We discuss the key question of this moment, for the midterm elections, and beyond: who actually pays the taxes that are known as tariffs? The answer is… well, listen to the episode on any podcast platform or by downloading the audio file here.

We put developments in historical context and explain how we have financed our recent current account deficits. Spoiler alert: foreign residents like investing in the U.S., although we do need to worry about how much of that investment is productive.

We also walk through the basics, including important jargon such as the balance of trade, the current account, the balance of payments, and “Most Favored Nation”. All helpful material for when you read about trade policy or get drawn into a debate on the topic. If you want even more substance, look at the range of views discussed below.

Here’s Gary’s speech from 2023, linking strong capital markets (including proper regulation of those markets) with the international role of the U.S. dollar – and our ability to finance current account deficits.

In our conversation, Gary highlights this important essay by Michael Strain of the American Enterprise Institute, arguing that the positive impact of the Trump tariffs on US manufacturing is likely to be limited, at best.

For more on historical US trade Deficits, you can consult this source (the Federal Reserve Bank of St. Louis is typically reliable).

In recent months, Simon wrote two op eds on these issues with Stan Veuger of the American Enterprise Institute:

• on the legal and economic problems with the Liberation Day tariffs imposed in 2025. A majority on the Supreme Court seemed to listen to arguments such as these when ruling that these tariffs were illegal.

• on the latest (2026) arguments put forward by the Trump Administration, justifying their so-called Section 122 Tariffs

These op eds respectively drew on amicus briefs that Simon and many other economists signed – thanks again to Stan for his leadership on these.

• before the Supreme Court, in Learning Resources/V.O.S. Selections

• in the US Court of International Trade, Burlap and Barrel case

How do tariffs affect prices? See this piece from the St Louis Fed. And the work of Alberto Cavallo on this topic is excellent and typically definitive

To go even deeper on particular dimensions, we recommend:

‘State of Tariffs’, Yale Budget Lab, March 9, 2026

‘National Trade Estimate Report on Non-tariff Barriers and Regulatory Capture’, Coalition for New Trade, March 2026

‘Adapting Trade Policy for Supply Chain Resilience’, USTR, January, 2025. (For our MIT class, we required reading pages 1 – 9).

‘Supply Chain Resilience’, Katherine Tai, Remarks at the National Press Club, June 2023 . Katherine was US Trade Representative under President Biden.

In the CEPR volume on the (Preliminary!) Economic Consequences of the Second Trump Administration that Gary and Simon helped to edit in 2025, see these chapters which all address the burning issue of who really pays for tariffs:

• Kim Clausing: on the distributional consequences of the Trump tariffs.

• Marcelo Olarreaga and Sara Santander: Who Pays for US Tariffs?

• Arnaud Costinot and Andres Rodriguez-Clare: What you really need to know about tariffs.

And for even more reading!! (All from ’TheEconomic Consequences of the Second Trump Administration: A Preliminary Assessment’, CEPR Press, December 1, 2025.)

• ‘From MFN to “Reciprocal Tariffs', Kevin Hjortshøj O’Rourke, Chapter 22.

• ‘Trumpian Tariffs- What, Why, What Next?’ Richard Baldwin, Chapter 23.

• ‘Second Round Estimations of the Effects of Reciprocal Tariffs’, Bouët, de Vaulchier, Guimbard, Mitaritonna, and Zheng, Chapter 25.

• ‘National Security Tariffs on the Auto Industry’ , Head, Mayer, Vicard, and Wibaux, Chapter 29.

Gary Gensler discusses with Richard Quest charges brought against an Army soldier involved in planning the US raid on Venezuela’s leader Nicolás Maduro in January and then allegedly bet $32,000 on prediction markets making over $400,000 on insider information. Having been CFTC Chair on the insider trading laws used to charge the sergeant, Gary shares that more needs to be done by Congress to better promote trust in markets and our government.

You can learn more by listening to Gary & Simon discuss Prediction Markets in ‘Episode Five: Prediction Markets’

The newsletter that accompanies our podcasts frequently recommends material from the book we co-edited in 2025, The Economic Consequences of the Second Trump Administration, A Preliminary Assessment, published by the Center for Economic Policy Research (the Second Edition came out in December!). The hard-working team at CEPR has now made it possible to download individual chapters (although you are still welcome to download the entire book for free from the CEPR website).

By episode, here are the relevant links.

Episode 1: Immigration

• ‘Immigration and Border Policies’ Anna Maria Mayda and Giovanni Peri, Chapter 4.

https://cepr.org/chapters/immigration-and-border-policies

• ‘Rural Economies and Communities’, Mary Hendrickson and David Peters, Chapter 19.

https://cepr.org/chapters/rural-economies-and-communities

Episode 2: The Federal Reserve and Monetary Policy

• ‘The Financial Sector and Global Dollar System’, Gary Gensler, Lev Menand, and Joshua Younger, Chapter 10.

https://cepr.org/chapters/financial-sector-and-global-dollar-system

• ‘The Federal Reserve, the New Administration, and the Outlook for the Economy and Monetary Policy’, William B. English, Chapter 11.

https://cepr.org/chapters/federal-reserve-new-administration-and-outlook-economy-and-monetary-policy

• ‘Dollar Dominance and the Trump Administration’, Steven B. Kamin, Chapter 12.

https://cepr.org/chapters/dollar-dominance-and-trump-administration

Episode 4: Is Greenland Next?

• “Greenland” by Bo Lidegaard, Mira Kleist and Nick Bæk Heilman, Chapter 37.

https://cepr.org/chapters/greenland

Episode 7: Artificial Intelligence

• Artificial Intelligence Development and Policy Landscape, by Gary Gensler, Chapter 7.

https://cepr.org/chapters/artificial-intelligence-development-and-policy-landscape

Episode 8: Why Don’t the Wealthy Pay More Taxes?

• “Fiscal Policy and Debt Sustainability,” Antonio Fatás and Ugo Panizza, Chapter 9.

https://cepr.org/chapters/fiscal-policy-and-debt-sustainability

• “The Aftermath of Tariffs”, by Kim Clausing, Chapter 24.

https://cepr.org/chapters/aftermath-tariffs

Thanks very much to everyone who worked on the book — and on making these research findings so readily available!

****

In our latest Power and Consequences podcast episode, we (Gary Gensler and Simon Johnson) discuss the US tax system, with a focus on how it developed over 250 years – and where it may go next. Discussions about taxes can sometimes seem a little dry or even boring, but our take is that nothing is more important if you want to understand who has power and what this means in modern America.

America has long been seen as the land of opportunity in which rising up the income, social, and wealth ladders has been an important aspiration for many people. But why do wealthy folks pay less tax than in some other countries … particularly when they paid significantly more tax relative to their income/wealth in the 1950s and 1960s? When did attitudes and politics change to allow repeated tax cuts for the very rich? Is it sustainable for the wealthiest in American society to have lower average tax rates than people who live on substantially less money?

Could the next turn in American politics be towards reducing taxes for middle income people? There is plenty of rhetoric about this from the Second Trump Administration. Their tariffs, though, are a regressive consumption tax (falling more on the less well-off) and their overall package of changes so far disproportionately favors the very rich. There are signs that Democrats are becoming interested in new tax cuts, focused on middle income people and families.

If taxes are cut further, what will happen to our budget deficit? What might that imply for the path for our national debt that may already be unsustainable? We’ll explore these questions and more in upcoming podcasts on U.S. debt, deficits, and the dollar.

For a class session recently at MIT Sloan, we assigned the following three items.

“Tax Reform After the One Big Beautiful Bill Act”. David Kamin, Tax Notes Federal, November 10, 2025. David is one of the country’s leading tax law experts; he and Gary have worked closely together in the past.

“Fiscal Policy and Debt Sustainability,” Antonio Fatás and Ugo Panizza, Chapter 9 in The Economic Consequences of The Second Trump Administration: A Preliminary Assessment, CEPR Press, December 1, 2025. Please go to the book’s website and download entire the book (it’s free!) and then locate the chapter: Two Europeans take a hard look at American public finances.

“Tax Refunds and the One Big Beautiful Bill Act” Erica York and Garrett Watson, Tax Foundation, January 15, 2026. An excellent primer on the 2025 tax legislation.

For a broader read on taxation, try “The Price of Democracy: The Revolutionary Power of Taxation in American History” by Vanessa Williamson of the Brookings Institution.

And for another deep dive into the history, including how exactly the evolution of the international financial system allowed American debt to become so large, take a look at “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You”, by Simon Johnson and James Kwak.

Here’s the paper we discuss, “How Much Tax Do US Billionaires Pay? Evidence from Administrative Data”, by Akcan S. Balkir, Emmanuel Saez, Danny Yagan, and Gabriel Zucman. In a long set of papers by themselves and with colleagues, Saez and Zucman have changed how many people think about these issues – and about potential policies.

And here’s a paper by Kim Clausing and Mary Lovely explaining why tariffs are regressive and attempting to anticipate what will be the effects of the Trump tariffs, when these finally settle down. See Figure 6 on p.15 for the bottom line. See also Kim Clausing’s chapter “The Aftermath of Tariffs” in The Economic Consequences of the Second Trump Administration.

There are two proposals for a different approach to tax cuts now circulating. For both the Yale Budget Lab offers detailed assessments.

-On “Senator Booker’s Keep Your Pay Act”, by Yale Budget Lab, March 12, 2026. Estimated to cost $5.4 trillion over 10 years.

-On “Senator Van Hollen’s Working Americans’ Tax Cut Act”, Yale Budget Lab, March 12, 2026. Full proposal “would be budget-neutral over the next decade.”

You also may wish to read this New York Times article published just after we recorded this podcast: ‘Are Democrats Becoming a Party of Tax Cuts?’

And here’s Simon’s Science Fiction recommendation: A Memory Called Empire by Arkady Martine. A compelling vision of what happens when technology makes a society productive but power remains concentrated (and the rich don’t pay much tax)… in Arkady Martine’s compelling version, it’s a return to imperial pomp and power, with unbelievable wealth alongside tragic poverty.

In this interview ‘The Markets and the Regulators’ with Barron’s, Gary discusses his views on the current SEC, turmoil in the private credit market, prediction markets, and more.

Watch here: ‘Federal Agency Probes Suspicious Oil Trades Made Before Trump Pivots,

Former Commodity Futures Trading Commission Chairman & SEC Chair Gary Gensler joins David Gura and Christina Ruffini to discuss a series of well-timed trades in the oil futures and prediction markets ahead of recent policy pivots by the President related to the war in Iran.

Hear how the movie ‘Trading Places’ inspired the ‘Eddie Murphy’ provision adopted by Congress prohibits trading upon material non-public information from government employees. Gensler also discusses the work he did with Congress related to limiting contracts involving assassination, war, terrorism, gaming, unlawful acts and yes … separately on movie box office receipts.

The article is available here: ‘Gary Gensler Paved the Way for Prediction Markets. Sports Betting Wasn’t Part of the Plan’

The IMF’s headline series (in the first part of Table 1.1 on p.9 of this April 2026 report) compares year-over-year output, i.e., growth for “2026” is calculated by comparing world GDP for all of 2026 with world GDP for all of 2025. In a sense, this is a slightly lagging indicator – it includes the IMF’s view of what will happen through the end of 2026, but in calculating the numbers, there is a relatively high weight on what happened already later in 2025 and in the first four months of 2026.

For a sense of the IMF’s view of the dynamics of what will happen within 2026 and within 2027 – and what is still to come – look at the second part of Table 1.1 on p.10 of the report, which shows their “Q4 over Q4” series. Compared with the previous (January 2026) forecast, world output in the fourth quarter of 2026 will be 2.9 percent higher than in the fourth quarter of 2025, implying a slowdown of 0.3 percent. Note, however, that in this baseline forecast, there is a robust global recovery in 2027, in large part because the IMF assumes the price of oil will fall back significantly (that forecast is 5 lines from the bottom of the table).

In the Q4 over Q4 view, which I recommend as the focus of attention, the US shows an acceleration of growth during 2026, relative to the previous forecast. In other words, the IMF does not think that the oil price shock is large enough to slow the US economy during 2026, relative to previous expectations and everything else that is going on. In all the other named industrial economies in this report, the Q4 over Q4 revision is more negative. And the slowdown in China is also more dramatic (compare minus 0.1 in the year-on-year series with minus 0.6 in the Q4-on-Q4 series).

Also keep in mind that the IMF calculates world GDP using “purchasing power parity” weights, which gives more importance (in a statistical sense) to middle income and lower income countries when you add everything up. Table 1.2 shows what happens if you prefer to use market exchange rate weights, which put more importance on richer countries. The answer is… in this case, it doesn’t matter for the headline: still a slowing of world output growth by 0.2 percent. This reflects the point that both “advanced economies” on average (that’s the US, Canada, Europe, and Japan primarily) and emerging markets on average are adversely affected by this oil and natural gas (and fertilizer etc) price shock. However you measure it, the biggest economies in the world are mostly oil and other fossil fuel importers.

The outlier is really the United States. While there are significant distributional effects within the US, including through the price increases for gasoline and diesel (respectively up $1 and $2 per gallon, according to the Energy Information Agency), at the level of overall GDP, the US is not slowing down much (if at all) from the oil price shock, according to the IMF. The big reason for this is quite simple. Since 2019, the US has been an “annual net energy exporter” (see this Energy Information Agency explainer).

Gary and I discussed the likely global effects of the US-Iran conflict in our podcast episode that aired on March 16, 2026. We didn’t commit to specific numbers at that time, but our overall assessment was very much in line with what the IMF is saying now — including the likely impact on farmers (diesel and fertilizer costs), on consumers (transportation, as well as gas for cooking and heating), and consequently on food insecurity and nutrition around the world.

(This post was drafted and edited by Simon Johnson)

Although sometimes debates about AI are presented in technical terms with a lot of jargon, we think the underlying questions are actually quite straightforward – although not easy to answer with a high degree of certainty. A new technology is arriving with potentially profound implications. Surely it will reshape some parts of how we organize the economy and our lives. But how quickly will we see these effects? Who wins and who loses, in terms of jobs? If productivity does increase, will the benefits be widely shared?

And if we can get a handle on any of these issues, what are the implications for policy?

Some readings for your consideration are below. Some of these we refer directly in our podcast, while others are items that you will find interesting if you would like to dig deeper. That’s a primary goal of this podcast – to encourage everyone to read more for themselves, to assess competing views, and then to update those views as new facts become available.

The recent AI Policy announcement from the White House: President Donald J. Trump Unveils National AI Legislative Framework, March 20, 2026. And here’s the Framework. As expressed in our opening, Gary is more skeptical of this proposal; Simon thinks it might actually have some value.

Gary has written extensively on AI-related issues. Here are two recent items.

Trump, Trade, and AI Growth, CEPR Vox Podcast, Gary interviewed by Tim Phillips) January 2026.

Artificial Intelligence Development and Policy Landscape, a paper by Gary as included in our co-edited ‘The Economic Consequences of the Second Trump Administration’ is availably on SSRN, December 2025.

And here is some material from Gary’s time at the U.S. Securities and Exchange Commission.

Office Hours with Gary Gensler – Short (3 -4 minutes each) videos: AI, Investors, Issuers, & the Markets; Systemic Risk in Artificial Intelligence; Fraud and Deception in Artificial Intelligence; Conflicts of Interest in Artificial Intelligence; AI Washing, February – October 2024

AI, Finance, Movies, and the Law, Yale Law School Remarks, February 13, 2024.

Isaac Newton to AI, Gensler, National Press Club Remarks, July 17, 2023.

And here is what has become a widely cited paper by Gary, anticipating (in 2020!) how the development of AI could affect financial stability.

Deep Learning and Financial Stability, Gary Gensler and Lily Bailey, November 2020.

As mentioned on the podcast, Simon is co-director of the MIT Stone Center on Inequality and Shaping the Future of Work, with Daron Acemoglu and David Autor. Here are a few recent work products of relevance.

Building Pro-Worker AI, by Daron, David, and Simon, February 2026. Can we change the path of technology development and deployment, to create more good jobs?

Expertise, by David and Neil Thompson, June 2025. How should we think about what happens to the tasks that we all do within our jobs, as AI arrives?

Learning from Ricardo and Thompson: Machinery and Labor in the Early Industrial Revolution and in the Age of AI, by Daron and Simon, August 2024. See this paper for more detail on what happened in the British cotton industry during the early decades of industrialization.

Simon and Daron’s 2023 book, Power and Progress; puts the age of AI – promise and peril – in the context of historical innovations, including many of the examples that we talk about in the podcast.

As promised in the podcast, here is a link to the fascinating work of Erik Brynjolfsson, Director of the Stanford Digital Economy Lab.

And here is a link to the very important work of Rumman Chowdhury.

To address these questions, we unpack what exactly private credit is (and is not), and from where it came. As usual, a bit of history (along with 1940s fictional character George Bailey) helps set in context the current situation. We start by pondering the run on Bailey Bros. Building and Loan in ‘It’s a Wonderful Life’. Jimmy Stewart (playing George Bailey) saves the day explaining to the panicked crowd, “The money’s not here. Your money’s in Joe’s house... and a hundred others.”

Over the past week, the pressure on some private credit funds has intensified – raising further questions about whether investors understood what they were getting into. Remarkably, this same week, the Department of Labor is now proposing to let a broad set of everyday people put their retirement money into these funds through their 401(k) accounts. Listen to our discussion and make up your own mind on whether or not this is likely to end well.

Gary also was interviewed about private credit on two recent shows: ‘CNBC Morning Call with Morgan Brennan’ and ‘Bloomberg Talks with Tom Keene and Paul Sweeney’. Both can be watched on our website’s In the News page.

Some additional reading follows, with a view to letting you dig into all sides of the debate.

“Retail Investors Will Be Ripped Off in Private Markets with SEC Approval,” Benjamin Schiffrin, Better Markets, February 26, 2026. Better Markets is a leading voice for investor protection, with many other laudable goals for the financial system. You should follow what Better Markets has to say about the 401(k) proposal. (Simon is co-chair of their academic advisory board.)

“Private Credit: Fact vs. Fiction”, a presentation by Apollo Global Management, December 2025. Industry heavyweights make the case for themselves.

“Essentials of Private Credit,” Blackstone. Another industry heavyweight.

“Clash of the Titans: The new Giants of Wall Street are Breaking Down Boundaries,” The Economist/Special Report, May 2025. Useful background, but a lot has happened in the past year.

“Why Private Credit is Creating Major Concerns Among Economists,” PBS NewsHour, December 11, 2025. Paul Solman is one of the best business explainers in the business.

And for those of you who enjoy history as much as Gary and I do, here are links relevant for some of the items we discuss:

“It’s a Wonderful Life”. The classic movie! Just remember that we now have the Federal Deposit Insurance Corporation (FDIC). But not for Private Credit…

“Barbarians at the Gate”. The classic book! A lot has happened since 1989.

“Renegades of Junk: The Rise and Fall of the Drexel Empire,” Bloomberg, April 1, 2015. A fascinating oral history – the protagonists speak for themselves.

This episode was recorded on March 26, 2026. This post was drafted by Simon Johnson.

The latest episode (#6: Private Credit Under Pressure) of Power and Consequences is now available on Apple Podcasts, Spotify, or wherever you prefer to get your podcasts. For links to all our podcasts and related written content, please visit (and, even better, subscribe to):

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John Lothian, founder of MarketsWiki, continues his interview with Gensler & Johnson about how political pressure, AI, and prediction markets are testing the resilience of US institutions and market integrity.

Read John Lothian’s full story here: ‘Gensler Warns of Threats to Regulator Independence as Prediction Market Risks Grow’

John Lothian, founder of MarketsWiki, interviews Gensler & Johnson about how ‘Power and Consequences’ Takes MIT Policy Debates to Podcast Listeners.

Read John Lothian’s full story here: Power & Consequences: Gensler and Nobel Laureate Johnson Take MIT Policy Debates to Podcast Listeners’

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We talk about the relevant history, stretching back to Pope Gregory XIV in 1591, running through pivotal Congressional decisions in the 1930s, and dealing in some depth with what was – or was not – included in the Dodd-Frank Act of 2010. Gary was in the room for many discussions about that law, which remains highly relevant for markets today. He shares reflections that may interest you - particularly if you care about market integrity or who oversees sports betting. You also can hear what he had to say on these topics in two recent interviews (The Hill Sunday, and BBC Business Today).

The big question is this. When people bet, in prediction markets or elsewhere - on geopolitical outcomes, elections, or sports - how does that affect the “integrity of the underlying” events? Is it possible to protect the integrity of the underlying sports, political or geopolitical events? Might well-regulated prediction markets help promote fair and transparent underlying event markets (or actions)? Or is there evidence of systematic tampering and manipulation?

In terms of additional reading, you could start with Gary’s speech, “U.S. Capital Markets and the Public Good”, April 2, 2024, when he was chair of the Securities and Exchange Commission, which includes this line, “The U.S. capital markets are a national asset. Trust in the markets is a public good. Capital market efficiency, competition, and liquidity are public goods.” The same principles apply to commodity and derivatives markets of all kinds.

For a hard hitting analysis of what prediction markets are and are not, you can consult this report by Better Markets. See also ‘“Prediction Markets,” Gambling, The CFTC & Regulation: Facts, Fiction & The Law’, by Better Markets, March 10, 2026. (Simon co-chairs a group of research advisors at Better Markets).

If you would like more history, try the following items.

“The Prediction Markets Opportunity Part 1: From Experiments to Exchanges”, by Pietro Decio, Neel Baronia, and Damian Stellings, Tower Research, March 10, 2026. There are a lot of interesting facts in their timeline.

“A LaSallian Street Disputation”, John Lothian, John Lothian News, January 2026. John is a legend in the business of commodity markets. John recently interviewed Gary and Simon; this recording should be available soon.

“Historical Political Futures Markets: An International Perspective”, Paul W. Rhode and Koleman Strumpf, NBER Working Paper 14377, October 2008.

If you would like more on Presidential Betting Markets, a particularly fascinating topic, see:

“The Rise and Fall of Presidential Betting Markets: A Century of American Political Wagering”, John Lothian, John Lothian News, October 2025

“Historical Presidential Betting Markets”, Paul W. Rhode and Koleman S. Strumpf, Journal of Economic Perspectives, Spring 2004

This episode was recorded on March 19, 2026. This post was drafted by Simon Johnson.

The latest episode (#5) of Power and Consequences is now available on Apple Podcasts, Spotify or wherever you prefer to get your podcasts. For links to all our podcasts and related written content, please subscribe to PowerandConsequences.com using the link below. (All content is free of charge!)

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Former SEC Chair and CFTC Chair Gary Gensler discusses prediction markets and legislative efforts to better guard against insider trading & promote market integrity.

Listen in and learn more as Gary & Simon discuss Prediction Markets in Episode Five - Being released Monday of this week.

Former SEC Chair and CFTC Chair Gary Gensler discusses prediction markets, current enforcement tools put in place after the financial crisis and possible further measures to better promote market integrity.

Wish to learn more? Listen to Gary & Simon discuss Prediction Markets in Episode Five released early next week.

Former SEC Chair Gary Gensler discusses private credit markets, stable coins, and the impact of the Iran war on the U.S. and global markets.

CNBC ‘Morning Call’ with Morgan Brennan 5:07

For historical and constitutional background, we strongly recommend that you start with, “Greenland” by Bo Lidegaard, Mira Kleist and Nick Bæk Heilman, which appears as Chapter 37 in The Economic Consequences of the Second Trump Administration, second edition, published in December 2025 by CEPR. Gary and I edited that volume, along with Beatrice Weder di Mauro and Ugo Panizza. You can download the entire book as a pdf (it’s free).

Trump & Greenland: Is There Logic in the Chaos? By Andreas Østhagen, The Arctic Institute, January 8, 2026. A careful review of strategic and economic considerations by a leading Norwegian expert.

Greenland, Rare Earths, and Arctic Security. By Meredith Schwartz and Gracelin Baskaran, Center for Strategic and International Studies, January 8, 2026. Taking strategic considerations seriously.

Greenland’s Critical Minerals Require Patient Statecraft By Reed Blakemore and Alexis Harmon, Atlantic Council, January 13, 2026. Taking critical minerals seriously.

For all questions related to critical minerals, we ask Professor Elsa Olivetti at MIT. She and her group are currently preparing some materials that they can share more broadly – these will be posted shortly in a research section on the Minerals Stewardship Consortium website. We would like to thank Ilenia Romani (a post doc working with Elsa), who helped us enormously in our class discussion on Greenland.

Elsa also has an excellent chapter on “Critical Minerals: Diversifying Supply Chains to Drive Resilience and Innovation,” forthcoming in Priority Technologies, an MIT Press book, edited by Elisabeth B. Reynolds, which will appear in April. This book is the outcome of a seminar series at MIT, focused on the development of technologies that are essential to national security; also includes chapters on semiconductors, drones, biomanufacturing, quantum computing, and advanced manufacturing. I contributed the introduction to this book. (Liz Reynolds and I convene the seminar.)

A Brief Explanation of the Overton Window Joseph Lehman, Mackinac Center, 2017. Gary refers to the Overton Window during our discussion, as a shorthand for the range of what is considered reasonable or feasible policy.

The 1917 Treaty through which the US acquired what are now the U.S. Virgin Islands from Denmark. The relevant language is in the Declaration by Robert Lansing, dated August 4, 1916, on p.35, “the undersigned Secretary of State of the United States of America, duly authorized by his Government, has the honor to declare that the Government of the United States of America will not object to the Danish Government extending their political and economic interests to the whole of Greenland.” (Emphasis added by me).

A Bonus Item: If, like me, you enjoy reading fiction that contains historical background relevant to current issues, I suggest Smilla’s Sense of Snow by Peter Høeg. This book is also highly recommended by my niece, Daisy Johnson, a brilliant British novelist (note that she refers to the book by its British title, Miss Smilla’s Feeling for Snow). In 2018 Daisy became “the youngest author ever to be shortlisted for the Booker Prize with her debut novel Everything Under”.

This episode of Power and Consequences was recorded on March 6th, 2026. This article (by Simon) was posted on March 23rd, 2026.

All versions of the podcast link back to this article, which provides suggestions for further reading — particularly to items that seem likely to remain relevant for a reasonable period of time.

This week, Gary Gensler and I (Simon Johnson) discuss economic consequences of the intensified US-Iran conflict, including impact on the price of oil (and natural gas), how this feeds through to gasoline and other energy prices, the potential impact on financial markets (including private credit), and what may come next for sanctions – including sanctions applied to the export of Russian oil.

It’s entirely unclear (to us at least) how long the Strait of Hormuz will remain closed to tankers from countries aligned with the United States. But this is already a big oil price shock – and comparisons with what happened in the 1970s are not out of place. But we also need to think about ways in which the economy – in the US and globally – has changed over the past 50 years.

Below are some readings to which we refer, as well as suggestions if you want to dig deeper into particular points.

International Energy Agency: best one-stop source for the global picture is its Oil Market Report, most recently published on 12 March 2026. World Oil Production by Region is on p.21. For calendar year 2025, average world oil production was 100.4 barrels per day; “total supply” (includes processing gains and global biofuels) was 106.1. Projected totals for 2026 are very similar, up slightly.

U.S. Energy Information Administration: best way to track key variables for the U.S, including: gasoline and diesel prices, retail series; US imports and exports of petroleum. There are many other EIA series worth your attention as events develop.

As Gary mentioned, the potential impact on fertilizer is likely to be significant. See: American Farm Bureau, Middle East Tensions Raise Spring Planting Concerns, March 9, 2026.

The DROP Act (Decreasing Russian Oil Profits Act) of 2026, which has bipartisan support: Senate version; House version, good news coverage. Simon recommends following this legislation as the sanctions debate (for Russia and Iran) intensifies.

Gary mentioned a 1966 speech “The Arrogance of Power,” delivered on May 5, 1966 by Senator J. William Fulbright, Chair of the Senate Foreign Relations Committee, 1959-1975. Here are some relevant (and very interesting!) links. Biography of Senator Fulbright, from the University of Arkansas. On the speech itself, you can look at: original documents, or a complete printed version as reported by U.S. News and World Report, as released from the archives of the CIA (!), which includes a rebuttal by President Johnson and Secretary of State Rusk. Or you can download the book, which appeared very soon after the speech. (The link is to a version marked up by Hannah Arendt.)

Gary also recommends Philip Gordon’s book, Losing the Long Game: The False Promise of Regime Change in the Middle East, published October 2020. Or see this essay that appeared in Foreign Affairs, October 7, 2020: “The False Promise of Regime Change: Why Washington Keeps Failing in the Middle East.” From 2013-15, Gordon was Special Assistant to the President and White House Coordinator for the Middle East, North Africa, and the Gulf Region.

This episode was recorded in the morning of Friday, March 13, when the price of oil (Brent benchmark) was just over $100/barrel. The price of oil closed on Friday at just over $103. At the time of publishing this note (Monday, March, the Brent benchmark is hovering around $101-102.

Bloomberg Talks: Former SEC Chair Gary Gensler 20:44

Former SEC Chair Gary Gensler discusses private credits role in US capital markets. He is joined by Bloomberg’s Tom Keene and Paul Sweeney on Bloomberg Intelligence.

Mar 19, 2026