WEBVTT - Surveillance: Fiscal Vs. Monetary Policy With Buiter 0:00:00.080 --> 0:00:12.960 Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Lee. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:28.560 Bloomberg dot Com, and of course on the Bloomberg Villain 0:00:28.560 --> 0:00:31.120 Bouncer joint to us here in New York City, specially 0:00:31.120 --> 0:00:33.640 Economic ad Fighter formerly of the NPC at the Bank 0:00:33.680 --> 0:00:35.839 of England and Money to Villiam. Good morning. We've had 0:00:35.880 --> 0:00:39.919 three growth scares in the last ten years, fifteen sixteen 0:00:40.320 --> 0:00:44.920 and now eighteen nineteen. Each and everyone driven by manufacturing, 0:00:45.000 --> 0:00:48.960 led by manufacturing, and the previous two didn't bleed into 0:00:48.960 --> 0:00:51.480 services in a big way. It was a head fake. 0:00:51.560 --> 0:00:56.400 We got out. Okay, is this any different? Well, I'm 0:00:56.440 --> 0:01:01.000 getting increasingly concerned that in Europe euro areas, actually it 0:01:01.120 --> 0:01:04.760 may be something different that we will get because of 0:01:04.800 --> 0:01:09.120 the extreme weakness of manufacturing. Data and sort of supplementary 0:01:09.120 --> 0:01:14.400 information about global trade coming from Korea that confirms this 0:01:14.680 --> 0:01:20.680 weakness as being more, i think than just manufacturing slow down. 0:01:20.680 --> 0:01:23.680 And I'm afraid this looks like it could really rub 0:01:24.319 --> 0:01:26.560 every part of the economy in the wrong way. For 0:01:26.600 --> 0:01:28.920 anyone tuning in this morning that hasn't seen the data yet. 0:01:28.959 --> 0:01:33.119 Exports out of South Korea down almost the data in Germany, 0:01:33.160 --> 0:01:35.400 the p m I coming in at forty one point four, 0:01:35.480 --> 0:01:37.040 there was a hope that we'd see her pick up 0:01:37.080 --> 0:01:39.600 their villain. Let's talk about the policy response. The e 0:01:39.680 --> 0:01:43.560 CP has thrown everything at it. Is that gonna work. No, 0:01:43.680 --> 0:01:47.080 it's not going to be enough. Central banks in the policity. 0:01:47.080 --> 0:01:50.400 The ECB with a polity ated miners sixty beats are 0:01:50.520 --> 0:01:54.360 effectively pushing on a string, maybe a nice string to 0:01:54.360 --> 0:01:59.240 push on, but it really will not boost activity where 0:01:59.280 --> 0:02:02.840 it needs to be boosted. Only fiscal policy can do that, Professor. 0:02:02.880 --> 0:02:04.360 But I want to get out in front of our 0:02:04.400 --> 0:02:07.280 conversation with William Dudley this morning, and I want to 0:02:07.320 --> 0:02:11.600 give it in a sixty thousand foot view way over 0:02:11.680 --> 0:02:15.600 the topics at hand, negative interest rates, what that does 0:02:15.680 --> 0:02:18.880 to savers and what it does to the incentives in Europe, 0:02:19.200 --> 0:02:22.680 the low rates, the fiscal and financial repression. Rather in 0:02:22.720 --> 0:02:26.640 the United States, have we thought too hard for fourteen years? 0:02:26.680 --> 0:02:31.680 Have we boxed ourselves in to a set of economics 0:02:31.800 --> 0:02:34.520 where we thought, you know, maybe this works, but to 0:02:34.600 --> 0:02:37.840 a lot of people. It's not It may not be 0:02:37.880 --> 0:02:39.480 working for a lot of people, but it doesn't mean 0:02:39.480 --> 0:02:42.280 there's a lot you can do about it. The fact 0:02:42.320 --> 0:02:46.080 that indust rates are negative now for seventeen chillion worth 0:02:46.120 --> 0:02:51.480 of debt outstanding is a larger reflection of a very 0:02:51.560 --> 0:02:57.360 low in the negative neutral global real interest rate, and 0:02:57.919 --> 0:03:03.720 central banks sort of tinker that fundamental reality which is 0:03:03.760 --> 0:03:10.040 driven by demographics, by lack of embodied technical change, and 0:03:10.120 --> 0:03:14.840 by other real economy factors. So central banks are not 0:03:15.400 --> 0:03:19.160 in some sense causing I didn't say they're causing it, 0:03:19.240 --> 0:03:21.800 but they have to deal with this new lower phenomenal GDP. 0:03:21.960 --> 0:03:25.960 You mentioned demographics and such. Do we need to clear 0:03:26.040 --> 0:03:31.519 out the zombie companies, the zombie assets and liabilities that 0:03:31.680 --> 0:03:35.560 have that have persisted through this twelve and fourteen years, 0:03:36.320 --> 0:03:40.800 especially in Europe, there has not been a thorough cleaning 0:03:40.840 --> 0:03:42.920 up with the bank balance sheet and it was always 0:03:42.920 --> 0:03:46.360 a good idea to do that. Of course, timing is 0:03:46.720 --> 0:03:53.720 wouldn't be ideal about determined attempt to clean up the 0:03:53.760 --> 0:03:58.560 balance sheets go be part of the solution to this problem. 0:03:58.680 --> 0:04:02.320 This Manchester United qualifiers as an ambie company join for 0:04:02.640 --> 0:04:05.560 not just yet, though some Manchester United fans might fill 0:04:05.600 --> 0:04:07.520 that way. Villam, I just want to run things out 0:04:07.520 --> 0:04:09.880 on the fiscal policy question. There's a lot of people 0:04:09.920 --> 0:04:12.040 on this side of Atlantic look into Europe just saying 0:04:12.040 --> 0:04:13.920 this has got to be inevitable. Now this is the 0:04:13.920 --> 0:04:16.640 only policy tool left. Surely they're going to use it. 0:04:16.680 --> 0:04:20.160 Madame Legard will make the difference as a European looking 0:04:20.200 --> 0:04:22.919 at the situation play out all of the experience you have. 0:04:23.360 --> 0:04:26.599 Do you see any chance of this happening in the 0:04:26.640 --> 0:04:30.240 next eighteen months. I do. Actually, it's not going to 0:04:30.279 --> 0:04:33.160 be dramatic. You're not going to see the kind of 0:04:33.760 --> 0:04:37.760 Trump style as an eighteen fiscal stimulus. But we could 0:04:37.800 --> 0:04:42.800 get a percent of GDP worth of fiscal relaxation in 0:04:42.839 --> 0:04:45.680 a selected number of countries, the ones with the most 0:04:45.720 --> 0:04:50.040 fiscal elbow room Germany, Netherlands and all that, and some 0:04:50.200 --> 0:04:55.280 smaller fiscal stimulus in in the rest of the euro 0:04:55.440 --> 0:04:59.400 Area where fiscal challenges are greater. If at the same 0:04:59.440 --> 0:05:03.440 time the ECB continues to engage in quantitative easing, Yeah, 0:05:03.520 --> 0:05:06.760 they're being business for what looks like a mini helicopter 0:05:06.800 --> 0:05:08.560 money drop. He Philliam going to catch you out with 0:05:08.600 --> 0:05:25.800 the conversation to be continued right now. We like to 0:05:25.880 --> 0:05:31.200 migrate sort of to a October kickoff of American politics. 0:05:31.200 --> 0:05:34.560 We can do that with Wendy Shower. She's a Brown University. 0:05:35.040 --> 0:05:36.919 I like what you say, Wendy, in the beginning of 0:05:36.960 --> 0:05:41.560 your note on the brand of populism, What is the 0:05:41.640 --> 0:05:47.960 brand of populism of Iowa front runner Elizabeth Warren. That's 0:05:48.000 --> 0:05:51.760 truly economic populism. I mean it's almost a blueprint from 0:05:51.800 --> 0:05:55.960 the ten eight nineties start of saying the individual working 0:05:56.080 --> 0:06:00.360 person deserves detection, deserves to make a decent wage. It's 0:06:00.400 --> 0:06:03.479 not sort of this elite tax cut, let's generate jobs 0:06:03.520 --> 0:06:06.840 through corporate America. It's what can we do to the individual. 0:06:07.040 --> 0:06:09.120 And so it's different from the Trump brand. When I 0:06:09.160 --> 0:06:12.640 first met the Senator ages ago, she was a professor 0:06:12.720 --> 0:06:16.279 at Harvard and she was total policy want. I say 0:06:16.320 --> 0:06:19.800 that with all great respect for her public service, and 0:06:20.000 --> 0:06:23.160 she's still that way. Is there any evidence of policy 0:06:23.240 --> 0:06:26.800 want you can get elected? Well, I mean we're seeing 0:06:26.800 --> 0:06:28.880 that in the polls now with her right, and we're 0:06:28.880 --> 0:06:31.000 seeing the response literally if you see the response in 0:06:31.080 --> 0:06:33.080 her rallies and look at the way she sort of 0:06:33.120 --> 0:06:35.640 characterized herself. She dresses pretty simply. I mean, you're not 0:06:35.640 --> 0:06:38.600 supposed to pay attention, but everybody does anyway. She's simple 0:06:38.600 --> 0:06:41.599 in her dress, she's simple in her address to people. 0:06:41.960 --> 0:06:44.760 She you know, runs sprints, she takes pictures with everybody. 0:06:45.080 --> 0:06:48.159 She really is trying working very hard to have come 0:06:48.160 --> 0:06:50.960 down from that Ivory Tower mountains and really relate to 0:06:50.960 --> 0:06:53.839 people one on one and that way, even though she's 0:06:53.920 --> 0:06:56.640 policy focused, she's finding a way to relate what she 0:06:56.680 --> 0:06:59.000 wants to do policy wise to have an effect their 0:06:59.080 --> 0:07:01.360 daily lives and the moment that seems to be resonating. 0:07:01.400 --> 0:07:04.720 Do you see that with the fourteen flavors of Democrats 0:07:04.720 --> 0:07:08.320 in Iowa? Is she at the margin pulling over a 0:07:08.440 --> 0:07:13.600 new constituency or new constituencies plural? I think she's working 0:07:13.600 --> 0:07:15.640 awfully hard at it. And where she's being I think 0:07:15.960 --> 0:07:19.680 strategically smart is talking about trade, figuring out how that 0:07:19.760 --> 0:07:22.440 effects formers. It's so important formers. However, you have to 0:07:22.480 --> 0:07:24.640 brace yourself for Trump to cut a deal with China 0:07:24.720 --> 0:07:26.880 and get this thing off the table by December. So 0:07:26.960 --> 0:07:28.840 she's not focusing all over time on that because you 0:07:28.840 --> 0:07:31.000 realizes that issue might actually go okay. But those are 0:07:31.040 --> 0:07:34.640 economic issues and we're very familiar with, you know, economics first, 0:07:34.640 --> 0:07:38.040 it's the economy stupid. Except last time around there other 0:07:38.080 --> 0:07:41.280 than depressed GDP, that didn't have much to do with 0:07:41.320 --> 0:07:45.120 the election. It was the battle of Mr Trump versus 0:07:45.160 --> 0:07:48.760 the Secretary of State. And I just wonder do we 0:07:48.840 --> 0:07:52.080 actually get back to policy discussions as we go through 0:07:52.080 --> 0:07:55.160 the conventions in the election or do you see a 0:07:55.240 --> 0:07:59.600 redux of the tenor of the tumbra of two thousand 0:07:59.720 --> 0:08:03.560 six team? Well, tomm, you're pointing out something so vitally important, 0:08:03.560 --> 0:08:05.600 which is that you have to break through a TV 0:08:05.680 --> 0:08:07.760 screen or a video screen or a phone screen, whatever 0:08:07.760 --> 0:08:09.640 it is. You have to have a kind of charisma 0:08:09.720 --> 0:08:11.960 that says I'm gonna fight for you. And that's the 0:08:12.000 --> 0:08:14.720 big question mark. Can she break through on the national 0:08:14.720 --> 0:08:17.160 stage in the general And we're seeing her breakthrough a 0:08:17.160 --> 0:08:19.960 little bit so far, but yeah, there's some question marks. 0:08:19.960 --> 0:08:22.280 Other way you can do that, it will be personality 0:08:22.360 --> 0:08:24.840 versus personality, and she will have to look as tough 0:08:24.880 --> 0:08:27.000 as Trump, and that is always more difficult for a 0:08:27.000 --> 0:08:29.400 wan to do than a man. So it's absolutely right 0:08:29.480 --> 0:08:32.360 question mark. However, she is performing better than anybody thought 0:08:32.400 --> 0:08:35.079 she would. What about in the twenty counties that matter. 0:08:35.160 --> 0:08:37.800 Maybe it's thirty, maybe it's ten. I don't know. That's 0:08:37.800 --> 0:08:40.200 not my area of folks. But in the in the 0:08:40.320 --> 0:08:44.120 hyper narrow counties of those five or six key states, 0:08:44.520 --> 0:08:46.800 do they know how to spell W A R R 0:08:46.920 --> 0:08:51.079 E N. I mean, is it working well? I think 0:08:51.080 --> 0:08:52.880 for her, she's gonna have to do a tremendous amount 0:08:52.880 --> 0:08:55.240 of recent politics in those areas. You're gonna have to 0:08:55.280 --> 0:08:57.320 get out there and meet and greet people, because that 0:08:57.480 --> 0:09:01.240 seems to be strong as asset Minnesota. You know, Minnesota 0:09:01.320 --> 0:09:03.559 could go either way, Republican or Democrat. You know, how 0:09:03.559 --> 0:09:05.280 does she play in Minnesota. That's the kind of thing 0:09:05.360 --> 0:09:07.600 I don't really start thinking about. Now, is this what 0:09:07.760 --> 0:09:12.640 Secretary Clinton didn't do? I think Clinton had so much 0:09:12.720 --> 0:09:16.400 more more baggage than Warren. Warren has ideological baggage. She 0:09:16.440 --> 0:09:19.559 has reputational baggage. For she thinks, however, you can counteract 0:09:19.559 --> 0:09:22.080 that when you meet somebody first you know firsthand, or 0:09:22.120 --> 0:09:24.400 you go to town meetings, their CAUCUSUS and over the 0:09:24.520 --> 0:09:27.560 primary season she can counteract that in some ways. But 0:09:27.559 --> 0:09:30.439 whereas Clinton could not shed the baggage because it was 0:09:30.480 --> 0:09:32.800 twenty years worth of baggage. And that's one thing was 0:09:32.960 --> 0:09:35.520 Warren does not have. Whatever baggage she has, is actually 0:09:35.520 --> 0:09:37.920 fighting for consumers. So I don't see her having to 0:09:38.000 --> 0:09:40.680 lift that kind of heavy load that Clinton had to lift. 0:09:41.000 --> 0:09:44.719 And that's the margin of difference. That would mean, I don't, 0:09:44.760 --> 0:09:47.240 you know, doesn't torpedo her campaign against Trump. It would 0:09:47.240 --> 0:09:50.520 be a tall mountain climb, it would. But I don't 0:09:50.520 --> 0:09:52.760 think he can be labeled the same way Hillary was labeled. 0:09:52.880 --> 0:09:54.959 How do you identify if your folks, if you're just 0:09:55.040 --> 0:09:57.719 joining us Wendy Show or Brown University, we diverge here 0:09:57.720 --> 0:10:00.920 on politics on a Monday morning. Future is a negative one, 0:10:01.240 --> 0:10:04.320 Professor Schiller. And this is a phrase. It was used 0:10:04.360 --> 0:10:07.440 disaffected Democrats at the time of the liberal blow up 0:10:07.520 --> 0:10:12.720 the Democratic Party. How do you identify disaffected Republicans, the 0:10:12.800 --> 0:10:16.199 people that do not support the president? How big are 0:10:16.200 --> 0:10:21.040 they and are they identifiable? It's a great question. I 0:10:21.080 --> 0:10:23.600 don't think there are disaffective Republicans at the moment. I 0:10:23.600 --> 0:10:26.040 think the Republicans that are annoyed, but I don't think 0:10:26.040 --> 0:10:29.520 they are they still going to vote for Donald Trump. Yeah, 0:10:29.720 --> 0:10:32.839 I firmly believe that, you know, I do. I don't 0:10:32.880 --> 0:10:34.480 think they're going to cross the aisle to vote for 0:10:34.480 --> 0:10:36.840 our Sanders or Biden or a warrant. The problem is 0:10:36.840 --> 0:10:39.160 they may stay home if Biden's a nominee, and they 0:10:39.160 --> 0:10:40.760 can live with Biden, but they don't want to vote 0:10:40.760 --> 0:10:42.920 for a Democrat and may stay I'll sit this one out. 0:10:43.080 --> 0:10:45.360 And if they sit that one out, it becomes and 0:10:45.400 --> 0:10:48.000 that's the advantage Obama had over me, and that's how 0:10:48.040 --> 0:10:50.640 the Democrats can win. But I don't think anyone's crossing 0:10:50.640 --> 0:10:53.559 the aisle in this day and age. Explain the dynamics 0:10:53.600 --> 0:10:56.480 of one moderate, which is Biden, among the front runners 0:10:56.520 --> 0:10:59.679 of the Democrats. I mean, are there moderates out there 0:11:00.320 --> 0:11:03.880 that can find some masks or we beyond that? No, 0:11:03.960 --> 0:11:06.480 I do think we're beyond that within within the general election. 0:11:06.480 --> 0:11:08.600 Whether we we have it in the Democrat party, it's 0:11:08.600 --> 0:11:11.000 sound clear. But I think there's a lot of fatigue 0:11:11.559 --> 0:11:13.679 with sort of up and down with Trump. I mean, 0:11:13.679 --> 0:11:16.440 there's just general fatigue and Biden is sort of a 0:11:16.520 --> 0:11:19.640 calm waters kind of right. This is like the guy 0:11:19.640 --> 0:11:22.760 who will get you there, smooth sailing, no disruption, no uncertainty, 0:11:23.040 --> 0:11:25.040 and there are people who are kind of craving that 0:11:25.440 --> 0:11:28.480 and he's liberal enough. So I think, particularly with men, 0:11:28.600 --> 0:11:31.319 because we white men in the Democrat Party, can Biden 0:11:31.400 --> 0:11:33.880 actually get them out the door, take him away from Sanders. 0:11:34.120 --> 0:11:37.040 That's the only way he wins the nomination. And that's 0:11:37.080 --> 0:11:39.080 what we're looking for right now. Is he resonating with 0:11:39.080 --> 0:11:41.120 that particular group within the party. They tend to be 0:11:41.120 --> 0:11:43.480 more moderate than everybody else in the Democratic Good update, 0:11:43.559 --> 0:11:47.040 Professor Shoulder, Thank you so much, Professor Political Science of 0:11:47.520 --> 0:12:02.920 It Brown. We're thrilled that she could join us. Julia 0:12:02.960 --> 0:12:05.640 Cornado joins us right now, before we get into the 0:12:05.640 --> 0:12:08.920 report discussion, Julia, why are the p M S and 0:12:09.000 --> 0:12:11.160 I S M has become so important? Is it because 0:12:11.160 --> 0:12:15.160 the math is better? Well, I think with the market 0:12:15.280 --> 0:12:18.680 measure that we're going to get this morning, it's useful because, 0:12:18.840 --> 0:12:20.839 as Jonathan mentioned, we get it twice a month. We 0:12:20.880 --> 0:12:23.800 get a preliminary reads and a final read. The other 0:12:23.840 --> 0:12:27.840 thing is that it's a consistent UM survey across country, 0:12:28.000 --> 0:12:31.800 so it's comparable from the US to the Eurozone, to Japan, etcetera. 0:12:31.920 --> 0:12:35.520 So it's a it's a useful timely barometer. Do you 0:12:35.520 --> 0:12:38.240 expect to say the same story that we're seeing in Europe, Julia, 0:12:38.280 --> 0:12:41.400 which is weight manufacturing, but perhaps some small signs that 0:12:41.520 --> 0:12:45.520 is showing up in services, well, that would be very 0:12:45.559 --> 0:12:49.560 important for the US. UM. The consensus is expecting a 0:12:49.559 --> 0:12:52.160 little bit of a bounce in the services measure, and 0:12:52.200 --> 0:12:55.240 we've seen service sector resilience in the US so far, 0:12:55.679 --> 0:12:59.760 and that is absolutely essential because we don't expect to 0:12:59.800 --> 0:13:03.760 me manufacturing sector to be snapping back anytime soon. And 0:13:03.760 --> 0:13:06.400 and really the Senate sector has been carrying the entire 0:13:06.559 --> 0:13:10.480 weight of the economy. Julia Cronado with this macro policy advisers. 0:13:10.480 --> 0:13:12.599 One minute ago, the headline comes out and John, I 0:13:12.600 --> 0:13:14.880 guess we get used to this. New York Fed takes 0:13:15.480 --> 0:13:21.880 sixties six billion of treasuries, securities and repo operations. So, Julia, 0:13:22.640 --> 0:13:26.320 they brought in full faith and credit bills, notes and 0:13:26.440 --> 0:13:31.400 bonds as a general statement, and they pushed out cash 0:13:32.080 --> 0:13:38.280 to whom to a variety of people, to banks, and 0:13:38.440 --> 0:13:43.400 through banks, to other financial intermediaries. UM. So it is 0:13:43.520 --> 0:13:49.440 really um the liquifying the entire financial system through these operations, 0:13:49.480 --> 0:13:53.280 including including foreign demand as well. And then on Friday, 0:13:53.400 --> 0:13:56.400 we had the idea that big banks were reticent to 0:13:56.559 --> 0:14:00.400 do something with their cash or their security is and 0:14:00.720 --> 0:14:03.839 the blame goes back to Bossle is that the only 0:14:03.840 --> 0:14:09.400 way we fix this is to deregulate the regulation. Um 0:14:09.559 --> 0:14:13.040 that would be one road you can go down. But 0:14:13.360 --> 0:14:16.920 the sets certainly knew that these regulations have been in place, 0:14:17.040 --> 0:14:19.720 and they made a decision to sort of explore the 0:14:19.800 --> 0:14:23.560 frontier of how much reserves were needed by the system. 0:14:23.640 --> 0:14:26.280 And they found the frontier. So we had a liquidity 0:14:26.320 --> 0:14:30.520 crunch on one of these periodic moments of elevated demand. 0:14:30.800 --> 0:14:34.920 They're going to act, probably movie move to actually increase 0:14:35.000 --> 0:14:37.200 the level of reserves in the system. I think that's 0:14:37.360 --> 0:14:39.920 we found the frontier. So Julia, ultimately does that mean 0:14:40.000 --> 0:14:42.920 expanding the balance sheet again? And when do you expect 0:14:42.960 --> 0:14:46.680 to see that? Well, they've been very clear signaling that 0:14:46.720 --> 0:14:50.120 this will be part of the October communication that we 0:14:50.200 --> 0:14:52.600 get from them, that they will explore these issues make 0:14:52.640 --> 0:14:55.960 a decision by the October meeting. So that's that's what 0:14:56.040 --> 0:14:58.440 I would expect to see. If the former New York 0:14:58.440 --> 0:15:00.640 Fed president built outly running an all had recently and 0:15:00.680 --> 0:15:02.280 Tom and I are really looking forward to catching up 0:15:02.280 --> 0:15:05.280 with him in about an arrant thirty minutes time that 0:15:05.320 --> 0:15:08.080 Plug thought bloomlet c and for Bloomberg Ready, I, Julia, 0:15:08.240 --> 0:15:10.880 excuse that, but he said that you could focus on 0:15:10.920 --> 0:15:14.280 the bills and not further down the curve, and then 0:15:14.280 --> 0:15:16.840 the optics of it will improve. And that's just one 0:15:16.880 --> 0:15:20.040 way of communicating. This is not que What do you 0:15:20.120 --> 0:15:22.040 what do you think of that, Julia focusing on buying 0:15:22.080 --> 0:15:24.920 treasury bills instead of going further down the curve to 0:15:24.960 --> 0:15:28.240 expand the balance sheet and increase reserves. Well, I'm not 0:15:28.280 --> 0:15:30.280 sure that they're going to go that route. When they 0:15:30.320 --> 0:15:32.920 have discussed this at the meetings this year, and they 0:15:32.960 --> 0:15:36.480 have been discussing these issues all year, they've sort of 0:15:36.760 --> 0:15:40.280 tied all of the balance sheet policy together under one 0:15:40.360 --> 0:15:44.720 investment policy, So both the reinvestment the mortgages and treasuries, 0:15:44.800 --> 0:15:47.840 as well as balance sheet expansion would all fall under 0:15:47.920 --> 0:15:51.440 the same policy, which currently is to sort of invest 0:15:51.480 --> 0:15:54.640 across the curve with the issuance pattern. And now folks 0:15:54.640 --> 0:15:58.200 are coronado dumb question of the day. I'm always qualified 0:15:58.240 --> 0:16:01.960 to do that. Does the pile sees this arcane PhD 0:16:02.000 --> 0:16:05.680 trust dynamics of the repo market? Does that mean that 0:16:05.760 --> 0:16:08.240 our listeners see D at their bank is a lower 0:16:08.320 --> 0:16:13.320 yield than it would be otherwise. No, this is unaffected. 0:16:13.400 --> 0:16:16.680 This doesn't affect retail yields. UH. And in fact, one 0:16:16.720 --> 0:16:19.560 of the goals of keeping these markets liquid is that 0:16:19.640 --> 0:16:23.920 these kinds of funding crunches don't affect retail yields. That 0:16:24.000 --> 0:16:26.960 all of this is behind the scenes plumbing in the 0:16:27.040 --> 0:16:33.320 wholesale market. Retail market should be Okay, we're losing Julia 0:16:33.440 --> 0:16:36.240 right now, Julia Coronado, thank you so much for wonderful 0:16:36.280 --> 0:16:54.680 explanations today. We are thrilled to bring you now. James 0:16:54.720 --> 0:16:58.560 Travitas UH, with his public service to the nation in 0:16:58.600 --> 0:17:02.680 the Navy and in course to Supreme Commander NATO as 0:17:02.720 --> 0:17:05.080 well with the Carlisle Group. Ad been wonderful to have 0:17:05.520 --> 0:17:08.199 with you. We could do a two hour conversation. We 0:17:08.240 --> 0:17:10.399 don't have time for that, but I do want to 0:17:10.440 --> 0:17:14.119 go back to a small memo which shows from another 0:17:14.160 --> 0:17:20.600 time and place, business as usual. May six, two thousand ten, Brussels. 0:17:21.359 --> 0:17:23.960 And this is where the Chief of Defense of the Ukraine, 0:17:25.160 --> 0:17:29.440 the Chief of Defense of Turkey, and the Supreme Allied 0:17:29.480 --> 0:17:33.879 Commander of NATO one Admiral James Travitas wandered into a 0:17:33.960 --> 0:17:39.520 room and signed a document to drive forward an ecumenical 0:17:39.760 --> 0:17:44.240 feel about Europe within all the politics of the moment. 0:17:44.720 --> 0:17:47.840 After what you've observed this weekend, has your efforts of 0:17:47.920 --> 0:17:51.920 May six, two thousand and ten been just destroyed by 0:17:51.960 --> 0:17:57.399 this domestic US politics? Certainly it's a setback. Tom. In 0:17:57.640 --> 0:18:04.160 any time UM you allow domestic politics to insert themselves 0:18:04.320 --> 0:18:09.560 in national security international concerns, you run great risk. And 0:18:09.600 --> 0:18:12.399 this is where the old saying comes from that UM 0:18:12.440 --> 0:18:16.880 politics ends at the water's edge. Well not so much anymore. 0:18:17.040 --> 0:18:22.120 And therefore very carefully crafted set of relationships with Ukraine 0:18:22.160 --> 0:18:25.760 are keetering right now. That's bad for US security. Do 0:18:25.840 --> 0:18:28.720 you perceive this is absolutely critical? Speaking with my good 0:18:28.760 --> 0:18:31.920 friend David Gura, who I know had Ambassador Brady on 0:18:32.040 --> 0:18:34.600 Nicholas Brady I believe was on up this weekend. And 0:18:34.640 --> 0:18:38.200 whether it's Nicolas Brady or it's James Travitas, the question 0:18:38.320 --> 0:18:40.880 is the same. Do you perceive this as a one 0:18:40.920 --> 0:18:46.119 off foreign policy domestic politics moment, the unusual nous of 0:18:46.160 --> 0:18:49.520 President Trump's tenor or is there a new permanence here 0:18:49.960 --> 0:18:54.080 to where we take domestic politics abroad. I think there's 0:18:54.119 --> 0:18:59.040 always been a subliminal element of what's going on domestically 0:18:59.160 --> 0:19:03.760 that bleeds into our international stances. Classic example, you and 0:19:03.800 --> 0:19:06.320 I are old enough to remember as the war in Vietnam, 0:19:06.359 --> 0:19:11.320 which eventually was completely driven by domestic politics. But um, 0:19:11.359 --> 0:19:14.159 since the fall of the Cold War, the fall of 0:19:14.200 --> 0:19:18.240 the Berlin Law, we have not seen this level of region. 0:19:18.720 --> 0:19:21.119 And like everybody else, hey, I want to read the 0:19:21.200 --> 0:19:26.879 transcript of that conversation and make a judgment. Does it exist? I? Oh, absolutely, 0:19:26.960 --> 0:19:29.200 I assure you would exists. Every time the President of 0:19:29.240 --> 0:19:32.520 the United States speaks to a foreign leader, it is 0:19:32.600 --> 0:19:36.199 recorded and transcribed. That's a fact. It exists. It's a 0:19:36.240 --> 0:19:39.240 government document, and given all that has happened, I think 0:19:39.240 --> 0:19:40.479 we need to take a look at it and then 0:19:40.480 --> 0:19:43.280 we can make a judgment. And that's a fair statement. 0:19:43.320 --> 0:19:47.159 Are you suggesting then that the uproar over Trump putin 0:19:47.280 --> 0:19:52.399 at Helsinki just with translators their documents to those conversations. 0:19:53.880 --> 0:19:59.119 That's a different, uh environment, when you're over when you're overseas. No, 0:20:00.000 --> 0:20:02.480 this is a phone call he made from the White House, 0:20:02.480 --> 0:20:05.920 and I've seen hundreds of those transcripts over the years. 0:20:06.200 --> 0:20:09.399 Typically they're passed around at the highest level, so is 0:20:09.440 --> 0:20:13.600 Supreme allet Commander at NATO. I would see UH interestments 0:20:13.640 --> 0:20:17.560 and discussion of UH of the President of the United 0:20:17.600 --> 0:20:22.320 States with David Cameron or with Nicholas Sarpos or Angela Merkel, 0:20:22.920 --> 0:20:26.959 because you need that intelligence content for your situational awareness. Um, 0:20:27.040 --> 0:20:29.400 so it exists for sure if you're just joining US 0:20:29.440 --> 0:20:31.480 admirals to Vidis. Of course, you know his book, The 0:20:31.600 --> 0:20:35.600 Leader's Bookshelf was my book of the year here in 0:20:35.640 --> 0:20:39.160 a not too distant pass. I still highly recommend that book. 0:20:39.200 --> 0:20:42.800 It's at least fifty books out there to make you 0:20:42.920 --> 0:20:46.080 wiser and smarter about the path of the nation and 0:20:46.280 --> 0:20:50.920 the future of our foreign and military policy. Can you explain, 0:20:51.080 --> 0:20:54.439 Admiral that I'm sure you aspired to be on the 0:20:54.520 --> 0:20:57.480 Joint Chiefs of Staff at whatever form. I mean, everybody 0:20:57.520 --> 0:21:01.840 does it wears a uniform, how they relate to this president. 0:21:01.920 --> 0:21:04.160 I mean they're all going to be quiet and take 0:21:04.200 --> 0:21:09.680 the maddest stoic line and all that. But what's actually 0:21:09.720 --> 0:21:13.280 going on at the Pentagon among our chiefs that are 0:21:13.400 --> 0:21:18.960 joint first and foremost. I was very lucky because I 0:21:19.000 --> 0:21:22.160 became Supreme Allied Commander of NATO. I was also commander 0:21:22.200 --> 0:21:25.119 you a Southern command, Everything South of the United States, 0:21:25.359 --> 0:21:28.679 so I never had to be in Washington in that 0:21:28.800 --> 0:21:33.919 mouth politics. Lucky me exactly my point um. But of 0:21:33.960 --> 0:21:36.919 course these are my friends and contemporaries who have done this, 0:21:37.040 --> 0:21:39.800 and in time, I think you've categorized it exactly right, 0:21:39.840 --> 0:21:42.440 which is all of them are citizens, all of them 0:21:42.480 --> 0:21:46.439 have used but the professionalism at that level has to 0:21:46.440 --> 0:21:49.879 be as solid as a brick wall, and it is. 0:21:50.080 --> 0:21:52.639 There are a few certain chiefs in lifetime, but I 0:21:52.680 --> 0:21:55.080 would bet my life that you will never see a 0:21:55.119 --> 0:21:57.320 member of the Joint Chiefs of Staff, Chairman of the 0:21:57.400 --> 0:22:00.560 Joint Chiefs out there in a public way involved. And 0:22:01.080 --> 0:22:03.159 how did it happen? How do you do we have 0:22:03.280 --> 0:22:07.040 war plans with Iran? I mean, you know, I don't 0:22:07.080 --> 0:22:09.480 want to give away the family secrets here, Adam get 0:22:09.480 --> 0:22:12.040 you in trouble, but I mean, I know General Dunford 0:22:12.080 --> 0:22:15.320 listens every moment of Bloomberg surveillance. But we have war 0:22:15.480 --> 0:22:18.680 plans with Iran. I get that. Now we're sending troops 0:22:18.720 --> 0:22:23.720 to Saudi Arabia. Is it quit like Gulf War two? 0:22:23.800 --> 0:22:28.080 Gulf War one troops? I mean, what's that deployment signify 0:22:28.160 --> 0:22:32.560 to you? First? We do have war plans for every 0:22:32.600 --> 0:22:36.439 contingency around the world, including war with North Korea, with China, 0:22:37.040 --> 0:22:40.280 with Russia in in this case with Iran, those are 0:22:40.760 --> 0:22:44.840 well built there, well resourced, they're detailed, um and they 0:22:44.880 --> 0:22:48.320 have escalation clauses in the time. So you start at 0:22:48.320 --> 0:22:52.000 the bottom and you probably look at things like cyber attacks. 0:22:52.000 --> 0:22:54.720 That probably what's going to happen next to Iran. But 0:22:54.800 --> 0:22:58.560 the deployment of troops will be part of that war plan, 0:22:58.720 --> 0:23:03.240 contingency plan, operational plan. And no, it will not be 0:23:03.480 --> 0:23:07.200 a hundred fifty thousand troops going to Kuwait. This will 0:23:07.240 --> 0:23:11.720 be uh in the thousand or two at the most. 0:23:11.960 --> 0:23:18.600 Mostly they'll be there to defend US facilities are embassy. 0:23:19.119 --> 0:23:21.720 I don't I don't mean to interrupt. What are two 0:23:21.800 --> 0:23:25.680 thousand troops going to do with the margin anywhere? Whether 0:23:25.680 --> 0:23:29.080 it's midtown it is midtown Manhattan or Riad, I mean, 0:23:29.160 --> 0:23:32.800 come on, it is it will be. To answer your 0:23:32.800 --> 0:23:38.120 fundamental question, yes, this will be deployment of trip Okay, Admiral, 0:23:38.160 --> 0:23:40.040 thank you so much. I needed a new book idea 0:23:40.119 --> 0:23:42.120 from you from the leader's bookshelf. I got to get 0:23:42.160 --> 0:23:44.720 back to my core. I'm reading about the Romans now. 0:23:46.680 --> 0:23:52.200 Tom the book coming out on October about character ten 0:23:52.280 --> 0:23:54.960 Admirals and the voyage of characters. You should check it out. 0:23:55.000 --> 0:23:57.440 There we go, it's a book plug by James Trevitas. 0:23:57.440 --> 0:24:00.600 Somehow I think we'll be doing that. We will apples 0:24:00.640 --> 0:24:02.040