A Wall Street guru, ECB president, and historian engage in a heated debate: Will "AI, tariffs, and geopolitics" drag the world toward the "1930s"?

Author: Long Yue , Wall Street Insights

• Historical mirror: ECB President Christine Lagarde and historian Adam Tooze warn that the current "technological boom + trade protectionism + geopolitical division" bears a striking resemblance to the path from the 1920s to the Great Depression of the 1930s.

• Debt Crisis: Citadel Securities founder Ken Griffin criticizes “reckless spending” by governments (especially the US) as the biggest threat to the current markets, not the private capital markets. “All governments are overspending, with almost no exceptions.”

• AI is not a bubble, but a K-shaped divergence is likely: BlackRock CEO and "Wall Street godfather" Larry Fink believes AI is not a bubble, but it will lead to a "winner-takes-all" scenario, where giants with scale and data (like Walmart) will crush their competitors. Christine Lagarde revealed that training a cutting-edge model requires $1 billion, and Griffin predicts that US data center capital expenditures will reach $600 billion this year.

• Tariffs and fragmentation threaten the expansion of AI: ECB President Christine Lagarde warns that geopolitical divisions and protectionism will hinder the flow of data and access to energy needed for AI, leading to decreased efficiency.

• The cost of tariffs: Lagarde points out that tariffs in Europe and the United States are climbing from 2% to 15%; Griffin warns that tariffs are essentially regressive taxes levied on American consumers and businesses, and could foster crony capitalism and stifle the vitality of small and medium-sized enterprises.

• Central Bank Independence: Facing political pressure, Lagarde reiterated the importance of central bank independence, emphasizing that fiscal consolidation cannot rely on the central bank to "bail out" the economy.

Photo: From left to right: Davos Forum moderator Andrew, BlackRock CEO Larry Fink, Citadel Securities founder Ken Griffin, renowned economic historian Adam Touz, and ECB President Christine Lagarde.

Amid the chill of Davos, top global financial figures have warned that out-of-control government finances and geopolitical divisions may be offsetting the productivity dividends brought by AI.

On the second day of the 2026 World Economic Forum, a key panel discussion brought together Larry Fink, CEO of BlackRock, the world's largest asset management company and known as the "Godfather of Wall Street" (managing $14 trillion in assets); Ken Griffin, founder of Citadel Securities, one of the most successful hedge funds (managing $65 billion in assets); Christine Lagarde, President of the European Central Bank; and Adam Tooze, a renowned economic historian.

In this discussion, which Griffin jokingly referred to as "gloom and doom," the guests provided an in-depth analysis of how the explosion of AI technology, soaring sovereign debt, and geopolitical fragmentation are pushing the global economy toward a dangerous crossroads "resembling the eve of 1929"—an era that led to the Great Depression after a technological frenzy.

Reject repeating history, but be wary of rhyming.

“Mark Twain said that history doesn’t repeat itself, but it rhymes,” Columbia University historian Adam Tooze said, getting straight to the point in his opening remarks. He pointed out that the current 2020s bear a striking resemblance to the 1920s: then came the technological explosion of electrification and the Ford assembly line, today it’s the rapid advancement of AI; then came the rise of the dollar’s hegemony, today it’s the pressure on the dollar system.

The most unsettling parallel lies in the “political failure.” Tooze warns that the attempt to use technology and finance to mask political divisions in the 1920s, a pattern of “over-reliance on money due to a lack of political imagination,” ultimately led to the collapse of the system.

Lagarde agreed. She added that in the 1920s, global trade as a percentage of GDP plummeted from 21% to 14% within a few years, and today, while a collapse has not yet occurred, global trade is experiencing unprecedented pressure due to geopolitical fragmentation and tariff barriers. She warned that without a minimum level of global cooperation, the "scale effect" required for AI will be stifled by fragmented markets.

Fiscal recklessness: the real systemic risk

Ken Griffin, head of Citadel Securities, offered a sharp assessment of the root causes of current market risks.

“This is a story about recklessness, but not recklessness in private capital markets; it’s recklessness in government spending,” Griffin bluntly points out. Unlike the excessive leverage in the private sector in 1929, the core risk in 2026 lies in unrestrained government spending. “All governments are overspending, almost without exception,” he warns, adding that this fiscal indulgence is threatening the foundations of the markets.

The US national debt has now reached a staggering $38 trillion. Griffin questions whether Washington's hopes for AI to bring about a massive productivity boost to "save" the deficit are achievable. If AI fails to deliver the expected leap in productivity, this unrestrained spending will be unsustainable.

AI: Not foam, but a brutal "K-type" cleaning

Larry Fink, who manages $14 trillion in assets, offers a more micro-level and brutal perspective on AI. He stated unequivocally, "I don't think we're experiencing an AI bubble, but I do think there will be huge failures."

Fink proposed the concept of the "K-shaped economy." He observed that across various industries, companies with economies of scale are rapidly widening the gap with small and medium-sized enterprises (SMEs) by leveraging AI. He cited Walmart as an example, pointing out that its ability to use AI for inventory control and consumer preference analysis is far ahead of the competition.

The root of this divergence lies in the staggering capital threshold. Lagarde revealed at the event that developing a cutting-edge AI model now costs as much as $1 billion and is heavily reliant on cross-border data flows. Ken Griffin offered an even more macro-level figure: this year alone, US capital expenditure (Capex) on data centers will reach $600 billion—Larry Fink even interjected that "the actual figure would be even higher."

Such a high "entry fee" means that only "large-scale operators" with deep capital moats can afford to play this game. As Fink said, AI will not naturally "democratize" but may instead exacerbate the winner-takes-all situation.

Tariff boomerang: Who pays the bill?

With recent escalation of geopolitical tensions, tariffs have become a persistent shadow over the Davos Forum. Lagarde provided a set of staggering figures: the average tariff level between the US and the EU has soared from 2% a year ago to over 12% currently, and faces the risk of rising further to 15%.

“If consumers bear 96% of the cost of these tariffs, it’s not good for inflation,” Lagarde warned.

Griffin, on the other hand, criticized the drawbacks of tariffs from the perspective of micro-enterprises. He pointed out that tariffs are not only a regressive tax on consumers, but also breed "cronyism." Under tariff barriers, companies with the closest ties to Washington gain privileges, which is a poison that stifles the innovation of small and medium-sized enterprises (SMEs). He reminded everyone that companies like BlackRock, Citadel, and today's AI giants all started as SMEs, and protecting this market vitality is crucial.

Central bank independence and the "last line of defense"

Faced with massive debt and fiscal deficits, markets often hope that central banks will once again "print money to save the market." Lagarde has taken a hard line on this, citing the example of Paul Volcker and emphasizing that central banks must remain independent and not become subservient to fiscal policy.

“I don’t believe that central banks will always be the ‘sole savior’,” Lagarde said, adding that relying solely on monetary policy cannot solve structural fiscal imbalances.

Tooze added that the concept of central bank independence itself was born in the 1920s to cope with populist pressures, and in today's extremely politicized environment, maintaining the central bank's "knave-proof" nature is more critical than ever.

Full text of the World Economic Forum panel discussion:

Davos Moderator (Andrew): It's a great honor to have these extraordinary guests join us in this conversation. Larry Fink is from BlackRock, and of course, he now manages $14 trillion in assets. I should also mention that he is the co-chair of this year's World Economic Forum. You've done an outstanding job during this time.

Ken Griffin is also here. He is the founder and CEO of Citadel. He manages $65 billion in invested capital and has been at the forefront of the financial industry for decades. He has consistently been one of the most insightful people about the direction of the economy, and we will speak with him later.

Then we invited Adam Tooze, a European historian and director of the European Institute at Columbia University, who has authored five books, including The Flood: The Great War, America, and the Reshaping of the Global Order (1916–1931).

This covers some of the periods we'll be discussing. Lagarde will join us later, and we look forward to discussing this with her as well. But I'd like to start with Adam, and if possible, provide some historical context for this moment, as there are some striking similarities. We were experiencing an incredible boom. Part of it was related to technology. There were technology-related issues at the time, then various currency issues, followed by tariffs later on, and you can start to see what that looked like.

Adam Tooze: Thank you very much. It's really great to be here. I don't think we should be doing that kind of automatically repeating historical narrative. I don't think history works that way. Mark Twain's famous quote, "History doesn't repeat itself, but it rhymes," is very useful. I do think there are a few points in the 1920s that are very relevant to our current moment. One is technological. It was truly a new era, especially in terms of electricity and mass production. It was the Ford era.

Essentially, that was when Fordism became a global phenomenon and a social model. It was a contract of high wages, high input, and high consumption, which, at its best, stabilized high levels of consumption and the 20th-century growth pattern.

But I think what's even more ominous is that one thing we tend to forget when talking about the 1920s is that, for most of their contemporaries, it was the first moment of unipolarity. It was the moment they saw the triumph of liberal forces. Why? Because the liberal powers won World War I. The 1920s followed closely after this epic revolutionary war, the first total war. And the victorious powers, in a sense, remained in control for a time.

The hegemony Mark Carney discussed yesterday afternoon—whose hegemony was it? In other words, the British Empire, the French Empire, and the United States—two republics, supreme powers of free empires, with Russia as their sole ally, succumbing to revolution in 1917 and becoming a more radical force. Their power was based on money. It was finance. It was the dollar hegemony of the 1920s, which was supposed to anchor this already fragile world.

The lesson of the 1920s is this: our first attempt to stabilize the world using technology and finance failed politically due to the failures of the Treaty of Versailles and the League of Nations. We assumed technology and finance would be a good alternative. For a time in the 1920s, this formula seemed to work, as the gold standard eventually evolved into an increasingly dollar-centric system. Arrogance, a failure of imagination, and political failure never sustained that structure. But I didn't anticipate this moment in my lifetime. The difference between economic power, productive power, and dependence on money (especially the dollar), and the failure to establish deep political connections within that context, is what truly means to me about the 1920s. That's why it resonates so deeply with me at this moment, because the key power here is the United States, just as it was in the 1920s. The new technologies were American. The important money was American. And it was essentially the United States, for domestic political reasons, that violated its hegemonic obligations.

Host: In the fall of 2024, you said that the AI bubble of the 2020s paralleled that of the 1920s, namely, the coexistence of technological progress and setbacks in global trade integration. Could you elaborate on that?

Lagarde: What I'd like to compare is the technological breakthroughs of the 1920s. Whether you look at the size and scope of the power grid, the internal combustion engine and its development, or the assembly lines that were developing at the time, those were breakthroughs of that era. At the same time, you also had a very strong stock market. What we observed in the 1920s, and perhaps Adam you've mentioned, was a major shift in global trade. I wouldn't call it a collapse, but it fell from 21% of GDP to 14% in about a few years.

So what we are seeing now is the rapid digitalization of our economy, with a particular focus on artificial intelligence. We are seeing excellent stock market performance, not only in developed economies but also in emerging market economies. We are seeing geopolitical fragmentation, accompanied by increased tariffs and import/export restrictions on almost all product categories.

This is unprecedented. As long as the WTO continues to monitor these restrictions, we haven't seen trade collapse as the figures I mentioned. It's declined slightly, but it's holding. The question is, can this be sustained? But if I had a little more time, the key point I'd like to point out is this: a major difference between the 2020s and now, which in some ways makes the current situation more unpredictable, and perhaps even more chilling. I've just come back from the cold outside.

“Cold” is a fitting word. The difference is that breakthroughs in the 1920s could spread across national borders—in layman's terms. In that era, you didn’t necessarily need that scale and network effect.

Now, if you ask the giants in the digital age and the big spenders in artificial intelligence—and by the way, developing a cutting-edge model today costs around $1 billion—and if you ask them what they need, they'll say they need as much data access as possible. They'll say they need economies of scale to truly amortize the investment costs of model development. Now, if we face severe threats to data access due to varying privacy laws and increasing protectionist barriers around the world, it will seriously hinder the scaling of these investments.

I may be overly pessimistic about what we're seeing right now, but I believe it's a real threat. The development of AI, and the productivity gains we hope for, are difficult to reconcile with fragmentation in standards, licensing, and access. I think this can only be remedied through a degree of cooperation. This will depend on people's willingness to accept and tolerate different paradigms, different cultural preferences, and different worldviews. That's difficult.

Host: Larry, if you can, please talk about this question, because I can see you're thinking about it.

Larry Fink: I think for Western economies, if we don't cooperate, if we don't scale, we'll fall behind. I think this will be one of the biggest questions people ask me when they ask, "Are we in an AI bubble?" There will be some big failures, but I don't think we're in a bubble. That being said, I'd rather say we need to spend more money to ensure we remain competitive.

The problem we need to address now is that everyone believes AI will generate a huge J-curve demand for information. The key is to ensure that this demand only emerges as the technology spreads to more applications and more uses. If the technology is only the domain of six mega-corporations, we will fail. So for me, and you know, we don't have enough information yet. The key is how quickly we spread it, and how quickly it is adapted and adopted—these will be two key characteristics for me. For me, the parallel between 1929 and 2029 is that the limiting factor will be: Can we grow our economy fast enough to overcome the deficit? Especially considering the rising US deficit. Second, are capital markets capable of continuing to finance these investments to achieve the J-curve of technology adoption?

Host: I'd like to ask Ken this question. The 1920s were financed by massive debt; how do you view the systemic risks, the concentration of AI, and the debt behind it now?

Ken Griffin: First of all, it's great to be part of this "Doomsday and Gloom" panel. The footnote to the 1920s is the Great Depression. Our recklessness here and now lies in the spending of governments around the world, which are all spending beyond their means. This is different from the recklessness of the private capital markets in the 1920s. Regarding AI, the huge question mark is: will it create the kind of productivity acceleration that governments hope for to overcome our reckless spending? The world needs a savior, and hope lies in AI. But it may or may not; we don't know yet.

There's a lot of hype surrounding AI right now. In a sense, large AI companies need to generate this hype to raise tens or even hundreds of billions of dollars in investment to enter the field. Larry might be (more aware) of this, but capital expenditures on US data centers this year are roughly $600 billion.

Larry Fink: I think there will be more.

Host: But does this mean it's been overhyped?

Larry Fink: A lot of data centers under construction are for cloud services. The big problem will be monetizing the spending. Data centers built for AI require more advanced chips. The question is, what is the lifespan of those chips? If we have a new technological revolution and the chips only last a year, then that spending will be a really bad one. If the lifespan is four or five years as they expect, and then those chips can be used for cloud services, then I think these investments will prove to be good investments. I am personally very optimistic about how AI will impact the world.

Host: Ms. Lagarde, regarding public sovereign debt in today's system. The U.S. had a budget surplus in the 1920s; today it has $38 trillion in debt. The playbook we learned after 1929 was to throw money at the problem. Ben Bernanke learned this and implemented it in 2008. We did it again during the pandemic. Can we do that again during the next panic? Is there an invisible red line in the bond market where investors will say, "We're not buying anymore"?

Lagarde: I don't deny that investment in artificial intelligence can be extremely net positive and will bring productivity gains, although the amount is questionable. Opinions vary widely on how much it will bring.

But I think returning to my point about “minimum cooperation,” we must also consider that it is capital-intensive, energy-intensive, and data-intensive. We must pay attention to all three. In terms of energy intensity, what kind of energy is used to manage data will be important. The consequences for humanity are also important. So I think that while we need this collaborative approach (including addressing data privacy and preferences in different corners of the world), we also need to be mindful of energy consumption, the types of energy, and their impact on the climate.

Second, we must be mindful of the consequences for humanity, because unless you know that we've entered Keynes's dream world where work is an option—which I don't see in my medium-term vision—we must understand what the consequences for humanity are unless we want to risk social chaos.

Returning to the debt issue, debt has increased significantly, but the key question is what this financing is being used for. Debt invested in necessary productive projects, debt for security purposes, will always find someone to finance it. That's my assumption. Debt not used for productive purposes, debt that cannot sustain growth on a sustainable basis, will be much more difficult to finance. So I won't tell you there's a red line. I also won't tell you central banks will always be involved. But I believe the nature of the purpose of debt purchases will be more important than the actual volume.

Host: What do you know about the idea that central banks may not always be present?

Lagarde: I've experienced many crises, and people have said that "central banks are the only lifeline," but that's not the right way to achieve lasting equilibrium. Fiscal authorities must take steps to reform and consider the purpose of spending and its consequences for the people in order to maintain social cohesion.

Ken Griffin: Are you implying that our legislature has abandoned fiscal prudence and become overly reliant on the central bank to deal with the shocks of reckless spending?

Lagarde: I'm not suggesting that this is the case now, but it has been observed in the past.

Adam Tooze: The irony of history is that when people in the 1920s were talking about central banks as the “only lifeline,” they were urging a more aggressive fiscal policy. The problem was that we had a low-inflation environment and stagnant growth, and prominent figures, including those at BlackRock, were advocating for a more assertive fiscal policy because of a profound imbalance between the two levers of macroeconomic policy—a lesson learned in the 1920s.

And now, as Ken implies, what you're advocating, I understand, is a more abstract claim—that every department of government has a responsibility. Yes, this responsibility isn't just about macro-level figures, I hear you saying, but also about specific types of spending. Your distinction between productive and unproductive spending isn't just for economic purposes, but also for the crucial issue of political legitimacy and social coherence. Because of the social contract in Europe and America—but actually in Europe, there's a profound pressure from the idea that the modern welfare state is unproductive, and a lot of very vicious distributive struggles, which are awakening another 1920s specter—the specter of fascism, right? Those parties that some of our participants really want us to give them more of a platform, they are the direct inheritors of that tradition. They are now mobilizing in Europe, attacking these productive, unproductive, national, international, immigrant, racial, state-based issues around the legitimacy of abolishing public spending. So that's why this politics is explosive.

Larry Fink: But Adam, in the 2000s, there was the "too big to fail" creed (Andrew wrote about it), but because of the "too big to fail" creed, there was a societal view that: don't bail out. So there wasn't as much fiscal stimulus as necessary. But I would say the lesson learned was in 2020, you could argue that we used a massive amount of fiscal stimulus, maybe too much, you know, looking back. So I actually believe, you know, we're all evolving, we're deciding which lever to pull. So I think you know, Europe, especially after 2008 and 2009, probably didn't use enough fiscal tools. We're all evolving, deciding which lever to pull.

Adam Tooze: It also depends on your structure. Again, because Europeans have jobs, they essentially have a short-time work system that keeps people employed. The US, on the other hand, with its soaring unemployment rate in 2020, didn't have a truly functioning national unemployment insurance system and had to rely on this "false prosperity" of trillions of dollars in emergency aid mailed into the mailbox. It's easy to overdo it, but it is indeed one of the great macroeconomic success stories of modern times, and we haven't had a repeat of 1929.

Host: Ms. Lagarde, regarding the independence of central banks relative to the political class. During crises, central bank governors must cooperate with the government. You recently signed a letter regarding the independence of the Federal Reserve; what are your thoughts on that?

Lagarde: No, but this… no, this touches on an interesting parallel. It touches on an interesting parallel. If you go back and look at what actually happened in the 1920s, especially 1929. I've read some of the diaries of members of the Federal Reserve Board during that period. They were very concerned about the politics of the time. They were very politically astute. Incidentally, it wasn't the president at the time, President Hoover, telling them exactly what to do. Rather, they were worried that the central bank itself… which was still considered an experiment at the time. It was still new.

Larry Fink: (It will) be disbanded.

Host: You'll talk about whether central bank governors will still be here, what they're unsure about, whether they're unsure if the balance will be broken, whether Congress will say, "Finally enough." So I'm wondering, during these crises, there have been many times when central bank governors have had to work hand-in-hand with the Treasury and the President. So here we are at this moment. You recently stood up publicly, you know, and signed a letter about what's happening in the United States and our Federal Reserve. What are your thoughts on that?

Lagarde: First, I want to distinguish… I salute your work because you've really studied in great detail how they were thinking and what their fears were during those days. But I would distinguish today's kind of "working together"—which we certainly did to some extent during COVID, let's face it—from "fiscal dependence." So working together in exceptional circumstances, even if those are extremely exceptional, I think is perfectly legitimate. Whether we've done too much, I think we should, and we should, is a very good debate.

It's also interesting to ask what form it takes, because between shock absorbers on this side of the Atlantic and direct fiscal spending to consumers, I think you know, there's no consensus on which is more effective. But fiscal dependence is another matter, and I strongly oppose it. You know, to me, the great champion and hero in breaking this dependence on central bank governors is Volcker. He took the risk.

The enormous risks, truly impacting and jeopardizing the economy, are what ensure lasting price stability. I think his stance before President Nixon at the time, to demonstrate the central bank's independence in order to restore price stability, is something we should, you know, keep in mind. I'm not going to comment on what's happening right now, including today, actually. Just say that I and several other colleagues did take the initiative, in the context of events that occurred a week ago, to advocate for the central bank's independence.

Adam Tooze: One of the truly fascinating things is that the concept of central bank independence itself is a product of the 1920s. It is a product of the 1920s because most central banks, unlike the Federal Reserve, are old institutions. Like the Bank of England, the Bank of France. What they had to deal with in the early 20th century was the emergence of modern democracy—multi-party systems, populists, social democrats, right-wingers. It is in this context that the Federal Reserve, in a sense, was born in crisis. One of the reasons the United States didn't establish a central bank sooner is that it is a democracy, and capitalist democracy is controversial; money is controversial in capitalist democracy. Central banks are also highly controversial, and the United States didn't achieve this until Wilson reached a compromise in 1913. And others—the British, the French, the Germans—of course, had to really figure out what it meant to be a market-centric, finance-centric bank, a bank, in a truly active social democracy. It is from this that the concept has been hostile to populist democracy from the very beginning, since the 1920s.

That's a quote from Montagu Norman, "knave proof," right? You want the central bank system to be able to withstand that kind of pressure. There's a certain resonance in that at the moment, isn't there? You need to enable central banks to withstand that kind of political pressure. I think this has been a productive forum for thinking about the relationship between expertise, politics, and market pressures since Volcker. People may have different opinions about Volcker, but I completely agree with you that he set the paradigm for modern independent central banks, whether people like the paradigm or not, but it was clearly a defining moment from Carter to Reagan, withstanding pressure during Reagan's presidency, and so on. But…

Ken Griffin: Just to put things in context. Modern central banks represent the reality that we're not on the gold standard, which was during the Vietnam War...

Ken Griffin: Let's go back 150 years. I'm not advocating for a gold standard, it's just a very different world. And the second significant difference between today and looking back over 100 years ago is the pervasive presence of debt. In a market economy, if you have…

Host: Where is the debt...?

Ken Griffin: Deflation is everywhere.

Adam Tooze: He… was terrified. Well, that’s the reality. Debt was everywhere in the 1920s after World War I. Post-WWI debt-to-GDP ratios in Europe were higher than ever before. Nobody was on the gold standard after WWI. So they had to manage a democracy, deal with 140%, 150% GDP debt, and figure out how to run a central bank. Surprisingly, they chose the gold standard. So none of Britain, France, or Germany were on the gold standard at the time. And Italy in 1919, when the 1920s began, they all had to go back there by converging with the US. This became the great conflict between Keynes and Winston Churchill in the 1920s: What will we pay for this? This is the Cross of Gold. In America it was William Jennings Bryan. In Europe in the 1920s. What will we pay for this re-stabilization? That’s what makes the Eurozone look and feel like the terrible 1920s.

Lagarde: Right? But that's a huge difference between then and now.

Lagarde: Monetary policy outcomes are completely rigid, while we have more flexibility and more tools at our disposal.

Ken Griffin: There are plenty of success stories. I mean, if you look at price stability in Europe—and I don't mean to be a jinx, but it looks really good right now.

Larry Fink: Yes, I want to bring this back to what we need to pay attention to today. I think this is the foundation for what we're thinking about at the 2026 World Economic Forum and Davos. It's about how technology will reshape many parts of society, whether we get the data right or not. What I see from BlackRock's perspective is that we're seeing more and more industries exhibiting a K-shaped economy. Yes, a huge super winner and many losers. The winners in almost every industry are the scale operators who have the opportunity, internal cash flow, and profitability to leverage AI much faster. Take Walmart, for example; they have an exceptionally strong understanding of inventory control that surpasses almost any other retailer. They instantly understand consumer preferences as consumers buy things, as things are taken off the shelves, and they can navigate between stores. You see that in their performance. You see them performing exceptionally well quarter after quarter for a period of time, achieving higher returns, while many retailers are really struggling. We have bankruptcies, and so on. I'm seeing this in every industry. We're likely to see this in every country, and the scale operators are winning right now, but this doesn't translate into a broad global economy. In many ways, it may be narrowing. For me, this brings us back to what Lagarde was talking about: how quickly we can see the adaptation and democratization of AI and technology will be the real key question. Is AI cheap enough? Is it widespread enough so that it can be distributed to small and medium-sized businesses that can grow and have the same advantages as large-scale operators?

But during this period, scale operators are winning. I mean, I've seen this in the asset management industry; scale operators have better connectivity because they're leveraging more technology. I think this is just in the initial stages, and it will represent some huge social issues.

Host: I can shift the topic slightly and bring up another big issue that didn't actually happen in the 1920s, but technically occurred in the 1930s—I think this is very important to everyone—talking about a parallel line. That's in 1930, when President Hoover, desperate to win votes in 1928, promised farmers he would implement tariffs. 1930 arrived. We had already experienced the crash of 1929. Every economist and banker was kneeling in Washington saying, "Please don't do this. I beg you, don't implement these tariffs." Of course, because he made that promise to gain those votes, he said he needed to push it through. And then, of course, a year later, trade had fallen by 60%.

I'm curious how you're thinking about this in the current context. I imagine the president might even talk about tariffs later today. And not just about what happened at that moment when trade dropped by 60%, but also about how long it actually took, for political reasons, to effectively remove those tariffs and bring us into a more globalized order, which could be deconstructed at this particular moment. Who wants to answer that question?

Adam Tooze: I mean, I heard Larry's hint that we shouldn't talk about history anymore. So I'm going to turn to the present and say the biggest difference is this issue of fiat currency. Because what really caused the collapse of global trade in the early 1930s was a combination of tariffs and monetary chaos, the collapse of the gold standard in 1931, and then the introduction of massive quotas. At this moment, we are still a long way from that kind of world, so while these are bad things, this looks more like a classic trade war type of tariff. This isn't good, especially considering the volatility of the current tariff regime. That's what really makes it strange. Historically, we don't actually know what the US tariffs will be next week. But that, I think, is a relative comfort. This is an axis that I don't think has any reason to panic about.

Host: Ms. Lagarde, do you consider these tariffs to be a permanent state of affairs? If we sit together 20 years from now, will the tariffs we are experiencing today still exist to some extent, and will the kind of division we have in our global landscape still exist?

Lagarde: I certainly hope not. But let's see, 20 years from now, you might be here, and I might not. But, you know, again, I think it's important to look beneath the surface of those tariffs and see who's really taking the hit. We might be surprised. You know, I haven't seen many studies, but there is certainly one at the Kiel Institute in Germany that identifies American consumers and American importers as the primary bearers of the tariff burden. If I look at the EU-US relationship now, from a 2% tariff, but a year ago, our average tariff in the Eurozone was just over 12%. With the looming threat, if it's targeted, we'll see it rise to an average of 15%. If 96% of that is borne by American consumers and American importers, I don't think that's a good outcome, especially in terms of inflation. So I think we need to really delve into what the consequences are, what the spillover effects are, what the resulting inflationary outcomes are, and how growth is affected.

Ken Griffin: So, you know, obviously, I've been speaking out on this topic for over a year. Unfortunately, I think some of the concerns I highlighted have come true. Tariffs are regressive for American consumers; we've seen the government remove tariffs on goods that directly affect American consumers—not all goods, but they removed tariffs on a lot of goods. The second is, who pays for the tariffs, right? With any tax, a tariff is a tax, and there's always the question of who pays it. In this case, it seems there are two or three studies that have been done suggesting that the tax falls on American consumers and American companies, not foreign companies. Then, of course, is the persistent fear of cronyism associated with tariffs. You create an environment where the companies most closely connected to Washington are the ones that curry favor, which puts small and medium-sized enterprises at a real disadvantage.

I want to touch on a point here, returning to your comments about the rise of these very large, successful companies. Most of them started as small businesses during our lifetime, right? The man to my right runs the world's largest asset management company. He founded the world's largest asset management company and built that business in less than a lifetime. That's a huge success story.

This is a story of the dynamism of the American economy, where small and medium-sized enterprises (SMEs) have risen to become global leaders in just a few decades. In fact, if we look at AI companies today, everyone is talking about Anthropic and OpenAI. Anthropic didn't exist a few years ago. OpenAI didn't exist 15 years ago. Nvidia is a company that makes video game processors. The three largest names in the AI field are actually all under 10 years old. It's this dynamism that attracts capital to the US and truly gives a sense of American economic prosperity. We need to continue protecting our SME opportunity set because you never know which one will be the next BlackRock, the next Anthropic, Apple, and so on.

Host: Larry, I have a technical question for you. One of the reasons we did have the crisis in 1929 was actually technology. You mean the New York Stock Exchange couldn't keep up with the trading volume, actually? I mean, you see those famous black and white photos, thousands of people standing outside the New York Stock Exchange, that was during the October 1929 crash. They were standing there because they were trying to figure out what happened to their money. They didn't know because the processing was too slow. Today, we can get that information on our phones, accurate to milliseconds, almost perfectly.

However, at the same time, let's talk about the idea that rumors can spread, and spread very quickly. You know, in the old days, it took a long time for a bad rumor to spread. And then, incidentally, it took a long time to correct that rumor, in terms of efficiency. But today, we're seeing this in Silicon Valley banks in the US, for example. The second someone says and publicly declares, "I'm going to transfer my account out of this bank," everyone can rush to the exit. Because they can see it all in a completely different way, so while technology is amazing on one hand, I'd like to know what you think are the risks on the other hand.

Larry Fink: So I would argue that through transparency, the risk is actually lower. I think Silicon Valley Bank was a poorly regulated bank. I mean, BlackRock was actually required to conduct research on their asset and liability portfolio, and we determined two years before it collapsed that it was the most mismatched bank in the U.S. at the time. So I think that was a failure of regulation, not a failure of information transmission.

I truly believe that when you talk about other things. I mean, the transmission of information is processed. Yes, we can have fairly extreme daily fluctuations at any given time. But we've all forgotten one thing in 2025. If you pick the first day of each quarter, the 10-year Treasury note moves 3 basis points. That's all they do, January 1st, you know, April 1st. And then the 10-year Treasury note moves three basis points? Yes. But between those quarters, there's huge volatility, you know, and… but that's the efficiency of the market. That's the beauty of Citadel, the rapid movement of money balances it out, and we determine what fair value is in a very short time. I think that's the magnificence of capital markets.

Transparency is the engine, I would say. The engine of market movement, Ken should answer that question, because he is one of the geniuses in this area of architecture.

But I would say, going back to the technical point for a second, yes, I think a move towards tokenization and decimalization is necessary. Ironically, we see two emerging countries leading the world in decimalization and the tokenization and digitization of currencies: Brazil and India. I think we need to move in that direction very quickly. We will reduce fees, and we will democratize more by reducing more fees. If all our investments are on a tokenized platform, we can move from tokenized money market funds to stocks and bonds and back again. We have a common blockchain. We will, you know, reduce corruption. So I think, yes, we may have more reliance on a particular blockchain, and we can discuss that. But that being said, these activities may be handled more securely than ever before. We…

Host: We're going to be overtime. Ken, very quickly. When you think about the technical aspects of this now, I think you believe the benefits outweigh the drawbacks for society, but I do wonder if you think the technical aspects represent risks we should be considering.

Ken Griffin: Our financial markets are still all about technology...

Host: On a macro level, I mean, I think financial markets are much safer because of (technology).

Ken Griffin: Look, here's a simple one, you know, everyone's been talking about how difficult this historical moment was. Okay, you could live the life you have today, or be born 200 years ago and be King of England. Which life would you prefer?

Host: Okay, historically, in which year do you think we are actually in? What is the closest analogy?

Lagarde: You know, I'm reminded of Hamilton's question to King George, "What's next?" I think that's what we all want to know, what's next. But I believe we all bear responsibility for what happens next. And my "minimum cooperation" is what I'm pleading for right now.