Goldman Sachs President on U.S.-China relation: Series of engagements have been 'productive'

That’s taken by comments you made at a Semaphore conference in April about the debt and demand for Treasury auctions, and leveraging the Treasury system and looking at the UK Trust budget as a cautionary tale. Can you expand a bit on that? How? How serious? How much do you see rhyming between the US and an episode like that? Well, what I was referring to is the absolute stock of treasury in the marketplace today has grown considerably. the US government continues to spend. I would argue both parties are showing very little discipline in the context of spending and fiscal stimulus in the economy. Now fiscal stimulus was needed when we were coming out of the pandemic, but I think we went too far and we continue to go too far. And I think that while we are the reserve currency and we have the ability to benefit from being the reserve currency, we should not abuse that privilege. And I think at this point, we’re getting to a place where it’s getting riskier. We have very low unemployment and yet very high fiscal spend. Were we to have higher unemployment and we actually need more stimulus, we may have less running room. And you’re very reliant now with with less buying of foreign governments, of U.S. Treasury stock. You’re very lying on the US households to continue to fund the US Treasury. So we worry about the the validity and veracity of these auctions. We worry about whether US households will continue to buy and we worry about the price that they will demand to continue to buy. And I think that I I just wish the government on both sides of the aisle would pay a bit more attention to that and be a little bit more disciplined as they think about the spending for for US. You think that’s a a winning political message in an election year or would we have to wait for a new term. It may not be a winning political message, but you know, frankly my focus is less on what’s a winning political message and more on what’s right for the system and what’s right for markets and that’s right for the economy. And I think that we’re, we’re playing with fire and I wish we weren’t doing that. You also point out that on that front, the Chinese have withdrawn a bit. You’re on the US China Business Council. I wonder how you judge relations right now that there appear to be very, very engaged with with CEOs and the Treasury Secretary and Lincoln and yet we have these skirmishes over things like technology. Yeah, look, I think the relationship has fundamentally changed. It’s it’s it, it was a different relationship back many years ago where it appeared that everybody thought that China was coming into the global system in a very seamless fashion and that’s obviously in a different place today. I give the Biden administration a lot of credit. I think they’ve done a good job re engaging and finding ways to lift the relationship up from what was a pretty low level. And I think that series of engagement over the course of the last six, 912 months has been very productive, obviously, leading up to the summit that the 2 presidents had. And I think that’s a good thing for for both countries because these are the two most important countries in the world. They have to be speaking to each other. They don’t have to agree on all matters or even many matters, But you have to continue that constructive engagement. I think that that that’s happening now, which I think is a much more positive direction than we had several months ago. I don’t want to, I hesitate to get too political. But yesterday the president did say on CNN that he didn’t think his opponent would accept the results if he lost. And I’m not asking you to weigh on in on that. But I wonder are desks beginning to think about what a trade might look like in that environment? Well, I, I, I don’t want to weigh in on the US presidential election, nor do I want to weigh on on who’s going to accept or not accept the results. But I think back to your question on on you know the trust budget and the and the LDI situation in the UK. The, the, the concerns that I would have or we would have would be around something that looks like more of a political crisis in America coupled with a lot of leverage in the Treasury system coupled with the the need to continue to borrow given our continued spending. And those are the sorts of elements that you have that I think we need to be paying attention to.