Top Traders Unplugged

GM89: When Credibility Becomes the Risk Premium ft. Maurice Obstfeld

15 snips
Oct 15, 2025
Guest
Maurice Obstfeld
Maurice Obstfeld, a Senior Fellow at the Peterson Institute and former Chief Economist at the IMF, shares his insights on the evolving global monetary landscape. He highlights how political pressures and tariffs are eroding trust in the dollar, examining the risks of payment system fragmentation. Obstfeld warns that U.S. policy changes could undermine the dollar's credibility while discussing the potential consequences of domestic industrial policies. He also explores AI's role in addressing fiscal challenges, striking a hopeful yet cautious note.
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INSIGHT

IMF's Role Shifted With Floating Rates

  • The IMF evolved from fixed-exchange focus to crisis prevention and support for emerging markets under floating rates.
  • It remains vital as capital markets deepen and sudden reversals can create acute financing needs.
INSIGHT

Tariffs Are Paid Domestically

  • Broad tariffs mainly raise revenue and hit U.S. importers and consumers, not foreigners who sell to the U.S.
  • These tariffs likely compress importer margins or lead to future price increases and business exits.
INSIGHT

Credibility Is The Dollar's Core

  • Dollar dominance rests on U.S. predictability, institutions, and willingness to internalize global spillovers.
  • Erosion of institutions, coercive tariffs, and politicized policy risk fragmenting the dollar's global role.
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