Hello and welcome to another episode of Real Politics. I am your host, Firasmodad, and I'm joined here by Dan Tubb.

And we are going to talk about whether or not we are facing another massive economic crisis that makes 2008 look like a bit of a picnic.

What do you think?

Well, I suppose the central throwing you're going with here is, you know, is this going to be worse than 1929? Is it going to be worse than 2008?

I mean, what I would say is that the central bankers are developing more tools all the time

to manage these situations and it's got a whole bunch more tools than

it had in 2008. The issue they got is that the underlying problem is bigger and getting bigger

all of the time. So at some point, there does have to be a reset of this system. And when we get to

that point, every time they've managed to kick the can down on the road for,

you know, another couple of years. Yeah. Well, that can gets bigger, you know, it's a pretty

bloody colossal can at this point. Yes. Yes. Yes. And I think what one of the things that sort

of expresses this idea is that now we are in a new world where Chinese dollar bonds are yielding the same as American

Treasuries and previously in the year they were yielding less than American treasuries. Help me

help me understand this a little bit. Yeah so bonds have got this curious relationship where the higher the yield, the more stress they are, the lower their yield, the more demand there is for them.

Yields move inversely to the price level.

So yield is how much you get on placing your money in that asset.

So say the bond is $100 and it pays a 5% coupon or $5 coupon, then that's a 5% yield on it.

And, you know, that might be about the level that a lot of these go out.

If no one wants to buy the bond, then the price of the bond drops. And so the yield on it you get goes up.

Because it's essentially saying, well, this is paying more now, so why don't you come and buy it?

And eventually at some point, even though they might think, well, the US has absolutely no intention of paying back this debt ever,

yeah, but I can get 8% on it, so I'm going to buy it.

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