The debt's not going up at 2% or 3%. The debt's going up 8 n 10% or or more. The US had a $1 trillion baseline budget deficit, a trillion dollars per year deficit for fiscal 2020 pre- pandemic. The Congress threw $3 trillion of emergency aid on top of that. And I'm not even criticizing all those programs. I mean, the the payroll protection plan loans, the extended unemployment benefits, the increased unemployment benefits. Imagine where we'd be if we hadn't done that. But that aside, debt


is debt. They piled $3 trillion on top. Now, this is going to take the US debt to GDP ratio up to 135%. It was 106% when Donald Trump was sworn in. It's close to 130% today. Because remember, you got two things going on. It's a debt debt to GDP. So debt's your numerator and GDP is your denominator, right? Well, what happened? Well, the denominator shrank. This got smaller and this got bigger. So what happens to the ratio? It blows up. So now it's 135%. If you get the laws of economics right,


which is not easy because most economists don't, but if you get if you get them right, um it's really a reflection of of human nature. I mean what is an economy other than all the people in the economy starting businesses, buying, selling, traveling, providing goods and services etc. So um human nature doesn't change at least it hasn't changed much in the last 100,000 years. So the fundamental laws of economics don't change either uh but circumstances change, facts change and


that's important. Now to answer your question Curry um you're right there is um a school of thought uh growing one and an influential one that that doesn't matter. I was like, "Well, wait a second." Um, so what? So the debt to GDP ratio went to 135%. Which it did. Who cares? What's wrong with it? 180%. We got issues. We got problems. Print up the money and monetize the debt and uh spend it and keep going. What what is the problem? Uh this this comes under the banner of something called modern


monetary theory, MMT. Uh it's flawed, it's wrong, but it's it's got its followers, and those followers are now in the White House because um one of the things Joe Biden had to do to get elected was to make peace with the Bernie Sanders wing of the Democratic Party. They take the view that if the Treasury didn't spend the money, how would anybody make any money? That's ridiculous, but that's what they say. They say, "When the Treasury spends money, what do they do?" Well, they they


um build aircraft. They have benefit programs. They have government contracts. They do whatever they do. But when the treasury gives you the money, you take the money and you spend it on somebody else. Goods and services, go out to dinner, have subcontractors, whatever it might be. That that's the real source of money. They also take the Treasury and the Fed and they merge them. Now, that's not legally the case. The Treasury and the Fed are separate institutions. The Treasury is just part


of the executive branch. Uh and the Fed is an independent agency. Uh and the Federal Reserve Banks are actually privately owned. Uh that a lot of people know. Some people know that, some people don't, but the the Federal Reserve banks are privately owned by banks in the districts or City Bank, Bank of America, etc. Uh so they're completely separate. But but the theorists ignore that and say no. Um the Treasury needs to spend money because that's how the economy grows and the Fed can monetize the debt.


So you spend the money you don't have. You borrow to cover it. You issue bonds to cover the borrowing. And if the market wants to buy the bonds, fine. But if not, the Fed can buy them and put them away on the balance sheet, wait 30 years, and collect the money. What's the problem? What's the issue? Who worries about the debt to GDP ratio? It's somewhat of a statistical summary. But why should that block the use of money to fix our challenges, which include free health care, free child care, free


tuition, forgiveness of student loans? That's a $1.6 trillion bill, by the way. And look, ordinary readers and investors, there's no reason they should understand all this material. This is completely insider baseball. You have to be a nerd like me to sort of stay current with it, but it's all approaching. What that indicates is we're going to test the raginhard hypothesis. Now let me just take a moment to clarify that up to a specific debt to GDP ratio there's a Keynesian multiplier greater than one. So the


traditional example is the UK was in a slump before the rest of the globe. They had been struck fairly hard before the Wall Street crash. People weren't consuming, they were saving. It's a liquidity trap. So if you obtain money, you pay it on liabilities. When you don't have any liabilities, you place it in the bank. Whatever you do, you don't spend it. You stockpile cash. Or people were purchasing gold. They were accused of hoarding gold, etc. But what they weren't doing was spending. And there


was a shortage of aggregate demand. And the bank were not issuing loans. So Cain said, "Well, if ordinary people won't do it, the government must. The government can borrow. The government can spend." And what they uncovered was that if you borrow a dollar and spend a dollar, you can generate $1.50 of GDP. Now, there's a separate discussion as to whether that's actually additional or whether you're just pulling growth ahead. But even if you're pulling growth ahead, maybe that's what


you need to do when you're in a liquidity trap. But there's a complication. He called it the general theory. The general theory of employment, interest, and money, but it was actually a specific theory. I think he had a little Einstein in mind because of the general theory of relativity, but it's actually a specific theory, which means it's a theory that functions in a set of circumstances, a set of conditions. The conditions where it functions are when you're either in a downturn or just emerging from one. You


have surplus capacity in labor and industrial capacity and you have very little debt. In those conditions, you can borrow a dollar, spend a dollar, and get more than a dollar GDP. The issue is that extra GDP you obtain for the borrowing and spending declines as the debt to GDP ratio increases. What Reinhardt and Ragafund covered is that at 90% you pass through the looking glass. Your payoff is now less than a dollar. You borrow a dollar, you spend a dollar, and you only get 90 cents of GDP or 95


etc. So now, not only are you not receiving your dollar's value for the borrowed dollar or something greater like you did at lower levels, you're getting less than a dollar. So now what's occurring? You're borrowing a dollar, you're spending a dollar, you're not receiving a dollar of GDP, but you're gaining a dollar of debt, which means your debt to GDP ratio is rising, and the 90% is becoming worse. And I just stated the United States is at 135%. So here are your two competing


frameworks. There's the Keynesian multiplier and generating aggregate demand with government debt and the Reinhardt ro of perspective. More than a hypothesis, I would say powerful evidence that beyond 90% it doesn't function. It drops to less than one. On the one hand, you have my colleagues Stephanie Kelton and Bernie Sanders and Kla Harris and the modern monetary theorists who say, "No, it's all fine. How could you get growth if you didn't spend money through the government?


These theories don't align at all. We're going to find out which ones function. I'll reveal the answer, which is that Reinhardt and Ragaf have it correct. They had it correct up to a point. Reinhardt and Ragaf discovered that critical threshold, whether you want to call it tipping point or phase transition, which physicists call it. The modern monetary theorists believe the opposite. And we're going to find out. But what it indicates if Reinhardt and Raga were correct and Keynes was


correct is that the more you borrow it's actually a headwind to growth. Now up to the threshold you got more and more and more. At a low level you got more but then it declined but it's like any diminishing marginal return. The curve begins very steeply. You get a lot of payoff. Then it levels out. Then it declines, but it's still positive. But at some point, it goes below the zero line and your marginal return is negative. And that's where we are. If your priority right now is not chasing


returns, but protecting what took decades to build, I've put together a private road map linked below. If your priority right now is not chasing returns, but protecting what took decades to build, I've put together a private road map linked below. O.