The Treasury Payment System Elon Musk Now Has Access To

Elon Musk and his Department of Government Efficiency (DOGE) have gained access to a unit within the Treasury Department called the Bureau of Fiscal Service. But what does this unit actually do? How critical of a role does it play in the operations of government, and potentially, financial markets? On this episode, we speak with Nathan Tankus, the author of the Notes On The Crises newsletter. He explains both the technical aspect of this office, as well as the legal questions surrounding impoundment and the ability of the executive branch to cut off payments that have been previously authorized by Congress. We also talk about the operational risks and the potential disaster scenario should this system — which has been built in COBOL over decades — go down. Read More: US Treasury Brings In Two Members From Musk’s DOGE Team Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlots See omnystudio.com/listener for privacy information.

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• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

• 0:16Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 0:58Speaker 01

  and hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:41Speaker 01

  Bloomberg Audio Studios. Podcasts, radio, news.

• 1:57Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:02Tracy Alloway?

  And I'm Tracy Alloway.

• 2:04Joe Weisenthal?

  Tracy, the theme of the last two weeks has been, I don't know, emergency episodes of the podcast. Look, in some respects, it's not surprising. New administration, new unexpected things. There's always going to be a flurry of activity when a new administration comes, unexpected stuff. But there's a lot.

• 2:23Tracy Alloway?

  Yes, we're basically a daily show now.

• 2:26Joe Weisenthal?

  Yeah.

• 2:26Tracy Alloway?

  At least for the past two weeks.

• 2:27Joe Weisenthal?

  Well, it's like how we were a daily show. I mean, we used to just do one episode a week prior to COVID. Now it's like really the mark of the world changing. It was like, as soon as COVID hit.

• 2:36Tracy Alloway?

  When you get more Odd Lots episodes, that's a bad sign.

• 2:40Joe Weisenthal?

  It's a sign, right? So some people would say it's a good sign that there's a lot of stuff going on that people want. But it's certainly a sign. And of course, there's been stuff going on on trade. I guess we'd, one of our emergency episodes was about the deep seek sell off. There's just a lot going on right now.

• 2:56Tracy Alloway?

  Yes, indeed. And we're going to talk about one of the other things that's been going on.

• 3:01Joe Weisenthal?

  Right. And so obviously, we've known for a while since part of the administration that Elon Musk and his Department of Government efficiency would be coming in. To my mind, there's like multiple questions here. I mean, there's just so many questions about what that is. You know, some people are like, oh, is it going to be about just making the government run more efficiently? Sort of capital E, which probably a lot of people wouldn't object to in theory. Then there's of course, the question about how much can an organization or an entity like this do unilaterally? Because a lot of the big spending decisions, they come out of Congress. One of the things that's happened though, there's been a lot of reporting on this from multiple outlets,

• 3:43Joe Weisenthal?

  is that Elon Musk and his team have apparently gotten access to a key payment system within the Department of Treasury.

• 3:50Tracy Alloway?

  Yeah, so this has been all over the news in recent days. And I guess, I guess the downside is we have a group of unelected people who I think technically aren't government employees, controlling the system through which the US sends basically all its payments, like everything. Social Security to Treasuries, all of that. But the upside is, we get to talk about payments technology.

• 4:17Joe Weisenthal?

  Right.

• 4:17Tracy Alloway?

  There's a small silver lining.

• 4:19Joe Weisenthal?

  Right. And, you know, look, this is actually, you know, we talk a lot about macro stuff on the podcast. So the amount of government spending that goes to this or that, or deficits or debt, or whatever. But it's actually, we both like it when we get to talk about like, how does money go from point A to point B? And this is an infinitely fascinating topic, but maybe sometimes people don't care.

• 4:43Tracy Alloway?

  Now they care.

• 4:44Joe Weisenthal?

  But now this is a time for people to care. Like, how does a payment actually get made to anything? Whether it's a social security recipient, whether it's to an independent contractor, whether it's to an employee, or whether it's to the holder of a government bond awaiting their coupon.

• 5:01Tracy Alloway?

  Yep, absolutely.

• 5:02Joe Weisenthal?

  Well, we're going to be speaking to someone who really knows payments and the intricacies. He seems to get really, I don't know many people who like are interested is going deep into how all these sort of like payments and accounting systems actually work going deeper than just the macro. The perfect guest, we haven't had him on in a long time. And we're going to originally talk about something else. Maybe we'll get to that one day. We're going to be speaking with Nathan Tankus. He is the author, editor, creator of The Notes on the Crisis Substack. So Nathan, thank you so much for coming back on Odd Lots.

• 5:35Speaker 04

  Well, I will say not Substack anymore.

• 5:37Joe Weisenthal?

  Oh, yes, sorry.

• 5:37Speaker 04

  Thank you very much.

• 5:38Joe Weisenthal?

  Newsletter, right. What is the Bureau of Fiscal Service?

• 5:42Speaker 04

  The Bureau of the Fiscal Service is a sleepy, obscure part of the United States Treasury that makes sure that all of the sort of operational things that the Treasury Department is doing operates. So, you know, you can have big conversations about foreign currency, about issuing Treasury securities, about social security and Medicare and government spending and tax collection. Of course, you know, the tax collection is an IRS prerogative. But the other side of that, the sort of flip side of the IRS with tax collection is the payment side. And of course, those tax collections.

• 6:28Speaker 04

  In turn, run through the payment system. The Bureau of the Fiscal Service is what sends out tax refunds. So tax refunds are not actually technically an IRS prerogative in terms of making those payments going out. And the Bureau of the Fiscal Service is what does that? Eighty-eight percent of government payments flow through this system every year. And it is what I've described as the beating, pulsating heart of the federal government's payments. Before you get to the banking system, before you get to the Federal Reserve, this is the heart. This is the artery that is making it all function.

• 7:11Speaker 04

  It is the most important aspect of the federal government, even though no one's ever heard of it.

• 7:19Tracy Alloway?

  How complex is it to actually send out these payments? Because on the one hand, I can kind of imagine a scenario where people are just, you know, pressing a button that says like, pay this person, pay that person, pay whoever. But on the other hand, I also imagine we're talking about, you know, millions of individual payments. People might have to be like on boarded into the system. I imagine getting into the technology that we're talking about seriously old mainframe type computers, like dinosaur systems. How hard is it to do this job?

• 7:54Speaker 04

  It's an incredibly complex task. I mean, we're talking about a mind boggling scale of payment process that you have to do. And there's a physical architecture to the system. There's what, you know, coding is called the business logic. So not just the logic of like the abstractly, the language of the program, but the business logic that is involved. The Treasury has, you know, belatedly gone into various payment modernization projects over the last 20 years. If, you know, as we'll get to, there's a sinking feeling in my stomach of that maybe it shouldn't have. But

• 8:33Speaker 04

  It is quite a complex system that requires a quite a specialized group of essentially aging programmers to manage this system and make sure that it is functioning properly and that, you know, all payments go out from the treasury on time and that they never miss a payment and it's never delayed.

• 8:58Joe Weisenthal?

  We like talking about aging systems that are taken care of by a handful of gray bear.

• 9:03Tracy Alloway?

  We need a, we need a Cobal klaxon.

• 9:05Joe Weisenthal?

  A Cobal klaxon. By the way, I went on IBM's website and I found some files where they had some Cobal examples. I dropped them into ChatGPT. I said, rewrite these in Python. It looked like it came out. Can't they just do that? Copy and paste the whole thing, drop it into AI and say rewrite this all in Python or something?

• 9:21Speaker 04

  Well, I mean, that is kind of what I was getting at with, with.

• 9:26Joe Weisenthal?

  Or you're a DeepSeek guy. Can't they just go all over?

• 9:28Speaker 04

  Yeah, no, I've been, actually, it's funny. I started playing with DeepSeek before this crisis really got on. I was having fun.

• 9:33Joe Weisenthal?

  You put it in.

• 9:33Speaker 04

  And I, you know, I, I, you know, I loved, you know, getting some R code and building an economic model, proving my math skills and understanding the mathematical properties of models. It was great for that. It has a ton of data that it is based on that it can do that. And each system, I mean, this is true about generally any sort of business system that has developed for over a long time, but it's especially true for Cobal system and especially true for older systems and no, no system is older than the treasury, even with the modernizations. You know, the modern, modernizing these systems mean changing the physical architecture

• 10:15Speaker 04

  that they run on and maybe updating the language so that it can also be used on, say, a computer and not just a mainframe. And there's some unification of business logic that is out, but it's not getting rid of Cobal. And actually getting rid of Cobal would be a bad, there's an updated version of Cobal, ARM Cobal, that they use. They're, these servers are now, are now, or at least I think for the most part, running on Linux servers so that they've got modern operating systems, but they're still very, very complex and it's still. Cobol and it's still decades and decades of business logic making the system run. You know, and all of these systems are highly confidential system in every bank in the world, in every, you know, major insurance company, every government. So there just is not like

• 11:00Speaker 04

  a set, an example of confidential data set of these things that can run on. And, you know, I should say, and this is part of why I'm so, you know, adept for this moment, that my father was a Cobol programmer. Oh, I didn't know that. At Morgan Stanley and he, for almost 20 years, he was the person in charge of making sure every financial advisor got their compensation. I've been telling him for the last three days, please let me, you know, me in the Odd Lots interview, please, please. And it's going to take me a couple of weeks to. You can do it, Nathan. I believe in you. I'm working on this. This is the hardest informant task that I've had in the last

• 11:45Speaker 04

  five days.

• 12:02Speaker 00

  What's next for virtual assets? I'm Jacob Greaves, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 12:18Speaker 05

  We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high frequency traders and that sort of thing, and folks who service institutional clients.

• 12:26Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Reese Merrick of Ripple says.

• 12:34Speaker 06

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 12:53Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 13:04Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Millions of Americans are taking peptides, short strings of amino acids that can act as biological signals for cells. Peptides like insulin can occur naturally in the body, or they can be synthetically introduced to induce a biological process, as happens with semaglutide, the active ingredient in Ozempic. Now Bloomberg's Anika Inamputi reports peptides may be exploring their next frontier: the brain. People are taking peptides for mental clarity and cognitive benefits as alternatives to psychiatric medications and to gain a competitive edge or stave off the effects of aging. Both insulin and semaglutide are approved by the U.S. Food and Drug Administration.

• 13:47Speaker 01

  Because importing or selling unapproved peptides for human use is not legal in the U.S., many people turn to online forums for guidance and overseas vendors with questionable credentials to obtain them. Unapproved peptides, which are marketed as research chemicals, have been circulating in what's become a billion-dollar gray market amid the rise of do-it-yourself medicine as people increasingly turn to social media or artificial intelligence for medical help. Doctors warn against self-experimentation and advise talking to providers before trying any new therapies. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 14:26Tracy Alloway?

  Okay, so Musk slash Doge now have access to this incredibly complicated system as you just laid out. Do we know exactly what kind of access they have? Because there's been a lot of discussion over whether it's read-only or maybe they have administrative rights. What do we know?

• 14:44Speaker 04

  So, you know, there was a lot of very terrifying reporting. You know, I do want to make a point of saying that when I first read the Washington Post reporting, which is the source that broke this in 3:00 PM, I was absolutely terrified. I had an absolute panic attack. And, you know, as this story got started developing in Saturday, anonymous sources started leading, say, the New York Times, other sources to update their articles, saying, well, they only have read-only access. But these, this was, there was never any public confirmation of the idea. These were anonymous sources that were trying to placate the utter panic that was coming out. And... Wired at 1 a.m. today reported-

• 15:28Joe Weisenthal?

  Recording this February 4th.

• 15:29Speaker 04

  Recording this February 4th at 12:19.

• 15:32Tracy Alloway?

  But that's how fast the news cycle is now. We gotta give the exact minutes.

• 15:37Speaker 04

  Yeah. And so at 1 a.m., they exclusively reported for the first time that that is not true. They have read and write access, and I've reported as of 7:30 this morning, confirms their reporting from my sources independently. I unfortunately couldn't be to it first. I crashed out and fell asleep at 7:00 p.m., got up at 3:00 a.m. and got going.

• 16:00Joe Weisenthal?

  So what can you do with read-only access?

• 16:02Speaker 04

  With read-

• 16:03Joe Weisenthal?

  Like, if someone has, quote, "read-only access" to it, what can you do?

• 16:06Speaker 04

  That means you can, my understanding is that means you can look at people's social security numbers, you can look at other confidential medical information, you know, all sorts of confidential information. You can look at the source code and so come up with ways of restructuring the code and then propose those restructurings and then, you know, goes through a testing process and then try to get one of these aging programmers to implement what you want.

• 16:34Tracy Alloway?

  And do we have any sense of what Elon wants out of this access? I mean, this is the big question, right? And if you look at his account on Twitter slash X, he's talking a lot about, "Oh, I'm rooting out fraudulent payments or improper payments." And my impression of this bureau is that, you know, the validity of payments isn't really their jurisdiction, right? Like, their jurisdiction or their task is to send out the payments that have been mandated by Congress or other sources. They're not there to necessarily say, "Well, this payment is legit and that payment is not legit."

• 17:14Speaker 04

  Yeah. So, I mean, I think, you know, for an Odlot's audience who talks about the banking system a lot more and talks about the Federal Reserve, I think that is where to start to talking about this. Talking about having individual verification of payments and trying to determine improperly payments at the technical operation, operational level of processing payments is like saying that like the operations departments at the Federal Reserve Banks should not just simply rely on know your customer laws, anti-money laundering and all sorts of other sort of

• 17:55Speaker 04

  safeguards for an authorized, you know, you know, authorized payer to make payments. That, you know, the fundamental premise of the payment system, of any payment system that you're supposed to rely on is that whether or not a legitimate payment is going is determined by the process of letting people into the system and that if a regularity show up with what is going on with one of these authorized users, then that gets investigated. Maybe they get shut out of the system, but trying to examine the individual payments.

• 18:37Speaker 04

  I mean, you know, it's like saying that, that the operations department of the Federal Reserve Banks have been improperly sending improper payments.

• 18:45Joe Weisenthal?

  Explain this further because obviously just in the abstract, the idea of being vigilant about improper payments is a good idea. I don't know how often they are, et cetera. But just sort of explain this idea further where, you know, in the vast system of the Treasury is the place or the seat of these sort of judgments and why is the, in your view, the Bureau of Fiscal Service not the sort of place to identify these?

• 19:14Speaker 04

  Yeah. So, I mean, you know, the big pictures to think about this is that The Treasury, the Bureau of the Fiscal Service is essentially, and thus the Treasury as a whole, is essentially a fiscal agent for every administrative agency in the federal government and a very, maybe some other entities as well. And so, you know, traditionally, when we talk about this, we talk about Treasury payments, people consolidate the entire federal government and just say the Treasury.

• 19:43Joe Weisenthal?

  Yeah.

• 19:44Speaker 04

  And, you know, it's a shorthand that's useful for 99% purposes, just like other forms of consolidation would be. But for payment operational level issues, and you ask that question, or when you ask questions about it, you have to disaggregate the federal government and examine those payments up.

• 20:02Joe Weisenthal?

  So just for an example, the Department of Agriculture, they would have their own focus on who is getting a payment that's legitimate or not. The Department of Education would have a division that focuses on these things, et cetera. But then ultimately, they make some decision, the Department of Agriculture says, okay, there's some subsidy to corn growers somewhere, but ultimately, that just gets routed through the Treasury.

• 20:27Speaker 04

  Yeah, and the Bureau of the Fiscal Service wants those administrative agencies to have better internal controls. They have their own payments integrity unit, which is not supposed to investigate the payments themselves, but to help improve the controls. There is one of these sprawling systems is a do not pay system where there is a list of do not pay that these files get pushed through before the payments actually get put out. And, you know, the Bureau of the Fiscal Service also has legislative proposals. Their last, you know, fiscal year 2024 report has seven legislative proposals. Five of them are about reducing improper payments, including giving them greater authority

• 21:11Speaker 04

  to require better internal controls from other administrative agencies. So these are known problems. The main barrier has been Congress has not budgeted enough and authorized enough to do this. And notably, a lot of this needs legislation to do, both on, you know, internal legal things within the federal government and also in terms of privacy protections for people, of doing responsible changes that make sure they're still privacy respecting.

• 21:41Tracy Alloway?

  So the other word that's been flying around lately is impoundment. And I guess my question is, you know, if Doge starts cutting off certain payments, for whatever reason, is there a backup contingency payment processor? Or is there like another agency that could maybe step in and do some of this?

• 22:05Speaker 04

  No, there is no rulebook or game plan. If this system goes down, then the payments don't go out that day. And if they break this system in a way that takes months to fix, that we have no rulebook for this. Now, ironically, the memos that I've gotten through FOIA about what the Federal Reserve's game plan in case of Treasury default or the debt ceiling kind of makes this situation a little bit less stubborn to panic because you could like, you know, who's caring about legalities at this point anyway with this, you know, basically decided to do anything? So you maybe like create an SPV for each administrative agency, lend to it with, you

• 22:48Speaker 04

  know, 13.3 authority and then try to work out payments, but you still have to figure out who to pay and where.

• 22:54Joe Weisenthal?

  But there's two separate questions here when we're talking about impoundment. One is the theory of does something break? But then the other question is, there is a legal theory, you know, the classic like sort of Constitution 101, Congress controls the power of the purse.

• 23:07Speaker 04

  Yeah.

• 23:08Joe Weisenthal?

  And the Congress decides so and so gets money, et cetera, and then it goes out there. And then there is this other theory that some of the Trump administration support that actually the executive branch does have discretion about payments. So Congress could authorize something, but tell listeners about the legal debate about what impoundment is.

• 23:28Speaker 04

  Yes, so, I mean, this is what I was covering Friday morning with my first, I mean, that's how also how you know things are really bad is when there had been three notes of the crises pieces in three days, in three business days. But the core issue is, as you said, the foundational constitutional principle is that Congress has control of the power of the purse. And that is, is not supposed to be.

• 23:58Speaker 04

  Abrogated. There is some, you know, the historical precedent here is the Nixon administration, the Empowerment Act of 1974 was meant to stop Nixon for impounding because he claimed that he could impound because, you know, Congress is spending too much and you know, maybe.

• 24:14Joe Weisenthal?

  Impounding, just to be clear, is the executive branch unilaterally deciding?

• 24:17Speaker 04

  Yeah, sorry. Uh, uh, yes, empowerment is the concept of the president deciding not to spend money that Congress has appropriated and and Congress appropriating the money is a directive to spend. And especially when Congress directs for an exact amount of money to be spent or an exact formula of money to be spent, the president does not have the authority to just stop those payments.

• 25:08Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Millions of Americans are taking peptides, short strings of amino acids that can act as biological signals for cells. Peptides like insulin can occur naturally in the body, or they can be synthetically introduced to induce a biological process, as happened with semaglutide, the active ingredient in Ozempic. Now Bloomberg's Anika Inamputi reports peptides may be exploring their next frontier, the brain. People are taking peptides for mental clarity and cognitive benefits as alternatives to psychiatric medications and to gain a competitive edge or stave off the effects of aging. Both insulin and semaglutide

• 25:49Speaker 01

  are approved by the U.S. Food and Drug Administration. Because importing or selling unapproved peptides for human use is not legal in the U.S., many people turn to online forums for guidance and overseas vendors with questionable credentials to obtain them. Unapproved peptides, which are marketed as research chemicals, have been circulating in what's become a billion-dollar gray market amid the rise of do-it-yourself medicine as people increasingly turn to social media or artificial intelligence for medical help. Doctors warn against self experimentation and advise talking to providers before trying any new therapies. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 26:31Joe Weisenthal?

  I mean, you mentioned the Impoundment Control Act of 1974. So there's obviously been some dispute about the basic premise that only Congress has this prerogative. Does this end up in a court fight?

• 26:45Speaker 04

  Yes, I mean, that is the traditional check and balance in our system is that the judiciary is supposed to step in and speak to a constitutional question and impose or say that a certain act that the president is engaging in is unconstitutional and should be stopped. In this situation, the obvious thing to say about that is that Trump appointed three of the nine Supreme Court justices that are on the Supreme Court. So it seems very unlikely, although not impossible,

• 27:22Speaker 04

  that the Supreme Court would actually step in and declare what Trump is doing unconstitutional, and even more importantly, impose some sort of consequences or block to what Trump is doing.

• 27:40Tracy Alloway?

  But even if the court were to rule it unconstitutional, you would still need someone to actually enforce that decision, which seems like it's pretty up in the air. One more question from me. So one of the interesting things about all of this is the Doge people who have access to the payment system. I think it's like a group of young 20 something year old programmers, according to various reporting. I find it kind of funny because I always thought Cobal was like, you know, this thing that not a lot of people understood, or there wasn't a lot of expertise in it, but apparently, you know, 20 year

• 28:20Tracy Alloway?

  olds seem to be able to understand it. What's the potential here that they actually messed something up pretty bad?

• 28:31Speaker 04

  The potential is absolutely enormous. The reporting that that I've done that confirms the Wired's reporting is that there is a 25 year old SpaceX, former SpaceX employee Marco Allez, who has read and write access to the payment automation manager and the secure payment system of the Bureau of the Fiscal Service. It is an absolutely enormously terrifying situation. I had a source describe it as apocalyptic. There's no way to exaggerate how enormously dangerous this is. Every financial market in the world, in the country, in the world,

• 29:16Speaker 04

  should be pricing in the operational failure uncertainties of of this system. Every single financial market should be pricing it in, and none of them are. None of them are even close.

• 29:32Joe Weisenthal?

  And just to be clear, my last thing, so like bond payments run through this system?

• 29:36Speaker 04

  Bond payments run through the system. There's another COBOL system at the New York Federal Reserve, which I know less about, that was also part of that. But I think it still foundationally relies on the COBOL systems that it communicates with at the Treasury.

• 29:53Joe Weisenthal?

  Nathan Tankus, thank you so much for coming on up. That was great. Yeah, that was excellent.

• 30:09Joe Weisenthal?

  Tracy, on the plus side, I like talking payment stuff. No, I really do. I mean, I think there are two main takeaways from me so far. It's like, one is the idea that this team now just has such access to like such sensitive data is extraordinary to me. And two, I have zero doubt that it would be very easy to screw up something that is truly at the the lifeblood of just like essentially how the entire economy operates.

• 30:39Tracy Alloway?

  Yeah, absolutely. I guess we still have to learn more about what the end game is here and what Doge is trying to accomplish exactly. The other thing I was thinking about was, you know, Nathan's kind of warning towards the end about the market just overlooking a lot of this. And I kind of remember in the first Trump administration, do you remember one of the rating agencies came out and they had a little piece warning about US credit worthiness and saying like, the rule of law gets eroded and that's kind of bad. It's weird that we haven't seen a lot of that over. I guess it's still early. It's happening so

• 31:22Tracy Alloway?

  quickly, but like, there hasn't been any of that in the past two weeks.

• 31:26Joe Weisenthal?

  Well, look, the way I would think about it is sort of like the debt ceiling, which is that the market will freak out when something happens, right? But before that, like if something happens and there's a payment system, something gets broken, then we're gonna see a market freak out. But everyone until that moment is just always operates like in the end, the payments will be fine. I don't think financial markets are good at situations like this, where it's very binary, right? Where it's like, the default is you just sort of expect the payments to keep on running and everything is fine, etc. The default is you expect them to always raise the debt ceiling eventually when they have to, or the default is you expect the Fed to step in or whatever, the meant to trillion dollar coin. But like, how to

• 32:11Joe Weisenthal?

  actually think about like, payments not actually happening and they're not being an easy way to fix this system. I for one, am not surprised that this isn't, that is, you know, it's hard to price that stuff in.

• 32:23Tracy Alloway?

  Here's a question. If the system got messed up or payments were impounded or something, would treasuries go up or down?

• 32:31Joe Weisenthal?

  Oh, I love this question. I'm actually, I put myself in the category of if you own a bond and you miss a coupon, you freak out, you buy more bonds. I think that's where I eventually.

• 32:44Tracy Alloway?

  Well, I think that's what actually tends to happen during debt ceiling crises.

• 32:48Joe Weisenthal?

  Yeah.

• 32:48Tracy Alloway?

  All right. Shall we leave it there?

• 32:50Joe Weisenthal?

  Let's leave it there.

• 32:50Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alockway. You can follow me at Tracy Alockway.

• 32:56Joe Weisenthal?

  And I'm Jill Weisenthal. You can follow me at the Stalwart. Follow Nathan Tankus. He's at Nathan Tankus and check out his newsletter at crisesnotes.com. Follow our producers, Carmen Rodriguez at Carmen Armand, Dash O'Bennett at Dashbot, Kale Brooks at Kale Brooks. For more Odd Lots content, go to Bloomberg.com/oddlots. We have transcripts, a blog, and a newsletter. And you can chat about all of these topics 24/7 in our Discord, discord.gg/oddlots.

• 33:23Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we dive into payments technology, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 34:16Speaker 07

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• 34:52Speaker 08

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