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00:00Well, what do the governments do when they don't have enough demand?
00:04Central banks come in and make up that demand.
00:07They essentially print money, and then they buy that.
00:11And then that has a consequence.
00:13The U.S. federal government's fiscal policy is on an unsustainable path.
00:17The level of our debt relative to the economy is not unsustainable.
00:21The path is unsustainable.
00:22With the Congressional Budget Office projecting that, at the rate it's going,
00:25the U.S. will owe over $50 trillion by 2035, or about 118% of its annual GDP.
00:35Ray Dalio has written a new book, available at no charge online, addressing the U.S. debt problem.
00:41It's called How Countries Go Broke.
00:43So what you have is a situation where there's a supply and a demand for debt.
00:50As we have a new supply, that will equal in the United States now.
00:54By the way, this is a problem elsewhere, too.
00:57But it's about 7.5% of GDP.
01:01So the supply of debt is going to be large.
01:03That's new debt.
01:05If I calculate also who are the buyers of that debt, and that there's not going to be enough demand for that debt.
01:13It doesn't look like there'll be enough demand.
01:15And the way that it works, so there's two things to keep in mind.
01:18There's supply and demand.
01:20And then what do central banks do, or what do the governments do when they don't have enough demand?
01:26Central banks come in and make up that demand.
01:29They essentially print money, and then they buy that.
01:33And then that has a consequence.
01:35And so just like in 2020-21, we went through they needed to give money away, and the government needed to borrow, and the central bank produced the money and bought that.
01:49That devalues money, raises inflation, and so on.
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