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Let's Know Things

Let's Know Things

著者： Colin Wright
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A calm, non-shouty, non-polemical, weekly news analysis podcast for folks of all stripes and leanings who want to know more about what's happening in the world around them. Hosted by analytic journalist Colin Wright since 2016.

letsknowthings.substack.comColin Wright 政治・政府
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  • US Treasury Twist

    US Treasury Twist
    2026/09/08
    This week we talk about money policies, yield curves, and government bonds.We also discuss the Fed, the Treasury Department, and a WWII accord between them.Recommended Book: Paved Paradise by Henry GrabarTranscriptIn April of 1942, a few months after the United States entered World War 2, the US Treasury Department asked the Federal Reserve to help it borrow a truly staggering amount of money, and as cheaply as possible. The Fed agreed, committing itself to holding short-term Treasury bill rates at three-eighths of 1%, while also capping the yield on long-term government bonds at 2.5%.This was a type of yield curve control. Rather than allowing the market to decide how much interest the government would pay, the Fed decided that price and promised to enforce it.That helped finance the war, because the Treasury knew its borrowing costs wouldn’t spiral out of control at a moment when it needed to spend unprecedented sums on ships, planes, weapons, soldiers, and all the other machinery of an ongoing global conflict.The downside was that the Fed lost control of an important monetary policy lever.Bond prices and yields move in opposite directions, so keeping yields below a certain level meant the Fed had to stand ready to buy bonds whenever their prices dropped. It couldn’t decide in advance how many it would buy, or how much money it would create in the process. The market would thus forth decide that, instead.Consequently, the Fed became, in some ways, an extension of the Treasury’s debt-management operation, its inflation-related responsibilities made secondary to the government’s need for cheap financing.That arrangement persisted after the war ended, despite the return of inflation, and President Harry Truman’s administration pushed to maintain it during the Korean War, as well.Fed officials resisted, though, with inflation running at more than 8%, and after a very public, very contentious standoff, on March 4, 1951, the Treasury and the Fed announced that they had reached what became known as the Treasury-Fed Accord.That agreement did not make the Fed independent all at once, but it established the principle underlying the modern relationship between these institutions: the Treasury manages government borrowing, while the Fed sets monetary policy based on inflation and employment, not on how much that policy costs the government.The market, in other words, would once again be allowed to decide the price of long-term US debt.What I’d like to talk about today is what happens when that price goes up, what’s pushing long-term US borrowing costs toward levels we haven’t seen in decades, and why two people appointed by the same president are pulling in opposite directions on this issue.—The Federal Reserve’s primary interest-rate lever is the federal funds rate, which is the overnight rate banks charge each other to borrow money. The Fed currently targets a range of 3.5 to 3.75 percent for that rate, and while it has other tools, this is the number people are usually talking about when they say the Fed raised, cut, or held rates.The Fed does not directly set the yield on 10- or 30-year Treasuries, though.Those securities are sold at auction and then traded in a huge secondary market, and their yields reflect a combination of what investors expect inflation to look like, where they think short-term rates will go over the life of the bond, and what’s called the term premium.The term premium is basically extra compensation for uncertainty. If you lock up your money for 30 years instead of rolling over short-term debt, you accept the risk that inflation, growth, government policy, and other variables will change in ways that make your bond less valuable over that thirty year period. The more uncertain the future seems, the more compensation you’re likely to demand.And again, when demand for a bond falls, its price falls and its yield rises. When we say yields are rising, that means borrowers have to offer investors, the people and institutions giving them the money they want to borrow, more money, more interest, to convince them to buy those bonds.That doesn’t only affect the government. The 10-year Treasury serves as something like a reference rate for the entire economy, influencing mortgages, business loans, and the value of long-lived assets.As of September 3 of 2026, the average US 30-year fixed mortgage rate was 6.71%, up from 6.5% a year earlier. That increase is the result of yield increases in the bond market.Long-term Treasury yields have been climbing for much of 2026, and that climb accelerated over the summer.The 30-year yield reached about 5.31 percent on August 17, its highest level since 2007. A few days earlier, the Treasury sold 30-year bonds at a yield of 5.216%, the highest borrowing cost at one of those auctions since 2001.The 10-year yield briefly hit about 4.81% this past week, its highest level since early 2025, and ended Friday at about 4.78%. The two-year ...
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    20 分
  • Virtual Power Plants

    Virtual Power Plants
    2026/09/01
    This week we talk about peaker plants, blackouts, and at-home battery backups.We also discuss energy resiliency, solar panels, and hydro.Recommended Book: The Tainted Cup by Robert Jackson BennettTranscriptPeaking power plants, often just called peaker plants, are power plants that are turned on only during periods of high energy demand. That’s in contrast to a baseload power plant, which operates more or less 24/7 to ensure there’s a steady amount of electricity available on the local power grid.The need for peak-load energy varies depending on the time of year and which part of the world you’re looking at. In general, though, energy demand tends to increase in the morning and evening because of temperature fluctuations and lifestyle rhythms.People are at home in the morning and return from work in the evening, at which point they turn on their ACs or heaters, TVs, lights, electric kettles, and video game consoles. That leads to an irregular surge in demand compared with the steady office and factory demand met throughout the day by the baseload power plant.When energy demand peaks, approaching or exceeding what the baseload plant can reliably provide, the peaker plant is spun up and more energy is added to the grid. This helps avoid brownouts and blackouts, situations in which people lose access to power because there isn’t enough to go around.This also helps stabilize energy prices. In most countries, pricing is used to manage scarce energy resources, so as a grid approaches the point where it’s running out of available electricity, prices rise to incentivize less energy use. Peaker plants keep those prices from going sky-high by increasing the supply, preventing demand from pushing prices into absolutely ridiculous territory.Some peaker plants operate for a handful of hours basically every day. This is especially true in places with extreme temperature fluctuations, or in areas where the population or manufacturing activity has increased rapidly and the local infrastructure hasn’t caught up. In those places, the backup plant is used more regularly because the baseload supply hasn’t yet increased to meet that new, consistently higher demand.Peaker plants are often less efficient to run because they aren’t meant to be used all the time. Consequently, if the baseload power plant isn’t capable of providing enough energy for a region on a regular basis, electricity can get much more expensive for everyone, all the time. A power plant intended for occasional use is instead operating constantly, and it wasn’t built to be efficient. It was built to come online quickly and operate only during periods of irregular, excessive need.What I’d like to talk about today is an alternative to peaker plants that was conceived of decades ago, but which has only recently started to be deployed at scale in some areas.—As I mentioned in the intro, a peaker power plant is meant to be turned on irregularly to meet above-average energy needs. Those periodic pops in demand are accounted for, and peaker plants are built specifically to meet them. As a result, these plants are typically more expensive and often more polluting than baseload plants, with many using natural gas or coal to produce extra electricity for the grid.In the late 1990s, researchers proposed that it might someday be possible to link energy-production and storage sites together, creating a more flexible grid system they called a virtual power plant. Further research in the early 2000s expanded on the concept, looking specifically at renewable-energy options and how they might be aggregated into a similar virtual-power-plant setup.The basic idea is to recreate the effect of a peaker plant—adding electricity to the power grid when it’s most needed—by aggregating power-generating or storage assets and tapping them only when necessary.Software manages that aggregation of smaller assets, ensuring the additional energy reaches the grid when it’s needed and at the necessary scale. Managing these assets in this way allows smaller production and storage infrastructure to recreate the impact of a larger peaker plant.A German energy company called RWE launched the first real-world virtual power plant in 2008, linking nine of its hydroelectric plants into a virtual 8.6 MW unit whose output could be managed and deployed remotely. A few years later, in 2011, a Swiss energy company called Kraftwerke did the same with a slew of biogas, solar, and wind-power infrastructure scattered across seven countries.The concept expanded to include demand-side residential energy assets in 2016, when the Australian city of Adelaide enacted a program backed by the Australian Renewable Energy Agency. The program deployed 1,000 battery systems to homes and businesses across the city. Those battery systems were hooked up to solar panels, and the software managing the batteries allowed their stored energy to act like a 5 MW peaker plant.Tesla then applied the ...
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    18 分
  • US-Canada Tariffs

    US-Canada Tariffs
    2026/08/25
    This week we talk about borders, trade wars, and belligerence.We also discuss Trump’s tariffs, inflation, and nationalism.Recommended Book: Vulture Capitalism by Grace BlakeleyTranscriptThe US and Canada share the longest international border in the world, totaling more than 5,500 miles, or nearly 8,900 km. The specific details of this border have changed over the decades, but the current delineation was largely in place following the San Juan Islands water arbitration of 1872, which brought a 12-year joint military standoff between the US and Great Britain, known as the Pig War, to an end, and fed into a 1908 legal framework that relied on modern mapping of the entire frontier, which led to the precise cartography of the current international border between the US and Canada.Since then, after some issues with gold rush-era land rights were figured out in Alaska, and some treaties were signed regarding the disarmament of the Great Lakes, things have been pretty calm along this massive border. Trade hasn’t always been the most efficient and free—the early 20th century in particular was pretty fraught in this regard, as Anti-Americanism raged through Canada. That led to a dismissal of a proposed lowering of trade barriers by the Canadian Liberal government in 1911, anti-American sentiment flogged by the Conservatives, who rode their slogan, “No truck or trade with the Yankees,” to a Canadian nationalism-powered victory.After the US entered WWI and the Allies tallied a victory, though, the US and Canada exchanged their first ambassadors, Warren Harding became the first US President to make an official visit the confederated Canada, visiting Vancouver in 1923, and things between these two countries were looking pretty good until 1930, when the US passed the Smoot-Hawley Tariff Act, which was a protectionist trade act that, among other things, raised tariffs on incoming Canadian goods in order to protect competing American business interests; making the local offerings artificially more competitive than the stuff coming in from Canada, basically.The Canadian government hit back with their own higher tariffs and shifted more of their trade to other Commonwealth nations, which led to a decrease in trade between the US and Canada of about 75%; and this was happening during the Great Depression, which is why that Act was enacted, the US government was hoping to bolster their own economy, but instead of helping, it furthered those economic difficulties, because of that drop in trade and international custom—Smoot-Hawley is generally considered to have been an incredibly bad economic move, and US President Hoover signed it against the advice of senior economists, because it seemed politically expedient, US businesses were clamoring for advantages because they thought it would help them, but instead it worsened the Great Depression, and this Act is now taught as a cautionary example of why protectionist trade policies, while appealing in a nationalist sense, tend to be pretty bad, almost always, economically.US-Canadian relations improved a bit in the WWII-era, and into the early decades of the Cold War. By the late-1960s, the US had become Canada’s largest export market, and that’s why Nixon’s 1971 decision to enact a 10% tariff on all imports, including those from Canada, hit the Canadian economy so hard. Overall US-Canadian relations soured during Nixon’s time in the White House, in part because the Canadian government pivoted toward Europe, rather than kowtowing to the US’ economic demands, and Nixon’s belligerence in the face of that pivot didn’t help matters.When US President Carter stepped into office, however, things improved for a while, and though there were serious bouts of stagflation in both nations through his time in the White House, American investment in Canada increased, and relations continued to be friendly leading into the 1990s, at which point the North American Free Trade Agreement, or NAFTA was signed, in 1994. NAFTA created a common market in North America, between the US, Canada, and Mexico, and that meant the $19 trillion or so in trade between the 470 million people or so living in North America by 2014, would be entirely or almost entirely without barriers, no tariffs or very small, focused tariffs.Though imperfect by many measures, NAFTA is generally considered to have been a major success, at least in terms of raw economic productivity in North America. And in 2020, is was replaced by the USMCA, the United States-Mexico-Canada Agreement, which is often called NAFTA 2.0, which is in many ways just a modernization of NAFTA that updates many of the earlier provisions and focuses more on digital trade and intellectual property than its precursor.In July of 2026, however, the US government announced that it would not be renewing the USMCA, after Canada asked the US and Mexico to renew it for another 16 years. The pact remains in effect until it expires in 2036, ...
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    16 分
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