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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. So here's the real world, folks.

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Speaker 1: I'm in a speech or whatever, and there's some young

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Speaker 1: cherub who says, when did life change? Life changed with

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Speaker 1: David Melpass. I can tell you exactly when it did.

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Speaker 1: Something called libor ois went out for standard deviations. I'm

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Speaker 1: in the show The Place is Chaos, top to bottom

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Speaker 1: of Thursday in August of two thousand and seven, and

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Speaker 1: I just screwed. I didn't screen Paul, my usual charming boy,

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Speaker 1: you know, like hr approved, Get Alan Meltzer, get David Melpass.

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Speaker 1: And it was a magical show, one of the iconic

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Speaker 1: moments within all that we're doing here at Bloomberg. Mister

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Speaker 1: Melpass went on from bear Stearns, where he was definitive

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Speaker 1: in writing essays on the American Experiment, to his public

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Speaker 1: service at the World Bank. Can I just say, you

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Speaker 1: look tanned and rested after the after the grind. What's

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Speaker 1: the biggest grind of public office that we don't see?

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Speaker 2: It's good to see your town, and Paul. The grind

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Speaker 2: is the travel. These conferences are constant, and I said no, no,

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Speaker 2: no to each of the conferences. I didn't go to Davos. Yes, yes,

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Speaker 2: people say, but this is your responsibility, and so you

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Speaker 2: travel and nothing happens at the conferences. So I was

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Speaker 2: happy to see President Trump on this latest the G

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Speaker 2: twenty going on in South Africa, say we're just not

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Speaker 2: sending people because they don't do anything that's useful.

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Speaker 1: I want to cut to the arch mail pass issue,

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Speaker 1: which is the physics of two Americas. We have an

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Speaker 1: America that's booming, Paul and I do it every single day.

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Speaker 1: We have an America being left behind on an historical basis.

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Speaker 1: How separate are we right now?

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Speaker 2: I think they call it inequality or that performance by

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Speaker 2: the bottom is massive, whether from a data standpoint it's

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Speaker 2: the worst. But what we need is job growth at

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Speaker 2: the bottom and median income growth. That is the whole

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Speaker 2: concept of a good economic policy. I did that around

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Speaker 2: the world that the way we evaluate whether an economic

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Speaker 2: program is going forward is the median income, the income

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Speaker 2: of people in the middle after inflation going up. And

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Speaker 2: so what we need or what I think lots of

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Speaker 2: policy changes can help with affordability right now. One that

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Speaker 2: I've written about is what the Federal Reserve could do

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Speaker 2: to stop stop causing this income inequality. We need a

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Speaker 2: lot more energy production. We need permitting reform, which is

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Speaker 2: really important in Congress. I think a capital gains tax

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Speaker 2: cut would actually enable a lot more capital mobility.

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Speaker 1: Paul Accelerated depreciation YEP is that puts a point on.

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Speaker 2: GDP, and very importantly it points a point or and

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Speaker 2: that growth comes from small businesses that invest in new machines,

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Speaker 2: which then enable workers and productivity. So it's a virtuous

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Speaker 2: circle that you create from that, and we desperately need

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Speaker 2: that now. I think Trump is going totally in the

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Speaker 2: right direction. The problem is implementation of it. And my

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Speaker 2: worry right now is that the Fed will choke it off.

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Speaker 3: So that's kind of where you were two weeks ago

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Speaker 3: with your opinion piece in a Wall Street Journal talking

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Speaker 3: about affordability, and it was certainly an issue in the

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Speaker 3: elections in New Jersey in Virginia. Is the Fed too

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Speaker 3: slow here in cutting rates to address its influence on affordability?

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Speaker 2: Yes, And so I did a Wall Street Journal article

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Speaker 2: in June that they should cut, should have cut in

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Speaker 2: that June meeting, And wouldn't the world be better if

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Speaker 2: they had cut in June because you would have had

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Speaker 2: the growth that came out of that, and the inflation

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Speaker 2: wasn't occurring. You know, people were kept saying there was

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Speaker 2: inflation and it didn't show up. So they would have

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Speaker 2: been able to cut and cause allow growth. That would

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Speaker 2: have helped the supply chains and maybe whether or not

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Speaker 2: they could keep going now anyway, you would have had

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Speaker 2: the benefit of it. And I put in this latest

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Speaker 2: article the cost to the fiscal deficit from them waiting.

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Speaker 2: So the government has been paying way too much interest

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Speaker 2: in the FED, of course itself pays interest to banks

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Speaker 2: for three months where the rate was too high, so

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Speaker 2: they can change that. But I'm worried that we've already

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Speaker 2: seen the bottom of the tenure yield. Unless the Fed

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Speaker 2: changes its models, they're right now looking backward at inflation

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Speaker 2: and they're going to have excuses why they don't want

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Speaker 2: to cut anymore.

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Speaker 3: As a former president of the World Bank, you have

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Speaker 3: a unique view of global trade. What's your view of

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Speaker 3: the tariff policy of this administration and its impact on

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Speaker 3: global trade.

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Speaker 2: I've emphasized that the trading system was really broken. We

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Speaker 2: were in it thinking that everybody was playing by the

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Speaker 2: same rules in China wasn't. And you can look back

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Speaker 2: and say, well, when did people figure it out? That

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Speaker 2: doesn't matter. You're stuck in a world wto the World

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Speaker 2: Trade Organization system that doesn't work at all. When you

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Speaker 2: have the second biggest economy with very aggressive industrial policy.

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Speaker 2: They're using economy of scale that means if you invest

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Speaker 2: in you're the first mover in a sector, then you

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Speaker 2: wipe out all your competition.

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Speaker 1: I got to get to send David mailpass. You don't

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Speaker 1: see this on radio, Lucky you. For those of you

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Speaker 1: on YouTube, mail Pass has a gold tie on today

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Speaker 1: that looks like the plated gold in the President's.

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Speaker 2: Oval office as well.

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Speaker 1: You are one of the few people that come in

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Speaker 1: here that have been in the trenches of working out

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Speaker 1: of a van, running for public office, in your case,

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Speaker 1: the Grand Old Party.

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Speaker 4: How does the geo he moved forward with a centrist tendency?

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Speaker 4: How do the Democrats, the evil Democrats, David move forward

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Speaker 4: with a central tendency? Where is the center tendency that

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Speaker 4: you've written about for forty years?

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Speaker 2: I ran for Senate in New York State in twenty ten,

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Speaker 2: so it was the Tea Party days. That was the

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Speaker 2: idea that you could create growth with lower tax rates,

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Speaker 2: with different policies and basically with a giant upheaval in Washington.

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Speaker 2: So that means each department changing so that they stop

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Speaker 2: blocking growth. Yeah, but look at the president's ratings. I mean,

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Speaker 2: the giant upheople ain't too popular right now. How do

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Speaker 2: we get back to the centrist politics that you and

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Speaker 2: John Riding and all wrote about years ago. So I

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Speaker 2: think you have to implement the upheaval that is going

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Speaker 2: on now, and that means in each area you need

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Speaker 2: more work on the tax code, you need more of course,

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Speaker 2: more work on restraining governments because Washington just wants to

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Speaker 2: spend all the money in the world. And very importantly,

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Speaker 2: these federal reforms would allow capital to flow to small businesses.

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Speaker 2: So that's the core of it. It's the same message,

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Speaker 2: and I think it is Trump's basic message, but you

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Speaker 2: have to implement each part of it in each department.

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Speaker 1: No, maybe that's not happening. David Mountbus, thank you so much, Paul.

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Speaker 1: I'm just going to mentione this now. The interview of

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Speaker 1: the year. Maybe the moment was Nancy Lazar talking much

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Speaker 1: like David about it. At the micro level, we have

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Speaker 1: to create jobs.

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Speaker 4: You do it through incentives, yep.

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Speaker 1: At all.

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Speaker 3: I don't know.

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Speaker 1: We'll see, We'll have to see.

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Speaker 3: We got a lot of economic here.

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Speaker 1: You're enjoying not being in public service.

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Speaker 2: Yeah, that's fine. For one. I exercise more and have

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Speaker 2: and don't travel as which you know wasn't isn't. I've

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Speaker 2: done it for so many years. It's uh, do you

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Speaker 2: get World Cup tickets? Time to get special tickets? Very important.

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Speaker 2: I signed the FIFA ball so at the G twenty

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Speaker 2: in Indonesia in twenty twenty two. It was amazing the

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Speaker 2: world that Ukraine had already been invaded. There was this

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Speaker 2: big round table and so Biden was there in macarn

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Speaker 2: and everybody and all they and the FIFA guy was

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Speaker 2: there and that he was the center of attention and

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Speaker 2: I got signed.

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Speaker 1: By This is great David Malpass with the FIFA guy,

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Speaker 1: greatly appreciate it. Mister Malpass of Chorus, former President of

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Speaker 1: the World Bank,