DKS T1 Magazine November 2025

TERM 1 MAGAZINE

Presented by the Dubai Keynes Society

Produced and edited by Ali-Mansur .V

Aarush .V

Inaya .B

Advik .B

TABLE OF CONTENTS

FOREWORD

by Mr. Duckling - Headmaster of Dubai College

It is a privilege to introduce this term’s edition of the Dubai Keynes Society newsletter The Society has quickly become one of the most enriching additions to our school, offering a dynamic platform for students to engage with global economics, finance, and business The dedication and vision of the student organisers deserve the highest praise; their efforts have created a space where ideas flourish and curiosity thrives

This term, we were honoured to welcome an exceptional line-up of guest speakers whose insights have broadened our perspectives:

Mr Andrew Sayers (Emirates Skywards)

Mr Aykut Zafer Tasel (Al-Futtaim Group)

Mr Hemang Kapur (Shipa Freight)

Mr Tucker Highfield (Banking & Cryptocurrency)

Mr Aaditya Sarna (Dubai Holding)

Mr Jahangir Aka (Aka & Associates)

Each brought unique expertise, sparking conversations that extend far beyond the classroom.

The Dubai Keynes Society exemplifies what education should be collaborative, relevant, and inspiring Thank you to all involved for making this initiative a cornerstone of intellectual life at our school.

TERM 1 HIGHLIGHTS

OPENING REMARKS

by Ali, Inaya, Aarush and Advik - The DKS Heads

Leading Dubai College’s most prestigious and longest-running club has been an honour for us all Term 1 involved us having to rise up to the challenge of maintaining the high standards of the society set by heads before us, as well as attempting to put our own spin and bring our own ideas into the club Retrospectively, Term 1 was a success, with the addition of DKS representatives, termly awards for lower, middle, and upper school categories, as well as the planning of more opportunities and competitions to come. The DKS team is immensely grateful to all the speakers that visited the society, whether their presence was in-person or through a Teams call, their insights were valuable and inspiring Our gratitude is also extended towards Mr Christopher, for his guidance and helping-hand in acclimatising us to our roles, and especially our members and article contributors - your support, through simply showing up, drives the DKS forward. We hope to boast even more success next year!

Within this termly magazine are the works of DC students from Years 7-12, with each student talking about a different field in Economics, Business and Finance. As you read through the amazing articles contained within these pages, we would like to leave you with a quote from the man who inspired the creation of the Dubai Keynes Society:

“Ideas shape the course of history... it being a link between the present and the future”John Maynard Keynes

BLACK SWAN EVENTS

by Ali-Mansur .V

From the markets crashing due to new tariffs announced by Trump, to constantly changing investor sentiment on AI – it has become almost impossible to predict where markets are going to go next Since Trump’s second inauguration into Office, we have seen firsthand how unpredictable the movements and changes in price of different assets have become One week, we see all-time highs for equities and indices around the world as investors believe AI is going to take over. Another, we witness markets crashing due to investor’s fearing the next AI bubble This chaos has made markets become extremely volatile, leading to market indicators like the volatility index (VIX) reaching peaks of over 50 Such extreme swings in the market highlight a broader phenomenon in economics and finance: Black Swan Events.

Black Swan Events are defined as “An extremely negative event or occurrence that is impossibly difficult to predict” (Loo, 2025) These are situations that occur in the market that are unexpected and unknowable. Think the 2008 Global Financial Crisis or the Covid-19 Pandemic These events were so surprising and unpredictable that even the greatest investors in history suffered significant losses due to the sudden nature of these movements Aside from investors, these events have significant impacts on both consumers and firms in the economy as a whole. These global shocks cause major detrimental effects on global consumer welfare and standards of living, as many workers lose their jobs and are unable to earn a living wage. Additionally, firms suffer as supply chains get disrupted, causing output to decrease and profitability to fall.

With this in mind, it becomes crucial to explore how these rare shocks have influenced markets, altered investor behavior, and will change global policy in years to come.

Theoretical Framework

The initial concept of Black Swan events was popularized by economist Nassim Nicholas Tabel, who began developing his theory in 2001 with the release of his book “Fooled by Randomness”. Later, he expanded on his initial ideas in his most famous work “The Black Swan: The Impact of the Highly Improbable” released in 2007 (MAPFRE, 2024).

Originally, the term comes from a 17th century historical belief: That all swans were white When black swans were discovered in Australia, this shattered the assumption that people believed around the world.

Just like black swans in the 17th century, Black Swan events are rare events that are beyond normal expectations and cannot be perceived by most humans. A Black Swan can be defined as an event with the following three attributes (Taleb, 2007)

It is an outlier

It carries an extreme impact

Can be explainable and predictable after the fact

These three core principles help economists identify when Black Swan events occur in the market and therefore helps both investors and analysts examine and learn more about these scenarios

Firstly, events are only categorized into Black Swans if they are outliers, meaning their nature is extreme These events are not simply something that happens on a regular day to day basis. Instead, they are situations that occur rarely in whichever field they affect For example, breakthrough technological advances such discoveries of new Machine Learning techniques can be considered outliers – they do not occur on a regular basis and therefore are rare to see within the field of AI

Next, extreme impact is required for any event to be considered a Black Swan Apart from being an outlier, Black Swans are required to carry an extreme impact with them This includes crashes in markets causing significant corrections or breakthroughs which cause industries to change the way that they operate. Impacts caused by Black Swans are not seen in other events, making Black Swans unique as they cause significant interference with regular market trends.

Lastly, Black Swans must be explainable after the fact. What this means is events must have retrospective predictability – people must be able to come up with explanations and understand why certain events happened after they have already occurred For instance, after historical crashes have occurred, early warning signs are always found that could have helped people predict the events. This means that humans are able to understand the underlying causes of Black Swan through analysis but are unable to predict them before they occur.

The central idea beyond Black Swans is that they highlight the blindness with respect to randomness (Taleb, 2007) Simply put, they emphasize human nature in the context of focusing on minute details rather than the possible significant large events even though they may have a huge influence. This means that humans often miss the warning signs that signal a Black Swan may be impeding (e.g Subprime Mortgages pre-2008).

Here are a few examples to better illustrate Black Swans in the real world.

The 1987 Stock Market Crash

Otherwise known as Black Monday, the crash of October 19, 1987, shows one of the earliest modern Black Swans in history On that day, the Dow Jones Industrial Average fell by 22.6%, the largest one-day decline in stock market history. This crash was driven by the rise of computer trading strategies, leading to automated sell orders that fueled the market decline.

Even through millions of traders and investors suffered during this time, there were still some winners. For instance, Taleb himself was able to use his knowledge of failing mathematical models to acquire substantial gains when conventional approaches collapsed

This shows the blindness of many investors in regard to the market Some traders, like Taleb, saw and understood the underlying risks which led to the crash. This was done through proper analysis and examination. However, most other traders simply did not care to properly analyze and understood and quantitative weaknesses in the financial system. As a result, these uninformed traders heavily suffered during this period

The 2008 Global Financial Crash

The 2008 financial is arguably the most notorious and globally recognized Black Swan event in modern history This crisis was initially triggered by the collapse of the US housing bubble followed by the subprime mortgage crisis. Risk was spread throughout the entire financial system in the form of mortgage-backed securities, creating underlying warning signs of the impending collapse

Similar to the 1987 Market Crash, some investors caught on before it was too large A prominent example of such an investor is Michael Burry, well known from the movie ‘The Big Short’. He was one of the investors that saw the underlying warning signs and instead bet against the market However, most investors and large institutions were oblivious to the warnings. Thus, as housing prices began to fall, defaults on mortgages skyrocketed which eventually led to the collapse of major financial institutions like the Lehman Brothers.

Recent Events

More recently, the 2023 collapse of the SVB (Silicon Valley Bank) and major market corrections due to Trump’s tariffs demonstrate how Black Swan events continue to occur at an alarming rate. Day after day, significant movements in the markets occur with investors failing to predict the moves before they happen.

What does all this mean?

Ultimately, Black Swan events reveal far more about human behavior than they do about markets They expose the overconfidence us humans have and the tendency to ignore the risks around us As recent shocks have shown, investors do not fail because they lack information but often because they misinterpret or dismiss the signals that contradict their beliefs

Sources

Loo, A (2025) Black Swan Events, Corporate Finance Institute Available at: https://corporatefinanceinstitute.com/resources/economics/black-swanevent/#:~:text=A%20black%20swan%20event%2C%20a,that%20are%20unexpected %20and%20unknowable

MAPFRE, R. (2024) The Black Swan Theory and Silicon Valley Bank, MAPFRE. Available at: https://wwwmapfrecom/en/insights/economy/the-black-swantheory-and-silicon-valley-bank/ Taleb, N.N. (2007) The Black Swan: The Impact of the Highly Improbable. Available at: http://georgiancapitalca/gcpwp123/wp-content/uploads/2017/02/4_The-BlackSwan-The-Impact-of-the-Highly-Improbable.pdf.

WHY ECONOMIC MODELS FAIL IN A WORLD OF UNCERTAINTY

by Aarush .V

The limits of traditional economic models

An essay by economist John Kay argues that that economists’ excessive reliance on formal economic models has caused them to be lead astray, asserting that such models do not accurately represent modern society Some statistical models used by financial institutions to value derivative securities based on mortgages prior to the 2008 financial crisis proves such a point. Additionally, models such as the Rational Expectations Hypothesis assumes consumers have perfect or near-perfect foresight, but has been challenged due to lack of accounting for herd behaviour, imperfect information and panic amongst other flaws. According to the Munich Personal RePEc Archive many critics point out that the REH theory assumes a level of knowledge and foresight that is unrealistic in practice From here stems the wellknown idea that there are no irrefutable laws in economics; economists are never able to completely predict every situation as the number of factors make economic models impractical in certain situations.

Risk versus uncertainty

Colloquially, “risk” signifies the possibility of an outcome considered as undesirable. In other words, it is that slight possibility that something will go wrong The rational view towards risk is that its identification should lead to its management hence the industry of risk management in which risks can be confronted before they become issues. Christian Fjader argues that this logic would mean the world should have been better prepared for the COVID-19 pandemic, and in doing so, saved thousands of lives and billions of dollars. This brings to light the concept of uncertainty, referring to the limits of our knowledge in regard to the possibility of sudden and undesired events. Frank Knight distinguished the differences between risk and uncertainty in his book “Risk, Uncertainty and Profit” by arguing that while risk is observable and measurable, uncertainty operates in the limits of our knowledge, making assigning probabilities impossible Economic models often assume that risks are quantifiable and be incorporated into decision making. For instance, Value-at-Risk models commonly used by banks, attempt to calculate the maximum potential loss over a given period with a specified probability. While models like VaR are useful tools, they break down in the face of deep uncertainty caused by sudden, large-scale shocks to economic factors.

Rationality in theory versus behaviour in practice

Classic economic models assume that individuals are fully rational: they have stable preferences, process information perfectly, and always choose the utilitymaximising option This is contradicted by real world behaviour Bounded rationality encompasses human decision making as limited by incomplete information, calculation inabilities and time limits This causes satisficing decisions (good enough) rather than maximising (perfect) decisions. This gap can be attributed to behavioural economic biases such as loss aversion, overconfidence, anchoring and present bias, which shape decisions in a way that cannot be modelled; thus models that attempt to do so struggle to accurately represent real decision making.

When small changes create big outcomes

The butterfly effect, a concept from chaos theory, comes into play economically. First described by Edward Lorenz, the butterfly effect shows how tiny changes in initial conditions can lead to disproportionately large and unpredictable consequences overtime Such nonlinear dynamics can be observed everywhere in economics. A slight change in interest rates can trigger consumer sentiment changes, causing ripple effects in investment, employment and global capital flows

A real world example of this is during October 2020 when a sudden COVID-19 outbreak in Kedah, Malaysia forced several semiconductor packaging and testing plants to shut down for just 3-10 days under government MCO restrictions. The ripple effect of this “butterfly wing flap” was immense, observed in NovemberDecember of the same year in which Toyota, Ford, GM and Volkswagen announced unexpected production cuts due to the inability to secure enough chips The butterfly effect highlights why long-term economic forecasting is so difficult: even minimal errors in underlying assumptions can produce dramatically varied outcomes.

Imperfect information

Even the most sophisticated economic models rely on the assumption that agents have sufficient information to make rational decisions But in reality, information is incomplete, unevenly distributed and often misleading. This creates information asymmetries, where one party knows more than another A firm may conceal product flaws, a borrower may hide the true riskiness of their behaviour, or an investor may act on insider information unavailable to the market In complex modern economies, these asymmetries are amplified by digital platforms and data-intensive business models Large firms accumulate vast datasets that give them predictive advantages, while consumers and smaller competitors operate with far less visibility. This imbalance doesn’t just distort choices; it alters market dynamics themselves When people cannot accurately judge quality, risk, or credibility, they rely on signals, heuristics, and behavioural shortcuts, often leading to suboptimal outcomes Information gaps therefore become another reason why standard models fail: markets cannot reach efficient outcomes when the underlying information is flawed, hidden, or impossible to process.

Conclusion

The shortcomings of traditional economic models highlight a broader truth: the economy cannot be reduced to a set of equations or predictions. While models are indispensable tools they must be complemented by an appreciation of behavioural insight, systemic complexity, and the limits of prediction. A more realistic approach recognises that small shocks can have obscure effects, that information is rarely perfect, that uncertainty cannot always be quantified, and that human behaviour often deviates from rational benchmarks.

ARE MICROFINANCE AND MOBILE BANKING HELPING KENYA BREAK THE POVERTY TRAP?

by Inaya .B

In Kenya today, a fruit vendor can buy stock, pay school fees, send money home and save- all without ever stepping foot in a bank For many years, traditional banking systems were out of reach for millions of Kenyan’s due to long travel distances to branches, high minimum balance requirement and limited documentations which meant that before 2007, over 41.3% of the population was financially excluded Without the ability to make secure payments, access credit and invest in education or healthcare, this reinforced the cycle of poverty. Then, in 2007, Safaricom and Vodafone introduced M-PESA – a simple, mobile banking app that allowed users to send and receive money in a secure and affordable manner. What began as a small-scale solution to digitalising cash transfers has now become the largest mobile money service in Africa. With a staggering 59% of Kenya’s GDP flowing through M-PESA and over 70 million global customers, the question remains: do tools such as microfinance and mobile banking apps help people escape property or create new risks?

Microfinance is a financial service that is offered to low-income individuals and small businesses that lack access to traditional banking. This is in the form of micro loans to people who are not able to access credit from commercial banks because they have little or no assets Instead of requiring collateral (property, fixed deposits, jewellery), microfinance institutions offer loans on a small scale with relatively low monthly interest rates, allowing households and small businesses to invest in livestock, education and healthcare. This increases both investment and consumption which stimulates aggregate demand in the economy, leading to economic growth. The combination of digital payment platforms such as M-PESA and the Microfinance ideology has increased financial inclusion by making finance available to those living in rural communities.

One of the key ways microfinance is helping Kenyans break out of the cycle of poverty is through enabling low-income households to open and expand existing businesses The overall poverty headcount rate was 398% in 2022, implying that over 20 million people were well below the overall poverty line. Furthermore, the national food poverty rate in 2022 was 317% Both statistics indicate the vast number of low income households in Kenya who are highly vulnerable to shocks such as crop failure, illness and droughts Since more than 40% of Kenya’s total population works in agriculture, which also employs 60% of the rural population, climate shocks can have a detrimental impact on businesses, leaving individuals with unstable incomes and thus preventing them from saving or investing for the future Instead of living from paycheck to paycheck which can be extremley uncertain, microfinance loans allow borrowers to invest in more efficient, productive machinery such as irrigation equipment, investing in pesticides or paying for transport to access a wider range of markets. Evidence from Muranga’s County demonstrates that farmers accessing microcredit had seen increase maize productivity by 30%, conveying how access to capital can boost output and production. This inturn can increase stability leaving individuals less vulnerable to climate shocks, allow households to move beyond day to day survival and establish a long-term pathway out of poverty.

With over 20 billion transactions in 2023, the success of M-PESA has not only ‘cornered the market’ in Kenya but has become a blueprint a new generation of digital lending products. One of M-PESA’s most successful innovations is Fuliza – an overdraft service which disbursed more than $64 billion in 2023 In simple terms, Fuliza will automatically lend a M-PESA user the difference if they try to make a payment but have insufficient funds

The user can then repay the loan automatically when money comes into their M-PESA wallet - making it convenient for low-income workers in the informal economy who require money instantly for transactions. Fuliza is one of the largest mobile lending products in Kenya with an average transaction size of $2, making short-term credit available for even the lowest income groups. This is extremley important as the ability to borrow and repay within hours is critical as daily liquidity is cruical to aid microentrepeneurs to keep their businesses open and smooth cash flow Further, it ensures traders can still operate businesses even when cash is short and prevents the need to borrow from ‘loan sharks’ which is more likley to trap them in a cycle of debt.

The expansion of both mobile banking platforms and the increase in microfinance has had positive externalities on Kenya’s economy as a whole. Both mobile banking and microfinance have significantly increased financial inclusion, increasing formal financial access to 34.8 million Kenyans from 2006-2024. This increases tax revenue as the government can tax 58.1% more people than they could previously allowing for greater government revenue which can be invested in public services such as healthcare and infrastructure. This way, mobile banking doesn’t only empower households individually, but increases Kenya’s capacity to fund better quality public services which can significantly contribute to poverty reduction. The growth of digital lending and payments has helped make taxation more transparent as more income flows digitally, the Kenya Revenue Authority has a clearer view on income flows Mobile money has contributed about 8.6 of Kenya’s GDP. For businesses now, they are more likley to see an increase in productivity and improvement in the capital stock of the economy which can lead to an increase in Kenya’s long run aggregate supply.

Whilst mobile banking can increase tax collection and revenue, the allocation of these do not translate into efficient public services. Kenya has faced a challenge of corruption and missalocation of public funds which has been clearly voiced from numerous political protests Recently, in June and July 2025, nationwide protests erupted over government corruption and high taxes not being allocated correctly. Despite the increased efforts to formalise the economy, many young Kenyan citizens have questioned how much of the tax revenue is being funded to public education and healthcare. Additionally, there is increasing criticism that citizens are paying 275% of monthly salary or 275% of household income for SHA (Social Healthcare Affordability) but not receiving the promised healthcare. Therefore, while mobile banking does help increase national revenue, the efficiency of the allocation of these resources depends on political stability and institutional capacity.

In my opinion, Microfinance and mobile banking have had an immense positive impact in helping Kenyans move closer to breaking the poverty trap, helping lowincome households and businesses to invest and grow However, whilst it has significant positive effects, it has become expensive to repay interests . Going forward, Kenya’s poverty rate may decrease if there is increased regulations implemented by the CBK (Central Bank of Kenya). This would be ensuring a maximum monthly interest rate so that borrowers are not exploited with significantly high rates Secondly, I think that a greater number of commercial banks such as DTB, Equity and KCB will look to shift to mobile banking and look for digital products to sell This is because the demand for small ticket loans has increased in demand, particularly from the success of M-PESA and other digital lending products This means that the supply of microloans and alternative lending products will rise, causing an increase in competitivness and thus borrowers are likley to see a fall in interest rates

THE RISE OF FRIENDSHORING

by Advik .B

For many decades now, the premise on which globalization has been built has remained quite simple, boiling down to lowering costs by dispersing production across borders. Firms found wherever different parts of their supply chain were cheapest and most efficient to operate, which allowed them to take advantage of low-cost labour, lighter regulations, as well as abundant resources abroad Undeniably, this model has delivered enormous economic gains, creating sprawling internationally interlinked supply networks and driving down consumer prices in the process, enabling multinational companies to scale at unprecedented speeds. However, this interdependence has internationally become a source of vulnerability in many instances; rising geopolitical tensions - which range from US trade wars to conflicts across the world - have highlighted how easily supply chains can be disrupted when political relationships detoriate Because of this, states face a difficult choice: they can attempt to pursue greater self-sufficiency, but for most countries this is neither economically feasible nor strategically efficient As a result, many have instead turned toward “friendshoring”, a term that came about through US Treasury Janet Allen in 2022 essentially referring to moving supply chains to countries that are politically friendly or trustworthy, so that trade and production are less likely to be disrupted by conflicts or tensions.

How friendshoring began

As discussed above, it was the series of systemic shocks exposed the fragility of the globalization model. Notably, the COVID-19 pandemic acted as a “contrast dye” in the global system, revealing how concentrated supply chains could paralyze entire industries, from PPE to semiconductors. The chip shortage alone shut down automotive factories across the world Russia’s 2022 weaponization of natural gas further deepened the sense of vulnerability; Europe’s dependence on Russian energy became a geopolitical liability that forced an abrupt and painful decoupling in a way that hadn’t been seen before to that extent The US –China rivalry intensified the fears: China dominated more than 70% of global lithium and cobalt processing, and nearly 80% of the world’s solar manufacturing capacity, giving it near-monopoly leverage over the technologies central to the green transition. Such concentration was now was viewed as a national security threat.

The implementation of friendshoring

It was this convergence of risk in the middle of 2021 that reached some sort of tipping point that pushed friendshoring from concept to concrete policy By 2021–2022, the U.S. began embedding friendshoring principles into major legislative frameworks This was seen when the CHIPS and Science Act included “guardrails” barring firms from expanding advanced semiconductor production in China for ten years if they accepted U.S. subsidies. Then came the Inflation Reduction Act (IRA), which tied the full $7,500 electric vehicle tax credit to whether battery components and critical minerals were sourced from the U.S. or nations with free trade agreements - showing a marked and concerted effort by the US to effectively create an exclusive friend

On the other side of the pond, Europe found itself forced down a similar path, albeit reluctantly The shock of Russia’s invasion of Ukraine in 2022 had already awakened the EU to the dangers of relying on Russia for their energy demands. In response, the EU began hard-coding friendshoring principles into its own industrial strategy, starting with the Critical Raw Materials Act (CRMA), which limits the EU to sourcing no more than 65% of any strategic mineral from a single non-EU country. The Act also requires that 40% of all critical minerals be processed within Europe by 2030, forcing firms to shift supply chains toward “trusted” partners like Canada and Australia. The EU further deepened this approach through the U.S.–EU Trade and Technology Council (TTC), where both sides coordinate export controls to prevent sensitive technologies from reaching geopolitical rivals. It isn’t just the West that has adopted policies like these, with BRICS countries also reconfiguring their supply chains. India, for example, has pursued selective decoupling by restricting Chinese investment in critical industries while strengthening partnerships with countries such as Japan, Australia, and the UAE through initiatives like the Supply Chain Resilience Initiative.

Impact of friendshoring: Boon or Bane?

Friendshoring offers clear advantages in a world where geopolitical tensions routinely threaten economic stability. By concentrating supply chains among trusted partners, states can reduce and mitigate exposure to sudden disruptions, ensure more reliable access to critical materials, and build industrial capacity in areas that are strategically important for national security. Especially, it has benefitted many developing countries as wellVietnam attracted over $31 billion in FDI in early 2025, and Mexico’s nearshoring boom has pulled in billions as firms see these developing countries as politically stable, lower-risk, and low cost alternatives to China.

However, friendshoring comes with significant downsides as well Most obviously, it often raises production costs and reduces flexibility, which creates bottlenecks on innovation and slows the ability of firms to respond quickly to changing market demands. It can also heighten geopolitical tensions, as excluded countries may respond with retaliatory measures or form rival alliances; for example, China has strengthened trade and investment ties with countries outside Western friendshoring networks, such as Pakistan, Russia, and several African nations, to counterbalance US and EU-led initiatives Furthermore, developing economies outside friendshoring networks have severely limited access to investment and technology. For instance, without preferential access to critical components or funding from friendshoring countries, these nations may struggle to develop domestic industries for renewable energy, semiconductors, or electric vehicles, which leaves them dependent on low-value, labor-intensive exports

TROUBLED- ROB HENDERSON

by Mr. Christopher

Rob Henderson’s Troubled is one of the most powerful memoirs I have read in a long time. It is an important text for any Economics student who wants to understand poverty and inequality not as theoretical ideas, but as lived experiences that shape a person’s entire life.

Henderson’s early childhood was marked by extreme instability. Before the age of nine he had already moved between nine foster families Each move weakened the sense of safety and belonging that most children take for granted. His teenage years were chaotic and at times dangerous, but the book makes it clear that this was not the result of individual failure. It was the predictable outcome of a childhood shaped by broken institutions, unreliable adults and a complete lack of security

Even in the middle of this turmoil Henderson’s intelligence stood out Books became both an escape and a way for him to make sense of a world that often felt unpredictable Joining the United States Air Force gave him the structure and discipline that had been missing from his early life. Later, through a government scheme for veterans (G I Bill), he earned a scholarship to Yale University This moment transformed everything that came after.

It is at Yale that the story becomes particularly interesting for Economics students. Henderson found himself surrounded by privilege and began to notice the subtle ways in which elite groups communicate status. As a psychology student he became fascinated by the idea of status goods and the ways people use education, culture and consumption to signal identity. This is also where he developed the idea of “luxury beliefs”, meaning beliefs that act as a form of status signalling among the elite, but whose consequences are often felt by people with the least power or security.

One of his examples is the “progressive” call to defund the police within a certain social strata. It can feel like a morally impressive stance on elite campuses, but the people who are most affected by reduced policing are those living in unsafe neighbourhoods, not those with private security or stable communities. Coming from a background where public safety was fragile, Henderson immediately saw the gap between fashionable beliefs and real-world consequences. For students studying status goods, signalling and Veblen goods in Theme 1, these ideas bring the theory to life

What makes Troubled so important is the insight it offers into how inequality begins long before income, grades or job applications Henderson shows that childhood instability repeated moves, broken attachments and unreliable adults has a compound effect on education, confidence, decision making and long-term opportunities This is one of the least discussed and most powerful forms of inequality.

This is why Economics students should read this book.

To understand poverty and inequality properly, students need more than definitions and diagrams. They need to understand the human stories behind the data, to see how disadvantages build over time and to appreciate why escaping them is so difficult Troubled is not simply a story of suffering. It is also a story of resilience, social mobility and the strange cultural codes that exist inside elite institutions Above all, it reminds us that empathy, the ability to understand lives that are very different from our own, is essential for anyone who wants to study society

I encourage all my students to read this book, not only to deepen their understanding of inequality but to strengthen their ability to see the world from the perspective of others Henderson’s story stays with you and challenges the way you think about opportunity and what society owes its most vulnerable children. A meaningful and important read

THE US GOVERNMENT SHUTDOWN

by Harihar .R

On the first of October 2025, the US Government shut down

Over the next 43 days, Democrats and Republicans fought to push policies supporting their agenda whilst vehemently trying to shift the blame off themselves to the other side After this period, the longest shutdown in US history, President Trump signed a bill, passed through the Senate and House, that finally ended the shutdown. This article aims to break down the idea of a Government Shutdown, the impacts of a shutdown on the public and private sector, and the causes and effects of its most recent occurrence

US Government Shutdowns

Shutdowns occur when the US Congress, or Legislative Branch, is unable to pass legislation before the start of the fiscal year (October 1st). Since laws like the Antideficiency Act prevent agencies from spending without approval once their funding expires, a shutdown causes most of the non-essential public service activity to grind to a halt This also affects private firms that work closely with the government, but its impact is often far wider.

During a shutdown, the following entities are affected as shown:

Non-expected employees are furloughed. This means that public employees in “nonessential” fields are put on temporary unpaid leave until the shutdown is resolved Expected employees, or those in “essential” fields, such as the military, air-traffic controllers, public safety workers, etc , keep working but are unpaid until funding resumes. Once the shutdown ends, all of the employees will receive retroactive pay for the duration of the shutdown

Non-essential, non-mandatory funding programs are paused. This could lead to museums and parks being closed, or budget cuts in the military. Mandatory spending primarily covers Social Security, Medicare, etc. to continue as normal since they run differently.

A shutdown can only end when a fiscal agreement is passed through the House and the Senate and signed by the President. Through this time, the event would have caused a spike in uncertainty, major disruption to the lives of public employees, and stress on public finances alongside the wider economy.

What Caused This Shutdown?

Deep partisan disagreements between the two parties that dominate the Legislative Branch, namely Democrats and Republicans, led to a lack of consensus come October 1st. The primary disagreement revolved around welfare programs. Republicans, who often support a strong, free market, opposed the welfare program Democrats wanted to continue lower tax rates on these programs, incentivizing further use.

Specifically, the Democrats were seeking an extension on tax cuts to the Affordable Care Act (ACA) With the government going into more debt, the Republicans sought to exercise their control over the Senate and the House by attacking these welfare programs

The question arises: if the Republicans had a majority, why shutdown at all?

Although Republicans hold a majority in both houses of the Bicameral Congress, the Senate has a rule known as the Filibuster, where at least 60/100 Senators need to vote in supermajority to move the floor to vote on the bill As a result, policies can be stuck in the Senate for a long time. The Filibuster played a major role in diminishing the importance of the Republicans’ 53-47 democratic majority

Once the shutdown was in order, each side blamed the other and used the shutdown as leverage to push their agenda.

Political Impact

The shutdown significantly impacted the markets:

Consumer Confidence is down to 88.7%

Assets, such as Bitcoin, have lost more than a fifth of their value

This shows the impact of shutdowns on the wider economy

Especially with the abundance of biased news sources today, it would be difficult to find objective sources, so utilizing a range of news sources is crucial.

The final bipartisan compromise passed 60-40 by incredibly tight margins. Furthermore, some of the bills, especially with regard to the ACA, are set to expire in January, so new negotiations need to begin as soon as possible to avoid another shutdown

Conclusion

The 2025 U.S. government shutdown shows how structural rules (like the Senate filibuster and the Antideficiency Act) combined with deep partisan disagreement can override a party’s numerical majority.

Even though Republicans controlled Congress, they couldn’t guarantee enough votes under Senate rules especially when Democrats insisted on including policy demands (like ACA subsidies) in the funding bill. The deal that ended the shutdown restored government operations but only temporarily, and without resolving the underlying conflict on healthcare.

The funding agreement runs only to January 30, 2026, leaving open the possibility of another shutdown unless a compromise on key issues is reached In the meantime, the shutdown cost real money, disrupted many lives, and underscored how vulnerable government functions are when political gridlock takes hold

THE PRISONER’S DILEMMA IN

ECONOMICS

by Matthew .P

Have you ever wondered why people work together, even when going down the route of selfishness may be more appealing? This questioning is what lead to the birth of Game Theory, which studies how individuals make decisions when their outcomes depend on what others do. It is a useful branch of mathematics and is commonly used in economics when modelling real lief scenarios which deal with price setting, competition and rational behaviour and one recurring dilemma which arises when using game theory to model these scenarios is the Prisoner’s Dilemma

Imagine the two major supermarket chains, Tesco and Sainsbury’s, who both sell similar products can either choose to cut their prices or keep prices high. As these major chains account for an oligopoly, they are in direct competition with each other and thus their decisions, either to defect or cooperate, would significantly influence either of these chains’ market share. We can model this scenario using a payoff matrix:

At first glance, it seems most rational to cooperate, as if both players were to follow this mindset then they would achieve the best possible outcome (making profit). However, if we isolate the scenarios for Tesco, we can see a completely different side to this dilemma. If Sainsbury’s keeps prices high, it is in Tesco’s best interest to cut prices, as Tesco could gain more market share and dominate the oligopoly If Sainsbury’s cuts prices, again it is in Tesco’s best interest to also cut prices as in either scenario, Tesco would earn less profit, however by cutting prices Tesco would not lose market share, as both firms would have similar prices. This is a clear indication that both Tesco and Sainsbury’s should cut prices if they want to maximise their individual benefit, as defection dominates cooperation. But if both act this way, they both earn less that if they had cooperated by keeping prices high, demonstrating the core economic insight of the Prisoner’s Dilemma: rational self-interest can lead to a worse outcome for everyone

When considering this why do people or firms abstain from cooperation?

Even though cooperation would maximise mutual benefit, there is the risk one player defects whilst the other cooperates, only benefitting the player who defected. This brings close attention to this idea of uncertainty, as players are not certain that their ‘opponent’ will act in their own self interest or out of mutual benefit and therefore people often fail to cooperate

In economics, the logic of the Prisoner’s Dilemma demonstrates why rational selfinterest doesn’t always produce the best collective outcomes. Firms in oligopolies have an incentive to maximise their profits and may do this through outcompeting an undercutting their competitors. Economists use this to explain price wars, market competition and why cooperation often requires frequent interaction, trust or other mechanisms to emerge, overall presenting the reasoning behind altruistic versus selfish behaviour within the economy

HOW WAS SOUTH KOREA

INDUSTRIALISED?

by Angela .P

South Korea has transformed from being one of the poorest nations in the world to one of the most powerful countries. After South Korea gained independence in 1951, the country started undergoing modernization with the country starting to implement more inclusive economic institutions. Modernization is when countries start to implement more modern systems to improve a country such as better education, a stronger economy and more democracy to improve their country; inclusive institutions are systems that aid this by increasing citizen rights and promoting equality. South Korea doesn’t have any natural resources which is why it was so poor initially, to combat this they started to progress their industries, from textiles to heavy machinery to electronics which is a very wealthy industry. This is an example of inclusive institutions and liberal globalization which is when countries promote more freedom and citizen rights because these industries create jobs for Korean citizens and improve the overall living standards. Additionally, another example of modernization that South Korea implemented was their focus on increasing the education levels in South Korea. The illiteracy rate in South Korea was 53 percent prior to educational policies being implemented , after these policies 90 percent of the population were going to/had gone to primary school. This rapid educational growth has been due to both the government and the citizens, the government implemented policies that made primary school mandatory and ran 24/7 schools, this required a lot of commitment from the parents in South Korea since they had to bring their children to school late at night after working the entire day

South Korea experienced a major economic crash in the 1990s, largely in 1997 for numerous reasons such as neighboring countries which they relied on for different products such as Thailand having economic problems which led to a withdrawal of foreign aid. Therefore South Korea started receiving loans from the International monetary fund (IMF), however this came with some conditions such as the reversal of their protectionist policies. These are policies that make South Korea reliant on themselves for majority of their product, the IMF insisted that South Korea opens itself into global markets which are steps closer to modernization. Nevertheless, South Korea implemented this and continued it’s economic growth largely aided by the Korean citizens hard work and commitment to improving their country. There are chaebols in Korea, who are large family owned conglomerates which contribute to 40 percent of South Korea’s GDP which gives them a lot of power. This leads to large inequality in South Korea since they control a large of portion of Korea’s economy, chaebols are often above the law rarely being given jail time because the government cannot risk the chaebols being out of power for long due to major repercussions on the country’s economy

THE OPTIONS KID: HOW CALLUM PUTMAN MAKES FINANCIAL

CHOICES

by Omar .L

Options are financial contracts that give the buyer the right (but not the obligation) to buy or sell an asset at a specific price by a certain date An asset can be anything valuable like stocks, an index (collection of stocks), bonds, commodities, currencies, or even services Think of it this way: you're not buying the actual stock itself, but rather you are buying the option or choice to buy or sell it later if you want to.

To help make the concept of options easy to understand, I will take you through a day in the life of an average kid from DC named Callum Putman (the name will make sense soon) explaining every “option” he bought or sold.

At 6:15am, Callum wakes up, still half-asleep, and watches the football highlights from the day before. An ad shows a gaming PC for 3,000 DHS. Callum doesn’t have the money yet, but gets his allowance in two weeks He pays 150 DHS for a 2-week call option, which gives him the right (but not the obligation) to buy the PC at 3,000 DHS before the deal ends, betting the price will go up If it rises to 4,000 DHS, Callum saves by buying at 3,000 DHS. If the price drops or he finds a better deal, he just loses the 150 DHS call price

At 11:00am during Arabic period 4, he uses his mom’s credit card to subscribe to a coding course. Worried it might become less useful next term when CS classes resume, he also buys a put option, which is a financial contract giving him the right (but not the obligation) to sell the subscription back for 200 DHS at a specific time within the current term This way, if he loses interest, the put option ensures he doesn’t lose the full course fee.

At 1:30pm, during form time after lunch, Callum hears everyone buzzing about the upcoming Travis Scott concert in Abu Dhabi Feeling FOMO and not wanting to see ticket prices spike an insane amount, he decides to buy a futures contract to get his tickets for 400 DHS when they release A future contract is a legal agreement to buy or sell something at a set price on a future date. If prices jump to 800 DHS, Callum still pays only 400 DHS as agreed

After school, Callum bikes home and meets up with his friend Tom on Al Sufouh Street Every week, they swap rides so that Callum gets Tom’s scooter, and Tom takes his bike. This way, they both get to try something different

At 6pm, Callum makes a deal with his friend to buy a new video game console in 3 months for 1,200 DHS using a forward contract This is a private agreement: no money now, but Callum has to pay 1,200 DHS for the console later, even if the price changes If the price goes up to 1,500 DHS, he benefits; if it drops to 1,000 DHS, he overpays. Forwards are different from futures because forwards are private and made just between friends, while futures are official contracts traded on big exchanges.

In conclusion, if you use calls, puts, futures, swaps and forwards like CALLum PUTman (who seems to have quite a bit of money), you can pick your price, avoid surprises and do relatively smarter trades

THE PSYCHOLOGY OF MONEY

by Ishaan .G

Why do some people take huge financial risks while others save every penny? Why do investors spend hours studying the stock market, only to throw all their money into a penny stock at 9 a.m. on a random Tuesday after convincing themselves they have cracked the code? The Psychology of Money by Morgan Housel explores how our thoughts, fears, and habits shape the way we use money - a real-world reflection of behavioural economics in action

While many finance or economics books try to teach you the quickest way to make money, or the best type of stocks to invest in, or how to cheat the system, The Psychology of Money simply focuses on how we think about money What is money? Why do we use it? Why do people drive themselves crazy chasing money? The book teaches how emotions and circumstances play an important role in human rationale and decision-making and gives relatable, surprising examples. Housel argues that financial success is not about how much you know or what formulas you use – it’s about how people behave when faced with harsh conditions or extreme circumstances For me, what made this book stand out is how personal it feels – he doesn’t use billionaires or bankers as examples on what to do or whom to follow or copy – he uses them to illustrate his different arguments, such as luck and risk as key factors. He uses everyday examples, even the small things we do, to show the impact they can have over a long time It felt like a reflection of human behaviour and the reason behind our reasoning. It’s a reminder that money decisions aren’t just about numbers - they’re about psychology, patience, and perspective

One of the most interesting lessons was Housel’s idea that luck and risk are two sides of the same coin. It emphasises the role of luck and risk in financial success – and failure He explains how many people underestimate or ignore these factors when they are the ones that you should be most concerned or conservative about, since these are beyond control For example, someone might work tirelessly, attribute all their success to hard work, and ignore the timing, opportunity, or even sheer luck that helped them succeed Conversely, those who fail are often judged harshly, even though bad luck or circumstances beyond their control played a significant role. Housel brings this point to life with real stories, like comparing the extraordinary wealth of tech pioneers who lost everything to a janitor who was hiding his extreme wealth or to those who were equally talented but didn’t have the same opportunitiesdemonstrating that success is never purely earned.

What I found particularly eye-opening was how luck and risk exist in simple, everyday decisions, not just in massive financial ventures.

Even small choices, like depositing a check into your savings account, or when to invest (even just a small portion of your income) are prone to luck and risk He reminds readers that being aware of this and using it to your advantage is not cheating – but making efficient use of an unpredictable “resource” He presents luck and risk as a factor that influences all decisions – whether you realise it or not. In my opinion, it is one of the first steps into understanding the world of behavioural economics – the study of how humans make choices, often influenced by bias and emotions rather than pure logic

Another key lesson is knowing when to stop – the concept of “enough” Housel argues that understanding your own definition of enough is one of the most powerful forms of financial control He explains how much financial stress can come from comparing yourself with others and what they have – leading to a constant chase of more money, more success, and more status – without ever stopping to think whether what we already have is “enough.” This leads to risky decisions, which are often unnecessary and may cause you to lose what you already have Each person has a different idea or definition of enough, which is why you should not compare your financial situation with others This idea of ‘enough’ also ties directly into longterm thinking – another one of his key ideas which I found particularly interesting. If you are always chasing more in the short term, you end up taking risks that can wipe out years of progress and stop you from benefiting from long-term compounding. But when you know what “enough” looks like for you, you make calmer, more sustainable decisions that keep you on track for the future rather than being distracted by what others are doing

Consider what would happen if you saved $1 every month from 1900 to 2019. You could invest $1 every month into the US stock market, come hail or shine, regardless of whether economists are screaming about a looming recession or a brutal bear market. Let’s call this investor Bob. But maybe investing during a recession is too scary. So, perhaps you invest your $1 in the stock market when the economy is not in a recession, sell everything when it is in a recession, save your monthly dollar in cash, and invest everything back into the stock market when the recession ends. We’ll call this investor Jim Or perhaps it takes a few months for a recession to scare you out, and then it takes a while to regain confidence before you get back in the market. You invest $1 in stocks when there’s no recession, sell six months after a recession begins, and invest back in six months after a recession ends. We’ll call you Tom. How much money would these three investors end up with over time?

Sue ends up with $435,551

Jim has $257,386.

Tom $234,476

Sue wins by a mile

This shows that staying in the long game is more beneficial than playing the short game. Sue kept investing no matter what, while Jim and Tom got scared by the market and pulled out and came back in when they thought it was ‘safer’ Sue was the only one who benefited from decades of compounding. Housel uses this to illustrate that investing isn’t predicting recessions or using the ‘perfect moments’ – it’s about staying in the long game.

In summary, The Psychology of Money isn’t like other investing books – he shows why we make the financial decisions we do and how our behaviour shapes our outcomes From the role of luck and risk, to understanding what “enough” to the power of patience and long-term thinking, the book reveals that financial success is more about psychology than numbers, and how human rationale plays a bigger role than we think

HOW DO TRUMP’S TARIFFS AFFECT THE BOND MARKET?

by Prisha .O

What are Treasury Bonds?

In the US, the government issues treasury bonds Treasury bonds are long term debt securities that a government gives to borrow money. The investor loans them a specific amount in exchange for regular, fixed interest payments, also known as coupons, and the return of the principal amount on a set maturity date. The bond yield is the return an investor receives, calculated by the coupon payment divided by the bond's current market price (Boyte-White, 2019). The yield changes depending on the state of the market. It is important to note that price and yield are inversely related, so a price increase would decrease the yield (Hayes, 2020) Bonds are beneficial both to the government and the investor. To the investor, bonds provide a steady income, while the government can borrow money for public projects like infrastructure, even though they have a large national debt.

Why is the US Bond Market so powerful?

Treasury bonds are considered one of the safest investments in the world as they are backed by the full trust of the US government and it has never defaulted Moreover, the US being an economic superpower, the US Treasury Market is the biggest in the world, worth $286 trillion in the first quarter of 2025 (Beshay, 2025) When a bank, company, or government borrows money, investors compare the risk to that of the US Treasuries. For example, if a 10 year US Treasury Bond pays 4%, the UAE corporate bond would have to pay higher, perhaps 6%, to attract more investors and compensate for the greater risk. Therefore, the US yield acts as a benchmark for investors to compare to

Additionally, central banks around the world watch US Treasury yields closely because they show whether global interest rates are going to increase or decrease. Yields and interest rates are connected, so when US yields rise, it usually means that interest rates in the United States will remain high. Furthermore, the US dollar is the world’s main reserve currency and tends to push borrowing costs up globally For example, when investors can earn higher returns from US bonds, they may demand higher interest rates from other countries, such as the UAE, to make it worth investing there instead

Higher US yields attract global investors to move their money into the United States in order to get better returns.

This strengthens the US dollar and can lead to weaker currencies in other places As a result, stock markets, exchange rates, and capital flows across the world are all affected Even though US Treasury yields are technically about borrowing from the American government, they end up affecting global financial conditions, influencing how expensive it is for others to borrow money.

The Effect of Trump’s Tariffs

When Donald Trump announced large tariffs in early April 2025 (Global Desk, 2025), the bond market reacted dramatically. A tariff is a tax on imported goods (Clark, 2025), raising their prices In this case, a concern of inflation spread through the United States because people expected higher input costs. Because inflation reduces the real value of future bond payments, investors became less willing to hold long term treasury bonds. Due to this, many sold their bonds, pushing prices down and causing yields to rise. For example, according to brookings.edu, yields rose from less than 4% to spike to 4 5% intraday on

Tuesday 8th April

However, the worst fears were eased just a day later because Trump announced a 90 day delay on tariffs for some countries (although tariffs on China increased). Even with this delay, long term yields remained higher than before the tariffs, rising about 25-50 basis points from April 4th (Liang, 2025)

Some of these bond sales may have come from hedge funds which are investment companies that manage money for wealthy investors and sometimes take large risks. This can push yields up when they sell large amounts of bonds.

Why Bond Yields Mattered During this Period

Bond yields are an important indicator for the economy. When yields rise, it usually means that investors expect higher inflation or more risk. A falling yield suggests that investors expect lower inflation or less risk lower inflation During April 2025, Trump’s tariffs caused yields on long term US treasury bonds to suddenly increase because investors were worried about rising prices and there was a lot of economic uncertainty.

Higher yields affect businesses and households as well, not just the US government because borrowing becomes more expensive. Furthermore, a higher yield can attract international investors, strengthen the dollar and cause interest rates to increase in other countries.

In summary, the changes in the yields during this period showed how sensitive the bond market is to policy changes, like tariffs, and why these changes can affect the whole economy

DE-DOLLARISATION

by Vihaan .D

What is de-dollarisation?

For the past 80 years, the dollar has been a global hegemony, dominating international trade and currently accounting for 54% of global trade (Lahiri and Eckman, 2025), 90% of all global FX transactions (Maronoti, 2022) and 56% of global FX reserves (Nephew and Gweder, 2025). These figures highlight the utter power and supremacy that the US dollar grasps globally This dominance can largely be traced to the Bretton Woods conference in 1944, which pegged all the participating countries (44 nations) to the dollar, establishing the dollar as the world's principal reserve currency. However, in recent years, there has been a movement of dedollarisation This shift aims for governments, firms, and individuals in a country’s economy to reduce the reliance on the U.S. dollar in domestic and international transactions

Reasons for de-dollarisation:

The shift towards de-dollarisation in multiple countries is motivated by a multitude of contributing factors associated with benefiting their national economy.

Some factors:

One of the primary reasons why nations are looking to move away from utilising the U.S. dollar in trade is to gain economic and political independence over their own economies. Any trade between countries using the U.S. dollar requires clearance from the American financial system. The United States’ dominant positioning enables it to impose sanctions over any trade deal made through the dollar, which can have immense influence over the economies of other countries. By dedollarising, nations reduce their susceptibility to American sanctions and monetary policies, while also acquiring sovereignty over their transactions without American authorisation

Another reason why nations might want to decrease their dependence on the dollar is due to risk diversification. As the majority of the world's FX reserves, almost 56% (Nephew and Gweder, 2025) are held in the US dollar Countries could be especially faced with certain risks associated with the dollar. This is as the United States is the largest debtor in the world, currently at a staggering 38 trillion, and the IMF forecasts its debt to rise to 143% of its GDP in the next decade, rising long-term to the dollar’s value (Shukla, 2025)

In addition, America’s money supply issues are becoming notable, with the M2 money supply reaching record levels of over $219 trillion in mid-2025, raising concerns about the stability of the currency (Godbole, 2025). Factors including rising debt levels, increasing money-supply but also unpredictable economic and geopolitical actions make nations hesitant about relying on the dollar, hence making them evaluate employing other currencies to minimise their risk from dollar-related risks.

Furthermore, countries might want to de-dollarise because of the opportunities to engage in new trade By reducing their reliance on the dollar, economies can freely trade using alternative currency options. Granting them the ability to participate in more diverse trade by accessing new markets, broadening trading relationships with countries, and potentially stimulating economic growth in a country by reducing dependence on the US dollar

Examples of de-dollarisation:

In recent years the influence and power of the US dollar have been deteriorating This is evident in a report from J.P. Morgan stating that ‘de-dollarisation is unfolding in central bank FX reserves, where the share of USD has slid to a twodecade low in tandem with its macro footprint’ (J.P. Morgan, 2025).

De-dollarisation is particularly evident amongst BRICS nations, which include Brazil, Russia, India, China and South Africa. Currently, approximately 90% of intraBRICS commerce is conducted with their local currency, such as rubles, yuan, rupees, reals and rands, this marks a 65% increase from 2 years ago (EBC group, 2025) A large majority of this ‘90%’ figure stems from the bilateral trade between Russia and China, where 99.1% of transactions between the countries are in their local currencies, bypassing the US dollar (Aktas, 2025) The reason why a large percentage of trade is done by Russia is due to the sanctions implemented by the United States on Russia in 2022 Not only this, but bilateral trade between the countries of India-Russia and China-South Africa is all transitioning towards promoting their local currencies as a primary form of payment than the dollar

The same shift away from the dollar is apparent in ASEAN (Association of Southeast Asian Nations) organisation. In 2024, more than 25% of all intra-ASEAN trade was settled in local currency, a staggering 150% jump from just half a decade ago. The shift has primarily been facilitated by regional agreements, by the adoption of China's Cross-Border Interbank Payment System (CIPS) by over 100 ASEAN banks, and by promoting payment in yuan and avoiding the use of the dollar (China Daily, 2025) The organisation is intending to expand ‘financial integration’, one of their goals from the ASEAN Economic Community Strategic Plan of 2026-2030 This could encourage the usage of local currencies and move away from the dollar (China Daily, 2025).

Challenges and limitations of de-dollarisation

One primary reason why de-dollarisation is unlikely to completely happen, and why the dollar will still remain a dominant currency in global markets, is because of the unmatched liquidity and depth of U.S. capital markets. The U.S. Treasury market is still seen as a ‘safe haven’ with investors from all around the world heavily relying on U.S. government debt. It is very unlikely that the U.S. government will default on its debt, although there is still a small possibility Furthermore, according to analysis from J.P. Morgan, the depth of the U.S. capital market makes it extremely challenging for any competitor currency to replicate the same level of trust and utility as the dollar, which makes full de-dollarisation unlikely in the near future (JP Morgan, 2025)

Secondly, a reason why de-dollarisation will not occur anytime soon is because of the dollar’s global hegemony and dominance worldwide. Around 56% of global foreign exchange reserves are held in US dollars (Nephew and Gweder, 2025), and large volumes of international transactions are also carried out using the dollar, which accounts for 90% of all global FX transactions (Maronoti, 2022) This makes it very unlikely for countries to move away entirely from the dollar.

Finally, a significant challenge for complete de-dollarisation is the lack of any credible alternative currencies to replace the greenback While currencies like the euro and yuan are sometimes proposed as substitutes, none match the dollar in terms of global trust, liquidity, or stability For instance, the euro is hindered by fragmentation among member states (Khan, 2025), and the Chinese yuan remains limited by capital controls and governmental regulatory restrictions (ADCB, 2024). The absence of a viable replacement makes it highly unlikely that countries will be able to fully abandon the U.S. dollar in international trade or reserves, reinforcing the dollar’s dominance in the global financial system.

Conclusion

In conclusion, while many nations and organisations, such as BRICS and ASEAN, are taking steps toward de-dollarisation to serve their own economic and political interests It is still highly unlikely that full de-dollarisation will occur in the global economy anytime soon. The dollar’s dominance in global financial markets, combined with the immense time and effort required for countries to transition away from a global reserve currency, makes complete replacement extremely difficult

The US Dollar and its Global Reach

by Rayan .H

With its reach extending across today’s global economic system, the US dollar plays a role substantially larger than simply the country’s local currency As WW2 crippled European economies and depleted their gold reserves, the US emerged from the conflict as the world’s largest economy, a net exporter, and the holder of the largest gold reserves in the world. This created an exceedingly positive outlook for the US economy, leading to the dollar rapidly becoming the most stable and trusted currency; this trust paved the way for the Bretton Woods system, where 44 countries agreed to peg their currencies to the US dollar, which would in turn be pegged to gold. Following decades of change, with the adoption and collapse of the Bretton Woods system, President Nixon’s termination of the gold peg and the dollar’s growing control over global energy trade due to the Petrodollar System (under which oil exporters were to price oil in USD), the dollar currently stands at the forefront of global trade and finance, acting as the world’s most vital means of exchange.

The Dollar’s Influence Across the Global Economy

One of the major functions of a currency is to serve as a store of value, and a critical measure of confidence in a currency’s ability to do so is its acceptance in foreign exchange reserves.

As shown in Figure 1, despite a fall from a peak of 72% in 2001, the US dollar can still be considered the world’s reserve currency, representing 58% of foreign reserves in 2024 This means that central banks across the globe hold large quantities of primarily the US dollar, indicating their trust in the currency to store value, intervene in currency markets, settle international trade, and aid in external debt payments. The consistently high demand for the dollar as a reserve currency is a contributor to its role as the backbone of global trade; as of 2022, the dollar was used 54% of foreign trade invoices globally (Booker, S and Wessel, D, 2024), and furthermore, since the Petrodollar agreement, the majority of commodities (including oil, gas, metals and agricultural goods) have been priced in the US dollar

Moreover, the currency also has a significant role in global financial markets The US is home to the two largest stock exchanges in the world, the New York Stock Exchange and the Nasdaq Stock Exchange, as well as the market for US Treasury Securities, the largest and most reliable bond market across the globe. Treasury Securities and many other dollar-denominated assets have been given safe-haven status, where in times of uncertainty, investors find them highly attractive due to their low risk, high liquidity and strong institutional credibility For example, during the 2008 financial crisis, despite a major shock to the economy, the dollar still appreciated by approximately 10% (Jiang et al, 2023) All of the above can be attributed to the fact that the global financial system holds a firm trust in the primary currency of the US; the dollar is seen as stable, US inflation is predictable, and the country’s Central Bank is reliable However, what exactly are the implications of a currency having such a wide reach?

Advantages and Disadvantages Dollar Dominance

+ Borrowing Costs: As of November 21st, 2025, the US had accumulated approximately 38.3 trillion USD of national debt (US Treasury Fiscal Data, 2025). Though this value seems large, it can be argued that it would be significantly larger if not for dollar dominance. Strong demand for the dollar allows the government to issue bonds at lower costs, as high interest rates are not required to attract buyers; as a result, it has been estimated that US borrowing costs are 10-30 basis points lower (Lahiri, U. and Eckman, E , 2025) Therefore, the US pays lower rates of interest on debt, increasing their overall borrowing capability.

+ Consistent Foreign Direct Investment: Stable, liquid and reliable US financial markets are exceedingly attractive to investors across the globe who already primarily hold dollars. As a result, the US received 5.3 trillion USD in 2023 (Lahiri, U. and Eckman, E., 2025), surpassing any other economy in the world. This helps strengthen the US economy, boost employment and improve innovation A key example is Japanese car manufacturer Toyota, who have recently committed to investing 10 billion USD in the country over the next 5 years, following the opening of their 14-billion-dollar North Carolina battery plant.

+ Safety and Stability: The dollar’s status as a safe-haven asset provides security to investors in global recessions. Treasuries and dollars provide an anchor, preventing major losses and chaos across the global financial system The currency offers a “flight-to-safety” function which helps stabilize economies worldwide after significant shocks.

– Trade Balance: Consistent demand for the dollar means that the currency remains relatively strong Consequently, consumers in the US view imports valued in weaker foreign currencies as relatively cheaper, whereas consumers in foreign markets consider US exports valued in the stronger USD relatively more expensive. Hence, demand for imports within the US rises, while demand for US exports declines, causing exporters to lose revenue. This is a key cause behind the country’s substantial trade deficit, which stood at 1 2 trillion dollars in 2024 (DeBarros, A 2025)

This issue brings us to the Triffin Dilemma, which refers to the conflict between the long-term international stability that a common reserve currency provides, and the short-term domestic instability caused by the need to run external deficits to supply the world with sufficient liquidity

– Dollar Weaponisation: The dollar’s widespread adoption lends more power to US financial sanctions As a large proportion of trade is conducted using the USD, many cross-border transactions are typically handled by correspondent banks– these are US-based financial institutions which act as intermediary parties between international banks, tasked with clearing dollar transactions through accounts held at the Federal Reserve Hence, the US government can restrict a firm– or even an entire economy– from doing business by removing the ability to trade in dollars For example, following Russia’s 2022 invasion of Ukraine, US sanctions blocked Russia’s access to the dollar by restricting Russian banks from using US correspondent banks, freezing $300 billion of Russian central bank assets (Siripurapu, A. and Berman, N., 2023) Though many see such measures as justified penalties, sanctions can have detrimental spillover effects; blacklisting Russia after the invasion exacerbated a global supply chain crisis, causing surges in energy costs due to Russia’s role as a major oil and gas exporter Hence, such use of sanctions may create an incentive for many countries, targeted or non-targeted, to move away from the dollar in an effort to lower vulnerability

Therefore, while dollar dominance brings notable advantages to the global economy, its drawbacks are beginning to prompt countries to explore alternatives; this brings us to de-dollarisation

The Rise of De-dollarisation

De-dollarisation refers to the fall in the use of US dollars across world trade, financial transactions and foreign reserves, as economies across the world strive to avoid overdependence, limit exposure to US sanctions and reduce vulnerability to US monetary policy. Though the dollar still stands as the dominant currency today, as aforementioned, Figure 1 shows consistent falls in the dollar’s share of global reserves over the last 20 years. This same trend can be gleaned from foreign-held shares of US Treasuries, which have declined by approximately 20% since the early 2010s (Lahiri, U. and Eckman, E., 2025).

A notable driver of de-dollarisation is improvements in payment technology. While converting currencies to and from the USD has historically been a cheaper option for global trade (due to the high liquidity of dollar markets), evolving technologies and means of exchange can enable currencies to be converted directly at lower costs, allowing for international shifts away from the dollar. Many countries are already developing Central Bank Digital Currencies (CBDCs), which are digital versions of a country’s national currency. Cross-border CBDC projects, such as the mBridge project involving the Central Bank of the UAE, the Hong Kong Monetary Authority and the Bank of Thailand, can facilitate direct transactions between currencies, without the need for the USD CBDCs can be used with Blockchain and Distributed Ledger Technology (DLT) to allow for secure and efficient transactions without intermediaries such as US correspondent banks

Furthermore, a crucial topic to explore when considering de-dollarisation is BRICS, the informal group of emerging economies Brazil, Russia, India, China and South Africa. For over 10 years, BRICS countries have been striving to reduce the use of the USD in international trade, and this is currently done through the use of their own national currencies for trade between the bloc, particularly the Chinese renminbi At the 2023 BRICS summit, several proposals were laid out as part of a larger push (led by Brazil’s President) to establish a common currency for the 5 countries, to be used in foreign reserves and for cross-border transactions The major concept introduced was the notion of a combined basket of BRICS currencies At the moment, such an initiative is unlikely; the countries have varying inflation rates, monetary policy and political ideologies.

The bloc lacks common monetary governance, the necessary institutional credibility and it is even internally divided (for example, the geopolitical rivalry between China and India). As a result, experts doubt that a BRICS currency could ever be stable and trustworthy enough to rival the USD, and to be adopted for commonplace international transactions (Ferragamo, M., 2025). Nonetheless, the efforts of the group still signal a growing shift away from the dollar, a mindset which many economies across the globe seem to be sharing.

Conclusion and Future Outlook

The dollar remains deeply entrenched in the global economic system, as the US reaps the benefits of its unrivalled liquidity, persistent stability and strong credibility. Former French Finance Minister Valery Giscard d’Estaing referred to the dollar’s role as the leading reserve currency as the “exorbitant privilege” of the US The currency’s role as a safe-haven asset provides global relief, while also lowering borrowing costs and fueling FDI for the US However, calls for de-dollarisation are only gaining more momentum as international economies grow wary of dollar weaponisation and their vulnerability to US monetary policy. Nevertheless, current efforts are unlikely to majorly impact the dollar’s central role in finance; alternative currencies, such as the renminbi and the euro, would struggle to match the liquidity, convertibility and trust that act as the foundation of the USD Analysts argue that while dollar dominance is here to stay, in the long-term, the USD is likely to begin to share its influence with other currencies, as the use of the renminbi and the euro rise (Siripurapu, A and Berman, N, 2023) This trend is likely to bolstered by excessive sanction use and growing uncertainty surrounding the US economy tied to financial instability and political turbulence Ultimately, as many countries seek to balance diversification with the stability that the dollar lends, we are likely to see a movement to a more balanced currency landscape, but one in which the USD remains the anchor of the global economy

FREE MARKET CAPITALISM VS CENTRAL PLANNING

by Luka .M

In this article, I will be discussing everything about Free Market Capitalism and Central Planning and explaining which one is more beneficial to a fast-developing economy.

In the world today, various countries that have been experiencing extreme poverty over the last century are discovering innovative ways to develop their economy and generate wealth Unfortunately, the issue some growing economies are facing is how to manage it. Should they take advantage of the influx of cash and develop a capitalist economy to manage the resources, or should they secure the money in government affairs and develop a socialist economy?

Free Market Capitalism

Definition: In economic system where stakeholders and businesses own and control property, industry, and business, with reduced intervention from the state Prices and production are regulated by supply and demand, with the government playing a very limited role in society According to an article from the London School of Economics and Political Science,

Advantages: Free Market Capitalism allows increased efficiency in resource allocation, more technological innovation in essential sectors, such as Education or Healthcare, and faster economic development.

Disadvantages: Less economic reliability, causing a more volatile development, the lack of a government safety net to sustain certain industries in troubling times, too short-term pro

Central Planning:

Definition: Central planning isa way of managing a national economy where a government or state makes the key economic decisions, controlling what goods and services are produced, how they are distributed, and how resources are used.Central planning isa system where a government or state makes the key economic decisions, overseeing what goods and services are produced, how to manage the distribution, and how resources are utilised to the welfare of the country

Advantages: This economic system leads to a safe and secure economy, always backed by the government, a potential for equity and less uncertainty for the general economy.

Disadvantages: Despite having many positive aspects, central planning also leads to inefficiency, lack of development and innovation and occasional misallocation of resources.

So, which one do you think fits a rapidly developing economy better, a safer yet less innovative economy or a capitalism, innovative economy with limited security?

IS INFLATION A THREAT TO CAPITALISM

OR NECCESARY TO MODERN ECONOMIES

by Vansh .K

People associate inflation with economic instability, and a prominent sign of a corrupt government. As consumers, we perceive it as a hindrance, denying us the opportunity to afford goods and services, at ‘fair’ rates As prices are rising globally, there is increased question on whether inflation has a positive impact on our planet, or a weapon of destruction, tormenting nations, and inhabitants themselves?

Inflation is condemned as an economic antagonist, always portrayed as a negative creation, eroding the value of assets, and pressuring budgets. However, looking at it from a certain lens misinterprets the pivotal part it plays in modern economies It is valid to have concern in cases of hyperinflation (typically over 10% annually), for it can recede the value of currency exponentially, however this solicitude is often only viable in periods of instability, and economic distress. The hunger of economies is only fulfilled with a subtle lubricant, a moderate inflation (around 2%) that enables nations to display growth, without severely impacting consumers. This faint grease has an imperative impact in the labor market

As stated by Blanchard, 2019, Macroeconomics (Novel 7), Page 109, “ The fact that, on average, wages increase with time- both because of inflation and because of real wage growth- allows firms to decrease real wages without decreasing nominal wages. All they need to do is to increase nominal wages less than they used to. The same is not true if inflation is zero In that case, real wages can only be decreased if nominal wages are actually cut. But workers do not like cuts in their nominal wages.” Nominal wages are the amount of money an individual accumulates, without factoring for inflation. Imagine an employee earning 100000 Dollars annually. Their nominal wage might remain the same-or slightly increase-, however, its value decreases, compared to last year.

Meanwhile, real wages are adjusted to inflation, and if a currency loses some of its value, ‘real’ wages are depreciated Workers are not bothered if their true wages are cut, however if their nominal wages are cut, it is presumed that it could encourage an unhappy environment, or the worker could seek their expertise elsewhere This technique helps companies to reallocate resources into other sectors and expand it. Without inflation, enterprises would not be capable of enhancing their performance, and in instances of negative inflation, the ‘real’ salary of an employee is (assuming firms do not decrease their payroll) increased Although it may seem an alluring offer for members of staff, this imbalance causes wages to be cut, and debt to be a further burden

Furthermore, inflation prompts positive economic activity As explained in previous paragraphs, inflation has negative effect on savers (either in miniscule or large bouts) and this has sparked many to divert into raising capital In markets such as the stock, bond and cryptocurrency, investors have gained gargantuan amounts of liquid cash, generally outperforming inflation in positive scenarios Although there is risk in the financial welfare of consumers, if you want to meaningfully grow your portfolios, it is necessary to invest In a world of financial unpredictability, markets are a hub for growth In conclusion, inflation has two sides to the coin. One side, a state of destruction, rampaging on economies in the darkest of times On the other hand, inflation, the balancing variable that defines modern economies. It is a matter of who has authority over inflation, rather than the instrument itself It maintains the needs of labor, the needs of firms, and relieving debt- as value regresses over time- causing it to be irreplaceable in the world of economics

WHY HOSTING THE OLYMPICS RARELY PAYS OFF

by Arya .K

Every 4 years, the world tunes into one of the largest global sporting events with the honor of hosting falling onto one country Host countries invest billions to transform themselves, attract tourists, and earn long term revenue. However, behind this public façade lies one of the biggest economic debates; Are the Olympics worth hosting. With costs increasing and fewer countries withdraw bids, it raises the question whether the Olympics is a beneficial use of taxpayer money. While the International Olympic Committee (IOC) promotes tourism and long-term growth, decades of research suggest otherwise The Olympic games constantly experience cost overruns with the economic returns rarely covering the initial investment.

According to a study on the financial risk of the Olympic games, the Economists Bent Flyvbjerg, Alexander Budzier, and Daniel Lunn found that every single host country since 1960 had overrun its budget and has ‘the highest average cost overrun of any type of megaproject, at 172 percent’ (Flyvbjerg, Budzier & Lunn, 2020, page 6)¹. One of the primary reasons for the cost overruns being very high is because of what Flvbjerg refers to as ‘blank check syndrome’ (Flyvbjerg, Budzier & Lunn, 2020, page 1)². Since the opening date of the games is fixed, hosts are unable to adjust the schedule to accommodate or compensate for rising costs. As a result, they are unable to make trade offs and instead spend more money, effectively committing unlimited funds Some of the other factors that also increase the cost spiral include tight project coupling and also because many hosts are organizing a mega event for the first time which reduces their ability to predict and reduce costs.

One of the most significant examples of this phenomenon is the 1976 Montreal Olympics, where the costs went over the budget by 720%, leaving the country in debt for decades (Flyvbjerg, Stewart & Budzier, 2016, page 2)³. Not only that, more recent events such as the Toko 2020 games incurred costs at around 13 billion USD. Academics have even warned that Olympic overruns are comparable in scale to ‘deep disasters’ such as earthquakes or pandemics (Oxford University, 2020)⁴.

Not only that, while it is expected that revenue from ticket sales, broadcasting rights, sponsorship, and tourism offset the overruns, it does not. A majority of the revenue does not go directly to the host city, instead going towards the IOC and organizing committees. According the Council on Foreign Relations analysis, although television broadcasting rights generate billions, the IOC retains a large share, leaving hosts with a tiny portion of the revenue(CFR, 2023)⁵. While sponsorships, and merchandising do also generate revenue, they are rarely sufficient enough to recover from capital costs In many cases, infrastructure investments are so large that the revenue generated during and after the Games barely makes an impact

Additionally, the benefit from tourism is not guaranteed. While some cities experience a surge in tourist spending, others are negatively impacted due to the crowding out effect, where regular visitors avoid the country during the games due to price hikes, security concerns and other factors (IPS, 2016)6. Furthermore, According to a report by the St. Louis Federal Reserve, only part of the spike in tourist activity is increased tourism revenue as many of the spending increases offset the decreased tourism from regular visitors (St. Louis Fed, 2012)7.

However, in some scenarios there are exceptions. One of these include the 1984 Los Angeles Olympics where through the reuse of existing venues, negotiation with the IOC and limited new construction, the city reported and operating surplus of 215 million USD(CFR, 2023)8 This case shows that with strategic planning, reuse, and cost control, a profitable Olympic Games is possible, however it remains the exception, not the norm. Additionally, despite cities being unable to turn a profit, there are some long-term benefits. This includes urban renovation, improved infrastructure and increased global reputation For instance, the Paris 2024 Olympics were projected to add up to 107 billion Euros (12.3 billion USD) into the French economy along with the creation of tens of thousands of jobs (Oxford Economics, 2023)⁹ However, these benefits may not be guaranteed as actual fiscal returns may fall short once cost risks and displacement effects are fully accounted for

To conclude, the Olympics is one of the riskiest economic investments The combination of fixed deadlines, political pressure, and unlimited financial commitment substantially increases the probability of overrun costs Not only that, revenue from broadcasting, sponsorship and tourism often fail to offset the economic costs and compensate for the long-term issues

“TRUMPSEQUENCES” ON THE WORLD

by Avyan .A

January 20th, 2025, Donald J. Trump became the 47th President of the United States 10 months into his second presidency, TrumpSequences (Trump Consequences) have become pretty evident, not just in United States, but the whole world From economic impact to social tension to strained international relations, the consequences are becoming quite apparent. His policies were introduced to bring economic growth and prosperity within the country; however it has deepened social and economic divide even further. Though some feel his policies that revolve around ‘America First’ are good for the nation, others differ and see far-reaching TrumpSequences.

Economic consequences –

Trump’s policies of putting hefty tariffs on goods imported from around the world, especially China, did promote and protect local industries, but also made everyday products more expensive American industries struggled as they relied on these low-cost imported goods and raw materials from different parts of the world This created uncertainty amongst investors and disrupted supply chains Trump’s policies to cut taxes for local companies had a short-term benefit on their growth, but long-term impacts on the national debt, increasing it by millions.

Foreign policies –

A lot has changed as a TrumpSequence of his foreign and international policies. Long-standing allies like Germany, Japan, and Canada feel criticised and challenged. His policies pressured allies to spend on defence, placed unjustified tariffs and trade policies, and created uncertainty and friction. Threatening to step back from organisations like the WHO and WTO changed the way it is looked at Donald Trump as a world leader Change in the Middle East policies has also led to a shift in relations between the US and Middle Eastern allies.

Environmental consequences –

Withdrawing from the Paris Climate Agreement, rolling back pollution policies, and supporting gas and oil drilling are showing TrumpSequences on the climate. Many scientists warn that slowing down national efforts to fight climate change will lead to extreme weather events.

Social impacts –

TrumpSequences of his policies created a greater social divide, his strong immigration rules created more uncertainty and his audacious statements about race and national identity created tension. Stricter immigration laws caused a shortage of labour and instability in businesses that depended on migrant workers Though his supporters praise him for his bold approach, leadership and prioritising national interest and for taking a strong stance against immigration and security, there are others who argue that as a TrumpSequence of his leadership, there is a greater social divide, strained international relations and increased environmental concerns

His policies have affected global markets and disrupted world trade It has created a dent in international relations and global security. His retreat from environmental policies has slowed down the fight against climate change His comments have sparked criticism and widespread debates regarding social and national identity, and have created unrest While the wealthy become wealthier, the poor face more challenges and are left to deal with a higher cost of living and limited opportunities Families are spending only on basic necessities and are still left with less disposable income.

The true TrumpSequence is yet to be felt by the world, but its early effects are already visible both at home and abroad

BOOK REVIEW: THE UNDERCOVER ECONOMIST

by Zoya .K

Harford’s main idea is that economics is present everywhere This book depicts why prices change, how markets work, how firms take advantage of information, and shows how government involvement can harm/benefit the economy

In the first paragraph ‘Who pays for your coffee?’, Harford describes why the location of the coffee shop affects the price. More specifically, how coffee shops in busy locations charge a higher price for coffee The key idea he explores is scarcity power This idea suggests that business with prime locations can charge higher (even if the product is not better) as demand is high. This is an introduction to supply, demand and scarcity rents.

In the next chapter, Harford describes how supermarkets manipulate shelf positioning to charge different customers different prices He explains how shops use layout and brand names to categorise their customers into groups based on their shopping habits This is an example of price discrimination

Then Harford talks about the perfectly competitive market and how prices are used as signals. His view of a perfectly competitive market is one where consumers and firms both have perfect information, and no one has market power Then he discusses the contrast to real life markets and displays the reality of them by talking about monopoly power, limited information and barriers to entry. This chapter displays how real markets cause externalities and how prices become signals that help people make the right decision.

Later in Chapter 4 ‘Crosstown traffic’, Harford gives the example of traffic congestion to explain negative externalities When drivers choose to drive on the road during busy times, traffic increases for everyone else but this is a cost they do not pay for. He imposes an idea that charging for congestion can fix this problem and reduce traffic overall.

Then he covers ‘information asymmetry’ in markets like health insurance. He describes how moral hazards can take place as insured people are more likely to take risks. As well as this he discusses screening and signalling mechanisms.

He explains that if one side of the market has more information that the other it could cause it to break down He shows how people make worse decisions when not having information.

In chapter 6 he depicts how hidden information can end markets. Harford uses the example of ‘lemons’ to show how uncertainty leads to people believing the worst which causes good quality products to leave the market. He then goes on to link this to bad business decisions

Chapter 7 talks about government involvement and how they use cost benefit analysis to make difficult decisions. He portrays the difficulty that governments go through by having to put a price on lives, safety and the environment but how it helps them make smarter decisions.

Harford then suggests how lack of resources is not the only reason a country remains poor. He says that weak incentives and governing, bad institutions contribute a lot more to poverty than lack of resources. His ideas to promote and economy is to fix governing and economic rule rather than providing money or resources.

Chapter 9 is based on trade, globalisation and comparative advantage. He shows how trade promotes productivity; specialisation has a big impact on living standards and how gl0bal supply chains lower prices. However, he does mention that not everyone is a winner when it comes to globalisation, and it depends on the countries and industries

The last chapter delves into Chinas quick economic rise Harford emphasises that China rose due to a change in economic ruling and market incentives and not due to funding and foreign aid He also wrote about decentralisation and how it encouraged more experimentation which overall caused a boost in Chinas economy. He also said that trade gave Chinas economy access to newer technologies and foreign investment which helped them a lot in growing.

What I particularly enjoyed about the book is how Harford linked micro and macroeconomic key concepts to everyday aspects of life making it very easy to understand and now I can think about these concepts while running daily errands, for example going to a coffee shop It was fascinating for me to see how I am constantly surrounded with hidden economic concepts and has made me view the world around me differently I also enjoyed how the book referred to broader issues such as poverty, globalisation and how China grew into the empire it is today. This helped me realise how large the scale of economics is and that it has a lasting impact on the whole world This book has encouraged me to look at decisions I make every day in a deeper level and to truly understand why I am making a certain choice

THE AI CHIP RACE: WHY THE NEXT SUPERPOWER WILL BE BUILT ON SEMICONDUCTORS?

by Tejas .J

Artificial Intelligence (AI) is transforming industries but it depends on AI chips. These specialized processors control the training of these massive AI platforms like ChatGPT and Perplexity. Now, several countries and companies treat these chips as strategic assets, igniting a global race for dominance. However, the race isn’t just about designing and manufacturing these chips, it's also about the supply of materials used to create them.

AI chips differ from normal CPUs as they can process large amounts of data in parallel thus reducing the time and cost needed to train large, complex models There are several companies dominating this industry. One such company is Nvidia. Its GPUs are used throughout the world powering large, complex AI models, Data Centers, Gaming and even healthcare. Even other tech giants like Meta rely heavily on Nvidia’s chips too As a result, the high demand has driven prices upward, creating enormous profit margins and giving these companies immense influence over the AI industry Additionally, several other companies like Intel and AMD are entering this industry creating immense competition in the market

However, these things have their pros and cons. AI chips enable faster processing, lower energy consumption, and the ability to run complex AI tasks efficiently ondevice. However, cutting-edge chips are extremely expensive as they have a high initial investment therefore limiting access for smaller firms They rely on scarce raw materials like cobalt, tantalum, neodymium, and lithium. Additionally, running AI models consumes massive amounts of electricity, contributing to carbon emissions and chips quickly become obsolete as AI models grow more complex.

Moreover, the global AI chip ecosystem is highly concentrated among some regions. TSMC, which is located in Taiwan and Samsung in South Korea handle most of the advanced manufacturing, producing chips designed by Nvidia, Apple, and Google. The United States leads in chip designing and has implemented export controls to limit China’s access. As a result, Beijing is investing heavily in domestic production. Meanwhile, Europe is attempting to catch up with initiatives like the EU Chips Act, which provides subsidies to boost local production.

Beneath all of this is the dependence on scarce rare earth materials. Companies like MP Materials, which mines and refines rare earths in the United States, play a critical role in supplying these minerals. Moreover, mining is concentrated in a few regions, creating vulnerabilities in the supply chain if geopolitical tensions rise. On top of that, scarcity of these materials drive up costs and give certain companies and nations strategic advantages while environmental and ethical concerns cause some problems.

To add to this, the AI chip race demonstrates the classic principles of scarcity and market power Limited supply and high demand have led to compute inflation, which has increased the cost of training AI models. Additionally, according to Goldman Sachs, the economic opportunity unlocked by AI could be as high as $8 trillion in U.S. capital revenues, with a range of $5–$19 trillion. Global GDP could rise 10–15% if AI adoption accelerates, although measurable effects are predicted to start around 2027.

Looking ahead, the race for AI dominance will continue. Countries will invest in domestic chip production and mining capabilities, while companies innovate to create more efficient processors. Overall, whoever controls both the chips and the materials needed to make them will hold a significant advantage in the coming era of AI development.

MATHS IN ECONOMICS OVERVIEW

by Adi .S

This term, the Maths in Economics Club at Dubai College has been as engaging as ever, withstudents taking the lead each week and creating presentations on topics they are passionate about. Throughout the term, members explored a diverse range of topics, including cryptocurrency, modern portfolio theory, game theory, Bayesian economics, and more. Students prepared and delivered presentations, introducing new concepts to their peers and designing problems to challenge their understanding. This approach allowed the club to go beyond theory, giving students a glimpse of what they can expect to see in university, as well as furthering their understanding of GCSE and A-Level Economics and Maths.

One of the highlights of this term was discovering the mathematical ideas that underpin realworld economic decisions From learning about hashing in cryptocurrency to covariance matrices in portfolio optimisation, members covered many practical applications of the ideas they were learning, building a solid foundation in mathematical thinking and economic reasoning. As many problems discussed in the sessions were student created, it encouraged collaborative problem solving and promoted deeper engagement.

Overall, this term in Maths in Economics has been extremely thought provoking and interactive Thanks to a mix of student initiative and Mr Jesani’s guidance, advice, and help with organising logistics, the club has run smoothly each week, and we hope to carry this momentum into the next term