The obscure pool of money the US used to bail out Argentina
The episode examines the U.S. Treasury's Exchange Stabilization Fund (ESF), a relatively obscure pool of money that Treasury Secretary Scott Besant recently used to extend a $20 billion credit line to Argentina without congressional approval. Through interviews with economist Brad Setzer and former Treasury official Jeffrey Schaefer, the hosts trace the ESF's origins, its rare large-scale use in the 1995 Mexican peso crisis, and compare that episode to the current situation in Argentina. The conversation explores how lender-of-last-resort principles, political risk, and Argentina's economic policies shape the chances that the U.S. will ever be repaid.
The year NYC went broke
The episode examines New York City's 1975 fiscal crisis, when years of accounting gimmicks and reliance on short-term debt led the city to the brink of default and inability to pay basic municipal workers. Through interviews with key participants like Steve Clifford and Donna Shalala, it details how the true scale of the hidden deficit was uncovered, how the Municipal Assistance Corporation (MAC) and an emergency control board were created, and how unions, real estate interests, the state, and ultimately the federal government were pressured into a shared-sacrifice bailout. The story traces the painful austerity and structural reforms that eventually restored the city's credibility and became a playbook for later municipal debt crises.
How the government got hedge funded
The episode explains how U.S. government debt is issued as Treasuries, how auctions work, and how primary dealer banks help distribute this debt. It then traces how hedge funds have become major players in the Treasury market via the "Treasury basis trade," using heavy borrowing and Treasuries as collateral, which can amplify risk. The hosts and guests discuss the March 2020 turmoil, the Federal Reserve's massive intervention, and the resulting moral hazard and policy trade‑offs between safe banks, stable markets, and allowing risk‑taking.