Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm show Wise and I'm Tracy Alloway. Tracy, there's a
Speaker 1: lot of talk about the deficit and the debt these days.
Speaker 1: For a long time, maybe that sort of story went away,
Speaker 1: but with the tax cuts and people wondering when the
Speaker 1: next downturn comes back, it really feels like a government
Speaker 1: debt is a big story again. Yeah. Absolutely, We've seen
Speaker 1: lots of talk about bond vigilantees staging a comeback. We've
Speaker 1: seen lots of forecasts from various analysts about just how
Speaker 1: big the US deficit is going to get. Given Trump's
Speaker 1: propensity to borrow and also enact fiscal stimulus. There is
Speaker 1: a lot to discuss when it comes to the world
Speaker 1: of US government debt nowadays. There absolutely is, And I
Speaker 1: think one of the things that's always driven me crazy,
Speaker 1: I think both of us crazy, is the sort of
Speaker 1: naive view about how people talk about government debt, particularly
Speaker 1: US government debt. There's this view often that sort of
Speaker 1: sees the government as just sort of a typical borrower,
Speaker 1: like a household or a person trying to borrow money
Speaker 1: to buy a car. And as we know, it doesn't
Speaker 1: really work that way, and that can really lead people
Speaker 1: to a lot of false assumptions, like about what interest
Speaker 1: rates are going to do and what the market is
Speaker 1: going to do. So, I know you say it's a
Speaker 1: naive viewpoint, but I'm going to make a confession here
Speaker 1: and say that you know, in my head, I understand
Speaker 1: the point that the US government is not the same
Speaker 1: as you know, the head of a household who's tatting
Speaker 1: up their income versus their expenditure every month. But deep
Speaker 1: down in my gut, I have always been uncomfortable with
Speaker 1: the no shin that the US can borrow extraordinary amounts
Speaker 1: of money and not have major major impacts. So I'm
Speaker 1: actually really excited to dig into this subject because hopefully
Speaker 1: it'll make me feel better. Yeah, I agree, there's a
Speaker 1: non intuitiveness about it. And even if you say, like, oh,
Speaker 1: you know, the US creates its own money and borrowing
Speaker 1: for the government is not the same as it is
Speaker 1: with the household, I know what you're saying about your like, well, yeah,
Speaker 1: surely we must be still getting close to some risk.
Speaker 1: So hopefully we can maybe usual this episode to get
Speaker 1: a little more comfortable with thinking about what government did
Speaker 1: means in a slightly different manner. Yeah, that sounds great. Great,
Speaker 1: So today I'm very excited to welcome to the podcast
Speaker 1: Brian Roman Chuck. He is the author of the Bond
Speaker 1: Economics blog. He's a financial consultant. He's written about the
Speaker 1: bond market and what really happens. He's a veteran of
Speaker 1: the financial industry, and he is going to help us
Speaker 1: understand what's really happening when the government issues all this debt,
Speaker 1: which of course is a major theme of the news
Speaker 1: these days. Ryan Romantric, thank you for joining us on
Speaker 1: odd lots. Let's start with the big question when someone
Speaker 1: or a bank or an investor is buying a government bond,
Speaker 1: what does it actually happen? On paper, it does look
Speaker 1: similar to buying another bond. You know, you transfer money
Speaker 1: to someone in exchange for a security which has a
Speaker 1: que sip, so there is some similarity. You're you're going
Speaker 1: through the same Selman process, and you know, you you
Speaker 1: end up with rights. If you buy a ten million
Speaker 1: you know, once you have control of it, then you
Speaker 1: get you know, a certain contractual payments, you know up
Speaker 1: until the bond maturity. And any bond, uh, well standard
Speaker 1: bonds all have the same source of structure will give
Speaker 1: you a certain coupon and then there's a final principal payment.
Speaker 1: So the cash flow perspective, all bonds are similar in
Speaker 1: that sense. So, at the risk of using a terrible cliche,
Speaker 1: you know you're getting this IOU from the government essentially,
Speaker 1: um it comes with a coupon, which kind of informs
Speaker 1: the yields that you're going to get. Most people when
Speaker 1: they think of US government debt, they're going to think
Speaker 1: of treasuries obviously, and they're going to think of the U. S. Treasury.
Speaker 1: Is it the US Treasury who is actually selling these things?
Speaker 1: Or are there other entities involved? The U? S. Treasury?
Speaker 1: The auction it as a Canadian I forgot the exact details,
Speaker 1: but it's done there. There's an auction and the the
Speaker 1: auction is they say there's gonna be a certain number
Speaker 1: of bonds and then at a certain maturity, and then
Speaker 1: the line of bidders and most of the bidding comes
Speaker 1: from there. They're called the primary dealers, mainly banks, but
Speaker 1: they're security dealers deal with the FED and they're obligated
Speaker 1: to bid and they do most of the bidding. Other entities.
Speaker 1: You can do a non competitive bid, but that's usually
Speaker 1: a small part of the market. And once all the
Speaker 1: bids come in, you don't give a price. You just
Speaker 1: say I want to buy it at this yield. And
Speaker 1: then you once all the bids come in, you say
Speaker 1: the you know, it's a lower yield is essentially higher price.
Speaker 1: The lowest yields to buy all the bonds win the
Speaker 1: auction and they get the bonds delivered to them, and
Speaker 1: then usually the primary dealers sell them on to other,
Speaker 1: you know, investors like pension funds, people like us and
Speaker 1: in the secondary market. Now, one of the things that
Speaker 1: we talked about this in the intro is that we
Speaker 1: have to dispel the myth that the US is just
Speaker 1: like any other private sector borrower. And so we've established
Speaker 1: that the bonds on paper look the same. It looks
Speaker 1: like any other corporate bond or alone that might get
Speaker 1: turned into a bond like instrument, but it's fundamentally different
Speaker 1: and the key difference is the source of fund So
Speaker 1: explain to us structurally why the US is a different
Speaker 1: kind of borrower. Well, the key difference, and you know,
Speaker 1: for the US, the US controls the central bank, and
Speaker 1: as the horrible counterexample is a place like the Euro Area,
Speaker 1: where the countries don't control their central bank. And because
Speaker 1: ultimately all these bonds say we're paying you U S
Speaker 1: dollars and the US dollars a liability of the US
Speaker 1: Federal Reserve, and the US Federal Reserve the FED is
Speaker 1: owned by the Treasury. So that gives you the one
Speaker 1: big picture difference than any other borrower, and the other
Speaker 1: the other issue is for the government, there main concern.
Speaker 1: They're more concerned a bit about the macro consequences of
Speaker 1: spending and not so much the financial A smaller borrowing
Speaker 1: an individual bank, you know, how big they might be,
Speaker 1: aren't really worried about the fact that they're spending on
Speaker 1: the overall economy. And that is a key difference in understanding, Well,
Speaker 1: you know, why are they different? Okay, so I'm gonna
Speaker 1: let my gut talk now, which is probably a mistake,
Speaker 1: but here we go. So, why why can't the US
Speaker 1: government just borrow as much as it wants, you know,
Speaker 1: enormous amounts of money? Uh what what? What are the
Speaker 1: negative effects that are going to happen if it does that?
Speaker 1: It's not the borrowing per se, that's the problem because
Speaker 1: the it's you would say, if there's a problem, it
Speaker 1: would be on the spending, because you say, what is
Speaker 1: the government buying? I mean, maybe they're buying good things,
Speaker 1: maybe it's bad things, but uh, one can always debate,
Speaker 1: you know, what the the spend money on. But from
Speaker 1: a macro perspective, what the worry is if the government
Speaker 1: starts buying too much stuff, they drive up the price
Speaker 1: of everything, i e. There's inflation, and they spend a
Speaker 1: lot and causes inflation. But the borrowing is the flip
Speaker 1: side of the spending because if they're spending more than
Speaker 1: coming in from taxes, there's a fiscal deficit, and the
Speaker 1: way that that's matched in practice is well that that's
Speaker 1: covered by borrowing. And so the borrowing comes with the spending.
Speaker 1: And so it's a mistake to worry about the borrowing
Speaker 1: and say what what is the government spending on. So
Speaker 1: this is the part that I think people really have
Speaker 1: a hard time, is why we shouldn't worry about the
Speaker 1: borrowing because in theory you would think, Okay, people are
Speaker 1: buying government dead, and the government dead just keeps going
Speaker 1: higher and higher, and that maybe one day these buyers
Speaker 1: will say whoa, You guys are spending so much money,
Speaker 1: You're never gonna be able to pay it back. Tax
Speaker 1: revenues aren't coming anywhere close. I'm not going to buy
Speaker 1: government debt anymore. So this issue, I think is still
Speaker 1: what we need to address, which is why is that
Speaker 1: not a risk that one day lenders just won't show up? Well,
Speaker 1: I mean that that is a worry, and it was
Speaker 1: anyone's being around the markets that was a worry. I
Speaker 1: started in finance about Japan and even that was a
Speaker 1: big worry. And that continued and it was called the
Speaker 1: widow maker trade people and all Japan is gonna default
Speaker 1: within months, and they short a Japanese government bonds and
Speaker 1: they kept losing money. By now people have largely given
Speaker 1: up on that. But the reason why the governments can
Speaker 1: get away with this, uh generally is they're spending creates
Speaker 1: the money that then is sucked back in by the
Speaker 1: bond auction. It's a circular flow. And this is why, yes,
Speaker 1: there's a demand for like you know, the demand for
Speaker 1: borrowing for the government at the same time they're supplying
Speaker 1: money that then is recirculated back into the bond market.
Speaker 1: I think this is the just sort of the really
Speaker 1: key point here, and I want to sort of really
Speaker 1: dive into this. So let's say the government wants to
Speaker 1: spend ten billion dollars more on some new aircraft program
Speaker 1: for the military. That ten billion dollars that they spend,
Speaker 1: I think, as you're saying, winds up in the bank
Speaker 1: account of some private defense contractor, and then that money
Speaker 1: in the bank ends up going perhaps a security circuitous route,
Speaker 1: ends up back being invested in government bonds. Do I
Speaker 1: have that right? Yeah, that's basically it. I mean, now
Speaker 1: it's it's a bit more common because you have excess reserves.
Speaker 1: But what happens is if the government sends a defense
Speaker 1: contractor ten billion, they'll have a ten billion deposit on
Speaker 1: the bank. The bank in return, they get ten billion
Speaker 1: transferred to them from the FED and they have ten
Speaker 1: billion as a deposit the Fed. I mean, these are reserves,
Speaker 1: and you know, because the Federals is a bank and
Speaker 1: so but the bank doesn't really want I mean, independent
Speaker 1: of what them, the customer and what might want, that
Speaker 1: ten billion UH is sitting in the bank account because
Speaker 1: they will have expenses. But the bank itself, what's it
Speaker 1: going to do with the ten billion it has an
Speaker 1: asset on balance sheet which is a deposit of the FED,
Speaker 1: which is a low risk asset which pays you used
Speaker 1: to pay nothing but now very little, and say we
Speaker 1: want to do something else with this asset in our
Speaker 1: balance sheet, And so they then go out and say
Speaker 1: we want something and gives a higher return, and essentially
Speaker 1: how the loop gets closed and say, look, hey, there's
Speaker 1: you know, treasury bonds. We buy them. They should have
Speaker 1: an expected return higher than lee ving the money on
Speaker 1: deposit the FIT. And so the bank will go out
Speaker 1: and buy the treasury bonds in the auction because otherwise
Speaker 1: they're stuck with the deposit the FED that's paying them
Speaker 1: very little. So Brian just on the money creation point
Speaker 1: when it comes to the US is government borrowing. A
Speaker 1: lot of people will often point to the special privilege
Speaker 1: that America enjoys by virtue of the fact that the
Speaker 1: US dollar is the world's reserve currency. In other words,
Speaker 1: other countries need it, and so they're going to keep
Speaker 1: buying US treasuries in order to stabilize their own accounts
Speaker 1: and their own currencies and things like that. How much
Speaker 1: does that play into the ability of the US government
Speaker 1: to keep borrowing. And you know, you mentioned the Japan example.
Speaker 1: People have been worried about Japanese government debt for ages.
Speaker 1: The end certainly is not the world's reserve currency. So
Speaker 1: how come they're able to do that as well as
Speaker 1: the US the reserve currency when you had to fix
Speaker 1: fixed exchange rate regime. It did make a difference in
Speaker 1: Bretton woods, but it's been a long time. Canada, Australia,
Speaker 1: United Kingdom, I mean, they're not really reserve currencies, but
Speaker 1: they're pretty much in the same position as the US
Speaker 1: from the perspective economic perspective. Let's say you have an
Speaker 1: Asian central bank. They look as far as the U S.
Speaker 1: Domestic economy is concerned, they're a private sector borow and
Speaker 1: they have the same choices to do, you know as
Speaker 1: any other private sector investor. What do we do with
Speaker 1: our with our U S. Dollar assets? And you know,
Speaker 1: they could hold cash, they could they could leave money
Speaker 1: on deposit the bank, or we could buy a treasury.
Speaker 1: So they don't really have a choice if if they
Speaker 1: want to hold US dollar reserves, they have to do
Speaker 1: something with it. And by convention, you know, they don't
Speaker 1: run around. It's it's it's frowned upon for central banks
Speaker 1: to run and run around and buy private sector ass
Speaker 1: it's like equity easy. There's a little bit of dabbling
Speaker 1: in equity markets, but that's only a tiny fraction. They
Speaker 1: keep their money in fixing comme assets, and they want
Speaker 1: safe ones. I mean they don't because they might need
Speaker 1: to call on their reserves if their currency is under attack.
Speaker 1: And then you know, they don't want a private debt
Speaker 1: that's in the process of defaulting when they need liquidity,
Speaker 1: and so by default they tend to end the treasury.
Speaker 1: So it's a two way street, and a certain extent
Speaker 1: they're trapped into the treasury holdings as well. And in theory,
Speaker 1: if a foreign holder of dollars, let's say they did
Speaker 1: want to buy equities instead of treasuries just for whatever reason,
Speaker 1: that would create some new holder of those dollars at
Speaker 1: some other bank. And so it's not like the dollars
Speaker 1: would just sort of disappear. It would be yet another
Speaker 1: buyer somewhere else would show up who would have dollars
Speaker 1: on reserve at a AC and then would theoretically go
Speaker 1: into treasuries. Yeah, it's it's for everybodyer. There's a seller
Speaker 1: and scare stories often revolve around forgetting that that basic principle. Yeah,
Speaker 1: there's someone with the dollars has to buy, so yeah,
Speaker 1: you know, the pricing can change, of course, I mean
Speaker 1: that's the thing if you're worried about pricing. Yes, treasury
Speaker 1: prices would go down relative to other things, but the
Speaker 1: flows will still cancel out. So how come Japan can
Speaker 1: borrow enormous amounts of money, Well, it's the same same issue.
Speaker 1: There's excess again. They're creating again and um I even
Speaker 1: looked at the latest data, but they're roughly a trade balance,
Speaker 1: so it's mainly domestic owners. Very few people want to
Speaker 1: go in and buy Japanese bonds. I mean people buy
Speaker 1: Japanese equities, but not bonds. People just think they're ridiculous,
Speaker 1: although now maybe not so as much. But the you know,
Speaker 1: the yen has is somewhere in the system and Happanese
Speaker 1: banks basically have no choice, but they buy the bonds,
Speaker 1: although recently it's been the Bank of Japan. They've basically
Speaker 1: bought most of them up and now the banks just
Speaker 1: have deposits of the Bank of Japan. But in the
Speaker 1: in the end, it's just that if they spend the
Speaker 1: end end up in the system, and the end has
Speaker 1: to go somewhere, and that drain is the Japanese government
Speaker 1: bond market. So doesn't matter if the buyers of your
Speaker 1: debt are more domestic or more foreign. Is one group
Speaker 1: better than the other. If you're borrowing in your own currency,
Speaker 1: I mean, this is very different. If you're like an
Speaker 1: emerging market borrowing in another country's currency, then you have
Speaker 1: to be very worried about foreign holders. Or if you
Speaker 1: have any fixed exchange rate pig and you see that
Speaker 1: in the Euro area, then you like domestic things, domestic
Speaker 1: buyers of your debt because you have more control over things.
Speaker 1: But for a floating currency sovereign if you have a
Speaker 1: lot of fire and foreign buyers, if you do, it
Speaker 1: means you're running big current account deficits. And is that good?
Speaker 1: Is that bad? You know, the US, their industrial strategy
Speaker 1: since being the World War two, has been running trade
Speaker 1: deficits with you know, strategic partners. And you know the
Speaker 1: U s has costs, and there's benefits for the US
Speaker 1: right now that people are focusing on the cost, but
Speaker 1: there's there are benefits the way the US runs a system.
Speaker 1: But the foreign buyers. In theory they could panic more,
Speaker 1: but at the same time they don't want to lose money.
Speaker 1: You know, it's very you know, if you're a big
Speaker 1: holder of bonds, you can sell in a panic and
Speaker 1: you can lose a lot of money. You know. I
Speaker 1: worked for firm which was large, and if we wanted to,
Speaker 1: we could lose a lot of money very quickly by
Speaker 1: selling our our assets and a panic. Well, that's not
Speaker 1: our job. Your job is not to lose money very quickly,
Speaker 1: so you generally avoid doing stuff like that. So that's why,
Speaker 1: on paper, the foreign investors could get spooked more, but
Speaker 1: they still want to make money, so it's not clear
Speaker 1: that they're much different than domestic investors in that respect. Okay,
Speaker 1: so we've established that for the US credit risk isn't
Speaker 1: really a thing because the dollars that come to buy
Speaker 1: treasuries come from the spending. And we've also established that
Speaker 1: you don't even need to be a reserve currency for
Speaker 1: this phenomenon to exist, because it's in Japan, which has
Speaker 1: lots of debt, and Canada, which is not anyone a
Speaker 1: reserve currency, Australia and New Zealand. Then the obvious question
Speaker 1: is why can't all countries do this? And so people think,
Speaker 1: to the extreme example of a country like Venezuela and
Speaker 1: the debt they have, why can't they just spend and
Speaker 1: keep a stable currency and a stable market. I'm not
Speaker 1: an emerging market person, but there's policy differences between Venezuela
Speaker 1: and the US coming down to the strength of the
Speaker 1: tax system. The i r S, as everyone knows, is
Speaker 1: a powerful organization, and it has the income tax, has
Speaker 1: the ability of damping economic activity, and so it controls
Speaker 1: inflation better than in the country with a weaker tax system.
Speaker 1: And my pet theory is that the difference comes down
Speaker 1: to the effectiveness of the tax regime for for inflation control.
Speaker 1: I mean, that's a major difference, but there is also
Speaker 1: a question of what is produced. If you if you're
Speaker 1: dependent on foreign imports for a lot of goods, then
Speaker 1: your domestic inflation is driven by your exchange rate. Whereas
Speaker 1: the US is largely a closed economy I mean, relatively
Speaker 1: a closed economy when compared to other countries, and change
Speaker 1: is the exchange rate don't have much of an effect
Speaker 1: on prices, so you can largely ignore I mean, if
Speaker 1: US dollar falls ten, it's not really noticeable in domestic prices.
Speaker 1: So with all the talk of the US deficit growing
Speaker 1: and the US government borrowing more under the current administration,
Speaker 1: lots of auctions happening, not just a longer term treasuries,
Speaker 1: but also t bills. What are you looking out for
Speaker 1: when it comes to US auctions to sort of gauge
Speaker 1: the health of the market and to determine how successful
Speaker 1: an auction is in terms of successive auctions. That was
Speaker 1: something that that was a technical detail I didn't worry about.
Speaker 1: But the the overall trend it's going to be. Are
Speaker 1: these deficits going to cause rapid growth? If you're if
Speaker 1: you're worried about the pricing which is the usual word,
Speaker 1: what's gonna happen to bond yield? If the government spending
Speaker 1: a lot, they'll will have inflation your pressure, and that's
Speaker 1: going to force the Fed to hike rates and that
Speaker 1: if you know from a bond market, uh, you know,
Speaker 1: pricing perspective, that's your worries that the Fed gets more
Speaker 1: aggressive with rate hikes and pushes up bond yield. That's
Speaker 1: going to be you know, much much more of a
Speaker 1: concern than the just supply demand. So the big picture,
Speaker 1: and if we sort of wrap it all up here
Speaker 1: is that it's not the borrowing per se. It's not
Speaker 1: the gap between the government's expenditures and its revenues via taxes.
Speaker 1: It's really about the capacity of the economy to absorb
Speaker 1: all that spending. That sort of is what theoretically would
Speaker 1: drive inflation, and then the link between inflation and what
Speaker 1: the Fed does that would sort of be what ultimately
Speaker 1: determines what long term rates are going to do. And
Speaker 1: then that you know, once you answer that, then you
Speaker 1: can decide whether it makes sense to buy a bond
Speaker 1: or not. Yeah, that's basically I mean, And the question
Speaker 1: is will I mean, it's not just a simple difference.
Speaker 1: I mean, this is the question. With the tax cuts,
Speaker 1: how much for stimulative impact have they had. I mean,
Speaker 1: there's been not much of an inflationary impact. It's been
Speaker 1: good for the stock markets, a lot of money got
Speaker 1: funneled into into stock buy backs, but by itself, that
Speaker 1: isn't that isn't putting inflationary pressure on the economy. So
Speaker 1: there's a big difference between what the deficit is doing
Speaker 1: and the effect on the economy. And it's hard to model.
Speaker 1: I mean, it's it's it's not an easy thing to
Speaker 1: say what the effect on the economy is gonna. Presumably
Speaker 1: there's a big inflationary difference between say, rich people are
Speaker 1: getting a tax cut versus a policy that said, everybody
Speaker 1: in the country gets a new bicycle, even if it's
Speaker 1: on a dollar amount, it costs the same. That's presumably
Speaker 1: the difference. I mean, you might have political this is
Speaker 1: where sort of politics comes in. People might disagree, but
Speaker 1: that's certainly my view that you you know, hand the
Speaker 1: tax cut to the bottom twent or you buy stuff
Speaker 1: much more inflationary than capital gains tax cut. Brian Roman Chuck,
Speaker 1: thank you very much. Very interesting conversation, and I think
Speaker 1: these sort of this guts of how this all works
Speaker 1: out very rarely discussed when people talk about the bond market.
Speaker 1: So appreciate you coming up. Thanks thanks to It's nice
Speaker 1: to be on so Tracy. Are you convinced that it's
Speaker 1: not a big existential threat for the government to run
Speaker 1: what's on paper very large deficits. I feel like I
Speaker 1: have a better intellectual grasp of what's going on, and
Speaker 1: the idea that you know, borrowing from the government isn't
Speaker 1: actually about moving money from one entity to the other.
Speaker 1: It's actually about creating money. I get that, but I
Speaker 1: gotta be honest, Joe, part of me is still thinking
Speaker 1: there have to be some consequences. I think there's two
Speaker 1: things that I think we're really useful there. So one
Speaker 1: is obviously just really understanding this idea of the closed loop,
Speaker 1: this idea that money never leaves the banking system, because
Speaker 1: I mean, for one thing, we know that all money
Speaker 1: is digital basically, and so kidd just disappear, and so
Speaker 1: if it's going to stay in a bank, and a
Speaker 1: bank will ultimately put it into treasuries, even if it
Speaker 1: caused many hop skips in a jump. I also think
Speaker 1: that point that he made about the strength of institutions
Speaker 1: is really important, and this idea that it's not necessarily
Speaker 1: the borrowing per se that you want to worry about,
Speaker 1: but if you want to look at sort of institutional
Speaker 1: degradation in developed economies, you could certainly point to a
Speaker 1: lot of things these days. Right, And we've had this
Speaker 1: discussion at one time or another about how when you're
Speaker 1: ramping up government borrowing, you're really making big decision and
Speaker 1: about what you're going to spend that borrowing on, and
Speaker 1: those are value decisions that are being made. The other
Speaker 1: thing I thought was interesting was when he sort of
Speaker 1: flipped it on his head and said, you don't necessarily
Speaker 1: need to worry about the borrowing, but about the capacity
Speaker 1: of the economy to absorb the spending. And that's something
Speaker 1: that you know, you've seen the Federal Reserve make noises
Speaker 1: about it, this notion that we are running close to
Speaker 1: full capacity at this point. And what impact is a
Speaker 1: whole bunch of fiscal stimulus actually going to have on
Speaker 1: the economy. Absolutely, and then also just this idea that
Speaker 1: there's gonna be different growth or inflationary impacts of different
Speaker 1: kind of fiscal policies. So right, it's like, you know,
Speaker 1: if you were to give Bill Gates a you know,
Speaker 1: one billion dollar tax cut or someone, you know, whatever
Speaker 1: it is, it's probably not gonna too much because Bill
Speaker 1: Gates has more money than he knows what to do with.
Speaker 1: Whereas if you were to put it towards consumption, and
Speaker 1: particularly consuming something that we don't have much capacity and
Speaker 1: like housing or something like that, then you might see
Speaker 1: a real growth or inflationary impact. Or bicycles. I like
Speaker 1: your free bicycle idea, let's do that one. Yeah, I
Speaker 1: support that. One. Other point I think is key and
Speaker 1: that and if you just sort of think to really
Speaker 1: sort of drive at home. In the last year, there
Speaker 1: has been all this questions like all right, we're the
Speaker 1: tax cuts are blowing out the deficit, and people are like, oh,
Speaker 1: who's gonna buy all that debt? And the simple answer
Speaker 1: is like, well, a bunch of people just got tax
Speaker 1: cuts and so they're gonna have a lot more money,
Speaker 1: so we can sort of already know who's gonna buy it.
Speaker 1: It's those people that have more money in their bank account.
Speaker 1: Like it's sort of if you think of this closed
Speaker 1: loop phenomenon, it allows you to sort of anticipate who
Speaker 1: is the new entity that's going to be doing good buying.
Speaker 1: The closed loop strikes again. I like it. All right, Well,
Speaker 1: this has been another edition of the Odd Thoughts podcast.
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway, and I'm Joe Wise of Thall. You could
Speaker 1: follow me on Twitter at the Stalwart, and you should
Speaker 1: follow our guest Brian roman Chuck on Twitter at Brian
Speaker 1: roman Chuck, and be sure to follow our producer to
Speaker 1: fur Foreheads at Foreheast as well as the Bloomberg head
Speaker 1: of podcast, Francesca Levy at Francesca Today. Thanks for listening.