Ruchir Sharma

Yeah, but you don't know what extent of that rate increase may be.

Because back in 1999, it took 150 to 200 basis points.

Like one and a half to two percentage point increase in interest rates for that bubble to burst.

In like Japan also it took something like that in 1989.

This time my thing is that because of the amount of the real weakness in this system currently has to do with the finances of the American government.

And this is what...

makes it so difficult.

Because if you look at the past bubbles, all the excesses were built on either the household balance sheet or the corporate balance sheet.

This time, all the excesses are on the government's balance sheet.

That the government of America is running a deficit of 6% of GDP in the midst of a massive economic expansion.

That is unprecedented.

That's not happened before.

And the way, as we have discussed in the past, it's a transfer of income going on away from the government.

They're almost giving money to the households and the corporate system.

And that's what happened even in the first half of this year, that why was American consumer able to once again withstand

The oil shock.

Partly it was because they were getting massive tax refunds, and also the corporate sector was benefiting from the bill.

Yeah, the tax cuts, basically.

Tax cuts.

You know, so the American government's ability to keep on financing the deficit is incredible.