Latest / How Canadian Markets Work / Episode 28: Fiscal Policy (Debt, Deficits, and the Denominator)

Transcript

Episode 28: Fiscal Policy (Debt, Deficits, and the Denominator) · How Canadian Markets Work

• 0:01
  Imagine a small room. Inside that room you have
• 0:04
  a committee of just a few people, and they meet
• 0:07
  maybe eight times a year to set a country's monetary
• 0:10
  policy. Right, and it's very quiet. Exactly,
• 0:12
  it is quiet. It's highly contained. But now I
• 0:14
  want you to contrast that with fiscal policy.
• 0:17
  You know, fiscal policy is this massive budget
• 0:19
  debated in a parliament by hundreds of elected
• 0:22
  politicians over weeks and months of just noise
• 0:25
  and friction and theater. Yeah, it's loud. It's
• 0:28
  totally chaotic. It really is. And yet if you
• 0:30
  watch the bond market, which is arguably the
• 0:33
  true financial engine of the world, it often
• 0:35
  reacts far more intensely to the politicians
• 0:38
  in that loud room than it does to the quiet committee.
• 0:40
  Which is fascinating. And why is that? It's because
• 0:43
  the government is the bond market's biggest customer.
• 0:47
  Right. So if you want to understand why your
• 0:49
  mortgage rate just changed, you don't look at
• 0:52
  the politicians shouting on television. You have
• 0:54
  to look at the underlying math of government
• 0:56
  borrowing. Welcome to the Deep Dive. We are so
• 0:59
  glad you are here with us today. Our goal for
• 1:01
  this one is to unpack a really fascinating stack
• 1:04
  of sources all about fiscal policy. Yeah, we're
• 1:07
  looking at how governments borrow money, how
• 1:10
  that borrowing is actually measured, and how
• 1:12
  it directly dictates things like the interest
• 1:15
  rate you pay on your own mortgage. Because I
• 1:17
  think government debt sounds like dry accounting
• 1:19
  to a lot of people. Oh, absolutely. People tune
• 1:22
  out. Right, they do. But it is actually the hidden
• 1:25
  machinery shaping your entire financial life.
• 1:28
  So we need to look at how that pricing actually
• 1:30
  works and how this debt reaches into your wallet.
• 1:34
  But to even look at the math clearly, we need
• 1:37
  a quick refresher on the vocabulary. Because
• 1:40
  there is a fundamental distinction here that
• 1:42
  gets weaponized in political speeches constantly.
• 1:45
  Yes, I am talking about the difference between
• 1:47
  the deficit and the debt. Right. It's the classic
• 1:49
  conflation of a flow. versus a stock. Which sounds
• 1:53
  technical, but it's really not. No, it's quite
• 1:55
  simple. Anyone listening to this who follows
• 1:57
  finance knows the basic definitions. A deficit
• 2:00
  is a flow. It's the shortfall for a single 12
• 2:03
  -month fiscal year where a government essentially
• 2:06
  spends more than it collects in revenue. Just
• 2:08
  one year. Exactly. Yeah. But the debt is the
• 2:11
  sock. It's the accumulated total of all past
• 2:14
  deficits minus any rare surpluses just sitting
• 2:17
  there on the ledger. I bring this up because
• 2:19
  the political spin around this is incredibly
• 2:22
  effective. A government will hold a press conference
• 2:25
  and boldly announce, you know, we reduced the
• 2:28
  debt. Which is almost never true. Right. If you
• 2:31
  actually look at the Treasury data, what they
• 2:32
  did was cut the deficit. They reduced the flow,
• 2:36
  not the stock. Which means the overall debt is
• 2:38
  actually still growing. just at a slightly slower
• 2:40
  velocity. It's like driving a car, right? Exactly
• 2:43
  like a car. If you are driving and you ease off
• 2:46
  the accelerator from 100 kilometers an hour down
• 2:48
  to 80, you are still moving forward. You haven't
• 2:51
  gone into reverse. Right. You're just gaining
• 2:53
  ground a little slower. The only way sovereign
• 2:55
  debt actually shrinks in absolute terms is if
• 2:58
  a government runs a surplus. Which is exceedingly
• 3:01
  rare. Very rare. But hold on. Let me push back
• 3:03
  on this a bit for you. When we talk about the
• 3:05
  absolute numbers, a national debt of $30 trillion,
• 3:12
  depending on the country you're looking at, it
• 3:15
  sounds fundamentally catastrophic. Oh, it sounds
• 3:17
  terrifying. Right. Because if a massive multinational
• 3:21
  corporation held that kind of debt relative to
• 3:24
  its revenue, the market would panic. They would
• 3:27
  be downgraded to junk status immediately. So
• 3:30
  why doesn't the bond market panic at the raw
• 3:32
  dollar amount of sovereign debt? Well, because
• 3:35
  the bond market isn't looking at the raw dollar
• 3:37
  amount. A trillion dollars in a vacuum is basically
• 3:39
  a meaningless number. It needs context. Exactly.
• 3:42
  The metric that dictates sovereign creditworthiness
• 3:45
  is debt to GDP. We measure the total accumulated
• 3:49
  debt as a percentage of gross domestic product.
• 3:51
  So it is a direct comparison between what a country
• 3:54
  owes and what a country actually produces in
• 3:56
  a given year. Because production equals the capacity
• 3:58
  to tax. And your capacity to tax is your capacity
• 4:02
  to service the debt. Let me try to translate
• 4:04
  this into something tangible for you listening.
• 4:06
  Think about a $1 million household mortgage.
• 4:09
  That's a great way to look at it. Right. Because
• 4:11
  if you make $80 ,000 a year, a million dollar
• 4:15
  mortgage is crushing. The bank probably wouldn't
• 4:18
  even give it to you. No way. But if your household
• 4:20
  makes $400 ,000 a year, well, that exact same
• 4:24
  million dollar mortgage is totally manageable.
• 4:26
  The raw number of the debt. the million dollars,
• 4:30
  it did not change at all. Your capacity to carry
• 4:32
  it did. That is the exact mechanism. And it reveals
• 4:36
  what we might call the central magic trick of
• 4:39
  sovereign finance. I love calling it a magic
• 4:41
  trick because it really feels like one. It does.
• 4:43
  It's all about the power of the denominator.
• 4:45
  So if a country's debt grows at, say, 2 percent
• 4:48
  a year, but its economy, its nominal GDP, grows
• 4:51
  at 4 percent a year, the debt to GDP ratio actually
• 4:55
  falls. So the ratio shrinks while the raw debt
• 4:57
  number continues to rise. Exactly. The government
• 5:00
  never repays a single dollar of the principal,
• 5:02
  but their financial position improves on paper.
• 5:05
  They outgrow the burden. The denominator does
• 5:07
  all the heavy lifting there. And historically,
• 5:10
  this is how almost every major advanced economy
• 5:12
  has managed massive debt spikes. You know, like
• 5:16
  the ones incurred during the Second World War.
• 5:18
  Right. They didn't aggressively pay off the bonds.
• 5:20
  No. They fostered decades of economic expansion
• 5:23
  that just... made the debt irrelevant by comparison.
• 5:26
  Yeah. And there is a quiet partner in this mechanism
• 5:30
  that is rarely discussed openly. Moderate inflation.
• 5:33
  Yes. Because inflation artificially pumps up
• 5:36
  the denominator. It inflates nominal GDP. Right.
• 5:39
  So if a government owes a fixed amount of debt
• 5:41
  from 10 years ago, but inflation is steadily
• 5:43
  pushing up nominal wages and nominal corporate
• 5:46
  profits and just the overall price of goods,
• 5:49
  then the tax revenues flowing into the Treasury
• 5:51
  increase. Meanwhile, that fixed debt from a decade
• 5:54
  ago stays exactly the same size. The real value
• 5:56
  of that debt is eroded. It just becomes mechanically
• 5:59
  easier to carry. Which is why a central bank
• 6:02
  targeting a steady 2 % inflation rate is not
• 6:05
  just about price stability for consumers. It
• 6:07
  actually creates a very favorable environment
• 6:09
  for a heavily indebted sovereign government.
• 6:12
  It's very convenient for them. So if the denominator,
• 6:15
  the entire economic output of the nation, is
• 6:18
  the golden rule for measuring debt. How do we
• 6:21
  handle a structural setup like Canada? Well,
• 6:23
  this is a huge point. Right, because if you apply
• 6:26
  that simple debt -to -GDP rule to Canada by only
• 6:29
  looking at the national government, you get a
• 6:31
  massive blind spot. A profound blind spot. If
• 6:34
  you read a standard international fiscal monitor
• 6:37
  from a global organization, they often compare
• 6:40
  the federal debt of one country to the federal
• 6:42
  debt of another. Which works for some places.
• 6:45
  Yes, in a highly centralized country the national
• 6:48
  government funds almost everything. Defense.
• 6:51
  health care, infrastructure, education. So their
• 6:54
  federal debt is essentially the whole story.
• 6:55
  But the Canadian Constitution splinters that
• 6:58
  responsibility completely. It does. The Constitution
• 7:00
  assigns the two most structurally expensive elements
• 7:03
  of modern society directly to the provinces.
• 7:05
  Health care and education. And those two categories
• 7:08
  absolutely dominate public spending. I mean,
• 7:10
  hospitals are incredibly capital intensive. An
• 7:12
  aging demographic requires massive ongoing medical
• 7:15
  funding. And universities and primary education
• 7:18
  systems require continuous compounding investment
• 7:21
  too. Exactly. So because Canadian provinces carry
• 7:24
  the responsibilities that would normally sit
• 7:26
  with a national treasury, they are forced to
• 7:29
  borrow heavily to fund them. This means if you
• 7:31
  are looking at a global chart and you see Canada's
• 7:34
  federal debt to GDP ratio sitting far lower than
• 7:37
  its peers, It is a dangerous illusion. It really
• 7:41
  is. The federal government looks remarkably fiscally
• 7:44
  disciplined, but only because the heaviest burdens
• 7:47
  were basically offloaded onto the provincial
• 7:49
  ledgers. The provinces issue their own debt,
• 7:52
  they maintain their own distinct credit ratings,
• 7:54
  and they borrow on the open market. In fact,
• 7:58
  Canadian provinces are among the largest sub
• 8:00
  -sovereign borrowers on the entire planet. Wow.
• 8:03
  Yeah. A province like Ontario issues more debt
• 8:05
  than many independent national governments in
• 8:07
  other parts of the world. But the bond market
• 8:09
  doesn't treat provincial debt exactly the same
• 8:11
  as federal debt, right? Because a province doesn't
• 8:13
  have a central bank. They can't just print money
• 8:16
  if things go wrong. And that is the critical
• 8:18
  vulnerability. A sovereign nation with its own
• 8:21
  currency and central bank can technically never
• 8:24
  default on debt denominated in its own currency.
• 8:27
  Because it can always create the liquidity to
• 8:29
  pay the bondholders. Oh, be it at the risk of
• 8:31
  hyperinflation. Yeah. But yes, a province cannot
• 8:35
  do that. Ontario, Quebec, British Columbia, they're
• 8:38
  users of the Canadian dollar, not issuers. So
• 8:41
  the bond market prices a slightly higher risk
• 8:44
  premium into provincial debt. It demands a higher
• 8:46
  yield to compensate for the fact that the province
• 8:49
  lacks a money printer. So to accurately assess
• 8:52
  Canada's true fiscal health. or to compare it
• 8:55
  meaningfully to a unitary state like the UK or
• 8:58
  France, you have to combine the federal and the
• 9:00
  provincial debt. You have to look at the consolidated
• 9:02
  general government debt. Exactly. But even if
• 9:04
  a country manages that consolidated debt to GDP
• 9:07
  ratio perfectly, a recession just throws a wrench
• 9:09
  in the whole machine. Oh, absolutely. And what
• 9:11
  fascinates me is that during an economic downturn,
• 9:14
  the deficit expands wildly without a single politician
• 9:17
  voting on it. How does a government accidentally
• 9:20
  borrow billions of dollars more than it planned?
• 9:23
  It happens through the architecture of automatic
• 9:25
  stabilizers. The fiscal system is literally designed
• 9:29
  to react mechanically to economic shocks. So
• 9:32
  how does that look in practice? Well, during
• 9:34
  a recession, corporate profits plummet, which
• 9:37
  means corporate tax revenues fall. People lose
• 9:39
  their jobs or work fewer hours, which means income
• 9:42
  tax revenues drop. People spend less, so consumption
• 9:45
  taxes decline. So the revenue side of the ledger
• 9:48
  collapses on its own. At the exact same time,
• 9:51
  the spending side automatically increases. Employment
• 9:53
  insurance claims surge. Social assistance payouts
• 9:56
  rise. So the gap between revenue and spending
• 9:59
  widens instantly, funding a massive deficit.
• 10:02
  Yes. It's almost like, well, it's not a conscious
• 10:04
  decision at all, is it? It is purely mechanical.
• 10:07
  It feels like a home thermostat to me. That's
• 10:09
  a perfect analogy. The heat kicks on the exact
• 10:11
  second the house gets cold. Nobody has to walk
• 10:14
  over and push a button. Nobody have to vote to
• 10:16
  turn the heat on. The system just senses the
• 10:19
  drop in the ambient temperature and reacts immediately
• 10:21
  to warm the place up. That is the beautiful way
• 10:23
  to visualize it. Automatic stabilizers bypass
• 10:27
  the political process entirely. And we can understand
• 10:30
  their value best when we contrast them with the
• 10:34
  alternative, which is discretionary policy. Right.
• 10:37
  Discretionary policy requires a deliberate, active
• 10:40
  decision by a government to launch a new stimulus
• 10:44
  package, which is like forming a household committee
• 10:47
  to decide whether you should buy a space heater
• 10:49
  for the cold house. Exactly. First, you have
• 10:52
  the recognition lag. You have to realize the
• 10:54
  house is actually cold, which takes time. because
• 10:57
  economic data is always looking backward. Right.
• 10:59
  Then you have the legislative lag. The committee
• 11:01
  has to debate what brand of heater to buy, argue
• 11:03
  over who pays for it, and draft a budget. Then
• 11:06
  comes the implementation lag. You have to drive
• 11:08
  to the store, purchase the heater, bring it back,
• 11:11
  and plug it in. By the time it actually starts
• 11:13
  blowing warm air, it might already be spring.
• 11:15
  And that is the inherent weakness of discretionary
• 11:18
  stimulus. By the time a massive infrastructure
• 11:21
  bill is designed, debated in parliament, passed
• 11:24
  into law and the capital finally flows down to
• 11:26
  the actual construction workers, the recession
• 11:29
  may have ended two years prior. So you end up
• 11:32
  stimulating an economy that is already recovering.
• 11:35
  Which can trigger severe inflation. Automatic
• 11:38
  stabilizers are elegant because they deliver
• 11:41
  economic support exactly when the pain is most
• 11:43
  acute. And they naturally fade away the moment
• 11:46
  the economy warms up and people go back to work.
• 11:48
  Precisely. This all paints a picture of a massive
• 11:51
  intricate machine. But why should you, the listener,
• 11:54
  care about any of this? Why should you care about
• 11:57
  provincial bond issuance or the GDP denominator
• 12:00
  or automatic stabilizers? It's a fair question.
• 12:02
  Because the bond market's reaction to all this
• 12:04
  government borrowing directly dictates the price
• 12:07
  of your own life milestones. Yes. The yield on
• 12:10
  sovereign debt is the absolute floor for the
• 12:13
  cost of capital in a society. It reaches right
• 12:15
  into your personal bank account. So let's walk
• 12:17
  through the mechanics of that for a second because
• 12:19
  it is the most crucial connection we can make
• 12:21
  today. Government of Canada bonds are considered
• 12:23
  the risk -free rate. Because as we established,
• 12:26
  the sovereign government controls the currency.
• 12:29
  The chance of a default is functionally zero.
• 12:32
  So the yield on those bonds is the baseline return
• 12:36
  an investor demands for parting with their money
• 12:38
  without taking on any credit risk. So imagine
• 12:41
  you are a major commercial bank. You have a pool
• 12:44
  of capital to lend out. The bond market has priced
• 12:47
  the five -year Government of Canada bond at a,
• 12:50
  say, 4 % yield. The government is essentially
• 12:52
  telling the bank, we will guarantee you a four
• 12:54
  percent return totally risk free if you buy our
• 12:57
  debt. Now, a citizen walks into that commercial
• 12:59
  bank looking for a five year fixed mortgage to
• 13:02
  buy a home. The bank looks at that citizen and
• 13:05
  even if they have a perfect credit score. They
• 13:07
  are infinitely riskier than the federal government.
• 13:10
  Right. They could lose their job. They could
• 13:11
  get divorced. The house could burn down. The
• 13:13
  bank has to consider the opportunity cost. Why
• 13:16
  would they lend money to a risky citizen at 4
• 13:19
  % when they can get a guaranteed 4 % from the
• 13:21
  government? They won't. The risk -free rate acts
• 13:24
  as gravity. The bank takes that 4 % government
• 13:28
  yield and adds a spread on top, let's say 2%,
• 13:32
  to cover their administrative costs. the risk
• 13:35
  of the homeowner defaulting, and their profit
• 13:37
  margin. So the citizen gets a mortgage rate of
• 13:40
  6%. The bank doesn't just invent that number.
• 13:43
  It is structurally tethered to the government's
• 13:45
  borrowing cost. It is entirely connected. If
• 13:47
  the bond market gets nervous about the size of
• 13:49
  the national deficit or inflation expectations
• 13:52
  rise and the yield on the government bond pushes
• 13:54
  up to 5%, your mortgage rate immediately pushes
• 13:57
  up to 7%. The government's fiscal choices literally
• 14:01
  dictate what you pay to live in your own home.
• 14:04
  Which naturally introduces one of the most intense
• 14:06
  ongoing debates in all of economics. It is a
• 14:09
  debate about the broader consequences of a government
• 14:12
  constantly borrowing from that pool of available
• 14:14
  capital. And before we outline this, we need
• 14:16
  to be incredibly clear with you. We are not taking
• 14:19
  a political side here. The mechanics of a bond
• 14:22
  yield spread are just math. Right. But what a
• 14:26
  government should do with those mechanics is
• 14:28
  entirely political. Serious economists hold very
• 14:31
  different views on this, depending on the context,
• 14:33
  and we are going to objectively outline both
• 14:35
  sides of the fiscal debate for you. It is essential
• 14:38
  we maintain that neutrality. The debate centers
• 14:40
  around a concept called the crowding out effect.
• 14:43
  Let's examine the first perspective. One side
• 14:45
  of the debate argues that heavy, sustained government
• 14:48
  borrowing is inherently damaging because it crowds
• 14:51
  out private investment. The logic goes like this.
• 14:54
  There is only a finite amount of savings available
• 14:57
  in the domestic and global financial system at
• 14:59
  any given moment. If the government is issuing
• 15:02
  massive amounts of bonds to fund its deficits,
• 15:05
  it is soaking up that limited capital. To attract
• 15:07
  enough buyers for all those bonds, the government
• 15:10
  has to offer higher and higher interest rates.
• 15:12
  And as we just discussed, when the government's
• 15:14
  rate goes up, every other rate goes up. So now
• 15:17
  a private business that wants to borrow money
• 15:19
  to build a new factory or research a new technology
• 15:22
  or hire a hundred new workers finds that the
• 15:25
  cost of borrowing is just too expensive. The
• 15:28
  government has basically outbid them for the
• 15:30
  capital. In this scenario, the government's debt
• 15:33
  is actively displacing private sector growth.
• 15:35
  Furthermore, it represents a burden transferred
• 15:38
  to future generations. If an economy is running
• 15:41
  at full capacity, meaning unemployment is low
• 15:43
  and factories are busy, government borrowing
• 15:45
  just competes for scarce resources. It drives
• 15:48
  up inflation without actually increasing total
• 15:51
  output. Now let's look at the opposing view.
• 15:54
  The other side argues that borrowing money is
• 15:56
  a necessary engine for societal progress, provided
• 15:59
  it funds productive investments. They argue that
• 16:02
  issuing debt to build critical infrastructure
• 16:04
  fund scientific research or improve public health
• 16:07
  generates long -term returns that far exceed
• 16:09
  the interest costs of the bonds. From this perspective,
• 16:12
  austerity or under -investing in the country's
• 16:15
  foundation is the true danger. The crowding out
• 16:18
  theory assumes the economy is always at full
• 16:20
  capacity. But if an economy is in a deep recession
• 16:24
  with high unemployment and factories sitting
• 16:26
  idle, the private sector isn't borrowing to expand
• 16:29
  anyway. Private capital is just sitting there
• 16:32
  terrified of the risk. So in a recession, the
• 16:35
  government stepping in to borrow and spend doesn't
• 16:38
  crowd out private businesses at all because those
• 16:40
  businesses are paralyzed. Exactly. The government
• 16:43
  is mobilizing dead capital to pull the economy
• 16:45
  forward. Both arguments rely on sound economic
• 16:48
  theory. The validity of either view depends entirely
• 16:52
  on the specific environment of the time. Are
• 16:54
  you at full employment? or in a recession? Are
• 16:57
  you borrowing to build a high -speed rail network
• 16:59
  that will increase productivity for 50 years?
• 17:01
  Or are you borrowing to fund immediate tax cuts
• 17:04
  that might just stimulate short -term consumption?
• 17:07
  It depends on what the money is used for and
• 17:09
  the temperature of the economy. But regardless
• 17:11
  of which side of that ideological divide you
• 17:13
  sit on, there is a harsh arithmetic reality that
• 17:16
  sits at the bottom of the ledger. You simply
• 17:18
  cannot argue with the math of interest payments.
• 17:20
  Exactly. Interest costs are a hard, unforgiving
• 17:23
  budget line. When debt accumulates, and especially
• 17:26
  when interest rates rise, servicing the existing
• 17:29
  national and provincial debt costs billions of
• 17:32
  dollars. And every single dollar spent paying
• 17:35
  interest to a bondholder is a dollar that cannot
• 17:38
  be spent on anything else. It is capital that
• 17:41
  cannot be deployed for health care, for education,
• 17:44
  or returned to the citizens as a tax cut. It
• 17:46
  is simply gone to maintain the structure of the
• 17:49
  debt. It is the ultimate reality check for any
• 17:51
  fiscal policy. Eventually, the interest burden
• 17:54
  constrains the choices a government is able to
• 17:56
  make. Let's pause here and take a breath to recap
• 17:59
  the core insights we've explored today. First,
• 18:01
  we clarified the vocabulary. A deficit is the
• 18:03
  flow of a single year shortfall, while the debt
• 18:06
  is the accumulated stock of all those years combined.
• 18:09
  Second, we examined the magic of the denominator.
• 18:12
  Debt is measured against GDP, meaning a growing,
• 18:14
  mildly inflationary economy can lower a country's
• 18:18
  debt burden without the government repaying a
• 18:20
  single dollar of the principal. Third, we uncovered
• 18:22
  the Canadian structural quirk. You simply cannot
• 18:25
  assess the country's fiscal health without accounting
• 18:28
  for the massive provincial debt, which is driven
• 18:31
  by the heavy constitutional burdens of health
• 18:34
  care and education. Fourth, we explored how automatic
• 18:37
  stabilizers act like a financial thermostat,
• 18:40
  cushioning the economy during a shock far faster
• 18:43
  and more elegantly than discretionary political
• 18:46
  committees ever could. And finally, we connected
• 18:49
  the sovereign bond market directly to your living
• 18:51
  room. The risk -free rate of government borrowing
• 18:53
  sets the floor for capital, dictating the spread
• 18:56
  on your personal mortgage and fueling the ongoing
• 18:59
  debate over whether public debt crowds out private
• 19:02
  growth. All of which brings us to a final lingering
• 19:04
  thought. A question to ponder long after we finish
• 19:07
  our discussion today. Everything we have unpacked,
• 19:09
  the deficits, the bond yields, the debt to GDP
• 19:11
  ratios, has been entirely focused on official
• 19:14
  recorded debt. The physical bonds that are sold.
• 19:17
  The numbers explicitly written down on the public
• 19:19
  balance sheet. The visible machinery of government
• 19:21
  finance. Yes. But what about the unfunded and
• 19:25
  contingent obligations? Think about the future
• 19:27
  health care costs of a rapidly aging population.
• 19:31
  Think about massive guaranteed public pension
• 19:34
  commitments that stretch decades into the future.
• 19:37
  These are monumental financial obligations. They
• 19:40
  are promises that absolutely must be kept. to
• 19:42
  the citizenry, and yet they do not appear as
• 19:45
  official debt on any government ledger today.
• 19:48
  They are essentially a shadow ledger. They are
• 19:50
  completely hidden from the headline debt to GDP
• 19:53
  numbers we rely on. So the question we leave
• 19:56
  you with is this. How will that all -important
• 19:59
  economic denominator handle a future where those
• 20:02
  massive hidden debts finally come due? It is
• 20:06
  the shadow over the entire system, and it is
• 20:08
  something the bond market will inevitably have
• 20:10
  to price in. And that brings us right back to
• 20:12
  our starting point. That quiet room setting monetary
• 20:15
  policy might feel like the center of the financial
• 20:17
  universe, but the bond market is always watching
• 20:20
  the political reality because no matter how loud
• 20:23
  the parliament gets, the government will always
• 20:25
  be the bond market's biggest customer. Thank
• 20:27
  you so much for joining us on this deep dive.
• 20:29
  We deeply appreciate you taking this time to
• 20:32
  explore the mechanics behind the headlines with
• 20:34
  us. Take care and we will catch you on the next
• 20:37
  one.