馃攳
Does The National Debt Matter? | What's Next For The U.S. Economy - YouTube
Channel: CNBC
[0]
I mean, the deficit
expansion has been dramatic.
[2]
Now is not the time to
worry about the national debt.
[6]
Actually running budget deficits
is a good thing.
[8]
That is not something that the
general public should be worried about
[12]
for the time being at all.
[22]
I think what we have to remember
is that the deficit expansion was
[24]
happening even before COVID hit, so we
were seeing, you know, in a
[27]
way an unsustainable path
for the deficit.
[30]
And then obviously once COVID hit
And we had this incredible amount
[33]
of support from Washington that is
ongoing deficit continue to swell.
[37]
So, you know, what's the concern?
[39]
I think the concern is what
happens on the other side.
[41]
So once we get past the crisis, you
know, do we start to see some,
[46]
you know, efforts to rein in
the deficit, shrink the deficit?
[49]
And what does that mean for,
you know, reductions in spending?
[53]
What does that mean for policies
going forward, especially since we
[56]
do have a, you know,
potential change of government?
[59]
There's lots of moving parts in terms
of how I think about the budget
[62]
going forward. But I think for the
time being, the consensus is very
[65]
much on both sides of the aisle
is for more deficit expansion as we
[68]
do what's needed to
stimulate the economy.
[70]
even though we've been running budget
deficits that are kind of
[73]
stupid, if you were if you were
going to run budget deficits, you
[77]
should be using the money to
build infrastructure to help education,
[81]
to work on the future.
[82]
And instead, we've been using it
to get big windfalls to corporations
[85]
and rich people I don't want
to say debt never matters.
[88]
I'm not going to go all that way.
[89]
But interest rates remain low.
[91]
There's no sign that
the markets are disturbed.
[93]
The arithmetic of debt is
really encouraging because interest rates
[98]
are well below the economy's normal
growth rate, which means that you
[102]
don't get increased debt, really doesn't
require that you make any
[105]
special sacrifices to pay it down.
[107]
And historically advanced countries, Britain
came out of World War
[112]
Two with debt. That was two
hundred and fifty percent of GDP.
[115]
Nothing bad happened.
[117]
So there really is no, we're not
anything like at a crisis point.
[121]
And at this point, with everything else
going on, I think the great
[125]
danger is that we spend
too little, not too much.
[127]
In a sense, We'll never
have to repay the debt.
[131]
The American economy
credit is good.
[134]
It's going to continue to be good even
if there is a huge crisis in
[138]
the world. American debt is something
that's one of the safest assets
[143]
to hold. So nobody is going to
come and say, please, reimburse,] the
[146]
debt that you owe me.
[148]
When you have this much unemployment,
when you have this much
[151]
underutilized capacity, this is the time
when government has got to
[156]
be the spender of last resort.
[158]
We know this.
[159]
I mean, even people who don't
like Keynes and didn't and rejected
[163]
Keynes, this is where
Keynes comes in.
[166]
This is where Keynesianism
is most applicable.
[169]
If you don't do it, we're just going
to continue to sputter at 80 to
[174]
90 percent of capacity for
on and on and on.
[177]
If we are going to take our debt
from 25 to 50 trillion dollars, that
[181]
is when U.S. sovereignty begins to
become at risk because other
[186]
countries see that we've run up so
much debt that we're no longer
[190]
beholden to anybody else but
the kindness of strangers.
[193]
And at that point, you start
to have real discussions about the
[196]
sanctity of the US
dollar reserve currency status.
[199]
And I don't want for my children
and grandchildren to be faced with
[202]
those issues. I would rather that
the Congress people in Washington,
[207]
DC act like adults.
[208]
I mean, I think by definition the
enormous amounts of debt created is
[214]
in itself, another one of
the massive uncertainties out there.
[220]
I am advocating also for many
countries that this is an opportunity
[225]
for the governments is
a bit tricky.
[228]
Again, in the US to in
those countries where there's independent
[231]
central banks from a legal perspective on
the US could do this, I
[237]
guess, but it'd be a
bit trickier because of Congress.
[239]
You essentially give them a
different target instead of just
[243]
inflation targeting to one
of nominal GDP targeting.
[248]
It was very intellectually fashionable to
debase about this, you know,
[252]
a good 10 years ago
and it never happened.
[255]
But a great way of trying to ensure
that debt to GDP ratios do come
[260]
down is by forcing the central bank
to have something other than a
[264]
low inflation target.
[266]
And part of that would be
deliberately trying to probably higher
[270]
target, higher inflation but in a
modest way than we have today.
[273]
But it would it would oblige
the central banks to pursue very
[277]
friendly monetary policies for even
longer than we have now.
[280]
So that would seem to me to be
a really logical way to try and deal
[285]
with the debt problem.
[287]
And then beyond that,
some kind of clever
[293]
domestic versions of the sovereign wealth
fund where you're trying to
[296]
convert some of this debt into
equity as we go forward?
[300]
Because otherwise, at some points, it would
seem to me that the sheer
[304]
scale of this debt is going to
end up being some kind of problem.
[307]
We need to think of the debt.
[308]
Are you creating money
for real economic activity?
[312]
If you're doing that just to
give somebody money, then, yeah, you've
[314]
got a problem. But if I'm a
private individual and I go to the
[320]
bank and say, I got this wonderful new
idea, I just need the money to
[323]
build my factory.
[325]
Nobody says, oh, that's horrible, you
just increase the money supply
[329]
because we all go. Yeah,
but there's a factory there.
[331]
It's a real thing. The
public sector says we need
[337]
to open schools, we
need to pay teachers.
[340]
We need to have
kids in the classroom.
[342]
We need extra bus drivers in order
to run split shifts for the
[346]
school. We need computers in order for
the kids to be able to do
[350]
distance learning. There are real
things, real economic activity tied
[354]
to that. So that's
not really different.
[358]
And so I, I don't think it's as
big a problem as people make it out
[363]
to be. Ultimately, all of these
decisions do make some people very
[368]
rich. I mean, again, you know, people want
to act like, oh, I made it
[374]
myself. No, there are a bunch of
policy decisions that give me that.
[377]
The federal government says American
kids need to continue education.
[382]
We don't have enough computers.
[384]
You're going to make somebody rich by
deciding we're gonna go out and
[387]
buy millions of computers in order
to have an educated workforce so
[393]
that our economy
can be competitive.
[396]
It's not a stupid decision.
[397]
It's a smart decision.
[398]
But you just made somebody rich.
[401]
And it's not because they came up
with some new idea or whatever.
[405]
It's because we made
a policy decision.
[407]
This is what our country needs.
[409]
So I think people have to get used
to the idea, you know what a lot
[412]
of our decisions make a lot
of people rich got to pay.
[416]
Well, I think, first of all, there
needs to be a bit more sharper
[419]
thinking about what we're doing.
[421]
It's absolutely the case to my mind,
that government is going to is
[424]
big and it's going to get bigger.
[426]
We already have a situation where
welfare payments in Europe and the
[430]
United States combined is 90
percent of world welfare payments.
[435]
I think government is going to also
have not just a bigger role, but
[438]
a more important role in terms of the
economy, both in terms as as an
[443]
arbiter of capital and labor.
[445]
And we're seeing that government
is bailing out industry.
[447]
Government is is earmarking or
targeting capital towards different
[452]
projects. We're seeing in the
United Kingdom, for example, the
[456]
government step in and pay
salaries in the labor market.
[459]
So to me, government
is definitely getting bigger.
[462]
But also at the same time, which
is quite worrisome from my side, is
[467]
that we're seeing corporations in the
private sector shrink in terms
[471]
of publicly traded companies.
[472]
In the past 10 years, we've seen
that number come down by about 50
[477]
percent. We're seeing much
more concentration in sectors.
[480]
The idea of companies are
becoming much more oligopolies.
[484]
So with this technology
sector, banking sector, pharmaceutical
[488]
sector, airlines, energy sector, I mean,
there are fewer and fewer
[491]
competitors in the space.
[492]
And so, again, there are
real questions about what fundamentally
[496]
happened. So, you know, I'm being a
bit long winded, but just that is
[499]
the backdrop that
we're dealing with.
[501]
And it seems to me that we
can't all just defer to government given
[506]
their own fiscal constraints.
[508]
I think it's really going to be
important to to try and engage the
[511]
private sector, as we've done before,
but really help get the private
[516]
sector involved in a manner that's
not just for the financial
[521]
shareholder, much broader for the
stakeholder given where we are.
[524]
And that means that more
private sector engagement is required.
[529]
The first rule of crisis is in
crisis management phase, Don't let the
[534]
perfect be the enemy of the good,
because by the time you figure out
[538]
what the perfect is, it's too late.
[541]
And that's absolutely right.
[543]
But there's a second rule
which is continuously learn and
[547]
continuously course correct.
[550]
Because while you may not get
to perfection in the beginning, when
[554]
you do the good, you
may have unintended consequences.
[559]
You may have collateral damage.
[561]
So be be willing to learn
and address as you go along.
[565]
And we tend to forget.
[567]
And that's why I said the biggest
mistake we made coming out of the
[571]
2008 financial crisis is that we won
the war against the threat of a
[577]
global depression. But we
lost the peace.
[580]
We failed to establish high, sustainable
and inclusive growth and our
[586]
economy got weaker and weaker and
weaker and our financial system got
[589]
more and more distorted because
central banks couldn't exit.
[593]
This time around, It's really important that
we both win the war and
[597]
secure the peace. Again, it's
not an issue of engineering.
[601]
It's an issue of implementation.
Most Recent Videos:
You can go back to the homepage right here: Homepage