1 00:00:02,730 --> 00:00:04,410 Speaker 1: Bloomberg Audio Studios. 2 00:00:04,890 --> 00:00:07,270 Speaker 2: Podcasts. Radio. News. 3 00:00:18,079 --> 00:00:20,619 Speaker 3: Well, hello and welcome to another episode of the Odd 4 00:00:20,660 --> 00:00:22,260 Speaker 3: Thoughts Podcast. I'm Tracy Allaway. 5 00:00:22,400 --> 00:00:23,570 Speaker 4: And I'm Joe Weisenthal. 6 00:00:23,730 --> 00:00:25,290 Speaker 3: Joe, we're back in Jackson Hole. 7 00:00:25,890 --> 00:00:28,050 Speaker 4: Where else could we be? I guess if you're watching 8 00:00:28,130 --> 00:00:29,450 Speaker 4: on video, it's pretty obvious. 9 00:00:29,490 --> 00:00:32,330 Speaker 1: If you're listening on audio, maybe there's some mystery. But 10 00:00:32,350 --> 00:00:34,010 Speaker 1: if you're listening on audio, switch and watch us on 11 00:00:34,050 --> 00:00:34,729 Speaker 1: video and you'll see. 12 00:00:35,050 --> 00:00:37,830 Speaker 3: Okay, for the old school audio listeners, we are back. 13 00:00:37,909 --> 00:00:41,500 Speaker 3: And the backdrop to this is always literally beautiful, right? 14 00:00:41,540 --> 00:00:44,780 Speaker 3: We have the mountains in the background. But I think 15 00:00:44,800 --> 00:00:47,000 Speaker 3: I say this every year. I think this genuinely might 16 00:00:47,060 --> 00:00:50,360 Speaker 3: be one of the most interesting Kansas City Fed economic 17 00:00:50,380 --> 00:00:51,080 Speaker 3: symposiums ever. 18 00:00:51,740 --> 00:00:54,040 Speaker 1: The most interesting until the next year. But yes, there's 19 00:00:54,180 --> 00:00:56,320 Speaker 1: quite a bit going on, both in terms of the 20 00:00:56,420 --> 00:00:59,270 Speaker 1: substance of what everyone's here to talk about, plus the 21 00:00:59,300 --> 00:01:03,370 Speaker 1: context of so many unresolved questions in the economy and 22 00:01:03,410 --> 00:01:03,890 Speaker 1: so forth. 23 00:01:03,950 --> 00:01:05,250 Speaker 4: So thrilled to be here. 24 00:01:05,370 --> 00:01:05,630 Speaker 2: All right. 25 00:01:05,670 --> 00:01:07,270 Speaker 3: Well, we should get into it. And I'm glad to 26 00:01:07,310 --> 00:01:09,130 Speaker 3: say we do, in fact, have the perfect guest. 27 00:01:09,150 --> 00:01:09,550 Speaker 4: Perfect guest. 28 00:01:09,569 --> 00:01:11,990 Speaker 3: We're going to be speaking with Kansas City Fed President 29 00:01:12,150 --> 00:01:14,420 Speaker 3: Jeff Schmidt. Thank you so much for coming back on 30 00:01:14,480 --> 00:01:14,899 Speaker 3: All Thoughts. 31 00:01:14,940 --> 00:01:17,280 Speaker 2: Well, welcome to Jackson Hole. I mean, this is amazing. 32 00:01:17,520 --> 00:01:20,920 Speaker 2: 49th year. So next year is the big 50. Oh, wow. 33 00:01:20,970 --> 00:01:22,030 Speaker 4: We'll definitely be back for that. 34 00:01:22,050 --> 00:01:22,830 Speaker 2: You've got to come back next year. 35 00:01:22,890 --> 00:01:23,610 Speaker 4: If you'll have us. 36 00:01:23,709 --> 00:01:27,350 Speaker 2: Oh, absolutely. I mean, it's such an amazing thing that 37 00:01:27,370 --> 00:01:30,770 Speaker 2: Kansas City Fed created. half century ago, and we just 38 00:01:30,810 --> 00:01:33,429 Speaker 2: keep on trying to add to it as we go forward. 39 00:01:33,550 --> 00:01:35,480 Speaker 3: Well, thank you for giving us an excuse to come 40 00:01:35,520 --> 00:01:37,820 Speaker 3: back to one of the world's most beautiful places every year. 41 00:01:38,080 --> 00:01:41,899 Speaker 3: So the theme of this year's symposium is financial innovation 42 00:01:42,060 --> 00:01:45,710 Speaker 3: in payments, but it's coming against this backdrop of general 43 00:01:45,830 --> 00:01:50,670 Speaker 3: economic uncertainty and pretty high bond yields. Is there a 44 00:01:50,710 --> 00:01:52,430 Speaker 3: connection between the two? 45 00:01:52,750 --> 00:01:56,680 Speaker 2: Yeah, so let's park that last question because it's a 46 00:01:56,690 --> 00:01:58,940 Speaker 2: good one. And let's talk a little bit about why 47 00:01:58,980 --> 00:02:01,900 Speaker 2: this is important. Because some people would say, oh, man, payments, 48 00:02:01,920 --> 00:02:06,780 Speaker 2: that's boring. Not us, but some people. But we want 49 00:02:06,800 --> 00:02:09,780 Speaker 2: to ultimately, as the Federal Reserve, make payments boring. I mean, 50 00:02:09,820 --> 00:02:13,220 Speaker 2: we move $ 5 to $ 10 trillion a day through the systems, 51 00:02:13,430 --> 00:02:18,430 Speaker 2: through multiple different pipes, payment pipes. What's really fascinating about 52 00:02:18,470 --> 00:02:20,150 Speaker 2: what you're going to see in the next couple of 53 00:02:20,210 --> 00:02:22,620 Speaker 2: days is with some of the research that's being done 54 00:02:22,720 --> 00:02:27,520 Speaker 2: is we're moving toward, I've seen the words atomic settlement 55 00:02:28,220 --> 00:02:31,660 Speaker 2: in the marketplace, which is actually when payments are actually 56 00:02:31,690 --> 00:02:35,089 Speaker 2: going to be instant. And through our lives, at least 57 00:02:35,130 --> 00:02:38,490 Speaker 2: my life, you've always talked about float and fees. There's 58 00:02:38,510 --> 00:02:41,190 Speaker 2: always been a friction and a cost to payments. Well, 59 00:02:41,210 --> 00:02:44,250 Speaker 2: this innovation that we have now in technology is going 60 00:02:44,290 --> 00:02:47,700 Speaker 2: to move a money from me to you instantaneously and 61 00:02:47,760 --> 00:02:50,919 Speaker 2: it's going to be reconciled instantaneously. So that's the atomic 62 00:02:50,960 --> 00:02:54,639 Speaker 2: side of this whole settlement business. And it's going to 63 00:02:54,680 --> 00:02:57,410 Speaker 2: be one, very innovative, but two, it's going to be 64 00:02:57,470 --> 00:03:01,510 Speaker 2: somewhat disruptive too. And so that begs the question about 65 00:03:01,570 --> 00:03:05,030 Speaker 2: how do you accommodate a system that's instant. Gets back 66 00:03:05,070 --> 00:03:07,609 Speaker 2: to your last question is that we're going to be 67 00:03:07,650 --> 00:03:10,150 Speaker 2: talking a lot more as we go forward about two 68 00:03:10,210 --> 00:03:14,040 Speaker 2: main things in our world. One is duration. duration of assets. 69 00:03:14,100 --> 00:03:16,860 Speaker 2: The second is going to be liquidity. And so when 70 00:03:16,880 --> 00:03:20,200 Speaker 2: you think about it, if the payment is instant, then 71 00:03:20,220 --> 00:03:24,299 Speaker 2: there's got to be proven liquidity behind it to settle it. 72 00:03:24,910 --> 00:03:28,430 Speaker 2: And so I think there's a couple of things in 73 00:03:28,450 --> 00:03:31,330 Speaker 2: your question that I think it begs. One is, what's 74 00:03:31,389 --> 00:03:34,290 Speaker 2: happened in the economy that's changed the nature of the 75 00:03:34,330 --> 00:03:37,120 Speaker 2: yield curve, the price of money, be it short term, 76 00:03:37,160 --> 00:03:39,680 Speaker 2: long term? Well, a lot of things. I mean, the 77 00:03:39,740 --> 00:03:47,160 Speaker 2: economy is moving along nicely. It's growing. And as long 78 00:03:47,200 --> 00:03:49,500 Speaker 2: as we can try to get this inflation thing back 79 00:03:49,540 --> 00:03:53,040 Speaker 2: to our mandated 2%, we're going to see a more 80 00:03:53,080 --> 00:03:57,950 Speaker 2: normalized yield curve. So if you think historically, whatever's happening, 81 00:03:58,610 --> 00:04:01,390 Speaker 2: the bond market's pretty good at pricing risk and price. 82 00:04:01,850 --> 00:04:04,890 Speaker 2: And so the nature of what's happening for me is 83 00:04:05,270 --> 00:04:07,690 Speaker 2: I try to simplify this because I'm not that smart. 84 00:04:08,070 --> 00:04:12,180 Speaker 2: Go back to supply and demand. If prices are changing, 85 00:04:12,220 --> 00:04:15,320 Speaker 2: then there's a dynamic between supply and demand that's occurring. 86 00:04:15,680 --> 00:04:17,779 Speaker 2: It could be in bond prices or corn and wheat, 87 00:04:17,900 --> 00:04:21,310 Speaker 2: whatever it is. It gets down to that when it 88 00:04:21,350 --> 00:04:22,130 Speaker 2: comes to economics. 89 00:04:22,790 --> 00:04:24,670 Speaker 1: The obvious move here would be to dive in a 90 00:04:24,690 --> 00:04:26,550 Speaker 1: little bit more on the inflation question. 91 00:04:26,950 --> 00:04:27,870 Speaker 4: But maybe that's obvious. 92 00:04:27,970 --> 00:04:31,770 Speaker 1: Maybe instead, I'm curious, since the last dots, actually, unemployment 93 00:04:31,830 --> 00:04:34,950 Speaker 1: has fallen from 4.3%, I believe, to 4.1%. 94 00:04:36,500 --> 00:04:38,520 Speaker 4: That fits with what you're saying. The economy is growing. 95 00:04:39,240 --> 00:04:41,560 Speaker 1: Have you changed your, when you think about this sort 96 00:04:41,600 --> 00:04:44,539 Speaker 1: of pace of economic gains or just. 97 00:04:44,790 --> 00:04:48,190 Speaker 4: The rapidity of the growth, have you lifted up your sort. 98 00:04:48,070 --> 00:04:52,450 Speaker 1: Of general view of what trend state growth looks like? 99 00:04:52,470 --> 00:04:55,890 Speaker 1: Have you become more optimistic about the durability of the expansion? 100 00:04:57,070 --> 00:05:01,490 Speaker 2: I'm pretty optimistic about the durability. So I think about 101 00:05:01,570 --> 00:05:04,670 Speaker 2: last year, I dissented a couple as a voting member 102 00:05:04,690 --> 00:05:08,230 Speaker 2: of FOMC. I talked a lot about last year, still 103 00:05:08,270 --> 00:05:10,930 Speaker 2: do talk about, that the labor force is going through 104 00:05:10,970 --> 00:05:16,010 Speaker 2: a very fascinating structural change. I mean, people in my generation, 105 00:05:16,050 --> 00:05:18,510 Speaker 2: the baby boomers, I mean, we're retiring at about 4 106 00:05:18,510 --> 00:05:21,599 Speaker 2: million people per year. So just when you think about 107 00:05:21,640 --> 00:05:24,480 Speaker 2: the dynamic of what that creates in the labor force, one, 108 00:05:25,339 --> 00:05:30,160 Speaker 2: it creates opportunities. Two, it creates risk. I mean, I'm 109 00:05:30,200 --> 00:05:32,520 Speaker 2: signing more retirement letters in the last three months than 110 00:05:32,540 --> 00:05:34,880 Speaker 2: I have for the last three years. But I worry 111 00:05:34,920 --> 00:05:38,800 Speaker 2: about the intellectual muscle that we're losing in that. So 112 00:05:38,820 --> 00:05:43,400 Speaker 2: what that does is that challenges my 25, 35, 45-year-old 113 00:05:43,700 --> 00:05:47,780 Speaker 2: Fed economist and banker saying, look, how do we think 114 00:05:47,860 --> 00:05:50,760 Speaker 2: about what the job entails? And how do we use 115 00:05:50,960 --> 00:05:55,500 Speaker 2: AI to transfer what the 65-year-old retiree knows to what 116 00:05:55,540 --> 00:05:57,560 Speaker 2: they need to know now, not wait till they're 55 117 00:05:57,560 --> 00:06:01,620 Speaker 2: or 65? So the labor force is changing. I mean, 118 00:06:02,080 --> 00:06:05,200 Speaker 2: immigration policy has an influence on it as well. But 119 00:06:05,220 --> 00:06:08,039 Speaker 2: we're going to continue to go through this probably for 120 00:06:08,060 --> 00:06:12,020 Speaker 2: the next decade as we kind of see the baby 121 00:06:12,060 --> 00:06:15,530 Speaker 2: boom generation go out of the labor force and kind 122 00:06:15,550 --> 00:06:18,390 Speaker 2: of the new entrants come in. But that's all going 123 00:06:18,410 --> 00:06:20,070 Speaker 2: to be net positive for the economy. 124 00:06:20,630 --> 00:06:22,710 Speaker 3: OK, well, I'm going to ask the obvious question then 125 00:06:22,770 --> 00:06:25,050 Speaker 3: and go back to inflation and what's going on with 126 00:06:25,110 --> 00:06:30,020 Speaker 3: bond yields. So the 30-year above 5%. The new Fed chairman, Warsh, 127 00:06:30,160 --> 00:06:33,820 Speaker 3: he says that yields can be a valuable signal for 128 00:06:33,900 --> 00:06:37,380 Speaker 3: policymakers such as yourself. They can say something about the economy. 129 00:06:37,820 --> 00:06:40,490 Speaker 3: When you see those yields, what are you seeing? What's 130 00:06:40,500 --> 00:06:41,060 Speaker 3: your takeaway? 131 00:06:41,310 --> 00:06:43,370 Speaker 2: So I would put it in a much more macro 132 00:06:43,410 --> 00:06:46,730 Speaker 2: context of just the price of money up the curve, right? 133 00:06:46,890 --> 00:06:50,810 Speaker 2: So we have, with our policymaking tools, we have influence 134 00:06:50,890 --> 00:06:53,970 Speaker 2: on the short end. We don't really have any influence 135 00:06:54,070 --> 00:06:56,070 Speaker 2: on the longer end, even though I will say this. 136 00:06:56,770 --> 00:07:01,669 Speaker 2: through the last couple cycles, the post-08 and post-2020 cycle, 137 00:07:02,089 --> 00:07:04,710 Speaker 2: we did take some actions inside of our balance sheet 138 00:07:04,800 --> 00:07:09,020 Speaker 2: to pull duration into our balance sheet, which did influence 139 00:07:09,060 --> 00:07:12,080 Speaker 2: some of the longer rates. So it's not absolute that 140 00:07:12,100 --> 00:07:14,340 Speaker 2: we don't have influence, but it would be more of 141 00:07:14,380 --> 00:07:17,119 Speaker 2: a balance sheet action that that would happen. For me, 142 00:07:18,420 --> 00:07:21,800 Speaker 2: what's really fascinating with a growing economy and this whole 143 00:07:21,880 --> 00:07:27,780 Speaker 2: technology and AI influence is what's creating demand for credit 144 00:07:27,920 --> 00:07:31,400 Speaker 2: inside that for the commercial sector and the public sector. 145 00:07:31,800 --> 00:07:35,720 Speaker 2: So here again, back to supply and demand. If there's 146 00:07:35,820 --> 00:07:39,940 Speaker 2: more demand for credit, you're going to have a competition 147 00:07:40,000 --> 00:07:42,830 Speaker 2: between commercial and public credit. And so that's going to 148 00:07:42,870 --> 00:07:45,670 Speaker 2: affect the price. So all I can say is it 149 00:07:45,710 --> 00:07:48,470 Speaker 2: seems to me like the demand or the yield curve 150 00:07:48,490 --> 00:07:52,750 Speaker 2: is fairly normalized inside of an economy that's growing somewhere 151 00:07:52,790 --> 00:07:56,600 Speaker 2: between 2% and 3.5%. And that the price of money 152 00:07:56,680 --> 00:07:59,460 Speaker 2: is going to be influenced by some of the more 153 00:07:59,570 --> 00:08:06,650 Speaker 2: dynamic growth curves inside GDP, most notably inside the data 154 00:08:06,670 --> 00:08:09,370 Speaker 2: center build, the AI build. What I need to try 155 00:08:09,390 --> 00:08:12,730 Speaker 2: to figure out is what percentage of that growth number 156 00:08:13,230 --> 00:08:17,590 Speaker 2: is in this kind of cycle, right? I think about 157 00:08:17,610 --> 00:08:21,570 Speaker 2: a flywheel. The more it spins, you've got to figure 158 00:08:21,610 --> 00:08:25,160 Speaker 2: out who that's affecting, where the risks are. And I 159 00:08:25,200 --> 00:08:27,260 Speaker 2: think that's what the Fed needs to do more of. 160 00:08:27,570 --> 00:08:30,810 Speaker 1: When you talk to businesses in your district, do you 161 00:08:30,870 --> 00:08:36,199 Speaker 1: encounter entities that perceive themselves to be as essentially competing 162 00:08:36,260 --> 00:08:39,230 Speaker 1: with the data center build out? for labor or for 163 00:08:39,290 --> 00:08:42,949 Speaker 1: equipment or for freight capacity or anything and that sort 164 00:08:42,970 --> 00:08:46,510 Speaker 1: of real crowding out phenomenon that like do you do 165 00:08:46,530 --> 00:08:48,110 Speaker 1: you hear that from people you talk to. 166 00:08:48,500 --> 00:08:51,170 Speaker 2: Every day i mean think about the commodities that it 167 00:08:51,220 --> 00:08:54,660 Speaker 2: takes that the data center is demanding that that apply 168 00:08:54,679 --> 00:08:57,640 Speaker 2: to other industries i mean think about the machinery industry 169 00:08:57,980 --> 00:09:02,510 Speaker 2: steel copper right so so uh i mean lately Not 170 00:09:02,550 --> 00:09:08,350 Speaker 2: that the AI influences commodities like grains. They've surged the 171 00:09:08,390 --> 00:09:13,250 Speaker 2: futures market on that. So absolutely, that's why we got 172 00:09:13,270 --> 00:09:15,970 Speaker 2: to peel the onion back and try to figure out 173 00:09:16,050 --> 00:09:20,050 Speaker 2: what parts of the growth onion are being driven specifically 174 00:09:20,110 --> 00:09:23,450 Speaker 2: by this kind of boom effect that technology and AI 175 00:09:23,510 --> 00:09:26,690 Speaker 2: and data centers is having from a commodity standpoint to 176 00:09:26,770 --> 00:09:29,810 Speaker 2: other industries. I think that's a really important part of 177 00:09:29,890 --> 00:09:31,689 Speaker 2: us getting inflation back down to two. 178 00:09:32,100 --> 00:09:34,239 Speaker 3: Okay, so speaking of getting inflation back down to two, 179 00:09:34,320 --> 00:09:36,280 Speaker 3: I mean, in addition to saying that bond yields can 180 00:09:36,320 --> 00:09:40,060 Speaker 3: be an important signal for policymakers, Warsh has also suggested 181 00:09:40,120 --> 00:09:42,599 Speaker 3: that higher yields can kind of do some of the 182 00:09:42,660 --> 00:09:45,280 Speaker 3: Fed's work for it in the sense that, you know, 183 00:09:45,330 --> 00:09:47,170 Speaker 3: if the 30-year yield is going up, you're going to 184 00:09:47,190 --> 00:09:50,590 Speaker 3: have higher mortgage rates, a dampening on credit, that sort 185 00:09:50,610 --> 00:09:53,929 Speaker 3: of effect. Is that the case for you? Do you 186 00:09:53,970 --> 00:09:56,050 Speaker 3: see a tightening effect from those higher bond yields? 187 00:09:56,190 --> 00:10:00,400 Speaker 2: So I would say think about what's happening. in the 188 00:10:00,460 --> 00:10:06,439 Speaker 2: longer dated treasury market and really think about how you 189 00:10:06,480 --> 00:10:09,300 Speaker 2: would react as a user of that credit. So the 190 00:10:09,370 --> 00:10:14,570 Speaker 2: competitive nature between commercial and public debt, that price is 191 00:10:14,590 --> 00:10:17,110 Speaker 2: going to influence, it's going to create a behavior. It's 192 00:10:17,150 --> 00:10:21,000 Speaker 2: either going to slow your decisioning to do that. Or 193 00:10:21,720 --> 00:10:24,020 Speaker 2: you might think that the returns on that are so 194 00:10:24,160 --> 00:10:27,750 Speaker 2: astronomical that an 80 basis point move in the 10-year 195 00:10:27,800 --> 00:10:31,260 Speaker 2: isn't going to affect your business model. But I think 196 00:10:31,890 --> 00:10:37,250 Speaker 2: moving rates, especially policy rates, I think has a behavioral impact. 197 00:10:37,790 --> 00:10:41,270 Speaker 2: And it should. You're trying to influence the movement of 198 00:10:41,350 --> 00:10:46,550 Speaker 2: capital and credit. And clearly, the market is pricing and 199 00:10:46,590 --> 00:10:49,990 Speaker 2: repricing risk and demand for that credit. And that's why 200 00:10:50,030 --> 00:10:53,030 Speaker 2: I think you've seen the longer ends change. But I 201 00:10:53,070 --> 00:10:56,130 Speaker 2: think that your question is a great one. But I 202 00:10:56,470 --> 00:10:59,550 Speaker 2: would think that as the price goes up, it is 203 00:10:59,580 --> 00:11:02,220 Speaker 2: going to influence whether or not you're going to have 204 00:11:02,420 --> 00:11:05,400 Speaker 2: accommodative or restrictive types of behaviors. 205 00:11:05,750 --> 00:11:08,160 Speaker 1: So, OK, maybe moves at the long end of the 206 00:11:08,240 --> 00:11:12,240 Speaker 1: curve could have some behavioral impact on the proclivity to 207 00:11:12,300 --> 00:11:16,480 Speaker 1: invest or build, etc. But ultimately, presumably, the Fed has 208 00:11:16,500 --> 00:11:19,320 Speaker 1: to do something if inflation continues to run hot. 209 00:11:19,840 --> 00:11:20,699 Speaker 2: Do you worry? 210 00:11:20,720 --> 00:11:21,860 Speaker 4: And it's been years. 211 00:11:21,640 --> 00:11:26,380 Speaker 1: Now of unacceptably hot inflation just in the current part 212 00:11:26,400 --> 00:11:27,860 Speaker 1: of the cycle that we're in right now. 213 00:11:28,340 --> 00:11:32,000 Speaker 4: Do you worry about a long term price for the economy? 214 00:11:32,480 --> 00:11:35,559 Speaker 1: If the Fed right now is not perceived as taking 215 00:11:35,600 --> 00:11:38,400 Speaker 1: this inflation seriously and acting on it directly? 216 00:11:38,640 --> 00:11:43,500 Speaker 2: I absolutely do. I mean, I've been fairly public about 217 00:11:43,540 --> 00:11:46,929 Speaker 2: my proclivity to say, look, I think the labor force 218 00:11:47,250 --> 00:11:49,929 Speaker 2: is in a pretty good place. We haven't done our 219 00:11:49,950 --> 00:11:54,750 Speaker 2: job yet on inflation. So the question is, and I 220 00:11:54,790 --> 00:11:58,260 Speaker 2: would say that it gets harder as you trend toward two, right? 221 00:11:58,320 --> 00:12:02,950 Speaker 2: Because Everybody worries. It's a natural thing to worry about overshoot, right? 222 00:12:04,450 --> 00:12:08,130 Speaker 2: Do you make decisioning? Either you're too slow or you're 223 00:12:08,150 --> 00:12:11,890 Speaker 2: too aggressive. And I think that's the nature of the 224 00:12:11,929 --> 00:12:15,320 Speaker 2: journey from three to two. But we clearly have had 225 00:12:15,600 --> 00:12:18,440 Speaker 2: a bit of a surge into the mid threes. It 226 00:12:18,480 --> 00:12:21,140 Speaker 2: has to be addressed. That's our mandate. It's one of 227 00:12:21,620 --> 00:12:27,120 Speaker 2: the two mandates. And you've seen the narrative from the 228 00:12:27,160 --> 00:12:30,260 Speaker 2: last meetings. There were several dissents. I think there were 229 00:12:30,300 --> 00:12:33,620 Speaker 2: very thoughtful dissents. I think it's consistent with what Chairman 230 00:12:33,920 --> 00:12:38,060 Speaker 2: Warsh wants is that great debate, because he's been pretty 231 00:12:38,100 --> 00:12:41,450 Speaker 2: vocal about we have a choice in the Fed to 232 00:12:41,690 --> 00:12:45,190 Speaker 2: manage inflation to two. And we should be up to 233 00:12:45,230 --> 00:12:48,170 Speaker 2: that task. And so I think the things he's going to, 234 00:12:48,790 --> 00:12:54,520 Speaker 2: people are very, they're anticipating this presentation on Friday. Maybe 235 00:12:54,559 --> 00:12:56,570 Speaker 2: it'll give us more insights. I mean, Got to give 236 00:12:56,590 --> 00:12:58,650 Speaker 2: him a little bit of room, right? He's still only 237 00:12:58,730 --> 00:13:01,929 Speaker 2: a few weeks in. But I like, he has a 238 00:13:02,410 --> 00:13:05,449 Speaker 2: vast imprint of what he believes the Fed should be 239 00:13:05,470 --> 00:13:09,060 Speaker 2: and what it should do. And I think I'm in 240 00:13:09,080 --> 00:13:11,959 Speaker 2: his camp as far as the mission and the mandate. 241 00:13:28,030 --> 00:13:30,330 Speaker 3: So you mentioned dissents and I know you're not voting 242 00:13:30,550 --> 00:13:33,110 Speaker 3: this year, but you have voted previously and you have 243 00:13:33,150 --> 00:13:37,449 Speaker 3: dissented previously. So I have a sort of behavioral FOMC question, 244 00:13:37,510 --> 00:13:41,030 Speaker 3: but like, what is the thought process when you decide actually, 245 00:13:41,410 --> 00:13:44,330 Speaker 3: instead of just voicing some uncertainty here, I'm actually going 246 00:13:44,350 --> 00:13:46,690 Speaker 3: to go for a dissent. Like what is the hurdle 247 00:13:46,730 --> 00:13:49,290 Speaker 3: that you have to get over before you're willing to 248 00:13:49,350 --> 00:13:51,610 Speaker 3: kind of, I don't know, push the dissent button. I 249 00:13:51,650 --> 00:13:54,550 Speaker 3: don't even know how you record your actual decision, but. 250 00:13:54,610 --> 00:13:58,020 Speaker 2: So, so it is a, here again, There's not a 251 00:13:58,059 --> 00:14:00,660 Speaker 2: lot of mystery to it, right? You've got 19 people 252 00:14:00,730 --> 00:14:05,030 Speaker 2: that have these amazing teams. Joe Gruber is our chief economist, 253 00:14:05,130 --> 00:14:07,270 Speaker 2: one of the brightest people I know when it comes 254 00:14:07,330 --> 00:14:10,650 Speaker 2: to trying to synthesize what's happening in the economy and 255 00:14:10,670 --> 00:14:14,010 Speaker 2: try to have this discussion and debate in the 10th 256 00:14:14,070 --> 00:14:16,960 Speaker 2: district about how do we represent the seven states that 257 00:14:16,980 --> 00:14:20,960 Speaker 2: we represent. So I'm a bit of a communication transmitter, right? 258 00:14:21,900 --> 00:14:24,570 Speaker 2: I go around the district. I listen closely. to what 259 00:14:24,610 --> 00:14:29,290 Speaker 2: businesses and leaders, local leaders are thinking and worrying about. 260 00:14:29,750 --> 00:14:33,050 Speaker 2: I bring that to the FOMC table. I speak my 261 00:14:33,110 --> 00:14:35,270 Speaker 2: piece on behalf of the 10th district. I go back 262 00:14:35,330 --> 00:14:37,410 Speaker 2: to the district and I say, this is what's happening 263 00:14:37,450 --> 00:14:42,450 Speaker 2: with the FOMC. So, you know, this dissent is just 264 00:14:42,550 --> 00:14:46,070 Speaker 2: an action that really has a life of its own 265 00:14:46,190 --> 00:14:52,100 Speaker 2: kind of between meetings. And as you know, we love data, right? 266 00:14:52,160 --> 00:14:55,229 Speaker 2: We all like to, you know, But we have to 267 00:14:55,270 --> 00:14:58,010 Speaker 2: be careful about, you always have to think about where 268 00:14:58,520 --> 00:15:02,360 Speaker 2: is the data today and how is it trending? And 269 00:15:02,380 --> 00:15:05,560 Speaker 2: then you have to rebalance your mandate between inflation and 270 00:15:05,600 --> 00:15:09,040 Speaker 2: full employment. And so everybody's going to have a little 271 00:15:09,060 --> 00:15:12,660 Speaker 2: bit different opinion about that friction. And at the end 272 00:15:12,680 --> 00:15:16,130 Speaker 2: of the day, we're all singular about it. But the 273 00:15:16,190 --> 00:15:19,450 Speaker 2: dissent is really a mechanism of saying, I think the 274 00:15:19,610 --> 00:15:23,570 Speaker 2: risks are between those two mandates are weighted differently than 275 00:15:23,610 --> 00:15:27,050 Speaker 2: you think they are. And that's the thing I love 276 00:15:27,100 --> 00:15:28,460 Speaker 2: about the conversation. 277 00:15:30,000 --> 00:15:35,060 Speaker 1: Let's talk more, actually, speaking of the conversation, Chairman Warsh 278 00:15:35,100 --> 00:15:38,500 Speaker 1: has described the, quote, good family fight, which sounds like 279 00:15:38,520 --> 00:15:41,020 Speaker 1: a good debate. Can you tell us, does the tenor 280 00:15:41,120 --> 00:15:43,660 Speaker 1: feel different? I mean, the idea of all of you 281 00:15:43,700 --> 00:15:46,260 Speaker 1: coming together and debating and going back and arguing, it 282 00:15:46,300 --> 00:15:49,660 Speaker 1: feels like I would hope that's how the FOMC is operating. 283 00:15:50,250 --> 00:15:55,190 Speaker 1: Does the new approach feel any, does it feel distinct 284 00:15:55,290 --> 00:15:57,430 Speaker 1: versus past FOMC chairs? 285 00:15:57,550 --> 00:16:02,790 Speaker 2: Yeah, so I now are into two tenures. I absolutely 286 00:16:02,850 --> 00:16:06,530 Speaker 2: loved working with and around Jay Powell. I think he 287 00:16:06,610 --> 00:16:11,740 Speaker 2: had a lot different kind of style and mandate relative 288 00:16:11,770 --> 00:16:13,870 Speaker 2: to the cycle that he was in the middle of. 289 00:16:13,920 --> 00:16:18,320 Speaker 2: I mean, we had the pandemic challenge, then we had 290 00:16:18,360 --> 00:16:23,190 Speaker 2: the inflation challenge. I really enjoyed, and by the way, 291 00:16:23,210 --> 00:16:25,270 Speaker 2: it was hard to dissent because I really have a 292 00:16:25,370 --> 00:16:28,330 Speaker 2: deep respect for the way he thinks about the market 293 00:16:28,370 --> 00:16:31,890 Speaker 2: and the economy. I actually have a great appreciation for 294 00:16:31,950 --> 00:16:35,670 Speaker 2: what Chairman Warsh talks about. And I think less about 295 00:16:35,730 --> 00:16:40,930 Speaker 2: the family fight is more about being willing and accepting 296 00:16:41,320 --> 00:16:45,780 Speaker 2: to the debate. And so, look, you can get into 297 00:16:45,820 --> 00:16:52,080 Speaker 2: these environments They're big, they're heavy, there's lots of issues 298 00:16:52,100 --> 00:16:53,830 Speaker 2: that you want to deal with. But to have a 299 00:16:53,880 --> 00:16:56,730 Speaker 2: chairman on any board, and I used to be chairman 300 00:16:56,760 --> 00:17:01,570 Speaker 2: of bank boards, you want people's truths. You want to 301 00:17:01,650 --> 00:17:04,050 Speaker 2: see where they stand because, frankly, a lot of times 302 00:17:04,690 --> 00:17:08,770 Speaker 2: those truths may impact the way I think about things. 303 00:17:08,830 --> 00:17:14,490 Speaker 2: So it's really more about being transparent and willing to 304 00:17:14,550 --> 00:17:18,770 Speaker 2: accept a debate versus saying, look, You've got other leaders 305 00:17:18,810 --> 00:17:21,070 Speaker 2: that say, you know, my way or the highway. And 306 00:17:21,170 --> 00:17:25,430 Speaker 2: so I don't like that style. I prefer the openness 307 00:17:25,490 --> 00:17:26,040 Speaker 2: of a debate. 308 00:17:26,480 --> 00:17:29,320 Speaker 3: Wait, so say more about the Fed chair's role in this. 309 00:17:30,010 --> 00:17:32,450 Speaker 3: in the family fight, I guess. Because you hear chairman, 310 00:17:32,570 --> 00:17:38,730 Speaker 3: you think head of the household. If you look at 311 00:17:38,770 --> 00:17:41,070 Speaker 3: it that way, his role could either be to try 312 00:17:41,109 --> 00:17:44,490 Speaker 3: to get everyone on board with what he thinks or 313 00:17:44,550 --> 00:17:46,930 Speaker 3: where the economy is going at any particular moment in time, 314 00:17:47,270 --> 00:17:49,590 Speaker 3: or his role could be to try to synthesize all 315 00:17:49,630 --> 00:17:52,790 Speaker 3: those different viewpoints and come up with a coherent strategy 316 00:17:52,850 --> 00:17:57,160 Speaker 3: and sort of transmit that communication. Which of those two 317 00:17:57,220 --> 00:17:57,899 Speaker 3: roles is it? 318 00:17:59,119 --> 00:18:06,000 Speaker 2: I would say that he has left an imprint on 319 00:18:06,119 --> 00:18:09,540 Speaker 2: his experience with the Fed that I have a huge 320 00:18:09,560 --> 00:18:11,940 Speaker 2: amount of respect for. I mean, he was a governor 321 00:18:12,530 --> 00:18:16,830 Speaker 2: through the 08 crisis. He's spent the last 15 years 322 00:18:16,910 --> 00:18:24,010 Speaker 2: really steeped in economics and monetary policy. A lot of 323 00:18:24,030 --> 00:18:27,490 Speaker 2: the things he knows are no secret. So I have 324 00:18:27,510 --> 00:18:30,070 Speaker 2: a high amount of respect for what he thinks because 325 00:18:30,430 --> 00:18:34,230 Speaker 2: he's lived it. He's studied it. And so I'm always 326 00:18:34,330 --> 00:18:38,510 Speaker 2: listening to not only him, but there's 11 other presidents 327 00:18:38,570 --> 00:18:41,889 Speaker 2: that probably have double my IQ that I have just 328 00:18:41,930 --> 00:18:45,670 Speaker 2: a real amount of respect for. But I do like 329 00:18:46,630 --> 00:18:49,790 Speaker 2: where he's come from, where he is in this point 330 00:18:49,869 --> 00:18:52,810 Speaker 2: in time, and where I think he can lead us 331 00:18:53,730 --> 00:18:57,770 Speaker 2: as we continue to really– pound at this dual mandate 332 00:18:57,790 --> 00:19:01,970 Speaker 2: that we have. And look, he's been very public about 333 00:19:02,970 --> 00:19:06,270 Speaker 2: what he feels and how important the Fed mission is 334 00:19:06,390 --> 00:19:11,240 Speaker 2: to the greatest economy on the globe. And so I 335 00:19:11,280 --> 00:19:14,620 Speaker 2: really appreciate my interactions with him. And I think he's 336 00:19:14,640 --> 00:19:15,140 Speaker 2: a great leader. 337 00:19:15,160 --> 00:19:17,840 Speaker 1: I'm going to try and ask the version of the 338 00:19:18,200 --> 00:19:23,820 Speaker 1: forbidden question, which is, how much easier is would you 339 00:19:23,900 --> 00:19:28,619 Speaker 1: perceive the task of getting inflation to target B were 340 00:19:29,010 --> 00:19:32,170 Speaker 1: the deficit smaller? 341 00:19:32,530 --> 00:19:34,649 Speaker 4: How much would that make your life easier? 342 00:19:34,810 --> 00:19:38,689 Speaker 1: Or let's say, for example, there was a plan to 343 00:19:38,770 --> 00:19:43,369 Speaker 1: reduce the cyclical deficit to something that resembled what it 344 00:19:43,430 --> 00:19:46,530 Speaker 1: was 10 years ago or something like that. How much 345 00:19:46,590 --> 00:19:49,850 Speaker 1: would that make your life easier in terms of getting 346 00:19:49,869 --> 00:19:50,570 Speaker 1: back to inflation? 347 00:19:50,990 --> 00:19:56,730 Speaker 2: Well, so for me, we elect people in Congress and 348 00:19:56,880 --> 00:20:01,900 Speaker 2: in the executive branch to really try to solve those problems. 349 00:20:01,960 --> 00:20:03,720 Speaker 2: I mean, it kind of gets back to this whole 350 00:20:03,780 --> 00:20:06,760 Speaker 2: discussion that we've had very actively in the last few 351 00:20:06,820 --> 00:20:10,280 Speaker 2: weeks and months about our reaction function. That really is 352 00:20:10,320 --> 00:20:13,500 Speaker 2: where the Fed's role is, is how do we react 353 00:20:13,540 --> 00:20:16,939 Speaker 2: to the data that is created by decisions that are 354 00:20:17,500 --> 00:20:22,720 Speaker 2: either legislated or fiscal and how that affects the economy, 355 00:20:22,760 --> 00:20:26,440 Speaker 2: but more importantly, the mandates that we have by Congress. 356 00:20:26,850 --> 00:20:30,750 Speaker 2: So it's a little bit like trying to discuss what 357 00:20:30,970 --> 00:20:33,890 Speaker 2: is the optimum size of the Fed's balance sheet. Well, 358 00:20:34,830 --> 00:20:37,139 Speaker 2: at the end of the day, it all depends. You know, 359 00:20:37,160 --> 00:20:39,540 Speaker 2: it depends on the kind of reserves that you want 360 00:20:39,580 --> 00:20:42,460 Speaker 2: in the system. It depends on how either fragile or 361 00:20:42,540 --> 00:20:45,400 Speaker 2: strong you think the markets are at that given time. 362 00:20:46,260 --> 00:20:49,580 Speaker 2: And so it's just relative. We just have to react 363 00:20:49,680 --> 00:20:53,919 Speaker 2: well to continuing to get this inflation number down as 364 00:20:53,980 --> 00:20:56,200 Speaker 2: long as labor is full. Okay. 365 00:20:56,220 --> 00:20:58,320 Speaker 3: I'm going to turn to, I guess, a topic that's 366 00:20:58,480 --> 00:21:02,000 Speaker 3: perhaps even more subjective than the optimum size of the 367 00:21:02,140 --> 00:21:05,520 Speaker 3: Fed's balance sheet and talk about R-star. Okay. 368 00:21:05,920 --> 00:21:06,240 Speaker 2: Oh, boy. 369 00:21:06,950 --> 00:21:09,130 Speaker 3: So, I mean, there's a debate about whether or not 370 00:21:09,230 --> 00:21:12,470 Speaker 3: like our star has just naturally been increasing recently in 371 00:21:12,510 --> 00:21:15,810 Speaker 3: the state of financial conditions. When you look at financial 372 00:21:15,850 --> 00:21:18,909 Speaker 3: conditions now, do you think something fundamental has changed in 373 00:21:18,930 --> 00:21:22,990 Speaker 3: the US economy such that perhaps we're more accommodative than 374 00:21:23,030 --> 00:21:24,090 Speaker 3: we would have been otherwise? 375 00:21:24,690 --> 00:21:29,840 Speaker 2: So, I would say that if you think, you know, 376 00:21:30,300 --> 00:21:33,989 Speaker 2: I was a banker in the 08 cycle. you know, 377 00:21:34,050 --> 00:21:36,689 Speaker 2: it'd be hard to second guess the actions of the 378 00:21:36,770 --> 00:21:39,730 Speaker 2: Federal Reserve and the FOMC back when that was happening. 379 00:21:40,090 --> 00:21:42,480 Speaker 2: Then you kind of, you know, your economy kind of 380 00:21:42,500 --> 00:21:44,699 Speaker 2: gets back on track. Then you have to deal with 381 00:21:44,740 --> 00:21:48,600 Speaker 2: the pandemic, you know, a few years later. So now 382 00:21:48,640 --> 00:21:50,940 Speaker 2: we're out of that. So the way I would frame 383 00:21:50,980 --> 00:21:55,889 Speaker 2: this is, I think actually things are normalizing when it 384 00:21:55,930 --> 00:21:59,070 Speaker 2: comes to our star. However, I would also say that 385 00:21:59,690 --> 00:22:03,060 Speaker 2: we may be in a higher position base level of 386 00:22:03,180 --> 00:22:08,670 Speaker 2: our star than we were back even pre-08. So yeah, 387 00:22:08,790 --> 00:22:12,310 Speaker 2: I think from my standpoint personally, I think we're at 388 00:22:12,350 --> 00:22:16,649 Speaker 2: a fairly accommodative place for rates right now. And I 389 00:22:17,109 --> 00:22:20,050 Speaker 2: think we continue to talk about the nature of our 390 00:22:20,109 --> 00:22:24,129 Speaker 2: star relative to where the yield curve and rates are today. 391 00:22:24,560 --> 00:22:28,280 Speaker 2: But for me, I think things are pretty accommodative. 392 00:22:28,880 --> 00:22:29,820 Speaker 4: You mentioned being a banker. 393 00:22:29,859 --> 00:22:32,340 Speaker 1: Just out of curiosity, Do you ever hear of a 394 00:22:32,400 --> 00:22:33,960 Speaker 1: company being like, oh, you know what? We want to 395 00:22:33,980 --> 00:22:37,540 Speaker 1: build that factory, but they raised rates by 25 basis 396 00:22:37,600 --> 00:22:38,540 Speaker 1: points last month. 397 00:22:38,600 --> 00:22:40,760 Speaker 4: And now it no longer checks out. Have you ever 398 00:22:40,800 --> 00:22:41,200 Speaker 4: heard of that? 399 00:22:41,359 --> 00:22:41,860 Speaker 2: Very rare. 400 00:22:41,900 --> 00:22:42,620 Speaker 4: Yeah, I never heard. 401 00:22:42,859 --> 00:22:46,179 Speaker 2: However, I will say this, that those, those decisions are 402 00:22:46,240 --> 00:22:49,570 Speaker 2: much more of a long dated decision. So that's why 403 00:22:49,630 --> 00:22:53,010 Speaker 2: the 10 year is such a benchmark because you're really, 404 00:22:53,330 --> 00:22:56,770 Speaker 2: you're making that decision for 10 and 20 years and 405 00:22:56,790 --> 00:22:59,980 Speaker 2: the financing and the leverage of capital. becomes much more 406 00:23:00,000 --> 00:23:02,890 Speaker 2: of a long-dated kind of thing. Now, I will say this. 407 00:23:03,230 --> 00:23:06,609 Speaker 2: It's much more sensitive to things like current asset stuff. 408 00:23:06,630 --> 00:23:11,050 Speaker 2: So decisions on, should I pre-buy inventory? If I'm going 409 00:23:11,070 --> 00:23:13,590 Speaker 2: to pay another 25 or 50 basis points on my 410 00:23:13,650 --> 00:23:18,480 Speaker 2: line of credit, maybe I stall that decision. So that's 411 00:23:18,520 --> 00:23:22,159 Speaker 2: when the restrictiveness of the short rate starts to influence 412 00:23:22,660 --> 00:23:25,580 Speaker 2: more of the current decisioning in the market. 413 00:23:26,100 --> 00:23:30,000 Speaker 1: Just real quickly, you mentioned the Fed's reaction function. Chairman 414 00:23:30,040 --> 00:23:33,980 Speaker 1: Warsh has talked about his dislike of forward guidance, et cetera, 415 00:23:34,000 --> 00:23:36,980 Speaker 1: and it's clear he has a different communication style than 416 00:23:37,040 --> 00:23:40,560 Speaker 1: his predecessors, but there was a different communication style under 417 00:23:40,580 --> 00:23:44,100 Speaker 1: the Greenspan years and so forth. That being said, do 418 00:23:44,140 --> 00:23:46,220 Speaker 1: you think either the public or the other members of 419 00:23:46,240 --> 00:23:49,360 Speaker 1: the FOMC have a clear handle right now on either 420 00:23:49,460 --> 00:23:53,330 Speaker 1: his or the Fed's reaction function currently? 421 00:23:53,890 --> 00:23:56,370 Speaker 2: That's one of the more exciting things, I think, that's 422 00:23:56,410 --> 00:23:59,270 Speaker 2: going to come out of the task force debate is 423 00:23:59,330 --> 00:24:02,370 Speaker 2: I think we're going to get information about things like 424 00:24:02,470 --> 00:24:06,649 Speaker 2: data sets. We're going to have much more clarity about communications, 425 00:24:06,730 --> 00:24:10,859 Speaker 2: what works, what doesn't. There's been lots of things written 426 00:24:10,980 --> 00:24:14,639 Speaker 2: on where is the Fed's role, let's say, in a 427 00:24:15,240 --> 00:24:18,859 Speaker 2: market crisis scenario, let's say post-08. Where should we be? 428 00:24:19,340 --> 00:24:22,280 Speaker 2: Most of that is kind of trust and confidence you're 429 00:24:22,300 --> 00:24:27,380 Speaker 2: trying to instill. But once things normalize, then I think 430 00:24:27,460 --> 00:24:31,899 Speaker 2: I was watching something that Chairman Warsh talked about, better 431 00:24:31,960 --> 00:24:35,899 Speaker 2: the Fed be on the page B12 versus A1. And 432 00:24:36,119 --> 00:24:38,040 Speaker 2: there's something to be said about that. It's a little 433 00:24:38,080 --> 00:24:42,510 Speaker 2: bit like this conference. We don't want payments on even B12. 434 00:24:42,770 --> 00:24:45,369 Speaker 2: We just want to make sure that payments are working well, 435 00:24:45,430 --> 00:24:50,229 Speaker 2: the technology is resilient, and it's protected. And so that 436 00:24:50,970 --> 00:24:55,250 Speaker 2: I think you can adapt all the time the communications 437 00:24:55,630 --> 00:24:58,670 Speaker 2: that you're creating where the Federal Reserve is concerned. More 438 00:24:58,730 --> 00:25:02,990 Speaker 2: important that the market has a function to decide risk 439 00:25:03,080 --> 00:25:05,520 Speaker 2: and price. And you want to make sure that market's 440 00:25:05,580 --> 00:25:08,400 Speaker 2: strong and that you're not making it in any way 441 00:25:08,520 --> 00:25:10,600 Speaker 2: fragile with some of your communications. 442 00:25:11,160 --> 00:25:15,440 Speaker 3: Are the task forces in dialogue with the regional Fed presidents? 443 00:25:15,480 --> 00:25:17,730 Speaker 3: Have they sought you out to discuss some of the 444 00:25:17,770 --> 00:25:18,650 Speaker 3: things they're looking into? 445 00:25:19,210 --> 00:25:23,300 Speaker 2: There's a lot of relationship overlap with the 15 that 446 00:25:23,340 --> 00:25:25,780 Speaker 2: were named, and I suspect that there is a lot 447 00:25:25,800 --> 00:25:30,260 Speaker 2: of discussion around that. I think Chairman Warsh has had 448 00:25:30,880 --> 00:25:37,210 Speaker 2: long relationships with these folks, but I think that'll come. 449 00:25:37,450 --> 00:25:41,750 Speaker 2: I think that'll come as the information, some of the 450 00:25:41,810 --> 00:25:45,090 Speaker 2: research emerges. Then I think there's going to be much 451 00:25:45,170 --> 00:25:49,650 Speaker 2: more interaction and dialogue between Those groups and the FOMC. 452 00:25:50,050 --> 00:25:51,710 Speaker 4: But as of now, not really so much. 453 00:25:51,770 --> 00:25:54,409 Speaker 3: Mervyn King isn't on the phone to you asking how 454 00:25:54,430 --> 00:25:55,770 Speaker 3: to change the comms policy. 455 00:25:55,869 --> 00:25:56,510 Speaker 2: Okay. All right. 456 00:25:56,530 --> 00:25:58,370 Speaker 3: Well, Jeff Schmidt, thank you so much for coming back 457 00:25:58,410 --> 00:25:59,699 Speaker 3: on All Thoughts. Really appreciate it. 458 00:25:59,800 --> 00:26:00,890 Speaker 2: I love doing this. Thank you. 459 00:26:06,220 --> 00:26:16,100 Speaker 3: Thank you. Well, Joe, interesting start to what I am 460 00:26:16,140 --> 00:26:18,149 Speaker 3: sure is going to be a very interesting symposium. 461 00:26:18,750 --> 00:26:19,510 Speaker 4: Really fun. 462 00:26:19,670 --> 00:26:20,150 Speaker 2: I love this. 463 00:26:20,190 --> 00:26:22,119 Speaker 1: Two years in a row, we've talked to Jeffrey at 464 00:26:22,560 --> 00:26:24,550 Speaker 1: the start. It hadn't clicked to me that next year 465 00:26:24,590 --> 00:26:27,389 Speaker 1: is the 50th, so we have to come to that. 466 00:26:27,750 --> 00:26:30,610 Speaker 1: But obviously always fun to talk to the person who's 467 00:26:30,650 --> 00:26:34,040 Speaker 1: throwing the party, you know? That is the perfect guest. 468 00:26:34,150 --> 00:26:36,440 Speaker 3: We'll ask him what his plans are for the 50th anniversary. 469 00:26:36,820 --> 00:26:39,440 Speaker 3: I do think the fact that the task forces don't 470 00:26:39,460 --> 00:26:42,740 Speaker 3: seem to have been in direct dialogue with the presidents 471 00:26:42,800 --> 00:26:44,300 Speaker 3: just yet is kind of interesting. 472 00:26:44,320 --> 00:26:45,580 Speaker 4: That struck me for sure. 473 00:26:45,940 --> 00:26:48,010 Speaker 3: And so I wonder what's going to happen when they finally, 474 00:26:48,030 --> 00:26:51,169 Speaker 3: I guess, release their findings. Jeff seemed to suggest that 475 00:26:51,210 --> 00:26:53,800 Speaker 3: that's when they were going to start the actual dialogue 476 00:26:53,840 --> 00:26:54,189 Speaker 3: about it. 477 00:26:54,580 --> 00:26:56,399 Speaker 1: No, there's going to be, look, there's, I have a 478 00:26:56,500 --> 00:27:00,060 Speaker 1: lot of questions about the task force because look, there's 479 00:27:00,220 --> 00:27:03,920 Speaker 1: the task forces. There's a million ideas about different ways 480 00:27:03,960 --> 00:27:08,520 Speaker 1: we could be measuring the economic data. There's a million. 481 00:27:08,310 --> 00:27:10,990 Speaker 4: Ideas for different ways to communicate and so forth. And 482 00:27:11,010 --> 00:27:13,410 Speaker 4: all that's great. And it's always, I. 483 00:27:13,350 --> 00:27:15,530 Speaker 1: Think probably a good idea to have fresh eyes. 484 00:27:16,210 --> 00:27:19,179 Speaker 4: On the other hand, In the here and now, I 485 00:27:19,220 --> 00:27:21,700 Speaker 4: think the big question is like, yeah, OK, but inflation 486 00:27:21,720 --> 00:27:22,120 Speaker 4: is higher. 487 00:27:22,140 --> 00:27:23,340 Speaker 2: You're going to raise rates, right? 488 00:27:23,359 --> 00:27:24,780 Speaker 4: That is to my mind. 489 00:27:24,920 --> 00:27:27,180 Speaker 1: And so this is I still think there is some 490 00:27:27,300 --> 00:27:30,859 Speaker 1: ambiguity about the reaction function of the new sort of 491 00:27:31,160 --> 00:27:34,890 Speaker 1: Kevin Warsh approach, etc., So I'm very excited to hear 492 00:27:34,910 --> 00:27:37,530 Speaker 1: about the task forces, et cetera. But I think for 493 00:27:37,570 --> 00:27:38,070 Speaker 1: a lot of people. 494 00:27:38,090 --> 00:27:40,690 Speaker 4: It's irrespective. There's still the, okay, yeah, but inflation is 495 00:27:40,710 --> 00:27:43,699 Speaker 4: still over 3%. The immediate problem of inflation above target. 496 00:27:43,780 --> 00:27:46,000 Speaker 3: Well, I guess we'll see what Walsh says on Friday. 497 00:27:46,020 --> 00:27:47,420 Speaker 3: But in the meantime, shall we leave it there? 498 00:27:47,460 --> 00:27:48,180 Speaker 2: Let's leave it there. Okay. 499 00:27:48,420 --> 00:27:50,899 Speaker 3: This has been another episode of the OddLots Podcast. I'm 500 00:27:50,940 --> 00:27:53,419 Speaker 3: Tracy Allaway. You can follow me at Tracy Allaway. 501 00:27:53,660 --> 00:27:56,639 Speaker 4: And I'm Jill Wiesenthal. You can follow me at The Stalwart. 502 00:27:56,780 --> 00:28:00,369 Speaker 1: Follow our producers, Carmen Rodriguez at Carmen Armand, Dashiell Bennett 503 00:28:00,460 --> 00:28:02,970 Speaker 1: at Dashbots, Kale Brooks at Kale Brooks. 504 00:28:02,770 --> 00:28:04,840 Speaker 4: And Kevin Lozano at Kevin Lloyd Lozano. 505 00:28:05,210 --> 00:28:07,260 Speaker 3: And for more OddLots content, you should check out our 506 00:28:07,300 --> 00:28:10,820 Speaker 3: daily newsletter. You can find that at Bloomberg.com forward slash OddLots. 507 00:28:10,980 --> 00:28:13,040 Speaker 1: And you can chat about all of these topics 24-7 508 00:28:13,619 --> 00:28:16,840 Speaker 1: in our Discord, discord.gg slash OddLots. 509 00:28:17,350 --> 00:28:19,810 Speaker 3: And if you enjoyed this conversation, then please leave a 510 00:28:19,850 --> 00:28:22,450 Speaker 3: comment or like the video or better yet, subscribe. 511 00:28:22,470 --> 00:28:23,950 Speaker 4: Thanks for watching and listening. 512 00:28:33,390 --> 00:28:34,550 Speaker 3: Thank you.