“This is generally what happens when interest rates in the economy go up. ‘Everything that the firm or the private sector would contemplate doing gets a little bit harder to do,’ said Jesse Schreger, an associate professor at Columbia Business School… ‘The U.S. is coming into this higher interest rate environment with just a staggering amount of debt outstanding that has to be refinanced at these higher rates.’”

”The trade war unleashed by US President Donald Trump has shocked many investors, since it seems so irrational by the standards of neoliberal economics. But “rational” or not, it reflects a shift to a world where economics has taken second place to political games, not just in America, but many other places too.

So universities like John Hopkins, Dartmouth, Kiel and Stanford are looking to expand their “geoeconomics” programmes (with the latter using machine learning for that end), along with entities such as the IMF, the Milken Institute and Atlantic Council.”

[Jesse Schreger] ``A big question here is, how much can you ask of your own firms? In competing with China, a US concern has been limiting Beijing’s access to cutting-edge semiconductors because of the military role. So, the US enacted export controls and would try to block, say, Nvidia, from selling such semiconductors to China. But there’s a limit to how much they could ask firms to do. They’d say, ‘Here’s the threshold above which chips can’t be sent.’ Yet, a firm could appear to make a chip that was just below the threshold — it’s easy for China to combine those and still compete. One of the trade-offs the US faces now is the more it would like to limit the ability of its own firms to do business with China, the more it cuts into these companies’ profit margins. How much pain can you ask your businesses to take — particularly if they are profit-maximising entities which have a choice of where to locate? Sometimes, the cost of outward power projection is making your own economy potentially worse.”

”Just after Trump spoke, a trio of American economists — Christopher Clayton, Matteo Maggiori and Jesse Schreger —  released a paper outlining the growing field of ‘geoeconomics’, inspired by Hirschman…

This work has already produced three themes that investors should pay attention to. First, and most obviously, the trio’s analysis shows that it is dangerous for small countries to become too dependent on any large trading partner, and they offer tools to measure such vulnerability.”

“Jesse Schreger, an economist at Columbia Business School whose work Miran cites, said the concept of a new currency accord is difficult to reconcile with the punishment Trump has inflicted on Mexico and Canada…

‘There’s a fundamental coherence to this. There is a plan laid out here. And because everyone is grasping for what is Trump doing, this is the document people are reading,’ Schreger said. ‘But the problem is it’s not what the president is implementing. There’s nothing in there that says we should start by going after Canada and Mexico. Instead, the document emphasizes building a coalition to coordinate trade efforts against China.’”

“Indeed, this is probably the only sensible thing for most countries to do, according to the Global Capital Allocation Project (a research site on hegemonic economic power that is replete with handy charts showing which countries are most vulnerable to American and Chinese hegemonic power). Diversifying inputs, this notes, is crucial if countries are to increase “economic security” in a capricious world.”