A trillion reasons to pay attention. August 21, 2026

26:29I'd probably fall another 30 % now that I've got a bit of a stake in that. And picked up some Pro Medicus too. Were they cheap? No, actually. I don't think they're that cheap. I put them in the category of great business at a fair price rather than they look like a bargain because they've fallen so much. but again it's sort of like this is the thing the the reason to at least again with your point on framing to celebrate this for what it is and and it's an opportunity it's exactly what it is i don't know what's going to happen oh so i'm always nervous giving real world examples but i dare say and i actually said this on straw man this is like i'm gonna take and these were these were these were not large positions i said like i've because that was the debate that we were having was just like is it cheap enough now?

27:12And everyone, it was a very wide divergence of opinions. But what tipped me over the line to get some was just like, I will regret, I will not be able to look myself in the mirror. If I do not at least buy some now, I will not be able to look myself in the mirror as a serious investor. And like, I just, I lose all legitimacy to ever speak with authority on this topic again like what are you waiting for if not this you know if this is not what you are wanting yeah what are you waiting for now pause here for a second i just need to sell my arb shares i didn't realize you're in them so i'm just gonna do that you really do actually sell and then go hang on keep going keep going hyper hyper leverage short on on that it's the easiest money you will ever make yeah yeah exactly but as i said on on the forum at the time which is kind of like well here's the scenario right there is one scenario which it just never comes back up to your point like it just it just goes and it's gone it's gone forever okay okay made a mistake that's that's that that's gonna happen i don't think that's gonna happen i think i'm i never say never i think that that that is unlikely so all of a sudden things look a little bit interesting but but i'm not i'm not i'm not cocky enough to think i picked the bottom or anywhere near the bottom them but if it so so let's take some is this is this a is this a decent is this a good company a decent price yes it is what does everything say that i should do it says you should buy some okay well and then the natural one is yeah but but but but what if it falls more it's like well the proposition's only just gotten better again assuming that the fall isn't something there's not something existential behind it and some massive change in the underlying capacity of the business it's sort of like well i guess i'll buy more and what if it keeps falling it's like well at some point i'm just going to have a 20 position in my portfolio and you have built up such a position i've had to have this what i regard as a very high quality company at an incredibly cheap price and that's going to be a brutal journey but you know fast forward x number of years and it's kind of like as i say what what what is the emotion that i want to be feeling in the future do i want to be going like oh i missed the bottom and or is this you know and i could have would have done a little bit better you know or was it just like i didn't do anything because i was waiting for a p of 12 on a hyper quality business that was never ever going to happen like that that i think it's a bezos quote in there you might remember it's something to do with sort of like it's expect what's it um regret minimization yeah yeah that's the one regret minimization strategy is is is a really good sort of way of a powerful idea i do i know i i really think that at heart across my life it's like what you know which am i going to regret more it's like It's a, the answer isn't always easy, but it's the right question.

29:53It's the right thinking to try and make it through. On your point there, mate, I do, I know, I've been for the record. But I think the other thing I do on that same basis is the question of, when you're looking at cyclical companies, and particularly ones whose short-term outlooks are a bit cloudy, and right now we can say discretionary retail fits well and truly in the middle of that one. And ARB's kind of in that discretionary retail space, right? So it's a nice segue. But I look at it and I kind of go, and we've done this before a little bit. We talk about other companies. It's like, okay, I own Harvey Norman, so I'll pick Harvey Norman.

30:22I'll do JB Hi-Fi because they came out this week. JB Hi-Fi, and the shares got smashed, right? Because sales and profit growth was okay last year, and the month of July, sales were negative, okay? I thought it was a good result. Anyway, it's a whole lot of discussion. Yeah, but it was the outlook. So the outlook's actually the 12 % or 15 % something stupid. Anyway. Yeah, yeah, yeah. And you look at that and go, okay, ask yourself the question, is JB Hi-Fi around in five years' time? Yeah, I think that's a pretty good bet. Okay. And once we get through whatever short-term media permissions we have, in five years' time, are their sales and profits going to be higher than they are today?

30:56It's like, well, I mean, why wouldn't they be? None of this is, by the way, a guarantee. It's a probability question, but is it really likely? Yeah. And you're also, just on that too, you're also not saying on the 20th of August in the year 2031 will they be higher? Correct. Because there's no, it's not a bond or an option or something with the set. It's just sort of like, it might be that exactly to the date, no, but then three months later, yes. Correct. You know, type things. So it's kind of like, you've got a flexibility with these home friends. Yeah. It's more just the frame of thinking. Like, okay, so if they're going to earn more at that period, in that period, roughly that time, five to seven years, 10 years, pick a number, whatever.

31:38Yeah. Yes. Okay. Is that likely to be decently more? Yeah, probably. Okay. And so if the shares are down now because of one month sales in the middle of 2026, is that the most likely contributor to its five-year plus future? Or is it more likely that this is the exception that proves the rule? And so you start to look at that and go, yeah, actually, if people are freaking about JB Hi-Fi's July sales, and maybe it's worse in August, and maybe it's worse in December, and maybe they're going to lose money next year. Maybe they deliver a loss because the discretionary contributor goes on strike. JB can't cover its cost because big store footprint, and they lose money.

32:12They have to write down the good guy's acquisition, whatever else it is, right? Okay, that all happens. Cool, okay. In, again, five years' time, will that be the future of JV? Well, again, maybe, but almost certainly not. Will they be a bigger, better business? Yes. Will they look back and go, that was cyclical? Yeah, probably. And so it's that idea of obsessing over what happened last year or what happened in the month of July or what might happen this year. Yes, the share price will respond to that because other people in the market are being the lemmings that you risk being if you follow them.

32:41and say, oh, sales are down. Oh, that's terrible. J.B. Hypo's worth. Shares fell, I think it was 15%. Let me make it 15 % because that's easy. It's about one-seventh of its value. Now, I'm not going to get into the dollar cost. Sorry, the discount cash flows here. But if a share price falls 15%, the market is saying this company, between now and eternity, is going to earn 15 % less than I thought it was going to earn yesterday. Not this month or not even this year, but from now till forever. Now, they might have been wrong yesterday, but they also might be wrong today. So you don't have to work out which one's right.

33:14I'm just comparing what the market is telling you it thinks. So yesterday it thought JBA is going to do$100 worth of discounted cash from now until forever. And today it's going to be$85. And it's like, did it? Now, again, I'm not saying this is necessarily cheap. I'm not saying it was expensive before. I'm not making any of that. I'm just saying, does it seem reasonable to you that a market, and again, there is no the market. There's only investors who trade. But, you know, for all intents and purposes, that's what it's telling us. The market has decided JB's future cash flows for ever and ever our men will be 15 % lower than they thought yesterday.

33:48And I hope what you're hearing is, that's a stupid thing to do. Who would think that? Then when I say the answer is actually the market, and then you say, I probably shouldn't listen to what the market says, should I? Yes, yes. That is the key point. The market will absolutely overreact. The market will be hyperbolic in both directions. It will be extraordinarily euphoric. It will be extraordinarily pessimistic. and day-to-day, month-to-month, year-to-year, individual companies within that will have the same kind of exposure. Woolies share price moves around. This is a grocery retailer. This is going to sell a few more cans of baked beans next year than this year.

34:21And the range of the Woolworths share price is not Tesla, it's not Amazon, I own Amazon. But look at that number, it's like, who in their right mind thinks that sort of volatility in a supermarket retailer's share price reflects their business outlook? And the answer is, of course it doesn't. So again, use that. What's my point? Remind yourself, the market doesn't know. Now, not always wrong either, by the way. So I'm not saying ignore it entirely or always. I'm not saying be contrarian for the sake of it. I'm not saying if it zigs, always zag. I'm just saying if you look at that and say, that doesn't seem rational, that's the first step to understanding.

34:57Let's be a bit philosophical about it. If you can look at it and go, huh, that's madness. I probably should pay even less attention to share prices and share price movements that I used to, then you have had a massive step forward. Yeah. Yep. It's a superpower. It's a superpower to, to not have your thinking influenced entirely by what a crowd of emotional apes are thinking, you know, it's just, it doesn't mean that you're going to be right either, by the way. I think it's actually, I think that you said it, but I'll, I'll, I'll say it again. It's sort of like the market is right more often than wrong.

35:38It is the whole weighing versus voting machine in the long run. Markets do all kinds of stupid things, but most of the time it does the right thing. So I do think that it's something that – isn't it weird? Like we've talked about this a lot. There's these dichotomies. There's these competing ideas you've got to hold in your head. And this is one of them, which is the market is generally right, but it's also very often wrong. Yes, yes, that's right. And it's sort of like, well, is it right or wrong now? I don't know. But that's kind of like, so you want to respect it. I think whenever I see a company, you know, I don't, as a younger man, I did.

36:22The market's so dumb. What does it know? And it's like, whereas these days it's kind of like, well, maybe it does know something. I'm not going to just wave that away. you know maybe I want to I want to take I want to take what it's telling me very very very seriously not because I'm just going to knee-jerk it and and react on the back of that because it's either I'm wrong or it's wrong and if I'm wrong I should sell and if it's wrong I should buy more right and it's like very different things for the same kind of uh move that move that move that you're seeing. So it's just that ability to just at least have an independent notion of value, roughly, ballparked, what's this thing kind of reasonably should be, could be kind of worth.

37:09And I've got that and I've arrived at that independently. It just gives me such a powerful touchstone to compare it against the market and at least try and begin to answer that question. Is this one of those crazy, reckless, Mr. Market kind of things, or is this the market actually sniffing something out that a lot of people haven't caught onto yet? So, which is exactly what you've just said, but I'm just sort of making that point there as well, because it's very, particularly in hindsight, you know, we always look at these past falls and go, how dumb was the market? Like, yeah, but at the time it wasn't, right?

37:42You know, that time that the massive short attack happened and And there was all these very, very well-resourced, hyper-clever hedge funds telling you very advanced reasons why this was going to zero. I was like, maybe. Maybe it was. That's exactly it. So I don't know. What am I saying? It's hard is what I'm saying. It's hard. There endeth this particular sermon. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

38:15Mate, let's move on to what we have talked about before and that is super for housing. And I want to raise it again because we have talked about it before and if you've heard us on it before, hopefully this will reinforce your thinking. If you haven't, then it's important because this week we had One Nation this time. The Libs and Nats took it to the last election. One Nation decided to bring it back up, including, by the way, the possibility of reviewing compulsory superannuation altogether, which made my head explode. and I thought it was worth talking about just to kind of outline what's going on.

38:47So I'll have a quick swing at it, mate, then you can jump in. Yep. The idea of super for housing is a really seductive idea. I've got 50 grand in super. If I could use that to put a deposit on a house, I could actually get into the housing market because I can't at the moment. I could afford that deposit. I could afford that loan. I could afford that unit or that house. I can't now. So me having money in super is counterproductive because it's keeping me out of the housing market when I could use that money and I'd be better off with a house in retirement than super and no house. That is the simplistic, I don't mean on behalf of those who think it, but those who use it as a policy position without thinking through the implications, it is simplistic.

39:26It is first order thinking. And here's why it's first order thinking, because you then say those famous and really important three words, and then what? the and then what is here's what happens andrew gets another 50 grand that'd be super to go and buy a house and if andrew gets it by himself he outbids me the auction we go oh okay well good congratulations you got a house well done you've entered the housing market uh as we like to say uh you've uh you've got your home it was worth it you couldn't have bought the house now you've got one congratulations you're in man this is a great policy except that doesn't actually happen What happens is Andrew has his 50 grand, he goes to the auction and he starts bidding.

40:08And the bidding goes up and I get to the point where I can't bid against him anymore. So rather than me losing the auction, I say, ha ha ha, I'll take my 50 grand out of super and then I'll beat you, Andrew. And at some point the auction finishes and the house sells for not just 50 grand more, by the way, because this is leverage, this is the deposit only. So it's going to sell for something way more than that. So this is even more damaging than it seems at first blush. But let's even leave the leverage out for a second. The house sells 50 grand more than it would have otherwise. And maybe Andrew gets it, maybe I get it.

40:37But the reality is if I was going to get it beforehand and I got the same sort of super balance as Andrew, I'm still going to get the house. He might outbid me, okay? He gets the house, I miss out. So we have, firstly, the winner has paid more for the house and then frankly has a higher long-term mortgage to repay. Secondly, it hasn't got anyone extra into housing. It may be Andrew, it may be me. By the way, one of us is in, one of us misses out. That was going to be the case previously. So it doesn't help housing availability in the slightest. It doesn't help home ownership in the slightest. And so more expensive housing, no change to housing availability, no change to affordability either, by the way, because it just pushed the price up.

41:19And then when it comes to retirement, Andrew says, I've got the house, which is great. I could have got 50 grand less had Scott not had his super either. And now I've got less money in retirement. Not only have I got 50 grand less in retirement, but Andrew and I were talking as 50-year-olds, we would have been 25 or 30 at the time. So Andrew's given up 37 years of compounding between there and retirement for that 50 grand, which would have been worth something very significantly more than 50 grand over that period of time. So he's got less super. The housing cost him more. I didn't put a single extra person into housing.

41:55Lastly, because Andrew's super is lower, he's more likely to need the pension system. so we've got more expensive housing no one extra in-house less super and or a greater burden on the pension and therefore the federal budget now i i i have said this on social media i've laid this out on social media around people come back to me say yeah but it's gonna be good to help young people get a hat so i know yeah but we should at least try let them try it's like no no no we should the the the lack of wanting to understand or believe this is a combination of desperation and frankly, this preconception that people don't want to be shaken out of, I literally say this and they go, yeah, but at least they'd get a house.

42:36No, they couldn't. I say that only because if you're listening to this now and you're saying to me, yeah, but it's better than nothing. No, no, it literally is not. It literally is worse than nothing. Because if it did nothing, at least housing can be cheaper and there'd be more money than super. This nothing, this something, sorry, is actually worse. Unless you're the seller, you're stoked. Everybody else in that equation, including the taxpayer, when Andrew hits retirement is worse off because we let Andrew dip in a super to buy a house in theory to help, in quotes, him get into the housing market.

43:07It is an absolute nonsense. And so One Nation should know better. The Liberal National Party should know better. And by the way, yes, the federal government's first home buyer deposit guarantee scheme at 5 % was also ridiculous. This is not a case of me bashing one party or the other. If you feel like that, you might be saying more about you than me, but you know, you do what you want with that. It is just a bit mad. So I hope I've done a half-decent job of outlining it, mate. It's just one of those – there are some things that are worth discussing on ideological or philosophical grounds, right?

43:35How much involvement government should have in our lives is not a yes-no question. You can't prove it. It's just a worldview view. When it comes to this, it's just the math. It's just literally just – you don't get your own maths. This is just universal. There's no yeah, but – no, this is bad, bad, bad, and bad. Go. Yeah, I mean, gosh, I'm so tempted to go down that path there. I do think that there is, economics in particular, I think there is a truth that can be arrived at that is beyond just, I reckon, which is what most of the debate seems to be framed around. But it's a whole other discussion.

44:17It's a whole other discussion. I think market forces are real because humans have incentives and seek to remove discomfort. And there's a whole discussion there. So, yes. Well, I guess I'll say is told you so. This is, expect more of this. This is a honeypot. It was one of the biggest in the world. And we'll talk about the debt in a moment, but they're going to touch it. They will. If it's not one nation, it'll be someone. They got it. So I guess I just make that point because I feel as though it's just like every opportunity It needs to be kind of said because it exists and it is a very special thing that we've got.

44:59And we need to be vigilant against tinkering with it. Why? Because there's so much at stake. Exactly what you've just said is just one of many consequences of like wasting so much money for no useful purpose and absolutely at odds with the desired aim of it. And I mean, if there's one reason to raid the piggy bank, that's not it. That is not it. But as I say, I think it is a very big temptation. As the debt gets higher, the deficits get bigger, the cost of living gets worse. I just think there'll be more and more and more temptation. And while you are absolutely right that the maths don't math, there is that, I think there is we are all of us less capable of making rational long-term decisions when we're in pain and when we're scared and when we're hurting and so i've i've had this conversation recently with some people and they'll go yeah but i just want to buy a house and this will help me no i literally just said how it won't help you yeah but no but i'll get i'll get this money and i can do it and it's like i mean you can have the i don't even need anyone to me to tell you this You've had the same conversation a thousand times.

46:16Like, no, no, no. And it gets to the point where it's like, I'm breaking out sock puppets and a whiteboard here. You know, I was like, how can I explain this in a way that I just, to my mind, this is just like black and white. There is just almost a mechanical kind of flow to this. A, then B, then C. It's like there is a strong, powerful, potent, undeniable connection between this and then this and then this. And there is a chain of events and it leads us to a very bad place. yeah, but I want it anyway. It's like, oh, for God's sake. So I don't know what to say. Help me help you. Help me help you.

46:54No, you're right about that, mate. You're absolutely right. And it's why these schemes end up getting support for a couple of reasons. One is the desperation, the pain. The other is just the – it's probably the same thing, frankly. It's like, you know, one person, oh, at least they're trying to help. It's like, no, they're really not even trying to help. They're trying to get elected. There's no helping here, right? and it's kind of and it's well the other one is at least they're doing something and again I get that feeling as well it's like just nothing else has worked if they're doing something maybe this time it'll work it's that cognitive dissonance of you know you do about the RBA all the time you know give me another forecast and tell me what's going to happen next and she's got an idea of like well if it's not I can't I can't manage I can't deal with except I'm doing nothing so something must be better than nothing it's that very human thing of don't just sit there and do something right and it's the it's the quote about you know all of man's problems stem from our inability to sit in a room quietly alone.

47:45It's just like a thing being done is somehow worthwhile, better than doing nothing. And so, again, it's perfectly human instinct. So you're right. It's very, very understandable, very normal. It will, unfortunately, though, still bring you down. And if you swallow this one, that's what I'm saying. The response on Twitter was like, yeah, but it's hard. At least it's... No, no, no, there's no at least here. The maths are the maths are the maths. As I say, mate, it's not even... I'm going to talk about the money going into it, 50 grand out of your super, for example, as I said before. The reality is the purchasing power that 50 grand deposit gives you because you can borrow the other 95 % is, I mean, yes, there's a limit to your wage, so it's not exponential, but does this push the price of a house up 50 grand?

48:31And that's the key, right? This is not just a one-for-one relationship. And so it's kind of, you know, it's just really, really, really awful. so yeah I don't know I don't know what to say other than please don't be fooled by this stuff it's not a political view I don't care which party you like but if your party's got a stupid policy I'm going to call it out we did it with the Labour with their 5 % deposit guarantee we did it with the LNP the first time around with the bloody soup of housing we're back doing it again with One Nation it's just dumb it's dumb because it's dumb it doesn't not dumb because of the colour of the tie it's just dumb yep more of it to come and maybe look I've got nothing else to say unless you do on that one but it is a nice segue to the debt, right?

49:10And why that will also get worse. It's the same kind of issue in the sense where I think you can make a pretty obvious and rational case as to this is not going in a good direction. Why is it bad? Well, it's bad for these reasons. And it's not something, oh, wait a second, I need four PhDs in economics and finance to understand this. My 12-year-old could understand this. It's not good to do. And yet we've just been, you can go into the archives and, you know, pick up the financial review from 10 years and 20 years and 30 years. There's always something about the deficit and the debt and that sort of there.

49:47And it's kind of like it just rolls on. It just rolls on. And it's just, I think it's a good time to, well, I'm always mentioning it, as our listeners know, but it's good that this, it's good, hitting a trillion dollars in national data is not good but but it is it is a milestone and it's a round number and it has prompted a lot in the mainstream media i just noticed opening up the papers today it's just yep it's all over there which is great which is great that it's actually getting a bit of attention let's find this up just quickly because that's so we kind of talked about it without saying what yeah yeah yeah so yeah so 20th of august yesterday when you're listening to this if you're of course you're waiting with bated breath just to drop and listening to it straight away.

50:29So your front afternoon, apparently sometime on Thursday, we were due. I don't think anyone knows when it is. Maybe it's already happened. Maybe it's about to happen in real time. We're going to hit a trillion dollars of gross national debt, government debt, as a country. That's a million million for the maths aficionados. That's a lot of millions. It's a lot. It's a lot of zeros. It's also, by the way, not far off$2 trillion nationally, including the state debts, which is something we don't do anywhere. We have talked about it before, but we don't do it anywhere near enough. So we have now got a trillion national, probably 800 billion or so state.

51:07I'll make that number up, but it's there. Heading towards$2 trillion. Special shout out to Victoria. Oh, fair to come.

51:16And you're right, mate. It's important to talk about because it has implications. Now, I think it's fair to say we are not in a world of hurt yet. I don't like it because we're paying more in interest than we would have to otherwise. so we are diverting resources away from other productive uses whether you prefer yours as tax cuts or more services I don't really care I know you care if you're listening to this you're yelling at the thing now but I'll just put that aside for a second whichever way we went it would be better in either case right if you're going to pay this much tax at least get more services for it and if you like the service you've got then pay less tax if you're a low tax person but I'm going to give you something for it it's better than not because now you're taxing on a debt so you'd have more stuff and if you want if you're a more spending person and you have all the service you got, and it costs you less tax.

51:58Whichever way you look at this, spending money and interest is just stupidity if you don't have to, and we don't have to. Ross, can I read Ross? Can I just wait? The really easy way to think about this is that interest is brilliant on the debt as long as it's less than the return you're getting on what you spent the debt on. True, true, true. And the reason I raise that is not to be the actually kind of guy. It's just that that's what makes it so obnoxious. It's what makes it so, gives that bad taste in your mouth because I would be the first to turn around and go, yeah, listen, it's just a round number.

52:36And yes, you're right, Scott, we're paying a lot more interest on it than we otherwise would. But look what we spent the money on and look at the returns that that's providing. In other words, this is a brilliant, this is like, this is like, you know, a margin line, you know, charging me 7%, but my portfolio is going up 20%. This is great. I'll do it all day long. But I make the point because it's not the case. So it's like we're spending that money on things that don't have not only an economic return, but sometimes a very questionable social return anyway. So, sorry, please go on. Go on. No, no.

53:08I want to quote Ross Kittens, Uncle Ross, one of the national treasures of the economic scene in Australia. And he writes about, I'm just going to read a couple of paragraphs. Quote, leaving aside its spending on infrastructure and other long-lasting assets, governments should stop their debt getting too high by offsetting deficits in bad times with surpluses in good times. The times have been reasonably good since 2020, but we've gone on running annual budget deficits with more to come for the foreseeable future. When, over time, we run deficits that aren't matched by the infrastructure we leave behind, we're spending money on our own comforts, then leaving part of the costs to be picked up by our children and grandkids.

53:53How is that a decent thing to do to your offspring? What's more, leaving debts for our kids to pay isn't itself cost-free. Governments borrow to cover their budget deficits and the lenders are paid interests. This means the debts we leave for our children to pay are a lot higher than the debts we left unpaid on the table. Yes, you said it so much better than I did. Did he? Yep. I saw it like two paragraphs like, oh, my God, that's literally, you know, that's the tweet, as the kids say. It's not, it's not, yes. It's also my mic drop, right? What else did you say? Yeah. We'll find something. I mean, it's also one of those things where it's not a problem until it is a problem.

54:36Correct. And if that's the case, by the way, fix it before it becomes on, which is we've been given the warning. We see it in front of us like, oh, okay, so if this keeps going, then we'll, yeah, yeah, yeah. Should we do something about it? Nah. It's that old, if something can't go on forever, it will eventually stop. You're liking that. That's your new favourite phrase. I love it. I love it. It is. I'm using it a lot. It's great. This is so good. It's so like, it's that really, it's really dumb and obvious and like, yeah, but it's also very good. Yep. Yep. It'd be easy at this point to sort of point to failing third world dictatorship and go, well, see, this is what happens.

55:16But I present to you, dear listener, the largest economy in the world and the global super power at this point. You know, well, that's debatable. But the US, this is where we end up. This is where we end up. Right. And the US is at the point now where it spends more on interest than it does on defence, which is already an ungodly amount for those guys as well. So it's sort of like, yeah, you're right. There's no burning platform here. The sky's not going to fall tomorrow or next year or anything like that, but it's just you're on a path. And as anyone who has ever been, unfortunately, in a debt spiral before, it's really hard to dig your way out of a hole, you know?

55:58It'd be one thing to sort of acknowledge how untenable this is and start to address it and start to take corrective action or at least have a plan to take some action. It's like, I don't do anything now, maybe, but maybe let's just direct our attention to this as an issue. And maybe going forward, we could at least maybe not have so big a deficit. Maybe, you know, we could do some other things that would sort of at least, you know, at the very least maybe do some productivity enhancing kind of investments that might help us grow our way out of it. I don't know, but we're not. So it's a milestone that's being passed and a momentum that's only accelerating.

56:41And then we know where it's going to go. And it gets to the point where it's just sort of like, you know, a very, very substantial proportion of our productive output goes not to creating more wealth, not to making more investments. Investments are just there to create more prosperity, but to just service the debt that we've already had. And we've spent it on frivolous kinds of things that just there is no lasting value in any of that. And it's just it is just the height of madness. I don't even know any other way to sort of say it. Now, let me just be very quick here to add it. You always say, but we have, people wonder why we lay it on so thick, but we get emails, right?

57:20So we're not having a go at anyone's kind of team here as well. And this is a problem that you could point to any stripe of government. And it's like, they've all done the same thing, right? And the next one will as well. And what it does is it shows you how difficult politically a problem, like economically, it's the easiest thing in the world to fix it tomorrow. I'm not saying you should necessarily do it in that way, but politically it's really - Exactly, exactly. Yeah. I thought it was really interesting. This is a little bit off topic, but not really. It's kind of on the same vein. Bersent last night, I don't know if you saw what happened with the US bonds, but they're issuing new bonds to buy back other bonds.

57:58So it's just kind of like for liquidity and all these other clever things. Anyway, what's interesting, without going down the rabbit hole, what's interesting about that is that when Bersent wasn't in the - the treasury secretary wasn't in the spot he is he was very very critical of yellen that is dumb here's all he's an ex-investment bank here's all the reasons that that's dumb that's really stupid you shouldn't do that and he was right he was absolutely dead right and again i'm not i'm not not pro-republican or anything to do with percent i'm just saying here is a guy who is now the boss in this field very in very recent history pointing out very very accurately that this is really dumb and getting it all.

58:35And then the second that he is in the same boat, it's like, yeah, we're going to do the same.

58:42And the reason is, I just want to underscore the challenge of the problem here, the political problem, because the person who gets up and goes, yeah, actually we are going to fix it, is gone in the next three years and then someone will get replaced by someone who isn't going to fix it. That's why I think you can afford to, you can just, you can be justifiably cynical in what's going to happen here. I've already seen the excuses come out. Now, it'd be different. There's a lot of political points going left and right over the, you know, grenades being lobbed over the fence here as well. But it's sort of like, it just strikes me as really strange that at least no one's at the very least kind of going, well, yeah, that's, that is true.

59:28that is true, but this is what we're going to do about it. It's just sort of like, oh, but you guys did the same. Oh, but this. And it's just, it's like, it's very childish, very schoolyardish. It's like finger pointing and name calling. It's just like, yeah, can we just get past all of that? And can someone just stand up and do it? But of course, again, they're not idiots. They're behind closed doors. It's just like, yeah, I just, it's going to happen, just not on our watch, right? And I'm not going to be the person who fixes it. Right, right. If I'm the person who fixes it, I'm not here. And anyway, I'm going around and I'm spinning my wheels at this point.

1:00:00No, you're right. No, you're dead right. The difference, of course, is we need someone who's actually going to have the conversation with, in this case, the American people, in our case, the Australian people, actually say this is what we need to do. And actually do that. That's what I mean. I should have said that. Yeah. No, no, you're right. You put it out there. Just acknowledge the problem. I mean, charmers are like, no, it's not really a problem. Or you guys did it worse. We actually lowered this. No, no, no. Everything is like, no, nothing to see here. It's like, man the hell up and just say, yes, this is a problem.

1:00:26multiple parties are at fault yes we're trying to put the political spin on it I suppose but it is a problem it is let's just acknowledge that and here are some things that we're going to try and do to steer the ship but it's none of that and our kids and our grandkids in fact not even that it's just like you know young adults today will be dealing with this in a very real way that's absolutely right so look we're talking about it which is great we do have to put more focus on the state debt because it's too easy to talk about the national debt. And it's always been bigger, so we've never had to think about it.

1:01:02Probably the state's got the same disease as the feds have got. And again... And they don't have a money printer. Right, exactly. Well, they end up leasing the federal one, right? And that's the reality. The feds are going to have to deal with whatever the states do in whatever way, shape or form, right? At some point you can bankrupt the state, I suppose, and take it over or something. But what else do you do? And so you're in that situation where you don't have the money printed, but they're so intrinsically linked, the states and the feds, it's going to happen anyway. And using the money printer is just a default by another name.

1:01:31Yeah, exactly. It's exactly the same thing, more or less. Yeah, yeah. So I don't know what to say other than the trillion dollars is notable. The two trillion dollars, when we get there, because we will, is notable. That the number, as you started out by saying, has at least prompted the conversation is useful. I haven't and Gittins again who is great credit says in the article I've dropped the ball I haven't been talking about this enough there's a time our pollers used to talk about it and we used to talk about no one's done it for a while and I haven't done it for a while I will say I'm going to claim a little bit of credit for us when Ross has dropped the ball we haven't we've been banging on about for ages not that it's about us or Ross but the point is it is an issue it has always been an issue it will always be an issue you'll go to political favour from time to time because it's not cool to talk about it and the politicians when they see the opportunity say well I could advocate for budget restraint and let that other guy over there spend, or I could say to hell with it, I'll join the spending party because you might vote for me if I do.

1:02:28It's kind of what we've got to. I'm going to say, man, I think it was the Howard government that was the last one to really take the national debt seriously. That's a long time ago. May have even been... And I'm pretty sure... It was definitely Keating Howard kind of years, right? Post-Rud, no one's really given a stuff. Some of the LNP supporters will say that Abbott had their... and Hockey had their back in black budget. That wasn't national debt. that was the budget actually not being in deficit for a change. That's how far we'd come. They were celebrating the fact that for once maybe we might – I didn't get there, by the way, because COVID hit first.

1:02:58But once possibly maybe we might actually be in surplus. Not pay the debt off, just actually have one year where we didn't spend more than we earned. And that was a – we didn't get there, but that was the celebration, right? And so it's just we haven't had anyone seriously do it. And until and unless we ask demand, make them do it, nothing changes. So, Ram, to your point, you're right. the temptation is always to outspend the other guy to buy the votes or undertax the other guy to buy the votes, which is the same thing in the sense that it just makes the deficit worse in either case. There's got to be a – we need a serious conversation and hopefully Gittin's on Wednesday.

1:03:35Shane Wright in the SMH on Thursday, so today when we're recording this, also wrote about it. He wrote about the state stuff, which I think was really useful. I'm polynare enough to hope but also realistic enough to know that we probably won't. this won't remain on the front page because it's boring and I always talk about it and what about tax cut instead hey and someone give me some cost of living relief and all those things that we always talk about this is literally the problem we are sowing the seeds of future drama and that future as you say it's not even grandkids it's in our lifetimes and it's in you know the worst this gets the more money we spend on interest just tomorrow we will spend more interest than we did today because of Decor okay so where's that coming from and so it will continue and what's the old line about compounding he who understands it receives it he who doesn't pays it yeah our pollies on our behalf are paying more compound interest to some other bastard because they're racking up more on the national credit card.

1:04:23It is just... Now, quickly, as an aside, there will be some, I want to address it, who will say, our debt has fallen as a share of GDP. It's actually true. Since 2020, I think, since the initial COVID stimulus, it's fallen as a percentage of GDP. And that's better than going up, right? So I'm happy to claim that as part of it. And the story goes, imagine this, right? Imagine you've got a credit card debt and you've got 10 grand credit card and you earn 100 grand a year, okay? And these are imperfect analogies because GDP is not income, but you know, go with me. And your credit card goes to 12 grand, but you're earning 150 grand a year all of a sudden.

1:04:58Your debt as a percentage of your income has actually gone down. And that's not nothing, right? I would have preferred you to add to the credit card, but at least your capacity to meet that has increased, has improved. And that's exactly what's happened for Australia over the past five, six years. And so that is, people say that's, and so my point is that's not enough. So those who defend it will say, see, that's better because at least that's, so that's not the point. The point is not, I mean, again, better than the alternative, but you're still racking up more debt. You're still paying more interest.

1:05:28And if the economy stops growing and the interest bill continues to come in, you've still got to pay the bill. So yes, it is better than the alternative. So people who want to say it's okay because of that, I will say gently and respectfully, I disagree. It is better than if it was going up, but it's not the same as actually paying that debt down and preferably paying it off and then running it again. I was really happy to see Ross Gittins talk about effectively, didn't use the phrase because it's nerdy and I use it and he doesn't, structural budget balance, which is the deficits in the bad times are paid by the surpluses in the good times.

1:05:59That is, I mean, I guess that's not controversial. It is. It shouldn't be controversial. It's exactly how any reasonable organisation would run its own circumstances, finances, and Australia is an organisation from that perspective in the sense that we have a national balance sheet and we are not doing that. We're not approaching it that way. We're doing it differently and it's not working for us. Yeah. Yeah. No, well said. That's GDP is not a great, it's a stock to flow comparison, you know, which is, I don't know, I get too nerdy with all of this kind of, I always think, I think metrics like that are always handy to contextualize a number because what is a trillion dollars?

1:06:36Is that a lot? Well, it depends on the size of the economy. and okay, maybe we should use, but you can benchmark it against a whole other range of sort of metrics as well. So I mean, all else being equal, yeah, it's a pretty good one. I know what perfect is the enemy, they're good, yada, yada, yada. But, you know, GDP is more of a function of sort of turnover than any sort of productive returns on investment, you know, which is probably the kind of thing that you need to measure the debt against to the earlier point, if a lot of debt has been taken on, but a lot of very, very high returning investments have been made, even non-financial high-returning investments.

1:07:11I mean, just I very quickly hasten to add, you know, then that's just a very different thing, but we're not going there. The direction sucks. I don't know. What is left to say other than just to say, got assets? Invoke the old milk ad, you know, do you have assets? You should think about getting some assets. I would get some assets. What do I do? Get some assets is what you should do. Get some hard assets or harder assets that are less likely. It's much harder to print land. It's much harder to print cochlea or ARB. These are things that always have value, but they have more value when you're in times like this, I would say.

1:07:57Nicely put. And to whatever extent you get the opportunity to bang the drum and tell more people about the irresponsibility of our current political system and see if you can interest some people and actually take an interest because that's all we're going to need is some people to put their hands up and start to make a bit of noise and if that gets its own momentum, then that goes somewhere. Yes, that might be a pipe dream, but the thing is if you don't do it, then we're kind of stuck with that, right? So do both would be my suggestion. Look after yourself, but also do your best look after the country as well.

1:08:28Do you know what I would love to see? Tell me. I would love to see, and I say Chalmers because he's, the guy at the moment, but whoever it happens to be, I would love to see a Lex Friedman style four-hour unscripted deep dive podcast interview with an informed interviewer, not one with an agenda, but one who is informed and could ask a series of questions where it's not like the tactic of running down the clock is not going to work, where it's just like you've got all the time in the world to explain this to me. Yeah, yeah, yeah. You know, they don't do it because, again, they're not idiots. There are a lot of things, but they're not idiots.

1:09:04And part of me is because there is that inner part of me, I just like, I want, I really deep down want to believe that there is like, oh, actually, you don't need to worry too much because of this, this, this and this. And there must be, there must be a way of doing that. I just haven't come across a credible way, but maybe there is, right? I would love to see the benefit of the doubt and go, right. I don't think there's too many things where the stakes are higher. I mean, there are things that are higher stake, of course. But in terms of running a country, let's call it in the top 10, be generous, right?

1:09:38It's like, does this deserve a conversation? Does this deserve a reasonable explanation? Hey, we're doing this. I'm like, well, that seems a bit, yeah, but let me explain why. And we just, I guess that to me is always the most frustrating part. It's not that, why doesn't everyone agree with me? I'm right. And everyone else is an idiot. It's definitely not that. It's just like, why doesn't anyone even care? Why doesn't anyone, it's not even up for discussion. Why isn't it? It's just not a thing. That's the most frustrating part of all of it. It's kind of like there's only two possibilities to it.

1:10:13It's just like I am really smoking something I shouldn't be smoking here and I've really got my knickers in a knot over something that is a real beat up here, definitely a possibility, or we need to be quite worried about it. And I really want it to be the former, but it's just sort of like I've searched. I've searched hard. I can't find a good I can't find an answer but if you're out there listening and you've got a good explanation please set us on the right path here because maybe we don't need to worry for an effort to be balanced I'll put that out there but I'd be surprised if there's a cogent argument which is even more crazy right there's not but we're still not going to talk about it and we're still not going to do anything about it alright then, okay it's the hardest thing of modern politics mate i i i don't want to do the nostalgia grasses or anything but i think i don't think it's i don't think i could be wrong i don't think it's a particularly rose-colored glasses thing to say that if you go back to the 80s and and the first government i kind of as an adult or not as a kid i kind of learned enough about to have a view about stuff was the hawk keating government 83 to whatever it was 96 between the two of them and And they had ministers who were genuine policy wonks.

1:11:32You take Kim Beasley, you take Ralph Willis, you take Keating himself, Barry Jones. I mean, some of these people were genuine, A, intellectual heavyweights, B, just complete nerds, right? Gareth Evans in foreign affairs. And this is not a pro-Labor thing, but they had genuine interest and understanding and passion about their policy areas. And I'm not trying to apply a statecraft, weren't they? It wasn't just like one interview to the next, can I get reelected? It's like, I've got opinions on this stuff. I think they matter. And I'm trying to advocate for them for the national interest and what this means for the country 10, 20, 50 years down the track.

1:12:13And they weren't being allocated to a portfolio because they happen to have the numbers in caucus. And, you know, okay, I've got to find somewhere to put Andrew Page. He can have education and employment. Okay, good. Well, I've got to give him something because he's got those pictures of me. So he's... So, yeah, it's just... And, again, I think... I want to say the Howard government was similar-ish. Again, love or hate them. The Peter Reiths, the Peter Costellos, again, they were passionate about their policy areas and they knew about their policy areas and they kind of... They wanted to understand them to improve them in their ideological views on both sides of the house.

1:12:50Sure. I'm not saying they were perfect or even I appreciate or agree with any of my other side, but you couldn't accuse him of not knowing. You know, Kim Beasley, defense nerd. Just defense nerd. And love the portfolio and love doing it and knew everything about everything. These days you kind of have that feeling of like, I was a political staffer or I was a union hacker or I was a whatever and I've got to get enough votes and I had this favour and I've got these photos, I should say, and now I'm the Minister for Employment or I'm the Minister for Health. And it's like, do you really care? You know, Nicola Roxson.

1:13:18More to the point, that's why I'm after the long form podcast because I reckon these people would collapse within 20 minutes. you know we always talk about the five whys you know it's like keep asking why why why they get one why they get a question from a journal what's this soundbite answer move on no one goes what i don't know can you explain that i don't understand but what about this and like they could i don't think they could i don't think they could that was my point that's that's my point i was trying to back your point up which is i don't for a second think they have that policy depth i don't think they are passionate about their portfolios i think they know enough or care enough because the 24-hour news cycle is just, how do I spin this to look good and move to the next thing?

1:13:56And you're right, that's the talking point. That's the announcement. They named the bill, the future made in Australia bill so that it sounds exciting and you can market that thing. They come up and put hard hats and vests on and say, we're going to do big things for big things and lots of people get employed in more big things and cut the ribbon, pat someone on the back, have the nodding dog standing behind them nodding away as they talk, and they go to the next press conference. Well, the other one they do is they go, let's have a royal commission. It's like, well, what? Yeah, but do we really need a royal commission into what colour the sky is?

1:14:24Can we just look up? Like, it's there, right? And maybe before we just jump to that, I mean, it'd be one thing if it's like, okay, well, can we at least follow the recommendations? Like, no, we're just going to do the performance art and then we're going to ignore it. And hopefully you've forgotten about it by then. Yeah, it's a joke. That's absolutely everything it is. That's the point. So anyway, why do we say that? Because it's, yeah, that's where we find ourselves. Mate, I reckon we've probably done this one to death. Will you come back on Sunday? Yeah, I was trying to think of a positive to end the pot on.

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