WEBVTT - Surveillance: ECB Policy Not Targeted At USD, Posen Says 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.640 Bloomberg dot Com, and of course on the Bloomberg Darken 0:00:27.720 --> 0:00:30.000 to the Door. Usually rock stars in at nine thirty 0:00:30.000 --> 0:00:32.720 in the morning, but Mr Wisenthal has greeted us this 0:00:32.760 --> 0:00:35.959 morning on this important story. I just got all flamed up. 0:00:35.960 --> 0:00:38.720 Somebody called a currency. I said, no way, there's no 0:00:38.760 --> 0:00:41.320 way this is a currency. Our article even says it's 0:00:41.360 --> 0:00:43.959 going to be based off securities. Is it a currency? 0:00:45.200 --> 0:00:49.920 It's currency ish? Yeah, Jamie Diamond doesn't care about ish. 0:00:50.000 --> 0:00:53.599 Jerome Paul and Randy Quarrels at the FED don't care 0:00:53.640 --> 0:00:57.520 about ish. Why is Zuckerberg different from anybody else that's 0:00:57.520 --> 0:00:59.680 going down in flames? There is going to be a 0:00:59.800 --> 0:01:05.039 thing called libra. Presumably you will have a wallet that 0:01:05.080 --> 0:01:07.679 has an X number of libra in it, So in 0:01:07.800 --> 0:01:10.800 that sense, it's that's I say, it's currency issue. On 0:01:10.840 --> 0:01:15.160 the other hand, it's backed by traditional financial assets probably 0:01:15.400 --> 0:01:18.200 no FIAD currencies and government bonds and banks. And if 0:01:18.240 --> 0:01:20.479 you think about it. If you look at your any 0:01:20.520 --> 0:01:23.200 wallet that we use that's digital, or any credit card 0:01:23.280 --> 0:01:25.960 or anything, what is it but a digital number that's 0:01:26.000 --> 0:01:29.560 represented by something mrez. Today the French finances are saying, 0:01:29.680 --> 0:01:33.039 yeah right, I'm in name the country. I've got five 0:01:33.640 --> 0:01:36.400 two thousand dollars I got to get into the United States. 0:01:36.440 --> 0:01:39.280 This sounds like a gift from God. I think that, Um, 0:01:39.440 --> 0:01:41.000 you know, this is the key thing, which is that 0:01:41.440 --> 0:01:46.440 traditional cryptocurrencies, they're designed to be decentralized permission lists so 0:01:46.480 --> 0:01:48.520 that I can send something to your design is an 0:01:48.520 --> 0:01:51.680 agent for criminals. This I just put it the nice way, 0:01:51.720 --> 0:01:54.480 but you put it the This is clearly not Morning TV. 0:01:54.600 --> 0:01:57.160 We're not nice. This is not designed for that. And 0:01:57.200 --> 0:02:01.080 they make very clear in the white paper and their 0:02:01.120 --> 0:02:04.440 documents that anyone dealing with this, any exchanges that listed 0:02:04.520 --> 0:02:09.320 wallets have to deal with traditional banking regulations, which means 0:02:09.360 --> 0:02:12.640 that it's much less like a traditional cryptocurrency as we 0:02:12.680 --> 0:02:15.120 know them, and much more like a lot of the 0:02:15.120 --> 0:02:19.840 payment apps that we use. Let's bring in yes, no, 0:02:20.040 --> 0:02:22.359 the nice one, the nice one who's in the doghouse, Joe, 0:02:22.360 --> 0:02:24.839 because I'm the one calling it prick cryptocurrency on air 0:02:24.880 --> 0:02:26.480 and Tom was like, no, it's not a currency. But 0:02:26.520 --> 0:02:29.320 actually what it means is I'm going to have a 0:02:29.360 --> 0:02:31.960 mobile phone. I'll be able to use a pacement system. 0:02:32.000 --> 0:02:34.440 So for the nerds out there, we can call it whatever, 0:02:34.480 --> 0:02:37.240 you know, the digital wallet package that Facebook is going 0:02:37.240 --> 0:02:39.960 to introduce, whatever Tom wants. But is it going to 0:02:40.000 --> 0:02:43.400 get traction? And when can you find out whether there's 0:02:43.400 --> 0:02:45.680 going to be traction? Isn't the first two months? Six months? 0:02:45.680 --> 0:02:47.720 Does it take longer? I mean, here's the thing, and 0:02:47.760 --> 0:02:50.160 this is the bold case, which is that there is 0:02:50.200 --> 0:02:54.600 no entity in the entire world that has Facebook size 0:02:54.760 --> 0:02:58.880 and global distribute and that is an enormous leg up. 0:02:58.919 --> 0:03:01.160 And so you have these aiment networks all around the 0:03:01.160 --> 0:03:05.160 world like and Paso or wheat Chad or Venmo or 0:03:05.200 --> 0:03:09.560 PayPal or whatever. It's fragmented. However, there's just no entity 0:03:09.600 --> 0:03:13.600 that exists that is huge virtually everywhere, essentially everywhere outside 0:03:13.600 --> 0:03:16.080 of China the way that Facebook is. So if you 0:03:16.080 --> 0:03:18.880 were able to layer on top of that a payment 0:03:18.919 --> 0:03:22.760 network in theory that could be really big and unify 0:03:22.880 --> 0:03:25.400 global payments in a way that nothing else quite has before, 0:03:25.520 --> 0:03:28.239 that would be I would say, is this right is 0:03:28.280 --> 0:03:30.680 this a medium for payments? Right? And if if it 0:03:30.760 --> 0:03:32.880 is a medium for payments, does it cut out the 0:03:32.919 --> 0:03:35.400 riff raff that Tom was talking about. I mean it 0:03:35.520 --> 0:03:38.600 is a medium for payments. It will attempt to cut 0:03:38.600 --> 0:03:41.280 out the riff raff because there's money backed up by 0:03:41.320 --> 0:03:45.400 traditional financial institutions. Because a libra is backed up by 0:03:45.520 --> 0:03:48.760 dollars and pounds and euros and yen or whatever in 0:03:48.760 --> 0:03:52.360 a bank, they're going to have to comply with traditional 0:03:52.440 --> 0:03:58.320 anti money laundering regulations, anti capital control or capital control regulations. 0:03:58.360 --> 0:04:00.800 If it were to turn out that well could use 0:04:01.160 --> 0:04:04.360 liber to evade these things, then I think regulators would 0:04:04.400 --> 0:04:08.280 attempt to shut down the project pretty quickly. Okay, but 0:04:08.280 --> 0:04:11.040 but I'm holding up in my phone, Joe Wist, I 0:04:11.040 --> 0:04:14.120 want to go to Sebastian galley on this zell from 0:04:14.160 --> 0:04:17.080 a bunch of banks. I can move money around already 0:04:17.080 --> 0:04:19.760 with banks. Why do I need this, Sebastian? Why do 0:04:19.800 --> 0:04:24.040 we need facebook coin? Because you want to avoid capital controls? 0:04:24.120 --> 0:04:28.039 And what when may happen? Is my words that continue. Yeah, 0:04:28.200 --> 0:04:30.839 it's not it's not pretty. In essence, it makes sense 0:04:30.839 --> 0:04:32.720 to have a unit of transaction, but that's called the 0:04:32.760 --> 0:04:34.720 dollar and that's what we use worldwide. So if you 0:04:34.800 --> 0:04:36.599 try to replace it by something else which is linked 0:04:36.640 --> 0:04:39.480 implicitly to the dollar, maybe so some other things you're 0:04:39.520 --> 0:04:42.440 trying to get some of that liquidity out. It might 0:04:42.520 --> 0:04:45.800 work in some small economies such as for example, you're 0:04:45.839 --> 0:04:48.160 sitting in Believia or something like this, there's a lot 0:04:48.200 --> 0:04:50.400 of demand for dollars, then that might be a lot 0:04:50.440 --> 0:04:52.839 of demand for lebos. Always gonna ask Mr Marcus today, 0:04:52.839 --> 0:04:55.000 I mean, I think the Bloomberg coverage and this has 0:04:55.040 --> 0:04:58.000 been very responsible. What are you gonna ask Mr Marcus today? 0:04:58.040 --> 0:05:00.480 I mean, I'm gonna ask him exactly about that. So 0:05:00.600 --> 0:05:06.120 if ah, someone in Bolivia or Venezuela or anywhere wants 0:05:06.160 --> 0:05:10.400 to obtain libra for the purpose of say moving money 0:05:10.440 --> 0:05:12.440 in and out of the country, of aiding in capital controls, 0:05:12.480 --> 0:05:14.880 whatever it is, how are they going to stop it? 0:05:14.880 --> 0:05:17.720 Will this currency be able to be used for that? 0:05:17.800 --> 0:05:20.360 Because if not, or if it can't be stopped, then 0:05:20.400 --> 0:05:22.800 I think the law enforcement in those countries is not 0:05:22.839 --> 0:05:25.840 going to be very happy. Joe. He's going to regulate 0:05:25.880 --> 0:05:28.440 this thing? Is that you know central banks? Is it? 0:05:29.240 --> 0:05:31.279 We don't know? Right? I mean, that is the Tacebook 0:05:31.320 --> 0:05:33.960 isn't going to regulate themselves, right, I mean that's the issue. 0:05:34.040 --> 0:05:37.240 So Tom held up his zel app, which is designed 0:05:37.279 --> 0:05:40.320 to be intro the U S and the regulative. It's 0:05:40.360 --> 0:05:44.400 designed to give money to children, but it's all based 0:05:44.440 --> 0:05:47.400 in US banks, and the regulators of a US based 0:05:47.440 --> 0:05:51.279 payment app are pretty straightforward. It's US regulators, it's the 0:05:51.320 --> 0:05:54.080 FED and so forth. But when you start thinking about 0:05:54.120 --> 0:05:56.280 how something like that could be made equivalent on a 0:05:56.320 --> 0:05:59.520 global scale, I think the regulatory thicket that Facebook and 0:05:59.640 --> 0:06:02.880 Bucking into is gonna be pretty unimaginable. Thank you so much. 0:06:22.800 --> 0:06:26.000 I think we need to find someone expert on monetary theory, 0:06:26.120 --> 0:06:29.200 linking it into the economy, linking it into what we 0:06:29.279 --> 0:06:32.279 do every day that also has a good understanding of 0:06:32.320 --> 0:06:36.799 Germanic culture and society, and possibly also as an expert 0:06:36.839 --> 0:06:39.920 on presidential tweets and and maybe worked at a central 0:06:39.920 --> 0:06:42.599 bank once upon a time. That would be good, fantastic bio. 0:06:42.760 --> 0:06:44.800 Please to say we found someone that fits it, ad 0:06:44.800 --> 0:06:48.920 impose it. Peterson Institute President. He joins us from Central Portugal. 0:06:48.960 --> 0:06:51.760 Good day to Adam's gonna have an empty office. Good 0:06:51.880 --> 0:06:55.480 day John, Good day, Good day Tom. Thank you can 0:06:55.520 --> 0:06:58.160 we start with the prospect of an emptier office over 0:06:58.200 --> 0:07:01.200 at the piece of Peterson Institute. It wasn't missed by 0:07:01.200 --> 0:07:04.800 many people that actually Olivia Blanche delivered the opening speech 0:07:05.400 --> 0:07:09.040 in Central Political yesterday evening Adam. There are some chats 0:07:09.120 --> 0:07:11.400 that perhaps he could be maybe in the running to 0:07:11.440 --> 0:07:14.440 be the next DCP president. Your thoughts on the Adam, 0:07:14.520 --> 0:07:18.200 He would obviously deserve it if they were willing to 0:07:18.320 --> 0:07:22.120 excuse me, if they were willing to consider academics. Um, 0:07:22.160 --> 0:07:25.200 but they're clearly not. It's it's clearly among people who 0:07:25.240 --> 0:07:28.119 are already central bank governors in the Eurosystem, or maybe 0:07:28.160 --> 0:07:32.640 deputy governors. So in an ideal world, yeah, I would 0:07:32.640 --> 0:07:35.360 give up the office of Olivier and or let him 0:07:35.440 --> 0:07:40.520 use my office to be west. But um, but that's 0:07:40.520 --> 0:07:45.320 not running. We have our textbooks, Dr Posen. None of 0:07:45.360 --> 0:07:48.080 what's on my Bloomberg screen is in the textbooks. And 0:07:48.160 --> 0:07:52.280 it's not funny. We've got an economic theory in search 0:07:52.320 --> 0:07:56.560 of a solution, butter stuff against the financial system in crisis. 0:07:57.200 --> 0:08:01.040 Are you surprised that we're back to queue ta contrast 0:08:01.040 --> 0:08:05.680 think whatever it is que five plus? Um, Yeah, I'm 0:08:05.720 --> 0:08:08.440 not surprised, Tom, because We've a number of us have 0:08:08.480 --> 0:08:12.200 been worrying rightly that when we get to the next recession, 0:08:12.240 --> 0:08:15.080 whatever it is, that there wasn't much room to do 0:08:15.160 --> 0:08:19.440 with normal interest rate cuts. And some of us at 0:08:19.520 --> 0:08:21.600 least have been arguing for some times that QUI should 0:08:21.600 --> 0:08:24.600 never have been as demonized as it was. The sad 0:08:24.680 --> 0:08:26.960 part is what you say. It's not even the YO curve. 0:08:27.040 --> 0:08:29.920 It's just at the ten year rate is so low, 0:08:30.640 --> 0:08:34.000 and as Larry Summers and others have argued, that represents 0:08:34.160 --> 0:08:37.320 just total lack of investment appetite, total lack of private 0:08:37.320 --> 0:08:41.080 sector growth momentum. I think that's the reality. That's not 0:08:41.160 --> 0:08:43.960 a monetary reality, that's an overall reality. And I mean 0:08:44.200 --> 0:08:46.520 you wanted to weigh in on the president's thoughts this morning, 0:08:46.559 --> 0:08:48.400 so for our listeners that might be just tuned in, 0:08:48.720 --> 0:08:51.760 I'll repeat the tweet from the president in the last hour. 0:08:52.080 --> 0:08:55.400 Mary drag just announced more stimulus could come, which immediately 0:08:55.480 --> 0:08:58.360 dropped the Europe against the dollar, making it unfairly easier 0:08:58.640 --> 0:09:01.160 for them to compete against the United States. They have 0:09:01.240 --> 0:09:03.800 been getting away with this for years, along with China 0:09:03.920 --> 0:09:08.439 and others. Adam, your thoughts, Yeah, it's it's about as 0:09:08.520 --> 0:09:13.000 unfounded as the average prisoner. Trump tweet regrettably, Um, you know, 0:09:13.200 --> 0:09:17.000 the US FED cut rates and did quee in two 0:09:17.040 --> 0:09:20.120 thousand eight, nine ten, and the rest of the world screamed, 0:09:20.160 --> 0:09:23.920 oh my god, Brazil, India, China, you're unfairly cutting the 0:09:24.080 --> 0:09:27.000 dollar against US. And no, they were just the US 0:09:27.040 --> 0:09:30.080 FED was doing the right thing, looking after its own economy. 0:09:30.240 --> 0:09:32.640 What the e c B did, it wasn't targeted at 0:09:32.679 --> 0:09:35.520 the U S. It wasn't targeted a trade. Was Mario 0:09:35.600 --> 0:09:39.720 draggy constraining his successor and setting forward the fact that 0:09:39.760 --> 0:09:44.080 the ECB will continue to pursue a reflationary policy. And 0:09:44.120 --> 0:09:45.880 I think that was exactly the right thing to do. 0:09:45.960 --> 0:09:47.719 And it would be much worse for the U S 0:09:47.760 --> 0:09:50.640 if you could if the EU didn't do that, if 0:09:50.640 --> 0:09:52.680 the Euro Area didn't do that and fell into trouble, 0:09:52.720 --> 0:09:55.360 you'd lose a lot more net exports to Europe and 0:09:55.400 --> 0:09:59.079 you lose a lot more asset values. I'm sorry just 0:09:59.120 --> 0:10:01.280 to jump in Sonia and we spoke Sebastian Galley of 0:10:01.280 --> 0:10:03.920 No Day Arrestment Management. That thinks perhaps the president isn't 0:10:04.040 --> 0:10:08.000 entirely off base. If we recall when the ECB adopted 0:10:08.040 --> 0:10:10.280 a negative deposit, right, it was to look at the 0:10:10.640 --> 0:10:13.360 X channel, and there's some belief this morning that maybe 0:10:13.360 --> 0:10:16.720 that's the primary tool once again to get inflation expectations higher. 0:10:17.120 --> 0:10:20.000 What are your thoughts on the ATOM. Well, they're not 0:10:20.120 --> 0:10:24.040 directly intervening, let alone manipulating currencies. They're setting a domestic 0:10:24.080 --> 0:10:27.200 monetary policy. If it has an effect on the exchange trade, 0:10:27.200 --> 0:10:29.440 it's then up to the Federal Reserve and the Bank 0:10:29.480 --> 0:10:31.400 of Japan and for that matter, the People's Bank of 0:10:31.520 --> 0:10:35.760 China to decide. Okay, given that the should we react 0:10:36.440 --> 0:10:40.760 and so there's nothing the ECB prevents other other central 0:10:40.760 --> 0:10:43.720 banks from loosening as well. And imposing whether this folks 0:10:43.720 --> 0:10:45.640 appears into the thrilled he could be with us, and 0:10:45.720 --> 0:10:48.000 we see markets on the move. A two year yield 0:10:48.000 --> 0:10:50.520 not back to a one eightiot but one point eight one, 0:10:50.840 --> 0:10:54.480 lowered by a solid six basis points. I'm watching. Yeah, 0:10:54.760 --> 0:10:58.120 it has not moved. That is the headline one O 0:10:58.240 --> 0:11:02.559 eight twenty nine. Slightly strong. Yeah, and adam posing within 0:11:02.800 --> 0:11:07.000 all of this talk of economics is the real economy 0:11:07.120 --> 0:11:09.720 in rule one Friedrich Kayak as you've got to clear 0:11:09.760 --> 0:11:12.520 out the debris. Maybe with Schumpeter, there's got to be 0:11:12.520 --> 0:11:16.200 a little bit of creative destruction of bad debt gone wrong. 0:11:16.480 --> 0:11:19.160 Are we suffering for the fact we haven't cleared out 0:11:19.480 --> 0:11:23.480 the ills of two thousand eight. I think we're suffering 0:11:23.840 --> 0:11:26.680 more from the fact that we started having ills in 0:11:26.720 --> 0:11:30.120 two thousand four. Toms as many people, including John Fernaldo 0:11:30.200 --> 0:11:32.360 used to be at the FED San Francisco, have argued, 0:11:32.960 --> 0:11:35.840 you know, the productivity growth rate in the US down 0:11:35.880 --> 0:11:38.440 shifted and in the rest of the Western world and 0:11:38.520 --> 0:11:42.520 Japan down shifted roughly around two thousand four, and we're 0:11:42.559 --> 0:11:46.240 still suffering for the fact that we haven't found something 0:11:46.280 --> 0:11:48.800 the next big thing in Michael Lewis terms to invest 0:11:48.840 --> 0:11:53.200 in and yeah, there's probably some some some detritus in 0:11:53.240 --> 0:11:57.520 the economy. But on the other hand, you've got monopoly 0:11:57.559 --> 0:12:01.760 oligopoly issues which are regulatory. They're not because of low rates, 0:12:02.320 --> 0:12:05.520 I think. So. I know people keep going back to that, 0:12:06.160 --> 0:12:08.560 But like a Neil cash App said at the FED 0:12:08.679 --> 0:12:11.120 conference in Chicago a week ago, I keep quoting people 0:12:11.160 --> 0:12:12.440 because I want to say I'm not out on a 0:12:12.480 --> 0:12:15.640 limb here. Uh, A new Caship of Chicago said, you know, 0:12:15.800 --> 0:12:18.640 we we had a supervisory regulatory problem. So let's do 0:12:18.679 --> 0:12:21.880 that better. Let's not screw around with monetary policy. Okay, 0:12:22.520 --> 0:12:25.760 when you look at the mix of Stewart in right now, 0:12:26.240 --> 0:12:29.839 it seems like it's a technology overlay that everybody's dealing with, 0:12:29.840 --> 0:12:32.640 whether it's Europe or the United States, and that do 0:12:32.720 --> 0:12:34.199 we just have to get used to one and a 0:12:34.240 --> 0:12:36.720 half percent growth? I mean? Is that? I mean in 0:12:36.800 --> 0:12:41.319 President Trump's defense is a politician, he can't he can't 0:12:41.360 --> 0:12:44.040 get elected on one and a half or even two 0:12:44.120 --> 0:12:48.480 point zero percent growth. Agreed, And in that sense, I'm 0:12:48.480 --> 0:12:51.040 not denying President Trump the right to complain and moan. 0:12:51.120 --> 0:12:53.760 I get nickers less in a twist about him yelling 0:12:53.800 --> 0:12:56.079 at the Fed than people do, because I remember past 0:12:56.120 --> 0:12:58.480 presidents yelling at the Fed as they didn't do things 0:12:58.480 --> 0:13:00.959 they like. So that's fine, that's fair game, as long 0:13:01.000 --> 0:13:03.480 as the markets and the average voter realized that's just 0:13:03.520 --> 0:13:07.520 a politician trying to increase his election chances. The important 0:13:07.520 --> 0:13:10.080 point is exactly what you said, Tom, that we are 0:13:10.200 --> 0:13:14.080 unfortunately going to have to continue to get adapt to 0:13:14.160 --> 0:13:18.080 a world where, for at least the foreseeable future, we're 0:13:18.120 --> 0:13:20.040 not going to be seeing an engine of growth like 0:13:20.120 --> 0:13:23.080 we did, and as Olivia Blanchard, who you mentioned not 0:13:23.160 --> 0:13:26.600 for ECB but for brilliant analysis, did with another colleague 0:13:26.640 --> 0:13:30.320 of ours. You know, Japan has coped, and part of 0:13:30.320 --> 0:13:33.960 how Japan coped is that that ongoing fiscal stimulus, ongoing 0:13:34.000 --> 0:13:37.400 easy money, because the alternative was a cratering Do you 0:13:37.440 --> 0:13:41.280 see evidence that your colleague Olivier Blanchard, who wants to 0:13:41.320 --> 0:13:44.400 goose things up to a four percent level, can that 0:13:44.559 --> 0:13:51.960 reflation end with economic growth? It can, It can't sustain 0:13:52.000 --> 0:13:55.080 it forever. I mean Olivier himself and certainly I and 0:13:55.160 --> 0:13:58.120 anybody else is not going to tell you that pure 0:13:58.160 --> 0:14:00.600 inflation is going to buy you anything. But what you 0:14:00.679 --> 0:14:04.119 can do is say, I'm not gonna worry about inflation 0:14:04.160 --> 0:14:07.440 in a world where there's so much deflationary low growth pressure, 0:14:07.720 --> 0:14:10.040 and I'm gonna try to push up growth through useful 0:14:10.080 --> 0:14:13.320 public investment. And as in the case of the e CP, 0:14:13.559 --> 0:14:16.600 to me, the biggest news from the Druggy statement was 0:14:16.640 --> 0:14:19.560 a very clear emphasis on a symmetric approach to the 0:14:19.640 --> 0:14:22.600 inflation target, that they'll have to overshoot someday to make 0:14:22.680 --> 0:14:25.720 up for the low inflation. Now, these are the elements 0:14:25.720 --> 0:14:28.480 of a sensible policy. Adam posing, thank you so much 0:14:28.520 --> 0:14:35.520 to thank you attitude for international economic We are thrilled 0:14:35.560 --> 0:14:39.000 to bring you a gentleman from a military family. Uh. 0:14:39.080 --> 0:14:41.440 And John McCain gets all the press of Late John 0:14:41.480 --> 0:14:44.960 McCain of Admiral's back fourteen generations. I think they were 0:14:45.000 --> 0:14:47.600 Bunker Hill or one of those battles. Is well. He 0:14:47.680 --> 0:14:51.240 has a grandson of Herbert McCrystal, with tours of duty 0:14:51.280 --> 0:14:53.960 including the Panama Zone. Your father was born in the 0:14:53.960 --> 0:14:56.640 Panama Zone. You did a number of tours of duty 0:14:56.640 --> 0:14:59.760 in Vietnam and then you wandered in and you be 0:15:00.040 --> 0:15:04.720 in a storied career, Generalman Crystal with the Special Forces? 0:15:04.840 --> 0:15:08.240 What was the first day like of Special Forces? And 0:15:08.360 --> 0:15:10.800 I believe Fort Bragg, Well, that's true. I left the 0:15:10.840 --> 0:15:13.400 eighty second Airborne as a lieutenant joined Special Forces and 0:15:13.440 --> 0:15:18.680 it was disappointing because this was and special Forces was 0:15:18.720 --> 0:15:21.400 a few years after Vietnam and it was a shadow 0:15:21.960 --> 0:15:25.200 of what it had rightly, and so I for much 0:15:25.200 --> 0:15:28.360 of my career was about rebuilding our special operating forces 0:15:28.440 --> 0:15:31.080 and watching what they to what they've become today. Edmirald 0:15:31.080 --> 0:15:34.040 Stravitas wrote a book about all you guys in your 0:15:34.080 --> 0:15:37.280 favorite books. What's the book right now the politicians need 0:15:37.280 --> 0:15:40.360 to read who were talking about military action in the 0:15:40.400 --> 0:15:43.240 Middle East, What's the book they need to read right now? 0:15:43.880 --> 0:15:48.240 That's great, that's a great question. Um, nothing jumps out 0:15:48.280 --> 0:15:50.880 of me, although I would probably read a book on 0:15:51.120 --> 0:15:53.880 World War two because when you talk about a war, 0:15:53.960 --> 0:15:56.080 you talk about something that's going to change the world, 0:15:56.160 --> 0:15:59.440 you better understand what it costs. Ed would be my 0:15:59.520 --> 0:16:02.600 choice or general. You've ented civilian life. You've not done 0:16:02.640 --> 0:16:05.000 what most generals do, which is going to advise companies 0:16:05.000 --> 0:16:08.320 and people and organizations on geopolitics. You're running your own 0:16:08.360 --> 0:16:12.360 firm and you're helping business understand the importance of leadership 0:16:12.440 --> 0:16:15.360 changing the hierarchy to better suit their needs. Walk us 0:16:15.400 --> 0:16:17.920 through your framework for thinking about this and what you're 0:16:17.960 --> 0:16:20.600 teaching people right now. It came from an experience that 0:16:20.680 --> 0:16:24.040 we had in Iraq where we had a purpose built 0:16:24.040 --> 0:16:28.120 counter terrorism force that was really operating our industrial age processes, 0:16:28.480 --> 0:16:31.760 top down command and control hierarchy, and we ran into 0:16:31.800 --> 0:16:35.200 a complex environment in which our kind of interac was 0:16:35.360 --> 0:16:38.680 very different. That's exactly what business is running into now. 0:16:38.680 --> 0:16:42.200 They're not competing against the big competitor they used to 0:16:42.200 --> 0:16:46.080 have their competing against a thousand linked together all the 0:16:46.160 --> 0:16:50.040 one consciously linked competitors from garages to small startups, and 0:16:50.080 --> 0:16:54.800 so as a consequence, size is no longer protection. It's 0:16:54.840 --> 0:16:57.160 not a mote to competition. So leaders have got to 0:16:57.520 --> 0:17:02.160 lead differently, organizations got communicate differently. Really, the core of 0:17:02.160 --> 0:17:05.920 this is about how you create shared consciousness in an organization. 0:17:06.280 --> 0:17:09.960 So the contextual understanding that used to be resident only 0:17:10.000 --> 0:17:12.840 in the C suite is now down everywhere, so you 0:17:12.840 --> 0:17:15.240 can make decisions closer to the point of action. You 0:17:15.280 --> 0:17:17.440 are a student of leadership. I hope you don't mind 0:17:17.480 --> 0:17:20.120 me saying so, both in terms of the military leadership 0:17:20.119 --> 0:17:23.040 and in terms of leadership in the business world. Who 0:17:23.080 --> 0:17:25.960 should we be learning from Well, I think first is 0:17:26.000 --> 0:17:30.239 go back and understand that leadership requires character. At the 0:17:30.359 --> 0:17:32.560 end of the day, if you don't have integrity, if 0:17:32.600 --> 0:17:34.520 you don't have the kinds of things that you can 0:17:34.560 --> 0:17:38.160 admire and trust, you're going to be building everything on 0:17:38.480 --> 0:17:41.800 a very weak foundation. I like to go back to 0:17:41.920 --> 0:17:46.840 leaders like uh Thomas Jefferson, George Washington, Abraham Lincoln. Those 0:17:46.840 --> 0:17:49.439 are the names we all know, but peel back some 0:17:49.560 --> 0:17:52.080 of the mythology about him and see how they really operated. 0:17:52.320 --> 0:17:54.119 The one who jumped out in our recent book is 0:17:54.160 --> 0:17:57.480 Martin Luther King Jr. Because although we think of him 0:17:57.520 --> 0:18:00.919 as this wonderful orator who stood on uh steps of 0:18:00.960 --> 0:18:03.400 the Lincoln Memorial in nineteen sixty three and give I've 0:18:03.480 --> 0:18:05.760 had a dream, actually he was a roll up your 0:18:05.800 --> 0:18:09.159 sleeves kind of leader who performed multiple roles for the 0:18:09.200 --> 0:18:12.120 civil rights movement that were very practical. He was jail 0:18:12.160 --> 0:18:16.400 twelve times, and so other than being a symbol, he 0:18:16.480 --> 0:18:20.040 was a practical leader who built teams. One final question 0:18:20.119 --> 0:18:26.000 general the attack jour is the offense against Iran. What 0:18:26.080 --> 0:18:33.120 does our naivete about defensing against or offensing against Iran? Yeah, 0:18:33.160 --> 0:18:36.720 I think Iran's behavior in the Middle East needs to 0:18:36.800 --> 0:18:39.520 be stopped and competed against. But if we talk about 0:18:39.600 --> 0:18:42.960 invading or starting a major warriors, talking about an action 0:18:43.000 --> 0:18:46.920 that would unite eighty million Iranians, they are a sovereign 0:18:47.000 --> 0:18:49.760 nation that would defend itself to the death, and so 0:18:50.119 --> 0:18:52.560 you have to ask yourself what comes next? You have 0:18:52.600 --> 0:18:55.840 a first strike, then what And so I think it's 0:18:55.880 --> 0:18:58.879 a much bigger prospect, and I'm not sure how it 0:18:58.920 --> 0:19:01.480 would end up. I'm sure that we could defeat Iran. 0:19:01.840 --> 0:19:03.560 But what we like there's a pentagon. I have a 0:19:03.640 --> 0:19:06.879 voice with this administration to address the then what's I 0:19:06.920 --> 0:19:09.600 can't speak from inside the room. I certainly hope that 0:19:09.640 --> 0:19:14.359 they do. General McCrystal, Thanks General, thank you. This morning, 0:19:15.800 --> 0:19:18.560 on the American economy, Lindsay Pegit joins us with stif 0:19:19.000 --> 0:19:21.119 Thrilled that she could join us this morning. Lindsey, I 0:19:21.160 --> 0:19:24.760 want to cut right to the chase. Your numbers for 0:19:24.800 --> 0:19:29.080 American economic growth? Can you make a forecast now? Or 0:19:29.160 --> 0:19:33.320 is it so jumbled your hesitant to look out one year? Well, 0:19:33.359 --> 0:19:35.399 it is difficult to look out one year because the 0:19:35.480 --> 0:19:38.800 data is not all pointing in one direction. But of course, 0:19:38.840 --> 0:19:41.520 to be fair, the data very rarely points in one 0:19:41.560 --> 0:19:44.280 direction to make it easy for economists. But what we 0:19:44.320 --> 0:19:47.960 do see is that there's very clearly evidence of the weakness, 0:19:48.359 --> 0:19:52.760 not just bubbling under the surface, but gaining momentum. Underneath 0:19:52.760 --> 0:19:56.960 the surface. We see business investment losing momentum, business confidence 0:19:57.040 --> 0:20:00.879 beginning to wane, manufacturing taking ahead. Even the consumer, with 0:20:01.000 --> 0:20:04.120 last week's better than expected retail sales report, is still 0:20:04.160 --> 0:20:07.800 on very uneven footing at best. So this is painting 0:20:08.080 --> 0:20:11.760 a pretty a pretty negative picture for the second quarter, 0:20:11.800 --> 0:20:15.000 particularly rested to that above trapped growth rate we saw 0:20:15.040 --> 0:20:17.320 at the start of the year. Lindsay, does the Federal 0:20:17.320 --> 0:20:21.840 Reserve disappoint tomorrow? Well, it's going to be very difficult 0:20:21.840 --> 0:20:24.000 for the Federal Reserve. I don't think that they change 0:20:24.119 --> 0:20:27.600 policy in any way, so keeping rates unchanged. But it's 0:20:27.600 --> 0:20:29.600 going to come down to the comments. It's going to 0:20:29.600 --> 0:20:32.240 come down to the tone of the statement, and if 0:20:32.240 --> 0:20:34.560 they failed to tweak at the tone to a more 0:20:34.680 --> 0:20:38.040 debbish position, that will disappoint the market. But I do 0:20:38.160 --> 0:20:41.960 think that Powell has at least opened the door for 0:20:42.040 --> 0:20:44.720 the conversation of a race. As we saw he removed 0:20:44.720 --> 0:20:47.640 that patient language from his earlier comments just a few 0:20:47.640 --> 0:20:50.000 weeks ago at that Fed Listens event. What is your 0:20:50.040 --> 0:20:55.520 twelve month forward economic growth? Is it above two? No? 0:20:55.640 --> 0:20:58.000 It's not. In fact, I don't think the longer run 0:20:58.840 --> 0:21:02.040 growth rate for the account is above Okay, what's your 0:21:02.080 --> 0:21:05.280 number for twelve months forward? I think that we're looking 0:21:05.359 --> 0:21:08.320 at one five percent? Okay, fine, that's the JP Morgan's 0:21:08.320 --> 0:21:12.959 with Lindsay, I like that. Great. What is Powell waiting for? 0:21:13.040 --> 0:21:15.920 I mean, I sound like President Trump. But if you're 0:21:16.040 --> 0:21:20.760 modeling and other adults are modeling, lindsay sub two g 0:21:20.880 --> 0:21:25.920 d P, why why do they need to be patient? Well, 0:21:26.119 --> 0:21:29.640 I think the sun has a historical position of waiting 0:21:29.800 --> 0:21:33.240 until the data very clearly shows that the economy is 0:21:33.320 --> 0:21:36.080 essentially falling off of a cliff. But we also know 0:21:36.200 --> 0:21:39.960 that historically the said weights too late and then when 0:21:39.960 --> 0:21:42.600 they begin to cut rape, they're unable to stave off 0:21:42.600 --> 0:21:45.359 that weakness. So I'm not sure if the fund is 0:21:45.359 --> 0:21:50.200 relying on very antiquated models that's telling them to take 0:21:50.240 --> 0:21:52.560 this more patient stance, or this could be more of 0:21:52.560 --> 0:21:55.600 a political posturing. They don't want to be seen as 0:21:55.680 --> 0:21:59.040 cowing to the whims of the market or political pressures 0:21:59.040 --> 0:22:02.160 out of the administration in lindsay, did President dragging ramp 0:22:02.240 --> 0:22:05.000 up the pressure for chair and power tomorrow or did 0:22:05.000 --> 0:22:06.520 he reduce some of it? How do you frame that 0:22:06.560 --> 0:22:10.800 this morning for our listeners? Well, it's uh, it's difficult 0:22:10.800 --> 0:22:13.639 because the ECB is certainly taking a much more a 0:22:13.680 --> 0:22:17.679 patient stance without even using the word patient. And so 0:22:17.720 --> 0:22:19.359 I do think that when we look out to our 0:22:19.400 --> 0:22:22.440