Klisman Murati

Applying First Principles Thinking to World Affairs with @paretoeconomics

[Klisman Murati @klismanmurati]

If the rumored Anthropic at $900 billion round goes through, Anthropic will be the first company in history to cross the $900 billion mark with negative Free Cash FlOW.

[Klisman Murati @klismanmurati]

Why didn’t Germany build a sovereign wealth fund?

Between 2014 and 2019, Germany ran five consecutive fiscal surpluses.

By 2019 alone, the surplus had reached roughly €45 billion.

For most countries, that level of fiscal space would have triggered a strategic debate about long-term capital allocation, national resilience, and future competitiveness.

In Germany’s case, it largely reinforced an existing political instinct toward fiscal restraint.

That may have been prudent in narrow accounting terms.

But strategically, it represented a missed opportunity.

Because at the same time Germany was generating persistent surpluses, it was also facing several long-term structural pressures:

• aging demographics
• declining relative industrial competitiveness
• infrastructure underinvestment
• growing energy vulnerability
• slower productivity growth compared to peers

In other words, the country had both the resources and the strategic rationale to think more long term.

Norway responded to resource wealth by building a sovereign wealth fund designed to convert temporary advantages into permanent national capacity.
Germany responded to sustained fiscal strength by institutionalising the debt brake.

One framework prioritised long-term strategic optionality.

The other prioritised fiscal orthodoxy.

The issue here is not austerity vs stimulus.

Nor is it an argument for reckless spending.

The deeper issue is whether states recognise moments when they possess surplus capacity and use those moments to strengthen future resilience.

Because fiscal surpluses are not inherently strategic.

What matters is what a country does with them.

Germany entered the 2020s with strong industrial foundations but limited fiscal flexibility relative to the scale of the economic transition ahead.

Today, the pressures are clearer:

• weaker industrial momentum
• rising geopolitical exposure
• increasing competition from the United States and China
• mounting investment requirements across defence, energy, infrastructure, and technology

The irony is that Germany had a rare window where it possessed both fiscal room and economic leverage.

But instead of converting temporary strength into long-term strategic capacity, it treated the surplus itself as the achievement.

That may ultimately be remembered as one of the most consequential economic policy choices of the last decade.

[Klisman Murati @klismanmurati]

Dispite America ranking 1st consistently in almost every military power index since the end of the Cold War, America has never ACTUALLY won a direct military confrontation with a peer or near peer competitor.

Yes NATO has been “successful” in Libya and Serbia and the Americas helped the Kuwaitis in the Gulf War against Iraq, but a direct military confrontation it scores - nool pwah. 👌

🇦🇫Afghanistan
🇮🇶Iraq
🇻🇳Vietnam

All long term failures that the American people had to pay for in more ways than one.

I reflect on this point following the proposed fiscal budget announced by Trump earlier this month where he called for a 40% INCREASE in defence spending while cutting non defence discretionary programs by around 10%.

Can I ask a simple question:

If you can’t win wars by having already the largest military budget know to mankind ever in the existence of planet earth, is adding more money really going to help tip the scales?

📍Fiscal responsibility is dead

📍Tax policy has collapsed into incoherence

📍Tariff strategy is crumbling

And the most important point of all:

Every region is increasing in their power over the last 30 years - our data shows it.

And this is why we are moving into an era of more aggressive geopolitical and geoeconomic volatility.

📍Money is not going to solve Americas problems

📍Nor will tech

The era of superpowers has died, what remains is the sticky perception of superiority.

That’s harder to scrub.

[Klisman Murati @klismanmurati]

US fiscal spending discipline has completely dissolved.

On April 3, 2026, President Trump released his proposed Fiscal 2027 Budget, calling for a 40% increase in defense spending while cutting non-defense discretionary programs by roughly 10%.

The cuts gut environmental protection, scientific research, housing, and small-business support — and still government spending surges, the deficit balloons, and debt held by the public climbs above 100% of GDP, reaching peacetime highs.

Three administrations have now practiced fiscal recklessness. Tax policy has collapsed into incoherence.

Spending discipline has disappeared entirely.

One feature dominates the picture: government consistently spends more than it collects. That gap produces deficits, and deficits produce fiscal illusion — a distortion that hides the real cost of what politicians choose to spend.

Politicians love deficits because deficits let them spend today and hand the bill to tomorrow. Future generations will pay those taxes.

So will people not yet born, who cast no vote on any of this. That is irresponsible, inequitable, and immoral.

Amend the Constitution. Require fiscal responsibility. Government must not spend without taxing.

[Klisman Murati @klismanmurati]

Central banks have a very hard job trying to control the economic outcomes of a catalyst they have zero influence over.

Every major central bank is watching every economic indicator, every public statement, every industry briefing like a hawk.

Sustained elevated oil prices are not new the 70s will tell you that.

What’s different this time around is everything around the elevated oil price.

Central banks like to promote the virtues of being independent but they are not… but not the way you are thinking.

Everyone is watching the Fed and if they hike, everyone will hike soon after, because the Fed sets the tempo.

When it signals hawkishness, other central banks must follow or watch their currencies weaken against the dollar which makes imported energy more expensive still.

The ECB and Bank of England are not pre-positioning because their domestic economies require it.

They are doing so because diverging from the Fed carries its own inflationary penalty.

I write more on this topic in our latest substack.

https://t.co/bJ14GUAcwl

[Klisman Murati @klismanmurati]

Coordinated rate increases will trigger a global recession.

Anticipated global inflation since the Iran conflict is entirely cost-push.

oil shock + supply constraints.

There is no demand-side inflation story.

📍Consumer spending is cautious.

📍Wage pressures are contained.

📍Credit growth is moderate.

Yet central banks globally are gearing to tighten as if we’re fighting demand-driven overheating from the 80s.

We’re not.

We’re fighting a supply constraint with demand destruction.

Oil prices spike from geopolitical shock, not monetary excess.

High oil costs force businesses and consumers to spend less naturally.

They’re already contracting. When central banks tighten on top of that, you’re adding policy-induced recession on top of an exogenous supply shock.

That’s stagflation — the worst of both worlds. And there’s no demand to destroy anyway.

Central bank decisions are based on:

1️⃣ Oil shock is global, so inflation prints globally, forcing their hand politically.

2️⃣ The Fed is tightening, so other central banks must follow to defend currency competitiveness or they get crushed on exchange rates.

3️⃣They can’t say “this is exogenous, so we’re doing nothing,” because that looks weak. The result is coordinated policy error.

Have we forgotten the 1970s oil embargo?

🏓 OPEC constrained supply.
🏓 Central banks raised rates aggressively.
🏓 Unemployment soared.

Inflation didn’t resolve faster , it got worse.

The bottom line: Cost-push inflation resolves when oil prices normalise or supply constraints ease. Rate hikes don’t materially speed that. They just add unemployment.

[Klisman Murati @klismanmurati]

@Arcteryx you need to tell your factories to double down on producing your Rho Merino wool crew neck LS Men’s - Black size M ASAP!!! I’m in London and it’s available Nowhereeeee. Not good.

[Klisman Murati @klismanmurati]

@charliejhills Local

[WION @WIONews]

Trump vs Europe on Greenland

EU may reactivate over $107 billion tariff package

@ShreyaOpines brings you more

@klismanmurati, economist, shares his views

[Klisman Murati @klismanmurati]

@Arden_2210 18

[Klisman Murati @klismanmurati]

@Qudsia_Malik33 60

[Klisman Murati @klismanmurati]

@JessicaLBurbank Just realised you have your own show 🙃

[Klisman Murati @klismanmurati]

@JessicaLBurbank You need your own tv show

[Klisman Murati @klismanmurati]

@callmeMizuko 1353

[Klisman Murati @klismanmurati]

I think we need to stop pretending to think we know the motivations behind Trumps actions.

Received an invite today from a firm who is hosting a workshop titled Venuzuela post Maduro.

Hold your horses there cowboy.

These sorts of events give off the same vibe as authors who published books on the long term impact of COVID and we were just in March.

And listen I get it - you want to be seen to be on the ball, clients are worries, curious or want to know if they should be worried.

But at this stage you don’t have any asimetic knowledge that the market hasn’t already priced in, so all you’ll probably talk about are the obvious.

•Oil price volatility
•Heightened geopolitical risk
•Reactions from China, Russia

Bla bla bla

What nobody is talking about is this:

Trump has proven time and again we should not doubt his proclamations.

He said he’s slapping tariffs on EVERYTHING and EVERYONE… most said nahh he’s bluffing - no he ment it

He said I’m repealing institutional wokeism - nope said the US sport association - yep said his executive pen.

We want Greenland said trump- nope you can’t have it said the policy wonks who want to get you to register to their webinars - trump goes… you get the point

But what about when Trump says no comment when asked if he wants regime change in Iran? That’s the most dangerous sign of all…. Because he really is planning action on that front.

What is harder to gauge with Trump is his thinking behind his actions, his real and often multi faceted intentions are not as transparent as the assurance that HE IS GOING TO DO WHAT HE SAID HE WILL DO.

Send me an invite unpacking that doosey and I’ll be the first to register to your webinar.

[Klisman Murati @klismanmurati]

Watching @bbclaurak interview PM Kier Starmer about Trumps actions against Venezuela - engineering a gotcha moment when she asks Starmer to comment on Trump comparing his actions to that of Putin in Ukraine is not useful.

What he really wants to say is don’t get me involved in what Trump does as I have zero leverage or interest to fall out of favor with him - which is the truth, but instead you make him come up with a lot of white noise just to get over the ridiculous question.

[Klisman Murati @klismanmurati]

@DABESTTODO23888 @conspiracyb0t @grok @grok if you had the choice to make one extra repayment a month or add that installment to an S&P tracker fund, which one would you pick?

[Klisman Murati @klismanmurati]

Diplomacy was meant to be the pressure release valve on global tension and conflict but for all intents and purposes this pressure release mechanism is broken.

One should not underestimate how much of an impact geopolitics will have on commodity prices, inflation, trade volume, globalisation and technology in 2026.

In some cases we will see a continuation of a slow boil with the heat turned up and in other cases we will see violent and (for some) unforeseen flashpoints exploding.

And instead of a pressure release, we have seen and will continue to see pressure increase due to current tensions remaining and escalating (yes, entropy also exists in international affairs)

and

New conflicts and flare-ups emerging (US-Venezuela, Colombia etc) , with a multitude of timelines having the potential to emerge as our shared reality with almost all of them leading to a more fractured world then cohesive one.

[Klisman Murati @klismanmurati]

Here is a good idea that will never happen. Instead of voting for parties we vote for specific cabinet appointees, based on their competence and vision for the country. Top cabinet picks then appoint a PM from another pool the people vote on.

If modularity helps serve spacific needs in life then surely having the ability to select the heads of the departments that serve the country would also work.

This way you filter for the reckless and unqualified and over time only the most qualified would want to throw their hat into the race knowing the grilling they will get.

If this seems too pie in the sky then why not have (like Singapore has) a quality standard where any cabinet position must be occupied by an expert in that field?

How ridiculous is it that one month a minister is the secretary of health then next month secretary of energy!

If you want less conspiracies of deep state activities have experts in positions they are competent in navigating.

It’s not hard.

[Klisman Murati @klismanmurati]

As we celebrate #Albanian independence day, I've come to realise that a lot of what unites the Albanian identity is shared historical trauma.

It seems to be more a time for morning and remembering the lives lost in pursuit of nationhood and against oppression, and not so much in relation to the #independence movements in 1912 but 2008 with the independence of Kosova.

A bloody time which gave rise the the colloquial term balkanisation. There is not so much pride in historical achievements divorced from the struggles that lead up to #Kosovan independence in 2008.

Yes there are obviously lamentations towards our national hero Skanderbeg but it feels we are grasping at straws and I want to ask the question: what have you done lately?

Strong and productive identity can not be build with trauma, nor can it be built with Ottoman era game of thrones idolisation.

It must be build with a national strategy that gives hope and proof to the idea that we will not continue to live in the trauma of our past, but will forge a new future based on unlocking the potential of its citizens so that we celebrate breakthrough achievements created by the people for the people.

This is how a nation moves forward and this is why nation building is such an important mission to get right.