Veronique de Rugy

Next week I will be in New York! If you are around, come see if you agree with me that billionaires already pay a large enough share of federal taxes.

CPI inflation annualized by Presidential term (2001-2026)

The latest episode of Qualified Opinions features @veroderugy in conversation with Jessica Melugin of @ceidotorg. aier.org/podcast/horses…

Congress passed a Covid bailout that gave billions to talent agents and celebrity touring companies. Lil Wayne used it to pay for his private jet. It turns out 70% of the programs' payments were improper. My latest @WSJopinion on the lessons of the SVOG wsj.com/opinion/the-co…

This was so much fun. If you are interested in listening to Jessica and I catching up after years of not seeing each other and having the best time doing it, this is the pod for you. Also we cover antitrust and questions like “who needs democrats when you have republicans like these” and so much more! Listen up!

In December, there was a panic-inducing report about Instacart. Surveillance pricing! Okay, minor detail: they found no evidence of that. Flash forward 5 months, and we have our first law out of Maryland. Lo and behold, the law is also confused about dynamic pricing, predatory pricing, price discrimination, really pricing overall. My latest in @PostOpinions about what happens when panic gets ahead of clear thinking

In which The New York Times describes a scheme to ignore a court ruling and draw an illegal map as a harmless “bank-shot proposal.”

Communists: “eat the rich” Capitalists: “how about we eat food”

Cato Institute’s Handbook on Affordability is featured on C-SPAN’s Washington Journal cato.org

"I don’t want politicians to be 'authentic.' I want them to be decent. I want them to be honest. I want them to be competent. And if they fail those tests, they don’t redeem themselves by opposing Donald Trump." nytimes.com/2026/05/10/opi…

"Sasse’s principled conservatism infuriated the Make America Great Again base... He took the view that personality cults are unconservative, a position which (proving his point) enraged the Nebraska GOP leadership." —@DanielJHannan washingtonexaminer.com/opinion/column…

The question isn’t whether Bill Gates earned his billionth dollar. The question is whether YOU have earned HIS billionth dollar. You haven’t, so you have no right to it, and that’s the end of it.

@stanveuger It has put you on a barricade fighting for liberalism against them. That’s a great success.

What are the greatest success stories of a decade of post-neoliberalism?

"In the first three months of this year, guests spent nearly $30 billion on Airbnb, but the company’s net income was only $160 million, according to earnings released Thursday. Not exactly rapacious." @PostOpinions washingtonpost.com/opinions/2026/…

Airline deregulation (and that other great Jimmy Carter legacy, legalizing interstate banking) is an excellent example of the Democratic Party’s best tradition of attacking entrenched and undeserved privilege in an intelligent win-win way with broad positive sum benefits.

Even Alexander Hamilton was a creedal American. Here he is on May 26, 1792, rejecting the tenets of Postliberalism.

How much is the dollar reserve status worth? Price theory helps to answer. Arvid Krishnamurthy, calculated it at Hoover using a simple supply and demand framework (which is not in the paper) based on a 2026 cool paper with Jiang, @HannoLustig , and Richmond (2026). They argue that without reserve status, the dollar depreciates 8.8%, US long rates rise 87 basis points, and the US loses a capitalized $33 trillion (approx the US GDP) of seigniorage. Here is how he got there, graph below. Foreigners hold about 45% of US GDP in safe dollar debt: Treasurys, agency bonds, bank liabilities. They pay roughly 2% per year for the privilege, in the form of accepting yields below what a synthetic dollar asset would deliver (they calculated that in a 2021 JF paper). That 2% is the convenience yield. It is what the world pays the United States for the use of dollar debt as money. That payment funds part of the US trade deficit --about 1% of GDP (45% × 2%). The US sells IOUs that pay below-market rates and gets goods in return. Now ask: what if foreigners stop wanting safe dollar debt? First, think of the bond market (Panel C). When foreigners leave, the change in yield is 90 basis points, not the full 2%. US households absorb the bonds the foreigners drop, and they take some of the convenience yield for themselves. How much? It depends on the slope of the residual demand curve. Second, think of the goods market, the left panel. X-axis is the trade deficit. Y-axis is the exchange rate. The trade-balance line slopes up: a stronger dollar makes imports cheap and exports dear, so a stronger dollar means a bigger deficit. Two vertical lines mark the two regimes. The one on the right is where deficit = seigniorage (1% of GDP), the reserve-currency steady state. The dashed one near zero is where the deficit must be if the seigniorage disappears. Two parameters are relevant. The horizontal shift is fixed by the convenience yield and foreign holdings. The vertical drop depends on the slope of the trade-balance line, the trade elasticity. Low end is η = 1/3, in which case the depreciation is 8.8%. The more inelastic trade, the more the dollar has to fall when the propping stops. Krishnamurthy called the 8.8% figure modest. The seigniorage is 1% of GDP. Closing it requires a trade-balance swing of 1% of GDP. With reasonable elasticities, that does not need an enormous exchange-rate move. The DXY (dollar index) did more than 8% during the 2014-15 oil shock without anyone questioning reserve status. A perpetual stream of 1% of GDP, capitalized at a low real discount rate, is a multiple of US GDP. The privilege has been worth $15 to $33 trillion depending on the discount rate. In sum the dollar question reduces to two questions: By how much does foreign demand for safe dollar debt fall? How elastic are the curves? Bond demand elasticity governs the rate rise. Trade elasticity governs the dollar fall. papers.ssrn.com/sol3/papers.cf…

@TaylorMillard Thank you!

Happy birthday to @veroderugy!

This looks awesome!