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Speaker 1: Live from our nation's capital. This is Bloomberg Sound on

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Speaker 1: the fundamentals are there for inflation for a while. We

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Speaker 1: don't necessarily need free money and hero interest rates forever.

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Speaker 1: Washington at this point doesn't want to add regulation to bitcoin.

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Speaker 1: Bloomberg Sound on the insiders, the influencers, the insides. Let's

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Speaker 1: look at the student loan debt, which is absolutely staggering

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Speaker 1: my view, you can't spend enough on infrastructure. Given the

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Speaker 1: size of fiscal stimulus we've already seen, this seems like

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Speaker 1: a drop in the bucket. Schloomberg Sound on with Joe

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Speaker 1: Matthew on Bloomberg Radio. I'm Jeanie Schanzano here with Rick Davis,

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Speaker 1: and we are filling in for Joe Matthew today. We

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Speaker 1: are waiting right now comments from German Chancellor Merkel and

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Speaker 1: President Joe Biden, who have been in a meeting in

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Speaker 1: the White House perhaps and most likely her last visit

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Speaker 1: to Washington, d C. As chancellor. She was She's been

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Speaker 1: in that position since two thousand and five, and she

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Speaker 1: is dealt with four presidents. So we're going to take

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Speaker 1: you to that live as soon as they begin. And

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Speaker 1: as I mentioned, we are awaiting remarks from the Chancellor

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Speaker 1: and the President. Earlier today, the President made some remarks.

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Speaker 1: He held a quick press greeting with Merkel, and he

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Speaker 1: had some kind words to say about the enduring friendship

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Speaker 1: that the Chancellor, he said, has been so responsible for.

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Speaker 1: One of the things that I want to talk about

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Speaker 1: is the and during friendship that the Chancellor has been

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Speaker 1: so responsible for nailing down and making sure it continues,

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Speaker 1: and we're ready to dive in. The cooperation between the

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Speaker 1: United States and Germany has been strong, and we hope

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Speaker 1: to continue that un confidently will And that was President

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Speaker 1: Biden earlier today welcoming Chancellor Merkel. As I mentioned, she's

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Speaker 1: and in that position since two thousand and five. She's

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Speaker 1: worked with four US presidents. Today is likely to be

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Speaker 1: her last visit to the White House as Chancellor. And

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Speaker 1: while it is a celebratory moment, they're still policy and

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Speaker 1: business to be done, and they are supposedly we're going

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Speaker 1: to hear more when they make the remarks, but they

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Speaker 1: have a lot to talk about, including climate change, the pandemic,

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Speaker 1: security challenges, relations with Russia, China, the Nordstrom Pipe stream

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Speaker 1: pipeline rather and many other things. So joining US on

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Speaker 1: the line to help, you know, get this meeting in

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Speaker 1: perspective and make sense about what's coming up in the

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Speaker 1: German Us relations is Yasha Monk. He is Associate professor

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Speaker 1: at Johns Hopkins School at Advanced International Study, a Senior

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Speaker 1: Fellow at the Council on Foreign Relations. He's also the

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Speaker 1: author of the People Versus Democracy, Why Our Freedom Is

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Speaker 1: in Danger and How to Save It. So, Professor Monk,

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Speaker 1: it's so good to talk to you. I wanted to

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Speaker 1: see if you could just walk puck Us through sort

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Speaker 1: of the historic nature of this visit. What we expect

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Speaker 1: is Chancellor Merkel's last visit as Chancellor to the United States. Well,

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Speaker 1: I think in many ways to work the stories about

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Speaker 1: it is the veldictory nature office. You know. I was

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Speaker 1: born in Germany and two a few months after a

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Speaker 1: man who Helmet Cole became Chancellor of Germany, and he

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Speaker 1: remained in office for sixty years. And I remember what

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Speaker 1: it felt like as a teenager, feeling that this phrase

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Speaker 1: bundest consta he would call, was really one word that

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Speaker 1: the chance that was always and would always be Helmet called.

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Speaker 1: You know, as I was listening to a program a

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Speaker 1: few minutes ago, I thought about the fact that I'm

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Speaker 1: the mercalist now reaching that record mark. She has been

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Speaker 1: in office for sixteen years, as well as a whole

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Speaker 1: generation of Germans who can't imagine Germany without her, And

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Speaker 1: so the question is, you know, how did that shape

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Speaker 1: German Us relations and how would have changed after Angele

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Speaker 1: and Locle. I think there's a lot of concerns about

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Speaker 1: that at the moment United States. But most likely her

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Speaker 1: successes are going to um continue in her footsteps in

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Speaker 1: terms of the basic friendship of the United States UM

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Speaker 1: and the basic unwillingness to confront China and to confront

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Speaker 1: over a talent powers around the world. UM. So actually,

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Speaker 1: I think that's going to be a lot of continuity

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Speaker 1: in but do it, but also in the a little

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Speaker 1: less good um in how Germany acts in the world. Professor,

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Speaker 1: I mean the continuity makes sense, I mean, new leaders,

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Speaker 1: same party probably post election. But we've seen her play

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Speaker 1: such an enormous role in Europe at large, and is

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Speaker 1: there a successor for European leadership. We've seen lately that

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Speaker 1: President mccron has delivered a few speeches to try and

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Speaker 1: fill some of that gap, and and she hasn't left

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Speaker 1: much room to do that. She's been very active as

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Speaker 1: an outgoing Prime minister and really the titular head of Europe.

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Speaker 1: So what how does that vacuum get filled and what

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Speaker 1: is the unique relationship between US and Europe that that

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Speaker 1: will change once she's left the stage. Well, I think

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Speaker 1: one of the interesting things about Angela Merkel is that

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Speaker 1: in part through being you know, the head of government

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Speaker 1: of the most powerful European states, and in part through

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Speaker 1: her she endurance an office, she has played this incredibly

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Speaker 1: important role, as you say, but it's not clear to

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Speaker 1: me that for leadership has been very decisive when you

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Speaker 1: think of the key crisis she has spaced over the

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Speaker 1: course of her tenure um the euro crisis and which

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Speaker 1: you sort of dis it for a long time, the

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Speaker 1: riser for full Retalian populist but really threatened the basic

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Speaker 1: logic of governance in European Union and kind of like

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Speaker 1: poy Hungry, where she for a long time she fort

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Speaker 1: a protective and polidity um ex even the refugee crisis

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Speaker 1: in twenty fifteen, in which it was as much a

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Speaker 1: lack of action by Angelo Merkel, which led to the

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Speaker 1: way in which he played out as a kind of

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Speaker 1: principal decision as to what to do UM. A lot

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Speaker 1: of the time, UM, the europe Black paneler Mercles was

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Speaker 1: marked by a certain amount of indecision and lack of

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Speaker 1: long term vision. And I think her successor is going

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Speaker 1: to step into exactive votes footsteps and most likely continue that.

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Speaker 1: UM does that means that Europe won't change all that much.

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Speaker 1: And Professor, one thing we keep hearing about, as you know,

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Speaker 1: is that there was a famously tense relationship between the

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Speaker 1: Chancellor and the previous American President, Donald Trump, and that

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Speaker 1: seems to have normalized a bit. UM, even though it's

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Speaker 1: early under President Biden. How much do you think that

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Speaker 1: is matters in terms of US German relations? And is

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Speaker 1: there concern in Germany about the outcome of the next

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Speaker 1: US election and returned to some of that tension if

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Speaker 1: that were to happen. Well, of course, the predecessor of

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Speaker 1: our town, President UM, has had tense relations on only

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Speaker 1: Angela Merkels, but also just about every other European head

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Speaker 1: of government of state. UM. I think Germany and the

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Speaker 1: rest of Europe is very relieved to see somebody like

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Speaker 1: Joe Biden who is a principal defender of the trans

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Speaker 1: Atlantic relationship. Who's somebody who stands with his values of democracy?

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Speaker 1: We're often um, but I think you're right. But there

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Speaker 1: is concern in Europe about you know, who will succeed

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Speaker 1: Joe Biden and what we might get a return of

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Speaker 1: ivan Donald Trump himself for one of his allies, and

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Speaker 1: what that would mean. Um. For you know, America's ability

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Speaker 1: and willingness to play its traditional role is leader of

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Speaker 1: a free world. Now it's also going to be a

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Speaker 1: little bit cynical, I would add, but perhaps that's slightly

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Speaker 1: also gives an excuse to European leaders, um to not

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Speaker 1: quite get on board what I think are good and

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Speaker 1: important form policy preferences of the count administration. So when

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Speaker 1: you look at something like the North Dream Too pipeline, UM,

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Speaker 1: no European politicians can say, well, you know, if you

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Speaker 1: had stay bed back, should we really put all of

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Speaker 1: our cards on one that? Um, you know, perhaps we

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Speaker 1: will hatch our bets a little bit and allow something

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Speaker 1: like Most Too to go forward. UM. I think given

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Speaker 1: of a way in which I would strengthen the autocratic

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Speaker 1: regime in in Russia, UM, that would be a big mistake. Um,

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Speaker 1: but it is a choice that most European needs seemed

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Speaker 1: to be making, and it is a choice that's so

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Speaker 1: far I'm going to Professor, I think it's a pretty

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Speaker 1: good bet. Picking up on your comments on the North

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Speaker 1: Stream too, that that's a that's a very important part

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Speaker 1: of the conversation going on during this visit between the

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Speaker 1: two leaders. And I'm kind of curious how you see

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Speaker 1: this playing out, because obviously the US position during Donald

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Speaker 1: Trump's period was much different than Obama has taken, Biden

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Speaker 1: has taken, but more importantly, uh Annel Merkel has really

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Speaker 1: been the one that has facilitated this deal, and and

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Speaker 1: and there are many European leaders who have expressed concern

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Speaker 1: about it because once they've built that pipe and connected,

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Speaker 1: we know that's you know, not far and along not

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Speaker 1: far off that. Um, how do you contain Russia's leverage

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Speaker 1: at that point in time when they start, you know,

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Speaker 1: doing things they've done before, which is cut off supplies

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Speaker 1: to Ukraine and things like that. Um that the Germans

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Speaker 1: under Merkel have said that they will sanction putin for

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Speaker 1: malign actions, but how do you how do you draw

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Speaker 1: the picture of like what justifies new sanctions and why

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Speaker 1: is it that we don't think Putin's probably got the

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Speaker 1: leg up? Now, I that's that's that's the important question.

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Speaker 1: And you know, I would love to listen in to

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Speaker 1: the conversation that Present Biden and Chancellor Merkel are having

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Speaker 1: right now. I don't know how much we will talk

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Speaker 1: about Nostrem two because I think both of them really

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Speaker 1: want this feeling the meeting to to be and feel

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Speaker 1: howmonious to be constructed. And this is the main point

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Speaker 1: in which they disagree that it may end up avoiding

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Speaker 1: the topic. U. It's interesting with al Alco has tried

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Speaker 1: to offer this safe saving, face saving formulation that, um,

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Speaker 1: you know, we will make sure that the Russian still

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Speaker 1: abused the pipeline and you know, will reactive they do.

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Speaker 1: It's not exactly here the outline what that would actually entail.

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Speaker 1: That sounds like something that's very easy to say in

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Speaker 1: theory but rather harder to do in practice. Um. But

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Speaker 1: the US administration has also sensed in from last month,

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Speaker 1: but it continues to a post no stream too. But

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Speaker 1: that's not going to push Germans and other European partners

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Speaker 1: too hard on this. So I think they're both trying

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Speaker 1: to sort of UM sweep this issue under the carpet

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Speaker 1: a little bit, UM, but it's still is to a

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Speaker 1: larger strategy destroy that Germany and other European countries will

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Speaker 1: have to make in the coming years, in decades. UM.

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Speaker 1: You know, on values, on uh important questions, they are

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Speaker 1: aligned with the United States. That's represented by somebody like

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Speaker 1: Joe Biden. UM. They think of themselves as part of

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Speaker 1: the Western trans Atlantic community upholding democracy. But at the

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Speaker 1: same time they have so far been very unwilling to

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Speaker 1: jeopardize the trade links to Russia, to China, or to

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Speaker 1: do anything that actually helps to contain the rise of

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Speaker 1: apers of rotarian power. The question is whether this will

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Speaker 1: in the long rue be sustainable. UM. Perhaps Germany and

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Speaker 1: other countries will actually more closely cooperate with the United

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Speaker 1: States and trying to contain that life. I think more

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Speaker 1: likely outcome is that they will drift into a kind

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Speaker 1: of the factor neutrality between the United States UM and

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Speaker 1: countries like Russia and China UM and meetings like today's

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Speaker 1: to sort of put anize piece of makeup of that UM.

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Speaker 1: But that is the fear that I have for how

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Speaker 1: the trans Atlantic relationship might drift apart and that is

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Speaker 1: just fascinating and I would love to be a fly

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Speaker 1: on the wall to this meeting too. And we should

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Speaker 1: note that we're still awaiting comments from the Chancellor and

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Speaker 1: the President and we'll bring those to you live as

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Speaker 1: soon as they come. Um. Fessor, you have such a

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Speaker 1: background here, both personal and professional. If you were to

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Speaker 1: guess understanding you were in the room. In addition to

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Speaker 1: the pipeline, whether they talked about that or not, as

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Speaker 1: you just mentioned, what other key policy issues do you

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Speaker 1: think we're on the agenda today? Well, imagine that uh,

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Speaker 1: they would have talked about the kind of change which

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Speaker 1: is a property both too, uh John politicians and the

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Speaker 1: command the market administration. UM. I imagine that they would

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Speaker 1: have addressed, um, some questions around trade and taxation, including

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Speaker 1: um recent agreements to ensure a minimum taxation of multinational

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Speaker 1: corporations around the world. UM. And they will have talked

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Speaker 1: about you know, Russia and China. They would have talked

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Speaker 1: a little bit about half the recent events in Cuba

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Speaker 1: and Haiti. UM I am as a better would have

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Speaker 1: been a pretty wide range and conversation not not dominated

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Speaker 1: by anyone WS and and one thing I just wanted

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Speaker 1: to get your thoughts on UM. We had a report today, UM,

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Speaker 1: in the last couple of days, of course, that Biden

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Speaker 1: is going to keep the travel ban on Europe despite

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Speaker 1: please to ease it. Do you think that's something that

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Speaker 1: is going to be addressed in the meetings today? And

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Speaker 1: how big of an issue is that in Europe and

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Speaker 1: in Germany in particular, UM, I don't think that this

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Speaker 1: is an issue that really inside the passion of the

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Speaker 1: average citizen in Europe. Traveling to the United States, UM

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Speaker 1: is not the same as traveling stay to Italy, to Spain,

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Speaker 1: or to Greece versa, the places that average Germans go

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Speaker 1: on the holiday and versus the places that UM, you

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Speaker 1: know public opinion when you react to whether they are open,

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Speaker 1: because Germans much prefer holidaying on the Mediterranean to holiday

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Speaker 1: on the North Seat. UM. When it comes to travel

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Speaker 1: to the United States, that's more question of facilitating business, UM,

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Speaker 1: some some amount of student exchange and so on and

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Speaker 1: so forth. UM. Nevertheless, I imagine that uh Angla Mercles

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Speaker 1: and her team rightly would like your teams to be

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Speaker 1: able to come to the United States. UM. Given that

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Speaker 1: a large number of Germans are vaccinated at this point,

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Speaker 1: it doesn't seem as though that would h put the

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Speaker 1: risk to the amount in public um if people are

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Speaker 1: duly vaccinated, and so I would imagine that she raises that,

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Speaker 1: but probably is one of the many different issues that

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Speaker 1: is discussed. I wouldn't imagine that you would be uh

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Speaker 1: wanting to turn this into the main question, Professor Market

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Speaker 1: if we could turn around and go back to this

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Speaker 1: comment you made about, you know, Germany and maybe broadly

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Speaker 1: Europe becoming sort of more in the neutrality section. I'm

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Speaker 1: old enough to remember the non aligned nations and the

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Speaker 1: struggle between the US and the Soviet Union, and and

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Speaker 1: and and and what a disaster that was for for

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Speaker 1: all involved. And uh. And yet we've seen enormous amount

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Speaker 1: of pressure over the last few years on Europe to

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Speaker 1: respond to China, and the US put a lot of

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Speaker 1: pressure on them to not do business with Huawei, trying

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Speaker 1: to facilitate a securified g Uh. There's been enormous pressure

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Speaker 1: to reform NATO. President began by expressing his condolences for

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Speaker 1: the victims of the horrible flooding that have killed dozens

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Speaker 1: in Germany and Belgium, something that the Chancellor's chancellor spoke

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Speaker 1: at length about as well. He then also noted the

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Speaker 1: historic nature of her leadership. She was the first or

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Speaker 1: she is the first woman chancellor in history, second longest

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Speaker 1: serving chancellor since Helmet Cole. And then they talked about

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Speaker 1: several of the issues that were raised during their meetings,

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Speaker 1: which they described as productive, everything from Nordstream to which

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Speaker 1: they talked a lot about, to their commitment to defending

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Speaker 1: NATO allies against Russian aggression, to the creation of a

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Speaker 1: partnership that they described as an energy and climate partnership.

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Speaker 1: They talked about the creation also of the futures for

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Speaker 1: him where they can elaborate as they shape a shared future,

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Speaker 1: and of course they talked about the pandemic. They ended

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Speaker 1: by taking two questions each, including one from Bloomberg's Jennifer Leonard,

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Speaker 1: who asked a really important question to the President about

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Speaker 1: his issuing of a business advisory um in terms of

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Speaker 1: Hong Kong that's supposed to go out tomorrow, and then

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Speaker 1: also about whether he believes that he can keep Mansion

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Speaker 1: and Cinema on board for the three point five trillion

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Speaker 1: dollar deal, and the President said he was quote supremely

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Speaker 1: confident that he can do that and believes he can

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Speaker 1: get the deal done. So one of the issues that

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Speaker 1: they talked about was they talked about the pandemic. As

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Speaker 1: I mentioned um and earlier today, Deputy Treasury Secretary Wally A.

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Speaker 1: Demo told Bloomberg's Joe Wisenthal that the Biden administration is

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Speaker 1: trying to expand the United States post pandemic economy by

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Speaker 1: investing in infrastructure and investing in the American people with

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Speaker 1: programs like the Child Tax Credit. Another thing that the

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Speaker 1: President mentioned after he took Jennifer Leonard's question today, take

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Speaker 1: a listen, and the reality is that today the families

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Speaker 1: of sixty million children who receive the Advanced Child Tax

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Speaker 1: Credit in their bank accounts, and what it's going to

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Speaker 1: do for the economy and for those individuals is going

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Speaker 1: to put parents in a position to invest in our

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Speaker 1: future by investing in their children, by making sure they

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Speaker 1: can pay for things like child care, helping them get

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Speaker 1: closed to go back to school, and will dramatically reduce

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Speaker 1: childhood poverty in our country. So, obviously this is still

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Speaker 1: a temporary program, but obviously it's the ambition of the

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Speaker 1: White House to make this permanent. Well, how would the

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Speaker 1: economy look different? We're something like this to just be

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Speaker 1: a permanent feature of the economic landscape. You know this well, Joe.

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Speaker 1: But demographics are the key to any country's future, and

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Speaker 1: the key for us is investing in our human capital

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Speaker 1: and investing in our children. Making a program like this permanent,

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Speaker 1: ex ending it will mean that we're in a position

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Speaker 1: to make sure that we're investing in children and showing

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Speaker 1: that they're in a position to learn to have the

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Speaker 1: resources they need to be productive contributors to society over time. Now,

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Speaker 1: obviously we're sort of in this era in which it

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Speaker 1: feels like um the political motions are towards war comfort,

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Speaker 1: with things like sending out direct checks, and we saw

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Speaker 1: that over a year ago when the crisis first hit.

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Speaker 1: We've seen multiple rounds of checks. Now we see this. Nonetheless,

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Speaker 1: there's still anxiety about the infrastructure of getting money out.

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Speaker 1: Not everybody has a bank account. What should be done

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Speaker 1: in terms of the investments to the infrastructure. We also

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Speaker 1: saw it in the UI, for example, not all the

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Speaker 1: states were equipped. What should be done in terms of

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Speaker 1: facilitating this so that in the future these kinds of

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Speaker 1: things go more go more smoothly. So we're very impressed

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Speaker 1: by how smoothly this has gone. Over eight percent of

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Speaker 1: the payments have actually went into bank accounts, and the

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Speaker 1: other payments have actually been checks that have been sent

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Speaker 1: out to the American people. Our goal is to make

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Speaker 1: sure that people receive these payments on a regular basis

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Speaker 1: on theft of each month in order to make sure

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Speaker 1: that they can plan going forward. We've created Child Tax

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Speaker 1: Credit dot gov, so if your banking information changes, you

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Speaker 1: can update it there so that you can make sure

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Speaker 1: that the money is getting to you so that you

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Speaker 1: can plan for the future. We think the infrastructure is

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Speaker 1: working well and we look forward to making sure that

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Speaker 1: more Americans have eligibility for this program. Now, let's pivot

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Speaker 1: a little bit. Obviously, one of the economic stories of

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Speaker 1: the moment has been the rise in headline inflation, and

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Speaker 1: we tend to think of okay, inflation is the Fed's

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Speaker 1: job and it's part of their mandate. But when you

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Speaker 1: look at some of the various components driving it, it's

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Speaker 1: obviously it's not obviously related to monetary policy, and many

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Speaker 1: of those things certain supply bottlenecks that we see issues

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Speaker 1: related to reopening the chip shortage and the effect that

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Speaker 1: that's having unused car prices. As the White House thinks

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Speaker 1: about budgeting and spending, how much consciousness and thought is

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Speaker 1: being put into easing supply side pressures such that we

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Speaker 1: can have rapid growth without running into these constraints and

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Speaker 1: creating inflation. To you, we are mindful of all the risks,

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Speaker 1: but important for us remember where we are. A year ago.

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Speaker 1: Our economy was shut down in order to make sure

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Speaker 1: that we could deal with COVID and the pandemic. Over

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Speaker 1: the course of the last several months, we've created more

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Speaker 1: than three million jobs in the economy, and we still

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Speaker 1: have a number of more jobs to create in order

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Speaker 1: to make sure we get back to full employment. We

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Speaker 1: always knew that as we opened up the economy, we

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Speaker 1: would be in a place where demand outpaced supply in

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Speaker 1: certain places, and we're seeing that, and we're seeing in

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Speaker 1: places like use cars and hotel rooms, and because we've

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Speaker 1: lack supply in some places, we've seen prices go up.

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Speaker 1: And we think that this is temporary and transitory. But

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Speaker 1: we're continuing to think about what we can do to

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Speaker 1: make sure that we can grow the economy, invests in

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Speaker 1: ways that create jobs and make sure that we expand

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Speaker 1: the potential of the economy going forward. Well, what does

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Speaker 1: that look like specifically When you say we're thinking about

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Speaker 1: um the next round of investment planned for perhaps later

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Speaker 1: in the year, what does that look like specifically to

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Speaker 1: expand the potential supply side capacity of the economy. This

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Speaker 1: comes down to investing in two areas. One is infrastructure,

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Speaker 1: and the presidents put out a plan and we see

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Speaker 1: the bipartisan group that's working on this. Investing in infrastructure

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Speaker 1: will not only improve our economy in the near term,

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Speaker 1: but it will ensure that we expand potential in the

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Speaker 1: economy over the long term and make the economy more competitive.

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Speaker 1: The second part of that is investing in human capital,

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Speaker 1: doing things like expanding the child tax credit in order

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Speaker 1: to make sure that we're investing in our children and

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Speaker 1: investing on our people in order to make sure that

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Speaker 1: our economy is more competitive going forward. And that was

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Speaker 1: Deputy Treasury Secretary Wally a Demo speaking to Bloomberg's Joe

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Speaker 1: Wisenhal earlier today, and that Rick Davis is just about

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Speaker 1: it for us. We want to thank Joe Matthew so

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Speaker 1: much for letting us sit in while he's away, and

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Speaker 1: we want to thank you for listening. I'm Jeanie Sanzano

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Speaker 1: and this is Bloomberg