Why the Price of Money Surged in the Last 6 Years

In this episode of the Odd Lots podcast, hosts Tracy Alloway and Joe Weisenthal interview Tom Orlik and Jamie Rush from Bloomberg Economics about the neutral rate of interest (r-star). They discuss the concept of r-star, its historical context, and the factors influencing its current and future trajectory. The conversation covers how the Bloomberg Economics model differs from others, the drivers behind changes in the neutral rate, and the potential impact of factors like government spending, AI, deglobalization, and demographics. The guests also address the implications of a rising neutral rate on asset prices and central bank policies, including the challenges to central bank independence and the credibility of inflation targets. The episode concludes with a discussion of the "5 Ds" (demographics, debt, deglobalization, datacenters, and defense spending) as key factors pushing up the price of money.