1 00:00:03,000 --> 00:00:07,880 Speaker 1: He's strong, he's committed, he's smart, and if he is 2 00:00:08,000 --> 00:00:11,720 Speaker 1: confirmed by the Senate, J will put his considerable talents 3 00:00:11,800 --> 00:00:16,520 Speaker 1: and experience to work leading our nation's independent central bank, 4 00:00:17,120 --> 00:00:21,640 Speaker 1: which has the critical responsibility to set monetary policy and 5 00:00:21,680 --> 00:00:26,160 Speaker 1: monitor our banking system as a hall. That was President 6 00:00:26,200 --> 00:00:29,840 Speaker 1: Donald Trump last week introducing Jerome Powell, also known as 7 00:00:29,960 --> 00:00:33,080 Speaker 1: J as his nominee for Chairman of the Federal Reserve, 8 00:00:33,159 --> 00:00:37,280 Speaker 1: America's Central Bank. Now as qualified as Mr Powell is, 9 00:00:37,760 --> 00:00:40,160 Speaker 1: what Trump didn't talk about is just why he needed 10 00:00:40,200 --> 00:00:43,360 Speaker 1: to replace Janet Yellen, whom Trump also described in the 11 00:00:43,400 --> 00:00:47,240 Speaker 1: same event as having done a quote terrific job. Surprise. 12 00:00:47,479 --> 00:00:51,480 Speaker 1: It's really a political decision, replacing a Democrat with a Republican, 13 00:00:51,880 --> 00:00:54,720 Speaker 1: and one that could have major ramifications not just for 14 00:00:54,760 --> 00:01:08,000 Speaker 1: the United States but the entire world. Welcome to Benchmark. 15 00:01:08,120 --> 00:01:11,280 Speaker 1: I'm Scott Landman, an economics editor with Bloomberg in Washington. 16 00:01:11,680 --> 00:01:14,039 Speaker 1: Dan Moss is off this week, but joining me as 17 00:01:14,040 --> 00:01:16,720 Speaker 1: a guest co host is my colleague Chris Conton, who 18 00:01:16,760 --> 00:01:20,040 Speaker 1: covers the Fed for Bloomberg. Chris, thanks for joining us today. 19 00:01:20,480 --> 00:01:23,520 Speaker 1: Very happy to be here, Scott. Now, before we bring 20 00:01:23,600 --> 00:01:26,800 Speaker 1: in our guest, I want to ask you a question, Chris, 21 00:01:27,520 --> 00:01:31,760 Speaker 1: what makes this appointment for FED chairman different from others 22 00:01:31,880 --> 00:01:34,959 Speaker 1: in the past forty years. Well, really, the first thing 23 00:01:35,000 --> 00:01:37,840 Speaker 1: that jumps out is that Trump has thrown out this 24 00:01:37,880 --> 00:01:43,399 Speaker 1: tradition of renominating FED chairs after they've had only one 25 00:01:43,560 --> 00:01:46,160 Speaker 1: term if they've been reasonably successful. That was the case 26 00:01:46,200 --> 00:01:50,040 Speaker 1: with his immediate predecessors to Janet Yellow and Ben Bernanky 27 00:01:50,120 --> 00:01:52,120 Speaker 1: got a couple of terms. Even though he was first 28 00:01:52,120 --> 00:01:56,720 Speaker 1: nominated by a Republican, Obama then renominated him. Greenspan also 29 00:01:56,800 --> 00:01:59,040 Speaker 1: had several terms. So that's the first thing that really 30 00:01:59,120 --> 00:02:02,600 Speaker 1: jumps out. Trump, perhaps not surprisingly, has thrown out a 31 00:02:02,640 --> 00:02:05,639 Speaker 1: bit of Washington tradition here. All right, Well, we're definitely 32 00:02:05,680 --> 00:02:08,160 Speaker 1: going to hit on that with our guest and and 33 00:02:08,200 --> 00:02:10,160 Speaker 1: talk a little bit more about how this could alter 34 00:02:10,280 --> 00:02:13,800 Speaker 1: the course of the FED and the global economy. Peter 35 00:02:14,000 --> 00:02:17,520 Speaker 1: Conty Brown is Assistant professor of Legal Studies and Business 36 00:02:17,520 --> 00:02:21,000 Speaker 1: Ethics at the Wharton School of the University of Pennsylvania. 37 00:02:21,440 --> 00:02:24,080 Speaker 1: But more relevant for us, one of his key research 38 00:02:24,160 --> 00:02:27,440 Speaker 1: areas is the history of the FED and how it operates. 39 00:02:27,760 --> 00:02:31,080 Speaker 1: He's the author of the book The Power and Independence 40 00:02:31,120 --> 00:02:33,880 Speaker 1: of the Federal Reserve and he's speaking with us from 41 00:02:33,919 --> 00:02:38,560 Speaker 1: Philadelphia today. Peter, thanks for joining us. It's a pleasure. Peter. 42 00:02:38,680 --> 00:02:41,480 Speaker 1: Let's talk about what Chris was mentioning a little more. 43 00:02:41,919 --> 00:02:45,639 Speaker 1: This is the first time a FED chair whose performance 44 00:02:45,760 --> 00:02:49,480 Speaker 1: wasn't questioned hasn't been renominated, or at least the first 45 00:02:49,480 --> 00:02:53,000 Speaker 1: time in recent history. Janet Yellen's performance, you know, it 46 00:02:53,080 --> 00:02:55,880 Speaker 1: wasn't like they had to force her out. What does 47 00:02:55,919 --> 00:02:58,959 Speaker 1: this all mean, Well, I would say it's a starker 48 00:02:59,240 --> 00:03:03,440 Speaker 1: example of partisanship at the FED. Beginning of the nineteen fifties, 49 00:03:03,480 --> 00:03:08,160 Speaker 1: when Dwight Eisenhower renominated Harry Truman's pick for the FED chair, 50 00:03:08,200 --> 00:03:12,079 Speaker 1: that's William mc chesney Martin, we've had a near constant 51 00:03:12,680 --> 00:03:16,640 Speaker 1: norm and understanding that the president will look at the 52 00:03:16,680 --> 00:03:20,560 Speaker 1: FED and tread lightly from a partisan perspective. And the 53 00:03:20,600 --> 00:03:23,800 Speaker 1: only exception to that was when we had Arthur Burns, 54 00:03:23,800 --> 00:03:26,560 Speaker 1: who was a Republican who was a close confident of 55 00:03:26,680 --> 00:03:31,280 Speaker 1: Richard Nixon. In the near immediate aftermath of Watergate, Jimmy 56 00:03:31,280 --> 00:03:34,760 Speaker 1: Carter did decide to go with a Democrat rather than 57 00:03:34,800 --> 00:03:38,720 Speaker 1: renominating him. But even Burns served two full terms, right, 58 00:03:38,800 --> 00:03:43,240 Speaker 1: So the fact that Janet Yellen with the best top 59 00:03:43,320 --> 00:03:45,520 Speaker 1: line numbers of any FED chair. By that I mean 60 00:03:45,560 --> 00:03:51,000 Speaker 1: lowest unemployment, lowest inflation, only served one term is pretty staggering. 61 00:03:51,160 --> 00:03:54,240 Speaker 1: This is a This is a new, unprecedented move that 62 00:03:54,320 --> 00:03:58,280 Speaker 1: President Trump made. Now, even though Mr Powell himself is 63 00:03:58,320 --> 00:04:02,360 Speaker 1: not considered a dangerous pick, he was probably regarded as 64 00:04:02,440 --> 00:04:06,240 Speaker 1: the safest of the people who were candidates to replace 65 00:04:06,320 --> 00:04:09,040 Speaker 1: Janet Yelling. I hear you kind of saying that this 66 00:04:09,240 --> 00:04:13,920 Speaker 1: is a gamble historically speaking for the president, would you 67 00:04:13,960 --> 00:04:16,080 Speaker 1: put it that way? I I don't know how much 68 00:04:16,080 --> 00:04:18,479 Speaker 1: of a gamble it is from his perspective. It certainly 69 00:04:18,600 --> 00:04:23,480 Speaker 1: is from from an external perspective. For his perspective, is 70 00:04:23,480 --> 00:04:26,520 Speaker 1: is pretty consistent. The President Trump is not one to 71 00:04:26,800 --> 00:04:30,600 Speaker 1: make much of the norms and traditions of Washington politics, 72 00:04:30,640 --> 00:04:33,400 Speaker 1: and this, this idea of cross partisan reappointment of a 73 00:04:33,440 --> 00:04:36,719 Speaker 1: FED chair is certainly one of those norms. So I'm 74 00:04:36,720 --> 00:04:39,599 Speaker 1: not sure how much this idea that he's breaking the 75 00:04:39,720 --> 00:04:42,679 Speaker 1: mold counts against his decision. Indeed, it might have pushed 76 00:04:42,720 --> 00:04:47,240 Speaker 1: him toward nominating someone other than Janet Yelling. But for 77 00:04:47,279 --> 00:04:51,520 Speaker 1: the future, this norm it will be much easier to 78 00:04:51,640 --> 00:04:54,640 Speaker 1: break than it will be to restore, and that does 79 00:04:54,760 --> 00:04:57,760 Speaker 1: make me nervous. Peter, let me ask you something else 80 00:04:57,760 --> 00:05:00,040 Speaker 1: about J. Powell. He's a bit of a no in 81 00:05:00,160 --> 00:05:01,920 Speaker 1: quantity in the sense that he's been at the FED 82 00:05:01,960 --> 00:05:06,159 Speaker 1: already for over five years in your historian of the Fed. 83 00:05:06,200 --> 00:05:09,560 Speaker 1: As we've said, if you look back at the sort 84 00:05:09,560 --> 00:05:13,000 Speaker 1: of pantheon of FED chairs, where where does he fit 85 00:05:13,200 --> 00:05:15,760 Speaker 1: in or how does he stack up at least in 86 00:05:15,880 --> 00:05:19,720 Speaker 1: terms of when they're incoming as FED chairs. You know, 87 00:05:19,760 --> 00:05:23,080 Speaker 1: it's it depends on how we characterize those FED chairs 88 00:05:23,160 --> 00:05:25,960 Speaker 1: if we look at who they were when they were appointed. 89 00:05:26,360 --> 00:05:29,680 Speaker 1: I think J. Palill stacks up very nicely. Is credentials 90 00:05:30,040 --> 00:05:34,320 Speaker 1: don't look terribly different from those of for example, Alan Greenspan, 91 00:05:34,480 --> 00:05:38,320 Speaker 1: or Paul Volker or or Mariner Eccles, to name three 92 00:05:38,560 --> 00:05:41,120 Speaker 1: FED chairs who from a monetary policy perspective have been 93 00:05:41,120 --> 00:05:44,360 Speaker 1: widely regarded as very good ones. You know, Alan Greenspan 94 00:05:44,400 --> 00:05:48,360 Speaker 1: has sometimes seen as this economist par excellance, but in 95 00:05:48,480 --> 00:05:51,960 Speaker 1: reality he wasn't really an academic economist. His PhD was 96 00:05:52,520 --> 00:05:56,119 Speaker 1: essentially an honorary degree. He received it in his late 97 00:05:56,520 --> 00:05:59,160 Speaker 1: late years, in his fifties, decades after he had been 98 00:05:59,279 --> 00:06:03,080 Speaker 1: enrolled at at n y U. His dissertation disappeared for 99 00:06:03,200 --> 00:06:06,520 Speaker 1: decades actually until Sebastian Mallaby founded again, and it would 100 00:06:06,560 --> 00:06:08,960 Speaker 1: ended up being just a collection of papers that they 101 00:06:08,960 --> 00:06:11,120 Speaker 1: had stapled together and said, hey, please give me a PhD. 102 00:06:11,160 --> 00:06:14,520 Speaker 1: In response to this, uh so, the idea that only 103 00:06:14,600 --> 00:06:17,960 Speaker 1: a PhD economist can be a FED chair successful in 104 00:06:18,000 --> 00:06:20,680 Speaker 1: his false And j palas he said, five years as 105 00:06:20,720 --> 00:06:24,640 Speaker 1: a central banker, many years working in private equity, working 106 00:06:24,680 --> 00:06:27,160 Speaker 1: on investment side, working on the policy side, as a lawyer, 107 00:06:27,600 --> 00:06:32,120 Speaker 1: this is a pretty sturdy basis of expertise compared to 108 00:06:32,200 --> 00:06:34,760 Speaker 1: at least some of them. Now that said, there are 109 00:06:34,760 --> 00:06:36,919 Speaker 1: other FED chairs who at the time of their appointment 110 00:06:36,920 --> 00:06:41,360 Speaker 1: also looked like j Pal. Probably most is the other lawyer. 111 00:06:41,480 --> 00:06:44,600 Speaker 1: That's Bill Miller, was Jimmy Carter's first appointment, and he's 112 00:06:44,640 --> 00:06:48,039 Speaker 1: regarded as one of the least successful FED chairs in history. 113 00:06:48,440 --> 00:06:50,760 Speaker 1: So it's an open road ahead for j Pal. I'm 114 00:06:50,800 --> 00:06:53,360 Speaker 1: not sure how well how he'll do. He's got a 115 00:06:53,480 --> 00:06:55,479 Speaker 1: history on his side for either being a great FED 116 00:06:55,560 --> 00:06:59,440 Speaker 1: chair or a mediocre one. And Bill Miller only lasted 117 00:06:59,520 --> 00:07:03,520 Speaker 1: about a year or so, as the historical records shows 118 00:07:03,839 --> 00:07:06,039 Speaker 1: Peter I wanted to step back and take a broader 119 00:07:06,080 --> 00:07:08,599 Speaker 1: historical look at the FED. You know, you can talk 120 00:07:08,640 --> 00:07:12,360 Speaker 1: about Greenspan's credentials, but it seems like he he really 121 00:07:12,520 --> 00:07:17,480 Speaker 1: did shape the perception of the FED in the financial world, 122 00:07:17,520 --> 00:07:21,920 Speaker 1: in popular culture too. When the FED was created a 123 00:07:21,960 --> 00:07:25,280 Speaker 1: century ago, did people back then have an inkling of 124 00:07:25,320 --> 00:07:29,280 Speaker 1: the kind of power it would command today, not just 125 00:07:29,400 --> 00:07:31,920 Speaker 1: over the U. S economy, but over the whole world? 126 00:07:32,000 --> 00:07:34,960 Speaker 1: And and how does that kind of shape the appointment 127 00:07:35,000 --> 00:07:39,280 Speaker 1: process today? You know, that's a that's a really kind 128 00:07:39,320 --> 00:07:41,560 Speaker 1: of deep historical question, because a lot of people had 129 00:07:41,560 --> 00:07:44,600 Speaker 1: different ideas about what it was they were creating in 130 00:07:44,800 --> 00:07:48,480 Speaker 1: n and something called it the Supreme Court of Finance. 131 00:07:48,680 --> 00:07:51,440 Speaker 1: So they had very vaunted ambitions for what the FED 132 00:07:51,640 --> 00:07:56,280 Speaker 1: could become. It was designed self consciously to insert the 133 00:07:56,360 --> 00:08:00,640 Speaker 1: US economy, which by then was already extraordinarily large, into 134 00:08:00,800 --> 00:08:04,080 Speaker 1: the international financial system, to create New York as arrival 135 00:08:04,120 --> 00:08:08,040 Speaker 1: to London as a as a financial center. Same time, 136 00:08:08,360 --> 00:08:10,560 Speaker 1: right after the FED is created, kind of call it 137 00:08:10,600 --> 00:08:13,640 Speaker 1: the Rodney Dangerous field of federal agencies. They could get 138 00:08:13,800 --> 00:08:16,960 Speaker 1: they just couldn't get any respect. There's a great instance 139 00:08:17,000 --> 00:08:19,600 Speaker 1: where there was a question of a state dinner and 140 00:08:19,640 --> 00:08:21,280 Speaker 1: where would the FED what we can now call the 141 00:08:21,280 --> 00:08:26,040 Speaker 1: FED governor sit at the state dinner. And the answer was, well, 142 00:08:26,160 --> 00:08:29,880 Speaker 1: in order of creation of the independent agencies, that put 143 00:08:29,920 --> 00:08:31,920 Speaker 1: them way down at the bottom of the list, and 144 00:08:31,920 --> 00:08:36,480 Speaker 1: that really rankled the FED, but seemed natural for everybody else. 145 00:08:36,520 --> 00:08:40,080 Speaker 1: So it was more of a backwater technical agency, not 146 00:08:40,240 --> 00:08:42,960 Speaker 1: at the core of the exercise of American power. That 147 00:08:43,000 --> 00:08:45,800 Speaker 1: took a century to change in shape to be where 148 00:08:45,800 --> 00:08:50,080 Speaker 1: it is today. Peter, a bit different question for you. Now, 149 00:08:50,520 --> 00:08:54,959 Speaker 1: there's been this point of debate regarding the FED actually 150 00:08:54,960 --> 00:08:57,320 Speaker 1: goes back many years, but got really hot since the 151 00:08:57,400 --> 00:09:02,920 Speaker 1: financial crisis about how much discretion should policymakers have in 152 00:09:03,040 --> 00:09:06,760 Speaker 1: setting policy. And of course, as you know, Republican lawmakers 153 00:09:07,120 --> 00:09:10,480 Speaker 1: leveled a lot of criticism at Ben Burnank and Janet 154 00:09:10,559 --> 00:09:15,760 Speaker 1: Yellen for using too much discretion. Now that we have 155 00:09:16,120 --> 00:09:20,679 Speaker 1: a Republican appointed or will have presumably a Republican appointed 156 00:09:20,960 --> 00:09:24,600 Speaker 1: FED chair, do you think those criticisms are going to 157 00:09:24,679 --> 00:09:27,000 Speaker 1: kind of fade, in other words, whereas it most recently 158 00:09:27,200 --> 00:09:31,160 Speaker 1: very partisan motivated those those criticisms, or do you think 159 00:09:31,200 --> 00:09:34,680 Speaker 1: those will continue as a big point of philosophical debate. 160 00:09:35,240 --> 00:09:37,840 Speaker 1: We're getting to the guts of monetary history with these questions. 161 00:09:37,840 --> 00:09:41,719 Speaker 1: This is great. Rule based monetary policy is as old 162 00:09:41,760 --> 00:09:45,480 Speaker 1: as money, right, The gold standard is a rule based system. 163 00:09:45,760 --> 00:09:50,439 Speaker 1: In medieval Korea, it was a rice based currency. Cury Japan, 164 00:09:50,480 --> 00:09:53,520 Speaker 1: we had a silk based currency. The entire idea is 165 00:09:53,600 --> 00:09:58,160 Speaker 1: is some sort of mechanism to discipline the provider of 166 00:09:58,200 --> 00:10:01,200 Speaker 1: this stuff, this money, so that they don't go hog 167 00:10:01,240 --> 00:10:04,200 Speaker 1: wild and rip everybody off by creating more than a 168 00:10:04,280 --> 00:10:07,680 Speaker 1: value could support. And that's the entire idea behind rules 169 00:10:07,679 --> 00:10:12,119 Speaker 1: based monetary policy. Discretion UH central bankers with discretional exercise 170 00:10:12,160 --> 00:10:14,719 Speaker 1: that the idea goes in ways that will favor their 171 00:10:14,720 --> 00:10:20,080 Speaker 1: political patrons. And so there's a foundational critique that is 172 00:10:20,120 --> 00:10:25,720 Speaker 1: existed pretty consistently that fired the imagination of Andrew Jackson 173 00:10:26,240 --> 00:10:29,080 Speaker 1: created for us the allegory of the Wizard of Oz 174 00:10:29,600 --> 00:10:33,680 Speaker 1: as a as an argument about rules and discretion. And 175 00:10:33,720 --> 00:10:35,880 Speaker 1: so I don't think that debate is going anywhere. It's 176 00:10:35,960 --> 00:10:37,960 Speaker 1: we've never had a world where we haven't been talking 177 00:10:38,000 --> 00:10:40,480 Speaker 1: about what our money is and who gets to decide. 178 00:10:41,400 --> 00:10:44,280 Speaker 1: But Christie make a very good point about, well, what's 179 00:10:44,320 --> 00:10:47,319 Speaker 1: the partisan flavor of this, and I think that there 180 00:10:47,320 --> 00:10:49,760 Speaker 1: are true believers who doesn't matter who is in office, 181 00:10:49,800 --> 00:10:52,760 Speaker 1: who's at the Central Bank, who will always be raising 182 00:10:52,800 --> 00:10:56,520 Speaker 1: these questions about the hardness of our currency, and they'll 183 00:10:56,600 --> 00:10:59,560 Speaker 1: keep on making those noises. The question is who will 184 00:10:59,679 --> 00:11:03,760 Speaker 1: join that coalition to amplify that critique, And there i'd 185 00:11:03,880 --> 00:11:06,079 Speaker 1: I'd agree with at least with implicit in the question, 186 00:11:06,080 --> 00:11:10,560 Speaker 1: which is amplifying that critique. Over during the Obama administration 187 00:11:11,000 --> 00:11:15,360 Speaker 1: was an antipathy for Barack Obama and the perceived ways 188 00:11:15,440 --> 00:11:18,720 Speaker 1: that the FED was supporting his economic program. Now that 189 00:11:18,760 --> 00:11:20,839 Speaker 1: those partisan hats have switched, I think there are some 190 00:11:20,880 --> 00:11:24,200 Speaker 1: people who are part of that critical coalition who aren't 191 00:11:24,200 --> 00:11:25,840 Speaker 1: going to care that much anymore, and indeed are going 192 00:11:25,880 --> 00:11:27,920 Speaker 1: to take the other side because they see it as 193 00:11:27,920 --> 00:11:31,880 Speaker 1: advantageous to their partisan interest. So I would expect we'll 194 00:11:31,960 --> 00:11:34,840 Speaker 1: still hear that critique, but not nearly as loudly as 195 00:11:34,840 --> 00:11:38,120 Speaker 1: we've heard it before. Peter, we're recording this now just 196 00:11:38,160 --> 00:11:41,800 Speaker 1: a couple hours after the Federal Reserve Bank of New 197 00:11:41,880 --> 00:11:46,760 Speaker 1: York announced the retirement of its president, William Dudley in 198 00:11:46,800 --> 00:11:50,520 Speaker 1: the middle of next year. Now he was a former 199 00:11:50,720 --> 00:11:54,040 Speaker 1: economist at Goldman Sachs when he became president of the 200 00:11:54,080 --> 00:11:57,680 Speaker 1: New York Fed in two thousand nine. I believe part 201 00:11:57,720 --> 00:12:01,240 Speaker 1: of that appointment kind of spark to anger, especially on 202 00:12:01,480 --> 00:12:04,880 Speaker 1: the liberal and the Democratic side, that you know that 203 00:12:04,880 --> 00:12:07,400 Speaker 1: that Golden Sacks was getting too much power. And actually 204 00:12:07,400 --> 00:12:11,000 Speaker 1: in the Dodd Frank Law, they were considering making the 205 00:12:11,000 --> 00:12:14,280 Speaker 1: New York Fed a political appointment subject to set in confirmation. 206 00:12:14,679 --> 00:12:17,079 Speaker 1: They decided against that in the end and ended up 207 00:12:17,320 --> 00:12:22,200 Speaker 1: stripping out bankers power across the twelve regional Fed banks too, 208 00:12:22,440 --> 00:12:25,880 Speaker 1: to have a say in appointing the president of each 209 00:12:25,920 --> 00:12:28,800 Speaker 1: reserve bank. But essentially it sort of goes back to 210 00:12:28,880 --> 00:12:31,840 Speaker 1: some of this anger over Dudley the New York Fed 211 00:12:31,880 --> 00:12:34,800 Speaker 1: and Goldman Sacks being part of the issue. There were 212 00:12:34,800 --> 00:12:37,880 Speaker 1: other things involved. So I want to ask you how 213 00:12:37,920 --> 00:12:41,839 Speaker 1: that debate will help shape the appointment of a successor 214 00:12:42,280 --> 00:12:45,600 Speaker 1: at the New York Fed in the coming months. It's 215 00:12:45,640 --> 00:12:49,359 Speaker 1: hard to say. The process of appointing Reserve bank presidents 216 00:12:49,679 --> 00:12:52,760 Speaker 1: is so opaque, and Chris is A is a real 217 00:12:52,880 --> 00:12:55,920 Speaker 1: national expert on this, that we have no idea what 218 00:12:56,120 --> 00:12:59,880 Speaker 1: goes into these discussions. We don't get to participate them 219 00:12:59,880 --> 00:13:02,440 Speaker 1: in the in the public. It's entirely up to the 220 00:13:02,480 --> 00:13:06,080 Speaker 1: Reserve Bank itself to determine how much public input, how 221 00:13:06,160 --> 00:13:09,560 Speaker 1: much transparency, or as is most often the case, how 222 00:13:09,640 --> 00:13:12,120 Speaker 1: much nothing of either of these they'll they'll have as 223 00:13:12,160 --> 00:13:14,800 Speaker 1: part of it. Bill Dudley had spent about two years 224 00:13:14,800 --> 00:13:17,840 Speaker 1: before his appointment two thousand nine as a New York 225 00:13:17,880 --> 00:13:21,400 Speaker 1: Fed employee. Now he was in charge of of asset 226 00:13:21,440 --> 00:13:24,079 Speaker 1: purchases in New York Fed, which is an incredibly significant 227 00:13:24,080 --> 00:13:27,040 Speaker 1: position within the system. But in two thousand nine, and 228 00:13:27,120 --> 00:13:29,360 Speaker 1: something else is happening here, which is, of course we're 229 00:13:29,360 --> 00:13:32,720 Speaker 1: at the guts of the of the crisis response and 230 00:13:33,360 --> 00:13:37,280 Speaker 1: the seeming inextricable connection between the New York FED and 231 00:13:37,320 --> 00:13:40,720 Speaker 1: the banks that it supervises, or really on the front pages, 232 00:13:41,120 --> 00:13:44,280 Speaker 1: you know, we had Jamie Diamond was was on the 233 00:13:44,360 --> 00:13:47,360 Speaker 1: board of the New York FED getting access to the 234 00:13:47,400 --> 00:13:49,880 Speaker 1: New York FEDS thinking at the height of the crisis, 235 00:13:50,320 --> 00:13:53,319 Speaker 1: there were others who were still being paid by by 236 00:13:53,360 --> 00:13:56,160 Speaker 1: Goldman Sacks that get ethical waivers. It was just a mess, 237 00:13:56,360 --> 00:14:00,080 Speaker 1: and a mess that fed hostility on the left and 238 00:14:00,160 --> 00:14:04,040 Speaker 1: the right. So if I were a member of the 239 00:14:04,040 --> 00:14:05,880 Speaker 1: board of directors in the New York FED, which is 240 00:14:05,920 --> 00:14:09,000 Speaker 1: something that I will probably never be I would be 241 00:14:09,360 --> 00:14:14,800 Speaker 1: really mindful of the political consequences of continuing down this 242 00:14:14,920 --> 00:14:18,640 Speaker 1: road of opacity and secrecy on this on this key 243 00:14:18,640 --> 00:14:21,840 Speaker 1: appointment process. And I would not go back to the 244 00:14:22,360 --> 00:14:27,560 Speaker 1: Goldman Sacks well um, as they've done so many times before. So, Peter, 245 00:14:27,640 --> 00:14:31,280 Speaker 1: that leads nicely into a question that's delves into the 246 00:14:31,440 --> 00:14:35,600 Speaker 1: structure of the US Central Bank. It really is in 247 00:14:35,640 --> 00:14:37,680 Speaker 1: the universe of central banks, I have to say, a 248 00:14:37,760 --> 00:14:41,520 Speaker 1: strange bird. It's not only decentralized, but it also has 249 00:14:41,640 --> 00:14:47,520 Speaker 1: this half public, half private legal foundation, the the regional 250 00:14:48,560 --> 00:14:54,000 Speaker 1: feds being actual private corporations. And that's led occasionally to 251 00:14:54,240 --> 00:14:58,880 Speaker 1: calls for reforms or restructuring of the FED. Do you think, 252 00:14:59,000 --> 00:15:01,520 Speaker 1: first of all, in or mind, is the FED right 253 00:15:01,760 --> 00:15:06,080 Speaker 1: for some sort of review or restructuring um? And if so, 254 00:15:06,240 --> 00:15:08,280 Speaker 1: do you think j Powell is a character who's going 255 00:15:08,320 --> 00:15:11,440 Speaker 1: to want to investigate that or is he going to 256 00:15:11,480 --> 00:15:15,400 Speaker 1: simply defend the status quo? So you're you're asking two questions, 257 00:15:15,440 --> 00:15:18,040 Speaker 1: is it right for review and is it right for restructuring? 258 00:15:18,240 --> 00:15:21,040 Speaker 1: And I would say an emphatic yes on the first, 259 00:15:21,520 --> 00:15:25,000 Speaker 1: and the second is trickier a predecessor bill to it 260 00:15:25,480 --> 00:15:28,320 Speaker 1: we're calling the Choice Act, which was the Choice Act 261 00:15:28,360 --> 00:15:32,320 Speaker 1: comes from the House Republicans. It's about making uh Dodd Frank, 262 00:15:32,360 --> 00:15:36,360 Speaker 1: repealing major provisions, reorientating others. But a predecessor buill to 263 00:15:36,440 --> 00:15:39,160 Speaker 1: this is the Shelby Bill that came out of cent 264 00:15:39,200 --> 00:15:43,080 Speaker 1: Banking Committee a couple of years ago, and in both 265 00:15:43,160 --> 00:15:48,400 Speaker 1: bills as a proposal for a new National Monetary Commission, 266 00:15:48,400 --> 00:15:52,680 Speaker 1: which is essentially to review top to bottom everything about 267 00:15:52,680 --> 00:15:56,040 Speaker 1: the Federal Reserve. Some versions of the bill excluded the 268 00:15:56,120 --> 00:15:59,000 Speaker 1: question of the reserve banks vitality, which I think would 269 00:15:59,000 --> 00:16:01,080 Speaker 1: be a gross error. Uh. And so I think that 270 00:16:01,160 --> 00:16:06,280 Speaker 1: review would be incredibly healthy. The structure that you described, 271 00:16:06,360 --> 00:16:10,400 Speaker 1: and gainly as it is, uh, was done to fit 272 00:16:10,440 --> 00:16:14,800 Speaker 1: a political logic of nineteen twelve and thirteen. And that 273 00:16:14,840 --> 00:16:18,600 Speaker 1: political logic barely made economic sense even then, and the 274 00:16:18,600 --> 00:16:21,560 Speaker 1: political logic today would be very different. The idea that 275 00:16:21,600 --> 00:16:24,440 Speaker 1: we'd only have, for example, one reserve bank west of 276 00:16:24,520 --> 00:16:29,040 Speaker 1: Dallas in San Francisco, treating economies as diverse as northern 277 00:16:29,080 --> 00:16:34,359 Speaker 1: California and Alaska and Salt Lake City, Utah. That's it's illogical. 278 00:16:34,360 --> 00:16:36,480 Speaker 1: The idea that we'd have two in the great state 279 00:16:36,480 --> 00:16:39,800 Speaker 1: of Missouri. With all respects to the Missourians who are listening, 280 00:16:40,080 --> 00:16:42,000 Speaker 1: that that doesn't that doesn't make any sense why we 281 00:16:42,000 --> 00:16:44,800 Speaker 1: would have that. The other idea, though, that you're getting at, Chris, 282 00:16:44,880 --> 00:16:48,480 Speaker 1: is that we would have private bankers, or at least 283 00:16:48,840 --> 00:16:53,880 Speaker 1: those who are appointed in part by private bankers, sitting 284 00:16:53,960 --> 00:16:56,600 Speaker 1: in these seats of power, exercising some of the most 285 00:16:56,600 --> 00:17:01,120 Speaker 1: important control over the national economy, but without any kind 286 00:17:01,160 --> 00:17:04,600 Speaker 1: of political input. That made sense when our central banking 287 00:17:04,640 --> 00:17:07,440 Speaker 1: model was the was the private Bank of England, which 288 00:17:07,440 --> 00:17:10,160 Speaker 1: is kind of the nineteenth century banking model central banking model. 289 00:17:10,600 --> 00:17:15,000 Speaker 1: But century we've seen an incredible evolution to the central 290 00:17:15,040 --> 00:17:18,560 Speaker 1: banks that we see today, which are decidedly public, which 291 00:17:18,560 --> 00:17:21,960 Speaker 1: are exercising public duties, and the idea that we'd have 292 00:17:22,000 --> 00:17:26,840 Speaker 1: private bankers doing that work at least needs to be reevaluated. Peter. 293 00:17:27,119 --> 00:17:30,120 Speaker 1: One last question before we wrap up, and this could 294 00:17:30,119 --> 00:17:33,680 Speaker 1: also touch on how the entire federal reserve system could 295 00:17:33,680 --> 00:17:40,000 Speaker 1: potentially be obliterated. There's been a rise of bitcoin cryptocurrencies. 296 00:17:40,680 --> 00:17:43,080 Speaker 1: How do you see that playing out with respect to 297 00:17:43,280 --> 00:17:45,919 Speaker 1: the federal reserve and central banking in general? Are we 298 00:17:45,920 --> 00:17:49,239 Speaker 1: going to be here twenty years from now, and you know, 299 00:17:49,280 --> 00:17:52,000 Speaker 1: whatever the FED has become will just be totally different 300 00:17:52,119 --> 00:17:56,080 Speaker 1: or a non issue. What's your sense of that. Have 301 00:17:56,280 --> 00:18:00,439 Speaker 1: other of you ever used cryptocurrency? Not many person I 302 00:18:00,480 --> 00:18:04,200 Speaker 1: have not. Yeah, a lot of people have, but they 303 00:18:04,240 --> 00:18:07,399 Speaker 1: tend to be enthusiasts, right, not those who are seeking 304 00:18:07,440 --> 00:18:10,880 Speaker 1: to simplify their monetary life. The technology of money it's 305 00:18:11,000 --> 00:18:14,199 Speaker 1: very well. There's always got to have three features to it. 306 00:18:14,200 --> 00:18:16,520 Speaker 1: It's got to be a medium of exchange, meaning you 307 00:18:16,520 --> 00:18:19,520 Speaker 1: find other people who are eager to use this intermediary 308 00:18:19,560 --> 00:18:22,800 Speaker 1: to solve your transaction. It's got to have a store 309 00:18:22,800 --> 00:18:24,920 Speaker 1: of value, so you don't want something that's gonna be 310 00:18:24,960 --> 00:18:28,840 Speaker 1: whip signing and value because you're putting your surplus into 311 00:18:28,880 --> 00:18:30,760 Speaker 1: this thing so that you can pick it up again later. 312 00:18:31,160 --> 00:18:32,800 Speaker 1: And it's gotta be a unit of accounts. You can 313 00:18:32,880 --> 00:18:35,960 Speaker 1: quote things in this cryptocurrency and people will understand, oh yeah, 314 00:18:36,080 --> 00:18:38,600 Speaker 1: one bottle of water equals this many iPhones, and I 315 00:18:38,600 --> 00:18:41,359 Speaker 1: can make that comparison because it's price. In the same way, 316 00:18:41,880 --> 00:18:45,159 Speaker 1: I'm not a bowl on cryptocurrency because other than the 317 00:18:45,280 --> 00:18:47,439 Speaker 1: enthusiasts who would love to see at all of the 318 00:18:47,440 --> 00:18:51,520 Speaker 1: power central banks or whatever torn down or frankly money 319 00:18:51,600 --> 00:18:56,240 Speaker 1: launderers and UH and black marketeers who like what the 320 00:18:56,680 --> 00:18:59,679 Speaker 1: technology of cryptocurrency can offer. Other than that, I'm just 321 00:18:59,720 --> 00:19:01,520 Speaker 1: not a lot of demand from people on the street 322 00:19:01,560 --> 00:19:06,160 Speaker 1: saying the money that I'm currently using is technologically defective 323 00:19:06,200 --> 00:19:09,320 Speaker 1: in a way that I can readily understand. And until 324 00:19:09,400 --> 00:19:11,400 Speaker 1: you get there, until you get to the point where 325 00:19:11,400 --> 00:19:14,800 Speaker 1: people are deeply unhappy with the money that the government 326 00:19:14,880 --> 00:19:18,280 Speaker 1: is presenting to them, then I don't see what cryptocurrency 327 00:19:18,359 --> 00:19:21,119 Speaker 1: is doing other than being a kind of a playhouse 328 00:19:21,160 --> 00:19:23,879 Speaker 1: for people to speculate and UH and think through the 329 00:19:23,880 --> 00:19:27,840 Speaker 1: intellectual puzzles of of of money. So put me as 330 00:19:28,040 --> 00:19:31,560 Speaker 1: a central banking bowl and UH and a cryptocurrency bear. 331 00:19:31,880 --> 00:19:33,720 Speaker 1: All right, Peter, Well, we'll come back to you on 332 00:19:33,760 --> 00:19:37,920 Speaker 1: the Benchmark Bitcoin podcast in and see how comments hold 333 00:19:38,000 --> 00:19:40,439 Speaker 1: up in twenty years. But Peter Conti Brown, thank you 334 00:19:40,480 --> 00:19:42,600 Speaker 1: so much for taking the time to talk with us today. 335 00:19:43,119 --> 00:19:48,720 Speaker 1: It was a real pleasure. Thanks for having me. Benchmark 336 00:19:48,760 --> 00:19:50,840 Speaker 1: will be back next week, and until then you can 337 00:19:50,880 --> 00:19:53,800 Speaker 1: find us on the Bloomberg terminal, Bloomberg dot com, our 338 00:19:53,840 --> 00:19:57,680 Speaker 1: Bloomberg app, as well as on Apple podcast, Pocketcast, Stitcher, 339 00:19:57,800 --> 00:20:00,640 Speaker 1: or wherever you like to listen to podcasts. While you're there, 340 00:20:00,720 --> 00:20:02,679 Speaker 1: take a minute to rate and review the show so 341 00:20:02,760 --> 00:20:05,560 Speaker 1: more listeners can find us and let us know what 342 00:20:05,640 --> 00:20:07,640 Speaker 1: you thought of the show. You can follow me on 343 00:20:07,680 --> 00:20:11,920 Speaker 1: Twitter at at Scott Landman, Chris You're at at Chris 344 00:20:12,040 --> 00:20:15,520 Speaker 1: Jay Condon, and Peter you are at Peter Conty Brown. 345 00:20:15,720 --> 00:20:18,240 Speaker 1: Benchmark is produced by Sarah Patterson and the head of 346 00:20:18,280 --> 00:20:22,359 Speaker 1: Bloomberg Podcasts is Macesca Levie. Thanks for listening, See you 347 00:20:22,440 --> 00:20:22,880 Speaker 1: next time.