Intro
Kenneth Rogoff, a Harvard economics professor, joins the hosts to work through the tariff fight between Donald Trump and Mark Carney, who actually loses from it, and what a Federal Reserve chair can and cannot say at Jackson Hole with an election coming. The hosts then take on Stacey Vanek-Smith's reporting on lab-grown diamonds, an op-ed Max Chafkin says was written with AI, and Dolly Parton's record as a businesswoman.
Guest: Kenneth Rogoff, professor of economics at Harvard and author of Our Dollar, Your Problem
Hosts: Max Chafkin and Stacey Vanek-Smith
Published: 28 August 2026 on Everybody's Business · recorded earlier
Listen on Omny | 36 min
Key Takeaways
Rogoff reads the US-Canada tariff escalation as ego rather than industrial policy
"It feels like a bar fight" — and he says the scale is lopsided, with Canada "less than a tenth the size of our economy"
Trump takes Carney personally because Carney was the one who did not flatter him
"everybody was sort of being sycophantic to Trump. And really only President Xi of China had stood up to him"
The US holds the stronger hand and Canada is choosing to take the pain anyway
"the U.S. has all the cards here", against a country that sends Rogoff's rough "two-thirds of its exports" to the US
Canada's retaliation is being aimed at the states that trade most with Canada
Rogoff's answer on who wins a trade war is that nobody does, and the US loses most
"But I would say the U.S. is going to be the big loser"
Every part of this creates room for China, including in Latin America and South Asia
The strong dollar is not what hollowed out US manufacturing, in Rogoff's telling
"It's mostly robotics, trade with China, not so much the dollar"
A Democratic administration in '29 would not undo the protectionism, he thinks
Kevin Warsh's problem at Jackson Hole is that he cannot say anything until the election is over
Lab-grown stones now cost less than breakfast, and mined diamonds cannot answer on price
"$15 a carat", grown a hundred at a time in a week in India and China
The diamond trade's only visible escape route is the one Rolex took
Stacey's conclusion from the diamond story is that value is a collective feeling
"Maybe we're just valuing all the wrong things"
Max's underrated story is that Stanley Druckenmiller wrote his Bessent op-ed with AI and said he was proud of it
Cold Open: A Wisconsin Tour, a Lab-Grown Necklace and a Tariff List With Dog Muzzles on It
Max opens back from a week away, on "a tour of Wisconsin where various family members live", after Stacey and Brad covered the show
The week's agenda, as the hosts set it: the Canada trade war, the central bankers gathering in Jackson Hole, and the split between mined and lab-grown diamonds
Stacey wears one of her Walmart lab-grown necklaces on the recording and says "It's like two carats"
Max guesses at the mined price: "That's like a $5,000 or $10,000 necklace"; Stacey puts it higher, at "$20,000, $30,000. If it were not lab-grown"
What she paid: "I think it was like under $100. I think it was like $50"
Max runs the tariff list back and forth across the border — "goods, fish, alcohol, plywood, wigs, dog muzzles, buoys"
Stacey's own reaction is that the exposure is easy to miss: "I didn't realize dog muzzles were at risk, as, you know, we always think of China and Mexico a lot. But Canada is a huge trading partner for us"
Rogoff: The Fight Is a Bar Fight, and Trump Is Taking It Personally
Asked what he sees between the two countries, Rogoff's first line is that this is not economics: "It feels like a bar fight. I mean, you know, I don't know, are they drunk? Like, there's a huge amount of ego going on here"
He sizes the mismatch as he goes — "Canada's, you know, less than a tenth the size of our economy"
Rogoff traces Trump's anger to a speech Carney gave at Davos in January, which he says Trump is still mad about
Why the speech carried, in Rogoff's account: "everybody was sort of being sycophantic to Trump. And really only President Xi of China had stood up to him. And he really stood up to him. And that Canada was just standing up on principle"
"It didn't really have much muscle" — the standing up was the point, not the leverage
The reaction abroad, as Rogoff describes it: "the Europeans are constantly quoting this, people all over the world. Mark Carney is a hero. Canada and Europe have moved closer. And I think Trump takes it very personally"
He notes the two men were friends before this, "like many stories with Trump," and expects a dusting-off afterward
Rogoff's irony is that the arrangement being blown up is Trump's own: "let's not forget, Trump 1.0 signed the greatest trade agreement ever, which was not to have tariffs"
Companies on both sides of the border built around it, and Stacey pushes back that it was NAFTA under another name — Rogoff's answer is "He wanted to rename. But he did sign it"
The US Holds the Cards, and Canada Is Backing Carney Anyway
"But what's really different here is the U.S. has all the cards here" — Rogoff grants it will hurt Americans and still calls the asymmetry decisive
"And Carney's being very smart about how he's crafting his retaliation", aiming at the places with the most to lose — "And those are the states that trade the most with Canada"
On Canada's dependence, hedged as he says it: "Canada, I don't know the exact numbers, like two-thirds of its exports are to the United States"
"And okay, Canada is important to us, but we could live without it"
Rogoff's read of Canadian opinion is that the fight is a winner at home: "it's very popular so far, what Carney's doing"
Max fills in the map from the tariff lines: seafood that could hit Maine, a lot of plywood tariffs, and the people sounding the alarm on both sides being in the border states
He names Ohio and Michigan, and Doug Ford, the premier of Ontario, "who's been a player in all this"
Max's framing of Trump's incentive: Canada has been out making its own trade deals with other countries, and "It would be bad for him and his strategy if Canada takes a very divergent strategy from Trump's"
He quotes Ford telling the most powerful person in the world to "kiss my ass" on Canadian radio, repeatedly, and asks what Canada thinks it is buying
What Canada Thinks It Is Buying With the Pain
Rogoff's answer is short: "Well, they value their independence, and this is a crucial moment for them"
"And I think the Canadian calculation is they are willing to take a lot more pain over this than we are"
His comparison is a country under far heavier pressure than tariffs: "Very parallel to Iran in a way where obviously Iran's getting, you know, creamed militarily and in every way. But, you know, they care a lot about whatever it is they care about"
"I think he'll be able to carry that for quite a ways. We'll see"
He still expects it to burn out: "I suspect it'll all end. Like I said, the bar fight will be over"
On why Trump keeps pressing, Rogoff hedges: Trump is "trying to carry it a long ways, maybe to make it seem like he'll be credible in other places"
Soft Power, Friends, and the Crisis That Needs Everyone
Max asks about the damage showing up in tourism numbers from Canada to Florida and in border crossings, and puts the question as "how risky do you think it is to get into a bar fight with your best friend, with the whole world watching?"
"Well, I think sometimes you need your friends" — Rogoff's case is that the tactic works until it doesn't
"And Trump's strategy has been to try to pick on one country at a time and go all in where he thinks he can win. He's backed down on China again and again"
The failure mode he names is a world crisis: "there's something where we need everyone to cooperate, we need everyone to do the same, or we need to plan for it. And the United States can't go it alone"
On why Canada in particular is the wrong target: "Canada's got incredible natural resources. I mean, the U.S. does, but my goodness, Canada does. We don't want them all shipping to China"
The line where the tariffs stop being abstract for consumers: "But then when you're saying, well, we can't have French wine, we can't have Italian olive oil, what? It gets real"
"I mean, our soft power's been a factor. Trump's leaned into the hard power. Hard power's not looking very good right now with what's going on in the world. That soft power's a big piece of what we have"
Rogoff is careful to separate this fight from the rest of the record — "he's not wrong about everything. Let's just be really clear about that"
He also argues the fight is not being fought for the metals industries, which are already protected: "Our steel and aluminum prices are already way higher than the rest of the world because of our tariffs"
Who Wins a Trade War: Everyone Loses, and China Gets the Room
Stacey puts it to him that on hard-power money the outcome should be open and shut, and asks who is actually winning
"Well, I think we're all losing is sort of the short answer" — and Rogoff says there was no case for a trade war in the first place
"But I would say the U.S. is going to be the big loser. We were the winner. We were ruling the world. We were the richest country. We were the most powerful country. We were the most respected country"
"And we're pushing to a world which is going to be more balkanized"
"100% all of this stuff elevates China. It creates a room and space for China to move into"
He points at Latin America and South Asia, where "They look to China. They don't just look to the United States, and this creates space for that"
The Canada-China talks Trump objects to are, in Rogoff's account, a result of his own policy: "Of course, Canada was negotiating with China. That was one of Trump's complaints here, but he pushed them in that direction"
On the story that the US was the loser from the old system, Rogoff allows a piece of it — "There's a little bit of truth to that. It's not completely wrong" — and then names what he thinks actually did the damage
"It's mostly robotics, trade with China, not so much the dollar"
Why Rogoff Doesn't Expect the Next Administration to Reverse It
"What's worrisome is I think the Democrats, if they take over in '29, will not change anything"
His comparison is deliberate and he flags it as such: "These are policies that I don't want to pick on Bernie Sanders, but I will" — he calls them "very protectionist"
"Oh, he was Mr. Anti-North American Free Trade Agreement back in 2016 when he was campaigning against Hillary. That was one of his leading things"
His evidence is from campus rather than polling: "I know because all the Harvard students who were very much in his sway were constantly quoting Bernie, not Trump" — in conversations, he clarifies, not in his economics classes
Max's addition: "part of the genius of Trump in 2016 was managing to absorb those concerns into his kind of tent"
Rogoff's own verdict on the protectionist program, wherever it comes from, is that "at the end of the day, I don't think it's really the solution"
Jackson Hole and the Speech Kevin Warsh Cannot Give
Stacey notes Rogoff is about to leave for Jackson Hole and asks what he is going to do there
"Well, I mean, the linchpin of it is that the Federal Reserve Chair gives their big speech of the year at Jackson Hole"
Rogoff describes it as the chair's thought piece — "It's their thought piece, where they're really free to just not talk about the interest rate. They talk about the principles, something different"
"It's really a place where the whole world listens. They have a lot of convening power"
His own role this year: "I'm a lunch speaker, not a paper presenter this year"
"This is, of course, a tough year for Kevin Warsh because he can't say much until the election's over. His hands are tied"
The trap is symmetric — "if he says something that seems to help Trump, that's going to be a disaster eventually if he says something that seems to help the Democrats, vice versa"
"And I think he's doing the right thing institutionally to try to stand back and not get sucked into the vortex of this bigger bar fight going on"
Rogoff's forecast for the speech itself: "My guess is he'll give a very thoughtful speech. He'll find something that's very interesting and important to talk about"
"But he's not going to answer, where's monetary policy going exactly? Because he can't"
Lab-Grown Diamonds at $15 a Carat
Stacey's Businessweek story is the second segment, and Max frames it as a question about "what is real? What is artificial? And where is value created exactly?"
Her setup is the diamond's old job: "diamonds have been for thousands of years quite valuable, like a really reliable store of wealth", portable across the world, and the mainstream engagement stone since the 1950s
Lab-grown technology has existed since the 1950s too, she says, but the stones were not beautiful and the machines were expensive — until the pandemic, when "a whole bunch of forces combined to give lab-grown diamonds this just huge boost into the market"
The inputs are almost free: "It's just carbon. You can use, like, graphite and salt", plus diamond seeds, which she describes as the tiniest scraps left over from cutting a stone
The price line of the segment: "So basically, for less than the price of a breakfast burrito, you can grow a diamond in a lab now. $15 a carat"
"they have these machines in India and China that can grow a hundred at a time and they can grow them in a week and they can grow them as large as you want"
"And they're clear and they're beautiful and they're technically diamonds, molecularly the same"
The mined industry cannot meet that, in her account, because "they have to pay the overhead of the mine and all the workers and the cutters and pulling it out of the ground"
Max identifies the industry's counter-move as a rebranding — "this rebranding from sort of diamonds to quote unquote natural diamonds" — pitched on natural processes over billions of years rather than on the blood-diamond and mining arguments
What People on Fifth Avenue Said
Stacey took the question onto Fifth Avenue, outside the jewelry stores, to find out whether shoppers even know the difference
One couple had bought lab-grown as a gift: "I did my research and I feel like lab-grown seems like the best option", with the recipient adding "Yeah, it looks real to me. It's like a real diamond, pretty much"
Another respondent's one-word verdict on lab-grown was "Fake," while saying she does not own a diamond and hopes to when she marries
"I know that getting real diamonds is supposed to be unethical, right? And very expensive. I wouldn't feel comfortable wearing like a $30,000 diamond on my hand or something like that"
Asked which she would want, she chose mined: "I think it would be more special if it's, like, coming from a natural place, a ground"
And then undercut it: "Although, if my husband could not afford that, I won't be mad"
Stacey's summary of the interviews: "The husband is the thing, not the stone"
Max's reaction to the couple is the joke of the segment, and he admits it was uncharitable: "I was— when she said, oh, I have a lab-grown diamond. You know, my boyfriend gave it to me. I thought, he doesn't love you"
He puts it down to being "kind of a square" and possibly caught up in outdated views of the industry
The Diamond-Water Paradox, and Why Even a Jeweler Cannot Tell
Stacey takes the question back to Adam Smith, "who wrote the first book on economics, called it the diamond-water paradox, where he was like, we need water to live. We do not need diamonds to live, but we pay a lot more for diamonds than water"
"And the essence of the question is why do we value what we value?" — she extends it to why a diamond costs more than a sapphire
The detection problem is the reason the question bites: "even a jeweler can't tell. They have to put it in a machine. And they can tell because it is too perfect"
The machine reads the structure and concludes "this can't be natural"
Max's separate worry for the industry is taste, not price: "for me, diamonds, even quote unquote natural diamonds, are kind of tacky"
He bought a vintage stone instead — "When I bought an engagement ring for my wife, we went to an antique jewelry store" in Brooklyn, an imperfect diamond that is "not an investment-grade anything"
His prediction is a backlash to any diamond at all, once "anyone with a Walmart Plus account or whatever can get a two-carat diamond for almost no money"
Rings Got Bigger Because the Stones Got Cheap
"the average size of an engagement ring, which used to be like a half carat, is now two carats"
"Because everything's been pulled up in size because you can get a really nice big diamond for pretty cheap"
Demand for large mined stones went up with it, and Stacey relays a story a diamond analyst got from a jeweler in Miami about a customer who came in wanting four carats
"Four-carat diamond is the size of an M&M" and, as she puts it, tens of thousands of dollars
The customer's reason: "my maid has a four-carat diamond and there's no way I'm going to have a diamond ring that's smaller than my maid's"
Max's read on that is a familiar shape — "We're just doing the K-shaped economy again", with natural stones at the top
Stacey's objection to his own framing is the detection point again: "But you can't tell the difference. Even a jeweler can't tell the difference. This is where it gets complicated. So the diamond industry is up against it"
"I hadn't looked at engagement rings since I got engaged 14 years ago. But looking at it, it feels inevitable that the diamond industry is going to lose" — Max, on jewelry stores selling both side by side
The Rolex Route, and Value That Comes Down to Feelings
"There is a beacon of hope. There is a possibility. And it is the road to Rolex" — the comparison every diamond analyst raised with Stacey
The functional case for a Rolex is gone, in her telling: "Now, everybody can afford a watch. You can pick one up at CVS"
Max adds that good mechanical watches sell for a few hundred dollars, and Stacey that an Apple Watch is more accurate and throws in a heart rate and a sleep score
"So Rolex has nothing to really offer that can't be gotten anywhere else for less" — and excellent fakes exist
Rolex prices went up anyway: "but Rolex is like, they've continued to go up in value," including in the secondary markets, which is what the diamond industry is looking at
The branding bet, as Stacey states it: "there is a possibility if we brand this right, if we can convince people that like, yeah, yeah, but this is the real thing"
"even if you're wearing a fake Rolex that looks exactly like a real Rolex, maybe it feels different"
Her conclusion is about the economy, not the jewelry: "how we value things, what we're willing to pay for things, it does kind of come down to how those things make us feel, which is insane"
"It's like collective feelings about how much a Bitcoin is worth or how much gold is worth"
"Maybe we're just valuing all the wrong things. And that is at the root of a lot of our societal issues"
Max takes the opposite emotional reading: "The idea that much of the value is wrapped up in our humanity is to me an encouraging sentiment at a moment in which Chinese robots are racing one another at a conference"
Asked what he would buy, he is blunt — "Hell no, I would not get a lab-grown diamond" — because it "embraces all the wrong things about what the diamond is"
The exception he arrived at while reading the story is a repair: his vintage ring is insured well above what he paid because replacing the stone is expensive, and if it fell out he would use a lab-grown one, "because the ring is the thing, not the stone"
Druckenmiller's Op-Ed Against Bessent, and Who Actually Wrote It
Max's underrated story is the bond market, which he notes is not a sentence he expected to say
The setup: "Scott Bessent, the Treasury Secretary, has been attempting in various ways to manipulate bond yields"
Stanley Druckenmiller — "one of the greats of macro investment trading," and, Stacey adds, "Bessent's mentor" — wrote a long Wall Street Journal op-ed against him
His argument, in Max's summary: "what the U.S. really needs to do is cut entitlements, which are Social Security, Medicare, and so on, basically get its budget under control rather than trying to manipulate the market"
Max's actual interest is in how the op-ed was composed, which he says was with AI
"It's chock full of metaphors. The metaphors don't all agree with one another"
"There are these like long run-on sentences, excessive flowery language. It's full of AI-isms"
"when you put this into the, like, these AI detectors, Pangram or whatever says it's 100% AI" — though he adds "I don't credit those AI detectors too much. They sometimes have mistakes"
The detectors turn out not to matter, because Druckenmiller said so himself — Max quotes him as saying "I'm actually kind of proud of it"
The defense, as Max relays it: "I was a B student in English, but an A-plus in economics. These are my ideas. I've been speaking about them for 15 years"
The paper is owning it too, which Max flags as unusual: "Most news outlets do not publish AI-written prose"
The Journal's editor, quoted by Max: "AI is a fact of modern life. The question for us is whether what we publish from contributors reflects an author's original argument"
Stacey draws the line back to the first segment: "these are his ideas. Does it matter that a machine wrote it?" — and says that because writing is her own turf, it feels completely different to her
Max rejects the analogy: "I don't think it's like the diamonds because they are identical to one another", whereas the op-ed is detectable "because it's full of freaking cliches"
Stacey's counter: "But in three years, it could be very hard to tell"
"anyone who is as big a deal as Stanley Druckenmiller should force the world to suffer through his B prose"
The strongest defense they can construct is the old one — Stacey's "I thought that's what underpaid assistants were for," and Max noting that VIP op-ed writers "use ghostwriters," sometimes with a dual byline
Where both land: Stacey calls it "a bad look" and "a lack of respect for the reader or something that he just thinks like, well, this is good enough," and Max agrees — "I think it definitely shows a lack of respect for the reader"
Dolly Parton, Old-School CEO
Stacey's underrated story is a death: "So this week, Dolly Parton passed away at the age of 80"
"I was so much more affected by this than I thought I'd be" — not a huge fan, she says, but an admirer, and she saw Parton play live in Idaho
Max's read is that the reaction is national and crosses cultural and regional lines: "I think a huge part of the country is going through this"
What Stacey admires is the business record, not the catalog: Parton grew up in the mountains with many siblings and nothing, married at 18 or 19 to a man who stayed out of the spotlight, and ignored the record labels telling her not to marry
"She kept the rights to a lot of her music. She didn't let Elvis sing one of her songs because she wanted to keep the rights to the song"
Stacey's recollection of which song is hedged: "I think it was maybe even I Will Always Love You"
On the other side of the ledger: "So at Dollywood, she would pay for employees to go to college", and "she started her big reading fund where she would give books to kids all over the country"
Stacey's comparison is to the CEOs Max covers: "I just really think she is more of an old-school CEO, like the way people used to give back" — people who "get a lot, and they feel compelled to give back"
She also credits the way Parton handled "what must have been so much sexism with like this very light, playful way"
The last word is a song: Parton "wrote one of the greatest work songs of all time," Nine to Five, which Stacey calls "the anthem of the working person"
Rogoff's bottom line is that a trade war nobody needed will cost the country that was already winning the most, and that the space the US gives up in Latin America, South Asia and Canada itself is space China walks into.
Products, Companies & Tools Mentioned
Rolex (The diamond trade's model for survival — Stacey says it "has nothing to really offer that can't be gotten anywhere else for less" and keeps rising in value anyway)
Walmart (Where Stacey's two-carat lab-grown necklace came from, for what she thinks was about $50; Max extends it to "anyone with a Walmart Plus account")
Apple Watch, CVS watches and cheap mechanical watches (The hosts' evidence that a luxury watch sells no function — more accurate, cheaper, and available anywhere)
Pangram (The AI detector Max says scored Druckenmiller's op-ed at 100% AI, and which he says he does not credit too much)
Claude (The model the hosts name for the op-ed's tells; Max says the column "would have been better if it didn't have all of the Claude-isms in it")
The Wall Street Journal (Ran the op-ed and defended publishing AI-assisted prose, on the test of whether it reflects the author's original argument)
Dollywood (Where Stacey says Parton paid employees' college tuition)
Tiffany's and the Fifth Avenue jewelry stores (The backdrop for Stacey's street interviews on whether buyers can tell or care)
Books & Resources Mentioned
Our Dollar, Your Problem – Kenneth Rogoff (Rogoff's book, named when the hosts introduced him as one of the foremost trade experts in the world)
Stacey Vanek-Smith's Businessweek story on the diamond industry (The reporting behind the middle segment, including the street interviews and the diamond analysts' Rolex comparison)
Stanley Druckenmiller's Wall Street Journal op-ed (Argues Bessent is mucking with the bond market and that the US should cut entitlements instead; Max's case study in AI-written prose)
Adam Smith's first book on economics (Stacey credits it with the diamond-water paradox — why we pay more for a thing we do not need than for the thing we cannot live without)
Nine to Five – Dolly Parton (Stacey calls it "the anthem of the working person" and one of the greatest work songs ever written)
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