Economics Matters with Laurence Kotlikoff

The price of oil on your TV screen and the price refiners are actually paying are two very different numbers. So which one should you be watching?Michael Eisenberg has spent 23 years as an investor and manager in oil and gas partnerships, with active operations in Illinois and Oklahoma. He brings a financial analyst’s eye to one of the most opaque and consequential commodity markets in the world. In this conversation with Larry Kotlikoff, he walks through the mechanics of the two-price oil system, explains what global inventory data is actually showing, and lays out why a market at $96 a barrel may be badly mispricing the risks still ahead.The conversation covers the Strait of Hormuz stalemate, the draw-down of strategic petroleum reserves around the world, Russia’s diesel export ban, and what happens when the consensus that “oil is plentiful” finally collides with the data that says otherwise.What You’ll Learn In This Episode:[00:05:10] The two-price system: why the futures price and the physical spot price have diverged significantly since the war began[00:10:07] What global oil inventory charts are showing, and why the numbers are worse than headlines suggest[00:19:54] How the pre-war consensus of a 2 to 4 million barrel surplus shaped market perception, and why that consensus persists[00:24:21] Strategic Petroleum Reserve releases: how much has been drawn down, and what risks remain[00:34:00] Why 1.5 billion barrels of oil from the Middle East have been “delayed,” not destroyed, and what that means for future supply[00:41:10] Iran, the Houthis, and why the oil market is not pricing in a prolonged conflict scenario[00:53:10] The long game: why a sustained blockade on Iran may be the most viable strategic option availableFeatured Guest:Michael Eisenberg is a self-described “self-taught oil man” with a financial background spanning Arthur Andersen, Wharton, and more than two decades managing oil and gas partnerships. He holds a BS in accounting from Brooklyn College and an MBA from Wharton, and has been an active investor and operating manager in producing oil fields in Illinois and Oklahoma since 2003. He lives in Israel and brings both a market analyst’s perspective and a frontline view of the geopolitical landscape.Resources Mentioned:EIA Weekly Petroleum Supply ReportArt Berman: Energy Analyst and Oil Market CommentatorDisclaimer: Any opinions expressed on Economics Matters are those of the authors and guests. These are not the opinions of Boston University or Economic Security Planning, Inc.

Is the AI boom the greatest wealth creation event in history, or the most expensive overbuild since the railroad era?Paul Kedrosky has spent his career finding what others miss. As a partner at SK Ventures, a fellow at MIT’s Initiative on the Digital Economy and the Oxford Mann Institute, and a longtime advisor to the world’s largest fund managers, he thinks in systems, distributions, and tails. And right now, he sees a bubble.In this conversation with Professor Kotlikoff, Kedrosky walks through the math of AI’s required returns, explains why DeepSeek’s near-free pricing makes the whole model collapse, and describes an incestuous financing loop that makes Nvidia something closer to a central bank than a chip company. He also explains why the fallout this time may land hardest not on banks or institutions, but on individual workers and their healthcare.What You’ll Learn In This Episode:[00:09:22] Why Kedrosky is predicting a crash in AI-related stocks, and what railroad history tells us about why[00:17:11] The $10 trillion CapEx number and what $4 to $6 trillion in annual revenue it would require to justify it[00:21:31] Token deflation: why AI’s core product is structurally deflationary, and what that means for revenue[00:34:45] DeepSeek: 98 to 99% cheaper than US frontier models, with comparable results[00:47:53] How Nvidia became the central bank of AI, and what happens when that flywheel stops[00:50:22] Why this crash could be worse than 2008, and why the people who need bailing out will be workers, not banks[00:52:31] The US anomaly: why Americans are uniquely gloomy about AI, and the healthcare connection[00:58:32] “Robots Are Us”: Larry’s paper on immiserating growth and what the data already showsFeatured Guest:Paul Kedrosky is an investor, writer, and researcher focused on technology, financial markets, and economic change. He is a partner at SK Ventures, a fellow at MIT’s Initiative on the Digital Economy and the Oxford Mann Institute, and a former executive director of the Von Liebig Center at UC San Diego’s Jacobs School of Engineering. He has written for the Wall Street Journal, Bloomberg, and The New York Times, and has been featured on the BBC, the Financial Times, and the Ezra Klein Show. He holds a PhD in IT from the University of Western Ontario.Resources Mentioned:Irregular Ideas with Paul Kedrosky at SK VenturesPaul Kedrosky on Substack“Robots Are Us: Some Economics of Human Replacement” (NBER Working Paper)Disclaimer: Any opinions expressed on Economics Matters are those of the authors and guests. These are not the opinions of Boston University or Economic Security Planning, Inc.

Is America’s financial system heading for another crisis, and do our institutions have the will to stop it?Joe Nocera has spent five decades at the center of American business journalism: Fortune, The New York Times, and now The Free Press, where he serves as deputy managing editor. He has covered every major financial failure of our time, and in this conversation with Professor Kotlikoff, he connects the dots from the 2008 crash to today’s private equity and private credit buildup, and asks whether we are watching a slow-motion replay.They also dig into the state of American democracy, the dollar’s standing in the world, the Iran conflict, anti-Semitism on campuses, and whether there is any path back to the norms that held this country together.What You’ll Learn[00:08:29] Joe’s view of Trump, tariffs, and the irreparable damage to America’s global standing[00:11:27] What The Free Press actually is: centrist, open-minded, and neither MAGA nor progressive[00:36:05] The books: A Piece of the Action, All the Devils Are Here, and The Big Fail[00:41:42] Why private equity has been a real problem for the American economy, and the simple fix[00:46:00] Financialization: how Wall Street became more important than the real economy[00:22:42] Mark Cuban’s Cost Plus Drugs and why he might be a serious presidential candidateFeatured GuestJoe Nocera is an American journalist and author with five decades of experience covering business, institutions, and corporate power. He has written for Fortune, The New York Times, Bloomberg Opinion, and The Free Press, where he serves as deputy managing editor. He is a three-time Gerald Loeb Award winner, a Pulitzer Prize finalist, and the author of multiple landmark books on American finance.Resources MentionedJoe Nocera at The Free PressA Piece of the ActionAll the Devils Are HereThe Big FailCost Plus DrugsDisclaimer: Any opinions expressed on Economics Matters are those of the authors and guests. These are not the opinions of Boston University or Economic Security Planning, Inc.

What if the biggest investment opportunity in the world is hiding in plain sight, and the reason no one is taking it is fear of the unknown?Theo Kocken spent two decades building Cardano into one of Europe’s most respected pension risk management firms. Then he walked away to fix something bigger: the broken financial infrastructure keeping billions of people in low-income countries from accessing the capital they need to grow.In this conversation, Professor Kotlikoff and Theo explore currency risk in developing markets, the mechanics of risk-sharing that could unlock trillions in private investment, and what a Monty Python filmmaker has to do with explaining the next financial crisis.What You’ll Learn In This Episode:[00:07:00] How Cardano was founded and why Theo left to focus on development finance[00:08:00] The Currency Exchange Fund (TCX): how it protects companies from devastating loan shocks in Africa and Asia[00:23:00] The real state of African development: why the GDP numbers don’t tell the whole story[00:29:00] ILX Fund: mobilizing pension capital alongside development banks for high-impact projects[00:37:00] Boom Bust Boom: the Monty Python-produced documentary on the human origins of financial crisis[00:43:00] Private credit and insurance risk: why today’s financial system may be setting up the next crisisFeatured Guest:Theo Kocken is a professor of risk management at VU University Amsterdam and extraordinary professor at NWU University in South Africa. He is founder of Cardano, a leading pension risk management firm, and co-founder of Cardano Development, a not-for-profit focused on financial inclusion in low- and medium-income countries. He is also a founding force behind TCX (The Currency Exchange Fund) and ILX, and the producer of economic documentaries including Boom Bust Boom (2015) with Terry Jones of Monty Python.Resources Mentioned:TCX: The Currency Exchange FundILX Fund: AfDB PartnershipBoom Bust Boom Documentary (2015)Cardano DevelopmentDisclaimer: Any opinions expressed on Economics Matters are those of the authors and guests. These are not the opinions of Boston University or Economic Security Planning, Inc.

What does it mean when one of the country's leading labor economists, a former Obama White House advisor who served as chief economist at the Department of Labor, tells you that Washington's bet on AI saving Social Security is built on a foundation of wishful thinking, and that the real numbers have been pointing toward crisis since 2017?Betsey Stevenson studied physics at Wellesley, switched to economics because the marginal costs were lower, earned her PhD from Harvard, passed up a Michigan faculty offer to work in the private sector, wrote a brand-new job market paper from private sector data to re-enter academia, and eventually landed at the Gerald Ford School of Public Policy at the University of Michigan — where she now teaches, researches, and co-authors a leading economics textbook with her partner Justin Wolfers.In this episode, Professor Kotlikoff sits down with Stevenson for a conversation covering the divorce law economics that launched her career, what Title IX actually proved about sports and upward mobility, how two economists navigate a two-career relationship, and a frank assessment of where the US economy is heading under the weight of deficits, AI hype, and a capital income tax structure that may be quietly turning America into a servant economy.What You'll Learn:[00:10:39] Why Betsey passed up academia after Harvard and what working at Forrester Research taught her about big data before big data had a name[00:11:00] The dissertation that launched her career: how unilateral divorce laws changed women's bargaining power inside marriage without changing the divorce rate at all[00:17:00] The surprising finding: no-fault divorce dramatically reduced spousal violence but also reduced spouses putting each other through school[00:22:16] The Title IX paper: how giving girls access to sports improved graduation rates, college attendance, and adult earnings using a natural experiment almost nobody had thought to use[00:36:00] How Betsey knew the Social Security formula at 16 and why she called it a pure tax on her teenage paycheck[00:40:31] Why the fiscal gap has been unsustainable since Trump's 2017 tax cuts, and how COVID made it dramatically worse[00:42:33] Why cutting short-term interest rates when inflation is above target pushes long-term rates up: the mechanism Washington keeps ignoring[00:46:13] Why AI productivity gains may flow entirely to capital rather than wages, and what that means for Social Security funding[00:47:29] The servant economy scenario: with foreigners owning most US investment, AI returns could look a lot like Jamaica's resort economy[01:04:33] Betsey's tax proposal: tax all income including unrealized capital gains, and why the Daniel Radcliffe vs. Johnny Depp analogy explains exactly why she opposes a wealth taxFeatured Guest:Betsey Stevenson is a Professor of Economics and Public Policy at the University of Michigan's Gerald R. Ford School. She earned her PhD from Harvard and served as Chief Economist of the US Department of Labor and as a Member of the President's Council of Economic Advisors under President Obama. She is a Research Associate at NBER and co-author, with Justin Wolfers, of Principles of Economics.Resources:Principles of Economics (3rd Ed.) by Stevenson and Wolfers: amazon.com"Bargaining in the Shadow of the Law" — the divorce and domestic violence paper, QJE 2006: nber.org"Beyond the Classroom" — the Title IX and sports earnings paper, ReStat 2010: nber.orgBetsey Stevenson's faculty page: fordschool.umich.edu/faculty/betsey-stevensonEconomics Matters Substack: larrykotlikoff.substack.comEconomics Matters: The Podcast is hosted by Larry Kotlikoff, Professor of Economics at Boston University.Disclaimer: Any opinions expressed on Economics Matters are those of the authors and guests. These are not the opinions of Boston University or Economic Security Planning, Inc.