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The Spillover

Council on Foreign Relations

How do critical international developments shape economic and financial markets worldwide? Each week, The Spillover examines the ripple effects of global events across policy, geopolitics, economics, finance, and technology. This podcast helps you better understand what’s happening, and why it matters to businesses, global markets, and the world.

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30 episodes
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Avg 49 min
English

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May 27 · 43 min
Japan Rearms + Guns vs. Butter + Global Defense Spending Boom
As governments around the world ramp up defense spending, a new era of rearmament is reshaping economies, markets, inflation, and politics. This episode examines Japan’s dramatic shift away from its postwar pacifist identity amid rising tensions with China, ongoing conflicts in the Middle East, and growing uncertainty around the global security role of the U.S. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) We discuss: Why the rearmament boom is globally synchronized and big enough to move fiscal balances and bond markets. How defense spending is colliding with already massive government debt, and pushing bond yields higher. Why Japan’s military transformation marks a significant reversal of its postwar identity. Why Japan’s debate over nuclear weapons remains emotionally raw more than eighty years after Nagasaki. How fear of China and doubts about the U.S. security umbrella are reshaping politics in Japan and Germany. How governments are trying to fund massive military buildups without cutting popular programs, and why bond markets may eventually force a reckoning. How rising military spending could fuel another wave of inflation, higher interest rates, and global market volatility, trapping central banks between fighting inflation and financing governments at war. As Rebecca Patterson puts it: “All this is happening when governments, frankly, can't afford more guns or butter because debt levels are very high.” How AI, drones, and cyberwarfare are rapidly changing the economics and strategy of modern conflict. How the new arms race is spilling far beyond the battlefield into tech, energy, supply chains, and the future of globalization. Mentioned on the Episode: David Kelly, “Five Scenarios for the Federal Debt,” J.P. Morgan Asset Management “Fiscal Policy under Pressure: High Debt, Rising Risks,” International Monetary Fund (IMF) “Global Supply Chain Pressure Index (GSCPI),” Federal Reserve Bank of New York “Majority of Japanese Support Constitutional Revision: Poll,” UPI “Rebuilding Our Military,” The White House “The True Cost of Peace: Rebalancing World Military Spending For a Sustainable and Peaceful Future,” United Nations “World Economic Outlook: Defense Spending,” International Monetary Fund (IMF) Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.
May 19 · 56 min
Data Centers In Space? + Planet Labs CEO Talks ‘Large Earth Models’
AI and satellite imagery are quickly converging to create “planetary intelligence,” a new generation of systems capable of capturing and analyzing images of Earth in real time. This episode explores how the AI infrastructure race could move into orbit, with space-based data centers, falling launch costs, and “large Earth models” potentially transforming the global economy, geopolitics, and the future of artificial intelligence itself. Host: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Guest: Will Marshall, CEO and Cofounder, Planet Labs We discuss: How AI could transform the space economy more profoundly than the invention of the internet, and potentially move the world’s supercomputers off Earth entirely. Why Planet Labs founder Will Marshall believes satellites and AI are converging into what he calls “planetary intelligence.” Why the real driver of the space boom wasn’t just rocket technology, but the smartphone revolution and the miniaturization of electronics. How commercial satellite imagery exposed Russia’s invasion buildup before the war in Ukraine, including the discovery of a pontoon bridge on the Belarus border. Why AI is making satellite data dramatically more valuable by allowing models to analyze satellite images in real time rather than having to send individual images back to Earth. Whether orbital compute infrastructure could expand the space economy by a factor of ten, and reshape the balance of geopolitical and corporate power. The idea of “large Earth models”—AI systems trained not on the text of the internet, but on continuous visual data from the physical world. Why tech leaders increasingly believe AI data centers could move into orbit, powered by uninterrupted solar energy in space. How falling launch costs from companies like SpaceX could make space-based computing economically viable within the next decade. Mentioned on the Episode: “Planet Successfully Runs AI in Space,” Planet “Thales Alenia Space Reveals Results of ASCEND Feasibility Study On Space Data Centers,” Thales Alenia Space “Is AI Putting Graduates Out of Work Already?,” The Economist Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.
May 12 · 53 min
Trump-Xi + Mutually Assured Disruption + Boeing, Beef, and Beans
President Donald Trump is set to meet with Xi Jinping in Beijing for a high-stakes summit shaped by Iran war tensions, trade disputes, critical mineral flows, semiconductor controls, and an intensifying AI race. This episode breaks down the growing U.S.-China rivalry, the risks facing global markets and supply chains, and whether the world is entering a new era of economic fragmentation and technological competition. Hosts: Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) We discuss: How President Trump’s high-stakes summit with Chinese President Xi Jinping comes at a moment of intense rivalry over AI, trade, semiconductors, and Taiwan. How the United States and China are locked into “mutually assured disruption” when it comes to trade, with China controlling critical rare-earth minerals and the U.S. restricting advanced AI chip exports. As Rebecca Patterson puts it: “If there’s not a happy hug between Trump and Xi on rare-earth minerals and chips, that might be problematic.” Whether Chinese AI firms like DeepSeek are catching up to American companies such as OpenAI and Anthropic despite U.S. semiconductor restrictions. The growing debate over AI safety and whether Washington and Beijing can cooperate on preventing dangerous applications of artificial intelligence while still competing for dominance. Why Taiwan remains the single biggest geopolitical risk hanging over global markets, semiconductor supply chains, and the future of the AI economy. How fears of a Taiwan crisis could ripple through global stock markets, especially tech and semiconductor companies tied to firms like TSMC, Nvidia, Intel, and Samsung. Why tariffs and supply chain disruptions continue to reshape global trade, with companies and governments from Europe to Southeast Asia forced to navigate a more fragmented global economy. Mentioned on the Episode: “At the Trump-Xi Summit, China Will Have the Upper Hand,” CFR.org Chris McGuire, “How Trump Should Approach AI Talks With China: Targeted Dialogue, Maximum Pressure,” CFR.org “Global Supply Chain Pressure Index (GSCPI),” Federal Reserve Bank of New York Ryan Mancini, “Trump’s Approval on Economy Hits New Low; 7 in 10 Expect Recession Next Year: Poll,” The Hill Xinyi Wu, “China, Indonesia Launch Cross-Border QR Payments – A Boost for the Global Yuan?,” South China Morning Post Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.
May 5 · 46 min
Are Prediction Markets Forecasting Tools or Virtual Casinos?
Prediction markets have grown into a multibillion-dollar industry. This episode asks whether they are powerful forecasting tools or gambling platforms in disguise—and what their rise means for how risk and information are priced. Hosts: Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Guest: Christy Goldsmith Romero, Former Commissioner, Commodity Futures Trading Commission (CFTC) We discuss: How prediction markets are turning the world into a “casino” where you can bet on almost anything, from elections and geopolitics to sports and niche events. The evolution of prediction markets from academic tools to mainstream platforms shaping finance, politics, and culture. Why these markets sometimes outperform polls, where they fall short, and how they blur the line between forecasting and entertainment-driven gambling. As Rebecca Patterson asks: “Are these markets actually useful, or are they just gambling dressed up as forecasting?” The legal gray areas that are allowing prediction markets to expand so quickly and the growing risk of manipulation and insider bets. An anecdote from France, where someone allegedly tampered with a weather sensor to manipulate the outcome of a prediction market bet. How governments and regulators are struggling to keep up. Whether these markets truly reflect the “wisdom of crowds” or just loud, well-funded players. Mentioned on the Episode: Anthony M. Diercks, Jared Dean Katz, and Jonathan H. Wright, “Kalshi and the Rise of Macro Markets,” Federal Reserve Board “The Future of Financial Services Regulation: A Conversation with CFTC Commissioner Christy Goldsmith Romero,” Brookings Institution Adam Hoffer and Jacob Macumber-Rosin, “Expanded Sports Betting Legalization Would Generate Billions in Tax Revenue,” Tax Foundation Andy Serwer, “Charles Schwab CEO Explains Why Investing Works—and Gambling Doesn’t,” Barron's Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.
April 28 · 51 min
K-Shaped Economies + Affordability Crisis + Trump vs. Mamdani Populism
This episode unpacks the concept of a K-shaped economy, examines how AI, war, and climate shocks may be widening inequality within and between countries, and explains why the divide is so hard to measure. It also explores competing responses to the affordability crisis—from Trump’s to Mamdani’s—and asks if a more centrist path could offer better solutions. Hosts: Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) We discuss: How a true K-shaped economy features a widening divergence in which some groups accelerate upward while others fall behind. Why measuring the K-shaped economy is complicated, with major disagreements over data and methodology. How asset ownership, not just wages, helps explain why wealthier households pulled ahead during and after COVID through equities, housing, and cheap credit. Why inflation, war-driven energy and food shocks, and different household spending patterns can deepen economic divergence, especially for lower-income households. How the “mega K” concept applies globally, with geopolitical shocks like the Iran and Ukraine wars worsening divides between rich and poor countries. How artificial intelligence and climate change could worsen the K phenomenon, disproportionately pressuring workers, poorer countries, and those without capital. How contrasting policy prescriptions—from Trump’s tariffs and immigration restrictions to Mamdani’s proposed taxes on wealthy second-home owners—reflect competing populist approaches to affordability. How a revival of “radical centrism,” combining fiscally responsible reforms with practical policies to manage inequality, AI disruption, and long-term economic inclusion might help. Mentioned on the Episode: “America’s Affordability Crisis Is (Mostly) a Mirage,” The Economist “Going Bananas Over Affordability,” Inside Economics “Compare Wealth Components Across Groups,” The Federal Reserve Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.
April 22 · 43 min
Is the Gulf Still the Capital of Capital? + How War Could Hurt America’s Tech Funding
This episode explores how the Gulf region transformed into a global “capital of capital,” and the risk of the Iran conflict disrupting that role. It examines the ripple effects on global markets, U.S. tech and AI investment, and the broader balance of economic power if Gulf capital starts turning inward to focus on defense. Hosts: Rebecca Patterson, Senior Fellow, CFR Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, CFR We discuss: How the Gulf transformed itself from a group of oil-dependent economies into a global “capital of capital,” attracting trillions in investment, talent, and tech partnerships. The scale of Gulf sovereign wealth funds and why it became a critical funding source for global markets, especially U.S. tech and AI. How a prolonged conflict could force Gulf states to redirect capital inward toward defense and reconstruction. As Sebastian Mallaby puts it: “If the capital of capital turns inward in any significant way, the global effects could be profound.” How the Iran war challenges the core assumption that the Gulf could remain insulated from geopolitics. The Gulf's history of boom-bust cycles and a key difference in the current bust: it's not about price, but the ability to move energy through key chokepoints like the Strait of Hormuz. How disruptions hit different Gulf economies in different ways, from physical damage in energy exporters to confidence shocks in hubs like Dubai. The potential global spillover of less Gulf capital flowing into U.S. markets, private equity, and AI infrastructure and what that means for everyday outcomes—higher bond yields, slower asset growth, and ripple effects on things like mortgage rates. The big open question: if the Gulf steps back as a global capital provider, who, if anyone, can replace it? Mentioned on the Episode: “How the US grows from PIF’s pioneering investments,” Newswire “Sovereign Wealth Funds and Public Pension Funds Tracker,” Global SWF Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.
April 16 · 29 min
The Hormuz Shock + Why the Fed is “On Hold”
Live from Washington, DC, this episode unpacks how war, AI, financial innovation, and global institutions are reshaping monetary policy, market stability, and the future of the international economic order. Host: Rebecca Patterson, Senior Fellow, Council on Foreign Relations Guest: William C. Dudley, Chair, Bretton Woods Committee; Former President and CEO, Federal Reserve Bank of New York We discuss: Whether monetary policy can still do the heavy lifting in a war-shaken macro environment. AI, productivity, and the inflation debate. The future of the Fed as an institution. The rise of non-bank finance and new financial stability risks. How global financial institutions and digital finance must adapt to structural change. Mentioned on the Episode: Pierre-Olivier Gourinchas, “War Darkens Global Economic Outlook and Reshapes Policy Priorities,” International Monetary Fund (IMF) “Chair Powell’s Press Conference” The Bretton Woods Committee Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.
April 7 · 42 min
The Oppenheimer of AI + Mailbag Contest Winners
This episode unpacks cohost Sebastian Mallaby’s new book The Infinity Machine and answers audience questions on AI, dollar dominance, the impact of Trump’s foreign policy on midterm elections, and more. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) We discuss: Demis Hassabis as a key architect of modern AI and the force behind DeepMind. AI’s upside in medicine and science, especially through AlphaFold and faster drug discovery. The tension between building powerful AI quickly and making it safe. Why the biggest AI winners may be the ones that turn models into useful products. Why the dollar still dominates, even as China and Europe look for ways to challenge it. How Trump’s foreign policy decisions on the Middle East and immigration could sway voters in the upcoming midterm elections. How drones and supply chain choke points are reshaping global conflict. Mentioned on the Episode: Sebastian Mallaby, The Infinity Machine: Demis Hassabis, DeepMind, and the Quest for Superintelligence, Penguin Random House Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.
March 31 · 38 min
Private Credit's Black Box + Why It's Not 2008 (But Still Risky)
This episode dives into how the opaque growth and structural risks in private credit, combined with global supply shocks and market stress spurred by the Iran war, are creating a uniquely fragile and unpredictable economic landscape. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) We discuss: The rapid rise of private credit, its lack of transparency, and why recent bankruptcies are raising red flags. How $10 billion in redemption requests were submitted to major private credit funds in the first quarter of 2026—including major funds Apollo, Ares, and Blackstone. Why this moment isn’t a repeat of 2008, but still presents real risks due to government debt levels and the lack of safety nets for private credit. As Rebecca Patterson, CFR senior fellow, puts it: “No one has any idea what’s going to happen—and that’s exactly the challenge right now.” Current structural risks in private credit, including liquidity mismatches, redemption limits (“gates”), and growing exposure to retail investors. Why financial markets are behaving unusually, with rising bond yields and weakening traditional safe-haven assets. How central banks are stuck between fighting inflation and supporting growth, creating a far more complex policy environment than past crises. Mentioned on the Episode: Sebastian Mallaby, The Infinity Machine: Demis Hassabis, DeepMind, and the Quest for Superintelligence, Penguin Random House Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.
March 25 · 58 min
U.S.-China AI Race Escalates + Chip Bans Aren’t Working + A Lesson From Nuclear Proliferation
This episode unpacks the evolving U.S.-China AI rivalry, the limits of technological export controls, and what’s really at stake as both countries race to shape the future of intelligence. Submit Your Question For a Chance to Win a Copy of Sebastian Mallaby’s Book The Infinity Machine! Host: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Guest: Chris McGuire, Senior Fellow for China and Emerging Technologies, CFR We discuss: How U.S. export controls on chips are slowing China’s AI progress, but not stopping it, as loopholes, smuggling and cloud access weaken enforcement. Why China’s progress is stronger than expected, with competing models only months behind the U.S. As Chris McGuire, CFR senior fellow, puts it: “Whoever has the better AI is going to have the offense-defense advantage in the cyber realm.” Why compute and advanced chips are the real bottleneck. Why the “AI intelligence explosion” is overstated, with real-world deployment slowed by infrastructure, regulation, and human constraints. The tension between containing China and working with it on global AI safety and governance. Mentioned on the Episode: Sebastian Mallaby, The Infinity Machine: Demis Hassabis, DeepMind, and the Quest for Superintelligence, Penguin Random House Chris McGuire, “The New AI Chip Export Policy to China: Strategically Incoherent and Unenforceable,” CFR.org Chris McGuire, “Trump’s Reversal on AI Chips is a Historic Blunder,” The Washington Post Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released! The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

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