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Luigi Buttiglione

lines on the record: 52
first: 2026-03-04
most recent: 2026-03-04
sittings or episodes: 1
sources: podcast

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“That would be fantastic, and thank you very much. I really had a very good time, by the way. And hope you enjoy our research. And up if you like it, that would be phenomenal. Thank you very much.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Reacted by rallying to geopolitical risks at the end of the, before the weekend and the beginning of today or the trading day today, and then it started to sell off. So yields went up in double digits in terms of basis points. And I would say there is a reason for that. So this is something that we have to watch, of course. And again, we don't know, but it's difficult to say there is no risk. Go up this way, you cannot say, well, it will come down. Maybe I hope, but again, as we said before, hope is not a good strategy.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Rates and of course you know this is bad for the economy but having a more persistent inflation shock it will be worse so we don't know of course what what's what will what will happen in the next few weeks we don't know but I would say the risks the tilting to the upside and by the way it was interesting and we have also quote unquote sympathy for the other markets behave this way this is also the way we addressed our clients this morning in our daily titling supply shock and basically say look now the risks that that in a few months interest rates actually will have to go up rather than down you know more material and it's interesting that initially the market especially the bond market”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“the Bank of England a bit less for the Fed which has a dual mandate so they have to target both with up and with inflation to inflation and to the labor market but still it's a problem also for them and where the problems come from a supply shock well if it is a short term one or let's say doesn't affect at all inflation expectations or wage dynamics then you don't need to react to that So as a central bank you do nothing, you see through that even if inflation goes up, you know it's temporary. A different thing is if there is a so-called second round effect. So if the shock is persistent enough, then it filters through other goods and services outside energy and to the labor market. Dennis is a problem for a central bank. Then you have to react. By hacking interest.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“At this discussion a few weeks from today, we look how silly was this point made on 2nd March 2nd and this is what we can say. But this is something which could be relevant. For instance, by the way, again, especially for Europe, unfortunately. For instance, we see that today gas prices in Europe have increased by at some stage by 50%, now it's 40%. These are big numbers. Our prices is, I would say, very far from historical eyes, but you know, it has increased quite a lot from the December lows. So if this dynamics persist, then this is a problem for central banks. It is a problem especially for the so-called inflation target, pure inflation targeters like the Europeans or Bank of Canada, the ECB.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Well, let me allow me to take an economist or a macroeconomics perspective on this. And then we. Because of course on geopolitics we can all have opinions and opinions are not analysis. I would say that one thing which is important to keep in mind in these situations from an economics and a market perspective is Develop the possible developing of a major supply side shock. And this could be one of them It's possible, we don't know, of course. This has to do with two things basically the extent of the shock of the increase in energy prices and its duration. Both of them And this could be one of them, potentially. Of course, I don't know, it's possible that if one looks at this.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Not too sure, frankly, whether this will be damaging or not. Of course, if they go below the line, the red line, definitely yes. Frankly, I'm not too sure. I don't know if they are crossing the line or not. Maybe they are doing the right thing. To be honest with you, that I'm not sure. I'm more sanguine on monetary policy. That is something I think is, for me, is more understandable. I mean, for someone with my background.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Going to the basin to wash deregulation story, well, I would say per se, I don't think that's a bad thing. The problem is what kind of regulation, I know it's a difficult problem, but this is the problem with regulation. So some is regulation useless? No, of course it's very useful. Is over-regulation damaging? Of course it is. The ability of the regulator is to find the right to fine-tune the right kind of regulation. Now, that much of an expert to tell you that it's so clear-cut, there is another regulation. Probably I would say after the great financial crisis, there was a bit of a run towards over regulation. Probably by the way, more”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Nobody speaks about this problem in those terms, but it has to do with that. If interest rates were higher, you would not think so easily about leveraging up. Interest rates are low, you And then you risk to overinflate something which probably will not need that. It was growing already organically. So that's a problem. Another problem which has to do with this and with AI in general, but any technological progress in general, tumultus like the one we are seeing now. Is that we know that all of the companies that we see now are going to survive. This is a necessity. There will be winners and losers. And the problem, of course, is the market doesn't know what the winners are the losers. So there is always a moment when it gets more shaky and that could be a discriminant to discern between these two groups.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“And this is exactly what is happening. If there is a risk, and I think I'm very happy that you pointed out because probably the picture I was giving about AI was too rosy otherwise. And by the way, as we alighted also in the sub stack paper that you mentioned, we highlight also that there is a problem with leverage. So it's increasing. It's not that leverage is necessarily a bad thing. But free cash flow is decreasing and probably in aggregate is not a huge problem for the time being, but for some companies, again, I don't want to mainno one in any of them, but we know that for some companies, the market is getting worried. It's getting worried for some companies. It's getting worried from some kind of private credit, the private credit market is nervous. And I think this kind of nervousness, I think, is not unjustified. It has to do with risk rather than a return, but I would say it's not crazy. And again, this is where monetary policy is subtle.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“There were political by the Fed before the election, the presidential elections, and this is also why Trump did not forget that and he backfired on powell and so on. And then there were some other cuts which again were tried to please the new administration. But actually, I can tell you, if I was coming from Mars or in another decade, the question in my industry would be of the trader would be, okay, Luigi, when are they going to hike? And the first hike is going to be 25 or 50. This is the question. This will be the question. And precisely because of that, because by putting interest rates too low, quote unquote, or too low relative to neutral rate, especially for these kind of industries, then you encourage them to leverage up.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Good question. I would say let's try to break it in two pieces. Let's go, let's start with AI and also let's reconnect to what you're discussing before with the neutral rate. This is exactly the case. This is the problem. This is where you read the problem neutral rate. If you keep, I think even the reductions which were put in place already in the last 15 months, I would say to some extent were political.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“I'm curious if you think whether specifically to the US, we're beginning to see the start of a reloveraging up of private sector balance sheets, because there's a couple things happening. Specific to what we talked about earlier about AI, the hyperscalers, the Mag7s, the big tech companies are starting to lever up for the first time. As they're, you know, most of their free cash flow has gone to data center buildouts. They're now at the point of beginning to issue corporate debts. So they're levering up. And then the other big thing I'm seeing is that it looks like if you read between the tea leaves of what Warsh and Besson have been talking about, it seems like they want to deregulate the banks and take away some of the Basel III related regulations to really get commercial banks to start loaning again, which really hasn't taken off since 08 again. And it feels like they're also looking for that private sector leverage up to happen again. Do you see those trends? And what do you think about them?”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“But it doesn't work this way. And I think China has the same problem. And I think China is in this situation that we depicted in that paper already 12 years ago, and they are not out of the woods at all. So there is definitely a big debt problem in China, which again is created by the fact that the assets which were created with that debt, which is basically real estate, are not very productive and now they are in trouble. And it's an unsorticit business.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“In 2009, when they reacted to the US Great Financial Crisis, and this is a common feature in that paper that you mentioned, we call about miracles. So there have been many miracles since World War II, economic miracles, Editarian miracle was one of them, the Chinese miracle is another one. And usually these miracles are made by two things. The main one is demographics. The second one is productivity. In Italy, it was after World War II, and in China it was after the accession to Free commerce in 2001, these things are, but then when these things slow down, when the miracles ends, people or government say, why should be the end? Let's try to prolong it. Productivity is not there anymore, so they leverage up. You know what, if we only grow as we used to grow until last year, it's very easy to pay it back.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“But also, and most importantly, productivity is very low, actually is negative. It's falling. So it's not even low growth. It's negative. And demographics are very poor. So this is really where the problems could be, unfortunately. Same thing for China, by the way. China is another place where productivity is going down and demographics are going down. And the leveraged up exactly the wrong moment.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“In other constituencies, more of a problem. Europe, to some extent, in China in other respects. I would say both are probably worse problems than the US has. Of course, as you know in Europe, you pointed out there are countries with relatively low debts, or Germany has other problems, but debt is still manageable. Others like Italy and France, where the situation is more difficult. Now it has been calmer in the last few years, but it doesn't mean it will be forever. And the reason why it's more difficult situation is not only because debt is any high in these countries.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“So, still, there is population growth, maybe not as much as in the 50s, but still decent by international standards. Employment growth is very high. So I would say the sustainability of public debt in the US, I would say to me, is not extremely concerned. I'm not saying that it's a good idea to leverage up, but I'm not so concerned. So if one day the government comes to power and says, look, I want to cut on that and raise taxes, people will complain, but the economy won't be the end of the US. They can do that.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“we probably will have to face these logics or these problems quite a lot in the next decade. I would say there is a lot of press about debt in the US. It's not a good thing. Frankly, I think it's not a good idea. Again, I don't think there is any need at the moment to leverage up the public balance sheet in the US economy. As we said, it's an economy in very good health. So there is no why you want to do that. I'm not sure why. At the same time, as we said, productivity is very high. And productivity and demographics, which is so-called real growth from a supply standpoint, so an economy grows if there is more people around and if these people are more productive. In the US, you still have both things.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“That's it. There is not a third option. When you don't pay back, there are two other options. There are also two options. You don't pay back explicitly. So you default on it. Or you don't pay back implicitly by inflation. This is something which is, and this depends very much on the taste of a population, how you want to default, or things like, is your debt held by foreigners, then the best way to default is explicit default says thank you very much. You were a great friend. Thank you for letting me money, but sorry, you're not receiving it. If it is, if that is domestic, then quote-unquote the best way is to inflate it away.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, thank you for reminding that paper of a few years ago. Yeah, I have to say the title, I would say, I still think it's quite actual. It was deleveraging what deleveraged. Will it be like the Italian way? What are we talking about? As you said, we were just moving private, translating private into public debt. Public is probably sounder than private, but I would say still debt is. And that has to be repaid. Now There are only two things that you can do with that. You either pay back or you don't pay back.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Shifting gears here a little bit, but in 2014, you wrote a seminal paper about Leverage. And at the time, it was very precious because there was this idea that private sector balance sheets had deleveraged significantly post-08. But in reality, it was just this transfer of leverage towards the public balance sheets. And I feel like ever since COVID, that idea has just become something that not even just economists talk about. Like the world society talks about, which is that look at government balance sheets, they have levered up like crazy. private sector balance sheets are pretty conservative these days, especially in countries like the US that we haven't really seen that. And I'm just curious about how you think about that these days because it leads to the question of fiscal sustainability, which leads to the question of fiscal deficits and how long this leveraging up the public debt balance sheets can occur. And just wanted to hear about how you think about all of that these days.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Doesn't work very much. And at the moment where the institutions, as you correctly point it out, of Europe are not so sound at the moment. So the end story on Europe has not been written. In Europe, I think a common Europe is a good thing, but it doesn't mean that we have taken the right, we are pursuing the right way to achieve it.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Now we are moving into a situation where, and again, there is not a judgment in this, say more, let's call nationalist government are taking the power or have a substantial power within each country. So in Italy there is a Meloni, which by the way is not doing bad. In France, I would say most likely soon there will be Le Pen or... An important minority government party and so on in the Netherlands, Belgium and so on. Now again, I don't want to express any judgment on these parties because that's not my job, but if you have project of mini-globalization like the euro without the support of all the other unions that i mentioned before it's very difficult to make it really sustainable where the parties in power are nationalists it's a bit of an oxymoron having a globalization or a mini globalization made by nationalists”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“It would take too long. Let's start from monetary union, and then we can force all the other unions. But as we know, as you said, these unions are not there yet. Is there a fiscal union? No. Is there a banking union? No. Is there a political union? No. Can a monetary union work for too long without all these unions? That's a question mark for the welfare of its people. That's another question mark. The last thing I would say is that now the situation is even a bit more difficult because the political situation, a political environment in Europe is not the same of five years ago, 10 years ago, 20 years ago. 20 years ago, the so-called pro-European parties were in power, right or wrong, by the way, I think they made a lot of mistakes for the good. Of their own people.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Economists, they used to say in this back to 1971, not so a long time ago. Everybody was in favor of the euro. Of course, I'm a European. I'm not stupid. I think European Union is a good thing. And the European currency is a good thing. But you have to do things well. You cannot do the bad thing well, they are not the same thing. Good means the economist used to say, I'm one of them, you have to do first economic union, then fiscal union, then banking union, then political union, and then when everything works very well, have monetary, which is a little bit the story of the US, and there was a civil war in between, by the way, which should not be forgotten. The monetarists used to say so-called monetarist, which in the end they won. They used to say, well,”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“I could agree more. You know, my personal story is that I left the banker in 2000, beginning of 2000. And you know what happened, beginning of 2000. There was the launch of the euro. I drafted personally the program, the entry program of my country into the euro. But because I drafted it, I left. And not because I was anti-European. Now it looks like if you are anti-European, this is the notion in Europe. It looks like you are a fascist. This is nothing to do. This is what you said. This is economics 101. It's nothing more than this. It's not to be a fascist. So frankly, this could be the topic for another. For another episode because it would take the whole broadcast. But the history of the euro is basically the history of the economy, so-called economist, and against the so-called monetarists.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Europe is not good at that. A lot of the people that you can hear also, I'm sure you hear also from the other side of the Atlantic, those big Europeans who have some fantastic ideas, well, these people most of the time are part of the problem, not of the solution. They are there not because they were phenomenal individuals, but because they had the right political connections. This doesn't smell like a great story, frankly.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Spend my really in infrastructure, and they say, so they are trying to spend, so it's easier to spend it in consumption, and also this is also why the question, even in Germany, the government is questioned on that. So you told that the UL leveraging gap for investments, and now you will leverage up for consumption. Not exactly the most promising story. I think they should try to do what we were saying before. The good thing about the US. And I don't want to say the US is the ideal place in the world, but there are a lot of very good things. And Europeans should learn about that rather than complaining. So they should invest much more in human capital, university, R&Ds, this kind of meritocracy.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Problem is when you want to deal with the problem that you leverage up. Germany can leverage up. It's true because they are The level of debt in that country is by international standards is low. So they can do that. It's not Switzerland. It's not Norway, but it's definitely not Italy, France, or the US. But frankly, thinking that they can sort out the German problems with that, I struggle. Even because, by the way, one of the problems they have now in practical terms is that because of inefficiencies in the administration, they struggle to spend that money.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Know it's a bit sad thinking that the good story of a continent has to do with that. Because this is what we are talking about. So before we're talking about productivity in the US and thinking that fiscal policy in Germany, which means debt, more debt in Germany can bring growth persistently over there. I think it's a bit sad. So to be honest with you, I don't think it's a great narrative to buy a currency thinking that usually I mean, unless you do a fantastic use of that to boost, again, productivity and so on, but frankly, again, I don't want to be perceived as anti-German or anti-Italian or whatever, but frankly, I think that they have a problem. And they better go to the root of the problem rather than trying to postpone. That is a postponement.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“So it means that even in terms of risk these days, maybe people are saying, well, maybe it's not that risky compared to Europe. Europe is much more vulnerable.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Even interest rates were discussing neutral interest rates, where neutral interest rates basically is productivity in the end. That's what it is. And this is in the US. So I think Europe is a story of at least a story of a year where rightly, I don't know, I understandably more than rightly, markets was trading more risk than return. And also some last time point, also looking at the dollar Really struggled to see to accept these ideas, these notions that this is the end of the dollar. It is not just it's not in the cards. There could be some bad years, yes. Bad years happen to everyone, even to the best people. And I think last year I was one of them and it has to do with Risk. But you can see even in this sad day of war now that we are witnessing, well, in the end, the dollar is not doing that bad.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Want to go into politics, but there was a perception of risk in the US of various kinds. If I am a reserve manager, say an Asian reserve manager, I fear that my reserves could be confiscated or someone can do war to me. These things unnert people. So you may accept to have lower returns, sometimes even much lower returns to investing in Europe, but because of a less lower risk. But I mean, I hope I know as we say in finance, hope is not a good strategy. But I want to hope that this is not going to be pursued for too long by US authorities. This is not good. But in terms of return, I think there is only one story. And this story is the US. Again, if you look at equities, companies, technology.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Well, let's be clear. I definitely prefer one thing, and I prefer the US thing. So, I think the other one is a short term development. The Euro performance in Europe is one of those one, I think it was one year in ten or one in 15, all of a sudden the European market was called cheap for 15 years. There was one year when it was true and then it outperformed. And probably it was not a, I mean, I don't want to go into politics, but let's say this. I think the US economy in the US market in terms of return is absolutely unbeatable. So if you look at price earnings, however you square them, equity market or even the bond market yields, the yield is all in the US. So if you want to make money, sorry, you have to invest in the US. What happened last year was that there was, of course, the other variable, which also matters, which is risk. And last year in particular, again,”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“This is one of those occasions. I'm not a huge fan of European policymaking, but this is one of those occasions which the so-called steady-hand approach is advisable. Trying to be too much of an activist and trying to exploit the short-term benefits of coming from an easy monetary policy, I think could be extremely dangerous. By the way, there is no need. It's an economy which is doing well. It's not doing badly. I think if there is a problem which is felt by the American people, I would say more than the lack of jobs is inflation. The prices are too high. You want to boost this problem. You want to increase this problem. Why? Not too sure where is the upside.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“And this is not really under control of the central bank. So the central bank, of course, can control the short-term rates, not long-term rates. But they matter a lot for mortgages. So this is something that they have to be very careful about. Because all of a sudden, if inflation is a slow motion process, but when it goes, it goes. It's very difficult to stop it. And when it goes, then this means that the 14 year is troubled and then for the economy is troubled. So I think...”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“I totally agree with you. I mean, I think in the end, the bond vingilanti will do the job. In that situation, I think that you depicted, I personally would expect the yield curve to steepen. And steepen, so sorry for this language bear steepening. So this means that the level, the average level of the yield curve goes up, but the long end goes up even more than the short end. And as we know for an economy like the US, the 10 year is probably the most important yield.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“I would not try to position the level of actual interest rates before below the level of neutral interest rates. That would be a policy mistake which could be extremely expensive in the medium term. Sometimes the medium term doesn't mean five years. It means a few months or maybe a year. And then even politically for Trump could be not... So I think the American public rightly seems to be quite sensitive to the topic of inflation. Not the super rich, but the middle class, yes.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“It is, but I think it won't be that difficult, I personally think, because I think even in times of jobs, we are not going to see really job distraction. We are going to see less job formation. But if you look, for instance, at the labor market as it is now, where it is now, the unemployment rate is low. I mean, it's not record low, but it's, I would say, quite low by historical standards and probably going down even further. I'm not too sure there is such a tragedy on the labor market. I would definitely much more concern about what's going on with inflation, if not in the short term, in the medium term. And exactly what you said, it is the fact that”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Was one of the greatest economists ever, I would say, not just of last century. I would say ever. And I invited him at the Bank of Italy and he wrote a paper with us. And he was very upset at the time with Greenspan. He was saying, but there is an evil pusher, he said. He used to say he's reading too much into CPI, CPI is low, but he's cutting interest rates and without understanding that actually he's doing that at the time of huge technological progress. And then he was saying, we will have a bubble, which is exactly what happened in the end of the 90s. And then actually Greenspan had two hike interest rates. He had to rush and hike interest rates because there was inflation in assets and in goods. So one has to be very careful. I hope Worsh won't do this.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Swedish economist of a long time ago, it's a big mistake to put the level of interest rates below the neutral rate because in the end what you have, you have overaccumulation of capital and in the end you have both a bubble, so asset price inflation and eventually also inflation of goods and services. So one has to be extremely careful. That would be really a policy mistake to just try to interpret and enjoy this productivity and the fact that you see unit labor costs going down in the short term and thinking that you can go and cut interest rates. If you allow me just a second, it reminds me in my time of the Bank of Italy in the second half of the 90s and previously I was visiting Scholar at Harvard and I met Paul.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Again, we have seen these things, we have witnesses this thing in previous episodes. I would say what has to be a criminally careful in translating this into easy policy, even in the short run. Because this is one of those cases in which it matters to look at the so-called neutral rate, the rate which equates savings and investment. And on these occasions, like the one we are seeing now, productivity growth, as you said, skyrockets. So this means that the neutral rate most likely goes up quite a lot. And if we go back also to the lessons of Excel.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“have been much greater even encompassing the fat supply of labor has been lower than usual because of less immigration especially in the last year or so it's more than that and it's also clearly that you can isolate as you said clearly in some sectors especially in some services which are more AI affected I would say there are a lot of you know indications it's difficult to have 100 proof but I would say the indication is there you mention monetary policy and I think this is going to be a big debate also with the new chairman coming Kadin Wars by the way I know him I know him since the time my time is a Brevan Hub but he was our consultant there He makes a point of the fact that productivity growth means less inflation. It could be in the short run.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Well, there is a probably a bit of both. If one looks at the The dynamics of productivity, there is clearly at the end of 2022, beginning of 2023, there is a jump in productivity. I mean, it cannot be just luck. We could see that after COVID, I mean, initially productivity went down, they rebounded very strongly, and then it was coming off gently. It was renormalizing to the pre-COVID trend. Then all of a sudden it rebounds, clearly and persistently and consistently. And, you know, this is exactly after the launch of ChatGPT at the end of 2022. So I would say it's very difficult that all of a sudden productivity goes up. Labor formation goes down. It's completely different from a recession. It has nothing to do with a recession. But definitely for this kind of growth, which we have seen, which we have been witnessing in the US in the last few years, job formation should”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“The so-called control revolution around 2010, 2015. And now there is AI. And in each case, we could observe a large, very significant boost to productivity in the US, which then normalized, but it was very significant. We almost saw none of it in Europe, for instance. So it's really a US The history of the US over the last 40 years or the so-called exceptionalism, it has all to do with technology. Although just to finish that, it's not that technology comes out from a tree. It comes from humankit. So in a sense, you can say that, you can call it physical capital revolution, comes from a human capital revolution. and which means university patents all”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“It's a blessing. It's not a bad thing. The other thing I would say is that you mentioned productivity, and this is, as I was saying, major, for the time being, mainly a US thing. For the rest of the world, it has not meant much. But again, also this is not new. If you look at the history of the last 40 years or so, we have had four major quote-unquote ecological revolutions. The first one was, say, personal computers when I went to university in the mid-80s. Actually, I came to the US and I was shocked. I entered the PC lab of New York University and I saw 60 PCs. I never seen one in my life in Italy. So this is one. Then there was, of course, the dot-com second half of the 90s and beginning of 2000. Then there is...”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“Jobs than humans, so there is a productivity which takes out some jobs, but then there is an income effect. So the society, the economy gets richer. So in the end, this broadens the pie. So there is more to do with more for more people. So again, I would say.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“I think disruptive is a nice word, and disruptive is good. So the way we think of it, especially for the US, because for the time being, AI is mainly a US thing. It affects very little for the time being in the rest of the world. But the way we see that is more of a blessing than a curse. Sometimes we hear of it as it was a curse. Oh my goodness, there is AI around how do we go from here. It's a good thing. I mean, there is no doubt. And I would say from that standpoint, the way we think of that is that it is not that different from previous major technological progress we have had in the past. Actually, from our analysis, so far it looks like the main one, but it goes in the same direction. So the way we think of it is that there is a substitution effect. So this means that the quote-unquote a machine does more.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT
“So, contacts, expertise to a larger audience. So, this is also why we started really a few months ago an app which could be much more accessible in terms of content, but also in terms of cost for a larger audience. I mean, so hopefully it's a kind of, you can read it a little bit as an attempt of democratization of economics and finance. It's called LB Macro, yes.”
2026-03-04 · Forward Guidance · The AI Productivity Boom Is Here | Luigi Buttiglione · IDENTIFIED FROM THE TRANSCRIPT