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Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane.

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Speaker 1: Daily we bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. It

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Speaker 1: is important to speak to Jason Furman, not only a

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Speaker 1: former chairman of the President Obama's Council of Economic Advisors,

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Speaker 1: but somebody who I think, what do you do? Did

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Speaker 1: you take like three days off your public service and

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Speaker 1: thinking about policy and writing about policy. I think it's

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Speaker 1: about too but you, guys, but you went right back

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Speaker 1: into it like nobody I've ever seen, and in that

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Speaker 1: there's so much to write about. And we just have

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Speaker 1: to go right away to your important essay in the

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Speaker 1: Washington Post with Alan Krueger, who joins us every job

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Speaker 1: stay share yelling as well, signing this essay that we

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Speaker 1: need to look at the budget now and not just entitlements.

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Speaker 1: What does does a more republican tilt. What do they

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Speaker 1: get wrong when they say we just got to solve entitlements.

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Speaker 1: Let's just look at the deficit. Tom. This year, the

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Speaker 1: I m F just came out with a report yesterday,

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Speaker 1: the United States is the highest as a share of

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Speaker 1: GDP deficit of any of the advanced economies. Number two

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Speaker 1: is Italy there one point nine percent to GDP, better

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Speaker 1: than US, and Spain is number three. Look out ahead

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Speaker 1: five years, the debt is rising as a share of

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Speaker 1: the economy, and the United States in every other country

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Speaker 1: that has a debt it is falling as a share

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Speaker 1: of GDP. Those two facts I just said have nothing

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Speaker 1: to do with entitlements and have a lot to do

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Speaker 1: with the fact that we just embarked on a virtually

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Speaker 1: unprecedented fiscal experiment, which is a large dose of stimulus,

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Speaker 1: mostly through tax cuts, at a time when the economy

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Speaker 1: is at our near full employment. Some economists criticized President

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Speaker 1: Obama for okay, raising taxes, but going too far. Excuse me?

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Speaker 1: Is there a middle ground, a middle ground to come

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Speaker 1: back from tax cuts towards more rational Here's a dangerous word,

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Speaker 1: more fair tax increases. You know, you look at the

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Speaker 1: Bull Simpson Fiscal Commission. They called for revenue to be

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Speaker 1: twenty one of g d P. This year. We're less

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Speaker 1: than seventent of g d P. You could sit me

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Speaker 1: down with any Republican economist and the two of us

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Speaker 1: could come up together with a tax plan that would

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Speaker 1: raise revenue and be more efficient and have lower effective

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Speaker 1: marginal tax rates than our current tax system does. So

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Speaker 1: I think we could have a or pro growth tax system.

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Speaker 1: You know, I wouldn't go back to the tax code

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Speaker 1: we had a year ago or two years ago. I'd

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Speaker 1: move forward, but I'd reform it in a way that

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Speaker 1: gave more predictability, more certainty, lower effective rates, and more revenue.

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Speaker 1: Jason Furman. One of the highlights of this earning season

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Speaker 1: so far has been earnings from banks. They talk about

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Speaker 1: how they're making more money because of changes to the

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Speaker 1: tax code. Uh. We're also getting word that Procter and

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Speaker 1: Gamble reporting quarterly results a dollar a share analyst estimates

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Speaker 1: was for ninety eight cents to share. They boosted their

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Speaker 1: core EPs estimates for the remainder of the year. Also,

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Speaker 1: a lot of that is to do with taxes. Is

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Speaker 1: there any evidence that the reduction in taxes leads to

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Speaker 1: sustained economic growth? Look, it's definitely gonna lead to faster

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Speaker 1: growth this year. I have I'm not debate that I

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Speaker 1: understand sustained Those sustained rather than just one quarter and

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Speaker 1: then quarter at the quarter measurements. So I think the

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Speaker 1: way you want to look get the sustained growth is say,

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Speaker 1: you know what investment project was not profitable in the

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Speaker 1: tax system before that would be profitable at the tax

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Speaker 1: system now. I think there are some of them, So

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Speaker 1: I think it will lead to some increase in investment,

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Speaker 1: some increasing growth. When I did my own study of this,

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Speaker 1: that added up to less than one tenth of one

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Speaker 1: percent of GDP year and growth UM Ernst and Young,

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Speaker 1: CBO others have found about the same, So I think there's, yeah,

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Speaker 1: a little bit extra investment um you'll get out of this,

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Speaker 1: but not not a whole lot. And in part that's

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Speaker 1: because effective tax rates were already a lot lower than

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Speaker 1: the headline tax rates even before this reform passed. One

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Speaker 1: of the highlights of the tax reform bill was supposedly

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Speaker 1: all the money that's gonna be reinvested, as you just indicated,

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Speaker 1: into projects, which I imagine have to be vetted by

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Speaker 1: boards of directors and top executives to see whether they

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Speaker 1: are going to pay the kinds of returns that warrant

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Speaker 1: those investments. And yet what we've heard is companies are

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Speaker 1: investing in stock buy backs. Is that necessarily good for

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Speaker 1: the economy. I don't have any problem with doc buy backs.

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Speaker 1: I mean, you're you get a lot of extra cash.

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Speaker 1: If you don't have profitable investment projects, you should give

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Speaker 1: that money back to your shareholders. And investment is not

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Speaker 1: determined by cash flow. There was a lot of cash

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Speaker 1: for any company that wanted to make an investment one

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Speaker 1: to three years ago. What we have a shortage of

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Speaker 1: is profitable opportunities. The tax reform will expand the profitable

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Speaker 1: opportunities a little bit, but not a whole lot. But

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Speaker 1: what do you say about social security? Chairman Greenspan yesterday

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Speaker 1: agrees with you that it is about budget responsibility, and yeah,

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Speaker 1: I guess we get to entitlements. And I think Chairman

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Speaker 1: Greenspan would go to you on the value of these

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Speaker 1: commissions and getting the political discourse over the fiscal responsibility.

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Speaker 1: Social security, by a lot of analysis, has challenges thirteen

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Speaker 1: years out, and yet you and others say it's easily solvable.

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Speaker 1: A lot of our listeners don't understand that. How is

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Speaker 1: the social security mess easily solvable? There's a well understood

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Speaker 1: menu of options for social security some of them are

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Speaker 1: on the spending side, some of them are on the

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Speaker 1: revenue side. You can just look down that menu and

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Speaker 1: pick a set of options that add up to the total.

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Speaker 1: I was thrown out of clubs that pim Fox is

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Speaker 1: allowed to attend because I did a chart Jason ten

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Speaker 1: years ago which extrapolated the income level of the top

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Speaker 1: people and what the social Security limit was A hundred

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Speaker 1: twenty three thousand, hundred thirty thousand, and I interpolated with

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Speaker 1: some squishy math that was not firm and like you

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Speaker 1: ought to run up to a hundred and fifty hundred

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Speaker 1: sixty thousand. The amount of hate Matt I got off

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Speaker 1: that chart was remarkable, remarkable. That's one of the options.

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Speaker 1: You knows. Another option you can, I mean, I'll get

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Speaker 1: myself run out of a lot of clubs. With this option.

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Speaker 1: You can broaden the tax base to include I are

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Speaker 1: you're sponsored health insurance payments that would bring more revenue

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Speaker 1: in UM, expand the base and do it in an

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Speaker 1: economically efficient way. But no one would like that idea.

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Speaker 1: So the time we've got left with you this morning,

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Speaker 1: Dr Ferman, I want you to once and for all

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Speaker 1: talk about the glide pass or Zach Ferman, the rest

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Speaker 1: of you. Matthew, guys talk about glide pass, nobody listens

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Speaker 1: believes it will be smooth. Give us the confidence that

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Speaker 1: we have smooth, smooth glide pass to the three, the five,

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Speaker 1: the tenure solutions that we face. On the fiscal side,

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Speaker 1: I have no confidence whatsoever right now. I don't see

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Speaker 1: a forcing event unless trillion dollar deficits really wake people

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Speaker 1: up and get attention in the way that um we

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Speaker 1: haven't seen to date. But right now on the fiscal side,

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Speaker 1: I don't see it. Look, but I do think our

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Speaker 1: economy is a big resilient economy. I think we have

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Speaker 1: a lot of ability to borrow in global capital markets.

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Speaker 1: I'm not foreseeing and warning of any sort of fiscal catastrophe.

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Speaker 1: I don't think that's what we'll see. I think what

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Speaker 1: we'll see as a fiscal chipping away at our prosperity

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Speaker 1: will be poorer, but there won't be one dramatic event.

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Speaker 1: Jason Furman, a former chairman of the President's Council of

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Speaker 1: Economic Advisors. Of course, writing for Pearson among others, and

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Speaker 1: teaching it his Harvard as well, very beneficial today with

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Speaker 1: US now is an important international economist Nathan Sheets is

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Speaker 1: with PGIM for years writing at City Group, and it's

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Speaker 1: acclaimed for writing thoughtful, six in seven page dense essays

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Speaker 1: on the dynamics of the international economy. Dr Sheets, wonderful

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Speaker 1: to have you with us is an open question. What

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Speaker 1: is the number one theme you would write about for

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Speaker 1: May of two eighteen. Well, Tom, thank you, it's a pleasure,

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Speaker 1: pleasure to be with you. I think the number one

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Speaker 1: theme at this stage is the surprisingly positive constructive performance

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Speaker 1: of the global economy. Over the last few years, we've

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Speaker 1: criticized the global expansion as being the new mediocre, but

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Speaker 1: over the last few quarters we realized that maybe there

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Speaker 1: was a silver lining to that, and that is that

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Speaker 1: imbalances and vulnerabilities you would have expected to have emerged

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Speaker 1: at this point in the cycles simply aren't there. And

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Speaker 1: it seems like this thing's got a fair amount of

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Speaker 1: momentum for the next couple of years. The momentum in

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Speaker 1: the glide path that matters to every single listener coast

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Speaker 1: to coast is we've got to boost exports. The discourse

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Speaker 1: is on imports, tariffs or that you know, the globe.

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Speaker 1: I mean, PIM Fox and I will sit over a

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Speaker 1: beverage of our choice. New York can say we need

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Speaker 1: to be a big Switzerland will belogny to that. What's

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Speaker 1: the prescription to boost exports other than dollar dynamics. This

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Speaker 1: is a profound point, Tom. I couldn't agree with you more.

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Speaker 1: The win win solution for the globally economy is for

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Speaker 1: all of us to export more. If we focus on

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Speaker 1: trade balances, UH, that pushes us to the lose lose

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Speaker 1: solution where we all import less. And UH I think that.

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Speaker 1: I think the increasing imports means more multilateralism, more plural lateralism.

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Speaker 1: It means TPPS and NAFTAS, but it also means countries

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Speaker 1: UH playing by the rules of the game. And from

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Speaker 1: that perspective, I do agree with this administration that China

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Speaker 1: has got some work to do to open up its economy,

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Speaker 1: open up its business environment to foreign firms, to allow

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Speaker 1: to allow more exports. Nathan Sheets, you served previously as

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Speaker 1: the Under Secretary of the Treasury for International Affairs. If

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Speaker 1: around the world, if internationally the economy is doing as

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Speaker 1: well as you describe, why are people not dancing in

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Speaker 1: the streets. They're protesting in the streets, and they want

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Speaker 1: to break up as many trade agreements as they have established.

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Speaker 1: Witness Brexit, witness what's going on with NAFTA, t p P,

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Speaker 1: and just about every political leader is under threat that

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Speaker 1: That is a extremely important question, And I think the

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Speaker 1: part of it goes back to the fact that the

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Speaker 1: last decade where we are now, it seems to me

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Speaker 1: as a pretty good place, But the last decade has

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Speaker 1: been wroth and people remember the financial crisis, they remember UH,

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Speaker 1: the uncertainties about employment. Now maybe we're moving to a

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Speaker 1: better place where the globally economy is going to perform

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Speaker 1: in a more effective way, And if so, I would hope.

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Speaker 1: I can't be absolutely confident, but I hope that some

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Speaker 1: of these populist pressures that we're seeing in the United

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Speaker 1: States and else where will start to abate. But I

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Speaker 1: very much agree with you that there's a very concerning

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Speaker 1: UH political dynamic that we're seeing globally that runs in

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Speaker 1: an opposite direction and may ultimately be if it doesn't abate,

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Speaker 1: may ultimately undercut some of the strong macro performance that

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Speaker 1: we're seeing. All right, But in that context, I'm sure

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Speaker 1: you're aware of the IMF report about the United States

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Speaker 1: and our jet to d DP trajectory. And you know

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Speaker 1: that reminds me of that quote. The most dangerous thing

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Speaker 1: in the world is what a second lieutenant with a

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Speaker 1: map in a compass? I mean, is this a map

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Speaker 1: in a compass kind of situation except they can't read it.

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Speaker 1: We have in the United States. We have in the

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Speaker 1: United States, UH, serious challenges with our fiscal position. The

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Speaker 1: im off is is absolutely right now. I don't expect

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Speaker 1: that that is going to slow the economy over the

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Speaker 1: next couple of years, but over a long horizon if

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Speaker 1: we don't address it, I think we're going to be

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Speaker 1: moving into a world with higher US interest rates and

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Speaker 1: more macroeconomic uncertainty. Dr sheets if you modeled deficit the

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Speaker 1: g d P I mean p JAM bond guys Greg

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Speaker 1: Peters in the crew, they really care about that kind

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Speaker 1: of metric. Can you get out to six percent like

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Speaker 1: Douglas Holtziken does. There are two contrasting views on this.

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Speaker 1: So one view, there's a body of work, let's call

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Speaker 1: it Reinhart rogue offf that once debt gets high, it

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Speaker 1: meaningfully slows the economy. The other side of that is

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Speaker 1: there a lot of countries out there that are able

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Speaker 1: to carry high levels of doubt with relatively low interest

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Speaker 1: I think it will. I think it will be a

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Speaker 1: negative effect on growth going for it. I don't know

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Speaker 1: how big Nathan, She's thank you so much for helping

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Speaker 1: us to continue this coverage from the meetings of the

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Speaker 1: Internettional Monetary Fund and the World Bank. It's always good

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Speaker 1: to speak with Mark Cafley of UBS, but particularly with

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Speaker 1: the undercurrents of i m F analysis of where we

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Speaker 1: stand market is the Union Bank of Switzerland, which means

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Speaker 1: a certain permanent and cultural austerity. We're not seeing that

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Speaker 1: from guns and Butter Washington. Do you care from an

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Speaker 1: international basis about a trillion dollar US deficit? Well, I

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Speaker 1: think it's a great question, and our investors around the

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Speaker 1: world absolutely care about this, and I think they do

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Speaker 1: raise some questions about what happens to the dollar in

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Speaker 1: these scenarios and that and we think that uh, the

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Speaker 1: fiscal deficit as well the current account depthsit can contribute

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Speaker 1: to a bit more dollar weakness this year. Mark, let

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Speaker 1: me put it to you dollar weakness this year. Is

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Speaker 1: it also because we have a funding crisis when it

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Speaker 1: comes to dollars. If companies repatriate all of that cash

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Speaker 1: that's overseas. That pulls money out of Europe, and that

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Speaker 1: means you've got to go find more dollars. Isn't that

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Speaker 1: going to be a sort of a confrontation between those

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Speaker 1: that want dollars and the dollars that are available. Well,

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Speaker 1: I think that, you know, the repatriation issue is an

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Speaker 1: interesting one, and it highlights the importance of investment in

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Speaker 1: the United States as the necessity to support the dollar.

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Speaker 1: Given the current account deficits, I think a lot of

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Speaker 1: the money that sits overseas may already be in dollars,

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Speaker 1: and so there's not necessarily a scramble to get to

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Speaker 1: get those dollars, uh, you know, converted. So you don't

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Speaker 1: see any funding issue thing to do with libor rates. Well,

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Speaker 1: I think I think that, Uh, where where libar plays

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Speaker 1: such an important role is in the you know, so

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Speaker 1: many things are are tied to it, so many loans

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Speaker 1: right from mortgages or corporate loans and things. And therefore,

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Speaker 1: as you see the libar rise and something, you know,

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Speaker 1: some of it perhaps for legitimate growth reasons or concerns

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Speaker 1: about inflation, that that can actually have a slowing effect

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Speaker 1: on the US economy, so that that certainly plays into

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Speaker 1: the mix. What's interesting your Mark, and I'd love to

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Speaker 1: get your perspective on this. What we like to do, folks,

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Speaker 1: is with the advantage of so many bright guests and

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Speaker 1: so many good conversations, if somebody brings up a telling point,

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Speaker 1: we like to get a second, third, and fourth opinion

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Speaker 1: through the morning on it. We're gonna do that right

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Speaker 1: now with Mark Kafley of UBS. William Lee First Rate

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Speaker 1: Economists now at the Milk and Institute makes very clear

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Speaker 1: that a weaker dollar does the FEDS work for them?

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Speaker 1: Are we developing a tighter US monetary policy, a more

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Speaker 1: restrictive policy by a weeker dollar in the last year? Well,

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Speaker 1: I think I think the weaker dollar certainly helps helps

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Speaker 1: on a lot of fronts in the sense that a

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Speaker 1: weeker dollar can make US UH exports more attractive, it

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Speaker 1: can help stimulate, and it can help rebalance some of

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Speaker 1: these imbalances that that we're facing, you know, like like

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Speaker 1: the current account depthsit so it you know, it's uh.

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Speaker 1: We we know the strong dollars, the policy, and then

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Speaker 1: we know some of the comments that have come out

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Speaker 1: of the Treasury administration and otherwise. But on the other hand,

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Speaker 1: you know, nobody could the dollars control by the market,

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Speaker 1: So it's more of a symptom of the underlying economics

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Speaker 1: than kind of the a force that can be pushed on.

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Speaker 1: Let's go the other way. Have we have a week

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Speaker 1: dollar of any warm or flavor. We know it's not

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Speaker 1: everybody in the pool, Which nation, which region, which blocks

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Speaker 1: which kind of nations will see harmful dollar appreciation? Is

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Speaker 1: we weaken the greenback? Well, you know, I think the

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Speaker 1: concerns have been around what happens in the emerging markets

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Speaker 1: and as the dollar moves, and so far the emerging

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Speaker 1: markets has has held up well as the dollar weekend,

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Speaker 1: and it's one of the and we think that's due

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Speaker 1: in part to this kind of you know, the story

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Speaker 1: of the synchronized global growth. So particularly this year where

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Speaker 1: we don't we don't see the dollar weakening to the

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Speaker 1: extent it it did last year. We think that, uh,

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Speaker 1: you know, we think actually the emerging market story can

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Speaker 1: can remain relatively positive. I think the issues that you

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Speaker 1: raise around what is going on with you as fiscal policy,

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Speaker 1: what is going on, uh, you know, how that will

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Speaker 1: roll through to the dollar. They're very political issues and

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Speaker 1: they do with the margins influence outside investors who are

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Speaker 1: thinking about whether they invest in the United States, move

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Speaker 1: capital into dollars and then into the United States verse,

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Speaker 1: taking it to other parts of the world. Mark, I

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Speaker 1: want to switch gears here because pitm it's time for

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Speaker 1: a UBS victory lap and and mark your Jeff, You

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Speaker 1: and your team in London was lights out brilliant during

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Speaker 1: the panic over weaker pounds, Sterling of saying maybe not,

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Speaker 1: and you did one of those things major banks rarely do,

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Speaker 1: which is you really went against consensus review that decision.

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Speaker 1: And now that we have a much stronger pounds Sterling,

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Speaker 1: can you advocate that it will ever strengthen. Well, Tom,

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Speaker 1: thank you so much for that. Look, I think, um,

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Speaker 1: this is the the situation will We saw in the

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Speaker 1: UK was that there was you know, massive pessimism uh

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Speaker 1: and around Brexit and and the fall in the pound

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Speaker 1: that accompanied that, and we saw massive positioning by hedge

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Speaker 1: funds and others. As part of our you know, we

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Speaker 1: have such a tremendous look into client accounts, but also

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Speaker 1: as the largest wealth manager in the world, we talked

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Speaker 1: to partners around the world what other funds are doing.

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Speaker 1: So we saw all that pessimism and at the same time,

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Speaker 1: I think what we've seen and this bears out on

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Speaker 1: the future, is we're in a lull now where they're negotiating.

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Speaker 1: There's no decisions now on Brexit for for a little while,

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Speaker 1: and therefore it you know, markets can only focus on

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Speaker 1: so many things at once, and so we thought that

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Speaker 1: as that as that political uh noise kind of there's

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Speaker 1: gonna be political noise, but no decisions made. We thought

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Speaker 1: that the pound could rebound and now as as the

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Speaker 1: UK economy is doing well and perhaps um you know,

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Speaker 1: the Central Bank they're raises rates a little bit. So

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Speaker 1: that's where we saw things going well. However, there is

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Speaker 1: going to be a bill to pay eventually around brexfit

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Speaker 1: uh you know, say not quite a year from now,

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Speaker 1: as those events begin to take center stage again. Mark Haafley,

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Speaker 1: thank us so much. He is with ubs with us

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Speaker 1: this morning of these free meetings of the I am

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Speaker 1: from the World Bank. Is the right guest. William Lee

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Speaker 1: is at the milk In Institute for years at City

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Speaker 1: grew up and of course his service to the International

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Speaker 1: Monetary Fund. Doctor. Really, you have a great observation which

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Speaker 1: I pointed out a couple of days ago. But you

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Speaker 1: take it further as you always do, and that is

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Speaker 1: a week dollar has consequences. For Chairman Paula, I want

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Speaker 1: you to walk through this oddity of a legitimate currency

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Speaker 1: move changes FED behavior, give us a clinic on you know,

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Speaker 1: Tom when when I was at the I M F

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Speaker 1: Generations ago, it was a cottage industry to develop what's

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Speaker 1: called the Monter Conditions Index, the equivalence between exchange rate

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Speaker 1: changes and interesting we call this going rogueoff. That's what

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Speaker 1: we call. Well, one of the things that that we

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Speaker 1: noted was that the dollar has depreciated since the beginning

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Speaker 1: of last year by about now using a US Monster

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Speaker 1: Conditions index, which is like ten to one or five

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Speaker 1: to one, that's equivalent to one to almost two percentage

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Speaker 1: points of interest rate easing. So it's actually we've all

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Speaker 1: set all of the tightening that the feed is done

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Speaker 1: this year and last year. So when the when the

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Speaker 1: markets are so worried about excessive FED tightening, they have

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Speaker 1: to remember we are starting from even a lower base.

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Speaker 1: And if we have three or four rate hikes modeled

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Speaker 1: in the dollar in the international markets, whether week dollar

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Speaker 1: or strong human strong euro, strong end through one oh

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Speaker 1: seven one oh five is doing the work for them

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Speaker 1: where they would only do one or two rate hikes exactly.

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Speaker 1: And so so one of the things that markets are

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Speaker 1: getting ahead of themselves about is this excessive tightening, choking

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Speaker 1: off the choking off the recovery and does you curve

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Speaker 1: flattening and the house polity inverting. Let's remember the inversion

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Speaker 1: is a nice correlation with recessions. It's a great correlation,

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Speaker 1: but it's not causation. And when you think about it,

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Speaker 1: why does the inverted you curve mean recession because the

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Speaker 1: FED is tightening like crazy because they think inflation is

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Speaker 1: getting out of hand. Right now, we have no sign inflictions.

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Speaker 1: We have a chart, right but but every time in

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Speaker 1: the past, for the last I think thirty years, inverted

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Speaker 1: inversion means recession. If this time it's different, then you

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Speaker 1: it means that actually we don't have any models left. Well,

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Speaker 1: actually the model, we have to remember how to use

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Speaker 1: the model appropriately. It inverted because the FED was aggressively

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Speaker 1: tightening to get rid of inflation running away. Right now,

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Speaker 1: the FED is not trying to get rid of inflation,

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Speaker 1: is running away because it hardly has any inflation Okay,

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Speaker 1: that's the chart. We will push it on social media.

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Speaker 1: What if the markets don't know how to live without

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Speaker 1: that life support and and so the markets are now

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Speaker 1: betting I think the wrong way. Which is the question

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Speaker 1: asked me before about the recession. Everyone is concerned about

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Speaker 1: the possibility of recession because we're only forty three basis

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Speaker 1: points away from an inversion, right, but that inversion does

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Speaker 1: not signal the fit aggressively tightening. You talk to anybody

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Speaker 1: in the FO see right now, they're saying, we're taking

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Speaker 1: it easy because we don't see what is the discourse

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Speaker 1: Francis story, which is time shut up? I want to

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Speaker 1: ask a further question. What is aggressive tightening? If you

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Speaker 1: have seven interest rate hikes the next eighteen months? Is

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Speaker 1: that aggressive? Aggressive means you get above neutral, you get tightening,

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Speaker 1: and so far that we are still accommodative and we're

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Speaker 1: trying to get to neutral. So aggressive tightening is passing

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Speaker 1: neutral and getting How does the FED get out of

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Speaker 1: this box? They're saying three or four rate increases. Everybody

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Speaker 1: agrees they're talking too much. Is it like a FED

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Speaker 1: speech where Chairman Powell drops Obama mean Bullard's comments on

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Speaker 1: Kurve flattening alone, we're interesting, but do we look listen

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Speaker 1: for Powell to speech, to to say something begins this dialogue.

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Speaker 1: Remember what he's what Sherman Hall said at the first

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Speaker 1: press conference, I'm worried about this rate increase. Everything else

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Speaker 1: in the future I don't I don't know anything about.

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Speaker 1: So essentially he's denying forward guidance, right, he has shut

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Speaker 1: it down forward guidance because it's not credible. Well said.

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Speaker 1: But the critical point, your doctor Lee, is if I

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Speaker 1: am data dependent, part of that data is the litmus

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Speaker 1: paper of the dollar system. Absolutely, and that the dollar

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Speaker 1: means that when you look at montre conditions, you have

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Speaker 1: to coordinate both the financial markets, the exchange rate and

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Speaker 1: interest rates. But is there a system that you could

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Speaker 1: do a bit of both. So forward guidance with data dependency,

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Speaker 1: because if you only do data dependency, you're chasing the

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Speaker 1: economy instead of guiding it. It's called Arthur Bird's Ideally

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Speaker 1: they wouldn't have done that, but they blew it, and

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Speaker 1: they blew it because the fit is no longer credible.

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Speaker 1: When they said we're going to increase by x amount,

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Speaker 1: they never did. This is quickly here, this is important.

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Speaker 1: You're saying Cheer yelling blew it Cher, yelling at BERNACKI

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Speaker 1: both blew it because they work. They got ahead of themselves.

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Speaker 1: They were too confident their forecasts. Powell is the guy

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Speaker 1: who says, I'm not an economist. All I know is

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Speaker 1: I'm only concerned about this increase, and all future ones

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Speaker 1: are going to be depending upon where the data and

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Speaker 1: the forecasts are going. All right, well, thank you so much,

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Speaker 1: Belie there at the Milk And Institute. Thanks for listening

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Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews

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Speaker 1: I'm on Twitter at Tom Keane before the podcast. You

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Speaker 1: can always catch us worldwide. I'm Bloomberg Radio