Jackson Hole Reckoning: The $40 Trillion Debt Crisis and the End of Fiscal Exceptionalism

0:00On the podcast today, it's all financial markets.

0:03David McWilliams: It's all the U.S. underlying budget deficit. It's the rates of interest. It's macroeconomics. It's global finance, as you have never heard it. It's all coming up in a couple of minutes.

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1:27David McWilliams: A quick heads up before we get into it. Kilkenomics 2026 is nearly on sale. If you're one of the crew, you get in first. Pre-sale opens Wednesday the 2nd of September at davidmcwilliams.ie slash crew. General sales kicks off on Friday the 4th of September. And I think this is the best program we've ever put together. We've got the entire Planet Money crew coming over for three separate shows from the US, including a live one in St. Canis's Cathedral. We have Corey Doctorow on Unshittification. Rory Sutherland doing his thing. Mariana Mazzucuto. We have a serious session on the end of the dollar, whether AI is going to break the middle classes.

2:10David McWilliams: We have Ronal Lyons on actually solving the housing crisis, plus comedy, music, and everything in between. That's Kilkenomics, the 6th to the 8th of November in Kilkenny. So, what are you waiting for? Get on the crew list. To understand the economy, you have to understand human nature. This podcast is powered by Acast. How are you doing there? It is time for the podcast. And the podcast today is going to be all about macroeconomics, particularly financial markets, the intersection of financial markets, bond markets, macroeconomic policymaking, and where exactly is the United States going more than any other big country.

3:01Why? Because America is still the biggest economy in the world, the most important economy. and today in Jackson Hole is the annual meeting of the world's financial elite, the world's central bankers, and they're going to be sitting down and for the first time in a long time, the issue of America's solvency may well be on the table. And when I say solvency, I don't mean to freak you out, But there is now a significant, significant question mark over the credibility of American macroeconomic policy. And the result of that has been a gradual increase in interest rates across the board in the United States.

3:49And last week, John's mate, Scott Besant, tried to tell the financial markets that they didn't know what they were doing and he knew better. And of course, surprise, surprise, John, the reaction was, you think you're so clever? We don't think you're that clever. Okay. So it is brewing up to be a hot autumn in American financial markets. And the reason American financial markets are important for all of us is they set the tone for the rest of the global economy. So there we have it, John Boy. That's what we're going to be talking today. Central banking, dollar, bond markets, all that sort of stuff.

4:25And Mr. Smug, smack in the middle of it. But here's the thing, though, Mac. The U.S. debt has crossed that 40 trillion threshold. And that's a serious landmark. So Trump came into power. He had the plan to sort everything out, to get rid of the debt, to bring down inflation, bring down the unemployment and all the rest. Now we're over the 40 trillion mark. Inflation is still way up. Interest rates are way up. and the bond vigilantes are kind of getting ready to react. So while the Iran war compounds all their problems, but that aside, do they have a plan? And what is that plan? Or, you know, where did it go from here?

5:13Okay, so let's just inform our listeners as to what's going on. United States gross national debt peaked last week. It was revealed it is now 40 trillion.

5:26David McWilliams: Just to put that in context, that's nearly twice the amount of Chinese debt, which is about 22 trillion. And more interestingly, it is about 615 million years of average U.S. workers' earnings. Put it into a context, right? The United States exceeded a trillion, the first trillion in 1981. So it took the Americans nearly 200 years to actually amass a debt of$1 trillion. Now they have$40 trillion. But this is the context of, again, the American debt this year since March has increased by a trillion. So this is how wild the spending is in the United States, okay? This gives people an absolute sense of why financial markets are worried, right?

6:21Just so consider what's going on, right? Inflation in the United States is about 3 % to 4%. Between 3 % and 4%, that's above the Federal Reserve's target in every single year since 2021. Well, that should be about 2%, is it?

6:36David McWilliams: It should be 2%, right? Right. Unemployment is at 4%, which means the economy, by any definition, is now at full employment. Full employment is around 4%. Now, typically, if the economy is growing so strongly, if unemployment is so low, the debt should be actually falling, not rising. And the reason that would be is because a growing economy throws off more tax revenue. a low level of unemployment means that your welfare spending is down. And this is what they call automatic stabilizers. So when an economy is in a recession, that's the time the government should spend. When an economy is flying along, the American economy is, that's the time the government should save.

7:22But what's actually happening now in America is the deficit is running at 6 % of GDP, right? This has never, ever, ever been as high in peacetime. particularly with full employment, right? As you said, the national debt has crossed 40 trillion, right? Yeah.

7:40David McWilliams: Net interest payments are 1.1 trillion for this year. That's more, we should say it again, that's more than the entire defense budget of the United States. Yes. And of course, what means the yields on long-term interest rates have begun to rise. So this is, in effect, what's happening, right? Now, what Stock Besant did last week, he came out and he said to the financial markets, you don't know what you're doing. The interest rates are too high, number one. And number two, I'm going to drive them down by doing the following. I'm going to use the Treasury's money to buy up long-term government debt, 10 and 30-year paper.

8:25And what that does, as you buy up the asset, the price, of course, rises. That means the yield falls. And what they're trying to do is they're trying to get the yield down to reduce the massive, massive government debt service bill. So what Besson did is he came in and he said, look, over the course of the next few months, I am going to increase the amount of money that I'm going to use to buy back my own debt. I'm going to actually increase it. I'm going to double it from$2 billion to$4 billion a month.

8:59David McWilliams: But the problem is, if a debt is 40 trillion, 2 billion or 4 billion isn't that much. Yeah, that's a piece of the ocean. So essentially what he's doing is, this is a style of QE then that we did back in 2008. And we know where that got us. But how is the international markets reacting to this? because, you know, I mean, he's this smug kid who's telling the American financiers that they don't know what they're doing. And he's essentially saying that to the rest of the world. But we're all looking on going, well, you're the lads who are in serious shit and we're kind of taking up the slack, as it were.

9:41Well, look, so the dilemma for the Americans is very, very simple. They need to either raise taxes or cut welfare spending. They need to bring that deficit, which is now running at 6%, which means they're running the economy incredibly, incredibly fast.

10:00David McWilliams: They're really revving up the engine, right? They need to bring that down to about 3%, and there needs to be a sense that everything is going to stabilize. Otherwise, it doesn't matter how much money you throw at the problem, because if people don't believe your medium-term credibility, then you become actually a pawn. In a way, it's almost like their strategy in Iran with the war, John. If people believe that the Iranians, just by staying still, are winning, and if they believe the United States military isn't big enough to do the job, and if they believe that Trump can't get out, then the credibility of the United States continues to erode away.

10:43I think it was Gorbachev who said once, it's not the actual power of our military. It's the threat of the power of our military that is actually the deterrent from everyone. So you actually just threaten rather than actually going in and doing something. So think about the same sort of analogy with these bonds, right? Once you have said, we don't like the price, i.e. the rate of interest. What you've said to the world then is that you people who actually set the price are wrong.

11:20David McWilliams: And the problem is that the only fiscal discipline the United States has is the bond market. It is the signal from financial markets that something is going wrong. if the head of the treasury reacts to that signal by trying to manipulate it downwards, what that will just do is that will scare investors yet more. Because they'll think, hold on a second, the bond market should be allowed to do its thing. I've always said, you know, it's this idea that the bond market is the signal from financial markets that something's going awry. But hold on a second, it's the market that sets the price, not any individual or group of individuals.

12:03So it's the market that sets the price, right? So that's like King Canute then, railing against the tide coming in.

12:10David McWilliams: There is an amazing thing, pal, John, King Canute. Do you know the King Canute and the tide? That was called Dangelt, John. And Dangelt was a tax that was raised in England. We see it was King Canute, but now you have me. It was actually a fella called... He's off. Ethelrod the Unready, right? And he was... The Unready. Yeah, yeah, Google it, Google it. This is mad stuff. Æthelrod the Unready was a Saxon king of England. And, of course, the Danes were coming across to invade the English around the east coast of England. Yeah. He said, look, what we'll do is we'll raise taxes and generate silver.

12:55David McWilliams: And with that silver, John, we will throw the silver into the sea, the North Sea. It was called Dangelt, which means Danish money, right? And that would persuade the gods of the sea, John. So it was the gods of the sea, not the Danes themselves, to actually scuttle the Danish fleet. Now, obviously what happened was the Danes arrived and the Dangelt was a complete waste of time. It's exactly the same dilemma that's going to happen here, right? Yeah. So Besson's The Unready is casting the dollar into the bond market. No, what he's doing, you mentioned QE, right? Yeah. QE is done by central banks, not by treasuries.

13:40Yeah. So this is quite interesting. Besant and Warsh don't seem to have a very, very good understanding, right? The two policy-making supremos in the United States. But years ago, I saw something very similar from inside.

13:56David McWilliams: And I think that might help listeners to understand what's happening. Go on, explain that. Yeah. You'll know that in 1992, when Besant was actually working with Soros, but allegedly Besant has really bigged up his role in the Soros administration, right? That he was a small player, not a big player. He now likes to say that he was the man who broke the Bank of England. But if you talk to a lot of insiders in Wall Street, they're like, nah, he was part of one of the various teams that Soros had. Yeah, he was making the tea, was he? And ultimately, of course, Soros was the guy who made all the decisions.

14:31But he that was made. When sterling fell out of the exchange rate mechanism in October of 1992, financial markets said, okay, the Irish, who are absolutely joined at the hip to the British, it's quite interesting, after Brexit, we thought something similar would happen, but the Irish economy has changed so much since then. But because Ireland trades with the UK and does more trade with the UK than it did with the European Union, the Irish currency will have to devalue in order to maintain competitiveness with the now devalued UK, right? So that was the market's view. And they said the price is too high.

15:14Basically, the Irish currency is too strong. The Irish Central Bank, where I was working, took the view that we are Europeans, not poodles of the UK, and we will not devalue simply because the UK devalued. So that was our official government stand. Yeah. But nobody believed us.

15:36David McWilliams: Nobody in financial markets believed Ireland, right? Because at the time it was thought that Ireland was so adjacent to the UK that we were more or less the same economy. But we had a different currency. We had the punt. So what happened is the whole world started to sell punts. And the only people who were buying punts with foreign currency was the Irish Central Bank. And so I saw this happening on a daily, daily drip, drip feed from inside. The most valuable piece of information at the time was how much money we were actually spending. And I saw this go from maybe 20 million a day to hundreds of millions a day.

16:16We were spending of our reserves.

16:17David McWilliams: The reserves were almost disappearing, right? Now, why? Because the financial markets had thought the policy mix in Ireland isn't credible. They will have to devalue in order to rebalance the economy. And it didn't matter how much the Irish Central Bank protested. And it didn't matter how much foreign currency we spent because they took the view that eventually Ireland will run out of foreign currency. And we did. and therefore by the end of January, so after a three or four month really futile campaign, eventually Bertie Ahern, who was the then finance minister, threw in the towel. And we did devalue and amazingly, the economy just righted itself.

16:58David McWilliams: So the markets were right. The markets were right. They sensed something was wrong. Can I just ask you, if we had devalued straight away, then we would have ended up in the same place, but just with all our currency reserves. Yeah, we wouldn't have spent all the money. In fact, I tell you the greatest, yeah, of course, of course. But this is the way bureaucracies work, you know? Yeah. But the greatest thing is Bert came in after we devalued, right? And he came in to talk to us and he said the most Bertie expression, right? This is exactly to your point. He said, if I had went in earlier, it would have went in quicker.

17:37I swear to God.

17:38David McWilliams: What he was trying to say was, had we devalued earlier, the fall in the currency would have been more precipitous. Right, right. But you're absolutely right. You know, there's no point. It's like Dangel, it's like your King Canute, it's like Etel Rudd the Unready. There's no point going against the markets once they fear that there's something wrong with your policy option. And that is exactly what Besant is doing. But this is the arrogance of Besant then, when he is going against the markets, because he thinks he knows best. He thinks he knows best, and he also thinks that he has enough firepower in the Treasury, but he doesn't.

18:17David McWilliams: Right. I mean, the point is, I mean, of course, the American state can issue Treasuries. They can go to the Federal Reserve, and they say, give us cash. We'll give you those IUs. But that's just making the problem worse. The problem in America is there's too much debt out there. And, of course, there's one last interesting aspect to all this as well, which is, John, Now, AI spending. So typically there's a pool of money in the world for what they call sovereign bonds, right? For government bonds. And that pool of money, particularly in the United States, is enormous, right? That's where you get the 40 trillion.

18:50That's an enormous amount of commitment on investors who have actually said, we're going to finance America.

18:55David McWilliams: But in the last year, John, another massive drain on American finance has been the huge, the ginormous sums that are being borrowed by American tech companies to finance AI and data centers. And so what that's doing, that's elbowing out the government. And so people are saying, well, we need a higher interest rate now because there's so much commitment on our cash. There's so many other places to put our money. And there, of course, is the dilemma for Besant because what he has to do is he has to convince everybody who's a player in this game that America has a long-term strategy to reduce the debt.

19:42David McWilliams: But given the debt dynamics, John, given that they've actually added a trillion in the last four months alone, people are thinking, now, is the United States the place it used to be? This is what investors are thinking. You know, for the last 100 years, the United States has been the safe haven asset when there is a problem around the world. Because the idea is that the United States will never default. They will always pay their debts. And in effect, you can buy American government bonds and go in your whole years because they'll always pay it back. It's called the risk-free rate of return. And that is about 5.5 % now.

20:24David McWilliams: Now, the problem for the American government is that that 5.5%, as the debt increases and increases dramatically, is becoming unbelievably expensive. Yeah. And again, if Besant had been a proper financial market player, because again, since Besant left Soros, his actual financial acumen has been disastrous. He's closed both of his funds. Both of them have been closed. Yeah, yeah, yeah. So I think what people are thinking is, hold on a sec, this guy has decided that he's some sort of fucking Odysseus sort of character, you know? You know, he's some sort of Greek hero from, you know, and it's kind of gone to his head.

21:07But can I ask you then, Mac, at what point, I mean, I know that last week Mark Carney actually commented that America is not what it used to be. But at what point does Besant and Trump kind of call in or tap the tech bros, you know, the trillions that they have? That's an interesting question. I mean, Trump has taken an equity stake in Intel. We know that. When Intel was in trouble last year, and a lot of people thought, oh, that's very unusual, right? Because, you know, it's unusual for the American state to be buying parts of technological infrastructure. But they said, look, Intel is systematically important because Intel is a chip maker, etc., etc.

21:52I'm not too sure at what stage they do this because what Donald Trump has always said is that he believes in what's called the Laffer curve, which is if you cut taxes enough, your revenue will rise because economic activity will rise and you will get all your money back. That's Arthur Laffer, who was an advisor to Ronald Reagan. Now, what we do know is that that has never worked, right? Every time you cut taxes, you diminish the tax base. And over time, your deficit gets worse.

22:28David McWilliams: But what Americans discovered at the same time as their deficit was getting worse over the last 30 years is that there was one thing that America exported that everybody wanted. And it wasn't AI and it wasn't tech and it wasn't social media companies. It was actually the dollar. So the rest of the world has, in the last 30 years, said, in effect, the Americans, you can borrow as much as you want because we will buy as much as you need. Now, it still is the case that 75 % of American treasuries are held within the United States. It's only 25 % are foreigners. But over the last few years, the foreign appetite for American assets, be they equities, stocks, property, everything, has gone through the roof.

23:16David McWilliams: And the reason it has gone through the roof is that the United States has built those companies that actually generate the significant returns. So European money has gone to America, Asian money has gone to America, enormous amounts of Middle Eastern money has gone to America. But the question is, and your question is, how long does that go on for? Can this go on indefinitely? I'll just give you a statistic about the debt, John. If the debt continues to rise as it is rising, that$40 trillion will become$64 trillion. And that's when the Congressional Budget Office, their own projection, by 2036.

23:53David McWilliams: So in 10 years' time, that debt will be$64 trillion. That will be, in effect, almost double American GDP, right? And what happens then if it hits$64 trillion? I mean, I can't even wrap my head around that figure. There was an economist. Actually, John, do you remember we did Ferris Bueller's Day Off? Yes. Yeah, yeah. And do you remember the guy who was the actor for Ferris Bueller's Day Off, who was the teacher, the economics teacher? Yes. Yeah, yeah, yeah. His name is Perbert Steen, okay? Yeah. But his dad was the head of Richard Nixon's actual Economic Council for Economic Advisors. So his dad, Herbert Steen, was the real deal.

24:42And he came up with one very serious, and it's called Steen's Law, which he said, if something cannot go on forever, it will stop. Okay? Right? Genius. Man, that's genius. I know. You don't know prices too much to pay for that sort of extraordinary wisdom. But at a certain stage, either the American bond market will discipline the government or the government will discipline itself.

25:09David McWilliams: And it's just a matter of which one happens. And then you have to get into the weeds of American politics to see is any constellation of Democrats or Republican presidential nominees likely to actually change direction and change course. And if you conclude that the Democrats will spend too much and the Republicans will give away too many tax cuts, then you have to focus on that$64 trillion question, which is what happens to the debt in 10 years' time when it gets to that level. Will China support them? Will Europeans support them? Will the Asians support them in general? Will the Middle Eastern countries support them?

25:53David McWilliams: I'm not so sure. Well, let me ask you this question then, just about the implications for the rest of the world, how this will ripple out. But in the context of the Iran war, I mean, as we said before, Trump can't seem to get out of that war. He can't resolve, he can't win it the way he wants to win it. And he's finding it very difficult to get out and save face at the same time. and then we have this new assault, this financial assault, this economic D-Day as Besant describes it. But China just said, well, you know, if you do that, you know, they will retaliate in some sort of way as well. So the whole thing, the whole thing's a mess.

26:39So how is the world going to react to this? But before you answer that big long question, I think we need a little breather. We do need a library. Okay, okay, okay.

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28:30So, Mike, just explain to me how the world is going to react to America's what seems to be a pretty impossible situation. Yeah, it's a sort of a drip, drip financial crisis that just seems to be getting worse. And it's basically a game of chicken between the tolerance of financial market investors, of American bad economic behavior. That's the first thing. When does their patience run out?

29:01David McWilliams: But number two, does the world have to own American treasuries? And as a result of that, that is what might save the Americans. Now, why is this important? You remember Liz Truss over there in the UK? She had a guilt crisis and there was actually a significant... She was guilty of many things now, in fairness. Yeah, yeah, yeah. But there was a significant meltdown of the UK financial system. Yeah, yeah. Because A, her credibility was shot because she announced these far too big tax cuts far too quickly. And everyone said, look, you're going to end up running a massive deficit. But nobody has to own UK goods.

29:46That's the key question, John. Yeah. The world can survive without sterling bonds. And that's why sterling had such a wobble, because the UK realized, shit, people don't need us.

30:00David McWilliams: They don't need our bond market, right? We need them. We need them, right? The question then is, are the Americans too big to fail? Now, when you hear that, you should always get nervous, right? Yeah. But why might that be? Because the American long-term bond market is the deepest, most liquid, most used in the world. Now, what is it used for? This is where a little bit of central banking and banking knowledge comes in, right? It is used as collateral for the rest of the world to finance itself. So when central banks print money, they don't just print money and say, there you go. They demand collateral from the banking system.

30:44David McWilliams: So if you think the central banks are just bankers' banks, so they behave the same way. So they go to, let's say it's Bank of America. So Bank of America wants money, right? Because it wants to lend that to its ponters. So it goes to the Federal Reserve. It has an account of the Federal Reserve. It says to the Federal Reserve, we'd like, you know,$100 billion. And the Federal Reserve says, Grant, no worries, we give you that, but you've got to give us collateral. Now, what is that collateral? It is always and ever American government bonds. So in a way, the banking system and the central banking system and the treasuries are kind of soldered together through this collateral.

31:25David McWilliams: There is no other collateral that is as widely used around the world. So all banks, therefore, need to hold a certain amount of American treasuries in order for them to have an account at the Fed, in order for them to get access to dollars, in order for them to behave as banks. Okay. So that might well be the only thing that saves the Americans because there is no other collateralized asset out there that is as useful and as widely used as the American treasuries. But then the question comes, at what price? And then we're back to the yields. And of course, the problem with the yields is as yields begin to creep up because prices are beginning to fall because people are selling a certain amount of their American treasuries and saying, look, we don't need to hold that many of them.

32:19That then absolutely translates to the bottom line of the American government

32:24David McWilliams: because they have to pay back at the prevailing higher rate of interest. Right. Which is why Besant intervened in the first place, trying to massage down the rate of interest, right? By basically manipulating what's called the yield curve. Now, the problem with all that is the market has seen through them. They said, you know what? You came in with your big balls move. You told us we didn't know what we were doing. You told us the price wasn't right. And yes, you got about two days of falling interest rates, and they're now back up again. So the market has basically taken one look at Bessenton.

33:00David McWilliams: They're not buying what he's trying to sell. And if you are, and I remember from being an economist in the central bank, if you're trying to sell something that the market ain't buying, you're gone. Because what the market is looking for is a fundamental change of direction of American economic policy. So Besant said, look, when he was asked about the deficit the other day, he said, oh, don't worry, we grow out of it. In a way, he's right. You know, if the American economy continues to grow, and the American economy grows at a rate higher than the rate of interest, So therefore, you'd need nominal growth rates in America to be above 5%, which they're nowhere near.

33:39David McWilliams: But he's saying, look, AI is coming. We've got a technological revolution. We're going to be flying. We're going to have so much productivity. Basically, what he's saying is that there's a check in the post and it's coming to us. And the punters are saying, we don't buy that. Yeah. And of course, what happens with all these things is it becomes then like a game of chicken. because he's trying to tell the market he wants lower interest rates. The marketer's saying, we're swamped with too much supply. What we really want from you, Scott Besson, is for you to do your job as Treasury Secretary. And what's your main, main responsibility as Treasury Secretary in the United States is to make sure the country is solvent and to make sure the dollar is solvent, right?

34:26David McWilliams: That's your job. And what they're saying now is, we're worried about that solvency. So we're in a very, very strange situation. So what's the alternative? I mean, could the US dollar be devalued? And what would that do if that's the case? Well, the US dollar has kind of bounced around in a range for the last two or three years. Long term, the prognosis for the United States dollar has to be as the world economic powerhouse shifts to Asia, away from Europe and away from the United States, If you believe that story, if you believe the story that basically we're in the Chinese century and Asians are going to outstrip Europeans and Americans and all that sort of stuff, right?

35:08If you believe that story, then you have to believe that the American dollar is on a long-term downward trajectory. Nothing dramatic, but downward trajectory. However,

35:17David McWilliams: AI and tech and all that stuff flies in the face of that because America has proven itself to be so resilient and they can produce great companies. And, you know, we know that the business of Americans is business, right? They're good at that sort of stuff. So that's really the bet you're taking. Whereas Europeans have sort of, we know that Europeans prefer long haul years and having glasses of wine and basically living well, right? Yes, work-life balance and all. So what I would think is that the fascinating one and the one to watch, right, is today the central bankers are meeting at Jackson Hole.

35:52David McWilliams: They need to come up with a long-term plan to manage all this sort of stuff, which is something like maybe the Plaza Accord in the 1980s where it's coordinated intervention. But you can be sure for the first time ever, John, and this I think is interesting, that not the solvency, but the promises of America are being interrogated a little bit more. And when they look at, for example, the Democratic Party, if you think the Democratic Party is going to go down the sort of American socialist route, that it seems to be certain of them are going down, right? Then people will say, well, if they go down this route, the kind of Mamdami route, that will mean more government spending.

36:35David McWilliams: Or if they go down the MAGA route, it'll mean more tax cuts because that's what MAGA is all about. Both of those eventualities scream higher budget deficits. So at some stage, there will be a fiscal crisis in the United States and there will be, it's like there'll be a handbrake turn. Yeah. And because the maths, the arithmetic don't lie, and the arithmetic are saying to Scott Besant, enough of your sweet talk, enough of you're trying to manipulate the curve, enough of you're trying to buy long-term bonds with short-term bonds, all that sort of Mickey Mouse behavior, that doesn't change the fundamental issue, which is that since Clinton, Clinton was the last president to balance the American books, right?

37:20David McWilliams: People forget that. Right. Clinton was a fiscal hawk. since then every single president particularly Biden as well have really let the American financial system and the American underlying budget rip whether it was Bush, whether it was Obama whether it was Trump but he was dealing with COVID as well though he was dealing with COVID but I mean again, you know, we have in Europe, we have a bias against Republicans that we think, oh Republicans bad all Democrats good, right? Well I don't but most people do, right? But you've got to see that both parties have been fiscally irresponsible. That's my point.

37:59David McWilliams: And when you're looking at Capitol Hill for the next five or six years, I don't see anyone willingly addressing this. But as Herbert Steen said, when something can't go on to wherever it stops, they will be unwillingly, they'll have to address it. And that crisis will come from the bond market. And I think we're seeing the beginnings of that now. It's not to say it's going to actually all collapse around people's ears. But if you're studying America, if you're studying markets, if you're studying budget arithmetic, things are only going in one way, Johnny. And it ain't that pretty. So we leave it there.

38:39You're having a laugher.

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