1929 to Today: What the Great Crash Teaches Us About Economic Resilience

ANDREW ROSS SORKIN: It's a pleasure and privilege

to be with you here.

And as Ruth said, I've actually been working

on this book about 1929.

But the truth was, I was never really expecting or intending

it to be about today.

We're going to talk about whether, though, it

is about today.

At least, I think as we've gotten closer to today,

things have started to converge in ways that I didn't expect.

I thought it was a prequel to "Too Big to Fail"

so I didn't have to write a sequel.

But I'm getting nervous that a sequel is coming.

I am here with two people who need no introduction

and know more about where our economy is going, hopefully.

We'll see.

There is no stock advice.

And you're not going to be on the hook for what you actually

say, in case people are going to be buying or selling things.

But that's not what we're really going to talk about.

What I wanted to ask you-- this is where I want to start this

whole conversation--

the great investor, Paul Tudor Jones,

literally just yesterday said that he

believed that we, our economy, and the markets

are in October of 1999.

Now, in October of 1999, people may remember or not remember,

the stock market still had 40% to go up, on the upside.

But you had to know when to jump off the train.

And so the question is if you believe

that we are in 1999, if we're in 1998, if we're

in 1996, what are we?

MOHAMED EL-ERIAN: We are in a completely new world, completely

new world.

On the surface, we're in a new world

because we've thrown everything at the US economy.

We've thrown tariffs, we've thrown all sorts of things.

And it is incredibly resilient.

Growth is keeping up.

Inflation is contained.

The markets are booming.

Look beyond and we're starting to see

things we didn't see in 1999.

We're seeing this very strange coincidence

of risk-on assets, stocks, and risk-off assets, gold,

at new highs together.

We've never seen that.

We're seeing the US starting to perform like a developing

country, take ownership in companies.

We had the fifth announcement today.

We're starting to see the dollar languish.

And even though people are in love with US private sector,

they worry about the US public sector.

As my daughter puts it, go long US enterprise, short the mess.

And what we're seeing is, people are investing

in the US but hedging.

I'm saying all that because we're

seeing the sorts of behaviors that we haven't seen before.

And that's why it's very difficult

to make a historical comparison, and fundamentally

why, because of what we've heard in this incredible gathering,

we are rewiring the global economy, both in terms of AI,

but also in terms of what the US is doing.

The US is trying not just to rewire the domestic economy.

It's trying to rewire the global economy.

So that's why I find it really hard to make a stark comparison.

I am uncomfortable about quite a few things,

and I'm incredibly excited about a lot of things.

ANDREW ROSS SORKIN: But I worry.

The problem is, just when things are about to go off the cliff,

everyone says, this time is different.

Is this time really different?

MOHAMED EL-ERIAN: I think this time is different

because of what Ruth said, because of what Sundar said.

We have a general-purpose technology.

We have proof of concept.

And we are just starting to diffuse it through the economy.

And if we get diffusion right, and that

will depend on a lot of you, understanding that this is not

a labor displacement, this is not about cost efficiencies,

this is about enabling the people who

work for you to do new things and incredible things.

If we get that right, this time will be really different

because we will get the productivity increases that

allow the awful legacy that I'm leaving for my kids, low growth,

high inequality, high debt.

If we get the productivity increase-- and Mike can speak

to that so much better than me-- we

can fundamentally change all the bad things that are happening.

ANDREW ROSS SORKIN: OK, well, Michael, let me just ask you--

and I'm sorry to be the skeptic here.

Look, I'm very excited about AI.

I think it's going to change the world.

And we might be in some kind of gold rush,

and we might be having a sugar rush at the same time.

What I'm trying to figure out is,

if you get all these productivity gains,

productivity is oftentimes a euphemism for the word

"layoffs."

It also means unemployment.

That's the only way to actually make

things demonstrably more productive, at least

in the short term.

So what does that look like to you?

MICHAEL SPENCE: So it looks turbulent

in the short run with the diffusion process

that Mohamed just adverted to, which is the only way

to get productivity.

If we get productivity surges in tech and finance,

and everybody else is still sleeping,

we're not going to see a productivity surge

and we won't make that much of a difference.

So that's a preoccupation of ours

and many people at Google and in James's AI in the economy

section.

But I'd like to back up.

The way I see the global economy, and not just

the American economy, is we are accumulating

headwinds that became obvious as we came out of the pandemic.

We've got aging, declining work forces,

declining productivity trends, high dependency ratios

for the young people who are still working and keeping me,

the oldest person in the room, going, et cetera.

And if you array that all and ask,

what is the one thing you would really

want to have to deal with debt overhangs,

to deal with declining?

The answer is productivity increases and real growth.

So I think the yin and the yang of this, Andrew,

is it's a pretty grim-looking situation out there

without the upside potential of this.

You have a global economy that is subject to shocks.

You have a global economy that is

riven by geopolitical tensions that won't go away because we

don't trust each other.

You have a completely different architecture.

We lived for 70 years after World War II

because a bunch of very smart Americans said,

we're not going to do the things we did in the past.

We'll create an open global economy

with just stunningly brilliant results.

That's not the architecture anymore.

The dominant force in economic international policy

is now security, resilience, and so on.

And so as a backdrop to the focus on this, which

I agree with both of you and everybody

else who's spoken here, it's urgent that we get this right.

ANDREW ROSS SORKIN: So let me just ask you this.

And then I want to get to tariffs and everything else

that's going on because I think we're all trying to understand

where this is all headed.

But on the AI front--

and I think we can all be very excited about it.

And it may be the thing that saves us in the end.

What I can't figure out is, in this moment, right now,

it looks like our economy is doing quite well.

What I can't figure out is whether the massive investment

in AI is masking, effectively, some much larger imbalances

underneath it and how sustainable this is.

So one of the things that's happened, that so many of you

have been commenting on to me, even in the past day and a half,

is this idea that you see NVIDIA take a stake, effectively,

in OpenAI.

You have OpenAI turn around and do this interesting deal

with warrants with AMD.

And they all look like circular deals.

It's one piece of money going from one pocket to another

to another, in some cases, even making up money in the process.

And how sustainable?

When I go back and look, by the way, at 1929, or by the way,

go back and look at the late '90s, this leveraged piece

and this idea of these circular vendor-financing deals is what

they call them, get people very anxious and typically are not

sustainable.

MOHAMED EL-ERIAN: You're looking at me?

MICHAEL SPENCE: You go ahead.

MOHAMED EL-ERIAN: No, go, go.

MICHAEL SPENCE: So I think there's two parts to this.

There are elements of what's going on in the financial sector

that I'm going to leave to you and Mohamed

because you know more, that feel more like the run up

to 2007, 2008, to the GFC, opaque instruments, things going

around in circles and so on.

But if you go back to the internet crisis,

I think this really does feel somewhat

different in the sense that--

I was the dean of the business school at Stanford.

I had the good grace to step down before it crashed.

It was one of my best decisions.

My successor did not thank me.

And the ratio of real companies that were being created then,

like this one, to things that were never going to succeed,

never had revenues, never had profits or anything else,

was fairly low.

These were important companies, but there

were tons of the other things.

And there was a massacre in the VC world, coming out of that.

I don't have any doubt that there's

incentives to over invest because of the cost of not being

at the forefront for the major players that are doing this.

And I wouldn't be very surprised if there's some excess valuation

that goes with this.

And as Sundar frequently says, and in addition, there's

a tendency to overestimate the impact

of a revolutionary technology in the short run

and then underestimate it in the long run.

So all of those things put together

suggest that for investors, you need

to be careful in this environment.

Mohamed, over to you.

MOHAMED EL-ERIAN: Yeah, I say most of us

would act no differently.

We would throw money at this, one for behavioral reasons

and another one for the upside.

On the behavioral reasons, history

shows that whenever you get a major innovation that

reduces the barriers to new activities and existing

activities, two things happen.

We as humans over consume and overproduce it.

Every single innovation has happened that way.

So there's a behavioral aspect that leads to the exuberance

that Sundar spoke about.

But then there's something else that we haven't seen before.

And that's what Mike just referred to,

is that it's rational for every actor in this

to invest as much as they can because the payoff is so huge.

So you will get excess investment.

You will get rational exuberance.

There will be tears.

There will absolutely be tears.

But in the process, you're going to enable

something that is going to be fundamentally transformational.

And if you start looking at health,

as we did this morning with Ruth, education,

if you go sector by sector and look

at what is being enabled, the minute that starts adding up--

so what we heard about health today is, AI, life sciences,

robotics are coming along.

Further down the road is quantum.

When all these things come together,

it's fundamentally transformational, Andrew.

MICHAEL SPENCE: Andrew, can I add one other--

ANDREW ROSS SORKIN: Please.

MICHAEL SPENCE: --the folks who don't live in advanced

economies-- and Ruth did reference this in the health

care area--

that the scans that early diagnose diabetic retinopathy

are important everywhere but they're massively

important in India where this is an endemic problem.

And literally millions of people will not

go blind because of this.

You can do the same thing with skin cancers.

But the one I wanted to mention, because it's

the world that both of you live in a lot,

there is a global explosion of the use of AI

to deliver credit to people who are otherwise completely

out of the system, anonymous, no collateral, no track

record, no nothing.

And the digital economy is just transforming

the opportunity set for them.

So in that dimension, it's really exciting.

ANDREW ROSS SORKIN: OK, let me ask

you a completely different question, which was, both of you

referenced this idea that the entire global economy is

shifting under our feet, namely around tariffs

and the combination of the more general idea

of national security and sustainability.

We can discuss all of that to some degree.

My question to you-- so maybe a political question

before we even get into the tariffs themselves--

do you see this as a permanent state?

Or do you say to yourself, you know what?

In 2 and 1/2, 3 years from now, if there's a different president

in office, or maybe in seven years from now,

if there's a different president or a different political leader

in office who says, I don't like tariffs,

we're not doing it this way anymore,

or do you think what's just happened over the last,

basically six months, is now our reality for the next generation?

MOHAMED EL-ERIAN: If you define the next generation

as the next 10 years, I have no doubt in my mind

that this is permanent, no doubt whatsoever.

The geopolitics-- you heard Condi say yesterday

that if anybody thinks that there

will be a reduction in tensions between the US and China

it's not going to happen.

You're talking about two major economies.

When economics was in charge, and politics

and national security were sitting in the back seat,

and economics was driving the car, it looked really good.

We had two unifying concepts.

One was called the Washington Consensus,

that countries should deregulate, liberalize trade, be

fiscally responsible, and one was

globalization, the more we link the world, the more efficient

it was.

We forgot about distribution.

We forgot that in the process, we may end up

alienating a lot of people.

And when people get alienated, they get angry.

And when they get angry, they become one-issue voters.

And you get a change.

And that change is with us for a while because a lot of people

out there say, this is what we needed.

ANDREW ROSS SORKIN: But you--

MOHAMED EL-ERIAN: But hold on, let me just say something.

We've gone through this before.

We went through it under Ronald Reagan and Margaret Thatcher.

They tried to rewire the economy in response

to what did not work.

And it was really painful in the process.

But we came out, both the UK and the US,

with a more efficient economy.

This time we're trying to do this on steroids.

The Trump administration is trying not just

to rewire the domestic economy.

It's trying to rewire the global economy.

So this is a massive experiment with much higher risk

that could lead to something good

or could lead to stagflation.

ANDREW ROSS SORKIN: Well, that's where I was going to go.

So, Michael, I guess the bigger question is,

is this going to work?

With the context being, by the way,

in 1930 we implemented the Smoot-Hawley tariffs.

Within 12 months of those tariffs taking effect,

global trade had dropped by 60%.

That's the math.

And so the question is, we're all looking around going,

oh it's all great.

I can't figure out, is it all great?

Is it because this whole AI boom is, as I said,

papering over everything else?

What's happening?

MICHAEL SPENCE: No, no.

First of all, it's not all great, right?

If we trusted each other and we weren't insecure,

if we didn't have single points of failure like ASML or TSMC

in Taiwan, then we could keep the old system

and it was more efficient.

It produced more static efficiency and dynamic progress.

But that's not the world we live in.

And I agree with Mohamed.

It's not just the China-US tensions.

It's shocks.

People will probably remember, the automobile industry

came to a screeching halt after the tsunami in Japan

because there was a single little park that

got swamped by that wave.

That's just not going to happen anymore.

And so both policy and corporate decision making,

to secure their supply chains, is just pushing us away

from that.

But there's a price to pay.

The short-run price is dramatically reduced growth.

And you can see it all over the world

because you don't make big structural changes

without any cost.

But even in the long run, when I'm teaching about this,

the students look at me and I say, look,

if you're trying to minimize costs, you minimize costs.

If you have another objective and you're not

minimizing the cost, you're not going to minimize them.

ANDREW ROSS SORKIN: OK, let me throw one other cost,

potentially, at you though.

MICHAEL SPENCE: OK.

ANDREW ROSS SORKIN: I spent some time about a week ago

with the CEO of one of the large American automobile

manufacturers.

They're not many so you can make a guess about who this is.

And this person said, in 10 years from now,

if we're having this conversation in 10 years,

the truth is--

this person said they did not want to say this on the record.

So I'm sharing this with you this way--

in 10 years from now, Americans will pay more for bad cars

than they ever did before and that the truth is

that you will go to Europe and you'll go to Asia

and you'll go to other parts of the world,

and you'll see people driving around in better cars

that cost a lot less.

And how are we going to feel about that then?

Do you believe that's what's going to happen?

MICHAEL SPENCE: No.

ANDREW ROSS SORKIN: You don't?

MICHAEL SPENCE: No.

So this is the difference between zero, one choices

and something in the middle.

So the fact that the global economy is undergoing a process

that many people refer to as partial deglobalization

does not mean that trade is going to stop.

It would take an insane set of policies

to try to reshore everything in America.

This doesn't make any sense.

Vietnam produces a significant fraction in the textiles,

apparel, and footwear device.

It would be enormously costly to bring that stuff back home.

So I am less cataclysmic in the view of how this is going to go.

But I think we should be realistic that it's

going to be expensive.

The other thing we talked about before,

and I'll just mention it briefly,

is it's going to hurt small economies more if trade fails

because a big economy like the United States or China

can afford to have a full portfolio of industries, service

and manufacturing, without paying a huge price in terms

of scale economies, learning curves, and other things.

But even a relatively rich, dynamic,

small economy like Sweden can't.

It has to specialize.

And the only way to thrive in a world of specialization

is trade.

So they're more vulnerable.

MOHAMED EL-ERIAN: Let me add a couple of things, if I may.

This is not the '30s because other countries

haven't retaliated against us.

And that's the big surprise.

Now, there are some outstanding ones.

We don't know what China's going to do.

We don't know what India's going to do.

But Europe folded immediately.

The UK folded immediately.

And somehow, other countries thought, it's better for us

to give the US what it wants than get in a fight.

That's a big surprise.

That's a big difference.

I think the thing we're struggling with

is that we are used to what's called a bell distribution,

a normal distribution.

There's a very high likelihood of an outcome

and very good, very thin, good tails and bad tails.

That's not the distribution we're living in.

We're living in a distribution where the middle

comes all the way down.

And the two tails, good and bad, are higher.

So you hear us talk excited here, scared over here.

So what do we need?

What do you all need to navigate this really uncomfortable

distribution?

Because you're looking one way, you're looking the other one.

You need what he said first, resilience.

The likelihood of making a mistake in this world is high.

We are in such a different world that you

need to be able to bounce back, and that's

about financial resilience and human resilience.

ANDREW ROSS SORKIN: I have a philosophical question for you,

though.

MOHAMED EL-ERIAN: I didn't give him the other two things I need.

ANDREW ROSS SORKIN: Give the other two.

MOHAMED EL-ERIAN: The other one is agility.

You need to think differently.

You need to have cognitive diversity

because if you're stuck in group think, you will fail.

And the third one is--

sorry, the second one is the open mindedness,

what we call optionality.

And the third one is agility, the ability to move quickly.

ANDREW ROSS SORKIN: OK, here's my philosophical, slash,

practical question.

The other thing that we see in the headlines

constantly is that the United States, typically known

for being this capitalistic bastion, free-market place,

is now taking stakes in companies

as if we are China or Russia.

And my question to you is whether you

think, long term, that is going to have any impact whatsoever.

So far, by the way, the stock market, economy,

nobody seems to care.

Everyone seems to think this is all good and fine.

I don't know if that's true.

Is it?

MOHAMED EL-ERIAN: So I'm nervous.

I'm nervous because it's going beyond national security.

I'm nervous because I don't believe this administration will

simply focus on ownership.

It will go over the line that says control.

And I'm also nervous because this is leading other countries

to do two things.

One is go back to the image they saw of the presidents of China,

Russia, and the prime minister of India--

and we talked about this yesterday--

tell the rest of the world, trust us,

we are now the custodian.

We will not do what the US is doing.

And they're starting to think, has the US really lost

its leadership role?

Is it no longer a responsible custodian?

And then the second question I get

asked is, so Russia has lived outside the dollar system

and survived.

How did that happen?

So the more we go into things that we used to say are bad,

the more the rest of the world is going to react by thinking,

maybe the US no longer is a responsible custodian

of the global order.

And that is a real problem for us.

MICHAEL SPENCE: I agree with that.

I live in Europe.

And I grew up in Canada.

And they both decided we're an unreliable and unpredictable

ally, whether it's defense or anything else.

So that part's right.

But to go back, there's a little bit of,

we're behaving developing countries,

we must be making a mistake.

I've spent a lot of time in developing countries,

trying to both understand and help them.

And the answer to the question, is it a mistake?

Depends entirely on the details.

So the test for whether a government investment

is a good idea depends mainly on whether it

is displacing the private sector or doing

something complementary to it that enables it to do more.

Right?

And you can find lots of examples of both things.

But there are lots of areas, especially

in developing countries, because they're

missing institutional capabilities and so on, where

the government does something that unlocks

rather than the reverse.

So I use that test on these cases.

Does the United States government owning 10% of Intel,

does that actually make a difference if we want

a healthy, domestically based company.

And I don't have a good answer to that.

But I'd really rather not people walked out of the room and said,

jeez, if they're behaving like developing countries,

there must be something wrong.

ANDREW ROSS SORKIN: Let me ask you a different question.

One of the other big headlines that I

think people have been grappling with recently

is this idea of the independence of the Federal Reserve.

And how independent is it?

How independent has it actually been, historically, meaning,

has it actually been independent?

And what happens as a result?

And so you hear about Lisa Cook.

You hear about Jay Powell, who's going

to be out of this job in May, and the president

will have a new person in that role.

When you look at this, are you surprised?

Because there were a lot of people with their hair on fire

who said--

and by the way, including myself at one point-- that

said, if there's no independent Fed,

the markets are going to take it out on them.

And that has not happened.

Why do you think that is?

MOHAMED EL-ERIAN: So let me just first start

with an independent central bank,

which means that the government, in case this Congress sets

its objectives, and then the central bank is left to choose

how it will achieve those objectives,

that notion of Independence, which is called tool autonomy,

is absolutely crucial to our well-being.

And we've learned this over and over again around the world.

So that's the first one.

The reason why the markets haven't reacted

is because the markets do not fundamentally

believe that we will lose the independence.

What is going on right now may be a good thing

because an independent central bank doesn't mean

an unaccountable central bank.

It doesn't mean a central bank that is stuck in group think.

It doesn't mean a central bank that doesn't modernize.

And the Fed being independent and being so protected

has made mistake after mistake.

It hasn't, like other central banks, owned their mistakes.

It doesn't have external members that

bring a different perspective into the discussions.

And therefore it gets stuck in group think.

And what I find encouraging, Andrew, is what's happening.

In the last two weeks, four senior officials of the Fed

have come out and said, we need to do this differently.

We need to do this differently.

So the one upside of this is that the issue

of reforming certain things within the Fed

is now being discussed inside the Fed.

The awful side of this is that it could go

too far on the politics side.

But we have to understand, this Fed has failed,

but it hasn't been held accountable.

ANDREW ROSS SORKIN: Well, OK, I think

there's a debate, though about whether you think it's failed.

I'm not so sure.

MOHAMED EL-ERIAN: We have been above the inflation target

for five years.

We will be, according to Fed estimates,

above it for another two years.

That's seven years where they haven't met the objective.

We've had banking crises under their nose.

You've reported on what happened in California.

And it is late in cutting interest rates.

I don't think anybody would give this Fed an A-plus.

ANDREW ROSS SORKIN: But I think there's a distinction.

And, Michael, I want to get your view on this.

I think whatever mistake they've made

has not been influenced by politics.

You may disagree with that?

MOHAMED EL-ERIAN: No, I don't.

It's been influenced by incompetence.

Why?

[LAUGHTER]

Because they're not open to the outside world.

ANDREW ROSS SORKIN: So you think that the political pressure

can actually be a good thing, is what I think you're suggesting.

MOHAMED EL-ERIAN: I can if it doesn't go too far.

ANDREW ROSS SORKIN: OK, Michael, go ahead.

MICHAEL SPENCE: No, I always defer

to Mohammad on this because that's

where he spends his intellectual life, and understands it better.

But I think if you look at the Fed,

there's two possibilities here.

One is that Trump is trying to force a regime that economists

call "fiscal dominance," which is,

we set the program and it's the Federal Reserve's job to make it

affordable.

And that usually means lower interest rates than are ideal.

The other one, which is more benign,

is there's a legitimate disagreement

in a very complex economic environment that's

hard for everybody to navigate, whether they're

in business or government or the central bank.

Mohamed described it very well at the start.

And so a more benign version of this

is, the Trump administration thinks

there's a legitimate reason to get the interest rates down

because there's some weakening in parts of the economy,

and the Fed is being stubborn.

And I will say, I'm a little bit on Mohamed's side on this,

that the Fed, because it talks mostly to itself--

and we know from lots of case studies

that when a company talks to itself

and doesn't have input from the outside,

usually it gets lost somewhere, like the old IBM case,

for example.

The Fed didn't respond very well, from my point of view

anyway, to a world that looked like it was changing

structurally, where their cyclical models weren't

predicting very well.

ANDREW ROSS SORKIN: I just want to make two quick points, one

about actually going back to 1929

and the politics of the independence of the Fed

because I don't know if people will fully appreciate,

one of the reasons the Fed did not step in,

in that moment, to try to fix things,

was because they were such a new institution--

they had just been created in 1913--

that they were worried about the politics.

They were worried that actually, if they tried to slow down

all of the speculation, and they did it and made a mistake,

that they would be not just blamed and lose their job,

but they actually thought the Fed would disappear,

like it wouldn't exist again.

Here's the big question I want to ask you

because we started talking about a bubble at the beginning.

To me, every financial crisis is a function

of one thing, leverage, too much leverage in the system.

And the one piece of this that I don't think we talk enough about

is, leverage in the system today has moved.

It's shifted.

It's not on the balance sheet of banks the way it used to be.

It's actually hidden in the context

of what's called private credit, and that the private credit,

even though it's off the balance sheet of banks,

is actually conjoined.

It's connected still to the banks,

but the banks don't actually have

control of what's going on because they're the ones that

provide, effectively, liquidity to them

and what happens in that moment.

And so I'm curious how you think about

that now because at some point, whether Paul Tudor Jones is

right about it being October or you're right about it,

whatever it is, at some point, the rubber will meet the road

and we'll feel something.

MOHAMED EL-ERIAN: So first, the fact

that the risk has shifted from the banking system to non-banks

is consequential because the banking

system is in the middle of the payments system.

If two banks don't trust each other, which

is what we saw in 2008 after the Lehman collapse,

the whole system comes to a stop.

It's called a sudden stop because nothing

happens on there.

This time we're looking at it differently.

That's the good news.

The bad news is, crises don't happen quite rationally.

What tends to happen is, suddenly

there's a change in sentiment.

And when that change in sentiment happens then

you get herd behavior.

And no matter how protected you think you are,

you will be impacted.

So I worry, like you, that there's excesses.

But remember, AI is playing a critical role.

60% of the growth in this economy comes from AI.

AI has made people wealthier.

They're spending more.

AI has literally pulled up the shares of other companies.

So we are anchored in something that's not as fluffy as 2008,

as fluffy as 2002.

But we do have excesses.

That's absolutely right.

And we'd be fooling ourselves to think that if suddenly sentiment

turns--

look what's happening in Europe.

Sentiment has turned against France in the bond market.

Now France is viewed as a bigger risk than Italy.

Italy is a peripheral economy.

Italy was one of the so-called "pigs," Portugal, Italy, Greece,

and Spain.

And France was viewed as the responsible.

No more.

France now, the French government, has to pay more

to borrow than the Italian government.

So if sentiment changes, this notion that oh, we've separated,

everything is fine, will come under stress.

MICHAEL SPENCE: I knew he'd bring up Italy.

I live there.

Could I just--

ANDREW ROSS SORKIN: Please.

MICHAEL SPENCE: --very briefly, when

I listen to people outside worry about this issue,

the first thing you hear about is whether or not

the dollar is as convertible as it used to be

and whether the United States is a good place to invest.

And there's some capital flows that

suggest there's some concerns about that.

And it's not just Russia.

Second, the United States' public debt

has benefited enormously from inflows from abroad.

So if you disrupt that by changing their confidence,

then you've got a potential problem.

And the third is, everybody I know

who's looked at the trajectory of public-sector debt

in the United States thinks that you can't do it forever.

That doesn't mean we know when it's going to break.

And so those pieces of the puzzle

are in addition to whether we have some huge transparency,

opaque problem that is going to spring on us.

ANDREW ROSS SORKIN: We do need to--

MICHAEL SPENCE: Get the book.

ANDREW ROSS SORKIN: --hand it off.

I want to thank both of these gentlemen

for a fabulous, fabulous conversation.

Thank you so very, very much.