Number of the day

1,419 days 

That’s how long Russia’s full-scale war on Ukraine has now lasted, a day longer than it took Soviet troops to reach Berlin in WWII.

Banking gone wild.

Jerome Powell has long given hope to lawyers everywhere. Yes, you too can pivot away from grinding billable hours through endless redlines to instead get rich in private equity before becoming the world’s most powerful central banker.

But even being a registered Republican (and Trump 1.0 appointee!) couldn’t save Powell from a new DoJ probe into his testimony over long-running Fed building renovations.

Powell is defending his honour, declaring “this new threat is not about my testimony last June”, but “a consequence of the Federal Reserve setting interest rates” based on data and not “the preferences of the President.” 🔥🔥🔥

And quick rewind, but we’ve seen this before. Way back in the groovy 1970s, Nixon was sitting on a costly Vietnam war, vast debt, and stubborn inflation, sending jitters among capitals still pegging their currency to the dollar — West Germany withdrew from Bretton Woods, and Paris even sent a gold ship to retrieve some of its reserves from New York! 

Nixon, recognising the Bretton Woods system wasn’t sustainable atop dollar-gold convertibility, and eyeing a re-election campaign, abandoned gold convertibility while pressuring his own Fed chair to loosen the rates spigot and juice the economy.

He basically shifted the dollar’s value away from gold towards trust in the US instead: ie, trust that a US dollar would be worth something because of American a) stability, b) prosperity, and c) authority to declare the dollar as tender to raise taxes and repay debts.

A half century later, the US economy still soars (4.3% growth!) even as the US dollar has lost 99% of its value compared to gold, which just hit another record Monday. As we’ve done for millennia, we humans keep returning to gold for safety.

Now lava lamps aside, some of those 1971 conditions exist today whether across debt, defence spending, inflation, or even the way the world now sees and (dis)trusts DC.

Which brings us back to this Powell-Trump story: a quick spin through time and space offers cautionary tales around central bank independence — the semi-sacred idea that you should let central banks make decisions best for your economy, not your politics.

First, on currencies: emerging markets offer the sharpest examples, though maybe also the trickiest to unpick from broader national volatility:

• Turkey’s Erdogan sacked three governors in two years until one finally agreed to lower rates into an inflationary environment, thus gutting the lira, evaporating household savings, and sending investors running for the exits, and

• Argentina’s Milei is still trying to clean up the mess after fiscal-monetary subordination (ie, the central bank doing what it’s told) unleashed a vicious cycle of inflation begetting depreciation begetting inflation.

But bottom line, if you were holding assets in the lira or the peso, you got burnt.

In the US context, keep in mind that many US economists want a weaker US dollar: Trump’s recent Fed nominee (Miran), for example, has argued the dollar’s reserve status means it’s persistently overvalued, driving US deindustrialisation.

Anyway, second, on bonds. Keep an eye on how Japan (the largest US bond-holder) reacts once back from holiday today, but Brazil is another interesting example: decades of on/off political pressure have entrenched inflation expectations that foster a debt-tolerant vibe — eg, it’s common to buy that $30 dress via instalments (parcelados) to lock in today’s price, then pay in tomorrow’s (weaker) real. But these short-term consumer wins reflect longer-term jitters, which become higher borrowing costs for Brazil.

Leading us to the core issue…

Third, credibility. Wall Street keeps telling its international clients to chill: their line during Trump 1.0 was “nothing ever happens”, but ask Maduro how that bet is working out. So the Street’s soothing lines are now a) it’ll be tough to prove Powell had any intent to lie; b) it’s just a ploy by Trump’s on-the-out attorney-general (Bondi) to keep her job; or just c) ultimately the Fed makes committee decisions, diluting any particular pressure on Powell.

Intrigue’s Take

There’s a classic if alarming quote attributed to Tony Blair’s former chief of staff, who’s now national security advisor to Keir Starmer: "When you arrive in No 10 and pull on the levers of power, you discover they are not connected to anything."

He was reflecting on the difficulties for a party returning to power, but the line jives with some of the frustrations that keep pole-vaulting populists into power: let’s ditch the red-tape and get stuff done! Or specifically on central bank independence, it’s how is an elected leader supposed to lead if they’re not even allowed to touch a core lever (rates)?!

This might have its own enticing logic in the short term, though if you want to nerd-out a little, UT Austin economist Carola Binder has published research drawing a pretty clear link between political interference and higher inflation/rates over the longer term.

Meanwhile, there’s a slow-burn story about dedollarisation in response, but it’s not always how it seems. Eg, Zambia is now allowing China’s miners to pay royalties in yuan, but that’s not about Zambia adopting the yuan, so much as China using its leverage to recycle yuan back home — where else is Zambia going to spend those yuan?

And speaking of China, this whole Fed situation poses a tricky dilemma for the People’s Bank: it’d be tempting to cheer on a weaker US dollar, but China itself is sitting on ~$3T in dollar reserves (mostly Treasuries), and it’ll be wary of any shocks to a dollar system still lubricating its export machine, let alone the pressure a weaker dollar puts on the yuan.

Anyway, for now, central bankers everywhere will still watch the Fed, but with two new questions: first, is any particular Fed move based on data, or a directive? And second, at what point do their own world leaders look at Trump and say I’ll have what he’s having?

Sound even smarter:

• The USD share of global foreign reserves just hit a new low of 56.92%, though that mostly reflects exchange-rate dips rather than some sudden sell-off.

• If you want to nerd-out, Lords of Finance is a Pulitzer-winning account of how four central bankers triggered the Great Depression.

Meanwhile, elsewhere…

Extra Intrigue

Here’s what people around the world are googling:

• Folks in the 🇺🇸 US looked up ‘Golden Globes winners’, as Hamnet and One Battle brought home the night’s two Best Motion Picture awards. 

• Netizens in 🇲🇾 Malaysia googled ‘university explosion’ after an air-conditioning compressor exploded at a private college, leaving one dead. 

• And 🇿🇦 South Africans searched for ‘UJ’ (the University of Johannesburg), which saw a record-breaking number of applications for 2026.

City of the day

Tech bros have all kinds of brohemian interests when not brogramming in the broffice, whether it’s brotein shakes, brocations at Brochella, or wildly expensive orthopaedic shoes.

But in recent years, they’ve developed a new passion. Or at least, a new name for the age-old passion of tax minimisation: tax-free cities.

Nobel laureate Paul Romer first popularised the charter cities idea via a 2009 TED talk — his focus was more on unleashing economic growth in the developing world by setting up new zones with better (external) governance, but his real-world attempts have struggled due to political interference and instability: a coup upended plans in Madagascar, and he ended up quitting the Honduras project over corruption.

That Honduras project continues today as Próspera (on the famous scuba-diving island of Roatán), backed by broligarchs like Peter Thiel. There’ve been rumours this is why Trump weighed into last year’s Honduran elections — to stop local efforts to unwind Próspera.

Anyway, all this to say there’s a new brotropolis on the block, and it’s called Dunia Cyber City. For now it’s still a rectangle of jungle on the Tanzanian island of Zanzibar, but French bromigo Florian Fournier promises it’ll be Africa’s Singapore.

Today’s poll

Yesterday’s poll: Do you think this unrest will topple Iran's regime?

✊ Yep, it's over (26%)
🤝 Maybe just a 'soft coup' (45%)
⛓️ Nope, it'll hang on (28%)
✍️ Other (write in!) (1%)

Your two cents:

• 🤝 A.R: “The head will change, the snake will remain.”

• 🤝 B.S: “I would love to see the ayatollahs fall altogether, but an IRGC general or affiliated politician taking over and promising to return the state to its revolutionary roots might be a more practical outcome.”

• ⛓️ Y: “Desperate leaders are not afraid to use violence, as Iran has previously demonstrated, to stay in control.”

• ✍️ P.N: “To paraphrase Hemingway, ‘slowly, slowly, then all at once.’“