start with some good news—especially for those who understand Danish. My new book, How Low Interest Rates Change the World, will soon be published in Danish! Even better, the Danish version will be priced far more accessibly—likely just 25–30% of the price of the global version. And there’s more: I’ll be adding a couple of new chapters exploring the s...| Rangvid’s Blog
In record time, US President Trump has transformed a strong economy into one on the brink of recession and a booming stock market into a collapsing one. This week, we came perilously close to a full-scale financial crisis—one that may have been narrowly avoided when Trump partly conceded defeat. Yet the danger is far from over, and the damage will be long-lasting. How did we get here?| Rangvid’s Blog
Why is inflation so high? How much of it is due to demand and how much to supply? And how much is temporary and how much persistent? These are arguably some of the most important economic questions these days. In this analysis, I present my views. I argue there are four main reasons why inflation is high, some of them transitory but others not, meaning it will be costly and take time to bring inflation back to target.| Rangvid’s Blog
The first part of my new book, How Low Interest Rates Change the World, examines the unprecedented decline in interest rates from 1980 to 2020, placing it within a historical context. I highlight how this period marked the most significant 40-year decline in nominal interest rates over the past seven centuries—driven by reductions in both […]| Rangvid’s Blog
My new book is out! In the book, How Low Interest Rates Change the World, I argue that forty years of declining interest rates from 1980 to 2020 fundamentally reshaped the world, and I speculate on what may lie ahead.| Rangvid’s Blog
2024 witnessed soaring stock markets, falling but persistent inflation, easing of monetary policy, and large fiscal deficits and an awakening of bond vigilantes in some countries. In this review of the past year, I reflect on five key lessons we learned in 2024 about economic and financial trends in the US and Europe.| Rangvid’s Blog
Since the 2007 financial crisis, the US has borrowed significantly more than Europe to fund higher public spending, which has contributed to faster economic growth in the US. But what about the future? Will the US continue to outpace Europe in borrowing?| Rangvid’s Blog
There is a great deal of euro-bashing circulating these days. The central argument is that Europe has been lagging the US economically, with an equally bleak outlook for the future. However, one often-overlooked factor is the significant role of massive borrowing—expansionary fiscal policy—in driving stronger US growth. When this is accounted for, the US’s apparent economic outperformance becomes less impressive.| Rangvid’s Blog
The US stock market has grown much faster than the US economy since the early 1980s. The total value of US corporate equities is now 280% of US GDP, up from 50% in the early 1980s. A key reason for this is the decline in interest rates over the same period. While interest rates have risen since 2022, they still cannot fall as much in the future, and therefore cannot support stocks as much, as they have over the past forty years. Expect low future returns from stocks.| Rangvid’s Blog
The US economy has proved remarkably resilient during this period of monetary tightening. One important reason is that households had large savings left over from the pandemic when the tightening began. I analyse why household savings accumulated during the pandemic and when they will be depleted. When this happens, households will be less resilient, which may have a negative impact on consumption and economic activity. I also analyse how excess savings are related to the flare-up and subsequ...| Rangvid’s Blog
