Hi im Steve Clemons and i have a question for you are you concerned that the worlds economy is more fragile than anyone is admitting lets get to the bottom line. You can always find doomsday predictions telling you that the dollar is on the verge of collapse or the Global Financial system is in serious danger but how much of it is true lets look at this clock this is a live shot of the u. S. National debt clock in new york its not 100 percent accurate but it gives you a good estimate of the American National deficit right now earlier this year it pushed well beyond 20 trillion dollars its 22. 00 trillion dollars now but what does that mean for the United States and for the world is the sky about to fall what do we really need to be worried about and what trend should we be paying attention to fortunately we have 3 people in the room who have all the answers to these questions sandra to v. T. Is c. E. O. Of the Global Consultancy Firm beyond global and shes author of super hubs how the financial elite and their Networks Rule our world edward luce is the chief u. S. Commentator for the Financial Times and doug redeker who has represented the u. S. In the executive board of the International Monetary fund is also a top leader at the World Economic forum in davos its so great to be with all of you here today thanks for joining me and let me just start out with a look at the National Debt clock is that something that we should care about or is it just a number show in principle you should always care about the level of the national why that is that because its a measure of what you can afford in the future as well as today id say that the absolute number 23 trillion whatever it might be. Isnt as important as the share of g. D. P. He and its still considerably below 100 percent of g. D. P. In the United States particularly if you include publicly held debt that is that as its called that no debt as implied by what we Social Security. In the future in the next 2030 years whatever that might be its actually not that and so numbers like 22 trillion. Theyre just numbers what matters is ratios and the ratio compared to say china compared to a lot of europe and compared to parts of the United States history particularly after the 2nd world war is not that high what matters is will growth exceed interest but i want to hear you say its really a number when obama came into office that clock was around 10 trillion dollars now its about 2120 trillion dollars when when trump came in its 2 trillion dollars youre now and youre saying that we really need to worry about a debt to g. D. P. Ratio which i think the United States is a is is about 90 percent there are different numbers depending on how you can do you know what the right number is virtually and somewhere around 90 there are different ways of calculated lets call it 90 plus so when i do so you know that so and. So give me give me and typically do this and give us some other numbers like what is japan at i mean japan is going to be staggered pan as well north of 200 percent of g. D. P. Debt to g. D. P. And japan is always considered an outlier whenever you have those great graphs and charts theres always the question do you include japan or do you do that little squiggly thing because if you include japan its such an outlier that everybody else is down here and japan is up there but japan is a very different economic model because its a different social model to different political model japan is homogeneous japan has outlasted every economic bear assumption for years on the assumption that someday the japanese will pull together and as a homogenous culture they will bear any costs in absurdum. Out of debt to g. D. P. But let me go back and i made it to air a point so i am more worried because i think its not a number that bothers me youre right 22 trillion 23 trillion i mean its an absurd or whatever number that does bother you so what bothers me is the deficit more than the debt because the deficit which is roughly a trillion dollars a year in good times in the u. S. Right now and the jump in ministration means that people are getting used to things that we are borrowing to pay for it so its not just the sum total of the outstanding debt stock its the fact that an ongoing basis we are now building up obligations to our people and to other government functions that need to be paid for on a rolling basis so its not that under the Obama Administration as a means by which to respond to the financial crisis we had a stimulus which then rolled off as the economy picked up in the crisis became something that we take care of let me let me just let me just make your point for you in a way and in 2016 the National Deficit was 585000000000. 00 and that has grown steadily every year now in 2001900 its 1. 2 trillion 1. 11 trillion dollars and as you said its likely to continue to grow and so put this in real terms i mean these are numbers right now what are we not able to do what is the United States not able to do because of this deficit thats building and creating future obligations so i wouldnt look at it that way because were able to do anything we want right now if we just consider that borrowing is a costly sexercise right whats happened in the world over the past lets call it the past decades but certainly in the past decade and certainly in the past recent few years is no longer do countries borrow on the expectation that they will repay they borrow on the expectation that they will refinance and in a 0 or low or negative Interest Rate environment thats a costless exercise you just borrow because youre actually getting paid in germany. Case youre getting paid for the privilege of borrowing so thats a great thing but thats not necessarily going to last forever in fact i would argue its impossible to believe its going to last forever so at some point these low absurdly low negative Interest Rate borrowing costs are going to turn around and since youre not being youre not borrowing on the basis of an ability to repay it boring on the basis of inability to refinance when those refinancing costs go up wheres the money come in just because i know youre going to bring sandra in very quick point im not sure youre disagreeing with me. Were talking about whether the tax is being used well and id agree entirely with these deficits that weve seen generated in the last 23 years on the trump have been wasted on the corporate sector that was already highly profitable that was already by starting right buying back shares with david m. So there was no so they were investing in capacity having this added to the economy that would be a different problem a sickly basically shelving it a stock buyback showing in other ways are are things that are unproductive the do not out of the stuff that promised during the Election Campaign training infrastructure all the stuff he hasnt done since he was elected if the deficit was being used to raise future growth rates that i would have a and i suspect they would have a different view of whether the. Standard youve written about super hubs of the financial elites and as i understand it really the way this is a stacked deck if you will the Global Economy in certain ways and so be it should in your perspective what doug just shared and but doug just zeroed in that this is in a way a stacked deck and that the numbers do matter but youve written that these folks are doing it purposely well let me differentiate i think after the financial crisis of 2008 the debt that was taken on was not a feature i think the president has taken over its been. A feature not a bug and i would say that dead is one risk and interaction with growth but also risks have the nasty habit of interacting with each other and exacerbating each other so i think a nother risk thats very dangerous when it comes together with debt is the global trade war because that will weigh on growth and potential long term globalization because we see protectionism all over the world so i think when you take all these forests together and the fact that since 2008 the world has become more interconnected technical progress has been exponential. And i just think that we cannot its impossible to say what the black swan will be when a crisis will happen and what will trigger it but that the whole system as such has become more fragile as a fact so just how do you look at both risks and then the status of the dollar and the status of the u. S. Economy the predominant position that america has in the world today are you still worried at all about that or do you think that actually were over hyping that fragility so i would i would divide into 2 things the dollar and the Financial Markets supremacy right the New York Stock Exchange as you see that sort of listen thing on the on the dollar itself what i guess none of us and to submit it was that you were going to have this bullying approach by the u. S. President that effectively because remember dollar values as any currency values have to be valued against Something Else so if you are tamping down the economic potential and activity of another country then by definition their currency is probably going to be weaker these are be the dollar so the u. S. Is a very resilient economy and has performed very well in spite of because its been a leading. Us economy has done well because it has intrinsic benefits and because as we just talked about youve got these deficits that weve. Taken on. To stimulate when stimulus might not have even been necessary but were doing well the u. S. Economy is doing well but because of the trade wars because of the abuse i would argue of sanctions and tariffs and other means youre actually seeing a tamping down of confidence in other countries and other major currencies so the dollar continues to appreciate which is exactly what of course donald trump doesnt want to see and why hes been jawboning jay powell to try and reduce u. S. Interest rates thats a separate issue the dollar so far has been stronger than the president would like it has been very resilient i would argue it is going to continue to be resilient however it is resilient in spite of the fact that most of the rest of the world views dollar supremacy no longer as a necessarily a good thing or even something that they are willing to tolerate for the the greater global good they actually view it as there is no alternative there is an effort now on multiple levels to see if they can find an alternative but for a variety of reasons its very difficult to see that there is going to be one cant the Chinese Renminbi eventually be an alternate will eventually is a long time but less so in the forseeable future the problem with the room in b. Is. The room in b. Is a managed currency so nobody believes that the chinese economy much less the chinese. Currency is actually set by the markets so if youre going to be using it as a reserve currency or as a currency for your transactions and trade you want to know that the value is either going to be retained so its stable because its fully fairly valued or because you can anticipate whats going to happen basically Market Driven mechanisms in the chinese case it is not implicitly is explosively a tool of the Chinese Government and so therefore the room in be as an attractive alternative to the dollar still has a long way to end or does this i mean it pocus for a minute and would love your view if if donald trump is pounding on the chairman of the Federal Reserve board jay powell as. Doug just shared. On the level of Interest Rates doesnt that reduce the sense of independence of the u. S. Dollar and whats going to do to have a kind of china mimicry where the Central Government is pounding on economic authorities to get economic results here any risk in Donald Trumps behavior well yes of course he wants to be an autocrat and so he behaves like an autocrat including those that he criticizes but i think the effect will still be that the dollar will be will remain strong only because its the best house in the neighborhood but i think part of the the exorbitant privilege the fact that the u. S. Can print dollars is also still considered a safe haven because of the institutions which while he has tried to undermine them and he has arguably weakened checks and balances it still compared to other countries relatively secure and i love this analogy best house in the neighborhood where its wrong that this is the best house in the neighborhood or just every other house just really sucks so bad that i think i think i want. To rephrase what theyre saying is that the dollar is the tallest dwarf you know tallest dwarf is the tallest 12 but to go back to the house analogy best house of the neighborhood as a former American Economic public official once said its not the wolf at the door its the termites in the foundation right so one might today the termites in the foundation. Political america is becoming increasingly ungovernable we have a president whos just discussing who is attacking one of the most secure institutions in the federal system namely the u. S. Federal reserve. We have a separation of powers that isnt delivering political Decision Making but most importantly of all we have a budgetary situation that is increasingly if you look at the share a federal Budget Expenditures going on yesterday and not tomorrow and tomorrow means training young People Education infrastructure opportunities. Environments in which big new business is a created particularly you know when demography is increasing aging but what the budget is increasingly going on is Social Security medicare Interest Payments on debt on yesterday in other words and thats those are the termites of the foundation theres no one particular moment where you realize its not a sort of flash crisis its a gradual thing to which we get a cloud let me ask you about that because i think why wouldnt there be a flash crisis as i would look at markets in the past or the change in political power historically something comes to mind is Great Britain in the 1950 s. In the suez crisis where with the single crisis it was became a punctuation point that the world realized your home country was no longer able to be the m. P. R. Instrument which drew support from the pound right eisenhower a little bit but it was britains dependence it raises the question with their minds in the in their framework are we not paying enough attention to the fact that tomorrow we may look at a very different. American situation with with regard to the rest of the world and his timing way once famously or one of his characters once famously said how did you go bankrupt gradually then suddenly. So theyre not mutually exclusive the termites in the foundation eventual cause it to collapse if it goes on like that what could cause that. You know a crisis in the gulf where america basically because the people dont want to risk troops. And spend more money where china takes over basically being the guarantor of Global Oil Supply and supplies i suppose that could be and meant it could be dramatic reform to make chinas currency open and liquid and deepen its Capital Markets that i find is less probable. Any number of blacks one of ents could cause this foundation to collapse but for the time being were talking about as i said earlier the top. Wolf the dollar the dollar is the least bad option available and id like to see this you know in i think in the sense that whether we get a return of President Trump in the United States or you get. Elizabeth warren or Bernie Sanders any number of other candidates as well do you think that could have ramifications to push reset on the way the dollar is looked at in the world so i would say the its not just the dollar i think the big issue and its akin to what youre describing is about the u. S. In gages men and the multilateral world order that we and the europeans created post world war 2 whether its Bretton Woods institutions the un or a wide range of the accepted institutions and norms that Global Trade Commerce finance economic this is the oh he did everything that i mean ironically you know this week the day mario will cease to function as it was designed to tell our audience watching the show has a dispute settlement board a body which is supposed to have 7 judges called the appellate body develop body it is supposed to have a minimum of 3 and as of december 10th 2 of those judges terms expire and the u. S. Has withheld support for renewing or extending those terms so that as midnight december 10th there will only be one in power judge which is below the core of which means that the dispute settlement mechanism cannot function but again thats thats you know arcane stuff but what matters more i think than the deputy you know is this institutional framing of do we believe in these multilateral institutions or not and you were asking about what happens as a result of the 2020 elections here in the United States i would say that youve got either a return to normal or you dont and normal to me lets say you dont is the reelection of donald trump or. As you said you know elizabeth Warren Bernie sanders who are really seeking a revolution on a lot of