Mohamed El-Erian: America Is Exporting Its Debt Crisis

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And this seems to have come about quite suddenly. What was the path, the series of decisions or events that took us to this apparent decline in American credit worthiness? It's a global phenomenon. And I'm surprised when I hear people say they're surprised that it has happened so quickly, because the drivers behind it have been evident for a long time. Think of the four major drivers. The first and most important one, and the one that's least talked about, is there's a fundamental imbalance between those who want to buy long-term bonds and those who need to sell long-term bonds. So governments, and increasingly the hyperscalers, the tech company, are major issuers of bonds. They need funding. On the other side, you're traditional, reliable buyers. I'm talking here about China that wants to buy fewer U.S. treasuries for geopolitical reasons, Norway that announced it was reducing its holdings, Japan that has things at home that it needs to deal with and cannot buy as much, and, of course, the Gulf countries that are spending more money at home and, in fact, are no longer buyers. They're now sellers of bonds. So you have this fundamental imbalance that has been well telegraphed. The second thing, and Richard can speak to this. The third thing, and Richard can speak to that, is the uncertainty about the endpoint as to what's happening in the Middle East and, therefore, what's going to happen to oil. I can argue for an oil price of $120. I can argue for an oil price of $80. I just don't know which is more likely. The third issue is inflation and the fact that with governments having difficulty on the fiscal side, central banks are going to have to hike more. And finally, the biggest players in this market have become the hedge funds. So it tends to overshoot on the way up, and it will overshoot at some point on the way down, but not for a while. What, Mohamed, do you think the consequences are going to be in the U.S. domestic economy of all of this? The U.S. is carrying an enormous amount of debt. Does it have to take out more debt in order to service the current debt? What are its options? Where do you think they're going to come out? So there are economic, social, and political consequences. The economic one is that the interest rate-sensitive sectors are being hit hard. It's housing. People find mortgages more expensive. If you have to refinance your mortgage, it's a different world right now. And it adds to the affordability pressure, which is real. The second is car loans. People don't think about this a lot, but many Americans fund their cars either through a lease or through a bank loan, and that price is going up. So what's going to happen is you're going to hit these traditional sectors. hard to make room for the hyperscalers and for government to be able to raise the funding they need. They are interest rate insensitive. So it's an interest rate sensitive element. The social element is this hits the low-income household the hardest. And this notion of a K economy, where the rich are doing better and the less fortunate are doing worse, is going to continue, which then has a political aspect to it. The U.S. bond market is the deepest in the world. And to hear the U.S. Treasury Secretary wanting to intervene in that market to artificially lower the yields just gives you a sense of how much of a political issue this is, as well as an economic and social issue. But Mohammed, what you're describing is, let's say, a sort of economic and political bind. And there is no obvious route out of it at the moment. And obviously, there are governments sort of struggling. If you look at France and you look at the U.K., despite the sort of projection in the U.K. with the new prime minister of a feel-good factor, there's no apparent solution being offered. You've mentioned the need for maybe a cooperative approach to the problem. But it seems that we're miles away from that at the moment. And so much depends on what the Trump administration chooses to do next. Is there an obvious route that you would recommend? And even if you have that, how long is it going to take to unlock this situation and find the sort of sweet spot that is going to improve outlooks for national economies? Those are great questions. And let me deal with them sequentially. First, the international effects. And secondly, what about the U.S.? What should it do? You know, back in 1971, the Treasury Secretary in the U.S. famously said, our dollar, your problem. Today, the U.S. is basically saying, our yields, your problem. And your problem, you mentioned the U.K., you mentioned France. I would add Japan. You have three G7 economies that are very vulnerable to the yield instability that the U.S. is exporting. And it's important to stress, these are G7 economies. These are economies at the core of the global system. These are not the peripheral economies. These are the core economies. You're right, Richard, to raise the global issue. As to where to solve it, I like the positive spin on this. The U.S. is lucky to have financial markets that are willing to fund a massive innovation that has the potential, if we can risk manage the bad aspect, has the potential of delivering higher productivity, higher growth. The U.S. is unique in having these capital markets. But you have to make room for it. There's two ways of making room for it. One, you leave it to the market. And the market, in making room for it, will hit the most vulnerable segments of your society. And in the process, will turn a financial and economic issue into a social and political issue. The other way is you smartly make room for it. And that speaks to the U.S. fiscal policy. It speaks to a 6% deficit at a time when the U.S. has full employment. This is a time for fiscal containment. Otherwise, we're going to get a crowding out that's going to be really problematic. I was taught early on in my career in markets, what you think should happen matters less than what you think will happen. So what will happen? We're not going to have the sort of fiscal adjustment we need. It's not going to come for a few years. And we're going to have a crowding out effect that's going to polarize the country even more. And I'm sad to say that, but that's the most likely outcome. And that should be, and that should be a very clear message to other countries. Don't wait for the U.S. to sort itself out because it has a longer runway to be fiscally irresponsible. It's the global currency. It has the biggest financial markets. So you will continue to import bond market instability and you have to deal with it at home. The cooperative approach is of course the best approach, but Richard, I don't see it happening right now. I see the middle powers losing trust. investment flows into the U.S. is investment in the private sector is at a record high. Investment in government bonds is coming down really quickly. And the rest of the world, to quote again my daughter, is saying we are willing to go long U.S. innovation, long U.S. private sector entrepreneurship. We just want to short the mess, the sovereign mess. That is how they see it. So yes, 80% of it is good. It is fundamentally good. You can either look at what I call small AI, what it can do to health, what it can do to education. It can fundamentally transform both and has a very positive social impact. Or you can look at big AI, which can fundamentally move the productivity needle and therefore the growth needle. Are there risks to be managed? Absolutely. And we're seeing them very clearly. There are risks to be managed. And they can be managed. A friend of mine, puts it really succinctly. He says, we are witnessing not just the industrial revolution, which was a notion of a general purpose technology coming in and changing how things are done. Electricity is a general purpose technology. But also the enlightenment. Because AI is not just a GPT, a general purpose technology. It's also an IMI, an invention machine for invention. It's like bringing in the microscope and suddenly you're seeing new things. That you've never seen before. So this is really transformational, but we need to manage it. And managing the 20% downside is critical while at the same time unleashing it. You know, the US tends to focus on, let's unleash the 80% and the other stuff will take care of itself. Go to Brussels, they want to regulate for the 20% and they forget about the 80%. You've got to embrace both. And if we embrace both, I think we can turn the legacy issue, turn the legacy issues around. Well, I mean, one, I think, crucial aspect of the AI revolution or whatever you like to call it, and you've described it so beautifully, seems to me, I mean, now we look through the geopolitical optic, is the relationship with China on this issue. Now, we've just seen Xi in Washington, strong on visuals, empty on content. Or at least that's my opinion. But the mere fact. the fact of the meeting and the fact that these two, you know, competing, but also conflicting economies can meet, you know, does sound the note of optimism. And it seems to me that the AI revolution is intimately connected with what happens in this economic relationship between China and the US. That will largely dictate the global shape of the AI revolution. And without that arrangement, the framework is lacking. And I think at the moment, the nervousness about AI is it has no framework. It hasn't reached that point of development where it desperately needs it. You're a sort of economic commentator, but I mean, you can't avoid geopolitical judgment. How is that relationship likely, in your opinion, to evolve? You know, Richard, you can speak to that much better than I can. Well, I'm so concerned about it because of the negative aspects of the relationship seem so predominant. And, you know, I'm actually very vociferous on that issue as regards the UK's relationship with China. On the other hand, I would like to feel that there is a sweet spot somewhere that can be established without getting into, you know, direct confrontation and conflict. But at the moment, it doesn't seem that the United States in particular is working hard to achieve that. Yeah, I worry that this sweet spot you talk about is what I would call an unstable equilibrium, that it's there simply because both countries wanted there but don't trust each other. The economists had a wonderful phrase for it called strategic stalemate. You get to a strategic stalemate where you're in the dependencies of both your strengths and your weaknesses. So they can either be weapons or they can be vulnerabilities. And you just freeze there. But you know, deep inside, you being U.S. and China, that whoever wins, quote unquote, the AGI, the Australia Agreement, or the artificial general intelligence race, will have not only an economic advantage, but a fundamental national security advantage. I think the reality is both countries are going to continue doing what they're doing. They're using completely different models. So it's going to be interesting to see which models turn. And at some point, you would hope, just like happened in the nuclear world, that there would be an agreement. But for now, I see, you know, let's first build domestic coalitions. And then let's build a nuclear coalition. Let's build coalitions among allies before we try to build a coalition with an adversary. So it's going to be sequential. And hopefully, we'll get there. And the question to you, Richard, is you saw it happen with nuclear weapons. It was the same sequence. Do you think it happens here? Or do you think it's just too far to happen? It's going too fast here for it to happen? Well, if you look at the later stages of the Cold War, you had the SALT agreement. You had the MBFR talks. I mean, you had. You had a whole range of discussions and relationships which ultimately were designed to, let's say, mitigate the risk of a thermonuclear war. And they worked reasonably successfully. And, I mean, funny enough, I was just writing something yesterday in which I said that, you know, the model for AI, if you take a longer-term view, has to be some sort of maybe disarmament negotiations. It's the wrong. It's the wrong phrase to describe them. But some sort of high-level talks which develop over time into not necessarily a balanced relationship, but a relationship which avoids crisis. I mean, I guess I'm looking at a minimalist outcome, but something that. The motivation on both sides is that humanity doesn't destroy itself. I'm sorry to put it so fundamentally as that. And I don't think the Chinese view of that is different from the American view. But on the other hand, finding that spot, particularly if you're in a crisis over, let's say, Taiwan, makes it that much more difficult. I mean, game theory, I always find very illuminating when it comes to things like this. You know, if you think of the three conditions you need, you have two of them. One, you just stated, a common objective. And I think both countries will buy into the common objective at some point. The two is the perception that you both win. And cooperative outcomes don't happen when. One side believes that they're losing in a big way. You could probably formulate it as both sides win. The third one is the one I worry about, is trust. And you brought Taiwan into this. You need trust for it to solve. So you have two of the three conditions. And the question is, how do you get that third condition? And like you, I think it's going to take time. And, you know, we had a modicum of trust with the Soviet Union in that we expected them not to do certain things. Okay, that was a limited concept. But it actually. It really served its purpose. And if you look at something like the Biological and Chemical Weapons Agreement, there were violations, but essentially, it has, over time, delivered what it was intended to do. So there are models out there which meet your three criteria, which I think is, you know, is fascinating. Those three criteria, Mohamed, bear transference to the Gulf, but not necessarily in an optimistic way. They don't seem to be present. But I just wanted to get you. Your views, Mohamed, on a couple of things there. First of all, going back to your comment on structural reforms and structural damage that we're now seeing, how deep do you think the structural damage is going to be to the Gulf economies? You know, they've ridden out some extraordinary hits, including the case of Kuwait being wiped off the map. They've ridden through COVID, and they've ridden through prolonged tension in the region. What do you think this time they're going to be forcibly reshaped? And in which case, how might they look when they come through this? I'll speak to the economic side. They will look much more diversified in terms of the supply chains, in terms of the assets, in terms of their resilience. They're going to be different. I think they've realized that they need to be both more resilient and more agile. And the good thing about the GCC is they actually have the resources to make that happen. So I see the region bouncing back, but at different speeds. The UAE will bounce back really quickly. And it will be much more diversified, much more able to absorb shocks than it has before. Others will be slower, either because they have fewer resources or because they don't adjust very quickly anyway. It's not in their DNA to adjust quickly. I think what's going to happen is that we're going to see a lot of change. I think we're going to see a lot of change. And that's going to happen with the rest of the world. And there's a very interesting debate going on in the U.S. right now. Should it ban diesel exports? Because we've learned two big things in terms of where the adaptation is in the global economy. Why is it that oil prices didn't go to $1.50? Because it turns out we had a swing producer and a swing consumer that we didn't know much about. The swing consumer was China. China was able to cut its imports. plus by four. 40% to allow for other countries to get oil at prices that didn't go to $1.50. The U.S. increased the taps, if you like, opened up the taps and became a major exporter to the rest of the world. So you saw contracts being reformulated. And now we have a debate in the U.S. because of not the price of crude, but the price of refined products. You know, I never thought my whole life that the first price I would look at every morning is diesel. But I look at diesel now because diesel is something we don't appreciate enough. It has, it's an input to virtually anything we buy in a store. It impacts the prices and it impacts the speed with which we get things. And its price is at record level in the U.K., in the U.S. And that is having a big impact. So we have a debate in the U.S. right now in the administration. Should the U.S. ban diesel exports? And the argument is very simple. We have it. Let's keep it. But against that, you've just established new contracts. And do you really want to be the unreliable supplier again? The GCC comes back quickly. But this whole rewiring that's happening, it's not even clear that that rewiring is stable. And that's why I stress. This is not just uncertain. This is structural uncertainty. When the very structure of the global economy, of global finance, is unstable. And some economies are going to be much less resilient in that period of instability. Nonetheless, they're going to have to make plans. And they're going to have to make estimates around costs. If you combine the gas crisis, perhaps as we go into North Atlantic, you're going to have to make estimates around costs. You're going to have to make estimates around costs. The winter, the diesel crisis there. Where do you see us being in a couple of months? Let's say three months, next quarter, in terms of the ability of governments. I'm thinking particularly the Western governments, maybe the G7 governments that you were mentioning, in meeting our energy requirements. Are we simply going to have to reduce consumption? Or do you think that there will be a cooling in the market that restores manageable prices? There will be a natural amount of what's going to happen. It's called demand destruction. Prices are such that certain activities are going to change. Do we need on top a, let me be extreme, rationing? I think it will differ from country to country. I think the realization is now happening that we need to focus on refined products. The problem is refined products. It's not crude. It's refined products. And that you cannot solve quickly. Every country is going to have to decide, do you want to leave it to the market? Or, and then you can protect your most vulnerable segment of the population. Or, do you want to do rationing? It's a tough decision. And that's why I go back and say, remember the three things you need. If I offer you an uncertain world, and you start building different scenarios, and you have to get used to scenario analyses, and forget about this comforting probability of distribution, what we call a bell curve in normal distribution, which is a very high likelihood of a certain outcome, and thin tails. No, you have a multimodal world where there's lots of possible outcomes. Well, you need resilience to be able to navigate this. You need agility to move quickly. But critically, John, you need optionality. You need the ability to think, how am I going to react in different scenarios? I think the example of the global financial crisis, if you read the records of the global financial crisis, the firm I was working at predicted the crisis. And the reason why that is the history, because the firm I was working at made money for its clients. We navigated it well. And its founder, Bill Gross, and I have spent almost 20 years saying, that's not true. We didn't predict anything at all. In fact, we had the completely wrong prediction. The weekend before Lehman Brothers collapsed and the crisis really took off, we were all sitting together in a room with three scenarios on the board. Scenario one, Lehman will not default. Scenario two, Lehman defaults in an orderly fashion. Scenario three, Lehman defaults in a disorderly fashion. And we asked the people in the room to attribute probabilities to the three scenarios. Scenario one, Lehman will not default, got 85% probability. So the notion that we predicted the crisis was completely wrong. In fact, scenario one and scenario two, neither of which happened, added up to 97%. And we only gave 3% to what actually happened. So why is it? The reason that people think we predicted it is because we had an action plan for every single scenario. We didn't fall into the trap of saying, this is a low-probability scenario, let's not have an action plan. So the minute we realized very late on Sunday that it was going to be scenario three, we knew which lawyer was going to bring the form of failure in order to reestablish all our swap positions. We knew exactly who was going to do what when. And I think this is important, is you need this optionality mindset. To say, I don't know, this is a fundamentally uncertain world. And I have to be open to doing different things. And yes, am I going to spend time on scenarios that are not going to happen? Yes, I am. But that's much better than a scenario that actually does happen and I have no plan for it whatsoever. It's a very strong point on optionality, Mohamed. And not least, it helps guard against optimism bias. Absolutely. And denial. And reframing. And all the behavioral traps we fall into when we're taken out of our comfort zone. But that sort of. Optionality is exactly what governments don't do. I mean, you know, a private company may do it in a crisis. They're so constrained by their political circumstances. I'm not going to. You know, if you take the UK at the moment, that sort of optionality isn't possible for the government because of the division that you get across, you know, the party. And then it's beholden to bits of the party which prevent optionality. Look, Mohamed, one of the things that. I think I've mentioned this to you before. But one of the things that has fundamentally changed over time that doesn't get much discussed is the advantages to the United States economy of being a truly significant exporter of energy now. And the benefit of that to the US economy. We're always, as it were, you know, thinking about the downsides and the cost and the fragility of the president's political position coming up to the midterms. But on the other hand, if you, as it were, pull back and look at the circumstances for the US economy, there must be an aspect of that which taking a longer-term view is going to be very beneficial because it sort of detaches the US from having to be so fundamentally focused on Middle Eastern politics. I'm thinking of the geopolitical. But I'm also thinking of the economic advantages. Can you sort of talk a little bit about that perspective? You're absolutely right. You know, in the old world of globalization, where we all bought into this unifying theme that the ever-closer integration of trade, of investment would result in a bigger pie. And unfortunately, we didn't pay enough attention to the distributional effects. But in that old world, you want it to be Singapore. You want to be small. You want to be very dynamic. And you want to be able to turbocharge your domestic growth by taking advantage of the global economy. In this new world of fragmentation, of energy uncertainty, of changing trading relationships, of tariff volatility, you want to be the US. And you want to be the US because first, you have a huge domestic market. Second, you're energy sufficient. In fact, you're energy export, as you pointed out, Richard. And thirdly, you have a very large domestic market. You have a very entrepreneurial private sector. The characteristics of how well you do have changed. Open small economies that in the old model were viewed as the ones most likely to develop quickly. Korea, Taiwan, Hong Kong, Singapore. Now, if you want to bet on the big countries with the big domestic markets, especially if they are energy self-sufficient, Brazil is another example of a country that can navigate this world well if it gets its domestic politics sorted out. Just following up on that analysis, the one area where it seems to me, you know, China, we've already discussed its importance as a partner and a player. But on the other hand, it has completely failed to restructure its internal economy. It seems to be, you know, frozen when it comes to reform. And it's driven, by an external market, not a domestic market. It seems politically, it's unable to deliver that change because it would create such a fundamental upheaval in terms of, you know, the shape of its politics, the shape of Chinese communist society. And I think that word communist is relevant there. That seems to me such a fundamentally important point when you're looking at these issues and how they're going to play out in the future. I mean, I would love to hear your comments analysis of that aspect of China too. I would say unwilling rather than unable, unwilling. Their growth model is weaker and weaker, but it's still potent. Why? Because they're able to flood some countries with exports. I'll give you two numbers. In 2025, Chinese exports to the US were down 25%. In 2025, Chinese exports surged to the rest of the world, and they recorded a record trade surplus of 1.2 trillion. Where did the exports go? They went to Europe and they went to Asian countries. And there was a wonderful headline in one of the German newspapers about the outcome of the recent election, where the extreme right did extremely well. And it said, China shock 2.0 delivers political earthquake in Germany. And what you're seeing is that. Is that China is de-industrializing in an accelerated fashion the manufacturing sector in Germany. So there's a limit to the safety valve that China is using right now, which is to run exports much hotter in order to compensate, as you rightly say, Richard, for domestic demand that's not there. That has a limit. Believe me, Europe cannot tolerate what's going on right now. And China needs to move. Is it able to move? It is able to move. But as you rightly pointed out, it has political consequences. They're able to restructure their economy to rely more on domestic growth. They're just unwilling to do so right now. And they don't feel the urgency because they've been able to use the export sector as an escape valve over and over again. Talking earlier, and this really resonates, about move away from multilateralism and move away from an economic order, which took multilateralism as a given to a global approach to trade, global approach to finance. Presumably, in that scenario, in that new normal, as you've called it, vulnerability to shocks or ability to deal with shocks, such as default economic failure, goes down. And countries are simply exposed and their dependents suffer accordingly. Is there any way that the risk that that entails can be contained? Is that what minilateralism does? Is it something that private money does? How do we build back resilience against those big shocks? I often joke with my two co-authors of the book you mentioned at the beginning of our conversation, Permacrisis. It came out too early. It came out in 2023. Permacrisis, the book has three sections to it. One is understand that we're in a world that is subject to more frequent and more violent shocks. Two is link that to the structural uncertainties that we talked about and show how uneven they are and how they are a source, not just of volatility, but of dispersion. And three, answer how do we make things better? Again, the engineering solution is not hard. The engineering solution is what's called pooled insurance. If you're facing more and more shocks, then you sit around and say, what sort of insurance do we have? Let's pool our insurance because these shocks are hitting us unevenly. And let's collaborate to manage that. In global order terms, it doesn't mean a return to globalization. That's not going to happen. It means the interim step of a managed globalization, light. So notice there's managed and there's light that are introduced. So globalization light recognizes that the political environment is not conducive right now to going back to globalization. And the managed part is we've got to manage whatever pooled insurance mechanisms we have better on there. If we fail to do this, we go to fragmentation. And fragmentation increases structural uncertainty. So it goes back to the beginning of this conversation. How do you stop at this managed globalization light? It can either be, and we saw it last week was the UN week in New York. And there were three visions put forward, the US vision. This global order is going to continue to be a US-led global order, but with an important qualification. The US will pursue its own objectives to a much greater extent than it did before. But it's still US-led. And the US can prove to be the conductor, if you like, to the global orchestra. The second proposal was by China. China will reinforce multilateralism and will become the guardian of multilateralism. That's what China was offering to the rest of the world. And then the third one, and it started with an op-ed by the leaders of the EU, Canada, Kenya, and Brazil, was the middle power alternative. It's the middle power of flexible coalitions of the willing that come together and solve these issues. These are the three models. And if none of them hold, and all three of them have issues, then we go to fragmentation. That's the world we're looking at right now. It is solvable. It is solvable. There's a notion that maybe we need something like the global financial crisis. You remember, the G20 and the G7 didn't really operate the way it did until April of 2009, with the G20 summit in London, chaired by Prime Minister Gordon Brown. And they came together, the world came together, to address something that could have resulted in the Great Depression. The question is, what is the catalyst for this managed globalization light model? And I hope it's not a crisis. Can economists and finance ministers, for example, succeed where politicians have failed in creating that unity of purpose? No, they need their political leaders. You know, a lot has been written about the summit of April 2009. They were talking about the problems, and the French president complained, there is no solution. And then President Obama said, actually, Gordon has a solution. And Gordon, you know, had his economist hat on from this time at the Chancellor's Office, this Chancellor. But you had the political avenue, if you like. Without the political masters enabling this, the ministers and the governors can't do it. They can coordinate at the edges, and the central banks do a great job of doing that. The central banks coordinate really, really well. The ministries don't do so well, but the central banks do really well. But if you look at this problem through the eyes of Europe, I'm thinking specifically of the EU. The one organization that should go to the EU is the European Union. The European Union and the European Union should go to the European Union. And if you look at this problem, you should find it's relatively easy given its internal structures, is the European Union, the Commission. And it's completely fading amongst itself to reach any resolution of the problem that you've articulated. And I find that pretty depressing. It's the one part of the world which should have all the aptitude for behaving in a sensible way. But the disintegration amongst the national objectives is pretty much infinite at the moment. It is. And you know, there's this notion that Europe ends up by doing the right thing, but needs a crisis to get there. I hope that that doesn't repeat. Mohamed, on that, the final question will be the one that we ask all our guests, which is what is the one decision or development that you're going to be watching? And perhaps particularly the one that might either stabilize the global bond markets or the one that might stabilize oil prices? So I think the solution comes from the tech side. The tech companies, they're not going to be the ones that do the work. The tech companies, the frontier labs are going through the same recognition that others have gone through, which is you do your own thing and then suddenly you wake up and realize you're systemically important. And when it's systemically important, you have to think differently. I'm going to be asking the question, when do they start thinking differently? Because they've become really systemically important. You know, we could do a whole podcast on NVIDIA is not only too big to fail, it's too dangerous to fail. There has been a significant development in terms of systemic influence that the firms that are now the leaders of that systemic influence haven't quite realized that's systemically important. So that's the one thing I'm going to be looking at. That's terrific. Mohamed, thank you for being with us today and for giving us a topic for another podcast. Thank you very much. Thank you, Mohamed. Thank you so much. Well, Richard, that was, as we expected, a fascinating, a wide range. Ranging conversation with Mohamed. A couple of things I made a note that I need to take away and think about. But what was it immediately that struck you? Well, it's the best analysis I have heard from anybody of the current global situation of indebtedness. And I think what's striking when you're listening to Mohamed is he's very clever at encapsulating the problem. And not offering crazy solutions. But at the same time, he's very constructive. And, you He will explain the pathways and encapsulate in a few sentences how the situation is altered over a period of time and what the pathways might be for the future. I think his answer on the one decision at the end is, at what point do the leaders of the big tech companies, particularly in the United States, understand that their role has become systemic and when it is understood, how then they react and behave. Clearly, they have a role ultimately, which I think we've understood, which may be more important in a political decision-making either at the state or federal level in the United States. There were so many points in his answers where he encapsulated the importance of the role of the cooperation light and the 80-20% balance of risk in AI. I just felt so much of it resonated with things that I feel, but he's so much better as an economist at making them comprehensible and describing them and putting them in language where you think, "God, he's really got that right. He is remarkably talented." Yes. He has a great gift for making the… …arcane business of economics accessible and not entirely dismal. I thought he was happy to talk about where solutions might lie as well as future problems. Like you, I thought his answer at the end was fascinating because that was very much behavioral rather than technical, wasn't it? Yes. Well, I think this puts the finger on, I think, quite frankly, I feel this from my time being in Cambridge, the great economists, and I would put Mohammed in that bracket. He emphasized the behavioral aspects of the subject matter. He is clearly a phenomenal technician as an economist, but on the other hand, he does understand that so much of it is behavioral and how you react and the decisions you take. The other point he made in relation to your question was the essential role of political leaders in decision-taking and that central bankers have… …a role to play and they're quite good at coordinating, but without that political input, you don't get the result that you want. There is so much in that podcast which I think is terrifically valuable for all of us to have a better sort of understanding of the times we're living through. It reminds me of a quote from the historian Tony Judd in which he says, "History is not written by those that live it," because there are so many of the people involved in history who don't really understand what's happening to them and why. I would say that Mohammed is the exception, par excellence, because he does understand what's happening to us and why, and he's able to describe it. In a way, he's writing or speaking contemporary history in a beautifully articulated and comprehensible fashion. I take my hat off to him. Yeah. Well, I agree with you. It was a real pleasure to talk to him. His ability to describe and chart a way through problems, I think, is inspiring. Let's hope that some of his more optimistic prognoses come to pass. They're certainly based on deep experience. Well, that's all for this episode. Please do join us every Thursday for new episodes. Subscribe to One Decision on YouTube so you never miss out on a conversation, and leave us a comment on YouTube. That will help others find us. Check out onedecision.com, commentaries, and explainers that you might have missed. I'm John Rain. Thank you for listening. We just moved into our new house, and I didn't realize just how close we were to the neighbors. That's when my friend told me about Blinds.com. Blinds.com isn't a medication, but it can improve how you feel about your home. Customers who shop at Blinds.com experience excellent customer service, from consultation to installation. Side effects include increased privacy and better sleep. 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