Latest news with #KennethRogoff
Yahoo
2 hours ago
- Business
- Yahoo
Harvard economist admits he was wrong about Bitcoin
Harvard economist admits he was wrong about Bitcoin originally appeared on TheStreet. Kenneth Rogoff, an American economist and chess grandmaster, predicted that Bitcoin was far more likely to fall to $100 in 2018. Speaking to CNBC Rogoff predicted that an increase in government regulation would cause the price to fall, adding that a decline to $100 was 'a lot more likely' than a rise to $100,000. He also made bold claims that without money laundering and tax evasion, the practical applications of Bitcoin would be almost negligible. Rogoff who previously served at the International Monetary Fund, is now the Maurits C. Boas Chair of International Economics at Harvard University. Seven years later, Bitcoin has crossed that threshold past the six-figure milestone, prompting Rogoff to explain why he believes his forecast failed. Harvard economist admits his Bitcoin prediction was wrong Rogoff expressed regret that he had underestimated the demand for Bitcoin and the reluctance of regulators to intervene, but in a sarcastic tone. 'I was far too optimistic about the US coming to its senses about sensible cryptocurrency regulation; why would policymakers want to facilitate tax evasion and illegal activities?' he wrote, adding that he did not anticipate Bitcoin becoming the 'transactions medium of choice in the twenty-trillion dollar global underground economy.' While previously he stated that the Government could hinder the asset's adoption, Bitcoin has only flourished rather than floundered. Institutional investors, corporations, and governments now have major stakes in the asset. As of August 20, the US government holds around $22.48 billion in Bitcoin, as per records. Additionally, Bitcoin exchange-traded funds (ETFs), launched in July 2024 to provide indirect exposure to the asset, have also fueled additional demand for Bitcoin. Over the course of 273 trading days between July 2024 and August 20, with an average of approximately $4.75 billion in transactions per day, the total trading volume comes to almost $1.35 trillion. However, Rogoff continues to argue that any demand Bitcoin has seen in the recent years, is propped up by illicit activity and regulatory blind spots rather than mainstream utility. He says: 'I did not anticipate a situation where regulators, and especially the regulator in chief, would be able to brazenly hold hundreds of millions (if not billions) of dollars in cryptocurrencies seemingly without consequence given the blatant conflict of interest.' Harvard economist fashes backlash from crypto community Bitcoin proponents harshly criticized his explanation. In a post on X, investor and analyst Anthony Pompliano rejected Rogoff's analysis. 'Fiat economist still doesn't understand bitcoin. Blames everyone but himself for missing it' wrote Pompliano. Moreover, in a weird twist of fate, the ivy league university, Harvard, has itself invested over $116 million in BlackRock's Bitcoin ETF (IBIT), making it the 29th largest holder of IBIT. At press time, Bitcoin stands at $112,957.69, down nearly 2% over the last day. However, the current price is still up over 85% in a year's time. Harvard economist admits he was wrong about Bitcoin first appeared on TheStreet on Aug 20, 2025 This story was originally reported by TheStreet on Aug 20, 2025, where it first appeared.
Time of India
31-07-2025
- Business
- Time of India
Donald Trump has succeeded in imposing US tariffs globally now — but this won't last as nations will learn how to retaliate: Kenneth Rogoff
Kenneth Rogoff is Maurits C. Boas Professor at Harvard University and former chief economist at the IMF. Speaking to Srijana Mitra Das, he discusses Donald Trump , tariffs, the dollar — and winning moves by India: Q. What is your new book 'Our Dollar, Your Problem' about? Explore courses from Top Institutes in Please select course: Select a Course Category Finance MBA Product Management Design Thinking CXO Data Analytics PGDM MCA Digital Marketing Data Science Cybersecurity Artificial Intelligence healthcare Others Degree Public Policy Operations Management Technology others Leadership Project Management Data Science Management Healthcare Skills you'll gain: Duration: 7 Months S P Jain Institute of Management and Research CERT-SPJIMR Fintech & Blockchain India Starts on undefined Get Details Skills you'll gain: Duration: 9 Months IIM Calcutta SEPO - IIMC CFO India Starts on undefined Get Details A. It looks at the rise of the dollar with the twists, turns and luck it had to reach the incredible dominance it enjoys today. The book explores the mistakes China, Japan, Europe and even the former Soviet Union made, which led to the dollar gaining market share — it also explains the vulnerabilities that point to a more multipolar system in the future. Q. What are the threats to the US dollar? by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Villas For Sale in Dubai Might Surprise You Dubai villas | search ads Get Deals A. Externally, the promiscuous use of sanctions has led both Europe and China to want to decouple from the financial system going through the United States — both China and Europe are trying to develop their own ways of doing international transactions now. The dollar is not just dominant in trade, it is also dominant as a lot of back office work of the global financial system goes through the US. This gives the US its incredible ability to impose sanctions, which it has on many countries. The dollar peaked 10 years ago — but two factors have now accelerated things. First, the US is taking on unsustainable debt — this applies to both our political parties. This will eventually lead to some form of debt crisis, high inflation, financial repression and possibly even partial default to some foreign countries. Everyone can see this — with Donald Trump, it's become more apparent. The second factor is both parties being unhappy at the independence of the Federal Reserve — this is at the heart of the whole system and gives stability for inflation but our politicians are clearly displeased at that. I think there is therefore a steady breaking away from the dollar — this is likely to accelerate if these problems grow worse. It's quite possible the US will have a budget crisis in the next four to five years — this means long-term interest rates will keep rising and politicians will finally be unable to take the heat. Live Events Q. If the dollar fades, which currency will replace it? A. None — the dollar will lose market share. The title of my book comes from 1971 when the Richard Nixon ad mi nist ration decided to stop offering to convert dollars to gold for governments. Europe was then the centre of the dollar bloc — today, Europe is gone. I think Asia will be the next part that is lost. Europe has a single currency which Asia won't have but it will likely become more centred on the Chinese yuan in the next decade. In Africa and Latin America, Europe will gain market share — before the European debt crisis, it had a quarter of global reserves. That fell to under 20%. I expect that to rise and see the Euro used more in global trade, particularly as the Europeans develop new digital currencies. Q. What are the likely economic outcomes of Donald Trump's tariffs for America? A. In the next couple of years, we could see slower growth, also because the taxes apply to intermediate inputs. It could make things more expensive and lower quality, which happened with the tariffs Trump established in his first term — those led to price increases and lower standards. You can't buy a washing machine in the US today that's as good as something from 10 years ago, thanks to those tariffs. What is remarkable is the extent to which Trump has succeeded in imposing tariffs on the rest of the world without retaliation — don't expect that to last. Countries will bide their time and if the US carries this on, the rest of the world will not just turn the other cheek — nations will retaliate. Trump has made all kinds of threats on security, etc., but I doubt he can hold it all together. From his perspective, his first round of negotiations has been remarkably successful — he did exactly what he said he would do and it's almost laughable to hear the Europeans say they got a good deal because the tariffs on them are 15%, not 30%, or that Japan not only accepted higher tariffs but lowered these on American goods and agreed to invest billions in the US. I don't think this is a sustainable situation. As political theatre, it's extraordinary and the President has succeeded in his ambitions — but the tariffs will not benefit the US. Tariffs hurt the country imposing them more than others. Even if he halts now, the world should know this is not the end — this is a ceasefire. As soon as, say, India does something Trump doesn't like, he will threaten a much higher tariff — but, by then, countries will learn to respond differently. Currently, Trump thinks he's triumphed. We haven't had a recession in the US and prices haven't risen much — but that could change. Q. As a chess grandmaster yourself, how do you analyse India's rise — and China's performance — in global chess? A. India's success is the story of the decade — India has several of the top ten chess players in the world, including the current world champion on the men's side, with women also moving towards the same swiftly. It shows India's remarkable talents in science, math and technology. It shows a level of excellence India should be proud of, beating China and surpassing the US. This is an important marker of India's rise. China has done well, particularly in women's chess — it's had a world champion for some time but that was more of a fluke. China just has less enthusiasm overall for chess than India. The Communist Party isn't interested in it — chess hasn't taken root there like it has in India. Views expressed are personal
Washington Post
31-07-2025
- Business
- Washington Post
Why America's new crypto regime makes other countries nervous
Kenneth Rogoff is a professor of economics at Harvard, a former chief economist at the International Monetary Fund, and the author of 'Our Dollar, Your Problem: An Insider's View of Seven Turbulent Decades of Global Finance and the Road Ahead.' Has the United States decided to be the Switzerland of crypto? The laudable aim of the Trump administration's landmark cryptocurrency legislation, eloquently exposited by Treasury Secretary Scott Bessent, is to bring some much-needed regulatory clarity to the wild west of digital finance. However, by proffering an official stamp of approval, the U.S. is potentially providing a powerful vehicle for facilitating tax evasion and all manner of illegal activity worldwide.
Washington Post
27-06-2025
- Business
- Washington Post
Exploding U.S. indebtedness makes a fiscal crisis almost inevitable
Jamie Dimon, the CEO of JPMorgan Chase, was more tantalizing than illuminating when he recently said, regarding the nation's fiscal trajectory, 'You are going to see a crack in the bond market.' Details, even if hypotheticals, would be helpful concerning the market where U.S. debt is sold. Twenty-five percent of Treasury bonds, about $9 trillion worth, are held by foreigners, who surely have noticed a provision in the One Big Beautiful Bill (1,018 pages). Unless and until it is eliminated, the provision empowers presidents to impose a 20 percent tax on interest payments to foreigners. The potential applicability of this to particular countries and kinds of income is unclear. It could be merely America First flag-waving. But foreign bond purchasers, watching the U.S. government scrounge for money as it cuts taxes and swells the national debt in trillion-dollar tranches, surely think: What the provision makes possible is possible. Such a significant devaluation of foreign-purchased Treasury bonds would powerfully prod foreign investors to diversify away from Treasurys, which would raise the cost of U.S. borrowing an unpredictable amount. Concerning which, Kenneth Rogoff is alarmingly plausible. Before he became an intergalactically famous Harvard economics professor, and a peripatetic participant in global financial affairs, he was a professional chess player. Hence his penchant for thinking many moves ahead. 'I have observed that, although the financial system evolves glacially,' he writes in his new book 'Our Dollar, Your Problem,' 'the occasional dramatic turn is to be expected.' What is expected is considered probable. The nation's exploding indebtedness could presage a 'dramatic turn.' 'The amount of marketable U.S. government debt,' Rogoff says, roughly equals 'that of all other advanced countries combined; a similar comparison would hold for corporate debt.' Furthermore, when in 2023 Silicon Valley Bank and some other small and medium-size banks became actuarially bankrupt because of rising interest rates, the Federal Reserve created a facility that implicitly backstopped potential capital losses of all banks, estimated to be more than $2 trillion. The facility has gone away, but the mentality that created it remains. Therefore, so does another potential large increase in government debt. 'The U.S. government has continually increased the size and scope of its implicit bailout guarantees,' Rogoff writes, 'creating what might be termed 'the financial welfare state.'' Those of the 'lower forever' school of thought regarding interest rates are serene about the challenge of servicing the national debt. Rogoff, however, notes that when Ben Bernanke left as Federal Reserve chair in 2014, Bernanke, then 60, 'reportedly began telling private audiences that he did not expect to see 4 percent short-term interest rates again in his lifetime.' Eight years later, such rates reached 5.5 percent, and long-term rates have risen significantly. Rogoff thinks today's higher rates are likely the new normal, resembling the old normal, for many reasons, including 'the massive rise in global debt (public and private).' And 'if the worldwide rise in populism leads to greater income redistribution, that too will increase aggregate demand, since low-income individuals spend a higher share of their earnings.' This would be an inflation risk. Rogoff warns that many believers in 'lower forever' interest rates express the human propensity to believe in a 'supercheap' way to expand 'the footprint of government.' The nation is, however, 'running deficits at such a prolific rate that it is likely headed for trouble.' He rejects 'lazy language' about U.S. government debt obligations being 'safe.' Debt is a temptation for inflation, which is slow-motion repudiation of debt compiled in dollars that are losing their value. (Ninety percent of U.S. debt is not indexed for inflation.) When President Franklin D. Roosevelt abrogated the gold standard backing the currency, the Supreme Court ruled it a default. Also, holders of U.S. bonds were not safe from significant losses during this decade's post-pandemic inflation, or from huge losses during the 1970 inflation. Investors watching U.S. fiscal fecklessness might increasingly demand debt indexed to inflation. 'How sure are we,' Rogoff wonders, 'that no future president would seek a way to effectively abrogate the inflation link out of frustration' that it impeded 'partial default through inflation.' A president could call this putting America first. Projecting the exact arrival of an economic crisis is, Rogoff writes, 'extremely difficult,' an uncertainty shared with medicine. Physicians can identify factors that increase risks of heart attack in patients who nevertheless escape them. And low-risk patients can suffer attacks after being deemed fit as fiddles. Still, today reasonable fiscal physicians discern not just a risk but a high probability of a debt and/or inflation crisis.
Yahoo
26-06-2025
- Business
- Yahoo
'Americans Are Not Prepared' Says Harvard Economist About China's De-Dollarization - 'Interest Rates Are Going To Be Higher For A Very, Very Long Time'
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. The global role of the U.S. dollar is shifting, and the consequences for interest rates and the American economy could be long-lasting. That's the warning from Kenneth Rogoff, a professor of economics at Harvard University and former chief economist at the International Monetary Fund. In a recent interview with CNBC, Rogoff said the U.S. is entering a new era of fiscal and monetary pressure, driven in part by a long-building move away from the dollar in global markets—particularly in Asia. "It's going to put pressure on the U.S. budget, interest rates, and Americans are not prepared for any of that," Rogoff said. The movement, often referred to as de-dollarization, is not new. But Rogoff believes it's accelerating, and could lead to a world where the dollar no longer dominates global trade and financial flows the way it has for decades. "Asia is half the dollar bloc," Rogoff said. "China... probably should have decoupled significantly from the dollar. It's happening." According to Rogoff, that shift—coupled with U.S. fiscal strain and political pressure on the Federal Reserve—is likely to keep real interest rates elevated far longer than most Americans or investors are expecting. "I think real interest rates are going to be higher for a very, very long time," he said. "That era of low interest rates is over." Check Out: Wall Street has been quietly buying up equity in owner-occupied homes, and the strategy is kind of genius. Here's how one company is using it to produce 15%+ annual returns for its investors. The dollar's global standing has long helped the U.S. finance its deficits and maintain low borrowing costs. When foreign central banks hold dollars or buy U.S. Treasury bonds, it supports demand and keeps interest rates in check. But Rogoff argues that trend is starting to reverse, especially as countries like China reduce their Treasury holdings and shift away from pegging their currencies to the dollar. This is due in part to rising geopolitical tensions and concerns over U.S. sanctions. That doesn't mean the dollar will be replaced overnight—but it does mean its role could be significantly diminished over the next decade. "It's not the same thing as replacing the dollar," Rogoff explained. "But it's certainly going to defang it to some extent." He compared the current moment to the early 1970s, when President Nixon ended the dollar's convertibility to gold, prompting European countries to move away from the U.S. currency. "We lost Europe. It never came back," Rogoff said. "Where is the dollar bloc now? The center is in Asia, and it may not stay that way." If Rogoff is right, a prolonged period of higher interest rates could impact nearly every corner of the U.S. economy. That includes mortgages, credit card rates, business borrowing, and long-term investment returns. It's also likely to put renewed strain on the federal budget. As rates rise, so does the cost of servicing the national debt, which has already surpassed 120% of GDP. Rogoff also raised concerns about the politics surrounding the Federal Reserve. While he praised Fed Chair Jerome Powell's leadership, he cautioned that the institution's independence is not as unshakeable as many believe, especially if it faces growing pressure from the White House or Congress. "There's a lot Trump can do to put pressure on the Fed," he said, noting that proposed appointments or budget threats could undermine market confidence. With both structural and political forces pointing toward higher interest rates, Rogoff warned that most Americans are unprepared for the economic consequences, especially if inflation remains persistent or geopolitical tensions intensify. Don't Miss: See how a $25,000 investment in home equity could outperform stocks in a high-rate economy. Rogoff's outlook suggests it may be time to reevaluate portfolio strategies that were built for a low-rate environment. Some have turned to inflation-protected assets, real estate, and commodities as ways to preserve purchasing power and hedge against currency risk. One area gaining attention is home equity, particularly through investment structures that offer exposure to real property appreciation without relying on rental income or interest payments. The U.S. Home Equity Fund by Homeshares is one such vehicle. It invests in Home Equity Agreements (HEAs), which provide homeowners with cash in exchange for a share of their future home value. It offers accredited investors exposure to real estate appreciation at an accelerated rate with built-in downside protection. The fund's strategy targets a 14%-17% net IRR Because the contracts are tied to actual home values and span multiple markets across the U.S., they offer a type of asset that may remain resilient even if interest rates stay elevated for years. See also: This fund gives you access to the $35 trillion home equity market without buying or managing property. Rogoff's message isn't apocalyptic. The dollar isn't disappearing, and the U.S. economy still has enormous strengths. But ignoring the shifts underway could be a mistake. Whether through higher borrowing costs, reduced global leverage or diminished policy flexibility, the effects of de-dollarization are already being felt. And Rogoff says the trend is only gaining momentum. "Trump has been an accelerant of trends that were already happening," he said. "But the fundamentals were in place no matter who won." The question now isn't whether the era of low rates is over. It's how to adapt to what comes next. See Next: The era of low interest rates is over. But this overlooked real estate strategy is just getting started. Image: Shutterstock This article 'Americans Are Not Prepared' Says Harvard Economist About China's De-Dollarization - 'Interest Rates Are Going To Be Higher For A Very, Very Long Time' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
