Noreen Harrington’s background in finance has involved working on everything from running Treasuries for Goldman Sachs to helping manage the creation of the Euro. In this latest episode of Onward, she joins Fundrise CEO Ben Miller to discuss the intricacies of Treasury markets and interactions of global currencies, to help us better understand why the upcoming debt ceiling crisis in the United States is a serious threat to economic stability.
As Noreen explains, her lessons in Treasuries dates back to her time working under Jon Corzine, who taught her that the most important part of underwriting an auction is not the size of the deficit but the question, “Can we fund it?” In other words, in the world of government debt, it’s not the size that matters — it’s the demand.
Now, in 2023, where the US deficit has exploded and reached previously difficult-to-imagine heights, the factors that go into determining global demand for US credit are considerably more complicated than they once were, when US Treasury’s credit and reputation were spotless, and the US dollar’s role as reserve currency had no conceivable challengers.
In today’s economy, though, those factors have begun to subtly but surely shift, with a number of macro crosswinds in play:
- China has begun to build a true alternative to the SWIFT banking system.
- We have seen what financial warfare can look like, in the western response to Russia’s invasion of Ukraine.
- Digital currencies may sound inconceivable, but in Noreen’s career she has seen the “impossible” happen.
All of these factors add up to our current moment, where a politicized debt ceiling crisis threatens to put the fundamental credit and reputation of the US dollar on the line. As Noreen explains, “If we default even one day, I think the ramifications could be on your children and their children.”
But finally, from an investing perspective, Noreen validates one of the primary ideas we’ve championed at Fundrise for the past several months, as The Great Deleveraging unfolds: “I think if you have liquidity, there'll be an unbelievable opportunity coming for you to have rescue capital.”
All this and more in the latest episode of Onward, anywhere that you listen to podcasts.
