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Moody's Talks - Inside Economics
Christmas Movies and Currencies
Mark, Ryan, and Cris welcome back Joe Kennedy, senior principal economist at MITRE, to discuss the U.S. dollar, reserve currencies, and crypto.
Recommended Read:
Ending Poverty: Changing Behavior, Guaranteeing Income, and Transforming Government, by Joseph Kennedy.
Mark Zandi: Welcome to inside economics. I'm Mark Zandi, the chief economist of Moody's analytics. And this is another special podcast. We're recording this on December 15th, the Wednesday, but this will air a week from now. I believe a week from now, or maybe... I'm not sure when, but next week, Christmas week. So we're not going to do the statistics like we typically do just because they'll be a little bit out of date by the time this airs. But we are going to just dive right into our big topic and it's its the dollar, the US dollar. And I you should say currency more broadly. And we have a guest. I'm going to introduce the guest in just a minute to help us kind of navigate through all this. But before I do, let me introduce my co-hosts Chris deRitis. Chris is the deputy chief economist and Ryan Sweet. Ryan is the director of real time economics. Although he had a... You had a tough morning, didn't you, Ryan? I said, I wasn't going to talk about statistics, but we got retail sales today. It was a little bit on the soft side. Wasn't it?
Ryan Sweet: Mm-hmm (affirmative).
Mark Zandi: Is that right?
Ryan Sweet: Yeah. It came in below what I thought it was, but I was lower than the consensus.
Mark Zandi: Yes you were. Yes, you were indeed. Why was it low?
Ryan Sweet: The seasonal factors were pretty aggressive. So if you look at NSA, you're non seasonally adjusted, the number wasn't that bad. And if you look at all the components, there's some weird volatility going on. Non-store was flat in November. That seems a little odd, so I'm not too concerned.
Mark Zandi: Yeah. I think you got to put into context, right? I mean October was boom, right?
Ryan Sweet: Yeah. It was very strong up.
Mark Zandi: And I think September was, as I recall, that was strong too. Wasn't it?
Ryan Sweet: It was.
Mark Zandi: That was over 1%. So year over year growth in retail sales is, I don't know, what 18, 19%?
Ryan Sweet: Mm-hmm (affirmative).
Mark Zandi: Something like that?
Ryan Sweet: Yep.
Mark Zandi: I mean, and of course there's inflation in there, but even abstracting from the-
Ryan Sweet: Yeah. Even if you adjust for your inflation, still really strong.
Mark Zandi: Very-
Ryan Sweet: Fourth quarter consumer spending will be strong.
Mark Zandi: It will be strong and Christmas sales. I wrote something for the New York times and I said in that, "This could be the best Christmas in terms of sales growth in history." Do you think that was hyperbole or do you think we got a shot at that?
Ryan Sweet: Yeah, we got a shot at it.
Mark Zandi: Got a shot at it?
Ryan Sweet: Mm-hmm (affirmative).
Mark Zandi: Yeah. Very good. Hey, and I do want to introduce our guest, Joe Kennedy. Joe, good to see you. Joe is... You're you're back, Joe. Thank you for coming back.
Joe Kennedy: I'm back. I think I'm the first one you've had back.
Mark Zandi: Indeed. Yeah.
Joe Kennedy: And At first, I was really pleased. I go to my ego and, and then I thought it might be a sign that you're having trouble getting deep.
Ryan Sweet: Oh wow. Ouch. That hurts.
Joe Kennedy: Yeah. Every silver lining has a dark cloud somewhere, so I wasn't sure which way to go.
Mark Zandi: Well, you diagnosed that wrong, Joe. We had you back because you were great.
Joe Kennedy: Well, thank you.
Mark Zandi: We were talking about markets, competition, antitrust, pretty complex issue.
Joe Kennedy: Yeah, really enjoyed it.
Mark Zandi: Yeah.
Ryan Sweet: We ran out of time.
Mark Zandi: Right. We did rum out of time. Yeah. And just to remind everyone, Joe and I got to know each other when Joe was the chief economist of the commerce department back in the day under President Bush.
Joe Kennedy: Bush, yes.
Mark Zandi: Got to know each other then. And since then, you've been very busy. You wrote a book, Ending Poverty. And you want to tell us a little bit about that book? I don't think we dove into that in the first part.
Joe Kennedy: Yeah, sure, sure.
Mark Zandi: You got copy?
Joe Kennedy: I do. I've got like a hundred.
Mark Zandi: It's like my book. Yeah.
Joe Kennedy: So yeah, I've had these ideas for a long time and I how to restructure government. And so this book, half of it spells out a system for guaranteed income, provided the recipient does certain things like work, not commit crimes, get educated. And then the rest, when I looked at the economy, it seemed like most sectors were doing okay. But there are a couple big sectors that are just sort of stuck. And so I devoted a chapter to each to talk about sort of systematic reform that would, over time, bring down prices and increase quality.
Joe Kennedy: And the main sectors were healthcare, education. I think I had housing in there. Because I think if... Why can't the cost a housing go down over time and quality go up? I mean, there's a limited amount of land, but you can go up. And we have so many ridiculous barriers to add extra cost to building a house that, if we got rid of a lot them, we could see deflation for at least a while. We could see prices fall. And the same with education, same I believe with healthcare. And if you did do that, everybody's standard living would go up quite a bit.
Mark Zandi: Very cool. Did you notice that corporate profits... This is Q3 data, 21, 2021 Q3 data. Corporate profits, as a share of national income, is at a record high. When I say record, we have data back to just after world war II, 14.6%. Is that surprising to you?
Joe Kennedy: Yeah.
Mark Zandi: That was surprising to me when I saw it.
Joe Kennedy: Yeah. You read all these articles about wages finally, and I would've guessed that-
Mark Zandi: Right. So they're raising price... Businesses are able to raise their prices to compensate for the higher labor costs. But that's interesting. Well, yeah, that like a great read. And hopefully, it gets on the best seller list when you take another stab at it. And I think you need to get it out there in other languages. That would also... that's what I tried to do. Didn't help me, but try. And now you're at [MITRE 00:06:37].
Joe Kennedy: I am.
Mark Zandi: You want to tell us a little bit about MITRE? You did this before.
Joe Kennedy: Sure. Yeah. Sorry.
Mark Zandi: Oh, is that a phone call?
Joe Kennedy: That's mine.
Mark Zandi: Oh, no worries.
Joe Kennedy: Sorry about that.
Mark Zandi: That's okay.
Joe Kennedy: So yeah, MITRE runs six federally funded research and development corporations. And in each one, it works with the federal government, an agency of the federal government, to deliver services to help that agency fulfill its mission. And a lot of it...
Mark Zandi: No, that's okay.
Joe Kennedy: Okay. A lot of-
Mark Zandi: We can edit that out, too, Joe.
Joe Kennedy: Okay. So a lot of it.
Mark Zandi: Why don't we start over?
Joe Kennedy: Okay, Let me get that. I'll just-
Mark Zandi: Go ahead, take the time. And I'll just ask that question again.
Joe Kennedy: Okay. Okay. Thanks.
Mark Zandi: And now Joe, you're at MITRE. Tell us a little bit about MITRE.
Joe Kennedy: Yeah. So MITRE runs six, what are called, federally funded research and development centers. And in each one, it partners with part of government to accomplish certain missions. It does a lot of very technical work in cryptography, in working with statistical agencies to protect their data, in helping these agencies make major IT purchases. And its main goal is to work on really hard problems that the government and society is facing, to bring together the right people, and then to deliver a product that actually addresses the problem and results in a solution that makes everybody better off.
Joe Kennedy: And it really tends to focus on key, big issues that involve systems of systems, so then involving a whole of government approach to the problem. And one of the things that's doing that attracted me was, it's spending a lot of resources on an internal project to better understand this great power competition that we seem to be starting to go through with the China and with, to the lesser extent, Iran, Russia, and some other countries. And we're looking at key variables in there in concluding the role of China's bill BIR-
Mark Zandi: Yeah. One belt, one road.
Joe Kennedy: One belt, one road. The scope of illegal fishing in one of these areas is the role of the dollar, and how it's been changing in response both to technology but also to just normal economic factors like the rise of China.
Mark Zandi: Yeah. It sounds like a great place to work. A lot of very interesting topics, not as [crosstalk 00:09:49] as analytics, but I'm just... sounds like-
Joe Kennedy: I couldn't aspire to that, but-
Ryan Sweet: Close second.
Mark Zandi: Close second.
Joe Kennedy: Yeah. I have to displace Chris and I'd never do that.
Mark Zandi: Oh, I thought you were coming for my job. What are you talking about? Yeah. But we'll come back to the dollar. Before we do that, though, the three of us were having an email exchange last night. I'm curious how you'd weigh in on this question. It's a very important question.
Ryan Sweet: Very, very important.
Mark Zandi: Obviously, this is one that Ryan posed. It's what's the best Christmas movie? And Ryan says there's... This is a slam dunk. There's- [crosstalk 00:10:28]
Ryan Sweet: Only one.
Mark Zandi: Choice for-
Joe Kennedy: Yeah, what's that one with that guy...
Mark Zandi: Yeah, that works. That one-
Ryan Sweet: Yeah. That's a good one.
Mark Zandi: That's a good one.
Ryan Sweet: That's the best.
Joe Kennedy: It's the one where her got [crosstalk 00:10:43]. Jimmy Stewart. Yeah.
Mark Zandi: Yeah. My wonderful... wonderful-
Ryan Sweet: It's a wonderful life.
Joe Kennedy: That's it.
Ryan Sweet: That's the prototypical.
Mark Zandi: Yeah. I like that one a lot.
Ryan Sweet: Absolutely. I agree with you, Joe.
Mark Zandi: Do you, Chris?
Cris deRitis: Yeah.
Mark Zandi: Is that your number one movie?
Cris deRitis: That's number one Christmas movie, by far. Come on.
Ryan Sweet: No.
Mark Zandi: That's not what Ryan had in mind.
Ryan Sweet: Mm-mm (negative).
Mark Zandi: So Ryan, actually, is a Die Hard fan. It can't be Die Hard. Is it?
Ryan Sweet: No, no. I was joking about that because everyone [crosstalk 00:11:09] Die Hard for Christmas.
Mark Zandi: Is that a Christmas movie? It's set in Christmas. Yeah.
Ryan Sweet: So Mark, what's yours?
Mark Zandi: I don't know the name of it, but there was this one movie about this small kid and it was like in a third person voice. And I think it was... The dad was-
Ryan Sweet: Oh.
Joe Kennedy: A Christmas story.
Ryan Sweet: A Christmas story.
Mark Zandi: Christmas story, yeah. That was-
Cris deRitis: Yeah. That's hilarious.
Mark Zandi: Really funny. It reminded me of my... see, I'm older than you guys. And that movie kind of was my childhood to some degree. Not that my dad was that guy's dad. I thought that was pretty funny. A Christmas Story. Yeah. I like that one, but that's not what you had in mind either. Is it Ryan?
Ryan Sweet: No, you're close.
Mark Zandi: Oh, okay
Ryan Sweet: Joe and Chris are way off.
Cris deRitis: Without a doubt, National Lampoon's Christmas Vacation is the best-
Mark Zandi: Oh, that is [crosstalk 00:12:00].
Cris deRitis: Christmas movie of all time.
Mark Zandi: That is good. That's the Chevy Chase, right?
Cris deRitis: Oh yeah.
Mark Zandi: Oh yeah, yeah, yeah. Yeah. Where they have the lights on the-
Cris deRitis: Oh yeah. Yeah.
Mark Zandi: That is hilarious. Yeah, that is [crosstalk 00:12:10].
Joe Kennedy: That is pretty good.
Ryan Sweet: That is funny.
Cris deRitis: How about from an economics point of view, Trading Places, right? That's the-
Ryan Sweet: Ooh. That's that's a closes second.
Mark Zandi: That's a good one.
Ryan Sweet: That's that's a great movie.
Joe Kennedy: Eddie Murphy.
Mark Zandi: [crosstalk 00:12:21] now picking movies that they like or is that... was that...
Joe Kennedy: Eddie Murphy, yeah.
Cris deRitis: That's Christmas. Again, debatable to the same degree that Die Hard as a Christmas movie. It does take place over Christmas.
Mark Zandi: That's set in Philadelphia.
Cris deRitis: It is.
Mark Zandi: Yeah, that was a good movie.
Cris deRitis: That's right.
Mark Zandi: That was [crosstalk 00:12:37].
Cris deRitis: [crosstalk 00:12:38] features.
Joe Kennedy: And what's that one with the other guy?
Mark Zandi: There he goes again. That's got to be great.
Joe Kennedy: The new one. It's a take off of a Christmas story, but it's got the next Saturday night SCTV guy in it.
Mark Zandi: I don't know that one.
Joe Kennedy: Bill Murray. It's got Bill Murray in it.
Mark Zandi: Is it a new movie?
Joe Kennedy: Yeah. It's-
Cris deRitis: Drawn out day related.
Joe Kennedy: Yeah. No it's about-
Cris deRitis: Scrooge.
Joe Kennedy: Yeah. That's it. Scrooge, that's a great one.
Cris deRitis: Mark, you got to see... If you love [crosstalk 00:13:16] day.
Mark Zandi: Love Bill Murray. I love bill Murray. Yeah. Okay. I've got to watch that. Good. Well, we got something out of this podcast.
Cris deRitis: There you go.
Mark Zandi: Christmas Eve kind of feel to it, right. I mean, you had to do it.
Cris deRitis: It's the week leading up to Christmas. This is perfect.
Mark Zandi: Leading up to Christmas. Yeah. All right. Well, let's chat the dollar, and currency, and crypto, and all that kind of good stuff. I know we're not going to play the game, but I'm going to play the game. I got a number for you. This is a good segue into the topic at hand. Ready? 60%.
Joe Kennedy: 60%. I know I'm going guess.
Mark Zandi: [crosstalk 00:13:55] Currency
Joe Kennedy: It's dollars. The share of reserve currencies that's filled by dollars.
Mark Zandi: Got it. Perfect.
Ryan Sweet: Wow.
Joe Kennedy: Where's that cowbell?
Mark Zandi: [crosstalk 00:14:07] Joe knows his numbers.
Ryan Sweet: No, it's right here. [crosstalk 00:14:10]
Mark Zandi: There you go.
Joe Kennedy: Thank you.
Mark Zandi: Pathetic. Actually. Pathetic-
Ryan Sweet: Napping children, Mark. Napping.
Mark Zandi: Oh, sorry. Right. You're taking care of [crosstalk 00:14:17].
Cris deRitis: Only only so much we can go.
Joe Kennedy: Thank you.
Mark Zandi: Okay. What's the second largest currency in the basket? If you look at reserve currencies, what's-
Cris deRitis: Euros.
Mark Zandi: Euros? Okay.
Joe Kennedy: Yeah, it's up there.
Mark Zandi: And then what's next after that?
Joe Kennedy: I guess, it's either SDRs or the pound.
Cris deRitis: What's the pound?
Mark Zandi: I didn't even see the SDRs. I don't know if... I don't know if SDRs were included in this table I was looking at. I'm not sure. Actually, interestingly enough, it's the yen. It's up like six, 7% reserve basket. And the pound is like four or 5%. Then you've got the Chinese currency, renminbi. And what else is in there? A few smaller currencies. Hey Joe, what does it mean to be a reserve currency? What does that mean?
Joe Kennedy: So central banks exists, at least, partly, maybe mainly to handle... Well, I guess, mainly to handle routine functions, but a big part of what they do is they service as bedrocks when the economy goes south for a while. And so one of the things you need to... If you're going to be the bedrock is you need assets that you can sell, when the time comes, so that you can inject liquidity into the market. And so you want an asset that's going to hold its value, maybe even is going to appreciate when the economy goes down there, you're about to enter a recession. And the dollar fulfills that rule because one, the dollar markets are so big and so liquid that you can always sell your dollar assets in and get cash. And they're also regarded as very safe, in that, people don't think they're going to fall over time. And so people, if you put them in your reserve pile, you're pretty sure that they're going to maintain their value. And in fact, they even increase in value in times of financial stress, because everybody goes to the dollar.
Mark Zandi: So reserves are, what they sound like, the reserves, right? Governments hold these currencies in reserve if they need them to... And you're saying, they generally don't need them in typical times. They'll build reserves or they'll wind down reserves a little bit, depending on what's going on with trade and the balance of payments. But but, in times of stress, that's particularly important because people need... Businesses, households, need cash, they need liquidity, as you said. And the reserves provide that source of liquidity in times of stress.
Joe Kennedy: Yeah.
Mark Zandi: Yeah.
Joe Kennedy: And they also pay for... If the country runs it a trade deficit over time, you can use your reserves to pay for that.
Mark Zandi: Pay that down. Right?
Joe Kennedy: Yeah.
Mark Zandi: But you can only do that for so long until you get trouble, which some... and there's always this kind of underlying lingering concern that you hear expressed that the dollar is going to lose... The dollar is the reserve currency, 60% of all reserves are in dollars. That it's going to lose its status as the reserve currency. That the currency that's used in a lot of global transactions and, as you say, is a kind of a safe Haven when times are tough. Do you have any sense that that is... Do you have any concern about that? That the dollar could lose its reserve currency?
Joe Kennedy: Not really. Its reserve status is... the dollar fulfills several functions and one, is reserve status, and other is invoicing currency. Oil is usually priced in dollars rather than some other currency. And then also, that is used in transactions. And as far as the reserve currency, you want something that's going to hold value. And to do that, you need... The country that is providing the reserve currency needs to be big, it's markets need to be liquid and varied. But you also need an institutional setting that reassures people. You need a rule of law that will uphold contracts. You need a pretty free... A lack of capital controls so that you can sell different currencies and exchange them as you want, and the government's not going to put down... Have new laws that limit-
Mark Zandi: [crosstalk 00:19:34] come in and say, "Look, you can't change the dollar for the Euro," or, £the dollar for Chinese Renminbi," or whatever it may be. That's free flow of capital. There's no capital controls like the Chinese has capital controls.
Joe Kennedy: Yeah. And the other thing is, since the kind of economy is expanding over time, the USA, since it's the dollar, has to provide more dollars over time and that means it runs a trade deficit. And so the country has to be willing... if another country's going to displace us, it has to be willing to run a significant trade deficit over many years, and I don't see any country willing to do that. The Chinese lack the institutional setting, the free cap, the free markets, and just the stability that the US has and so it... I don't think it's ever going to seriously challenge the dollar as a reserve currency. One currency that could is, if a true Euro market arose. Right now, you have a French Euro market, a German Euro market, a Greek Euro market. But if more euros were backed by all countries, and so they were interchangeable, that would significantly broaden the pool assets in their liquidity. And that could boost the euro's percentage in as far as reserve currencies.
Mark Zandi: One thing I did notice looking at the data is, it's been 60% roughly... It's been 60% for a long time, roughly. It's up a little bit, down a little bit, in any given year, but it doesn't really... It has not really changed to any appreciable degree, despite all the hand ringing about this. I guess the question is, if it isn't the dollar, exactly who's currency would be the reserve currency? And it's hard to imagine.
Joe Kennedy: I mean, yeah, the Euro maybe could... could not displace it, but increase its importance. But we've been through this before. There was concern about the end. There was concern about the mark, the German mark. Then there was concern about the Euro when it was created. There was a little bit of concern over SDRs issued by the IMF. And now there's concern over China. And in each case, I think, just when you look at it, the advantages that the dollar are so great.
Mark Zandi: Yeah. We've mentioned SDRs twice. Can you just describe quickly, for the listener, what an SDR is?
Joe Kennedy: Sure. It is called special drawing rights, and it's made up of a basket of currencies, including the Yuan. And the IMF issues it periodically to members of the IMF, the issued certain baskets. And then those members can, if they want to, at some point, take them back to the IMF and get paid in the currencies. And so it gives each recipient country a basket of currencies that they can sell if they need assets on a quickly. So I had another thought, but it'll come back to me.
Mark Zandi: I've got plenty of thoughts. I've got plenty of thoughts. So why do we want to be the reserve currency? I mean, what's the deal? I mean, why is it such a big deal. If Sue cares if Euro or, yen, or even the Chinese Juan became the reserve currency, why would we have a problem with that?
Joe Kennedy: Maybe if different people measure it differently, but we get maybe 300 billion in benefits a year from having the reserve currency.
Mark Zandi: I didn't know it was quantified. Okay. Interesting.
Joe Kennedy: Yeah. Well, so we get some seigniorage because it costs less to make a dollar than to get than to sell it. So you make a little bit of money there. But more important-
Mark Zandi: Sounds like an NFT to me, I'm just saying.
Joe Kennedy: Huh?
Mark Zandi: Sounds like an NFT to me. So no, come back to that.
Joe Kennedy: A more important reason is that, all this demand for dollar assets reduces the interest rate on dollar borrowing. So when the federal reserve or that goes out to borrow money, or the treasury goes out to borrow money, it gets a lower rate. But also, when you and I go out to borrow, we get a slightly lower rate on what the loan we get. Another, is we get a... Our financial industries have a sort of leg up overseas because they're already deeply entrenched in the dollar's benefits. Another, is that, if we tighten up monetary policy in this country, some of that pain is shared by other countries. Because how do we tighten up monetary policy? We raise interest rates. And if you raise interest rates on a dollar, then other countries, have to worry about capital flowing out to the US. So they feel, "I need to raise interest rates, too, to keep funds from leaving." So those are some of the main benefits.
Mark Zandi: Yeah. Hey Chris and Ryan, did you think Joe missed anything here with regard to the discussion around currency, the concern? Are you guys at all worried about the US dollar losing its reserve currency status? Any concerns about that? You're in the same camp with Joe?
Ryan Sweet: No. Not in my lifetime.
Cris deRitis: Yeah. Not anytime soon. But if it did, I don't know that I would be terribly... if the Euro did take... Yeah, there are benefit that-
Mark Zandi: That's because you're Italian. That's why you're [crosstalk 00:26:10].
Cris deRitis: But I don't know that it's such a... I don't see it as a catastrophic event. Right?
Ryan Sweet: No.
Cris deRitis: The British pound was the reserve account currency for centuries and then it wasn't anymore, but UK still goes on. Right? It's not a cataclysmic event.
Mark Zandi: Do you agree with that, Joe? Do you think that's right?
Joe Kennedy: Yeah. Well, no. Not a catastrophic event, but I think what would seriously hurt the dollar's role is all things that the US would be responsible for. So if we let inflation get wildly out of control, that would make people think twice about the dollar. If we toy a little bit too much about defaulting on the dollar, and not paying it back, not making payments quite on time like we sort of do every year and we hit the debt ceiling, if people start to really take that seriously, that could really hurt us. So there are just general mismanagement of our economy could really hurt the dollar over time. Not suddenly, but over time. And so the lesson is, if you're those things, let's get our house in better shape.
Mark Zandi: Got it. The dollar has been the reserve currency now since, really, since world war II, really, or maybe even world war one, really.
Joe Kennedy: Yeah.
Cris deRitis: Yeah.
Joe Kennedy: You could argue world war I.
Cris deRitis: World war I.
Joe Kennedy: Because Germany came... Not... Well, Germany came out that with a lot of debt, but so did great Britain.
Cris deRitis: Yeah.
Mark Zandi: Yeah. Yeah. So really, and the British pound was the reserve currency in the 19th century up through world war I.
Joe Kennedy: Yeah.
Mark Zandi: So a hundred twenty five, a hundred fifty years, something like that. Yeah. Okay. All right. Very good. Hey, before we move on to crypto. One thing that I've observed I find fascinating, I guess, in a kind of a weird wonky sense, is that the dollar, the value of the dollar, has been very stable against other currencies. The there's chaos in the economy, right? Pandemic, geopolitical issues, China US trade war, all kinds of things. I'll think going on, but through it all, certainly in recent years. I mean, if you go back to the last 5, 6, 7, 8 years, the dollar has been stable. And if you look at the dollar on a broad trade way basis so, of course the dollar, you can look at it against all these different currencies.
Mark Zandi: And if you look at against currencies, appropriately weighted to reflect our trading relationship with those countries, the broad trade weighted dollar is. Today, roughly where it's been on average. This is on a real basis. On average, since the Bretton Woods agreement collapsed and we went to floating exchange rates back in the early 1970s. So over the past 50 years, if you go look at the average real broad trade weight of dollar, we're pretty close to... Maybe a little on the high side, right now, but very, very close. And again, relative stability. Is that something that is just me, or is that something you've observed and have thought about? This is just to anybody, to Joe, to Ryan, To Chris. Has this kind of entered into your thinking at all?
Cris deRitis: Yeah, no, no, certainly. [crosstalk 00:29:33].
Ryan Sweet: We talked about the gold standard in our inflation episode. So certainly that to me is evidence. Why are we even contemplating a change here? Right. Things are working out relatively well, obviously, there are things can improve. But why would we reject the current environment here and go back to a gold standard that we know has a track record of volatility? Right. So I agree with you. It's so normal that I think we take it for granted.
Mark Zandi: Any other comments around that, Joe? I mean, have you... Has that got on your radar screen, that observation I just made about the stability of the currency markets? I mean, historically you can see big swings and currencies, right? We've seen that in the past, but we just have not seen that in recent years, despite all the volatility that's going on. That's something that's gotten on your radar screen.
Joe Kennedy: Yeah. And I haven't thought a lot about... But to me, it's just another sign that these markets are deep in liquid and the advantages that the dollar has are so systematic that it's going to take a long time for anything to replace the dollar. And right now, no asset has the traits that would be necessary to do that.
Mark Zandi: Right. Right. And, of course, this is a nice segue, although I'm not sure I want to make the segue exactly at this moment because there's one other thing I want to talk about. But this makes a nice segue into crypto, right? One of the issues with crypto, obviously Bitcoin, Ethereum, and there's a gazillion other ones at this point, is their value fluctuates widely against everything and anything else. Right? Particularly we compare it against the dollar. We tend to compare everything against the dollar, but if you compare it against the dollar, it's like up and down and all around. But before we go to crypto... And I know I've teased this a couple times, I promise we're going to get crypto.
Mark Zandi: One of the criteria for being a reserve currency is size and heft in global trade. And obviously, talking about size, you think China. And in terms of trade, I think the Chinese trade more than the US now. So if you add up imports and exports from China to the rest of the world, in sheer numbers and dollars, it's bigger than I think the US at this point. And obviously, that's going to continue to be the case, I believe. So that obviously isn't the only criteria for choosing a reserve currency, but why don't you think the Chinese could displace the dollar as reserve currency? Ryan said, "Not in my lifetime," well, why do you think that? What is it about the Chinese system that precludes it from taking on the reserve currency status? Anyone want to take a crack of that question?
Joe Kennedy: Yeah. So if you're a government, European governments, say, and you're building up reserves and you want them to be there and retain their value in times of crisis. So you can have the dollar, which has got a long history, deep markets, a rule, a law, pretty stable government policy. Or you could have the Chinese one, which is increasingly controlled by a hostile dictatorship that the communist party reserves the right to renegotiate international agreements at any time, has strict capital control so you can't easily change a couple billion dollars worth of Yuan into something else, all of a sudden and looks out for itself and doesn't really care about what act impact its policies, national policies, have on other countries. It seems, faced with that choice, countries are going to choose dollars.
Mark Zandi: Got it.
Joe Kennedy: And I don't think that characterization of the Chinese government is going to change anytime soon.
Mark Zandi: Summarize, it boils down to property rights, most fundamentally. I mean, because the Chinese government can change the rules on who owns what with just a statement, really. And I guess, capital controls are part and postal of that same. It's a tangential... It's in the same vein as property rights, but it's kind of a different kind of problem for the Yuan to become a reserve currency. You just have the capital controls. People can't take their money in and out of China easily.
Joe Kennedy: Yeah.
Mark Zandi: That's a problem. Yeah. Okay. Very good. Okay. So let's turn to the other currency that people seem to be thinking might ultimately displace the dollar, or so-called Fiat currencies. Fiat, meaning they're backed by the full faith and credit of government. Trust in the government is going to support the value of that currency and not debase it, not do things that are going to result in high rates of inflation or deflation. You're going to maintain the stability of that currency. And that's that's crypto.
Mark Zandi: So crypto, people think... And this Fiat currency is, in some sense, private, but it's also public, right? Ultimately, it works because it has the backing of a government and institutions that people trust, and crypto is purely private. At this point, there's no government support to it. So very different kind of way of operating. So I guess, Joe, I'd like to know, before we dive in here into this conversation, are you... And I know what Ryan and Chris are, but I... Chris is, I would call, a crypto crazy. He believes in crypto and Ryan is a crypto denier. He thinks it's going-
Cris deRitis: Going to zeros.
Mark Zandi: Obviously, I'm mischaracterizing their perspectives. I think they both... And I'll let them speak for themselves on this, but what are you a crypto crazy? Do you think this is future, or are you a crypto denier? Just so we level set here in the beginning.
Joe Kennedy: Yeah. I guess, I'm midway there. I mean, I think the movement and especially Bitcoin have come up with some valuable innovations, like the blockchain, the fact that you don't need the central money market or money maker, you can deal, people can deal directly. You can exchange funds with anybody without somebody inter mediating. I think, but also the ability to do try transactions relatively cheaply, especially international transactions, is really important. And I think those innovations would be integrated into the formal market in some way. And probably, not just in the financial markets, but other markets will find a way to use things like the blockchain. But I don't see why... As like on domestic markets where increasingly transactions are electronic, anyway. You give you debit card or your credit card, and transactions between banks are totally electronic. So what is something like Bitcoin offer in that. And also, the transfers domestically are pretty cheap and rapid. Bitcoin or cryptocurrencies could put pressure on them a little bit, but I don't see what the area is.
Mark Zandi: Yeah. What's the value. What does it offer that the USD, or the Euro, and the yen doesn't provide?
Joe Kennedy: Yeah. And the crypto market really is still Bitcoin. And Bitcoin's, I think, way too volatile to ever be, in a foreseeable future, widely used for making transactions. Maybe as a store value, if people might be correct in thinking that it's going to go continue to go up over time and maybe lose some of these wild swings. But, as a medium of transaction, as a medium of pricing products, I don't see it being Bitcoin.
Mark Zandi: Yeah. Well I think-
Joe Kennedy: Maybe stable points.
Mark Zandi: There's a lot unpack there. One thing, I think is important for people to recognize is, is we need to distinguish the blockchain from the cryptocurrency, right? The blockchain is a technology that the cryptocurrency utilizes, but the blockchain is a technology that has many potential use cases. Although, at this point, there isn't a whole lot of them, but it allows for transparent accounting of transactions between entities, people, businesses, that kind of thing. So it's a technology that Bitcoin, and Ethereum, and other cryptocurrencies use. But these are independent things. It does add the value that it is transparent and you can make sure that the transactions are proper and in an order. So that does add value to Bitcoin, but these are independent kind of things.
Mark Zandi: In terms of the point about medium of exchange and store of value, my sense is that those are the two key sources of value of any currency, right? You use that as a medium of exchange. I get a dollar and I can spend it for a tube of toothpaste, and I can exchange it, and I feel confident that the dollar I have in my pocket today is going to buy the same roughly tube of toothpaste a week from now and a month from now. And the other is it's a store of value. So I can just put that dollar away and get it three years from now when I'm in retirement and it's still... It's going to lose a little bit of value because we'll have some inflation, but I can still use it. And if I take that dollar and I invest in some asset that's producing some kind of interest rate, I can build my wealth and I have more money when I retire.
Mark Zandi: All of that. Both of those values, the medium of exchange and store value, depends on stability, right? On the stability of the currency on that thing is not going to move in value in a big way. And that, Obviously, is not the case for crypto, right? I mean, that goes up and down and all around.
Joe Kennedy: Yeah. It's not the case for Bitcoin. It could be the case for some crypto. There's this talk of stable coins where you back... Just like in a bank, you issue coins or money and then you back all that money with liquid assets. And so whenever somebody comes to you and they want to redeem a bunch of the coins, you give them dollars back. And so those stable coins are designed to hold their value relative to whatever there is backing them, whether it's the dollar or mix of currencies.
Mark Zandi: Okay. Just to take a step back. Okay. We've got Bitcoin Ethereum, we're using those as the poster child for a cryptocurrency. And now you're saying, "Okay, yes, everyone now understands that the volatility of the price of Bitcoin and Ethereum makes it less valuable or useful as a store of value or medium of exchange. Maybe it's useful as a medium of speculation, but you can't use it as a currency." So how do I solve that problem? And the way that the market has tried to solve the problem was these so-called stable coins. So what would be an example of a good... Tether would be an example of a stable coin. And stable coins say, "Okay, I'm going to... You give me a dollar, I'll give you whatever you... I'll give you the stable coin and I'll make sure, if you give me that stable coin back, you're going to get the dollar back," right?
Joe Kennedy: Yeah.
Mark Zandi: "And the dollar you give me, I'm going to invest in whatever I'm going to invest in." And you're saying that solves that problem, or at least addresses that problem of volatility and makes it more likely to be a medium of exchange.
Joe Kennedy: It does as long as the stable coins can be redeemed at any time. And so the worry is, is like the money markets.
Cris deRitis: Exactly.
Joe Kennedy: They work great. And everybody says, "Oh, there's... We don't need federal backing of money markets. Everybody understands the risks." And then you go into an almost depression and a couple of the money markets break the dollar and the fed feels compelled. And federal government feels compelled, to come in and back everybody up because-
Mark Zandi: So Chris, you were just commenting there. So can you want to explain that risk in a little bit more detail? What's the concern about stable coin at this point in time?
Cris deRitis: It goes right to your point about it being backed a dollar for dollar, right? That promise that a depositor makes in exchanging a dollar bill for a tether, or US dollar, whatever stable coin, that that promise is ironclad. Right? If the next day, the fund tether is investing those funds in whatever instruments, and there is a crisis, they may not be able to redeem those coins back for a dollar. So that's the issue I see. I still fail to see what the true value to the consumer. How is this any different to me than entries in my bank account, electronic entries in my bank account? What is the advantage of paying for something with this coin versus just the debit card or... Not transfer. So that's the value question.
Mark Zandi: Yeah [crosstalk 00:44:58] the question. Why would you do that? I mean, why?
Joe Kennedy: Yeah, I think there are two reasons. One is, on international transactions, there are high transaction costs. The other one is secrecy. These stable coins, or the crypto coins, they don't offer complete privacy or security, but they are pretty secure and anonymous. And so if that's what you want, either for legal or illegal purposes, that would be an asset, or is an asset. It's also a main regulatory concern.
Mark Zandi: Right. So two fundamental sources of value. If you solve the question of the volatility of the value of it, which is stable coin, you get two sources of value. One is that it's a better medium of exchange in international transactions. Because right now, let's say I'm a immigrant worker in the central valley of California. I get my paycheck and I want to get it back to my family, let's say, in El Salvador. Previously, I had to go down to the Western union with my cash. They would turn it into a wire, wire it down to El Salvador. My relative would have to go to the Western union down there and collect the cash. And of course, Western union, could be a two day, three day process. Western union collects its vague, it takes a fee.
Mark Zandi: And there's reports of people getting robbed as they come out of the Western union in El Salvador because people know they're going there for getting cash. Right. So that's a problem. So here, this could solve that problem to get that money down. And that's why to some... One of the reasons why El Salvador said, "Okay, we're going to take Bitcoin as legal tender. Dollars, welcome. We've been dollarized in El Salvador, but we'll take Bitcoins as well." So does that... And the other value is, as you say, secret. I can move the money around and it's hard to track.
Joe Kennedy: Yeah. And actually one other is that, for people who aren't... For people who don't have bank accounts, it can provide several valuable services, especially... Here that population is relatively small. In other developing countries, especially when in the rural areas, very few people might have bank accounts. And so this gives them a place to easily... Everybody's got a phone so they can buy stuff, they can put stuff in their savings account.
Mark Zandi: Yeah.
Cris deRitis: Once-
Mark Zandi: Go ahead, Chris.
Cris deRitis: I was going to say-
Mark Zandi: [crosstalk 00:48:04] already could you see you wanted to say something. Go, ahead.
Cris deRitis: [crosstalk 00:48:09] This is one solution-
Ryan Sweet: [crosstalk 00:48:10] crypto.
Cris deRitis: But we have other solutions out there too, right?
Joe Kennedy: Yeah.
Cris deRitis: I make international transactions as well. I have family in Europe. Obviously, it's not a developing country but, yeah, I've seen the prices of those transactions falling over time. Can very easily PayPal someone today. So I think the technologies are interesting and we will learn from them. And I see this as just an extension of broader FinTech trends, right? So we had that FinTech boom a few years ago, perhaps is ongoing in terms of lending. And now the banks have largely adopted many of those technologies. So I think it's great that we're experimenting it, but I don't see the long term viability. I think these... There are other advantages that we've just described or ascribed to the dollar that I think are going to overwhelm any advantage of the big Bitcoin to provide,
Mark Zandi: I guess the other issue is regulation, right? I mean the banking system is highly regulated, which adds to the confidence that money good. If I put my money in the bank and move it in the banking system, that money's there. No one's going to... I'm not going to lose it. I'm going to get dollar for dollar, and also money market mutual funds now post financial crisis, right? Because before the financial crisis, money market mutual fund could so-called break the buck. One of them did. And that was one of the approximate causes for the cratering of the financial system, because people thought, "Oh my gosh, this was money good. But it really isn't, I'm going to lose money." And there was a run on money market mutual funds. And so the stable coin is very much as, Joe, you said, the analog to a money market mutual fund, but it's not... at this point not regulated. Right, Joe? I mean-
Joe Kennedy: No.
Mark Zandi: You can't be assured you're going to get your money back. They say you're going to get your money back, but who knows?
Joe Kennedy: Yeah. I mean, they're kind of regulated. And then if you sell these things under a promise, the federal government will hold you to that promise. And so a couple of staple coins have gotten fined because the assets they had in reserve, weren't the assets that they were telling everybody they were carrying. So but there's an indirect form of regulation. I think most people think, "Well, you got to regulate them somewhere in this banks because the government's going to have to guarantee them at some point." So-
Mark Zandi: Because why would we want the bank? We established the regulations in the banking system to protect against this problem of runs on the system, which are devastating in times of crisis. Right? I mean, what happened in the 1930s was a bank run. What happened around the financial crisis, that a run on money market mutual funds on the financial system. So we know that those are pretty bad things. We don't want that to happen. So why would we let this other system that's setting up that has the same risk not be regulated in the same way? That doesn't make sense. Right?
Joe Kennedy: I mean, getting back to It's A Wonderful Life.
Mark Zandi: Getting- Oh, there you go.
Cris deRitis: There you go.
Mark Zandi: Connected.
Cris deRitis: I like it.
Joe Kennedy: [crosstalk 00:51:30] All there.
Cris deRitis: Full circle.
Ryan Sweet: Circle of life, yes.
Joe Kennedy: It's all there.
Mark Zandi: Yeah. So I guess Chris' point is, "Well, once that happens," and logic would dictate that that's going to happen, right? That we're going to... I mean, obviously, this is a big debate in Washington right now and it's in the legislative process. But feels like, at the end of the day, there's going to be more regulation here. So once that happens, the cost of operating stable coin rises to be more consistent. And as Chris points out, transferring money and doing all those things that stable coin can do in the regular banking system better. Why stable coin? Why would you have it? What's the of advantage? Why is it going to live to see another day? I guess the answer is, "We don't know." Maybe the technology can change in a way that makes it more valuable, but it's hard to see that at the current point in time.
Ryan Sweet: But don't you think if there's a run... there was a run on money market mutual funds, the fed stepped in. Do you think the Fed's going to step into crypto markets if there's a liquidity issue? I don't think so.
Mark Zandi: Why?
Ryan Sweet: If they [crosstalk 00:52:34] Right now.
Cris deRitis: Exactly.
Mark Zandi: Why not? Yeah, Why?
Joe Kennedy: If they get big.
Cris deRitis: They have to get much bigger. I mean, they have to propose a contagion effect on the financial system. And I don't think that would... If Bitcoin went to zero tomorrow. I don't think the financial system's going to collapse.
Mark Zandi: Do we know much is stable coin? Do you know what it... I don't, is it assets under management? I guess, what do we know? I know the value total crypto right now is about two... It's well over $2 trillion.
Cris deRitis: It got up to three.
Mark Zandi: Sounds like a lot. It was [crosstalk 00:53:06].
Cris deRitis: Well, it's come back now. Right? Because it was like down 20%-
Mark Zandi: Depends on the day.
Cris deRitis: In November, I think, it was 3 trillion.
Mark Zandi: [crosstalk 00:53:14] okay.
Joe Kennedy: Yeah, I think it's relatively minor, but it's been growing rapidly in the last couple years. Two years maybe. So I kind of agree with Chris. I think these companies, the more successful ones, are going to push the envelope on technology and services. And hopefully that will get adapted by the incumbents. But in the end, I think the advantages of Fiat currency are so great that it's hard for me to see one of these emerging. And I think the competition is going to whittle it down to, I don't know, two or three who fight to be these stable coin. But even then, I think if you really want a stable coin that's backed 100% by dollars, why not just have dollars? Why do you need this middle?
Mark Zandi: Exactly. Exactly.
Cris deRitis: Yeah.
Joe Kennedy: You need a bank because you want the bank... The bank's going to earn money by lending it at a higher rate to somebody else, and is going to successfully transfer a short term liability into a long term asset. But whether cryptocurrency is going to do, that's of equal worth.
Mark Zandi: Well, here's the other issue. I mean, we've been talking about the relative merits, but one of the D merits I think of the crypto market is it's definitely a vehicle for raw speculation. Right? I mean, speculation in the sense that I'm just buying this thing because I think I can sell it to the greater... The other fool faster before it falls in value. Right? I mean, again, that who cares if it's private parties? Not a big deal, can't hurt a lot of people if prices go down when it, when it does eventually go. Because it will go down, but if it's big and then we're two $3 trillion rising rapidly, that's a whole different ballgame. And it's sucking lots of people in. I mean, Chris, didn't you tell me... Or was it Ryan? You saw a Bitcoin ATM?
Ryan Sweet: Yeah. At my local gas station.
Mark Zandi: Local gas station?
Ryan Sweet: Mm-hmm (affirmative).
Mark Zandi: Right.
Ryan Sweet: And there was someone using it. I'm curious how it works. So next time I go in, I'm going to read the instructions.
Mark Zandi: What will they do? Put their American express card in and say, "Give me-"
Ryan Sweet: I have no idea.
Mark Zandi: "One, 100th of a Bitcoin," which is... How much that would be? That's still a lot of money. That's [crosstalk 00:55:58] $470, that would be. Yeah, Something like that. Yeah. Right. I mean, am I wrong about that? I mean, what do you think?
Cris deRitis: Well, speculation and nefarious. If you are using it for transactions, most of those transactions are not to buy gas. Right?
Mark Zandi: Right. Yeah. Joe, I mean, if you... I know you're very... I don't think skeptical is the right word, but you're very judicious when you think about you want to use regulation judiciously. You don't want overregulate. You don't want to squelch private activity and innovation. But with that hat on, with that as a prism... Tell me if I got that wrong, but with that as a prism-
Joe Kennedy: No, it's true.
Mark Zandi: How do you think about regulation of the crypto market?
Joe Kennedy: Well, I think we need regulations of stable coins.
Mark Zandi: We need that, you're saying?
Joe Kennedy: We need that.
Mark Zandi: Okay.
Joe Kennedy: At a minimum, we need against fraud. If they become any appreciable size, we need regulations. Because the federal reserve is going to have to worry about backing them in a crisis. Right now, our regulatory approach seems to be that we have five or six existing financial regulators and they're all sort of jocking for position and trying to decide what aspect of cryptocurrency is in their existing jurisdiction and how they should use that these existing powers to regulate the economy. I think it would be much better if we stepped back and we had a broader discussion about how to regulate cryptocurrencies, and maybe wrote new rules that applied just to them in assets like them and put them all in one regulator rather than having a couple regulators battle over jurisdiction. And all also preempted state rules so that you didn't have to worry about complying with 20 different states that all had their own different rules.
Mark Zandi: You're not against regulation. You're just saying, "If we're going to regulate, let's just do it right?"
Joe Kennedy: Yeah, and I think these... it might be that, 10 years from now, people look back and see China made a big mistake when it banned all these cryptocurrencies and that maybe we benefited a lot because we let them continue and we got a lot of innovation out of it.
Mark Zandi: Yeah. And that brings up the last thing I'd like to chat about with you and that is central bay digital currency. And as you point out the Chinese, did they actually ban all crypto? You're not allowed to... I didn't know.
Joe Kennedy: Believe they did.
Mark Zandi: Did they? And they now have... They haven't adopted, but they are... I think they have a proof of concept, let's call it, for a central bank digital currency. Do you want to describe what they're up to and what CBD is actually all about? Because it's a digital currency. So it's into the same crypto... Is it block- it's not blockchain based, is it? I don't think it is. No.
Joe Kennedy: No.
Ryan Sweet: It'll have to be.
Mark Zandi: Yeah. Yeah. Right.
Joe Kennedy: So yeah. And I've been meaning to plug another book. Eswar Prasad's book on The Future of Money is just absolutely great on this, and he goes up till about June of this year. So it's got a lot of recent events in and just a wonderful explanation of all these issues.
Mark Zandi: On our book list. We got a book [crosstalk 00:59:51].
Joe Kennedy: Yeah. And he-
Mark Zandi: I put your book on there and on there and I put [crosstalk 00:59:54] on there.
Joe Kennedy: Yeah, I have. I don't know how many people have...
Mark Zandi: Yeah, sorry about that. I'm not the [crosstalk 01:00:02] book club.
Joe Kennedy: Yeah. So yeah. I kind of agree with him that sort of CBDCs are pretty inevitable. The central bank now issues dollars. And so instead of issuing dollars, it would give everybody an electronic account. You could have a system where just only banks have digital accounts with the federal reserve, but that's the system we already have, it's just they're in dollars, not in some other electronic something. But if you had, what they call a retail system where a lot of individuals in businesses had their own account in these digital dollars, the fed would issue them. And there's some advantages. There's one that the federal, the fed, contains of the money supply and all these things are backed in the same way that a dollar bill or a quarter is backed.
Joe Kennedy: It could make it easier for the federal reserve to conduct monetary policy. If it had to inject money into the economy quickly, it could just put money in these accounts overnight where it could aim at certain businesses or certain types of individuals and give them more money. It would probably displace any other digital coins, I think. Why would you need another coin if you have these? So it has real advantages. It'd be tougher to conduct illicit business with it with a-
Mark Zandi: Of course, digital isn't one of the downside- oh, Chris, go ahead. I've got a couple downsides, but I'm sure you're going there, too.
Cris deRitis: Well, go ahead. I'll start, you... I mean, the disadvantage, right? Advantage, perhaps, that for greater control, but disadvantage certainly is commercial banks, right? As you mentioned, we already have a commercial bank digital currency. Most currency's actually created by the banking system. Right? That seems to me as a significant downside where you're putting all the eggs in the basket of the fed.
Joe Kennedy: It is, but you could put these accounts in banks and just so allow the fed to reach into the bank and add money to account. Or you could have a minimum, a maximum size on the account so that most of your money still is in the banking sector. The bank still get the vast majority of deposits and use those to lend out, but I agree it's a serious issue and you don't want the fed to be deciding who should get credit. You want the private sector to do that.
Cris deRitis: Right.
Joe Kennedy: And go ahead.
Mark Zandi: Sorry. Go ahead, Chris. I'm sorry, go ahead.
Cris deRitis: No, go ahead. Go ahead, Mark.
Mark Zandi: No, I was just going to say, shouldn't we be worried though about central government control? My sense is that's one reason why the Chinese want this because they now have complete control over everything in the payment system. And, holy cow, that's a lot of control in power. It feels... Just feels, I don't know, big borders to me. I'd be very... I don't know my... Is that just misplaced concern?
Joe Kennedy: Yeah. I think it's a general problem with technology. We have these security cameras all around and other things. On the one hand, you want government to be able to stop for fraud and stop crime. And on the other hand, you want to protect individuals. And I've always thought that we need some sort of system where, if the feds or any the state wants access to certain data, it has to show a court that, "Well, there was a crime committed here between this hour and that hour. And so I want to look at all the security cameras in that area." And then the court oversees that examination to make sure that the government doesn't tamper with the records or go beyond its... What's been allowed and show that the control of access by the state is very restricted to legitimate means. And you you could do that... you could set up that sort of a system with a CBDC.
Mark Zandi: Yeah. Well, okay, how do you handicap this, Joe? I mean, in the US 10... Let's say, 10 years from now, what are the odds that we're going to be moving in the direction of a central bank digital currency?
Joe Kennedy: I think about a hundred percent. I think it makes sense to do it slowly to get Congress on board, to have it show everybody, including most of the public understand what's being done and how it's going to work and why we're doing it. I don't think we have to race China to set one up, but I think we would do it.
Mark Zandi: Wow. A hundred percent? That's...
Joe Kennedy: Okay. 98.5.
Cris deRitis: That's conviction.
Mark Zandi: Do you have any [crosstalk 01:05:40] you're going to continue to rise every morning? A hundred percent? That's pretty confident.
Joe Kennedy: Yeah, a hundred percent.
Mark Zandi: Yeah. Okay. Chris, did you hear that? Ryan?
Ryan Sweet: I heard it. Yeah.
Mark Zandi: Do you have a different set of odds, or do you need to think about it more deeply for you answer?
Ryan Sweet: I'll take [Gunder 01:05:58].
Cris deRitis: I'll take gunder, too.
Mark Zandi: Good move. Ryan, I'm sure Ryan's the same way.
Joe Kennedy: That is my mistake right there.
Mark Zandi: Well, one of those things that it's going to take a lot longer to happen than people think. And then all of a sudden it's going to happen very quickly. So I don't know about 10 years from now, but could be a couple gen- sorry about my dogs. It is what it is, but it's going to maybe a generation from now and then all of a sudden. But I suspect it's going to take more than 10 years, first, to move down this path because that's a big change. It feels like to me. Big, big change. Yeah. Anyway, we covered a boatload of ground, as they would say. And I do want to make a couple advertisements. At Mark Zandi.
Ryan Sweet: There we go. There it is. [crosstalk 01:06:47] It never fails.
Mark Zandi: On Twitter. So my handle is at Mark Zandi. Ryan, last week, you told me you were going to tell us what your new Twitter handle is.
Ryan Sweet: Oh, I forgot to check.
Mark Zandi: Oh, you forgot.
Ryan Sweet: I'll have a for you next week.
Mark Zandi: Yeah. You're not, you're playing nonchalant. And Joe, do you have a... Are you on Twitter?
Joe Kennedy: I am on Twitter. I think my handle is at JV underscore Kennedy.
Mark Zandi: So it doesn't sound like you use it very often. Not too often.
Joe Kennedy: I get on and these people are following me. I don't know who they are. It's just a quite creepy thing.
Mark Zandi: Hey, I'm just saying Joe, at Mark Zandi. I mean, you can follow me. Chris, you're not on Twitter, right?
Cris deRitis: I am following you.
Mark Zandi: Oh, you are?
Cris deRitis: Yeah. This week, I logged in.
Mark Zandi: [crosstalk 01:07:36] do that. Okay. Okay. Fantastic. Very good. Okay. Well, anything else anybody wants to bring up? I mean, I know it's getting close to Christmas, so I'm sure people want to get onto other things other than listening to the podcast, and central bank digital currency, and Bitcoin and SDRs, and reserve currency. I know there's a lot to cover, but very, very important to. Thank you, Joe. Really appreciate you-
Joe Kennedy: And I always enjoy it.
Mark Zandi: Merry Christmas. Happy new.
Joe Kennedy: Thanks. You guys, too.
Mark Zandi: Thanks guys.
