Editor’s Note: econVue fellow Saliya Weerakoon reflects on the human emotions that shape decision-making in business, diplomacy and markets. His essay arrives amid new reporting that Iran may be rebuilding suspected nuclear facilities and renewed tensions around the Strait of Hormuz.

Against that backdrop, this lyrical VuePoint calls to mind the 12th-century Persian poem “The Conference of the Birds”. Birds from around the world gather in search of a sovereign who can guide them. Their journey becomes an allegory of human fear, longing and self-knowledge — a fitting image for Weerakoon’s reflection on the invisible council of hope, fear and jealousy that accompanies decisions made under uncertainty.

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The Limits of Logic

Some of the most important decisions in my life have also been the most difficult to explain.

They involved my family, my business and, more recently, the essays I write. I searched for evidence, listened carefully to competing views and tried to construct rational explanations before arriving at a decision. I sometimes wonder whether those decisions were ever guided by logic alone. Experience seemed to whisper quietly. Intuition occasionally interrupted reason. Hope encouraged one direction, fear questioned another, and jealousy, although less welcome, sometimes revealed itself in unexpected places.

Explaining those decisions to others often proved more difficult than making them. Rational arguments helped me understand my own thinking, although they rarely produced complete agreement around a boardroom table. Over time, I found myself returning to a simple question: if individual lives are seldom guided by logic alone, why should nations be any different?

That question gradually changed the way I observed the world. Boardrooms looked different. Governments looked different. Financial markets looked different. International negotiations also appeared less mechanical than they first seemed. Institutions express themselves through policies, strategies and carefully prepared statements. Behind those institutions, however, sit people carrying memories, ambitions, disappointments, responsibilities and uncertainty.

The Invisible Council

Perhaps civilisation has always been accompanied by an invisible council. Hope, fear and jealousy never cast a vote, sign a treaty or issue a public statement. Even so, they seem to accompany many of the decisions that eventually shape history. They wait quietly beside those entrusted with difficult choices.

Diplomacy Under Pressure

The recent diplomatic exchanges between the United States and Iran encouraged me to think about that possibility once again. Only weeks ago, an interim understanding created cautious optimism. Markets steadied. Commercial shipping through the Strait of Hormuz appeared to move toward gradual normalisation. Governments, investors and businesses briefly allowed themselves to imagine that one of the world’s most dangerous confrontations might slowly move toward greater stability.

That confidence weakened quickly. Military exchanges resumed. Political accusations returned, even as diplomatic channels remained open. New reporting and satellite imagery also raised concerns that Iran may be rebuilding suspected nuclear facilities. The understanding appeared neither fully alive nor completely abandoned. Viewed only through diplomacy, those developments may appear contradictory. Viewed through the psychology of decision-making, they may simply remind us that agreements are negotiated by people before they become documents.

Hope may encourage leaders to begin negotiating because they understand the cost of permanent conflict. Fear may persuade the same leaders to hesitate when compromise appears politically dangerous. Jealousy may quietly influence questions of prestige, influence and strategic advantage. Perhaps all three remain present, even if they never appear in official communiqués.

The Silence Around the Table

During the past few weeks, I found myself listening carefully to friends across different parts of the world. A former J.P. Morgan investment banker remained cautious about predicting financial markets because experience had taught him how quickly certainty can disappear. A Vietnam War veteran viewed the Middle East through memories formed decades ago, reminding me that old conflicts rarely leave the minds of those who lived through them. A Singaporean pioneer in artificial intelligence examined the same events through the language of systems and accelerating technology. An Indian author kept returning to the human story behind the headlines. Their conclusions differed, though each reflected a lifetime of lived experience.

Most importantly, there were many who remained silent. Their silence seemed to speak a different language. Some no longer wished to choose sides. Others appeared tired of reacting to events that felt beyond their control. Silence, I began to realise, may also be a form of judgment.

Walking through ordinary streets offers another perspective altogether. Most people I meet are not thinking about Tehran or Washington. They are thinking about rising living costs, their children’s education, their livelihoods and whether tomorrow will be a little more secure than today. The younger people I meet often express one quiet hope. They believe adults, particularly those entrusted with power, require greater maturity.

Perhaps that observation deserves as much attention as the diplomatic statements.

What Algorithms Cannot Feel

Artificial intelligence has also become part of this changing landscape. Algorithms now interpret shipping movements, commodity prices, satellite imagery, political statements and financial sentiment within seconds. Markets increasingly respond to calculations that no human mind could perform alone. Unlike the people who designed them, algorithms carry neither hope, fear nor jealousy. They simply calculate.

That distinction invites reflection rather than certainty. Algorithms appear remarkably capable of interpreting information. Human beings remain considerably more difficult to interpret. A carefully chosen diplomatic sentence may reassure financial markets while provoking political rivals. The same military action may strengthen confidence in one capital while deepening anxiety in another. Human judgment continues to move through memory, emotion, intuition and experience in ways that rarely follow mathematical precision.

The world itself appears increasingly noisy. Artificial intelligence amplifies narratives before facts have fully settled. Markets interpret political language almost instantly. Public opinion often forms before governments complete their own assessments. Decision-makers are expected to project confidence while operating with incomplete information and carrying responsibilities whose consequences may extend far beyond anything they intended.

Watching the United States and Iran over recent weeks, I found myself thinking less about missiles and memoranda than about the people carrying those responsibilities. A political leader signs a treaty. A military commander authorises an operation. A central banker makes an announcement. A chief executive commits billions of dollars. An investor deploys capital accumulated over decades. Those decisions may appear institutional from the outside, although each is ultimately experienced by a human being navigating uncertainty.

The Human Question

Perhaps that is why I keep returning to the same question. Technology continues changing the instruments through which civilisation operates. Artificial intelligence may transform economies, diplomacy and warfare in ways we are only beginning to understand. Institutions will continue evolving. Markets will become faster. Information will travel almost instantly. The human condition, however, may continue evolving at its own pace.

I do not know whether hope, fear and jealousy explain the world. They do, however, seem to appear repeatedly whenever difficult decisions are made under conditions of uncertainty. Perhaps that invisible council has always been present. It may have sat quietly beside kings and queens, presidents and prime ministers, entrepreneurs and investors, parents and children. It may also be sitting beside us today, listening patiently before the next important decision is made.

That possibility, at least, may be worth reflecting upon.

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❝ A risk of epic proportions.
— Rosemary Gibson, author of China Rx, on US reliance on foreign upstream materials for medicines, quoted in Goldman Sachs’ 2026 Investment Strategy Report

While rare earths have been in the spotlight, another critical supply chain is also at risk in the current geopolitical environment: medicines.

Our panel will examine vulnerabilities in pharmaceutical quality and supply in the US, and the broader policy and economic forces that have left critical medicines and medical devices increasingly exposed to disruption — with potential consequences for almost every American family. The conversation will also examine the history and current role of foreign dependence and how meaningful reforms could improve long-term resilience.

Why this matters

• China’s role in the pharmaceutical supply chain is not limited to finished pills. According to Rosemary Gibson’s 2026 Senate testimony, China controls roughly 90% of the global supply of certain key starting materials — the chemical inputs used to make active pharmaceutical ingredients, or APIs. (APIs are the components of medicines that produce the intended therapeutic effect.)

• That vulnerability extends beyond generics to the broader medicine supply chain, including antibiotics, hospital drugs, injectables, and medical devices.

Panelists

Lyric Hughes Hale is editor-in-chief of econVue and founder of the Hale Strategic Resources Initiative, a nonprofit research organization. She will moderate the panel and off-the-record audience discussion. A replay of the panelists’ remarks will be available to registered participants.

Panelists and participants include industry experts:

David Johnson, economist and CEO of 4sight Health, a Chicago-based advisory company working at the intersection of healthcare strategy, economics, and innovation;

Marta E. Wosińska, PhD, Senior Fellow at the Center on Health Policy at the Brookings Institution and

Shannon Morfin, CEO and co-founder of LifeScienceX, focused on life-science, pharmaceutical, CDMO, and healthcare infrastructure, including capital formation and resilient manufacturing capacity.

👥 REGISTRATION

Date: Friday, July 10 | Time: 12–1 pm (CDT)

Please register in advance for this meeting:

Register

After registering, you will receive a confirmation email containing login information and suggested reading. This event is open to all subscribers.

About the Hale Strategic Resources Initiative:

Hale Strategic Resources Initiative

The official site of the Hale Strategic Resources Initiative, and the HSRI newsletter, supporting economic security and resiliency with a special focus on the American Midwest.

By Lyric Hughes Hale

Editor’s Note: One theme has emerged repeatedly in recent months. Whether writing about Hormuz, AI infrastructure, insurance, healthcare, or monetary systems, I kept returning to the same question: how much stress can a complex system absorb before it changes its character? A concept from astrophysics helped me see these seemingly unrelated stories in a new light.

As we celebrate the Fourth of July with fireworks, we look to the skies. Far beyond Earth, the universe produces spectacles of its own.

A dying star can appear perfectly stable for billions of years. But how much pressure can any system absorb before it stops evolving and adapting, and starts collapsing?

In astrophysics, the Chandrasekhar limit describes the maximum mass a stable white dwarf star can carry before gravity overwhelms it. Below that threshold, electron degeneracy pressure resists the crushing force of gravity. Above it, gravity prevails and can result in a supernova explosion, leaving behind a neutron star.

This issue of reVue is about thresholds: the point at which shocks stop being isolated and begin to move through entire systems: insurance, oil markets, AI infrastructure, central banks, healthcare, stablecoins, US-China relations, and even human agency: all appear in this issue not as separate subjects, but as parts of a larger question. Are the systems that made modern economic life possible still strong enough to carry the weight now being placed upon them?

Where are Today’s Hidden Thresholds?

All complex systems have limits, including economics and institutions. They can appear stable for long periods while accumulating hidden cracks: debt, risk, dependence, political pressure, institutional mistrust, infrastructure bottlenecks, technological complexity, or geopolitical strain. At a certain point, which often appears obvious in hindsight, something changes. The stabilizing force that once seemed sufficient is no longer strong enough.

The Chandrasekhar metaphor has limits. In astrophysics, once a white dwarf crosses the Chandrasekhar limit, collapse is inevitable. Human institutions are different. They can adapt, decentralize, recapitalize, regulate, insure, reroute, and rebuild. They do not evolve automatically or painlessly, but under stress. Policy matters because it can either relieve pressure before the threshold is crossed, or add weight to systems already near their limits.

At econVue, we have been circling this question from many angles. The Strait of Hormuz is not only an energy chokepoint; it affects farmers in Brazil, and factories in China. Insurance is not only a financial product; it is the hidden infrastructure that allows the risk-taking that builds nations. AI is not only a software in the “cloud”; it is a physical buildout of land, power, water, chips, and social consent. Stablecoins are not only a crypto story; they are part of the changing architecture of money. Healthcare is not only expensive; it is a system struggling under the accumulated mass of complexity. The question is not whether these systems are fragile, it’s whether we know where their limits are.

–𝓁𝓎𝓇𝒾𝒸 💬

Editor-in-Chief

Lyric Hughes Hale

JANUARY 1, 2012

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econVue contributors share their latest thoughts on the global economy and their own experiences covering it.

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Hale Strategic Resources Initiative

Data is the New Steel

AI sovereignty depends on resource sovereignty — but what’s in it for local communities?

Lyric Hughes Hale, with contributions from Mark P. Mills and Mark Roeder — May 25, 2026

AI is often described as ethereal: models, software, intelligence in the cloud. But the cloud has a physical footprint. Data centers require land, electricity, water, chips, substations, transmission lines, backup power, cooling systems, and communities willing to host the infrastructure of national competition.

This HSRI piece argues that data centers are the steel mills of the digital age. They are strategic, capital-intensive, and essential to national power. But unlike old industrial facilities, they often arrive with fewer permanent jobs and more visible local burdens.

👥 PANELS

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Upcoming Panel on July 10th

🎧 THE HALE REPORT

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Barry Eichengreen: The Hale Report Ep. 79

Money Beyond Borders

May 6, 2026

Barry Eichengreen joined The Hale Report and brought historical depth to today’s monetary and geopolitical quandaries. His work on reserve currencies, monetary power, financial crises, and global trust fits naturally into this issue.

Monetary systems rarely collapse all at once. What could cause the US dollar to lose its position as the world’s reserve currency?

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10.:

A Special Conversation: Lyric Hale and Ram Charan at the 2026 SIC Conference

China’s Tightrope: Energy, Control, and the Global Order

Dr. Ram Charan’s work has focused on leadership under complexity. Systems may carry the weight of risk, but individuals still have to make decisions. One key takeaway from the Mauldin Economics conference: Dr. Charan does not believe that China will ever invade Taiwan. His book, the subject of the conversation moderated by Ed D’Agostino, can be found here: China's 90% Model.

Many thanks to Mauldin Economics for sharing this video.

↪: Off econVue 🔈

Contributors & Guests

11.:Karim Pakravan on Iran, oil, and dangerous equilibria

At Random Access Economics, Karim Pakravan has been tracking the financial and geopolitical consequences of the US-Iran conflict, oil markets, and the Strait of Hormuz. His recent invited piece by Kaveh Mirani, The US-Iran Conflict: A Stable “No War, No Peace” Equilibrium?, extends econVue’s own Hormuz work by asking whether markets are pricing a manageable shock — or merely assuming that a dangerous equilibrium can remain stable.

Also relevant: Karim’s Global Financial and Emerging Markets Weekly Update from May 8.

12.:Brian McCarthy on China’s role in the Iran crisis

At Macrolens, Brian McCarthy has focused on the China angle, including Beijing’s role in US-Iran talks and the broader strategic implications for the Trump-Xi relationship.

His US-Iran conflict at a Beijing Crossroad and The China Angle place Iran, China, oil, and diplomacy inside the same strategic frame.

13.:Rick Katz on Japan, Taiwan, Korea, and the AI basket

At Japan Economy Watch, Rick Katz asks whether Japan, Taiwan, and Korea are placing too many strategic and economic hopes in the AI-related boom.

His piece, The Economist Cites Me on Japan’s Anorexic Demand, adds an important Asian industrial-policy dimension to this issue. The problem is not only whether AI can deliver growth, but whether too much national strategy and market confidence are being loaded onto a single technological cycle.

14.:Mark P. Mills on AI’s energy reality

Mark P. Mills has been writing, speaking, and convening around the electricity demands of AI data centers and the policy choices needed to power them.

His City Journal piece, Data Center Resistance: Déjà Vu All Over Again, belongs alongside HSRI’s Data is the New Steel. AI may be digital, but its limits are physical: generation, transmission, permitting, cooling, grid reliability, and public consent.

Mark also recently participated in the Hamm Institute’s American Energy + AI Initiative summit in Washington, DC, where the discussion focused on what it will take to add firm, reliable power fast enough for AI-scale data centers and advanced manufacturing while keeping energy affordable and secure.

Also relevant: his New York Post piece, Panic over data centers is wildly exaggerated.

15.:Mark Roeder on AI, undercurrents, and the future

Mark Roeder’s Substack is a natural companion to this issue’s AI and civilization thread. His work focuses on the powerful undercurrents reshaping the modern world, including artificial intelligence, and his forthcoming book, Leaving Plato’s Cave, explores how non-human intelligence changes the way we understand reality, agency, and decision-making.

In the Chandrasekhar frame, Mark’s work helps move the discussion beyond infrastructure and into perception itself: what happens when the systems we build begin to mediate not only what we do, but what we believe we know?

16.:David W. Johnson on the biology of AI in healthcare

At 4sight Health, David W. Johnson argues in The Biology of AI that AI is becoming an evolutionary force in healthcare, accelerating the rate at which organizations must adapt.

Healthcare is one of the clearest examples of a system approaching its own Chandrasekhar Limit: too much cost, too much administrative complexity, too little trust, and too many misaligned incentives. AI may be a solution, but it is also another layer of pressure on a system already carrying too much mass.

17.:Gina Pieters on tokenised money and financial plumbing

Gina Pieters’ recent work around tokenised money and stablecoin regulation belongs in this issue’s monetary architecture thread.

The Cambridge Centre for Alternative Finance report, Tokenised Money: Use Cases, Interoperability and Regulation, frames tokenised money as moving from experimentation into diffusion — exactly the point at which new financial infrastructure begins to matter for monetary sovereignty, regulation, liquidity, and systemic risk.

PDF link: Tokenised Money: Use Cases, Interoperability and Regulation

18.:Martin Wolf on managing the AI revolution

Martin Wolf argues in the Financial Times that the AI revolution cannot be left simply to markets, firms, or national rivalry. It requires governance.

That argument fits the Chandrasekhar frame precisely. AI is not only adding productive capacity; it is adding systemic mass faster than our institutions may be able to absorb.

19.:Daniel Yergin on Hormuz and energy shock absorbers

Daniel Yergin’s recent Wall Street Journal piece on energy markets and the Hormuz shock pairs directly with The Race is On. The key question is whether today’s energy system has enough buffers to prevent a geopolitical shock from becoming a full economic crisis.

20.:David Marsh on the ECB and inflation memory

David Marsh’s recent OMFIF commentary, ECB exorcises ghosts of inflation past, belongs in the monetary architecture section of this issue.

Central banking is another threshold system. Credibility can hold for years, then reprice suddenly.

21.:Steve Clemons on Iran and Trump foreign policy

Steve Clemons discussed Iran and Trump administration foreign policy on C-SPAN’s Washington Journal, returning to themes that echo his Hale Report conversation: fragmentation, conditional alliances, Iran, and the risk of miscalculation.

His work reminds us that geopolitical systems can become unstable not only because rivals miscalculate, but because alliances themselves become conditional, transactional, or uncertain.

Closing Reflection

The Chandrasekhar limit is powerful not as a metaphor of doom, but as a metaphor of structure, of the life and death of systems.

Insurance. Diplomacy. Central banks. Infrastructure. Energy systems. Healthcare. Hidden stresses accumulate inside complex adaptive systems until one more increment changes the governing dynamics.

A white dwarf does not collapse because gravity suddenly appears. Gravity was always there. The star collapses when the countervailing force is no longer sufficient. That is the question running through this issue of reVue. What are the stabilizing forces in the global economy today? And where will the first cracks appear?

🔗 Visit econVue.com for original articles, global panels, and expert insights on economics and geopolitics.

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❝ A risk of epic proportions.
— Rosemary Gibson, author of China Rx, on US reliance on foreign upstream materials for medicines, quoted in Goldman Sachs’ 2026 Investment Strategy Report

While rare earths have been in the spotlight, another critical supply chain is also at risk in the current geopolitical environment: medicines.

Our panel will examine vulnerabilities in pharmaceutical quality and supply in the US, and the broader policy and economic forces that have left critical medicines and medical devices increasingly exposed to disruption — with potential consequences for almost every American family. The conversation will also examine the history and current role of foreign dependence and how meaningful reforms could improve long-term resilience.

Why this matters

• China’s role in the pharmaceutical supply chain is not limited to finished pills. According to Rosemary Gibson’s 2026 Senate testimony, China controls roughly 90% of the global supply of certain key starting materials — the chemical inputs used to make active pharmaceutical ingredients, or APIs. (APIs are the components of medicines that produce the intended therapeutic effect.)

• That vulnerability extends beyond generics to the broader medicine supply chain, including antibiotics, hospital drugs, injectables, and medical devices.

Panelists

Lyric Hughes Hale is editor-in-chief of econVue and founder of the Hale Strategic Resources Initiative, a nonprofit research organization. She will moderate the panel and off-the-record audience discussion. A replay of the panelists’ remarks will be available to registered participants.

Panelists and participants include industry experts:

David Johnson, economist and CEO of 4sight Health, a Chicago-based advisory company working at the intersection of healthcare strategy, economics, and innovation;

Marta E. Wosińska, PhD, Senior Fellow at the Center on Health Policy at the Brookings Institution and

Shannon Morfin, CEO and co-founder of LifeScienceX, focused on life-science, pharmaceutical, CDMO, and healthcare infrastructure, including capital formation and resilient manufacturing capacity.

👥 REGISTRATION

Date: Friday, July 10 | Time: 12–1 pm (CDT)

Please register in advance for this meeting:

Register

After registering, you will receive a confirmation email containing login information and suggested reading. This event is open to all subscribers.

About the Hale Strategic Resources Initiative:

Hale Strategic Resources Initiative

The official site of the Hale Strategic Resources Initiative, and the HSRI newsletter, supporting economic security and resiliency with a special focus on the American Midwest.

By Lyric Hughes Hale

❝ A risk of epic proportions.
— Rosemary Gibson, author of China Rx, on US reliance on foreign upstream materials for medicines, quoted in Goldman Sachs’ 2026 Investment Strategy Report

While rare earths have been in the spotlight, another critical supply chain is also at risk in the current geopolitical environment: medicines.

Our panel will examine vulnerabilities in pharmaceutical quality and supply in the US, and the broader policy and economic forces that have left critical medicines and medical devices increasingly exposed to disruption — with potential consequences for almost every American family. The conversation will also examine the history and current role of foreign dependence and how meaningful reforms could improve long-term resilience.

Why this matters

• China’s role in the pharmaceutical supply chain is not limited to finished pills. According to Rosemary Gibson’s 2026 Senate testimony, China controls roughly 90% of the global supply of certain key starting materials — the chemical inputs used to make active pharmaceutical ingredients, or APIs. (APIs are the components of medicines that produce the intended therapeutic effect.)

• That vulnerability extends beyond generics to the broader medicine supply chain, including antibiotics, hospital drugs, injectables, and medical devices.

Panelists

Lyric Hughes Hale is editor-in-chief of econVue and founder of the Hale Strategic Resources Initiative, a nonprofit research organization. She will moderate the panel and off-the-record audience discussion. A replay of the panelists’ remarks will be available to registered participants.

Panelists and participants will include industry experts such as David Johnson, economist and CEO of 4sight Health, a Chicago-based advisory company working at the intersection of healthcare strategy, economics, and innovation; and Marta E. Wosińska, PhD, Senior Fellow at the Center on Health Policy at the Brookings Institution. Additional panelists will be announced shortly.

👥 REGISTRATION

Date: Friday, July 10 | Time: 12–1 pm (CDT)

Please register in advance for this meeting:

Register

After registering, you will receive a confirmation email containing login information and suggested reading. This event is open to all subscribers.

About the Hale Strategic Resources Initiative:

Hale Strategic Resources Initiative

The official site of the Hale Strategic Resources Initiative, and the HSRI newsletter, supporting economic security and resiliency with a special focus on the American Midwest.

By Lyric Hughes Hale

Editor’s Note: Collin Canright has long followed the intersection of payments, fintech, digital assets, and public policy. In this article, he looks at Illinois’s new Digital Asset Privilege Tax not simply as a crypto-tax story, but as an early signal of a broader fiscal shift. As more economic value moves from physical property to digital representations of value, governments are beginning to follow the money.

Illinois has become the first state in the nation to place a transaction-style tax on digital asset business activity, including cryptocurrency exchanges, transfers, custody, and wallet services. The levy falls on digital asset businesses, but the cost is likely to be passed through to businesses and consumers.

The tax matters for more than the immediate cost of a crypto transaction. It points to a legislative sequence many jurisdictions are now working through across digital services, platforms, and intermediaries: first legal recognition, then regulatory supervision, and finally taxation.

Illinois offers an early case study. Digital asset adopters first sought state support for innovation and legal recognition. Consumer protection followed. A new revenue source came next. This article considers that trajectory in three parts:

1. The facts of the Digital Asset Privilege Tax. This section covers how the tax passed, what it appears to cover, what remains uncertain, and why the backlash has already produced a repeal bill.

2. The revenue needs of Illinois and Chicago. The digital asset tax is another example of how public officials are turning to nonphysical and digitally mediated activity for revenue, especially when geography makes the tax more politically palatable. I refer to that dynamic as asymmetric tax targeting.

3. The political conclusion state lawmakers appear to have reached. Legislators saw limited immediate benefit from digital assets measured by visible jobs and investment in their own districts. They did see a potential revenue source that, at least on its face, was politically feasible. Illinois once tried to attract blockchain and digital asset businesses. It now appears more focused on regulating and taxing them. That shift says something larger about how governments are likely to treat the digital economy as the tax base moves from physical property to digital value.

1. Digital Asset Transaction Tax Facts

The Digital Asset Privilege Tax was incorporated into Senate Bill 3019, Illinois’s roughly $56 billion budget bill for fiscal 2027. The Act imposes a 0.2% tax on the value of covered “digital asset business activity”.

DATA relies on the foundational definitions established in the state’s 2025 regulatory framework, the Digital Assets and Consumer Protection Act, or DACPA. Under Illinois law, a “digital asset” is defined broadly as a digital representation of value or contractual rights that may be cryptographically secured and recorded on a blockchain or distributed ledger.

That definition covers cryptocurrencies such as bitcoin and ether. It can also cover tokenized assets, including stablecoins, because a tokenized asset can represent a contractual right recorded on a blockchain. For that reason, the tax reaches well beyond cryptocurrency trading.

The tax is scheduled to take effect on Jan. 1, 2027, the same general timeframe as the state’s new digital asset regulatory regime. That delay gives exchanges, custodians, wallet providers, businesses, and consumers time to adjust systems, evaluate whether transfers should be made before the effective date, and wait for additional guidance from the Illinois Department of Revenue.

The backlash from the crypto industry has been swift. Opponents argue that the measure is unprecedented, discriminates against digital assets, and risks damaging Illinois’s reputation as a fintech and digital-assets hub. Supporters frame it as a modest revenue measure that brings digital asset businesses closer to the tax and regulatory expectations imposed on other financial intermediaries.

That backlash has now moved from industry statements to legislation. On June 22, 2026, Rep. John M. Cabello filed HB5798, titled “Digital Asset Tax Act-Repeal,” which would repeal the Digital Asset Tax Act effective immediately. The bill may not pass, but its filing confirms that the tax has already become a political issue as well as a tax-policy experiment.

Business and Consumer Taxation Scenarios

For businesses and consumers, the tax means that certain transactions moving from one digital asset to another will be taxed. If past tax history is any guide, digital asset exchanges will likely pass at least part of the cost on to customers while absorbing significant compliance costs themselves.

• Scenario 1: Exchanging BTC for USDC on Kraken or Coinbase. That transaction is likely taxed if the exchange is a covered digital asset business serving Illinois customers and meets the statutory threshold. Both bitcoin and USDC are digital assets, and major exchanges are likely to qualify as covered digital asset businesses. A $1,000 exchange would generate a $2 tax at a 0.2% rate.

• Scenario 2: Moving $1,000 from a bank account into Kraken or Coinbase to buy BTC or ETH. The movement of ordinary U.S. dollars from a federally or state-chartered bank is not itself a digital asset transaction. The subsequent exchange into BTC or ETH is the taxable event.

• Scenario 3: Holding or storing $10,000 of BTC, ETH, or USDC in an exchange or custodial account. Custody and wallet services are among the issues creating the greatest uncertainty. Is a taxable storage or custody event one-time, periodic, or tied to value changes and additions? The statute and future guidance will have to answer those questions.

The Illinois Department of Revenue will need to clarify a host of implementation issues. The storage and custody provisions are likely to be the most difficult to administer. The easiest policy solution would be to narrow or eliminate those provisions; absent that, “nightmare” is not too strong a word for the compliance challenge.

For a more technical discussion of the statute and its legal arguments, George Bellas’s Chicago Business Attorney Blog provides a useful practitioner overview.

2. Asymmetric Tax Targeting

The State of Illinois and the City of Chicago need additional revenue. Both face long-running pension deficits and strict funding requirements. No political constituency wants to pay more taxes. High-growth sectors, especially those that appear remote, digital, or lightly rooted in a particular district, become natural targets

Chicago is a trading town, home to decades of financial derivatives innovation and world-leading exchanges. It is notable, and not accidental, that the examples above use Coinbase and Kraken, neither of which is headquartered in Illinois. But the tax is not limited to out-of-state exchanges. It can apply to any covered digital asset business that is based in Illinois or that provides covered services to Illinois customers and meets the statutory gross-receipts threshold.

That means the affected universe is broader than crypto exchanges alone. Depending on future guidance, it could include custodians, wallet providers, crypto payment processors, transfer businesses, and other firms that exchange, transfer, store, or provide wallet services involving digital assets for Illinois customers.

At the same time, cryptocurrency derivatives traded on Chicago exchanges such as CME or Cboe are not the same as the underlying digital assets themselves. DATA targets covered digital asset business activity— exchange, transfer, custody, and wallet services—rather than ordinary derivatives trading in contracts that reference crypto prices.

That distinction helps explain why Gov. Pritzker can support a digital asset transaction tax while continuing to oppose a broader financial transaction tax on trading. Financial transaction tax proposals would have applied directly to trading activity rooted in Chicago’s exchange ecosystem. The relocation threat from trading firms, exchange-related businesses, and their owners is much more visible and politically dangerous.

This is why the term asymmetric tax targeting is useful here. Geography marks political boundaries as well as physical boundaries. The adage “all politics is local” holds with special force when the subject is taxation.

Gov. Pritzker has long opposed taxes on trading transactions, as did Mayor Rahm Emanuel during his 2015 reelection race. Progressive politicians and unions supported versions of what became known locally as a “LaSalle Street Tax.” Emanuel’s challenger, Jesús “Chuy” García, supported such a tax, and the proposal became part of the city’s broader fiscal debate.

Pritzker again opposed financial transaction tax proposals when they resurfaced during later mayoral campaigns. Mayor Brandon Johnson made an FTT-style proposal part of his 2023 campaign, but the idea has not become the city’s fiscal centerpiece in office.

In contrast, taxes designed as lease, amusement, social media, advertising, or digital-activity taxes have gained more traction. They fit the asymmetric pattern: the companies subject to the tax are often not headquartered in Chicago or Illinois, while the revenue can be framed as local.

Chicago has already expanded its tax base to include digital services and platforms through the Personal Property Lease Transaction Tax, often called the “cloud” or SaaS tax, and through the Social Media Amusement Tax. Illinois has now extended the same logic to digital assets and targeted advertising. The direction of travel is clear: public finance is moving from taxing only things and places toward taxing digital access, digital attention, digital intermediation, and digital representations of value.

A small Illinois irony is worth noting. North Dakota’s attempt to collect sales tax from Quill Corp., an Illinois-based retailer, produced the 1992 Supreme Court decision requiring physical presence for certain state tax collection obligations. Wayfair later overturned that rule. Illinois is now on the other side of the same long-running shift: the tax base is following economic activity even when the business is not physically present.

3. From Blockchain Dreams to Revenue Realities

As early as 2017, digital asset supporters in Illinois saw potential for the state to become a blockchain innovation hub. Early legislation proposed a study group for blockchain-based government records. That effort did not survive, but the state’s Blockchain Technology Act gave legal effect to blockchain records and smart contracts when it took effect in 2020.

The next attempt, in 2021, focused on changing Illinois banking law to make the state more hospitable to cryptocurrency and digital asset firms. HB 3968 proposed a special-purpose trust charter for digital-asset firms, similar in spirit to Wyoming’s approach. The bill passed the House unanimously but stalled in the Senate.

The likely reason is familiar. Supporters could describe the strategic upside, but they had a harder time tying the bill to visible, district-level gains in jobs and investment. At the same time, crypto markets collapsed, and federal regulators became far more hostile to the industry.

By 2025 and 2026, legislative sentiment in Illinois had shifted from recognition and attraction to supervision and taxation. DACPA and the Digital Asset Kiosk Act created a consumer-protection framework. DATA then built on that framework by levying a new 0.2% tax on digital asset business activity.

Conclusion: Follow the Money

Illinois may be the first state to levy a usage-style tax on digital asset transactions, but it is unlikely to be the last. The move to tax digital technologies may be focused on out-of-state firms for political cover, but it also reflects a deeper shift. Governments are searching for revenue without raising visible taxes on voters, and the digital economy looks undertaxed relative to its economic importance.

Assessors, county commissioners, and municipal leaders are realizing that 20th-century tax models weigh heavily on traditional industries while often missing the value created by technology peers. In Cook County Assessor Fritz Kaegi, Illinois has one of the country’s more vocal proponents of changing property tax laws so that data centers are assessed more fairly based on their digital economic output and not simply on their physical footprint.

That chapter deserves its own article. For now, the larger point is that a shift toward taxing digital technologies has begun. If the growing backlash against AI data centers is any indication, the general public may be more willing to tax the digital economy than technology firms and their investors would like.

For his part, Gov. Pritzker has called on state legislators to return to the data center question in the fall. Incentivizing data centers while managing electricity costs will require a more delicate balance than digital asset taxation.

The politics will not be simple. The crypto community turned sharply against Democrats during the last national election cycle, and Pritzker has come under criticism from digital asset advocates for championing a crypto tax after opposing trading taxes. My guess is that he is making a calculated bet: the number of affected Illinois voters is small enough, and the number of out-of-state firms large enough, to provide political cover.

But the larger story is not only about crypto, Illinois, or even this particular tax. It is about the next stage of public finance. As more economic value migrates from physical property to digital platforms, digital services, and digital representations of value, governments will follow. First comes legal recognition. Then comes regulation. Then comes taxation.

That is what makes Illinois’s experiment worth watching. The state may be first, and the Digital Asset Privilege Tax may yet be amended, narrowed, repealed, or challenged in court. But the fiscal impulse behind it is unlikely to disappear. States and cities need revenue, and the digital economy has become too large, too visible, and too tempting to ignore.

“Follow the money” may be the maxim we all know from Deep Throat in All the President’s Men. In the digital economy, the equally important question is whose money lawmakers choose to follow — and how quickly the rest of the country follows Illinois.

Tables

Sources

1. Digital Assets and Consumer Protection Act / Illinois General Assembly: https://www.ilga.gov/legislation/BillStatus?DocNum=1797&DocTypeID=SB&GAID=18&SessionID=114

2. SB 3019 / Illinois General Assembly bill status: https://www.ilga.gov/legislation/BillStatus?DocNum=3019&DocTypeID=SB&GAID=18

3. BDO, “Illinois Enacts Potentially Wide-Reaching Digital Asset Tax”: https://www.bdo.com/insights/tax/illinois-enacts-potentially-wide-reaching-digital-asset-tax

4. PwC, “Illinois legislature passes budget bill with new digital taxes”: https://www.pwc.com/us/en/services/tax/library/pwc-illinois-legislature-passes-budget-bill-with-new-digital-taxes.html

5. IDFPR, “Gov. Pritzker signs historic legislation to protect consumers from cryptocurrency scams”: https://idfpr.illinois.gov/content/dam/soi/en/web/idfpr/news/2025/2025-08-18-gov-pritzker-signs-historic-legislation-to-protect-consumers-from-cryptocurrency-scams.pdf

6. City of Chicago, Personal Property Lease Transaction Tax: https://www.chicago.gov/city/en/depts/fin/supp_info/revenue/tax_list/personal_propertyleasetransactiontax.html

7. Sales Tax Institute, Chicago Social Media Amusement Tax: https://www.salestaxinstitute.com/resources/chicago-rolls-out-social-media-amusement-tax

8. South Dakota v. Wayfair, U.S. Supreme Court: https://supreme.justia.com/cases/federal/us/585/17-494/

9. Chicago Business Attorney Blog, George Bellas overview: https://www.businessattorneychicago.com/illinois-just-became-the-first-state-to-tax-crypto-transactions-here-is-what-every-business-needs-to-know/

The boundary between the insurable and the uninsurable is the line between expansion and stagnation.

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Editor’s Note: In this Vuepoint, Saliya Weerakoon suggests that Pope Leo XIV’s new encyclical on artificial intelligence should be read not only as a religious document, but as a civilizational inter…

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The Trump-Xi Summit in Beijing May 14-15, 2026

You are invited to an econVue virtual panel discussion on the upcoming Trump-Xi Summit, scheduled to take place in Beijing on May 14–15. The conversation will be moderated by Lyric Hughes Hale.

The meeting comes at a critical moment for US-China relations. Trade tensions, technology restrictions, rare earth dependencies, Taiwan, sanctions, and the widening geopolitical fallout from the Iran conflict are all converging ahead of the summit. Whether the meeting produces a genuine reset or merely a diplomatic pause, markets, policymakers, and allies will be watching closely for signs of how Washington and Beijing intend to manage competition in a more fragmented global economy.

👥 Panelists

Our panel will bring together three sharply informed perspectives on China: Christopher Balding, who spent much of his academic career in the PRC; Brian McCarthy, who analyzes China from a Wall Street and global macro perspective; and Eric Huang, Hale Strategic senior fellow, joining us from Taipei.

Christopher Balding is CEO of Siphtor, a financial data provider based in California, and a senior fellow at the Henry Jackson Society. He spent nine years at Peking University HSBC Business School in Shenzhen and later taught at Fulbright University Vietnam. His work focuses on China’s economy, financial markets, technology sector, and corporate governance. He is widely followed on X as @BaldingsWorld.

Brian McCarthy is the Managing Principal and Chief Strategist of Macrolens LLC. A Harvard-trained economist, he has held senior roles at Alliance Capital, AIG, Barclays, UBS, RBS, and Emerging Sovereign Group, where he managed a China-focused macro hedge fund. He founded Macrolens in 2018 to provide institutional investors with independent research on global macro trends, China, and US-China financial dynamics.

Eric Huang is a senior fellow at Hale Strategic and a recognized expert on US-China-Taiwan geopolitics. He previously represented Taiwan’s Kuomintang Party in Washington, DC, where he worked at the intersection of cross-strait relations, US policy, and Taiwan’s domestic political debate. He is frequently quoted in leading global media, including The Economist, BBC, and Bloomberg. He holds degrees from Johns Hopkins SAIS, Harvard Kennedy School, and MIT.

Lyric Hughes Hale is editor-in-chief of econVue and host of The Hale Report. A longtime observer of the Chinese economy and US-China relations, she will moderate the panel and audience Q&A.

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❝ The unhappy scenario is one in which confidence in the dollar is lost abruptly…I worry about risks to financial stability that could lead to a disorderly migration away from the dollar before adequate alternatives exist.
— Barry Eichengreen

Episode Details

Guest: Barry Eichengreen
Book: Money Beyond Borders: Global Currencies from Croesus to Crypto
Host: Lyric Hughes Hale, Editor-in-Chief of econVue
Producer: Sam Fu
Recorded: Friday, May 1, 2026 | 48 minutes

Episode Overview

Barry Eichengreen joins econVue editor Lyric Hughes Hale on the The Hale Report to discuss his new book, Money Beyond Borders: Global Currencies from Croesus to Crypto. The conversation ranges from ancient coins and Spanish silver to sterling, dollar dominance, gold, stablecoins, and central bank digital currencies. His book spans centuries, from the history of money, to the state of US dollar dominance, and the future of digital money.

Eichengreen does not believe that the dollar is about to be replaced by the euro, renminbi, gold, or crypto. Instead, he warns that geopolitical fragmentation, US debt, sanctions, pressure on Federal Reserve independence, diminished faith in institutions, and new forms of market fragility could erode trust in the dollar system faster than alternatives can develop.

The result would not be a clean transition to a new reserve currency, but a more unstable monetary system, marked by increased reserve diversification, parallel payment systems, digital money, gold accumulation, and echoes of the 1930s.

About Our Guest

Barry Eichengreen is one of the world’s leading economic historians and monetary scholars. He is Distinguished Professor of Economics and Professor of Political Science at the University of California, Berkeley, where he holds the George C. Pardee and Helen N. Pardee Chair. He is also affiliated with the National Bureau of Economic Research and the Centre for Economic Policy Research, and previously served as Senior Policy Advisor at the International Monetary Fund.

He is a regular columnist for Project Syndicate and a past president of the Economic History Association. His most recent book is Money Beyond Borders: Global Currencies from Croesus to Crypto.

🎤 Topics and Key Moments

Money Beyond Borders: Money That Travels
The conversation begins with one of the book’s central ideas: currencies become international through trade before they become tools of finance, from ancient coins to Spanish silver to the US dollar.

The Life Cycle of Global Currencies
Eichengreen discusses whether reserve currencies rise and fall according to a recognizable life cycle, and whether the dollar’s century-long global role is entering a new phase.

The Dollar Under Stress
The dollar remains dominant, but Eichengreen argues that its strength depends on more than markets. It also rests on political stability, rule of law, Fed independence, and alliance trust.

❝ International currency status has economic and financial prerequisites, but it also has important political prerequisites.

Gold, Oil, and War
The conversation explores why central banks are buying gold, how sanctions are reshaping reserve management, and how Eichengreen sees events in the Middle East.

❝ I do think events in the Middle East are dollar negative and renminbi positive.

China, Silver, and Hong Kong
Eichengreen explains why the renminbi lags far behind the dollar, what China’s silver standard period reveals about global money, and why Hong Kong’s dollar peg depends on unusually specific institutional conditions.

Crypto, Stablecoins, and CBDCs
The discussion turns to Bitcoin, stablecoins, tokenized bank deposits, and central bank digital currencies, including Eichengreen’s warning that stablecoins could create new forms of Treasury-market fragility.

❝ We know from history that something that is safe and liquid today can become unsafe and illiquid tomorrow.

Monetary Fragmentation and the 1930s Scenario
The episode’s darkest warning is not that the dollar will be replaced overnight. It is that confidence in the dollar could be lost before alternatives are ready.

❝ The unhappy scenario is one in which confidence in the dollar is lost abruptly.

Policy and Practical Takeaways
To preserve the dollar’s role, Eichengreen argues that the United States must protect Federal Reserve independence, address its fiscal trajectory, maintain institutional credibility, and reassure allies.

Mentioned in This Episode

• Barry Eichengreen, Money Beyond Borders: Global Currencies from Croesus to Crypto
  Eichengreen’s newest book and the focus of the episode.

• Barry Eichengreen, Exorbitant Privilege
  Referenced through the discussion of dollar dominance and the advantages and burdens of the dollar’s global role.

• Federal Reserve Act of 1913
  Discussed in relation to the creation of the Federal Reserve and the early use of the dollar in international trade finance.

• GENIUS Act and CLARITY Act
  The GENIUS Act, signed into law in 2025, created the first federal framework for payment stablecoins, including rules on reserves, redemption, supervision, anti-money-laundering obligations, and sanctions compliance. The related CLARITY Act, still under debate in Congress, addresses the broader digital-asset market structure by clarifying regulatory jurisdiction between the SEC and CFTC.

• Dodd-Frank Act
  Discussed in relation to post-global-financial-crisis regulation, stress tests, and capital requirements.

• Smoot-Hawley Tariff Act
  Referenced as part of the 1930s breakdown in trade and global liquidity.

• Project mBridge
  The cross-border central bank digital currency project involving China, Hong Kong, Thailand, the UAE, and Saudi Arabia.

• Simon Kuznets’s “four kinds of economies” line
  A memorable reference to “developed, developing, Argentina, and Japan,” used to explain Japan’s unusual place in the global economy.

• John Greenwood
  Referenced in connection with the Hong Kong dollar peg. Greenwood is widely associated with the design and defense of Hong Kong’s modern currency board system, which restored the Hong Kong dollar’s fixed link to the US dollar in 1983. In the episode, his views are discussed in relation to the peg’s automatic convertibility and rule-bound credibility, as a comparison to stablecoin protocols.

• Paul Warburg
  Discussed as a central figure in the creation of the Federal Reserve and Eichengreen’s chosen dinner guest.

  ---

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Guest: Arthur Laffer
Title: The Other Side of Taxation: Incentives
Host: Lyric Hughes Hale
Producer: Sam Fu
Recorded: Mon March 17, 2026 · 57 minutes

Art Laffer on Incentives, Policy Design, and the Future of the Global Economy

My conversation with Arthur Laffer explores a central question in economic policy: how incentives—shaped by taxation, trade, and monetary systems—drive outcomes across the global economy. What follows is a short guide to some of the key ideas discussed in the episode.

About our Guest

Arthur Laffer is best known for the Laffer Curve—the idea that beyond a certain point, higher tax rates can discourage work, investment, and entrepreneurship, ultimately reducing both economic activity and government revenue. His work helped shape the tax reforms of the Reagan era and continues to influence debates about taxation and growth today. Trained at the University of Chicago and long engaged at the intersection of academic theory and public policy, Laffer has spent decades focused on a central question: how incentives shape economic behavior.

In this conversation, Lyric Hughes Hale speaks with Arthur Laffer about how those ideas apply today—at a moment when policy decisions are reshaping the structure of the global economy.

🎤 Topics and Key Moments

Laffer’s framework is deceptively simple:

“ Incentives are what economics is all about.”

From this starting point, the conversation moves across taxation, trade, healthcare, and monetary policy—but consistently returns to the same underlying principle: policy does not merely allocate resources, it shapes behavior, often in ways that are not immediately visible.

This is something that, in Laffer’s telling, policymakers either recognize—or fail to recognize—at critical moments.

One of the more striking parts of our discussion—and one that aligns with broader questions about structural imbalances in the global economy—was Laffer’s critique of tax-exempt institutions.

He argues that exemptions, particularly in healthcare and education, have created significant imbalances in how capital is allocated. Resources flow not necessarily to their most productive use, but to sectors where tax treatment is most favorable.

“We could get rid of the income tax… just by eliminating those exemptions.”

The point is not simply fiscal. It is structural. When policy privileges certain sectors, it shapes the direction of investment, the cost structure of services, and ultimately the behavior of institutions.

On trade, Laffer offers a perspective that reflects both classical theory and contemporary reality.

“No one wins from a trade war—but they don’t all lose the same.”

That distinction reflects a shift from theory to application. Trade relationships are no longer evenly balanced, and policy tools—especially those executed through executive authority—can be deployed quickly and strategically.

Here, Laffer’s experience across administrations becomes instructive. He describes Ronald Reagan as unusually open to economic reasoning—willing to adopt ideas such as broad-based tax reform and energy decontrol, even when they ran counter to internal resistance. Policy, in that context, was designed with a clear view of incentives.

That same emphasis on execution appears in his description of Donald Trump—not in ideological terms, but in operational ones. As Laffer recounts, the ability to move from concept to action quickly can itself shape outcomes.

“President Trump doesn’t sit there and study a subject for 300 years… he makes a decision and it’s done.”

Whether one agrees with the policy or not, the observation points to something fundamental: the timing and clarity of decisions can be as important as the ideas themselves.

In discussing energy policy, Laffer points to earlier moments when shifts in policy reshaped entire markets. As he noted at the time—in a New York Times op-ed during the Reagan administration—measures such as oil price decontrol were not simply about prices, but about changing the incentives that governed production and investment decisions across the energy sector.

The lesson is consistent: policy works through the signals it sends—and those signals propagate across the system.

The conversation then turns to healthcare, where Laffer identifies a structural challenge rooted in the absence of information.

Without price transparency, markets cannot function effectively. Consumers cannot make informed choices, and providers face limited pressure to compete on cost or quality. The result is a system in which prices rise, but signals remain unclear.

Here again, the issue is not simply cost, but structure. When information is obscured, incentives shift—and behavior follows.

From there, the conversation turned to monetary policy, where Laffer draws a sharp historical contrast.

Prior to the creation of the Federal Reserve in 1913, he describes a system in which money was largely private—issued by banks, backed by their balance sheets, and subject to market discipline. Bank-issued notes circulated alongside one another, with their value tied to the credibility of the issuing institution.

From his perspective, the transition to a centralized system marked a profound shift.

“Starting in 1913, all hell broke loose.”

Laffer contrasts this with the earlier era of commodity-linked and privately issued money, which he describes as one of long-run price stability. While that period included cycles of inflation and deflation—including during wartime and financial disruptions—the overall price level remained broadly stable over extended periods, rather than exhibiting the persistent upward trend that has characterized much of the modern era.

It is in this context that he views the emergence of digital currencies:

“Stablecoins are the private market’s attempt to replace government money.”

Much like earlier bank-issued currencies, instruments such as Tether are designed to provide a stable medium of exchange, backed by underlying assets and governed—at least in principle—by market mechanisms.

This perspective places current developments within a longer intellectual lineage—one that extends through Laffer’s own work to that of Robert Mundell. Mundell, often described as the father of the euro, argued that the world had not yet gone far enough—that a truly international currency was still needed.

Laffer suggested that we may be closer to that trajectory than many assume—a market-driven, technologically enabled step toward a more global monetary system.

If there is a single thread that runs through this conversation, it is that policy design shapes incentives—and incentives shape outcomes. Taxes are simply negative incentives.

Policy structures evolve quietly, and become embedded in systems that appear stable, even beneficial in the short term. Over time, they influence behavior in ways that are difficult to reverse.

At a moment of structural change in the global economy, the question is whether incentives are aligned with the most beneficial global policy outcomes. And the answer is that we have a long way to go.

📚 Related Reading & References

Taxes Have Consequences: An Income Tax History of the United States, coauthored by Arthur B. Laffer, Brian Domitrovic and Jeanne Sinquefield

🎙️ About Our Host

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💬 What we are seeing is not the end of globalization, but the emergence of a new geostrategic system of alliances—more connected, not less.

If you missed our panel last week, or want to revisit it in light of Japanese Prime Minister Sanae Takaichi’s visit to Washington this week –as well as the postponement of the Trump-Xi Summit, the replay of our March 11, 2026 panel is posted above.

Our panel asked a central question: Are we witnessing the emergence of a new Monroe Doctrine, and what are its geographic boundaries? Panelists include Dr. R. Evan Ellis, Dr. Joshua W. Walker, and econVue Senior Editor Eric Huang.

Why This Matters Now

Today, President Trump will meet with Japanese Prime Minister Sanae Takaichi as markets and policymaker reassess global risk. Japan’s Maritime Self-Defense Force is one of the most capable naval forces in the world, underscoring the strategic weight of the US-Japan alliance.

US actions in Mexico and Venezuela, and the escalating crisis with Iran, could have profound implications for security strategy and trade across Latin America and the Indo-Pacific—including Taiwan.

Key Takeaways

Evan Ellis (Latin America)

“This administration increasingly sees engagement in the Western Hemisphere not as co-development, but as an extension of U.S. homeland security.

Joshua Walker (Japan)

“Japan is our canary in the coal mine—no country needs the U.S. alliance more, but none is watching its limits more closely.

Eric Huang (Taiwan)

“Economic security is no longer a supporting pillar—it is the foundation of U.S. global strategy, and that is where Taiwan becomes indispensable.

Governments across Latin America, Japan, and Taiwan are reassessing assumptions about sovereignty, deterrence, and alliance commitments as the implications of recent events ripple across both the Western Hemisphere and the Indo-Pacific. Recent developments are sending geopolitical shockwaves far beyond the regions directly involved, and China’s leadership is no doubt recalibrating its options after US strikes in Iran.

Are we seeing the early contours of a new Monroe Doctrine in US strategic thinking — one that extends beyond the Western Hemisphere — as Washington navigates a more contested global order?

Introductory remarks by our speakers were recorded, but the Q&A session was off the record.

↳ Panelists

R. Evan Ellis
Research Professor of Latin American Studies at the US Army War College Strategic Studies Institute, specializing in China’s role in the Western Hemisphere.

Joshua W. Walker
President & CEO of Japan Society; former Eurasia Group executive and U.S. government official focused on alliances and Indo-Pacific strategy.

Eric Huang
Geopolitical strategist and econVue Senior Editor specializing in US–China–Taiwan relations and strategic technology competition.

It was a pleasure moderating this panel. My thanks to our panelists, and to our audience, who posed excellent questions. Join us next time to be part of the discussion.

–𝓁𝓎𝓇𝒾𝒸 💬

Editor-in-Chief, econVue

^📍Chicago

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Dear Readers,

Last month, we lost Karen Petrou. I wanted to reshare a conversation I had with her five years ago, a podcast we recorded in March 2021.

I first contacted Karen after reading her excellent reports at Federal Financial Analytics. She did me the honor of reading and commenting on mine. I planned to be in Washington for an event where she was speaking, and we agreed to meet after her speech. As I sat listening in the audience, I noticed that she had a dog at her side. Only then did I realize she was blind.

I could not believe that she was able to digest and analyze the enormous amount of information required for her reports, and I never complained again about having too much to read. I learned so much from her, especially from her book on Federal Reserve policy and inequality, which we discussed during this podcast five years ago, and personally from her remarkable ability to make what she did seem effortless.

It was a great privilege to know Karen. She never let her blindness keep her from the truth. Her work, including as Board Chair of Foundation Fighting Blindness, mattered to so many.

–𝓁𝓎𝓇𝒾𝒸 💬

About this Podcast

The March 2021 Hale Report podcast is my interview with Karen Petrou, discussing her new book, Engine of Inequality: The Fed and the Future of Wealth in America. Just published, it is already the #1 book in its category on Amazon.

Ms Petrou is a well-known and influential commentator on monetary policy and banking regulation, and is managing partner at Federal Financial Analytics in Washington DC. We have often included links to her analysis in our newsletter, and I have had the great pleasure of meeting her both in Chicago and Washington. 

That was not possible this time of course, so I interviewed Ms Petrou remotely. She made several key points: the Fed is responsible for the record rise in inequality between 2010 and 2016, and it continues to look for data in all the wrong places. Other potential countermeasures to inequality such as education simply take too long.

She strongly believes that the Fed should have a third mandate in addition to employment and price stability, economic equality. I've included excerpts from her remarks below, but hope that you will find time to listen to our half-hour podcast via the link below.  I always hope our listeners will learn something they didn't know before, or hadn't thought about in that way. I think this interview accomplishes just that.

Excerpts

❝ I think, sadly, the data the Fed uses are often way off base, because they're averages and aggregates. And in a highly unequal country, as the United States has become, that's very misleading.

❝ Something happened in 2010 and income and wealth inequality grew far worse, far faster than ever before. And the one thing that clearly changed, starting in 2010, after the Great Financial Crisis's worst effects were behind us, was new monetary and regulatory policy. And that's what this book is about. What happened in 2010, and how could it have made us so much less economically equal and, as you said, what can we now do to change?

❝ Think about it though, economic inequality, what's it about? It's about income and wealth. That's the engine that makes us more or less equal. But what is its fuel? In economic inequality, the fuel is money. There is no agency in the United States with the power over money other than our central bank. That's what monetary policy is all about. Bank regulation, what is it about? It's about who has the money, who gets the money, how much does it cost to get the money.