Moody's Talks - Inside Economics - Bonus Content: A conversation with Daleep Singh

Episode Date: December 11, 2025

Welcome to a bonus episode of Inside Economics. This is a recording that took place between Mark Zandi and our most recent podcast guest, Daleep Singh at the Aspen Ideas Festival a couple of months ago. Questions or Comments, please email us at [e-mail]. We would love to hear from you.  To stay informed and follow the insights of Moody's Analytics economists, visit Economic View. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Inside Economics. I'm Mark Zandi, the chief economist of Moody's Analytics, and this is a little different. We had a conversation on Inside Economics with Dilip Singh earlier in the week. Delip is the vice chair and global chief economist of PGM, large global asset manager. Great conversation, got a lot of great feedback. Given that, we thought we would post a conversation I had with to leap back in October at the Aspen Ideas Festival. It was a great conversation, not too dissimilar from the one we had on our podcast, but dissimilar enough that we thought you'd find it of some interest. So hopefully you do. And with that, here it is. Good to be with you, DeLeep. I've admired you from afar for many years, and here we are.

First time we've actually in person. Yeah, on the couch. On the couch. We were just commenting, this couch, it looks comfortable. It really isn't. Do we lean back or do we lean forward or, you know, what? I'm going to have an awkward moment. My back is going to be in pain very shortly, so just don't pay attention.

Hey, so, Dilip, I want to know a little bit about you and how you got to be. You're both vice chair and chief economist of PGM. which is the big investment management firm for prudential. First question, which is more important, vice chair or chief economist? Oh, it's a lot of words. I don't know what either means precisely, but I mean, my career path,

it's been a nonlinear one. Maybe it's been incoherent. That's probably a better word. I've spent about half of my career in public service and half in the private sector. I started out in the tech industry in the late 90s during the dot-com boom. Then I went to Goldman for most of the 2000s

when the world hyper-globalized. But then post-financial crisis, I pivoted to public service because I always wanted to make a contribution at a moment that felt consequential and when I had something to say. And it took me about a decade to have something to say. But I raised my hand and joined the Treasury in 2011

to work on Dodd-Frank financial reforms. So we can blame you for that. Yeah, exactly. Just line them up, all the complaints. I still get them. But it was a, I mean, it was a... No, actually, that was a wonderful piece of legislation, in my humble opinion. A lot of moving parts, but...

We don't have the counterfactual, but I think it's helped us get through a number of stress tests post-2008. Right. But I loved it. I worked on Dodd-Frank. I ran our debt management office. I led our engagement with Greece when it was flirting with Euro exit. I designed sanctions against Russia after it invaded Crimea. I only left after the election in 2016 to come back to the private sector.

I became a global macro hedge fund investor. And then the New York Fed called right before COVID and said, will you run the markets group? You know, this army of people that implement monetary policy. So I did, and that job involved setting up the emergency facilities that backstop the real economy during the crisis.

And then Joe Biden was elected, and Jake Sullivan called and said, will you be my deputy national security advisor for international economics? And I said, what does that mean? And he said, well, well, you just break down the silos between national security and economic policy

and lead our policy efforts at that intersection. And now I'm back here after another election. Wow. Yeah, so I'm vice chair. Very cool. Elections tend to matter in my career. So, no, my job here is... Well, you're in the desert right now.

Well, I feel pretty comfortable here. This is a nice couch. My job is to connect the dots for our clients, to help them do that, and for them to help me do it as well. I see. Between economics, geopolitics, financial markets. So I'm trying to see the world as clearly as possible.

I'm not trying to shape the world as it should be. I'm trying to see the world as it is and how it's going to be. And sometimes, you know, you and I use the lens of economics to see the world clearly, but sometimes it's through the lens of geopolitics or politics, increasingly it's technology. And what I see is definitely colored by where I've been, because I came a professional age at the high watermark of the post-Cold War international order, you know, the so-called end of history. And so what I saw in the 90s was low inflation,

expanding global supply chains, rising capital flows, technological diffusion, the ascendance of democracy and multilateralism. And it seemed like a permanent feature of the world economy, and then it fell apart. So I spent a lot of time thinking about how did we get here and where are we going. Well, let's talk a little bit about that.

I mean, here we are, the global economy, maybe I'll just characterize it in my own words and throw it back at you to you and see what you think. Obviously the global economy is a big place. There's a lot of moving parts, some parts of the world doing a lot better than other parts of the world. But if you take a look at the global economy in its totality, it's growing.

It's not in a recession, but it feels uncomfortable. It's just not growing to its potential. and that potential rate of growth is throttling back because of, you know, what's going on. But it's a struggle, a bit of a struggle. I'd say that's what I characterize the U.S. economy as being and the global economy as being.

Is that fair? We call it a muddle through. A muddle through. We're slightly below the long-term trend of growth and we have high and sticky inflation. And I think we're in a different regime. You know, an economist, we look at the high... We used to have high-frequency data.

We don't right now. But, you know, we tend... He's referring to the government shut down. Yeah, I'm sorry. Geeky economists talk. Although we get a data point on Friday, we get the consumer pricing. God bless. God bless, yes.

It's easy for us to miss regime shifts. You know, and so we're no longer in the post-Cold War unipolar moment that underpin the great moderation of the global economy for 30 years. You know, I think everybody understands that we're in a different geopolitical regime. Both Russia and China have expressed and revealed a desire to challenge the U.S.-led order. They both have the capacity to do so in different ways, and especially in coordination with each other. The U.S. and its allies are pushing back,

but there's a large and growing number of what I call geopolitical swing states that are hedging their bets and trying to carve out a non-aligned path. So think of India or Indonesia or Saudi, UAE, South Africa, Turkey, Brazil. So we're in a new regime, I think, with much more uncertainty. You mentioned struggle, but yeah, uncertainty and struggle are part of it. I think we're going to have less scope for cross-border cooperation to manage cross-border risk, like a pandemic or like climate change or like food insecurity, energy insecurity, debt distress. And we're going to have a higher likelihood of conflict. And here's how I connect the dots.

I mean, if it's the case that we're back in a world of great power competition, well, most of today's great powers are nuclear powers. And so the risk of mutually assured destruction, I think, is channeling direct conflict between great powers away from the battlefield and into the theater of economics because confrontation is not existential. So then what does that mean for the steady state? That's the question for us as economists. What's the steady state for the economy?

How fat are the tails for financial markets? And I think we'll look back and see that about a decade ago, we had a structural break in the regime. You know, the anchors on growth, on inflation, on risk premium, on interest rates, they've loosened. Because monetary policy, fiscal policy, regulatory policy, foreign policy, they're all in flux at the same time. Okay, so central banks, they're not the only game in town. They're increasingly taking their orders from political authorities. Political authorities are ushering in an era of fiscal dominance, right, to finance defense spending and industrial policy. They're deploying economic weapons to a degree that we've never seen before to break bonds in the global economy

or to threaten doing so for geopolitical advantage. And then democracies themselves, political authorities, are coming apart at the seams from polarization that we haven't seen in a century. And if you have less weight in the political center, you're going to have less centrist economic. policy, a general disregard for deficits, more erosion of institutional norms, and less policy credibility. To me, that's the new steady state, and it feels uncomfortable. But I don't think it necessarily means that every geopolitical risk is a market shock. You know, coming back to the private sector, I think we need a new taxonomy for how we think about what geopolitical risks actually create a fat tail for financial markets. My working hypothesis, they're the risks that are new. They're

the ones that are quantifiable, potentially non-linear in terms of their impact on the major economies of the world, you know, and they don't have a readily available policy offset to the shock itself. So that, to me, it helps explain why markets responded so sharply to the step change in tariff announcements in April. And sadly, sadly, so little to the erosion of our institutional norms, which are much harder to quantify and not quite so new anymore so just take what you said and there's a lot of to unpack there and kind of put it into my own words it feels

like what you're saying is that look for a number of decades certainly between 1990 and let's say the global financial crisis in the 2008-2009 that period that almost 20-year period and in the middle of that period China entered into the World Trade Organization, and that's when it really came on to the scene in a very big way. That period was a period of globalization, that the... Hyperglobalization. You call hyperglobalization, right?

And you have this great chart that you show where you just take exports plus imports, this is for the U.S., exports and divide by GDP, and take a look at that, and it is pretty much straight up during that 20-year period. Yeah, it ended up slowly after World War II, and then it existed. exploded after 1990, doubled. In 1990, in your work, it seems to be an important day because that's kind of when the Soviet Union kind of fell apart. Is that kind of...

That was the beginning of this post-Cold-war unipolar moment that I think really did underpin the moderation of inflation, created steady growth, and gave us a sense that there was some kind of permanence to this, but there wasn't. Okay, and so then we get up to the financial, the GFC, the global financial crisis, Obviously, very, a lot of dislocation, rethinking of lots of different things. Dodd-Frank being an example of, you know, rethinking the banking system, the financial system more broadly. And then President Trump's first term, that trade war and those tariffs. And that was a key point in time also because President Obama had the Trans-Pacific Partnership,

which was a free trade deal with Pacific nations that excluded China because they weren't playing for it. never got passed, I got blown up in President Trump's first term. And since then, it's been a process of what I would call de-globalization. Sure. I call it slow-ization, but sure. Because if you go back to that chart, you look at exports plus imports divided by GDP, it hasn't, there's a straight flat to down, you know, since then. And in my thinking, policy now is just reinforcing that de-globalization. The tariffs are a good example of that.

immigration, highly restrictive immigration policy, you know, the export, and I'm not making a comment on, is it good or it's bad, it's just what it is. It is what it is. Right. Sanctions, export control, controls on investment, all that's, and it's not just the United States now, it's the entire global economy doing this. And I guess my question to you is, this feels like a massive sea change in the way we're organized globally, but yet here we are, we're still growing. You know, it's not. like this was a cliff event. Yeah. Yeah, how do you square that? You drink a lot of wine. The thing is, I think we have been here before. You know, I spend a lot, I think we're going to probably talk about this all day. I spend a lot of time thinking about the pre-World War I era between 1870 and 1914. That marked the first wave of globalization. Okay, and Keynes wrote poetically in terms of capturing this spirit. He said, I can sip my morning tea in bed, order all the products of the earth by telephone, invest in any quarter of the globe, travel to any country without

passport, and regard the state of affairs as normal, certain, and permanent. And at the same time, you know, we had revolutionary... Oh, like Kane said that? He wrote that. He wrote that, like 1940 something? It was his post-script to World War I, economic consequences of the piece. Okay, cool. Yeah. And, and At the same time, I mean, the technological changes were revolutionizing our way of life. You know, the railroad, electrification, the internal combustion engine, telephone, telegraph. And then together, you had globalization, innovation, creating enormous, extraordinary amounts

of wealth. But that wealth was concentrated in the hands of a few. The oligarchs of that era, we know their names. They're still plastered on the plazas and buildings of New York. Rockefeller, Carnegie, Vanderbilt, J.P. Morgan, no offense to J.P. Morgan. And, you know, that kind of extreme inequality fueled populism. Populism increasingly expressed itself as nationalism, nationalism intensified geopolitical rivalry between established powers and rising powers, and eventually collapsed the brittle balance of power in 1914

and triggered a chain of catastrophes for the subsequent 40 years. I mean, does any of that sound familiar? It does to me. I mean, the point is, we have been here before. You know, now we have, we're living in the aftermath of another wave of, I call it, hyperglobalization, and the crest of a new one from technological change. And so we're witnessing another super cycle of innovation, wealth creation, inequality, populism, nationalism, geopolitical rivalry. And if I look at, you asked about markets, which is almost kind of like a mundane question in that context, but it's a good one because it's what, you know, we have to do. In that period, the old normal, I call this the old normal, not the new normal.

You know, you had extended bull market runs for years, decades, and then they were punctuated by panic, financial panic, and political upheaval. And there was a systematic unwillingness or inability to price and consider tail risks. And that fed a very dangerous complacency. So I think, you know, the challenge now, we do have these markets that keep going up and up and up, The important thing is cultural. Think in terms of probabilities and scenarios, not a point estimate around a single base case,

and focus very much on the tails. What could go wrong? Pressure and probe the base case. Attack lazy narratives. You know, search for our own blind spots. We've all got them. And I just think this is going to be another one of those moments, just like back then,

in which you'll be rewarded for humility, you know, for curiosity, for listening more than talking. and it'll reward those who are willing to learn from the past and imagine the future, right? It's going to punish those who are confidently asserting this time is different

and we can just reflexively extrapolate the recent past forever. Okay, so what sounds like you're saying is, look, markets haven't react, the economy is still hanging together. And they won't react. But there will be punctuated by, as you said, periods of crises.

Yeah, because I think they price what they can quantify. And they're not going to be an early warning signal for democracy either they're not a morality tale so don't expect markets to be your guardrail okay so here we are stock markets going straight up feels like valuations are very high in the markets you know by some measures not quite as high as in the y2k bubble but we're getting into that kind of neighborhood how do you feel about that is this one of the are we getting close to one of of those periods of crises?

I mean, this is why you get paid the big bucks, right? I think this can go on. You can go on. Yeah, and look, I mean, it's where I am, I make it personal. I'm really awful at identifying triggers, but I can see vulnerabilities. I mean, I see, I see so many parallels from today's crypto complex and the 2006 subprime moment. A lot of good money chasing after intrinsically bad assets that are getting leveraged,

increasingly finding the way in the balance sheet of systemically important institutions what could go wrong? You know? Right. Okay. Deleet promised,

he promised me we're going to end on a positive note. We will get to that shortly. It's not going to last very long. That was my positive. Okay, all right. But I am a careful consumer your work and you actually wrote a great piece in foreign affairs it was that kind of lays out

the argument and you spent most of the piece on how do we kind of avoid the worst of the fallout from the way this thing seems to be going you know we're as you say we're going from a unipolar moment time to a to a period where you know there's all kinds of conflict that we're going to suffer a lot of tension in markets. How do we, what kind of policy should we be thinking about or implementing to kind of avoid that kind of darker outcome? Yeah, I mean, to be clear, I don't think 1914 is our destiny. And just to be clear, that is the, that's when World War once started.

And you're saying that World War I was the culmination of the second Industrial Revolution 1870 all the way up through 1913 and that's a very similar period and therefore if you're using history as a guide to understanding the future that doesn't augur well but that doesn't have to be the case yeah precisely because you know I mentioned the super cycle we're in now between innovation wealth creation inequality populism nationalism geopolitical rivalry that ends in catastrophe that was the same sequence back then so the question is are we going to sleepwalk into another 1914 moment And again, I don't think there's anything preordained about this. We have choices to make.

And I am genuinely not for the sake of pretending optimistic. I do like our chances. One of America's superpowers is the capacity for self-correction. You know, when I read American history, what I visualize is a double helix, you know, of excess and reform, fragility, renewal. You know, we're talking, you called it the second industrial age. You know, others call it the Gilded Age. The Gilded Age gave way to the progressive era, progressive, like not in a political sense, but, you know, that's the name. And during that era, we amended the Constitution four times in seven years to create an income tax, to create the country's first labor protections, to give voting rights to women, to provide for the direct election of senators.

We created the Fed because we've been in a boom-bust cycle roughly once a decade preceding 1913. 1913, the Fed was put on the planet, right. Exactly right. So we have the capacity to rewrite the social contract at home. I think the mistake of 1914 was we did not lead and shape a stable equilibrium abroad. So I think if we learn the lessons of that catastrophe, we're not destined to repeat it. I do think right now, though, we need to have the same level. level of ambition that has existed in the early 1900s, deep structural reforms to restore

trust in our democratic foundations. I mean, big, but also simple ideas that have broad bipartisan support. We have a 95% incumbency rate in this country for federal elections. Why don't we end gerrymandering and replace it with independent redistricting? We have orders. Thank you. He's got a website collecting donations for his campaign. I am not running for anything.

I'm very happy in my day job. No, I'm just, I mean, these are not my ideas, but they're very simple, and gerrymandering. Overturned citizens united and provide for public financing. You know, we spend orders of magnitude more. Money in politics in this country is orders of magnitude greater than any other advanced country.

Why is that? You know, term limits on Supreme Court justices. Make, you know, make election Day of Federal Holiday. Is that so crazy? Maybe we should limit presidential pardons. Both sides have abused it. That's the truth. You know, but I think we have to have an equally ambitious agenda. This is what I wrote the piece about on the international front. You know, I think we need a doctrine of economic statecraft. We've spent hundreds of years in this country creating and refining doctrine for the use

of military force. But if we're in this global competition in which it's going to happen and mostly in the theater of economics, shouldn't we also have limiting principles for the use of economic force? So we avoid a race to the bottom. So I do think limiting principles on why, when, how, to what extent, and against whom we deploy economic weapons is timely.

Sanctions, export, I mean, I helped freeze the assets of Russia, $300 billion worth. Right. And that's kind of the nuclear option in the economic realm. We need to have limits. But, but, Daly, we can't even keep the lights on. in the government so I mean how how realistic is this yeah I mean our politics are

fractured yeah and it doesn't feel like there's any middle ground here and the kinds of things you're talking about I mean they require some compromise on both sides it just doesn't feel likely I think I think reform and renewal are very difficult absent crisis right but But, you know, the kind of... Absent crisis. Especially absent a crisis, even during a crisis, but especially outside of one. But I sense a real hunger out there.

And what do I know? I just look at polls. And I see people saying that, you know, they feel like everything is still broken. They're deeply worried about the future, especially for their kids. They feel the American dream slipping further away. they're tired of dysfunction and division really tired and so the demand signal is there

let's put it back in terms of supply and demand there is a demand a hunger for change and I think moments of renewal they don't come in a straight line who predicted Barack Obama in 2008 but I do think if the appetite for change reaches a crescendo I mean I think what we can do is concerned citizens

That's all I am, is to be ready with ideas and energy and ambition to meet the moment. You know, I give a lot of talks to my, I have a similar kind of job at Moody's and speak to a lot of business executives and boards and investors. and you know my talks kind of are sort of like like yours kind of dark and then I come to the end and I don't want to end on a dark note because you know I feel like our history is consistent with being optimistic and success in fact there's a quip I think it's by Winston true someone can chat GPT at this to make sure if it's correct Winston Churchill said something to the effect that, you know, Americans, they try everything and then they ultimately do the right thing. And I firmly believe that, based on my much more limited experience working in Washington, I sense the same.

Amen. Amen. Well, thank you, Deleep. Thank you so much. Thank you. And now, for a conversation. How about, wasn't that a happy ending, a reasonably happy ending? Thank you.

Thank you. And now, for a conversation on the state of the American dream, please welcome New Jersey Governor Phil Murphy.