The Spillover

This week on The Spillover, hosts Sebastian Mallaby and Rebecca Patterson unpack what they got right—and wrong—in their forecasts over the course of the year so far, covering the “Fragile Four” economies, OpenAI’s funding crisis, the AI IPO race, the Iran war, and more. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

This week on The Spillover, hosts Sebastian Mallaby and Rebecca Patterson sit down with author and historian Anne Applebaum to discuss Europe, the ongoing war in Ukraine, and the escalating geopolitical headwinds the region faces. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Guest: Anne Applebaum, Pulitzer Prize–winning author; staff writer, The Atlantic; Senior Fellow, Johns Hopkins University Mentioned on the Episode: Anne Applebaum, “MAGA Is Making the World Safe for Corruption,” The Atlantic Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

Cohosts Rebecca Patterson and Sebastian Mallaby stage a friendly debate over two so-called dollar alternatives—gold and bitcoin—weighing whether either has truly earned its reputation as a store of value. Patterson defends gold’s centuries of institutional credibility and diversification track record, while Mallaby makes the bull case for bitcoin’s finite supply and upside potential. Hosts: Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Mentioned on the Episode: SPDR Gold Shares (GLD): The largest and most highly traded physical gold ETF, holding bullion in secure London vaults. It carries an expense ratio of 0.40 percent. This is just for information; it is not a trading recommendation. Rebecca Patterson, “Gold as an Equity Hedge Requires Patience,” Financial Times “CLARITY Act Countdown: Crypto Bill Misses July 4 Target, August 7 Deadline Looms,” Yahoo Finance “Central Bank Gold Reserves Survey 2026,” World Gold Council Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

In this episode of The Spillover, host Rebecca Patterson and former Federal Reserve Vice Chair Roger W. Ferguson Jr. reflect on the legacy of recently deceased former Fed Chair Alan Greenspan, and examine what may lie ahead for the Fed under its new chair Kevin Warsh. Hosts: Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Guest: Roger W. Ferguson Jr., Steven A. Tananbaum Distinguished Fellow for International Economics, Council on Foreign Relations (CFR); Former Federal Reserve Vice Chairman (1999–2006) Description: On this episode of The Spillover, cohost Rebecca Patterson speaks with CFR Distinguished Fellow for International Economics Roger Ferguson about Kevin Warsh's first FOMC meeting as Chair of the Federal Reserve, which played out largely as predicted. To bring in fresh perspectives, Warsh has created five task forces. They cover communication, the inflation mandate, productivity and jobs, data collection, and a balance sheet framework. Well-led task forces have historically moved the Fed forward, but progress will likely be uneven and slower than hoped. As Roger Ferguson notes, “This is the kind of thing where you want to measure twice, cut once. Once you make the change, you're gonna have to live with it for a period of time.” Current conditions point to a rate hike rather than an ease. Core inflation appears stuck above three percent, energy-driven price pressures from the Iran war remain unresolved, while labor market and financial conditions are resilient. The Fed works with blunt tools and within limited frameworks. Its single national interest rate cannot target individual sectors like housing or specific prices, and its goal remains controlling inflation rather than propping up housing, or equity prices. The Fed also never established a clear framework for when and how to use its balance sheet as a monetary or financial-stability tool, or how quickly to unwind quantitative easing. AI is currently acting as an inflationary force, not a disinflationary one. It is driving a surge in capital expenditures that should push market rates somewhat higher to balance increased demand for capital. Patterson and Ferguson discuss the life of Alan Greenspan—including his daily engagement with the U.S. economy for over fifty years, his habit of tracking unconventional indicators like railroad car loadings, and the fact that he was more often right than wrong on major issues. As Ferguson notes, Greenspan was part of a group of economic policymakers in the second half of the 20th century that helped the U.S. economy grow globally, overcoming the Soviet Union. Mentioned on the Episode: Sebastian Mallaby, “Alan Greenspan Understood Power and Was Not Afraid to Wield It,” The Washington Post “Federal Reserve Issues FOMC Statement,” Board of Governors of the Federal Reserve Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

The scale of the SpaceX IPO is dominating financial headlines, but the more important story might be what the sale reveals about the structure of modern capital markets, corporate governance, and the blurry line between public and private investing. This episode unpacks what the numbers actually show, why much of the popular narrative is overblown, and what investors should actually be paying attention to. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) We discuss: How the SpaceX IPO could raise around $75 billion, making it the largest IPO in history, and value the company at $1.77 trillion. How subsequent IPOs by Anthropic and OpenAI could bring a wave of funding valued at close to $200 billion in total. Why the equity supply panic is overblown. SpaceX's alarming governance structure, under which Musk serves as CEO, CTO, and chairman simultaneously, holding a supermajority of votes despite a minority equity stake. How growth equity, unlike traditional private equity, offers zero oversight, often granting founders supervoting shares and investor loyalty pledges that amount to anti-governance rather than governance. How SpaceX's initial index weight will be tiny, since only a small fraction of the company will actually be publicly floated. How the S&P's profitability requirement is a deliberate lesson from the dot-com bust. Why SpaceX's revenue projections sound dazzling but tell only half the story, given that estimated capital expenditure could far outpace revenue through the end of the decade. Mentioned on the Episode: “IPOs: Number and Proceeds,” U.S. Securities and Exchange Commission Jason Dean, “U.S. Officials Said to Discuss Taking Stakes in AI Companies,” The Information Natalia Emanuel, Emma Harrington, and Amanda Pallais, “Remote Work Leaves Younger Workers Sidelined,” Federal Reserve Bank of New York Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

As governments around the world ramp up defense spending, a new era of rearmament is reshaping economies, markets, inflation, and politics. This episode examines Japan’s dramatic shift away from its postwar pacifist identity amid rising tensions with China, ongoing conflicts in the Middle East, and growing uncertainty around the global security role of the U.S. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) We discuss: Why the rearmament boom is globally synchronized and big enough to move fiscal balances and bond markets. How defense spending is colliding with already massive government debt, and pushing bond yields higher. Why Japan’s military transformation marks a significant reversal of its postwar identity. Why Japan’s debate over nuclear weapons remains emotionally raw more than eighty years after Nagasaki. How fear of China and doubts about the U.S. security umbrella are reshaping politics in Japan and Germany. How governments are trying to fund massive military buildups without cutting popular programs, and why bond markets may eventually force a reckoning. How rising military spending could fuel another wave of inflation, higher interest rates, and global market volatility, trapping central banks between fighting inflation and financing governments at war. As Rebecca Patterson puts it: “All this is happening when governments, frankly, can't afford more guns or butter because debt levels are very high.” How AI, drones, and cyberwarfare are rapidly changing the economics and strategy of modern conflict. How the new arms race is spilling far beyond the battlefield into tech, energy, supply chains, and the future of globalization. Mentioned on the Episode: David Kelly, “Five Scenarios for the Federal Debt,” J.P. Morgan Asset Management “Fiscal Policy under Pressure: High Debt, Rising Risks,” International Monetary Fund (IMF) “Global Supply Chain Pressure Index (GSCPI),” Federal Reserve Bank of New York “Majority of Japanese Support Constitutional Revision: Poll,” UPI “Rebuilding Our Military,” The White House “The True Cost of Peace: Rebalancing World Military Spending For a Sustainable and Peaceful Future,” United Nations “World Economic Outlook: Defense Spending,” International Monetary Fund (IMF) Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

President Donald Trump is set to meet with Xi Jinping in Beijing for a high-stakes summit shaped by Iran war tensions, trade disputes, critical mineral flows, semiconductor controls, and an intensifying AI race. This episode breaks down the growing U.S.-China rivalry, the risks facing global markets and supply chains, and whether the world is entering a new era of economic fragmentation and technological competition. Hosts: Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) We discuss: How President Trump’s high-stakes summit with Chinese President Xi Jinping comes at a moment of intense rivalry over AI, trade, semiconductors, and Taiwan. How the United States and China are locked into “mutually assured disruption” when it comes to trade, with China controlling critical rare-earth minerals and the U.S. restricting advanced AI chip exports. As Rebecca Patterson puts it: “If there’s not a happy hug between Trump and Xi on rare-earth minerals and chips, that might be problematic.” Whether Chinese AI firms like DeepSeek are catching up to American companies such as OpenAI and Anthropic despite U.S. semiconductor restrictions. The growing debate over AI safety and whether Washington and Beijing can cooperate on preventing dangerous applications of artificial intelligence while still competing for dominance. Why Taiwan remains the single biggest geopolitical risk hanging over global markets, semiconductor supply chains, and the future of the AI economy. How fears of a Taiwan crisis could ripple through global stock markets, especially tech and semiconductor companies tied to firms like TSMC, Nvidia, Intel, and Samsung. Why tariffs and supply chain disruptions continue to reshape global trade, with companies and governments from Europe to Southeast Asia forced to navigate a more fragmented global economy. Mentioned on the Episode: “At the Trump-Xi Summit, China Will Have the Upper Hand,” CFR.org Chris McGuire, “How Trump Should Approach AI Talks With China: Targeted Dialogue, Maximum Pressure,” CFR.org “Global Supply Chain Pressure Index (GSCPI),” Federal Reserve Bank of New York Ryan Mancini, “Trump’s Approval on Economy Hits New Low; 7 in 10 Expect Recession Next Year: Poll,” The Hill Xinyi Wu, “China, Indonesia Launch Cross-Border QR Payments – A Boost for the Global Yuan?,” South China Morning Post Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.