Can growth outrun the debt?

So it's a very good start on an important journey. And I've said that I would, by the time President Trump leaves office, that we would like to have something with the three in front of it, which will stabilize the deficit to GDP, which is important number and enable us to start paying down debt.

Okay, so now if you were to look at a company like that or an individual like that, you have that problem. So as a handy number, 3% of GDP would sort of stabilize the situation. Very unhealthy condition. It's not just unhealthy because it's squeezing out those spendings, but also because there's a supply and a demand. In other words, you have to roll over the $9 trillion of debt that's coming due, and you have to sell 2 trillion more, something like that, okay? So now you go to the buyers, and the buyers, who are the buyers? There are some domestic buyers and there are foreign buyers, about a third of foreign buyers, and now it's a riskier situation from their point of view. It's riskier. First of all, it's a lot to acquire.

Okay, so now if you were to look at a company like that or an individual like that, you have that problem. So as a handy number, 3% of GDP would sort of stabilize the situation. Very unhealthy condition. It's not just unhealthy because it's squeezing out those spendings, but also because there's a supply and a demand. In other words, you have to roll over the $9 trillion of debt that's coming due, and you have to sell 2 trillion more, something like that, okay? So now you go to the buyers, and the buyers, who are the buyers? There are some domestic buyers and there are foreign buyers, about a third of foreign buyers, and now it's a riskier situation from their point of view. It's riskier. First of all, it's a lot to acquire.

The tactical answer to the question that you asked before is, why is he in the market buying bonds? It's called yield curve suppression, meaning when you buy bonds, you bid up the prices and the implied yields go down, which allows Scott to then finance at a lower borrowing cost because then if yields are 5.1 versus 5.3, and then now you're issuing bonds, they're marked against that 5.1 print versus 5.3. So the yield suppression is trying to help what Friedberg talked about, which is just this refinancing tsunami that is coming. Okay, but look, just take a step back for a second. I think the very big issue is that Congress is ultimately responsible for spending. Congress is completely unable to do anything to get these budget deficits under control.

We have to get 3% of our debt, our annual deficit needs to be 3% of GDP. Well, it's 6% now, so it would have to be cut in half. And I think it's very reasonable, and a lot of people nodded their heads, but it takes a tough vote. Like I voted to raise the age of Social Security, and people said, God, do you hate old people? I say, no, I aspire to be an old person. I want my Social Security, and I want the system to be around for ordinary people, but it's not going to be around unless you raise the age to 70 That's the only way it sticks around.

Not just because of the politics, because it's not right and it won't work. So we're going to have to actually deal with the revenue side as well as the spending side. I gave you a cap, but we have a tax code that everybody on this show, me included, are rewarded for preserving wealth, passing it on. There was a story the other day in the Wall Street Journal, six weeks ago, retreats are being organized to help kids figure out how to handle their inheritance. You have got to be kidding me. We have a tax code that favors that. You are an idiot if you don't take advantage of actually preserving your wealth and passing it on from one generation or another. You all know this. We all know it.