Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: with David Gura. Daily we bring you insight from the
Speaker 1: best of economics, finance, investment, and international relations. Find Bloomberg
Speaker 1: Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course,
Speaker 1: on the Bloomberg. Ben burn Anaki needs no introduction. Yes,
Speaker 1: the former chairman of the Fellow Reserve. But not only that,
Speaker 1: but one of our frontline academics. A little did we know,
Speaker 1: A wonderful author. His book, Encouraged to Act, starts quickly
Speaker 1: and moves ever forward breathlessly through the crisis that we
Speaker 1: have all lived and the aftermath as well. He's out
Speaker 1: now with a new addition paperback, perfect for beach reading,
Speaker 1: and it's got a new after the word as well. Ben. Congratulations,
Speaker 1: I know you've done the interview circuit. I want to
Speaker 1: dive into a longer, more thoughtful conversation about many of
Speaker 1: these themes. Let me first begin with the emotion you
Speaker 1: capture at the beginning of the book. Anybody in the
Speaker 1: racket of business journalism knows the name Michelle Smith. She's
Speaker 1: the keeper of the gate. She guards the lock and
Speaker 1: key at the fed. If you don't get along with
Speaker 1: Michelle Smith, you don't talk to anyone. You open your
Speaker 1: book with you exhausted in an office with Michelle Smith.
Speaker 1: Tell us about that moment where you really finally hit
Speaker 1: the wall in this crisis. Well, Michelle Smith was also
Speaker 1: functioning to my chief of staff and general advisor. And
Speaker 1: that was the day that UM we had decided to
Speaker 1: to uh intervene with a I G. And it was
Speaker 1: an enormously risky situation. I had been earlier that day
Speaker 1: to Congress. I talked to a group of senators and
Speaker 1: representatives and they basically made it clear that we were
Speaker 1: on our own, that whatever we did was our responsibility
Speaker 1: and our call. And of course, this was a couple
Speaker 1: of days after after Lehman, and the financial system was
Speaker 1: in in shock, essentially, and it required an unanimous vote
Speaker 1: to take the actions we did, which was eventually to
Speaker 1: lend eighty five billion dollars today i G. So it
Speaker 1: wouldn't collapse, and so I could have stopped it, but
Speaker 1: you know, we thought it was the right thing to do,
Speaker 1: and and we went ahead and did it. But it
Speaker 1: was perhaps the darkest one, or at least certainly one
Speaker 1: of the darkest moments. From there on things began to
Speaker 1: look better, But certainly there was some very dark moments.
Speaker 1: That's all sorts of hindsight going on here. I remember
Speaker 1: being trend fixed at a fancy Bloomberg chart, watching bear
Speaker 1: Stearns go down in flames, and we all have our
Speaker 1: individual uh moments here. Not when did you know it
Speaker 1: was all clear? But from those dark moments, where did
Speaker 1: you get the confidence that the theory and the foundations
Speaker 1: that you had learned at M I T and onto
Speaker 1: your teaching career at Stanford Princeton. The other is when
Speaker 1: did it click in that you may get this right? Well,
Speaker 1: I think I understood the crisis. The crisis it was
Speaker 1: about some prime mortgages, about all these things, but it
Speaker 1: was basically a panic. It was a financial panic, very
Speaker 1: analogous to the runs on the banks we saw in
Speaker 1: the nineteenth century or in the depression, but it was
Speaker 1: an electronic panic. So everyone was in the sense that
Speaker 1: the short term funding of the system, through the repo
Speaker 1: market to the commercial paper market was all being withdrawn.
Speaker 1: Everything was freezing up. And you know, I'd seen the
Speaker 1: analogy to the earlier panics, and I unders I think
Speaker 1: I understood in principle at that point how we were
Speaker 1: going to comment, how we were going to stabilize the situation.
Speaker 1: But the politics was difficult, as you know, even after
Speaker 1: even after leaving failed, it took quite a while to
Speaker 1: get Congress to act. Took two tries before they would act.
Speaker 1: I think the passage of the Top Bill, the the
Speaker 1: Troubled Asset Relief Program, which provided money to stabilize recapitalize
Speaker 1: the banking system. And then there was a meeting in
Speaker 1: October of the of the g G seven in Washington
Speaker 1: where we met with the finance ministers and central bank
Speaker 1: governors of the other major industrial powers. And there was
Speaker 1: a sense of that meeting that we had to work together,
Speaker 1: you know, hanging together or hang separately at that point,
Speaker 1: and I talked about it in my in my book,
Speaker 1: and between that resolution in Washington and then collectively among
Speaker 1: the G seven that we were gonna do what it took.
Speaker 1: To use Mario drag famous phrase, I thought from there
Speaker 1: that we were going to find our way out, but
Speaker 1: it was still very tricky. It's such a luxury of
Speaker 1: a longer conversation with Ben Bernankey. We're going to touch
Speaker 1: on a number of the themes that we've got going
Speaker 1: on right now. And of course we will avoid, as
Speaker 1: we always do with any former FED official, the immediate
Speaker 1: talk as we go to the FED meeting this afternoons.
Speaker 1: I'm not gonna ask Ben Bernanke about how many interest
Speaker 1: rates will they do this year? Anything like that. That's
Speaker 1: part of the rules of the game. One of the
Speaker 1: joys is is to look back at your former speeches.
Speaker 1: I want to speak about the structure of the FED,
Speaker 1: and this goes back to your speak fifteen years ago
Speaker 1: almost now with Milton Freeman and presence his ninetie birthday.
Speaker 1: It's a great speech about something you're really good at,
Speaker 1: which is depression history. But at the end of it
Speaker 1: you talk about then, which is exactly like now, this
Speaker 1: uncertainty of FED leadership. Benjamin Strong in the Depression has
Speaker 1: the audacity to get sick and die, and you make
Speaker 1: clear they never recovered. Do we face that now with
Speaker 1: this this new administration into multi talk about John Taylor,
Speaker 1: they talk about Glenn Hubbard, but they talk about other
Speaker 1: names as well that don't have your pH d jobs.
Speaker 1: Do we have a risk of a leaderless FED with
Speaker 1: President Trump? Well, I think it's presumption is to say,
Speaker 1: we don't know who he's going to appoint. He could
Speaker 1: conceivably reappoint Jenny Yellen, which I think would be from
Speaker 1: his perspective, would be to reappoint Cherry Yellow. Jerry Yellen
Speaker 1: would be certainly, from his perspective, a very reasonable sensible
Speaker 1: thing to do. She's obviously highly competent, she's done a
Speaker 1: good job, she's got the confidence of the markets. But whoever,
Speaker 1: whoever is appointed, I'm sure will certainly work carefully with
Speaker 1: the rest of the FMC. And there's a reason why
Speaker 1: there's so many people on the Federal Market Committee making
Speaker 1: those decisions, including seven members of the board and then
Speaker 1: high quality staff which provides a lot of guidance and help.
Speaker 1: So I don't think we're quite in the situation by
Speaker 1: any means, And of course very hopeful that that um
Speaker 1: they will appoint, if not Janet Yell, and if they
Speaker 1: will appoint somebody strong and kind competent with within that
Speaker 1: is this sharp debate within the business media, and I
Speaker 1: would suggest with an economics as well, where if you've bet,
Speaker 1: I'm gonna pick on Gary Khne of the of the
Speaker 1: Trump administration. With great respect for Mr Kohn's abilities. Do
Speaker 1: you need to have a PhD in economics? You need
Speaker 1: to be a front line academic out of m I
Speaker 1: t give me presumptuous to say that. I mean Paul
Speaker 1: Looker does not have a PhD. He was obviously very
Speaker 1: familiar with monetary policy and the FED, having been in
Speaker 1: the system for a number of years, and obviously new markets. Uh. Well,
Speaker 1: so I think there's a range of skills that you
Speaker 1: can have. But obviously you also have to be at
Speaker 1: least familiar obviously with monetary policy and how it works
Speaker 1: and what some of the issues are and and there
Speaker 1: are important technical components to it. But but leadership is
Speaker 1: not constrained by a narrow set of skills. There's there's
Speaker 1: I think different types of backgrounds that could generate create
Speaker 1: a good fair chair. But it is important, obviously to
Speaker 1: know a lot about monetary policy and the financial system.
Speaker 1: What do you envision that our vice chairman of what
Speaker 1: I'm gonna call generally regulation will do? This is a
Speaker 1: new position. There's talk Randy Coral's name, among others, has
Speaker 1: come up for a more regular I think it's it's
Speaker 1: not the romance of the FED that we cover Bloomberg
Speaker 1: and within all of business economics. What do you envision
Speaker 1: that job to be for that new kind of vice chairman. Well,
Speaker 1: it's a very important job obviously because, as they say,
Speaker 1: personnelitis policy and so even if the regulatory structure is
Speaker 1: only moderately changed, is not substantially changed the way it's
Speaker 1: applied in executable man are a lot in practice. So uh,
Speaker 1: you know, the people they've talked about generally are people
Speaker 1: who are I think highly qualified. I've had a lot
Speaker 1: of background in financial regulation. But it's also important to
Speaker 1: get somebody who will take very seriously. What I think
Speaker 1: we kind of learned from the from the Great Crisis
Speaker 1: was that it is not enough to be looking at
Speaker 1: individual banks and at the individual components of the system.
Speaker 1: Somebody has to think hard about the stability of the
Speaker 1: system as a whole. And that was something that really
Speaker 1: was course brought home to us when the system as
Speaker 1: a whole went into shock in two thousand eight. So, uh,
Speaker 1: that person will have a very important role coordinating with
Speaker 1: other regulators, the ft i C and other agencies trying
Speaker 1: to make sure not only are banks individually stable, but
Speaker 1: is the system as a whole resilient for the next
Speaker 1: shock that will come. One more question, and we look
Speaker 1: back to things we've learned. Another crisis, within the depression,
Speaker 1: within the great contraction, as many have called it, there's
Speaker 1: this single idea that we had to keep the banks afloat.
Speaker 1: This has been a great theme of yours. What's so
Speaker 1: interesting is you're in speech. If you don't go back
Speaker 1: to nineteen twenty nine, you go back to challenges of
Speaker 1: nineteen eight. Do you worry that right now we have
Speaker 1: any of the precursors or setups, not of the hysteria
Speaker 1: of a depression, but of nineteen eight when everything was perfect,
Speaker 1: and yet it wasn't. Wasn't, No, it wasn't. I wouldn't
Speaker 1: say so. I see strong parallels there, and among other things,
Speaker 1: the FED is in a much better position, and I
Speaker 1: think it's much stronger, smarter than we used to be. Well,
Speaker 1: one hopes so, One hopes so. You know, sometimes sometimes
Speaker 1: things go in cycles, but certainly our financial system is
Speaker 1: a lot stronger. And one of the problems of the
Speaker 1: thirties was that the FED, which was at that point
Speaker 1: it was very young institution and only been created in
Speaker 1: nineteen fourteen, essentially uh and one of its its objectives
Speaker 1: was to help maintain stability in the banking system. It
Speaker 1: did not succeed in doing that, and in the United States,
Speaker 1: something like eight thousand banks failed in the nineteen thirties,
Speaker 1: which not only had menacing negative impacts on the money supply,
Speaker 1: but also in credit as you would imagine. And one
Speaker 1: of the lessons we took in the financial crisis of
Speaker 1: two thousand and eight was that the financial system is
Speaker 1: a critical input to the health of the economy as
Speaker 1: a whole. You can't let it collapse because it will
Speaker 1: bring down the rest of the economy. And I think
Speaker 1: that was certainly something we learned with the benefit of
Speaker 1: hindsight seeing what happened in the nineteen thirties. If you're
Speaker 1: just joining us on Bloomberg Television and Bloomberg Radio, lengthy
Speaker 1: conversation with a former chairman of the Third System, Ben Bernanke.
Speaker 1: The book is The Courage to Act. It is out
Speaker 1: with a new afterward where he speaks uh interestingly and
Speaker 1: I would say, perhaps sharply about the president administration and
Speaker 1: their view for it will get to that in a moment.
Speaker 1: I want to talk about investment. It's a theme that
Speaker 1: constantly occurs with another work that all of our economic
Speaker 1: team does. It's why equal see plus I plus G
Speaker 1: plus annex and I isn't there. In oh seven o eight,
Speaker 1: Ken Rogolf identified this to me. Bill Pole identified this
Speaker 1: to me. Now everyone knows that where is the investment?
Speaker 1: What the mystery of the lack of investment? Now? Well, Uh,
Speaker 1: it has been weaker than we would like capital investment,
Speaker 1: new factories, new buildings and so on. UM, it hasn't
Speaker 1: been catastrophically bad, but certainly should should be better. And
Speaker 1: that would be better not only in terms of driving demand,
Speaker 1: you know, for for output, but also in creating more
Speaker 1: capacity and increasing productivity and helping us grow more in
Speaker 1: the long run. UM. I think you know, Larry Summers
Speaker 1: talks about secular stagnation, and I have some sympathy with that.
Speaker 1: I have some other thoughts about that. But but there
Speaker 1: is some evidence that around the world that U there's
Speaker 1: a lot of savings looking for good investments to make UM.
Speaker 1: But for variety of reasons slower growth, slower growing labor force, UH,
Speaker 1: relatively weak productivity gains, and advanced industrial economies, that the
Speaker 1: number of strong capital projects that pay a high return
Speaker 1: is just limited and with the amount of saving that
Speaker 1: we see looking for returns that's driving down the olds
Speaker 1: keeping interest rates a little globally. Uh, we have to
Speaker 1: look for new sources of growth, new industries, new technologies,
Speaker 1: those things are becoming I think, which is why I
Speaker 1: don't buy secondistagnation as a permanent situation. But right now,
Speaker 1: and partly because of the after effects of course of
Speaker 1: the crisis itself. Uh, we just we just don't have
Speaker 1: the opportunities out there that that we would like. Can
Speaker 1: there be a policy prescription to jump start investment that
Speaker 1: is modern and forward looking, or do we risk having
Speaker 1: a nostalgic investment where we build you know, as they
Speaker 1: did in Japan years ago, bill roads. Well, those there's
Speaker 1: different There's there's different elements. There's cost, the capital and
Speaker 1: tax policy obviously know it's got a discussion about core protectorates.
Speaker 1: There is technology. We need to continue to support technological
Speaker 1: advance and the adaptation of new technologies into commercial purposes.
Speaker 1: Um skilled workers to provide complements to those uh, to
Speaker 1: those uh investments. Uh. Even you mentioned roads and buildings,
Speaker 1: you know, in the United States, I don't think we're
Speaker 1: quite in the state where we couldn't benefit from some
Speaker 1: improved infrastructure in New York as well. I mean, you know,
Speaker 1: you were talking the other day about how long it
Speaker 1: took you to get from Washington hosts DC l G
Speaker 1: A fix. If you want you want people spend less
Speaker 1: time in traffic jams and uh less time traveling from
Speaker 1: city to city, which is the detriment to productivity, then
Speaker 1: you know infrastructure is is one way to prove that
Speaker 1: to mension, so that there's a number of different things
Speaker 1: that can can can help. But it's a slow process.
Speaker 1: You can't expect people make firms make capital investments over five, ten,
Speaker 1: twenty year horizons. You can't expect everything to turn on
Speaker 1: a dime. But I'm hopeful that there will be some
Speaker 1: improvement in that. I had the clearest memory Chairman Bernanke,
Speaker 1: Chairman Greenspan, not baffled but almost bewildered by the buoyant
Speaker 1: productivity of another time and place. Every chairman of a FED,
Speaker 1: all with courage to act, are their productivity cards. Cherry
Speaker 1: Yelling has been out a very tough deck on productivity.
Speaker 1: It's a mischief. Speaking with my colleague Michael McKee about this,
Speaker 1: it is at the top of Mike mckey's list, capital dynamics,
Speaker 1: labor dynamics, and with a great honor to Robert Solo,
Speaker 1: this odd thing off to the right side of the equation.
Speaker 1: What is wrong with America's productivity right now? Well, some
Speaker 1: of it may be after effects of the financial crisis.
Speaker 1: After all, the crisis led to a fewer startups of
Speaker 1: new firms. Let's venture capital, less r and D, less
Speaker 1: capital investment, all those things that generate productivity over time.
Speaker 1: I think we're moving away from that now. It's almost
Speaker 1: a decade since since the crisis. The other thing is
Speaker 1: the line pursued by Bob Gordon, you know his work
Speaker 1: on to Rise and Fall of American Growth, and he
Speaker 1: argues that the period after World War Two, the fifties
Speaker 1: sixties was kind of unusual period. There was a lot
Speaker 1: of catch up after World War two. Um, a lot
Speaker 1: of transformation is happening in the American economy, which we're
Speaker 1: not quite seeing that degree of change at this time.
Speaker 1: And so the slower productivity gains are just reflecting the
Speaker 1: fact that technology comes and eds and flows. You mentioned
Speaker 1: Greenspans technology boom in the nineties. That was a period
Speaker 1: where the new I T revolution. Information technology revolution was
Speaker 1: really first having its big impact on productivity from areas
Speaker 1: from office work to retail, you know, to engineering. Um
Speaker 1: that seems to have slowed in two thousand five. Appears
Speaker 1: by that time that a lot of that first wave
Speaker 1: of I T productivity had been absorbed. It may we
Speaker 1: may get another wave, but at the mother we're kind
Speaker 1: of in a little bit of a flat spot. Within
Speaker 1: this flat spot of productivity is the clearly, with Mr
Speaker 1: Trump doing so well in Senator Sanders and the populism
Speaker 1: and other elections around the world, there's a primal scream
Speaker 1: to do something about how do you lift wages? Where
Speaker 1: does wage growth? Where does that sense as Mr Gordon
Speaker 1: talked about with a wonderful twining center that you and
Speaker 1: I live, Where does that prosperity come from? Well, it's
Speaker 1: not just prosperity. I think there's an interesting in the
Speaker 1: following sense. There's an interesting paradox, which is that if
Speaker 1: you look at the economy as a whole, you talk
Speaker 1: about the unemployment rate and job creation and GDP growth
Speaker 1: and all those things. You know, the recovery has been
Speaker 1: pretty good overall unemployments for and a half percent, we
Speaker 1: created sixteen million jobs. But then, of course Donald Trump
Speaker 1: was elected president because a lot of people are very dissatisfied.
Speaker 1: So it's not just the overall strength of the economy
Speaker 1: with the United States is frankly the envy of a
Speaker 1: lot of other economies in the world, but the fact
Speaker 1: that those games are not being broadly shared, that social mobility,
Speaker 1: upward mobility is is not what it was forty or
Speaker 1: fifty years ago in the United States. So a big
Speaker 1: part of the overall growth picture is also trying to
Speaker 1: make sure that everyone is contributing, everyone is sharing in prosperity.
Speaker 1: I think that is that is where we have fallen down,
Speaker 1: where we have not helped provide the opportunity that that
Speaker 1: we need. Is it a cultural dearth of productivity? Page five,
Speaker 1: eighties six? Here this so it's five eighties six, and
Speaker 1: it reads faster than that. It's not more in peace,
Speaker 1: don't be don't be afraid, Bernankee. I called on Congress
Speaker 1: to increase spending or cut taxes, or at least to
Speaker 1: avoid new austerity. Are we victims of our cultural economics,
Speaker 1: almost our cultural religion where we can't spend money when
Speaker 1: we need to? What it's it's ironic because of course
Speaker 1: now we're talking about big tax cuts. You know, from
Speaker 1: at least from the perspective of putting people back to work,
Speaker 1: it would have made more sensitive had more tax cuts
Speaker 1: and more spending twelve, which is when I was asking
Speaker 1: for that. I think that from at least from that perspective,
Speaker 1: with unemployment at four and a half percent, the case
Speaker 1: today is a little weaker. Although there's always a case
Speaker 1: for improving the quality of the tax colle making it
Speaker 1: more the fish and fair simple and so on. But
Speaker 1: in terms of adding demand to the economy, you know
Speaker 1: that that would have been a little bit better a
Speaker 1: few years ago. Let's make some news. Here are these
Speaker 1: tax cuts, tax cuts you can support is proposed, and
Speaker 1: particularly are these tax cuts within a gilded age where
Speaker 1: all those benefits go too narrowly to the affluence. Well,
Speaker 1: if I talk about the proposal, the income tax proposal
Speaker 1: for personal income, I guess I have a couple of concerns.
Speaker 1: One is that it is more demand side, I think
Speaker 1: oriented than supply side. That is, it's going to generate
Speaker 1: more consumer spending. It's not obvious it's going to increase
Speaker 1: the potential of the economy very much and as they're saying,
Speaker 1: four or five years ago, we could have used more
Speaker 1: demand side uh stimulus. Today it's not as obvious that
Speaker 1: we do need that. The other aspect of it, uh
Speaker 1: is that has written down. Of course we don't know
Speaker 1: the details. That appears like it would create a bunch
Speaker 1: bigger deficit. I'm not opposed to increasing depths under our
Speaker 1: circumstances by any means. But if we're going to increase
Speaker 1: the depthit, why not think about improving the efficiency of
Speaker 1: the corporate tax code or doing infrastructure that I think
Speaker 1: would have more direct effects on supply potential output than
Speaker 1: personal tax You didn't suffer the pain of working at CBO, right,
Speaker 1: Uh No, But I was in the White House for
Speaker 1: a while and I had my connections with o MB
Speaker 1: that officers and management budget. Do you have in your
Speaker 1: head a deficit to GDP percent? Where for ben Burn
Speaker 1: Nankey it becomes problematic? Is it five right now? Folks
Speaker 1: worth three give or take a little five? Does does
Speaker 1: your caution click in at six percent? Where is it? Well?
Speaker 1: I think that what the way I think about this
Speaker 1: is the CBO, the Professional Budget Office, does these um
Speaker 1: projections of the debt and the depths out for years,
Speaker 1: and so I think about it that way. I mean,
Speaker 1: I think you can always have I was supportive of
Speaker 1: the fiscal program in two thousand nine in the depth
Speaker 1: of the recession, where where because the recession was so
Speaker 1: bad we needed some fiscal stimulus that a big deficit
Speaker 1: was kind of inevitable at that point. So I tend
Speaker 1: to think about the longer term perspective, and so how
Speaker 1: much will changes in paul See effect that longer term trajectory.
Speaker 1: And by the way, I think one of the key
Speaker 1: elements to that is really what's going to happen to healthcare.
Speaker 1: Not that I really want to get into the deep
Speaker 1: details of healthcare policy, but but uh, the federal government,
Speaker 1: which some people have described as being an insurance company
Speaker 1: with an army, you know, that's basically the two things
Speaker 1: it does. It It ensures people for health and retirement,
Speaker 1: and it and runs the military. Um, if if the
Speaker 1: cost of healthcare in our aging society continue along the
Speaker 1: lines we you know, we've seen in the past few decades,
Speaker 1: that's gonna be a huge fiscal burden. Years ago, I'm
Speaker 1: gonna go I'm gonna take debate, folks. Here we go
Speaker 1: on healthcare, which is the theme in Washington this afternoon.
Speaker 1: It was sevent of GDP. It's ridiculous how much more
Speaker 1: we spend in every other prosperous nation in this world.
Speaker 1: Would you suggest that the Affordable Care Act, Obamacare or
Speaker 1: trump Care can lower that contribution to GDP of healthcare, Well,
Speaker 1: there's been some success on that in the last few years,
Speaker 1: and that the rate of growth of healthcare costs is
Speaker 1: diminished somewhat. But the quite honestly, the focus of both
Speaker 1: Obamacare and and some of the proposals here are more
Speaker 1: about coverage. I mean, how many people are covered and
Speaker 1: at what cost, and the tough decisions about quality, what
Speaker 1: we're gonna pay for, how much is gonna cost. That
Speaker 1: that's there, but it hasn't gotten as much attention as
Speaker 1: the coverage. To take a memo, we're going to a
Speaker 1: three hour and maybe we got too many things to
Speaker 1: talk about here today. A couple more minutes with Ben
Speaker 1: Berniky here, and we're gonna come back on some important themes,
Speaker 1: including the idea of the FED banalance sheet, which I
Speaker 1: know is really front and center. I was talking to
Speaker 1: our Brendan Murray and he talks about the complacency that's
Speaker 1: out there, the quiet that's out there without reporting every
Speaker 1: day at Bloomberg, Are you worried that we're lulling ourselves
Speaker 1: into being not careful with our economic thought? Is it
Speaker 1: just too quiet up there right now? Well, you know,
Speaker 1: markets are are pretty quiet, the volatility indicators are pretty low,
Speaker 1: and I don't feel understand it. Certainly the world is
Speaker 1: is a dangerous place in some dimensions. Certainly, Uh, there
Speaker 1: there's no shortage of geopolitical concerns. Uh, you know, from
Speaker 1: North Korea, you know, to the Middle East. Um, But
Speaker 1: markets so far don't order politics. So we're seeing, for example,
Speaker 1: in Europe to market so far, I've kind of dismissed
Speaker 1: those things. That's interesting you make of that. And for
Speaker 1: the haves, those that have assets and are in the game,
Speaker 1: not the people that feel so removed and disaffected. There's
Speaker 1: just the quiet to what's going on. Yeah, No, I
Speaker 1: don't really have a great explanation for it. I think
Speaker 1: that the good news is that, you know, while a
Speaker 1: lot of the increase in market valuations in the last
Speaker 1: six months or four months came about because of of
Speaker 1: the reaction that there was going to be some kind
Speaker 1: of Trump Bool, which so far is not obviously materialized,
Speaker 1: and it looks to be pushed further out in the future.
Speaker 1: Uh not all of it is not all the market
Speaker 1: reactions due to expectations about President Trump's policy. Some of
Speaker 1: it is due to the fact that it's has been
Speaker 1: a some of better tone globally. I mean, we've seen
Speaker 1: a little bit better tone in in Europe, a better
Speaker 1: tone in China. And that's that. That has made people,
Speaker 1: I guess a little more comfortable because you and I
Speaker 1: use kufuls or slide rules. Remember you had a slide
Speaker 1: rule and it was a pain. You couldn't figure out
Speaker 1: how to use it. And one day this magical thing
Speaker 1: showed up, a Hewlett Packard calculator. Remember the first rich
Speaker 1: kid in your class, so that want to yeah, and
Speaker 1: you know everybody the rich kids had him. It was like,
Speaker 1: one day I'll have this too. That technological progress that
Speaker 1: you and I lived in many others, that many of
Speaker 1: our viewers and Bloomberg people lived, is that really what's
Speaker 1: going on now is a technological progress that is only
Speaker 1: advantage to a certain group of people versus a broader
Speaker 1: part of society. Well, I don't know. I mean, everybody
Speaker 1: has a cell phone, or a large number of people
Speaker 1: have cell phones, even an emerging markets. So some of
Speaker 1: the some of these technological things are helping the advances
Speaker 1: are helping a lot of people. I think it is
Speaker 1: true that that there's a bit of a paradox again
Speaker 1: that we talked about all these amazing advances in communications
Speaker 1: and artificial intelligence and so on, but overall productivity just
Speaker 1: isn't doing very much. And I think the truth is
Speaker 1: that outside of some areas like communications like social media,
Speaker 1: that the technological opportunities we see out there have not
Speaker 1: yet really you know, completely diffused into our economy, and
Speaker 1: that that's a potential for the next couple of decades.
Speaker 1: Now we're gonna come back with Ben Bernankey in support
Speaker 1: of the Courage to Act. It was hugely successful and
Speaker 1: hardcover now out in paperback with a new Afterward, we're
Speaker 1: gonna come back and talk about the immediate issues of
Speaker 1: the Feller Reserve. No, not the meeting today, that's not
Speaker 1: fair game. But yes, we will talk about the balance
Speaker 1: sheet as well. Right now, the joy before our FED
Speaker 1: meeting is a conversation where the former Feller Reserve System
Speaker 1: chairman Ben bernanke he is out with a courage to act,
Speaker 1: hugely received in a hardcover here a year ago, maybe
Speaker 1: fourteen months ago, and now on paperback with a new
Speaker 1: biting afterward about the events of his Washington Now he's
Speaker 1: of course been at the Brookings Institution writing must read
Speaker 1: blogs on a really accessible theory that's on the edge
Speaker 1: of Milton Freedman. I mean, I remember Milton Friedman when
Speaker 1: we were kids writing newsweeks. Are you enjoying grinding this
Speaker 1: out or is this David Wessel beating you every Wednesday?
Speaker 1: And get the note I do try to get to
Speaker 1: get out something else in a while. It's a it's
Speaker 1: a public service. Let's go right to it right now.
Speaker 1: I'm not going to ask you about silly Fed immediacly,
Speaker 1: but I am going to ask you about the FED
Speaker 1: balance sheet. You've written about this. I would suggest it
Speaker 1: is a fear in some camps, bordering on the sterea.
Speaker 1: And you seem to face this debate about lowering the
Speaker 1: FED balance sheet the balloon up during the crisis. You
Speaker 1: seem calm about it. Are you calm about it? In
Speaker 1: actually might calm? I mean, I think they're legitimate questions
Speaker 1: about how big it should be ultimately, and we can
Speaker 1: talk about that, of course, but but there seems to
Speaker 1: be no concern, certainly not much visible in markets that
Speaker 1: the unwinding part is going to be very difficult. Uh.
Speaker 1: The whole strategy the FED is basically two Uh. At
Speaker 1: some point stop reinvesting maturing securities and let it run
Speaker 1: off in a very quiet, passive way. And I suspect
Speaker 1: that will be received pretty well when the concision of
Speaker 1: your thought, what you lead to always is within the
Speaker 1: paragraph distinctions, and you've got an important distinction within the
Speaker 1: balance upward. Educate our audience about the word to shrink
Speaker 1: passively and that there's different ways to shrink, and you
Speaker 1: make a key distinction there. Well. Sure, the balance sheet
Speaker 1: is mostly consists of U S Treasury securities and mortgage
Speaker 1: backed securities Fanning and Freddie securities backed by US government. UM,
Speaker 1: those are obviously you know, private sector type of private
Speaker 1: securities that are owned by the FED, and they have
Speaker 1: a maturity and at some point, you know, each individual
Speaker 1: security will will mature and and and run off. And
Speaker 1: what happened was that earlier on in the process of
Speaker 1: expanding the balance sheet, we began to say well, look,
Speaker 1: we don't want a balance sheet to decline in a
Speaker 1: passive way because things are running off, you know, maturing.
Speaker 1: So we began to process. This is back in whenever
Speaker 1: a security ran off, we took the proceeds, we reinvested
Speaker 1: it in new security, so to keep the size of
Speaker 1: the balance sheet unchanged. And so since October when they
Speaker 1: said stopped buying securities, that balance sheet has basically been
Speaker 1: fixed size. But all maturing securities haven't been replaced. Now,
Speaker 1: what they're eventually going to do, according to their explanations
Speaker 1: and many speeches and and and the minutes and the like,
Speaker 1: is that at some point, probably in this year, next year,
Speaker 1: they're gonna say, well, from now on, we're gonna not
Speaker 1: replace all of the maturing securities, may replace half of them,
Speaker 1: for example, whatever they decide. And that just means that
Speaker 1: without actually selling anything right or taking any active decision,
Speaker 1: the balance sheet will vary gradually over a number of years,
Speaker 1: you know, just begin to shrink deck down towards something
Speaker 1: more sustainable. There's a there's in folks within a curse
Speaker 1: to act. The photos are absolutely extraordinary, and particularly family
Speaker 1: photos of the Bernicke's of Europe and particularly of Lithuania.
Speaker 1: There's a wonderful, lonely photo of you taking lunch with
Speaker 1: Tim Geitner, where I'm sure you had lots to talk
Speaker 1: about at the time. Maybe you didn't even need You
Speaker 1: just talked to each other about what you're gonna do
Speaker 1: with the ugly media. Within that was the glide path
Speaker 1: from two thousand seven to win the balance sheet was done.
Speaker 1: Do you have a date where you would think we
Speaker 1: would get the balance sheet to normalcy? Is it two
Speaker 1: years out, five years out? Is it twenty years that well,
Speaker 1: the FAT has released a lot of simulations or projections
Speaker 1: of what they think it will do, and of course
Speaker 1: it depends where they decided to end up. UM. I
Speaker 1: think the best guess is something like four or five
Speaker 1: years after they began the process of unwinding to to
Speaker 1: get back to some kind of sustainable level um. And
Speaker 1: so again, I think that it's not going to be
Speaker 1: a huge problem. Um. And one reason though they waited
Speaker 1: until this point to begin that process is if it
Speaker 1: does end up tightening conditions to the v races interest
Speaker 1: rates a little bit, then they have raised the short
Speaker 1: term rate, the federal funds rate enough away from zero
Speaker 1: necessary they can can wait, or even if necessary, cut
Speaker 1: a little bit too offset whatever effect the balance she's
Speaker 1: had in terms of policy wants and everybody worried about
Speaker 1: the found and what cherry yelling is gonna say, and
Speaker 1: all that. This is the most important item of this
Speaker 1: entire conversation. You your Princeton commencement speech, you talked about
Speaker 1: a parent who bought a Cadillac every year, that truition
Speaker 1: cost so much and then you drive it off a cliff.
Speaker 1: That guy was Carl ricka donna. He's with us in
Speaker 1: Bloomberg Economics, zero space out of Princeton, and his father
Speaker 1: every year drove a Cadillac off the cliff to pay
Speaker 1: for your pay Yeah, meta, Well, maybe not importantly, But
Speaker 1: Carl today said to me something very important. He said,
Speaker 1: just what you alluded to. You need an interest rate
Speaker 1: buffer to make the balance sheet reduction work. They work
Speaker 1: in tandem. What's your confidence that well meaning people can
Speaker 1: link those two items together to make the balance she's
Speaker 1: shrink and at the same time get the right buffer
Speaker 1: that you need. Well, they don't want to start the
Speaker 1: process of shrinking the balance sheet until the interest rate
Speaker 1: is far enough away from zero. They feel that they
Speaker 1: have some confidence space. They want to make sure the
Speaker 1: economy is moving along in a good way at that point.
Speaker 1: You know, if if it's a very uncertain period and
Speaker 1: things are slowing down, they might delay and be cautious. Um,
Speaker 1: but they're just gonna have to monitor. I mean, there's
Speaker 1: really no there's no magic crystal ball. You have to
Speaker 1: see what's happening in the economy, following the data, following
Speaker 1: the financial markets. And you know, I think they'll they'll
Speaker 1: they'll be able to do it unless there's some new
Speaker 1: problem from outside, some new shop of some kind. But
Speaker 1: I don't see any practical reasons why they can't unwind
Speaker 1: the balance sheet in a relatively passive way within the
Speaker 1: dynamic of the balance sheet. And then so much that
Speaker 1: you're here talk about the expansion of the balance sheet.
Speaker 1: Is it about measuring it to economic growth? Or do
Speaker 1: you measure it to price change? Do you measure it
Speaker 1: to wage growth? Or is it a set? Is it
Speaker 1: a super thing that FED looks at. Mostly is what
Speaker 1: is the outlook for the economy? What is the model
Speaker 1: and the analysis and the best guesses of the of
Speaker 1: the economists say about where the economy is going? One
Speaker 1: it put infut into that outlook is what's the state
Speaker 1: of financial conditions? Are financial conditions very tight with high
Speaker 1: interest rates and low equity prices, or they loose that
Speaker 1: are supportive of growth. Um. So they'll be looking at
Speaker 1: the outlook of the economy trying to assess how the
Speaker 1: balance sheet wind off wind down is affecting those financial conditions,
Speaker 1: and based on that they'll make those judgments. Um. Just
Speaker 1: because of time here and we could go on for hours.
Speaker 1: I could go on for hours. You probably don't want,
Speaker 1: so let's talk about It's not in your book. It's
Speaker 1: in the moments, in the zeit geist of the world
Speaker 1: at this time. It's in the French elections, it's in
Speaker 1: the special election in the United Kingdom, and it's here
Speaker 1: as well. And that is trade. Douglas Irwin was with
Speaker 1: us of Dartmouth is wonderful against the tide from years ago,
Speaker 1: Paul Krugman's essay on Ricardo from twentysome years ago. If
Speaker 1: I state, interview after interview, we have the risk of
Speaker 1: becoming a zero sum America and our in our rhetoric
Speaker 1: back to a mercantile state, is that a legitimate risk?
Speaker 1: To ben Vernankee I don't think it's very likely because
Speaker 1: the cost of doing it would be so overwhelming, you know,
Speaker 1: just just the idea of shutting down and after for example,
Speaker 1: that the US auto industry in the Mexican auto industry
Speaker 1: are so integrated that if you were to draw a
Speaker 1: barrier between those two parts of the industry, you would
Speaker 1: have not only it wouldn't be good for the US
Speaker 1: auto industry, they would be shutting down to semi lines
Speaker 1: because they couldn't get the parts. So the world is
Speaker 1: very integrated now. So I just think that any attempt
Speaker 1: to really shut down trade would have such a bad
Speaker 1: effect almost immediately that that people would back off in that.
Speaker 1: And I don't see that happening frankly. I mean, you're
Speaker 1: seeing a lot of discussion saying talk about rhetoric. You're
Speaker 1: seeing some some actions taken, like the like the lumber
Speaker 1: uh action, you know, against Canada, and there's gonna be
Speaker 1: a bunch of things like that. But I I guess
Speaker 1: I just don't see it as a realistic threat that
Speaker 1: there's gonna be a major shutdown. Written workings or have
Speaker 1: you responded to the Navarre A ross thesis of trade
Speaker 1: and particularly trade with China. Well, it's not the case that, uh,
Speaker 1: the trade is a zero sum game. I mean, that's
Speaker 1: certainly true. Everyone benefits, or at least every major economy
Speaker 1: that's involved in trade is going to benefit the same
Speaker 1: way that you and I benefit from trading with our neighbors,
Speaker 1: you know, in in in a store or in uh
Speaker 1: in a factory. Um. But it's not to say that
Speaker 1: there aren't improvements that can be made in our relationships.
Speaker 1: And I you know, I think that uh, if you've
Speaker 1: ever seen if you've ever seen a trade agreement, they're
Speaker 1: incredibly complicated. There are many of them are deal with
Speaker 1: the details of small differences across different products and the like.
Speaker 1: So I'm not denying there couldn't be ways that you
Speaker 1: could improve our trade relationships. But the broadly speaking, I
Speaker 1: mean I think that we are we United States are
Speaker 1: irretrievably and irreversibly integrated into the global economy. There's really
Speaker 1: no way we would want to undo that. We can
Speaker 1: we can try to uh improve the relationship, we can
Speaker 1: try to do better for people who are displaced or
Speaker 1: disrupted by trade, but we certainly don't want to end
Speaker 1: our our global our global role. If you're just joining
Speaker 1: us on Bloomberg Television, Bloomberg Radio worldwide. Ben Bernanke in
Speaker 1: conversation and support of the Courage to Act with a
Speaker 1: new afterword, A memoir of crisis and its aftermath. I
Speaker 1: can't say enough about the velocity of the book and
Speaker 1: getting through the most difficult eight nine and ten years
Speaker 1: Enable Bernankey, My son, you used able Bernankey. I hope
Speaker 1: you enjoyed the royalty check. I don't know what it
Speaker 1: costs me. I was like cats, like two d or
Speaker 1: something or two fifty or something. That's able, Bernankey. Are
Speaker 1: the dollar dynamics Enable Bernankey? True? Today? Is President Trump
Speaker 1: ignorant of what dollar dynamics could be? Given some of
Speaker 1: what we hear in right, there is a bit of
Speaker 1: a contradiction in different parts of the program that in
Speaker 1: that the some of the fiscal plans, so the infrastructure
Speaker 1: tax cuts, that part of it, if it doesn't come about,
Speaker 1: is going to raise interest rates and cause the dollar strength.
Speaker 1: And strong dollar has a lot of effects in the economy.
Speaker 1: One of the effects it has it's probably gonna make
Speaker 1: it more difficult to say, bring back manufacturing jobs, because
Speaker 1: manufacturing the US would be less competitive goldally, so there's
Speaker 1: different parts of the of the program which are not
Speaker 1: entirely consistent the dollar is one of the reasons that, uh,
Speaker 1: you know that that the fiscal part could actually be
Speaker 1: inconsistent with the trade part. With within this and just
Speaker 1: one more question here and I want to get to
Speaker 1: the broader American picture. Is a phrase expect the unexpected?
Speaker 1: What is the unexpected we could see within international economics
Speaker 1: using currency as a litmus paper. Is it do you
Speaker 1: do you think about rend men need? Is it about
Speaker 1: dollar dynamics? Is it something to do with europolitics right
Speaker 1: now and the experiment of the euro? What's the part
Speaker 1: of currency dynamics that could be the unexpected in the
Speaker 1: coming years. Well, uh, there was a lot of relief,
Speaker 1: you know that, at least in the financial circles that
Speaker 1: Mr Macron one one along with Lepen won the first
Speaker 1: round of the French election because of the concerns that
Speaker 1: le Pen would push to take France out of the Euro.
Speaker 1: Um it does look to me like, at least for
Speaker 1: the media future, the Euro is going to remain stable.
Speaker 1: If there was a country like particularly one of its
Speaker 1: biggest for France, that tried to leave the Euro Zone.
Speaker 1: It would be very disruptive and would have major implications
Speaker 1: not just for the Euro's a currency, but for for
Speaker 1: a wide range of assets. So there are some political
Speaker 1: risks that come, you know, from Europe. There similar risks
Speaker 1: in in in Asia. And remember the evaluation in August
Speaker 1: by the Chinese which had such disructive effects on the
Speaker 1: global financial markets because people don't understand, you know, what
Speaker 1: it was about, what was the reason for it. And
Speaker 1: and they have sence them to much clearer about their strategy,
Speaker 1: which has been very helpful. And I'm honor to ask
Speaker 1: you this question. Uh, and this goes back to Tokyo
Speaker 1: two thousand five speech, which I consider your most important
Speaker 1: academic effort, your courage to act to tell Japan how
Speaker 1: to reflate is abonomics. Ben Bernankee's speech of two thousand five. Well, actually,
Speaker 1: I'm going to be at the Bank of Japan later
Speaker 1: this month and I'm gonna try to update some of that.
Speaker 1: I think they've they've made a lot of progress. I
Speaker 1: think that bonomics and particularly the very aggressive policy to
Speaker 1: the Bank of Japan have moved them in the right direction.
Speaker 1: But quite honestly, it's been harder than I anticipated in
Speaker 1: two thousand um and I need to think hard about,
Speaker 1: you know, what more they can do if they need
Speaker 1: to do something. In your book, there is a one
Speaker 1: single picture which speaks to transparency. It is the first
Speaker 1: picture in your book, A Couraged Act. It's you on
Speaker 1: a street corner in Dylan, South Carolina with Scott Paley
Speaker 1: of CDs. Was that your decision to do that? Was
Speaker 1: that your screaming call, we have to be more transparent
Speaker 1: I'm going on in general, yes, but you mentioned the
Speaker 1: beginning of the hour you talked about Michelle Smith my
Speaker 1: communication FED. No, no, no, she thought it was a
Speaker 1: good idea. I mean, traditionally the FED has been very,
Speaker 1: very removed from so to the main street. I mean,
Speaker 1: this is just just just a culture and very focused
Speaker 1: more on financial markets, on economists, you know, and and
Speaker 1: on some limited part of the of the media. But
Speaker 1: it was clear that in the middle of a crisis
Speaker 1: as we were having that it was important for the
Speaker 1: FED to get out and explain what we were seeing,
Speaker 1: what we were doing, why we were doing it. And
Speaker 1: and the sixty Minutes program with Scott Paley where we
Speaker 1: went back to my hometown of Dylan, we sort of
Speaker 1: showed my background, tried to humanize me a little bit,
Speaker 1: but also just try to get a chance and difficult,
Speaker 1: I know, but try to give me a chance to
Speaker 1: explain to ordinary people what the FED is. I mean,
Speaker 1: most people don't have that good a sense of what
Speaker 1: the FED is and what it does. And it seemed
Speaker 1: that that was the time when it was really important
Speaker 1: to get out there. If I live a Dylan, South Carolina,
Speaker 1: if I believe up on the northern border of South Carolina,
Speaker 1: it was railroads. I looked the other day, there's Dillon Yarn,
Speaker 1: which has gone through all the textile turmoil, and that
Speaker 1: I want you to speak to Mr Trump's America that
Speaker 1: has been to use the phrase financially repressed. Low interest rates,
Speaker 1: low nominal rates, low real rates. They can't save. There's
Speaker 1: been twelve and fifteen years of median incomes dagnation here.
Speaker 1: What can the elites do in Washington, in the sanctuary cities,
Speaker 1: what can they do to assist those people who have
Speaker 1: been crushed? All Right, So this is a big, big
Speaker 1: issue for the United States. People are the American dream
Speaker 1: is about upward mobility. It's about the idea that if
Speaker 1: you are even if you are very modest origins that
Speaker 1: if you work hard and you get some education and you,
Speaker 1: you know, continue to to improve yourself, that you'll you'll
Speaker 1: make your way up the ladder, and that upward mobility
Speaker 1: is much reduced to compared to what it was a
Speaker 1: few decades ago. And it needs to be a major
Speaker 1: it needs to be a major priority for policymakers in
Speaker 1: general for Americans. UM, it's not an easy problem. It's
Speaker 1: been many years into making that. Many things you need
Speaker 1: to do, ranging from um, you know, pre k interventions,
Speaker 1: through programs for working class kids, through apprenticeships, through better
Speaker 1: access to college, to more infrastructure to create more productivity,
Speaker 1: to improve technologies, all these things you need to make
Speaker 1: the economy stronger, but with more focus on the question
Speaker 1: of who's it for? You know, we we can't just
Speaker 1: have look at the overall numbers, the overall GDP numbers.
Speaker 1: You have to think about is everyone got a chance
Speaker 1: to make their way up the ladder? And if not,
Speaker 1: then the economy is not really serving. We're living were
Speaker 1: you have fed chairman for a guilded age, I mean
Speaker 1: you were in crisis. We know that from a courage
Speaker 1: to act or so I should say this is cherry
Speaker 1: yelling a chairman for a guilded age. Is it a plutocracy?
Speaker 1: I think that's that's a little strong, But it is
Speaker 1: certainly true that the share of growth, the share of
Speaker 1: GDP gains going to the upper fraction of the of
Speaker 1: the contribution is is very high. And what as you mentioned,
Speaker 1: it reflects the fact that the median wage has not
Speaker 1: risen very much over the past few decades of the
Speaker 1: debates about the exact measurement. But what I what I
Speaker 1: think is is important is not just the fact that
Speaker 1: there's a range of outcomes, but the fact that you
Speaker 1: start off at at a lower part of the distribution
Speaker 1: than the odds are today, that you're going to stay there,
Speaker 1: You're not gonna be able to make your way up
Speaker 1: the ladder. So I think people are okay with a
Speaker 1: certain amount of difference in a certa amount of inequality,
Speaker 1: as long as I feel that it's fair and that
Speaker 1: everybody has a chance. And I think through an increasing
Speaker 1: extent people don't think there's a fair fair game, and
Speaker 1: that that is really important to address. What can the
Speaker 1: monetary leads and I don't mean just the FED, and
Speaker 1: I don't want you to talk about this FAT day,
Speaker 1: but the easy to be the bank of a leaders
Speaker 1: of our financial system. What can they do then to
Speaker 1: jump start that sense of fair Well, I think what
Speaker 1: what the FED has has done in other central banks,
Speaker 1: you know, the let's look back. I mean, the policies
Speaker 1: were very criticized. They were arguably gonna People were saying, oh,
Speaker 1: they're going to create hyper inflation, They're not gonna have
Speaker 1: any benefits. Now we look at an economy that in
Speaker 1: many ways is much better off now than was a
Speaker 1: fewyears ago. We have not had hyper inflation, we've had
Speaker 1: low and stable inflation, and we've had a lot of
Speaker 1: job creation. And I think that helping the economy meet
Speaker 1: its potential and provide jobs, that's the best thing that
Speaker 1: central bank can do. And that's the fact that FET
Speaker 1: has done that. The FED, however, does not have the
Speaker 1: ability to create you know, better educational opportunities. It can't
Speaker 1: make factories more productive. Um, those are things that that
Speaker 1: the private sector and other policymakers have to be addressing.
Speaker 1: The FAT has a certain number of things that can do,
Speaker 1: and it's really not fair to ask it to go
Speaker 1: beyond the tools that it actually has. When you write
Speaker 1: volume two. Ellen Meltzer would tell you you must write
Speaker 1: a volume two. He was good at that is where
Speaker 1: many others when you write a volume to a courage
Speaker 1: to act, there's a single sentence in your book and
Speaker 1: it is President Obama. You people are shell shocked, and
Speaker 1: he simply goes, how did we get to this point?
Speaker 1: He just quietly as that, how did you respond? And
Speaker 1: how would you respond today to Americans saying how did
Speaker 1: we get to this point? Well, the crisis itself was
Speaker 1: a complicated phenomenon, and it was essentially a big panic
Speaker 1: in the financial system that was built up over a
Speaker 1: number of years, excessive risk taking, excessive reliance on short
Speaker 1: term funding, and and frankly, you know, the regulators and
Speaker 1: the policymakers didn't see it coming, or at least not enough.
Speaker 1: I mean, we addressed some parts of it, so that
Speaker 1: that was a failing and certainly is one of the
Speaker 1: reasons why people are still angry today, because even though
Speaker 1: we've recovered from it and they're still they went through
Speaker 1: a lot. But I think, you know, again, I think
Speaker 1: it's important to distinguish that, as important as it was,
Speaker 1: from these longer term issues which go back to at
Speaker 1: least to the seventies of slower productivity growth, greater inequality,
Speaker 1: and lower lower social mobility, which the crisis didn't help
Speaker 1: any of that, but it wasn't the cause of it.
Speaker 1: This is something that's been going on now for probably
Speaker 1: at least forty years, and it's not something that's going
Speaker 1: to turn around in a few weeks. That the takes
Speaker 1: gonna take a lot of concerted effort attention to get
Speaker 1: us back in the right on the right track. Ben
Speaker 1: BERNANKEI thank you so much a courage to act, and
Speaker 1: I did not ask him how many rate increases we
Speaker 1: would see this year. Thanks for listening to the Bloomberg
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keene. David Gura is at David Gura. Before the podcast,
Speaker 1: you can always catch us worldwide on Bloomberg Radio.