WEBVTT - Surveillance: Bernstein & Dudley on U.S. Stimulus Outlook 0:00:09.840 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 0:00:13.960 --> 0:00:17.560 we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.640 --> 0:00:27.880 Bloomberg dot Com, and of course, on the Bloomberg Right Now. 0:00:28.200 --> 0:00:31.120 Jared Bernstein's joins us to say he's a member of 0:00:31.160 --> 0:00:34.200 the White House Council of Economic Advisors for President Biden. 0:00:34.560 --> 0:00:39.360 Barely describes his public service to liberals and conservatives. He 0:00:39.560 --> 0:00:43.160 is one of the liberal economists that conservatives are forced 0:00:43.159 --> 0:00:45.600 to read. They've been doing that for decades with his 0:00:45.600 --> 0:00:48.840 work in Washington, and he joins us now representing, of course, 0:00:48.840 --> 0:00:54.240 the Biden administration. Jared, can you apply stimulus in a 0:00:54.400 --> 0:00:59.200 narrow enough way to help those so beleaguered in this economy? 0:01:01.240 --> 0:01:04.880 Sure we can. In fact, much of what's in the 0:01:04.959 --> 0:01:08.720 American rescue plan is targeted at those at the bottom 0:01:08.800 --> 0:01:11.360 leg of this K shaped recovery, meaning that this is 0:01:11.400 --> 0:01:15.440 a recovery where many folks never missed a paycheck did. 0:01:15.800 --> 0:01:18.679 We're able to work from home and so on, while 0:01:18.959 --> 0:01:22.560 so many others were stuck bearing the brunt of the 0:01:22.600 --> 0:01:26.520 pandemic and the economic crisis. For example, we expand a 0:01:26.640 --> 0:01:30.120 child tax credit, make it fully refundable. According to a 0:01:30.160 --> 0:01:34.959 Columbia Poverty analysis group, this reduces child poverty by fifty percent. 0:01:35.319 --> 0:01:38.560 That's some pretty top shelf targeting from my perspective. We 0:01:38.640 --> 0:01:40.839 have a history here of decades of what I'm gonna 0:01:40.840 --> 0:01:45.000 call lockey in individualism. John Taylor of Stanford, clearly a 0:01:45.040 --> 0:01:50.920 conservative economist, shows the value Jared Bernstein of automatic stabilizers 0:01:50.960 --> 0:01:54.280 that benefit all of us, where the halves are benefited 0:01:54.440 --> 0:01:57.680 by the stabilization of they have not explained in this 0:01:57.880 --> 0:02:02.200 natural disaster how they have us will benefit by stimulus, 0:02:02.320 --> 0:02:06.440 for they have nots Yeah, no, I think first of all, 0:02:06.640 --> 0:02:10.800 one thing to recognize is that our automatic stabilizers often 0:02:10.880 --> 0:02:13.080 shut off too quickly. So one of the things we 0:02:13.120 --> 0:02:14.919 ought to do, and that's a problem that we've had. 0:02:15.200 --> 0:02:17.240 Is one of the reasons why the American rescue plan 0:02:17.600 --> 0:02:20.360 is so urgent, because we've had these kinds of air 0:02:20.400 --> 0:02:22.960 pockets created by the kind of wait and see what 0:02:23.080 --> 0:02:25.680 happens next, so we get behind the curve. What we 0:02:25.720 --> 0:02:28.480 need to do is make sure our automatic stabilizers are 0:02:28.560 --> 0:02:31.040 kicking in with the alacrity that we need them. To 0:02:31.400 --> 0:02:34.520 that's embedded in this plan. Yeah. Look, this is a 0:02:34.560 --> 0:02:38.120 matter of uh, you know, if GDP is a spectator 0:02:38.160 --> 0:02:41.720 sport for half the economy, Uh, it's simply not going 0:02:41.760 --> 0:02:44.880 to achieve the goals of the Biden Harris administration. So 0:02:44.960 --> 0:02:49.079 we have to start building the policy architecture the kind 0:02:49.080 --> 0:02:53.519 of connective tissue that reconnects GDP growth to the prosperity 0:02:53.520 --> 0:02:57.560 of all within a special sensitivity to racial equity. And 0:02:57.600 --> 0:03:01.600 that's in this plan. It's also the more broad building 0:03:01.600 --> 0:03:04.120 back Better plan that's coming later. So alright, let's get 0:03:04.120 --> 0:03:06.560 to those two issues into a distinction. Here. This eight 0:03:06.800 --> 0:03:09.400 and then the stimulus Is this just the eight package 0:03:09.400 --> 0:03:12.800 it package and the stimulus packages coming lights out. I 0:03:12.880 --> 0:03:15.799 definitely think of this much more in terms of relief, 0:03:16.360 --> 0:03:20.160 at least initially than stimulus and the sense of there 0:03:20.160 --> 0:03:22.280 are a lot of people who can't go back to 0:03:22.320 --> 0:03:25.040 work untold. Uh, you know, it's safe to go back 0:03:25.080 --> 0:03:26.880 in the water. So one of the key parts, of 0:03:26.919 --> 0:03:29.440 course of the rescue plan. I heard you guys talking 0:03:29.440 --> 0:03:31.760 about the European Union. They've had great trouble with us, 0:03:31.840 --> 0:03:35.560 and it's reflected in their economy, is to not only 0:03:35.600 --> 0:03:39.240 control the virus, but producing distribute the vaccine in a 0:03:39.280 --> 0:03:42.360 way that is obviously much more driven by science, much 0:03:42.360 --> 0:03:45.760 more organized, has a much clear federal presidents than was 0:03:45.960 --> 0:03:49.120 heretofore the case. The connection, as I'm sure your team 0:03:49.200 --> 0:03:53.200 well knows, between controlling the virus, distributing the vaccine, and 0:03:53.240 --> 0:03:56.800 finally launching a robust recovery is extremely tight, and we 0:03:56.840 --> 0:03:59.960 cannot drop the ball on that. That's where President Biden 0:04:00.120 --> 0:04:02.880 is coming from. That's why the urgency of acting now 0:04:03.080 --> 0:04:05.920 is so acute for him. So let's talk relief to stimulus. 0:04:06.040 --> 0:04:08.400 We understand the relief pomp. We've talked about this bill 0:04:08.480 --> 0:04:10.600 many times. What does the stimulus bill down the road 0:04:10.600 --> 0:04:13.680 look like? Jared, You know, I guess I wouldn't think 0:04:13.720 --> 0:04:15.920 of it so much as a stimulus bill. I think 0:04:15.960 --> 0:04:19.200 down the road, with the help of the rescue Plan, 0:04:19.279 --> 0:04:23.039 the economy should be moving uh in direction we needed to. 0:04:23.400 --> 0:04:25.159 I think again, this gets to the point I was 0:04:25.200 --> 0:04:28.400 making a second ago. It's not enough to have GDP 0:04:28.600 --> 0:04:31.320 growing a trend. We have to make sure that it's 0:04:31.400 --> 0:04:34.960 reaching people who have heretofore been left behind. So now 0:04:35.000 --> 0:04:38.600 we're talking about more structural changes to the economy. Standing 0:04:38.680 --> 0:04:42.120 up a childcare sector that's really never existed in this country, 0:04:42.200 --> 0:04:44.360 to give parents a chance to get into the job 0:04:44.400 --> 0:04:47.039 market if that's what they want to do. Uh. Finally 0:04:47.120 --> 0:04:50.760 taking a real stab at clean energy, making sure that 0:04:50.839 --> 0:04:53.400 we deal with the kind of racial inequities that have 0:04:53.480 --> 0:04:56.040 plagued this economy so long, in the air of housing 0:04:56.120 --> 0:04:59.520 and criminal justice, for example. That's the kind of broader, 0:04:59.560 --> 0:05:02.600 more structural change. I think you have to distinguish between 0:05:02.640 --> 0:05:05.600 cyclical and structural, and I think the latter is more 0:05:05.640 --> 0:05:09.200 of a structural, uh approach. So in order to get there, 0:05:09.400 --> 0:05:12.839 what's more important for the economic recovery FO checks to 0:05:12.920 --> 0:05:17.920 each family or local and state aid. You know, this 0:05:18.000 --> 0:05:20.440 is just we just can't do either are in this case. 0:05:20.440 --> 0:05:22.599 And I think that's a good example, because you know, 0:05:22.640 --> 0:05:27.000 we are in a set of discussions with Republicans who 0:05:27.680 --> 0:05:30.520 in many cases very much share the urgency that we do, 0:05:30.839 --> 0:05:32.440 but sort of want to take a different route to 0:05:32.480 --> 0:05:35.880 get there. And I think the key to the rescue plan, 0:05:35.960 --> 0:05:38.919 as as the President has articulated, is that it really 0:05:39.040 --> 0:05:42.279 is calibrated to meet all the various different needs that 0:05:42.320 --> 0:05:45.360 we face right now. Families are struggling, they need those checks, 0:05:45.560 --> 0:05:48.200 which By the way, we just got polling data clocking 0:05:48.240 --> 0:05:52.160 in about seventy cent approval. But the state and local 0:05:52.240 --> 0:05:55.359 sector has to get help to reopen schools and to 0:05:55.600 --> 0:06:00.360 finally distribute the distribute the vaccine, control the virus and 0:06:00.400 --> 0:06:03.440 put COVID nineteen behind us. Jared, how important is it 0:06:03.520 --> 0:06:06.040 to push as much as possible into this bill due 0:06:06.080 --> 0:06:08.400 to the lack of consensus, the lack of any kind 0:06:08.400 --> 0:06:11.599 of agreement between Republicans and Democrats on the Hill to 0:06:11.680 --> 0:06:14.160 get some of those structural changes through that you're talking about, 0:06:14.320 --> 0:06:17.880 especially if there isn't the onus on getting economic growth. 0:06:19.200 --> 0:06:21.240 You know, I I gotta say, I think that the 0:06:22.680 --> 0:06:27.600 bipartisan support for UH, this kind of UH, this kind 0:06:27.600 --> 0:06:30.920 of relief is actually much broader than you might think. 0:06:30.920 --> 0:06:33.080 Now there's the Hill. That's one thing, and I get 0:06:33.120 --> 0:06:36.679 what you're saying, But in fact, again these polling results 0:06:36.680 --> 0:06:38.880 show that something like two thirds of the American people 0:06:38.960 --> 0:06:43.200 support UH, the president's approach, with the majority of Republicans. 0:06:43.760 --> 0:06:46.839 But it's also if you look at the Business Roundtable, 0:06:46.880 --> 0:06:49.000 the Chamber of Commerce folks you have on your show, 0:06:49.279 --> 0:06:51.920 they support this plan. If you look at Republican mayors 0:06:51.920 --> 0:06:56.000 across the Land. They support this plan. Trump's former chief economist, 0:06:56.080 --> 0:06:59.960 Kevin Hassett, Glenn Hubbard, Bush's former chief economists, they support 0:07:00.279 --> 0:07:04.000 the plan. So it's it's a much broader sense of 0:07:04.160 --> 0:07:06.040 the urgency of the relief. And I think what we're 0:07:06.120 --> 0:07:09.000 arguing about in Washington are a set of details that 0:07:09.080 --> 0:07:11.640 you know, they're important to policy wanks like me and you, 0:07:12.000 --> 0:07:14.760 but for the American people, Uh, they just need to 0:07:14.760 --> 0:07:17.200 get get relief out there, you know, as soon as 0:07:17.240 --> 0:07:19.160 as soon as possible. JAREDA don't mean to be flipped 0:07:19.160 --> 0:07:21.800 about it, but you'd expect the approval writing for checks 0:07:22.040 --> 0:07:24.400 from the government going out to individuals to be high anyway, 0:07:24.400 --> 0:07:28.120 wouldn't you. Yeah, I mean I think I think that 0:07:28.120 --> 0:07:30.559 that doesn't mean it's a bad thing. In other words, 0:07:30.800 --> 0:07:33.520 this is a time when I think we really have 0:07:33.720 --> 0:07:37.080 to look at the kinds of short falls Americans are facing. 0:07:37.200 --> 0:07:39.080 You know, these checks have gotten a lot of flak. 0:07:39.800 --> 0:07:43.840 If you look at a family with seventy five thousand dollars, 0:07:43.840 --> 0:07:48.960 for example, many of these folks have savings or savings raids. 0:07:48.960 --> 0:07:50.760 This is not well known. I looked at this the 0:07:50.760 --> 0:07:54.200 other day. If you look at people who have zero 0:07:54.360 --> 0:07:58.160 or near zero savings raids, you get pretty quickly up 0:07:58.200 --> 0:08:03.320 to income levels around even higher. Now, many of these 0:08:03.360 --> 0:08:08.080 folks are engaged in mortgage moratoria or rent a uh 0:08:08.120 --> 0:08:12.760 temporary not rent moratoria. That means that they are accumulating 0:08:12.840 --> 0:08:17.560 significant debt. At some point when these moratoria and UH 0:08:17.680 --> 0:08:21.920 and and forbearance on mortgages uh and these families are 0:08:21.920 --> 0:08:25.280 gonna face massive debts. So the idea that some of 0:08:25.320 --> 0:08:28.280 this uh, some of some of these direct payments are 0:08:28.320 --> 0:08:31.680 saved and not spent initially is actually a feature, not 0:08:31.800 --> 0:08:33.920 a bug. What we've seen in earlier round is that 0:08:33.960 --> 0:08:36.520 they're initially saved and then when these families hit an 0:08:36.520 --> 0:08:39.400 air pocket, there's there. They're spent. And there are middle 0:08:39.440 --> 0:08:43.000 class families who are struggling here. Jared, one final question. 0:08:43.040 --> 0:08:44.839 You and I have known each other for years. I've 0:08:44.840 --> 0:08:47.400 always asked this question of people. When a new president 0:08:47.559 --> 0:08:51.000 is minted, a president has you into the oval office 0:08:51.080 --> 0:08:53.960 or around a table. He's sitting on the couch. And 0:08:54.000 --> 0:08:58.680 there is a way any given president takes in economic data, 0:08:58.760 --> 0:09:03.680 economic advice, economic perspective. What is the Biden method in 0:09:03.720 --> 0:09:07.400 the oval office? It's a great question. He sits in 0:09:07.440 --> 0:09:10.200 a chair, we sit on a couch. And what he 0:09:10.280 --> 0:09:14.959 does is he asks us our economic advice, and he 0:09:15.000 --> 0:09:17.320 absorbs it through what I think of as kind of 0:09:17.320 --> 0:09:21.640 a political political economy filter. That is, he's he's not 0:09:21.679 --> 0:09:25.000 looking to me to give him political advice. Once when 0:09:25.040 --> 0:09:27.440 I did so, he reminded me that I couldn't be 0:09:27.480 --> 0:09:29.600 elected dog catcher. I mean he did it in a 0:09:29.679 --> 0:09:35.360 nice way. Um, so he's very Joe Biden has has 0:09:35.440 --> 0:09:39.360 just really sharp political antenna, and you know, he knows 0:09:39.400 --> 0:09:41.000 what he knows, he knows he doesn't know, so he 0:09:41.080 --> 0:09:44.199 comes to us for political advice and then he thinks 0:09:44.240 --> 0:09:48.160 through the political machinations to get to the economic place 0:09:49.000 --> 0:09:52.800 that meets his vision. Chad, final question from me, and 0:09:52.840 --> 0:09:54.600 I've sort of got to talk about this. Do you 0:09:54.600 --> 0:10:00.280 think seventy five dollars for a family isn't enough in America? 0:10:01.480 --> 0:10:04.160 You know, I think it's hard to say a blanket 0:10:04.280 --> 0:10:07.200 statement like that, but I can tell you this, there 0:10:07.240 --> 0:10:10.760 are lots of families with that income level who have 0:10:10.960 --> 0:10:14.920 struggled to make ends meet, to keep roofs over their head, 0:10:15.160 --> 0:10:18.240 to meet not only their basic needs, but to meet 0:10:18.280 --> 0:10:21.080 their aspirations to send their kids to college. To pay 0:10:21.120 --> 0:10:24.400 for affordable childcare. And as you know, it's not just 0:10:24.480 --> 0:10:27.040 the level, it's the derivatives. So you know, families who 0:10:27.120 --> 0:10:30.280 are at that level and they're stuck at that level 0:10:30.320 --> 0:10:33.560 even though they're working hard. The economy is increasingly productive. 0:10:33.600 --> 0:10:36.400 They see the stock market going up, they see wealth accumulation. 0:10:36.800 --> 0:10:38.679 You know, we know that the bottom half of families 0:10:39.160 --> 0:10:43.800 have almost zero in terms of equity in the streets. 0:10:43.840 --> 0:10:45.240 Just to jump here, because we only have about a 0:10:45.240 --> 0:10:46.600 couple of minutes, and I need to get this follow 0:10:46.679 --> 0:10:50.200 up in as a family growing up, there years where 0:10:50.200 --> 0:10:53.160 we had folest than that. So believe me, I understand 0:10:53.160 --> 0:10:56.600 what you're talking about here. But this goes beyond pandemic relief. 0:10:56.600 --> 0:10:59.000 You're talking about a real ideological shift in the role 0:10:59.040 --> 0:11:02.240 of government. And if you want bipartisan agreement, Dan and 0:11:02.360 --> 0:11:06.760 d C. That's a big oscar, isn't it, Jared? I mean, 0:11:06.800 --> 0:11:08.760 it isn't it isn't I mean I I think that 0:11:08.840 --> 0:11:12.559 the role of government has to be to provide opportunities 0:11:12.559 --> 0:11:15.240 for not just low but for middle and upper middle 0:11:15.280 --> 0:11:18.160 class families to get ahead, for them to reap some 0:11:18.240 --> 0:11:21.480 of the benefits of the productivity that they're helping to generate, 0:11:21.520 --> 0:11:24.040 they're helping to bake a bigger, bigger pie. They should 0:11:24.080 --> 0:11:26.960 get bigger slices, you know, whatever their income level is. 0:11:27.480 --> 0:11:30.720 But the problem is that those bigger slices have only 0:11:30.760 --> 0:11:33.480 been going to the narrow top top one, top five 0:11:33.559 --> 0:11:36.840 per cent. So I think the key here is partially 0:11:36.880 --> 0:11:39.000 the levels. And we talked about that family is being 0:11:39.000 --> 0:11:41.839 able to meet their aspirations, but the idea that if 0:11:41.920 --> 0:11:44.440 you're playing by the rules, you ought to get ahead. 0:11:44.520 --> 0:11:48.200 And again, I think that policy architecture, that connective tissue 0:11:48.240 --> 0:11:51.439 has been torn over the years by policies that's been 0:11:51.520 --> 0:11:53.959 very insensitive to those in the middle class and down, 0:11:54.160 --> 0:11:57.200 and we're trying to We're gonna try to fix that, Jod. 0:11:57.240 --> 0:11:59.040 I look forward to continue in the conversation with you. 0:11:59.120 --> 0:12:02.199 We appreciate times. Thank you, Jap besting that of the 0:12:02.240 --> 0:12:11.080 White House Council of Economic Advices joining us now from 0:12:11.160 --> 0:12:15.080 Jared Bernstein and the Biden administration. The academic William Dudley 0:12:15.160 --> 0:12:17.320 joins us, of course, his work at Golden Sacks for 0:12:17.440 --> 0:12:19.800 years and then at the New York Fed. We're thrilled 0:12:19.800 --> 0:12:23.439 that Bill Dudley could join us. Writing for Bloomberg opinion today, 0:12:23.840 --> 0:12:26.720 Bill Dudley, I I look at where we are in 0:12:26.760 --> 0:12:28.800 the greater theme of things, and there's going to be 0:12:28.840 --> 0:12:32.560 a point now, maybe a point in the future, where 0:12:32.600 --> 0:12:35.320 the day to day work of the FED to support 0:12:35.360 --> 0:12:39.840 the economy is over and they begin to pull away 0:12:40.000 --> 0:12:43.680 from the monthly fundings that they're doing, they pull away 0:12:43.760 --> 0:12:47.880 from the jargon in the speeches of providing ultra accommodation. 0:12:48.320 --> 0:12:52.720 Are we close to that moment? No, the FED basically 0:12:52.720 --> 0:12:56.560 has told us that sure, police said is premature to 0:12:56.600 --> 0:13:00.960 be talking about even beginning to, you know, wind down 0:13:01.040 --> 0:13:03.960 the rate of acid purchases. So the FED is not 0:13:04.120 --> 0:13:08.199 probably can do anything different at least until late fall 0:13:08.840 --> 0:13:12.600 early next year. Well, that may be the policy as well. 0:13:12.600 --> 0:13:14.840 But then we go FED meeting to FED meeting. You've 0:13:14.840 --> 0:13:18.520 been in the crucible to this, Bill Dudley. Little sentences 0:13:18.559 --> 0:13:22.160 are given out in speeches from say Cleveland, from St. 0:13:22.240 --> 0:13:25.679 Kansas City, from San Francisco, or from the pressures you 0:13:25.840 --> 0:13:29.640 faced in New York. Are we gonna see theory come 0:13:29.720 --> 0:13:35.040 out in the speeches of federal officers in the coming months. Well, 0:13:35.040 --> 0:13:37.199 it really depends on you know, how strong and the 0:13:37.320 --> 0:13:39.160 rebound in the economy is. I mean, what we're hoping 0:13:39.600 --> 0:13:42.520 is people get vaccinated, and once people get vaccinated, social 0:13:42.600 --> 0:13:46.719 distancing can be relaxed, the e commy can be reopened. 0:13:47.160 --> 0:13:49.800 And when that happens, the economy should accelerate pretty sharply 0:13:49.840 --> 0:13:52.079 because you're gonna have a big increase in demand and 0:13:52.559 --> 0:13:55.080 uh in the leisure and hospitality area in particular. People 0:13:55.080 --> 0:13:57.280 are gonna go to movies, they're gonna restaurants, are gonna travel. 0:13:57.960 --> 0:14:00.040 So that could be a pretty strong second half of 0:14:00.240 --> 0:14:02.839 the year if things go well, and I think at 0:14:02.880 --> 0:14:04.920 that point then people will start at the FED will 0:14:04.920 --> 0:14:06.880 start to you know, begin to think about it. Okay, 0:14:06.880 --> 0:14:09.920 how do we start to uh pull pull back? But 0:14:09.920 --> 0:14:12.960 the FED doesn't want to pull back prematurely because there's 0:14:13.000 --> 0:14:17.079 still nine million people that have lost their jobs since 0:14:17.080 --> 0:14:18.920 the pandemic started, and so they don't want to pull 0:14:18.920 --> 0:14:22.000 back too early because they did. If they do, Bonnils 0:14:22.080 --> 0:14:24.840 go up, stock Mark goes down. That titans financial conditions 0:14:25.200 --> 0:14:27.120 and that makes it harder for the FED to achieve 0:14:27.200 --> 0:14:29.680 its objectives as we get closer to running the economy. 0:14:29.720 --> 0:14:32.960 Hot Bell, there's a question of financial stability risks and 0:14:33.000 --> 0:14:35.960 how you measure it in a time of shadow banking, 0:14:36.040 --> 0:14:38.360 at a time of robin hood traders, at a time 0:14:38.680 --> 0:14:41.160 of other structural changes to the market. You put out 0:14:41.160 --> 0:14:43.600 a column about this. Do you think the FED is 0:14:43.640 --> 0:14:46.920 gauging systemic risk correctly as they look forward to and 0:14:47.040 --> 0:14:51.240 perhaps hotter economy. Well, I think the problem that they 0:14:51.280 --> 0:14:53.080 have is that at some point they are going to 0:14:53.200 --> 0:14:55.960 have to turn the dial back away from you know, 0:14:56.840 --> 0:15:00.440 significant accommodation. And when they touch that dial, when they're 0:15:00.440 --> 0:15:03.560 perceived too about to touch that dial, markets are gonna react. 0:15:03.560 --> 0:15:05.160 So I think it's gonna be very difficult for the 0:15:05.200 --> 0:15:09.680 FED to avoid a you know, a bond taper tantrum. Uh. 0:15:09.720 --> 0:15:12.120 You know, you're either all in or you're not. And 0:15:12.120 --> 0:15:13.840 at some point the Fed is not gonna be all in. 0:15:13.920 --> 0:15:16.560 And when that happens, markets are going to react. And 0:15:16.640 --> 0:15:18.240 some of the risks that you put out there in 0:15:18.240 --> 0:15:20.200 this column that you wrote this morning for Bloomberg Opinion, 0:15:20.600 --> 0:15:24.720 you mentioned mutual funds and ways to protect against runs 0:15:24.760 --> 0:15:27.960 on these particular funds. Do you actually view this as 0:15:27.960 --> 0:15:30.480 a real viable risk going forward if there is some 0:15:30.480 --> 0:15:33.680 sort of taper tantrum like you're saying, Well, it depends 0:15:33.720 --> 0:15:35.320 on how violent it is. But you know the problem 0:15:35.320 --> 0:15:37.360 we have is we have mutual funds that are vested 0:15:37.400 --> 0:15:40.400 in very a liquid asset classes like high you'ld dead, 0:15:41.040 --> 0:15:43.640 and yet we offer these mutual funds and we basically 0:15:43.640 --> 0:15:46.640 tell people they get their money out overnight, and you 0:15:46.640 --> 0:15:48.560 can't actually and a lot of people show up at 0:15:48.560 --> 0:15:50.880 that mutual fund to get their money back. The market 0:15:50.960 --> 0:15:54.000 really can't absorb that much mutual bonds being sold into 0:15:54.040 --> 0:15:56.680 the market. So it makes sense for a liquid mutual 0:15:56.720 --> 0:15:59.880 funds to basically tell people, no, you don't get overnight liquidity, 0:16:00.000 --> 0:16:03.160 get weakly liquidity or monthly liquidity, and that gives the 0:16:03.280 --> 0:16:06.320 mutual fund manager time to actually liquidate their assets in 0:16:06.320 --> 0:16:08.560 an orderly way so that you don't have the fire 0:16:08.560 --> 0:16:11.440 sale of assets, which which which would obviously depress prices 0:16:11.480 --> 0:16:14.040 even further. Bill an unfair question, but you know I'm 0:16:14.200 --> 0:16:16.440 legendary for that, So I'm gonna go with the John 0:16:16.760 --> 0:16:21.560 emails in from Capri and says asked Dudley about drag Bill, Dudley, 0:16:21.600 --> 0:16:24.320 you would be on the short list of technocrats that 0:16:24.360 --> 0:16:27.240 would take over the American government if we were in 0:16:27.360 --> 0:16:31.080 political crisis. We all know that. I mean, you Secretary 0:16:31.160 --> 0:16:34.560 yelling Mr Brannankey, Dr Brannankey, and and and the rest. 0:16:34.880 --> 0:16:38.280 Bill Dudley, what is your perspective on what drag is 0:16:38.320 --> 0:16:42.120 being asked to do? How do guys like you turn 0:16:42.200 --> 0:16:48.080 into politicians? Is it doable? Well? Mario Draggy is extraordinarily skilled, 0:16:48.160 --> 0:16:51.640 not just as a commist but also as a diplomat, 0:16:52.040 --> 0:16:54.320 So he has the I think the political skills to 0:16:54.840 --> 0:16:57.680 actually take out political position. You know. I think you 0:16:57.720 --> 0:17:00.960 saw that in terms of how he handled the European 0:17:01.000 --> 0:17:04.320 Central Bank during the European crisis. Uh, you know what, 0:17:04.880 --> 0:17:06.800 We'll do whatever it takes. And that was and it 0:17:06.840 --> 0:17:08.840 will be enough. And that was a very very important 0:17:08.880 --> 0:17:12.960 Stephen that showed I think that a lot of sensitivity 0:17:13.000 --> 0:17:14.680 to the political side of things. So I think if 0:17:14.720 --> 0:17:18.240 he were, you know, put in power in Italy to 0:17:18.280 --> 0:17:21.240 try to, you know, be a party of unity, I 0:17:21.280 --> 0:17:23.320 think you'd be effective in that job. But that's probably 0:17:23.320 --> 0:17:26.000 because who he is as a person, not because he 0:17:26.080 --> 0:17:29.240 is a former central banker. A paradigm shift, and Tom 0:17:29.280 --> 0:17:32.480 Bill is absolutely right. If you think back when Tricia 0:17:32.640 --> 0:17:36.080 left and drug stepped up, Tricia had been hiking rates 0:17:36.119 --> 0:17:38.600 a couple of times over the previous few years. I 0:17:38.600 --> 0:17:40.600 think my memory serves correct our way, and I think 0:17:40.640 --> 0:17:44.199 again in and then drug came on board, and the 0:17:44.240 --> 0:17:46.800 idea of taking rates negative at the ECB, at a 0:17:46.880 --> 0:17:50.240 large central bank like that, wasn't really in the conversation 0:17:50.280 --> 0:17:52.760 at all, Tom. The idea of buying corporate credit wasn't 0:17:52.800 --> 0:17:55.480 really in the conversation. The idea of getting Germany to 0:17:55.520 --> 0:17:58.239 come along for the ride, and by softeign debt not 0:17:58.320 --> 0:18:00.440 part of the conversation. Bill it was apparent on shift. 0:18:00.480 --> 0:18:02.720 And I'm just wonder in your mind whether we have 0:18:02.880 --> 0:18:07.000 taken this too far at central banks. Well, we won't 0:18:07.000 --> 0:18:09.679 know for a while, but clearly the central banks have 0:18:09.760 --> 0:18:15.400 done extraordinary things to support economic activity during an extraordinary pandemic. 0:18:15.880 --> 0:18:17.919 And how this plays out in the long run, you know, 0:18:17.960 --> 0:18:19.920 it's really you know, as they say, too soon to 0:18:19.960 --> 0:18:22.520 tell the economist and you though, do you think you 0:18:22.560 --> 0:18:25.440 sacrifice the dynamism of an economy when the central bank 0:18:25.480 --> 0:18:27.680 takes a bigger role in the white has done well? 0:18:27.720 --> 0:18:28.959 I do think we have to worry a little bit 0:18:28.960 --> 0:18:31.840 about you know, very very low interest rates, basically you know, 0:18:31.920 --> 0:18:34.760 keeping companies afloat that probably shouldn't be afloat. You know, 0:18:34.760 --> 0:18:37.639 there's a so called zombie companies because that can actually 0:18:37.680 --> 0:18:40.920 interfere with the real allocation of capital from bad uses 0:18:40.960 --> 0:18:43.640 to better uses. So we'll have to see how it goes. 0:18:43.680 --> 0:18:45.399 I mean the good news is the u AS economy 0:18:45.480 --> 0:18:48.880 is pretty dyna dynamic, uh, and so capital does sort 0:18:48.920 --> 0:18:51.480 of moved to its best use. So I would say 0:18:51.520 --> 0:18:53.359 at this point, I'm not that worried about it. But 0:18:53.960 --> 0:18:56.080 you know, again, we've never done we've never done this before. 0:18:57.040 --> 0:18:58.919 We don't have any experience in terms of what the 0:18:59.000 --> 0:19:01.160 recovery will actually look like. So I think it's really 0:19:01.200 --> 0:19:03.960 premature to be be able to say, oh, geez, I 0:19:04.040 --> 0:19:06.040 know this is gonna work. Bill, just real quick, care 0:19:06.080 --> 0:19:07.879 before we let you go, How do you view the 0:19:07.880 --> 0:19:09.960 games top saga that we've seen over the past couple 0:19:10.000 --> 0:19:13.800 of weeks. Was this evidence of froth? Well, I don't know. 0:19:13.960 --> 0:19:17.280 You know, I don't know if it's evidence of froth. 0:19:17.480 --> 0:19:19.520 I think it was bad judgment. I mean, you know, 0:19:19.960 --> 0:19:22.679 you really shouldn't buy assets when they're well above their 0:19:22.960 --> 0:19:26.280 intrinsic value. If you do that, you're probably going to 0:19:26.320 --> 0:19:29.040 lose money eventually, because eventually there's going to be more 0:19:29.040 --> 0:19:31.880 sellers than buyers. I mean to make money in game 0:19:31.880 --> 0:19:34.760 stock when it's selling it two hundred dollars of share. 0:19:35.160 --> 0:19:36.720 The only way you're gonna make money is if there's 0:19:37.119 --> 0:19:39.920 there's other people to come in behind you to buy 0:19:39.960 --> 0:19:42.040 the stock at even and push it to even higher levels. 0:19:42.240 --> 0:19:45.720 That seems like not a very sound proposition when when 0:19:45.960 --> 0:19:48.080 you know the intrinsic value of the company is much lower. 0:19:48.800 --> 0:19:50.960 Great to catch up, as always, come back soon. Bill Dunting, 0:19:51.000 --> 0:19:54.320 that bloom bag opinion columnist and former New York Fed president, 0:19:58.960 --> 0:20:01.520 the Dirty Little Secret votes because the cell side is 0:20:01.520 --> 0:20:04.920 not only about price targets and enthusiasm about up here 0:20:05.000 --> 0:20:07.680 down there, but it's about the density of the note. 0:20:07.720 --> 0:20:11.800 Thomas Forte is a d A. Davidson in rights, brilliantly 0:20:11.960 --> 0:20:15.720 thick notes about the details of a company. Tom Forte, 0:20:15.800 --> 0:20:17.800 thanks for joining us. I want to go right to 0:20:17.880 --> 0:20:21.640 your thoughts on third party where you notice this new 0:20:21.720 --> 0:20:25.359 dominance of third party Explain to our audience while you 0:20:25.400 --> 0:20:30.320 have a persistent buy off the dominance of Amazon embracing 0:20:30.480 --> 0:20:35.600 in other sellers. So if you think about and the 0:20:35.640 --> 0:20:40.000 importance of third party sales on Amazon, it's more profitable 0:20:40.440 --> 0:20:45.280 when businesses and individuals sell products on Amazon than when 0:20:45.320 --> 0:20:49.880 Amazon sells the products itself. Additionally, I think it puts 0:20:49.920 --> 0:20:54.000 a lot of the antitrust heat off of the company. 0:20:54.119 --> 0:20:56.520 I still think there is very significant But if you 0:20:56.520 --> 0:20:59.560 look at Tom for example, when they reported their Black 0:20:59.600 --> 0:21:02.919 Friday Cyber Monday sales, they focused on the amount of 0:21:02.920 --> 0:21:08.080 money third party sellers made selling on Amazon, not Amazon itself. 0:21:08.359 --> 0:21:11.840 I think it's very important Tom. This raises regulatory risk, 0:21:11.880 --> 0:21:13.480 though in a big way. If you think about the 0:21:13.480 --> 0:21:17.360 big railway railway bearers, they were utilities, they were necessities. 0:21:17.520 --> 0:21:20.320 This becomes the same thing, the same argument that any 0:21:20.359 --> 0:21:23.800 company has to join forces with Amazon and use its 0:21:23.840 --> 0:21:27.160 infrastructure in order to get ahead. What kind of regulatory 0:21:27.280 --> 0:21:31.760 risk does this type of dominance create. The good news 0:21:31.840 --> 0:21:35.639 for Amazon in that regard is Walmart is starting to 0:21:35.680 --> 0:21:39.560 step up its game in terms of marketplaces, Target is 0:21:39.160 --> 0:21:43.399 still very well behind, so Amazon can show that there 0:21:43.440 --> 0:21:47.439 are now more marketplaces that sellers can offer their products on. 0:21:47.960 --> 0:21:52.480 But I do think the challenge for anti competitive against 0:21:52.480 --> 0:21:55.760