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Trillion dollars the credit Valeant chief policy strategists -- Potomac research group says.
About it joins me up from DC to explain -- they can't be as simple as that Greg so now it's don't go on.
It's a pretty big number I think you have to agree but that let me make a serious point it doesn't worry the bond market.
If it doesn't worry the bond market it's not gonna keep me awake at night.
What we're just not sure so narrow because.
Only reason why US rates are depressed is because Europe is in shambles so all of a global investment money looking for the safe haven play.
Is piling into the US -- you don't have bond vigilantes out there yet.
Well -- pushed back on that one at that I think that the hour.
This this trend of interest rates plummeting has been a decade long trend and for the last decade.
Deficits have gone straight up right so in yes in the last year -- two.
The move downward on yields has intensified because of Europe and the that I can't disagree with that.
But most people who -- this people lot smarter than me have concluded there is no correlation between deficits and interest rates zero.
So let's talk about the interest payments that Doug -- away it was.
Talking about it could.
Push the economy right into arrested at the recession alone because of what we're going to be having to pay in in the interest alone on -- sixteen trillion figure.
It and into be fair and there are some things you have to worry about one obviously is interest rates another risk.
We could be spending that money a lot more productively whether it's on the infrastructure or lower tax rates -- I'd I'd be foolish not to acknowledge that.
But I I think.
One of the key premises of the deficit hawks has always been -- we don't do anything boy oh boy.
But interest rates are gonna go straight up it just hasn't happened and I think.
In Washington where it's so difficult to get anything done you need that catalyst from an angry market and you don't see it right now.
You think that we could get an angry catalyst -- -- is it is brewing out there is their straw waiting to break the camel's back.
At some point you know a timing is everything I think the key would be -- if the economy really -- to -- not this very anemic recovery.
We have now but if we started to see GDP growth at 33 and a half 4% that automatically would raise rates and -- the bond market would look at.
The size of our deficits and would demand.
Action they're not demanding action right now.
I suppose a girl can wish right right yes.
OK so pick your poison sixteen trillion or the fiscal cliff you know does that make.
The day more -- some considered we've got all of these issues about to hit us at the end of the year.
About to meet the fiscal cliff as a far more serious issue I mean what a way to run a railroad.
To say to investors too big companies to the markets a we don't know what tax rates will be on January 1 that's an appalling situation to have.
And I would argue it's going to be mid December at the earliest before we get any kind of certainty on taxes we've got another four or five months ago.
-- no one really knowing where taxes are going to be.
Want to play you sound bite from our interview yesterday with the GOP.
Candidates Mitt Romney talked about better serve send you -- and and seeing choosing take on us -- and -- reaction.
You know I don't think QE2 was terribly effective.
I think -- QE3 another another.
A federal fed stimulus this is not gonna help this economy I think that's the wrong way to go I think it also seeds.
They -- that kind of potential for for inflation down the road.
That would be harmful to the value of the dollar and the and I think harmful to the stability that that our nation needs.
And Romney saying he would replace Federal Reserve Chairman Ben Bernanke when -- think about him being so forthcoming on that.
I I would agree that QE3 probably isn't going to do a heck of a lot.
But whenever I hear a politician.
Start to meddle with the Fed I get nervous whether it's Barney Frank on the left or Rick Perry -- were Ron -- on the right.
I think politicians should butt out of the Fed -- -- largely because they've done such a terrible job.
On fiscal policy they're gonna get involved in monetary policy now.
I just don't think they know enough about it.
And for Romney to say there's going to be inflation if there's more fed stimulus -- hasn't been any yet and people have been warning about that for years and it just hasn't happened.
Well Greg I know you're a great friend of Stuart Varney -- thank you so much executed time to speak with me today -- valley there are.
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