Why Governments Haven't Learned The Lessons Of Japan

and post crisis were into that. But I think for the vast majority of people, including I would say the vast majority of economists, unfortunately, I don't think that concept is one that's like really in their their language and their terminology. Typically. Yeah, I kind of have to remind myself of this because I got into financial journalism right after the two thousand eight financial crisis, and balance sheet

recession was sort of the hot thing then. It was the parallel that everyone was reaching forward to explain what was happening to the US at the time. But of course it's still a relatively new concept, and it's still a relatively rare type of recession, I guess, right. And you know, again, this sort of one of the questions that developed market economies are dealing with right now is why have the traditional tools that governments and central banks

use to stimulate the economy not been effective? Why have lower interest rates not caused faster growth and more rapid inflation? Why don't we see uh, more rapid growth and inflation thanks to budget deficits that are essentially near their highest levels of all time and places like the US and elsewhere, And so it kind of in keeping things we've talked about long time, like well, what is really wrong with

the framework? And is there a different way to think about the malaise that we see across so much of the world's economy. Is right, and I think we are seeing more and more policymakers who are arguing that school stimulus is the way forward, or that fiscal is the new monetary policy, and a lot of that thinking stems from the balance sheet recession ideas. So why don't we

go ahead and dig into it. I'm really happy to say that our guest on today's episode is Richard Coup, the chief economist of Nomura Research Institute and the man who the term balance sheet recession is actually attributed to. So Richard, thank you so much for coming on, Thank you for having me here. So why don't we start with with the obvious question, what exactly is a balance sheet recession? And how did you come to start thinking

about recessions in that way. I have to first disclose my UH geography, because I think in Japan for the last thirty six years, starting around close, Japan fell into this what I go, balancee recession and boj brought rates down to almost zero. WHI I to stimulate the economy and nothing seemed to work. And it took me about seven years to figure out that perhaps we have to come out of our ordinary in a private sect always maximizing profits kind of framework to understand what's going on.

And one day I stumbled upon the chart that indicated the Japanese companies are not borrowing money at all, they're actually paying down debt. And then it came to me that why would a private sector company is willing to pay down debt when interest rates are zero? And then of course it's the only reason that can happen is that they have a financial problems of some sort, perhaps balance it under water. And then when I start thinking

in those terms, everything kind of fell in place. That is to say, during the bubble days, people typically leverage themselves up thinking that they're going to make lots of money very quickly. When the bubble bursts, as the prices collapse, all that liabilities remain. Their balance is underwater, and people all start paying down that at the same time and

paying down that. It becomes kind of a survival issue for them because if people outside outside the companies, for example, find out that your company is actually in a negative equity, they will stop trading you on credit. They demand everything to be settled in cash. Your best employee could leave because realizing that you know, this company might be under water for many years to come. When all these things

come to surface, you're basically dead. So people inside the companies who understands the actual situation keeps their mouth shut, tell investors, shareholders whatever they want to hear. They try to repair their balances as quickly and quietly as possible. And that's, of course, on the individual level, the right thing to do. If I were running one of those companies,

are we doing it? Many of the people listening in this podcast in the same situation will probably do the same because if you have a cash flow, and in the Japanese cage, a lot of companies still had cash flow. Japan was running the largest trace of plus in the world. People wanted to buy Japanese products all over the world. So the main line of business was okay. They had a cash flow, but their balance sheets were horribly under water. So all these people start paying down debt to repair

their balance sheets. And that way you don't have to tell your shareholders. It's it's not the shares all piece of paper. Now you don't have to do bankers, it's not all non performing loans. And most importantly, you don't have to their workers. They are normal jobs tomorrow. So of all the stakeholders involved, using the cash flow to

pay down that is the right thing to do. But when everybody does that at the same time, we fall into this fallacy of composition problems in that even though everybody is doing the right things collectively, you get the wrong result. And you get this wrong result because in the national economy, if someone is saving money or paying down debt, someone else has to be borrowing those money and putting them back into the income stream. If everybody is saving money or paying down dead and no one's

borrowing money, the economy is just implode. When all these people start paying down dead, economy began to uh desalerate and the situation that wasn't wasn't worth. They tried to do monetary stimulus, but if you balance it is underwater. You cannot borrow and the banks won't lend your money either.

So I read your book, like many people I think in our field did I probably I came across it in the book The Holy Grail of macro Economics, where you lay out this theory essentially by looking at exactly what you described the Japan scenario post where despite lower and lower interest rates, nothing could change on the corporate behavior because corporates were incentivized to pay down debt. How much, though,

is this concept of the balance sheet recession? And what you see is sort of like you know, on the individual level, corporate level makes sense to pay down debt, but in the aggregate level it's real, it's really problematic. But how much is this different or essentially a new reframing of sort of very old Keynesian ideas about how what might make sense for one householder a company suddenly becomes very problematic when it's the behavior of the overall economy.

As you mentioned at the beginning, is a real occurrence not this type of recession because most of the time, people are very careful with their finances, they're very careful with their balance sheets. But during the bubble days, that discipline disappears and people just leverage themselves up as much as they can so that they can make tons of money very quickly. And when that bubble burst, the number of people who are affected it will be far large

than in ordinary circumstances. And when they all collectively start paying down debt, even if there were some people who were still borrowing money on the net basis, private sector as a group becomes a net saver, and in that case we fall into balancee recessions. So I'm curious, where do you see, given that these are relatively rare types of recessions, where do you see balance sheet recessions now in the world? Is it still in Japan, possibly still in the US or in Europe? Where where would you

say and at what stages? Well, I say rare because bubbles are relatively rare occurrences, and so balance sheet recession, which typically follows the bursting of the bubble, is rare because of that reason. Now Japan, the bubble birs, and it's already thirty years from that. Corporate balances in Japan are in very good shape now. They the balance sheet recession powers probably ended around UH five, five to ten years ago. Some companies may still be struggling, but on average,

Japanese companies are in pretty good shape. But even after the balance sheets are repaired, because of the this process of the leveraging process of paying down that is such a painful process. Most companies that comes out are still saying to themselves, oh, that was terrible experience, will never borrow money again. So this is a kind of trauma that gets stuck with this this mindset. And when you look at what happened to Americans after the Great Depression,

the Great Depression was this type of recession. Everybody was leveraging up. Once the bubble burst, everybody start paying down that all at the same time and GDP collapsed, but people still paying down that and those Americans who lift through the Great Depression never borrow money until they died because the trauma was so bad. In Japan, we have a mini version of that. A lot of people still not borrowing money because the previous experience was so bad.

Now us I think household take the balance it are becoming much cleaner thanks to all the help from the government and the Federal Reserve, and so I think US is almost to the end of this process, but I think the trauma pot will be still with us for

maybe some more years. In Europe, because they had a double deep recession with the European crisis starting around twenty eleven twelve, the problem got a lot worse and they are beginning to look better, but European economies at the moment are very much dependent on exports, and with the exports weakening all around the world, they're slowing down even faster,

and so for Europe it might take much longer. And even after the balances are repaired, this this trauma period who also going to be last thing for quite some time. So if we go back to Japan, and you mentioned that maybe the balance sheet recession in Japan only and maybe about ten years ago or less, so essentially it was a twenty year balance sheet recession in your view during that time, and the sort of standard view I

think that people would say is okay. The way to or at least within your framework, the way to address too much debt overhanging the private sector is for essentially to move the debt onto the government's books because the government operates differently, and uh, that sort of theoretically relieves the burden and the government has all the debt, but

the government can service the debt because it's the government. Now, Japan did that to some extent because the deficits and the national debt sword sky high during this balance sheet recession. So at the same time, during this long painful day leveraging prices, the Japanese public debt absolutely sword. But why wasn't that enough? Why wasn't some of the most eye watering levels we've ever seen of debt to GDP anywhere in the world. In fact, Japan is famous for the

size of the stock of its public debt. Why wasn't that enough? Two more quickly alleviate the private sector's problems At the beginning, no one has this framework in their minds, including myself, I have to admit. And so they when they put on the fiscal stimulus to keep the economy going, they thought, with one big jolt, who act as a pump priming and economy will come out very quickly, and

then they can rescind the fiscal stimulus afterwards. You know, when US fell into one in two thousand and eight. It was Professor Barry Summers who said, oh, we all, we needed a big jolt to get the economy going again, a bit jolt of fiscal stimulus. The same argument was made in Japan eighteen years earlier. So they put in the fiscal stimulus and fiscal stimulus government spending money. Of course, economy responds very quickly, but at that time the balances

are still under under repair. But people didn't realize that part. As soon as the economy begin to show improvement, they decided to cut the deficit because that, you know, we don't want to leave any that to our children and all that kind of argument. And so even though households, households and companies was still repairing balance, she is the fiscal stimulus or was cart economy tanked again? And then they put a lot of fiscal stimulus. Economy improved again,

and they cut the fiscal stimulus again. So we had actually this on and off situation for a very long time. And that is not the way to to to fight this this recession. It has to be sufficient and it has to be consistently applied sustained, and that was not how it was applied unfortunately, and we made even bigger mistakes. Are really trying to cut the budget deficits, thinking that

economy is already strong enough. And at that time I M. F or E. C D, who also didn't understand anything about balanced recession UH strongly insisted that Japan should reduce its budget deficit. And when that was put in place, we have five consecutive cultus of negative growth, complete breakdown in the banking system, and that became the second one,

that became the double dip, the real double dip. And once you have a double dip in already this very difficult circumstances, people become very, very pessimistic, and that's why it took us nearly twenty years to come out of it. If these were understood from the very beginning and physical stimulus were applied in a sufficient amount in a sustained way, I'm sure that time period could have been cut significantly.

So talk to us about how fiscal stimulus actually affects private sector borrowing and how you get companies specifically to move out of this debt trauma, because it seems really difficult, at least in the case of Japan, and I think even today, you know Japanese companies don't actually borrow that much. I think we had the first ever Japanese junk bond sale just this year, and something like half of Japanese

companies have no outstanding debt at all. So to some degree it seems like we're still struggling with this debt trauma issue, at least in Japan. Yes. Um, the way it works is that once everybody started paying down that at the same time there will be no borrowers. But households actors do saving money do these de leveraged funds also counters the savings, and the economy begins to shrink. Right If I may give you an America example, Suppose I have thousand dollars of income and I spend nine

hundred myself. The nine is already someone else's income, so that's not a problem. It's already circulating in the economy. The hundred dollars I decided to say, if you go through financial sector and will be lent to someone who can use it. When that person borrows and spends it, the total expenditure will be nine hundred dollars I spent plus this hundred dollars that this borrower spent uh combined would be thousand dollars against my original income a thousand dollars.

Then economy moves forward. If there are too many borrowers rates interestect the raised two few borrows interest the lower, sometimes with the help of the central bank to make sure that this income psychle is maintained. That's the usual economy. Then when you're in balancing recession, what happens is that I have thousand dollars of income, I spend nine hundred myself. Nine is already in a circulated in economy, so that's

not a problem. But the hundred dollars I decided to say, get stuck in a financial sector because there's no borrowers, even at zero negative interest rates, because everybody is repairing balance sheets. When this hundred dollars gets stuck in a financial sector not coming out, only nine hundred dollars is spent in the economy, So economy shrinks ten percent from one thousand to nine hundred. The person who receives a

nine hundred. If that person says, okay, let's save ten percent and saves ninety dollars, spends eight hundred ten the ninety dollars gets stuck in the financial sector again, because repairing balance sheet takes a long time five ten twenty years, so economy could go from one thousand, nine hundred hundred ten seven hundred thirty very very quickly, even with zero

interest rates. And the last time this actually happened was the Great Depression I mentioned to earlier, when United States lost forty six percent of its nominal GDP in just four years because of this process one thousand, nine hundred hundred ten seven. Now, if the government comes in and borrow the hundred dollars at the beginning, then economy will be kept that thousand dollars because I spent the nine hundred government bar and spend a hundred so combined with

thousand dollars, so the income is maintained. If the income is maintained, people have the income to repair their balance sheets. And that's basically why why the government acting as borrower of lost the result is so important in these type of recessions because by keeping income from falling, people have

resources to repair their balance sheets. And after the balancets are repaired, then of course you have to reverse the situation private sector borrowing money and government repairing balance sheets. But we haven't got there yet in any of these countries, unfortunately. So we recently did a episode with Michael Pettis and we talked about China and the challenges it's facing right now with its gigantic or ursioning private sector debt load.

And I've seen a lot of people lately talking about this idea that was, Uh, there has been this huge private sector debt build up in China, opportunities are coming to an end, and that there is now the risk of a long drawn out Japan style balance sheet recession in China simply due to the high level of private sector debt. Do you see a similar situation playing out

with what we know about the Chinese economy. Well, uh, there are a lot of economists who like to throw these huge debt numbers and see people going wow, I'm afraid I'm not one of them, even though I'm the one who started talking about that before others. And so I'm kind of glad that people are paying more attention to this issue. This big debt numbers that people throw around,

I am not ah particularly happy about. And the reason it's quite simple, and that is that unless some money saving money, you cannot have a debt right that cannot come out from nowhere. Someone has to be saving money for someone to be borrowing money. So that's one key point that a lot of people have forgotten. And the second point is that if someone is saving money, someone has to be borrowing money to keep the economy going. This uh, you know one thousand and nine issue comes

from there. And when you look at some of the debt numbers and a huge but when you look at the savings numbers and compare with it, savings numbers are of course those are available from flow funds data, and they are of course growing, but growing nowhere near the debt numbers. So how do you describe how they explain this this discrepancy? And I think this this discrepancy exists because those of us in the financial sector has all sorts of ways to increase these numbers through so constructured

products for one thing, and more. In the most simplified way, suppose a large state on enterprises in China was able to obtain funds from banks that are relatively are cheap interest low interest rates. Then if this state on enterprises then supply credit to its supplies let's say smaller private

sector companies that are slightly higher interest rates. There will be increased in a debt number because and so we borrowed it first, and it lent the money to another private sector companies, so the debt is doubled, but the actual borrower is the last borrow, right, the private sector borrow. But the numbers could grow very rapidly as a result,

the debt number can grow very rapidly. And if you look at Chinese flow funds data carefully, I don't see the kind of craze that happened in Japan and all in the United States prior to two thousand eight, where for example, household sector, which should be saving money becoming a net borrower. We actually happened in the United States, Spain and Ireland during the really bad bubble days. That

is not happening in China. Household sector is still saving money and corporate sector still borrowing money, but nothing especially irregular that you would expect to see in really bubbic situations that happened in Japan and other places. So yes, I think Chinese house real estate prices are high and the bubble could burst. Chinese household sector COPA sector did not really went as crazy as some of the household sector and and COPA sector in the West during the

three to two thousand eight period. Well, a related question, but in trying to resolve a balance sheet recession by getting the private sector to lend again, how do you how do you make sure that you don't end up inflating another bubble, Because at least in the US, and you know, you can agree or disagree that what happened in two tho was a balance sheet recession or not, there does seem to be a lot of concern that the corporate sector is borrowing too much and we are

on the verge of another sort of corporate bond bubble of some form or another. So how should policymakers walk that that line? Well, first of all, I think all the reliance on monetary policy is the shortest way to get another bubble in place, because doing balance sheet recessions, private sector borrows basically a present themselves. So the fund managers point ninancial industry basically flood absolutely flooded with with cash. Because household sectors continue to save as they have done

in the last five thousand years. Corporate sector is the well. And then there's de leveraged funds coming back into the UH financial sector that basically the debt repayments, and then the central bank, believing that they have to maintain the two percent inflation rate or something, continues to add funds through que So during balancing recessions, everyone else are short

of money except the financial sector flooded with money. And if the government is the only borrower left, a large portion of that funds will move towards the government bonds. And that's the reason why government bonds come down to these ridiculously low levels during balancing recessions, even with ever larger public debt. For example, us to their a public that is pretty large compared to what we were used

to before, but tenure treasury is only one Japan. Even before b o J went on to this q q E under Governor Coroda, the public that was already close to two g g d P, but j GB was building only zero point seven. That all comes from the fact that the excess funds in the private sector all head towards the only borrower left, meaning the government. But if the government doesn't play its role and abserve all

these excess savings, what happens to the remaining funds. The remaining funds will have to go to fix the existing assets, right, because companies are not borrowing money for investments, so these funds have to go to some sort of a fixed assets such as commercial real estate stocks and and things like that, and that's where you could have another bubble growing. And US commercial real estate prices if I see my last number, it was forty forty four and higher than

the previous peak. And when Janet E. Allen and those people talked about the problem in bubble in the commercial real estate, well, it is actually there. And part of that I think comes from the fact that it's overreliance

on monetary policy. If we switch from reliance and monetory policy to fiscal policy, fiscal policy means government will be borrowing more money, so the excess savings that have to go to existing assets will be absorbed by the government, and so there will be less chance of having another bubble. So you worry about bubbles right now? Or how worried about bubbles are you right now? If you look and say the US economy, well, share prices and commercial real

estate prices worry something. In my view, yes, I am somewhat worried, and many companies US come and he is also used this very low and interest environment to buy back their shares. Right, That's why the corporate that is so much higher buying back shares still keeps money in the financial sector. It just changes the the nature of the liabilities from equity to bonds. But the money is

still in the financial sector. And so people who received that payment, who I, still want to invest in something, and so that could still end up creating more bibbles while weaken in the corporate balance sheets. So you've identified one of the key sort of themes, which is that in all these post post balance sheet recession periods, there's this reluctance to lean heavily on fiscal policy and over

alliance on monetary policy. You talked about the fits and starts of fiscal stimulus in Japan after and how that setback. You talk about the bubbles that we've seen here or that maybe brewing here in the US because we've relied

so much on monetary policy. I'm curious in your conversations that you've had over the years with policy makers, investors, and so on, what is it, What is it that explains this sort of like innate reluctance or distrust to add public debt and it doesn't seem like it almost doesn't seem to matter what period of the cycle we're in. You could go back to two thousand nine. Even then Bernanke was talking about the need to eventually take care

of the public debt or fiscal consolidation. Why this pervasive view among policy makers everywhere, including those at the I, m F and so forth, UH to be very reluctant about public spending and to be overreliant on lower interest rates. I think that comes from the fact that all the economics we learn in universities based on this key premise that privacyctis maximizing fits. But for private sector to be

maximizing profits, two conditions who have to be met. One is that they have clean balance sheets and the other is that they are flooded with interesting investment opportunities. In that world, if government comes in and borrow tries to borrow, you end up crowding our private sector investments, pushes up interest rates, maybe miss allocate resources because government is not very good at uh spending money. It's all negative, very

few positives. And that world where households sectors saving money, but corporate sector was very eagerly borrowing money to expand factories and so forth. That world did exist all the way to maybe around eighties in the United States and Japan, maybe into the mid nineties. Our textbook economics is based on that period where there's very strong demand for private funds from the private sector and household sectors saving companies

are borrowing. In that world, I fully agree with them that ciscal policies should be discouraged and it should be handled with monetary policy, because monety works. Policy works very well when there are lots of people who want who's out there willing to borrow money. In that case, when central bank raises rates a lower rate, they will have immediate impact on the economy. But we are not in that world anymore. Households are still saving money, but corporates

are not borrowing money. And once you enter this different stage, we have to change our mindset completely that we don't have borrowers there save us us still there, but the borrowers have absented themselves. But this is so hard for economy is who are trained in this whole notion. The private sector is always maximizing profits to accept and so they kept on saying, well, if you do, how more

money there is stimulus. Let's say, go to helicopter money on negative interest rate, so deepen the negative interest is something got to happen that they're still working on this premise that that we are still in the textbook world. We're privacy, the PLANTI privacy, the borrowers out there, but we are not in that world anymore. But no one has told them that in this this different world, we have to think differently except you. You wrote the book,

The Holy Grail of Macroeconomics. It's we Tracy and I read. Why hasn't everyone else read it? Well? Maybe uh, I didn't work hard enough. Hopefully, hopefully they're listening to the podcast. Wait, I have I have one more question. So I mentioned in the intro that the idea that fiscal is the new monetary policy seems to be gaining some ground. And you just hear policymaker after policymaker talk about the need for fiscal stimulus, but rarely do they actually get into

detail about what that call stimulus could be. Does it matter to you in your model what type of fiscal expenditure government's actually use, like corporate tax cuts, infrastructure spending. Is there a difference to you? Yes, there is You're right in pointing out that a lot of people are not talking about fiscal stimulus because they argue that multi policy has it had reached its limits zero, low, abound.

You know that kind of talk, And what I find it wanting is that they should not talk about fiscal stimulus just because interestrates and zero they have. They should really explain to the people why interestrates a zero to begin with, because that's the key. Interestates a zero because

people are not borrowing money. But if in the national economy someone is saving money, someone has to borrow money to keep the economy going, then what do you do with the private sector's not borrowing money, the public sector will have to borrow money to keep the economy going.

That part of the explanation hasn't come from Mr Powell, of Mr Draggy, or even from uh MS LA Guarde, even though they all three are now talking about the importance of fiscal stimulus, and was the September eighteen talk German Powell even said fiscal policy is more powerful than monitor policy. The key reason why fiscal stimulus is needed is not given in my view that they are actually lack of private sector borrowers. So I like to see that uh made clear first and the second point your

point about the nature of fiscal stimulus. It matters a lot in this instance because if you give them a people who are repairing balance sheets a tax cut, they were used to attack cut to pay down debt. So in that case GDP will not be affected. So in this type of situation, I'm afraid one has to use public works government actually spending and creating demand to make sure that our income level is maintained. And only by keep maintaining the income level, people have resources to pay

down there and repair their balance sheets. And so during this type of recessions, government has to be the borrow of last resort and the spender of last resort. Now, this think takes a long time to repair the balance repair takes in many years. Japan took nearly twenty years,

although he didn't have to be twenty. Uh. Once we know that in advance, then we should really put together, for example, an independent commission, put our bright best and brightest people in it and let them trying to find out um those public works projects that earns the very low rate of return that we see on government bounds today. For example, if it's ten year treasuries are yielding one

point eleven percent les. So today, if we can find a public works project that earns the social rate of returned about one by all means we should do it. Because those projects will be self enancing. You will not be a burden on our future taxpayers. And that's the way we should be thinking. And unfortunately, in Japan back twenty years ago or after two or eight, people needed riscal stimulus right away because otherwise it would be in the one thousand, nine hundred and seven cycle. So they

had to do all sorts of things very quickly. Some of them were not very well sought out, and that's why you end up bridges to nowhere, roads to nowhere. If we knew in advance that these things can take a long time. Of course, some stop gap measures are necessary, but we should have set up some sort of independent commission to make sure that we pick good projects that are self enancing at these ridiculously low government bond yields,

then everything will be sustainable. Well, Richard, I really don't understand the excuse that people have, because I thought you're writing has always been very clear. But nonetheless, I hope people listen to this podcast and continue to read your work because it makes a lot of sense to me. And as you point out, these issues aren't going away. Large private sector debt loads still exist in the US.

There's uh bubbles in the US. There's a unwillingness to borrow that we're obviously seeing in Europe, and that's going to scar the region for a long time because of the double dip nature. As you said, So hopefully we uh, we've done some good here. But I really appreciate you coming out of always been a big fan of your work. Oh, thank you very much. Thanks so much, Richard. That was great. So Joe, I don't have to ask you. I can

tell that you enjoyed that conversation. I love Richard. Like I said, I read his book in I was like, oh, this makes sense, and you called it the Holy Grill of mecro economics, and it might seem you know, all you were saying is that Japan has a lot of lessons for the rest of the world. That's what you're saying. You look at Japan and you could see what how the economy works in a way that elsewhere could be applied.

But there hasn't been much application of it since then. Yeah, And one thing I really like about his whole theory is the behavioral aspect of it all, the idea of this debt trauma, because you don't often see that in traditional economics textbooks. People don't talk about what past experience actually means to the way economics is supposed to work.

And of course if people have a bad experience, then they might not act rationally in the future, so they might not borrow money even if interest rates are really low or below zero even totally. I think, Uh, there's a lot of economists have this sort of like overly mechanical view of how the economy is supposed to work and how firms maximize profits or households maximize incomes, and if you have x opportunity to invest and your cost of capitalist below X, then you're just going to do it.

But that of course ignores, as you say, and as Richard pointed out, how one's historical experience may inform in a very significant degree, to a significant degree, how you

behave Yeah, exactly. Well. One other thing that really struck me is it's kind of interesting to me how Coup has this sort of middle ground I think between sort of mainstream macro on one end and mm T on the other end, because in the MMT framework it's almost you should always rely on fiscal policymakers and that deficits are never really a problem extent except to the extent that they cause inflation due to uh an economy at maximum potential, where it's clear that he is does not

quite buy this view. So he like more sees the sort of sectoral balances view in a way that I think mainstream hasn't come around too. But he still thinks that in normal times, the basic idea that the central bank should do demand management and the government it's dangerous to run up debt is something he agrees. He just doesn't think these are normal times for developed economies right. Well.

He argues that eventually governments should concentrate on fixing their own balance sheets, but only after they've sort of substituted the private sector and stepped in and done a bunch of stuff, and in a way that I think would probably happen decades after the fact anyway. Um, but it is very different to MMT in that respect. You're right, it is a nice middle ground, radical but middle This has been another episode of the All Thoughts podcast. I'm

Tracy Alloway. You can follow me on Twitter at Tracy Alloway, and I'm Joe Wisenthal. You could follow me on Twitter at the Stalwarts, and be sure to follow our producer on Twitter, Laura Carlson. She's at Laura M. Carlson. And check out all the Bloomberg podcasts on Twitter at the handle at podcasts. Thanks for listening.