Eswar Prasad

debt relative to GDP, that number doesn't grow too fast, then we are okay.

But the difficulty is that that number has been growing over time.

So there is a possibility that at one time domestic investors and also foreign investors say, we've had enough of this and that's going to significantly affect growth because right now it's pulling in a lot of savings and that is not going to productive growth building elements of the economy.

So it is a real fragility.

The U.S., because it still has the dominant currency in the world, the dollar, has a lot more leeway than any other economy would, but surely this is going to have an effect negative in terms of growth and potentially a somewhat more, you know, cataclysmic effect if we reach a point where all of a sudden there is no escaping from this debt.

The evidence on income inequality, it turns out, is a little less clear-cut than we were thinking, especially over the last few years.

If you look at some aspects of wage inequality, it's continued to go up.

Some aspects of income inequality have, but if you look at the overall income, accounting for government taxes and transfers, it's not gone up as much as you might think.

But wealth inequality has certainly gone up, and the most noticeable portion of wealth inequality

Of course, it's what goes to the top 1%, to the top 0.1%.

And I think the real concern here, again, is that there is a sense that

market-oriented liberal democracies, which were seen as the paragon, and the U.S.

in turn was seen as a paragon of those values, that turns out to have some intrinsic deficiencies.

And the deficiencies especially come out when the political system becomes subject to capture.

And I think it's that sense of unfairness, Scott, that is really the problem.

In a market economy, people accept that there is going to be inequality.

And in fact,

That's how we get wonderful innovation, because the returns to innovation are very high.

But if people feel that the system is unfairly stacked against them, that is a problem.

But to your point about, you know, what might happen to the tensions beneath the surface, if you think about the U.S., you know, it is known for going from one side to another, and of course the U.S.