Today, John Cochrane writes of another concern newly minted Fed Chair Kevin Warsh will face: uncertain forecasting. Andy Hall finds that beyond all the doom-and-gloom projections of its effects; video content creators are loving AI. And H.R. McMaster speaks with a leading legislator in the Merz coalition governing Germany, who discusses the future of US-Germany relations amid a changing international order.
The Economy
In this week’s Grumpy Economist Weekly Rant, Senior Fellow John H. Cochrane examines one of the central challenges facing the Federal Reserve under Kevin Warsh’s leadership: how to make policy when forecasts and models remain deeply uncertain. Cochrane argues that the Fed’s inflation forecasts have repeatedly proved unreliable, from misplaced expectations in 2016 to the belief that inflation would fade quickly in 2021 and 2022. Cochrane distinguishes between forecasts, which try to predict what will happen, and models, which are better suited to asking “what if” questions about policy choices. But both, he argues, have limits. When central bankers do not fully understand the forces driving inflation, monetary policy should be guided by caution, evidence, and the capacity to respond decisively to events rather than relying too heavily on uncertain predictions.
Artificial Intelligence
Taking on the often negative perception of AI among the American electorate, Senior Fellow Andrew B. Hall looks at a specific subset of internet savvy individuals, digital creators on YouTube and TikTok, and finds their responses quite positive. After sifting through 25,000 videos, Hall says his research team found much more acceptance of AI than rejection. “There is way more content that embraces AI than you might expect if you only read national news, perused certain corners of X, or listened to politicians and lab leaders constantly discussing the public’s AI backlash,” Hall writes. “On TikTok and YouTube, content embracing AI beats out explicitly anti-AI content by 3 to 1.”
Determining America’s Role in the World
Norbert Röttgen, deputy chairman of the Christian Democratic Union of Germany/ Christian Social Union in Bavaria parliamentary group in the German Bundestag, joins Senior Fellow H.R. McMaster on Today’s Battlegrounds to discuss US-German relations; Germany’s defense, economic, and foreign policy priorities; strains in transatlantic relations; and the future of NATO and the European Union. The conversation examines Germany’s evolving approach to security and defense in the wake of Russia’s invasion of Ukraine, the changing balance of responsibilities within NATO, and the challenges posed by Russia, China, and Iran. Röttgen and McMaster also discuss economic competitiveness, energy security, transatlantic cooperation, democratic resilience, and the political and social forces reshaping Western democracies, as well as the future of the US-German partnership amid a changing international order.
In this new essay, D. P. Srivastava, former Indian ambassador to Iran, writes of the “complementaries” that could enable India to grow its relationship with the US. Srivastava says this can be achieved through increased trade in liquefied natural gas (LNG), and nuclear cooperation, especially in the wake of the blockade of the Strait of Hormuz by Iran in 2026. Srivastava says India’s intense need for LNG creates a unique market opportunity for US producers. India also plans to increase its nuclear power output by more than 1,000 percent between now and 2047, and US suppliers and power plant designs could assist India in meeting this goal.
Revitalizing American Institutions
In a new paper for the Michigan Law Review, Senior Fellow Orin S. Kerr of Stanford Law School and Matthew B. Kugler of Northwestern University’s Pritzker School of Law find that courts have a different view of how curtilage—the part of a property immediately outside and around a dwelling—should be protected by the Fourth Amendment. Using three studies with 600 participants each, they find that ordinary citizens think a broader part of a person’s property should be protected from warrantless search and seizure than what current doctrine states. “In the doctrine, curtilage is limited to the area immediately around the home. But the public disagrees,” Kerr and Kugler write. “To most people, privacy in the home extends to the entire property. If it’s part of the property, it’s private. In short, the public has a far more expansive conception of home privacy than courts allow.”
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