years. >> muhamed el-erian, you spoke about the monies that's sitting on the sidelines and i hear ken rogoff referring to that too. with is it going to take that shake that loose to make business owners feel that it's a good thing to invest. >> it's going to take what ken said and critically, it's about a number of items that have to be addressed simultaneously. you know we like this notion. maybe there's a shortcut, maybe there is a killer app, maybe there is this one thing. well, there isn't. it's taken us years to get in this mess. it's goingo takes years to get out. and we only get out through simultaneous progress on a number of areas. so ken spoke to fiscal reform. he spoke to infrastructure. he spoke to education. i would add labor retraining and retooling. and i would also add fixing the credit pipes of this economy. so it's a long list. it requires simultaneous progress. and the longer we wait, judy, the harder it gets. >> woodruff: and to end on a negative question, i guess, ken rogoff, what would prevent all of those things from happening? >>boy, well, gridlock in washington. we c

now, speaking of games, something you probably do not know about harvard economist ken rogoff, he is national grand master in chess, a title he earned as professional chess player in his youth. and last month, ken even played the world's top-rated grand master, magnus carlson, to a draw here in new york. this is big news in the chess world. ken, you described to me last spring a chess maneuver called the force move. tell our viewers what that is and why washington has been reduced to a series of force moves. >> still recovering from those pictures. magnus carlson, by the way, is an incredibly talent player, maybe the best in 50 years since bobby fisher. but force move really in a chess game is when you find yourself in a position, you've backed yourself into a corner where you find there's nothing else to do. that's the way it is in the government. so they punt. there's no long-term strategic measure. >> so the fiscal cliff, what is that? what do we need to do to fix if fiscal cliff? it feels like a force move to me. >> they're waiting until there's nothing else to do but extend it fo

now, speaking of game, something you probably do not know about harvard economist ken rogoff. is an international grand master in chess, a title he learned as professional chess player in his youth. last month ken even played the world's top rated grand master to a draw here in new york. this is big news in the chess world, folks. ken, you described to me last move a chess ma yoouneuver calle force move. tell everyone what that means and how washington has been reduced to a force move. >> magnus carlson, by the way, is an incredibly talented chess player. force move in a chess game is when you find yourself in a position where you've backed yourself in a corner and there's nothing else to do. thael that's the way we've run the government where there is nothing else to do, so they punt and there is no long-term strategic vision. >> what do we need to do to fix the fiscal cliff? that feels like a forced move situation to me. >> they're waiting until there's nothing else to do but extend it in four months for some way for the status quo instead of really thinking about how do we

. >> not here yet, but interesting economists, you and i both like, like ken rogoff who suggested thatemise of growing debt has a pressing effect on the commit regardless of whether or not you can continue it. the day of reckoning is coming and then we'll find out. do they want that high level of spending or low taxation? >> the day of reckoning is actually going to be here on november 6th. that's the day of reckoning because the american people will get a choice for those things and the choice is very clear. one side is saying cut particularly discretionary spending, increase the defense budget despite the fact that the department of defense hasn't asked for that and cut expenditures and cut taxes on the wealthy. that's what they are saying. the other choices, keep that remarkable historical balance between government spending and government work and free enterprise, and the balance between the two is what makes this country great, but when free enterprise begins to say we don't want government regulation, we don't want taxes, we don't want nothing, that's when things get out of kilte

ken rogoff did a, wrote a recent book looking at 800 years of government borrowing, but this particular study goes back more like half a century and looks at government or borrowing. and what they conclude in the abstract is that once you get to 90% debt to gdp ratio of 90%, you actually start facing risks to your economy. and what they found is that growth flows by about 1% annually once you get to that point. this is a very simplified version of their exhaustive study, but a lot of people are citing this. and one of the most maddening things about covering economics in this town is everyone tries to redefine what happens, what basic economic theory means. and this is a particular point that's going to come up a lot because a lot of people think that we've reached the breaking point when it comes to u.s. government debt. and if you were to actually look at two figures i've put up here, they are both figures of u.s. debt, one is u.s. gross debt which is $16 trillion, and that would be 100% of gdp which presumably is over that debt to gdp target and should p mean over time u.s. economy's

[laughter] i wrote a paper with ken rogoff looking at the experience since the napoleonic war of 22 advanced economies, and here's the bottom line. episodes of debt overhangs where you have gross debt more than 90% are very possibly the growth discount on the order of 1.2% slower. those episodes are very long, median duration is 33 years, by the time you get out of it, the level of gdp is a quarter lower than it had been if you ever got there, and it isn't always about rates. 11 out of the 26 cases, it wasn't market discipline forcing that contraction, it's something else. so, um, i understand that the unemployment rate is high in many advanced economies, unacceptably high. we need more policy accommodation. we have to do that in a way that gets us to a path for which we have, consolidate our fiscal accounts. >> if you frame it as u.s. versus europe, one of the crucial, crucial, crucial distinctions is, of course, the u.s. benefits of the safe haven. and so in this some sense we have the flexibility to deal with vince's problem over time in a away that other countries don't. if you compare u