WEBVTT - How Paul Volcker Views His Life 0:00:10.200 --> 0:00:13.560 Hello, and welcome to another episode of The Odd Lots Podcast. 0:00:13.600 --> 0:00:18.480 I'm Tracy Alloway and I'm Joe. Joe. Who's your favorite 0:00:18.480 --> 0:00:24.240 central banker? Oh? Wow, good question right now? Or throughout history? 0:00:25.239 --> 0:00:28.480 Throughout history? You know what's funny, I'm kind of on 0:00:28.560 --> 0:00:34.720 an Allen greenspand kick to you dad. Oh controversial choice. Why? Well, 0:00:34.920 --> 0:00:37.639 because he seems to have a lot of relevance right now. 0:00:37.760 --> 0:00:41.400 Like everybody in the late nineties was predicting inflation was 0:00:41.400 --> 0:00:45.040 gonna happen, but he didn't believe it would happen. You vegged, 0:00:45.040 --> 0:00:47.680 you got into some arguments with Janet Yellen, and the 0:00:47.680 --> 0:00:52.240 economy had this big boom because he let monetary policy 0:00:52.320 --> 0:00:56.000 run easy and unemployment dropped further than anyone thought. Then 0:00:56.040 --> 0:00:58.320 there was this huge bubble and then there was this 0:00:58.440 --> 0:01:02.000 huge crash. So, you know, you kind of there are 0:01:02.000 --> 0:01:04.880 some good aspects of his legacy, but also maybe some 0:01:05.000 --> 0:01:07.920 lessons to learn on the negative side too. What about you? 0:01:08.000 --> 0:01:11.600 What's your favorite? Oh god, um, I'm going to completely 0:01:11.640 --> 0:01:14.760 sidestep the question because I want to get to the 0:01:14.880 --> 0:01:17.199 point of the question that I just asked you, which 0:01:17.200 --> 0:01:20.480 you summarized perfectly, and that's the notion that you know, 0:01:20.560 --> 0:01:25.760 throughout central bankers working lives, their professional lives, they kind 0:01:25.760 --> 0:01:29.280 of fall in and out of favor with each other 0:01:29.520 --> 0:01:32.600 and also with the general public. And it's really interesting 0:01:32.600 --> 0:01:35.520 to watch that happen. Absolutely, I mean, even like the 0:01:35.640 --> 0:01:39.520 very recent FED shares for example, I think that's the case. 0:01:39.640 --> 0:01:45.319 So I think people were very into bernanke and yelling 0:01:45.440 --> 0:01:48.040 for a while, and of course bernanky for the actors 0:01:48.120 --> 0:01:51.400 he took in stemming the financial crisis. But then you 0:01:51.480 --> 0:01:54.680 look now and you see that inflation is still cool 0:01:54.840 --> 0:01:57.760 and unemployment his dropped much further than they expected, and 0:01:57.760 --> 0:02:01.000 you're like, oh, did they tightened policy too quickly? So 0:02:01.360 --> 0:02:06.320 subsequent events, whether their crashes or changing economic conditions, can 0:02:06.360 --> 0:02:10.959 really um shade how we saw a banker, a central banker, 0:02:11.000 --> 0:02:13.119 even just one that was in office a few years 0:02:13.120 --> 0:02:17.040 ago exactly. And do you ever wonder what the central 0:02:17.080 --> 0:02:20.679 bankers themselves think of what they are doing when they're 0:02:20.720 --> 0:02:23.840 in office. I always do, Like, you know, does Jerome 0:02:23.880 --> 0:02:26.320 Powell stay up late at night worrying that he's making 0:02:26.320 --> 0:02:29.560 a policy mistake? What was Yelling thinking over the past 0:02:29.600 --> 0:02:33.240 few years, What was Alan Greenspan thinking immediately after the 0:02:33.280 --> 0:02:37.600 financial crisis. These are all very interesting questions, and today 0:02:37.760 --> 0:02:41.000 we're going to explore all of those through the prism 0:02:41.040 --> 0:02:44.920 of one former FED governor in particular, and that is 0:02:45.000 --> 0:02:49.320 Paul Volker. Yeah. I'm really excited about this episode. I think, 0:02:49.480 --> 0:02:52.600 you know, obviously right before Greenspan definitely a sort of 0:02:52.760 --> 0:02:59.239 legendary central banker, and whose influence in terms of expectations 0:02:59.240 --> 0:03:03.959 regarding again flation and FED independent and making difficult choices 0:03:04.720 --> 0:03:09.600 in the face of political opposition still looms large today. 0:03:09.680 --> 0:03:12.600 So I think his life and career hold a lot 0:03:12.639 --> 0:03:16.000 of lessons for right now. Yeah, and we are very 0:03:16.080 --> 0:03:20.480 lucky at Bloomberg because one of our colleagues, Christine Harper, 0:03:20.600 --> 0:03:24.400 she's the editor of Bloomberg Markets magazine, has actually co 0:03:24.880 --> 0:03:30.239 authored Paul Volker's autobiography. It's called Keeping Edit, The Quest 0:03:30.320 --> 0:03:33.119 for Sound Money and Good Government. It just came out, 0:03:33.560 --> 0:03:35.520 and so we're going to get to ask her all 0:03:35.560 --> 0:03:40.120 these things about what Paul Volker was thinking and how 0:03:40.280 --> 0:03:54.240 he actually was considering his legacy throughout the years. Can't wait. Christine, 0:03:54.400 --> 0:03:56.760 thanks so much for joining us. You're lighted to be here. 0:03:57.280 --> 0:03:59.440 So I have to admit when I first heard that 0:03:59.520 --> 0:04:02.320 you were co authoring a book with Paul Volker. I 0:04:02.400 --> 0:04:04.680 had no idea what was going on. Can you please 0:04:04.720 --> 0:04:07.840 explain how you actually know him and how this project 0:04:07.840 --> 0:04:10.280 got started? Well, I really have to admit it was 0:04:10.320 --> 0:04:14.640 a pure luck. He has worked in the past with 0:04:14.760 --> 0:04:18.719 a publisher named Peter Osnos, who founded a publishing imprint 0:04:18.800 --> 0:04:22.440 called Public Affairs, which is now part of Hashat, and 0:04:22.720 --> 0:04:26.040 Paul and Peter had some discussions about how Paul, maybe 0:04:26.080 --> 0:04:28.560 after all these years, might want to write a memoir, 0:04:29.600 --> 0:04:34.359 and so Peter wanted to make that happen, and I 0:04:34.400 --> 0:04:37.000 wanted to find somebody to work with Paul on it, 0:04:37.800 --> 0:04:39.680 and he thought it was very important. It'd be somebody 0:04:39.680 --> 0:04:41.520 in New York who knows a little bit about finance, 0:04:41.560 --> 0:04:45.320 but who wouldn't dominate the process, and who would have 0:04:45.360 --> 0:04:49.040 the right kind of chemistry with him and could kind 0:04:49.040 --> 0:04:52.479 of regularly go and meet with um Paul and talk 0:04:52.640 --> 0:04:55.800 about you know, basically interview him and then try to 0:04:55.839 --> 0:04:59.200 pull it all together into a book. So I I 0:04:59.279 --> 0:05:01.680 was very surprised. Eyes I knew, I knew Peter a 0:05:01.680 --> 0:05:05.040 little bit, but I was really not, you know, expecting 0:05:05.080 --> 0:05:06.839 to be asked to do anything like this. And it 0:05:06.920 --> 0:05:09.840 was a big surprise. And but obviously I couldn't think 0:05:09.880 --> 0:05:12.920 of a book. I'd rather work on um what I legend. 0:05:12.960 --> 0:05:15.760 And I kept thinking throughout the process that no matter 0:05:15.800 --> 0:05:17.480 what happened, I'd get to spend a lot of time 0:05:17.520 --> 0:05:21.360 with Paul Wolker. So it was a phenomenal experience. Basically 0:05:21.400 --> 0:05:25.440 spent the last year and a half kind of almost 0:05:25.560 --> 0:05:27.960 daily and you know, or you know, a few times 0:05:28.000 --> 0:05:31.680 a week at least, seeing um, this great man, listening 0:05:31.680 --> 0:05:34.359 to his stories, getting to work with him, learning a 0:05:34.480 --> 0:05:37.120 great deal about not only the history of the economic 0:05:38.080 --> 0:05:42.200 story of America and the world, but just about sort 0:05:42.240 --> 0:05:47.239 of government and integrity and how to live a really 0:05:47.279 --> 0:05:51.160 good life over ninety years. How does this start? So 0:05:51.600 --> 0:05:53.919 you interviewed him, But like, did you have like a 0:05:53.960 --> 0:05:56.320 sort of mapped out idea of the interviews or do 0:05:56.320 --> 0:05:58.640 you just start and say, all right, Paul started telling 0:05:58.680 --> 0:06:00.760 me your story and let's hear this guy. Yeah. I 0:06:00.839 --> 0:06:03.960 basically took that approach. I had no idea. First of all, 0:06:04.000 --> 0:06:07.360 I mean, you know, he's a he's a pretty amazing man. 0:06:07.680 --> 0:06:11.799 You know, he's six ft seven, he's served under six presidents. 0:06:12.440 --> 0:06:14.960 You know, he is not easily sort of guided to 0:06:15.000 --> 0:06:18.240 do anything. He knows what he wants and he gets it. 0:06:18.720 --> 0:06:21.960 So there was no point really going there and trying 0:06:21.960 --> 0:06:24.040 to tell him what we wanted to talk about. I 0:06:24.080 --> 0:06:26.200 would I would sort of go in and say, hey, 0:06:26.320 --> 0:06:27.719 let's you know, where do you want to start? And 0:06:27.760 --> 0:06:29.560 he'd say, okay, let's start at the beginning we talked. 0:06:29.960 --> 0:06:32.720 And also I should say that what happened after we 0:06:32.720 --> 0:06:34.480 were We did a whole bunch of interviews. I got 0:06:34.480 --> 0:06:36.880 a lot of transcriptions of these interviews, which proved to 0:06:36.920 --> 0:06:40.320 be very helpful. But he also then started just writing himself. 0:06:40.400 --> 0:06:43.800 He started writing on yellow pads, which is his long 0:06:43.839 --> 0:06:47.040 time practice. He doesn't type, and uh, he he has 0:06:47.080 --> 0:06:49.400 a He has an assistant who typed them all up 0:06:49.920 --> 0:06:51.880 and would email them to me. And I would just 0:06:51.920 --> 0:06:54.720 go through this and you know, edit and say, hey, 0:06:55.040 --> 0:06:56.880 you told me this great story, let's add it in 0:06:57.040 --> 0:06:58.760 you didn't put it in, or you know, why don't 0:06:58.760 --> 0:07:00.680 we recast it a little bit. So I ended up 0:07:00.680 --> 0:07:03.479 becoming sort of more of a an editor and a 0:07:03.560 --> 0:07:06.279 sort of a coach, and uh, we would kind of 0:07:06.320 --> 0:07:08.880 send edits back and forth. And he's great. I mean, 0:07:08.880 --> 0:07:11.160 he's also a natural copy editor. He loves to he 0:07:11.200 --> 0:07:15.520 loves to go through documents and make kind of tiny, 0:07:15.760 --> 0:07:18.960 you know changes. Um, But he's lovely, he's he's a 0:07:19.040 --> 0:07:21.480 lovely collaborator. And I kept worrying that at some point 0:07:21.480 --> 0:07:24.800 he might become really, really tough to deal with, because 0:07:24.800 --> 0:07:29.520 obviously he has to have really, um, you know, strong will, 0:07:29.720 --> 0:07:32.800 and I thought at some point he might vehemently disagree 0:07:32.840 --> 0:07:35.440 with me on something. But actually we we had an 0:07:35.440 --> 0:07:38.360 amazing experience and um, you know, it was very lucky, 0:07:38.760 --> 0:07:40.800 um that we got along so well. And so Peter 0:07:40.840 --> 0:07:45.200 Osinos was was right. It was a good combination. Uh 0:07:45.240 --> 0:07:48.160 So when you when you first met him to discuss 0:07:48.280 --> 0:07:51.240 this project, Paul, I mean, what did he tell you 0:07:51.360 --> 0:07:54.120 about what he was trying to do? What were his 0:07:54.400 --> 0:07:57.680 motivations for for doing this at the age of I 0:07:57.680 --> 0:08:00.440 think he's ninety one or something like that now. Yeah, 0:08:00.440 --> 0:08:02.040 so when I first met him, he was eighty nine. 0:08:02.080 --> 0:08:04.360 He turned ninety late last year and then he just 0:08:04.400 --> 0:08:09.120 turned one. He wanted to put down his story in 0:08:09.160 --> 0:08:11.680 his own words. There have been three biographies written of him, 0:08:11.680 --> 0:08:13.920 which was a little daunting when I realized that, you know, 0:08:13.960 --> 0:08:16.800 because I did and I read a book that he 0:08:16.840 --> 0:08:21.840 wrote with a former Japanese official named Toyou Goten, who 0:08:22.240 --> 0:08:24.560 they wrote together back twenty five years ago, a sort 0:08:24.560 --> 0:08:28.160 of a series of pieces about their involvement in international 0:08:28.200 --> 0:08:32.360 monetary system reform, which is really good. It's called changing Fortunes. 0:08:33.080 --> 0:08:34.640 So there are a lot of a lot of his 0:08:34.640 --> 0:08:37.640 stories had been told, um, but it was really about 0:08:37.720 --> 0:08:39.960 getting to tell it his way, and getting to tell 0:08:40.000 --> 0:08:43.000 things that maybe biographers hadn't thought were so important. You know, 0:08:43.040 --> 0:08:44.920 he has a chapter in there, for instance, about the 0:08:44.960 --> 0:08:48.319 importance of accounting reform. He has a chapter in there 0:08:48.360 --> 0:08:52.080 about his involvement with you know, trying to reform the 0:08:52.200 --> 0:08:57.400 u N and the and the World Bank. So those 0:08:57.440 --> 0:09:00.640 weren't always the sexiest topics for his biographers, but he 0:09:00.679 --> 0:09:02.839 really cares about these things. So he he wanted to 0:09:03.000 --> 0:09:06.080 He wanted to write about all the ways in which 0:09:06.120 --> 0:09:08.680 he was involved, not only at the FED but throughout 0:09:08.800 --> 0:09:11.840 you know, his career, and and about the importance of 0:09:12.360 --> 0:09:17.520 public service. So what is the overriding theme when it 0:09:17.559 --> 0:09:21.480 when it's accounting reform, when it's World Bank, when did 0:09:21.520 --> 0:09:25.280 this sort of global monetary reform? What is the common 0:09:25.360 --> 0:09:30.320 thread with which he approaches these big topics? One of 0:09:30.320 --> 0:09:34.599 the overriding things about him and sort of the foundational 0:09:34.760 --> 0:09:39.480 element of his career was that he grew up during 0:09:39.480 --> 0:09:42.800 the depression in the World War Two with a father 0:09:42.960 --> 0:09:45.600 who was part of us Are Good Government reform movement 0:09:45.760 --> 0:09:48.200 in the United States. His father was a son of 0:09:48.200 --> 0:09:53.800 German immigrants, grew up in East New York Brooklyn, ended 0:09:53.880 --> 0:09:57.240 up getting a great education fortunately and became an engineer, 0:09:58.080 --> 0:10:01.120 but also ended up going into city management at a 0:10:01.120 --> 0:10:03.640 time when they're sort of a big move towards ending 0:10:03.679 --> 0:10:07.360 the corruption of the political sort of Tammany Hall type 0:10:07.360 --> 0:10:11.320 of politics at the time. And uh so Paul Wolker Sr. 0:10:12.080 --> 0:10:15.640 Became town manager of this of this New jerseytown, te Neck, 0:10:15.679 --> 0:10:19.360 New Jersey, where Paul Wolker Jr. Grew up and completely 0:10:19.400 --> 0:10:22.040 turned it around. And he did an amazing job of 0:10:22.120 --> 0:10:26.800 making this town that was basically almost bankrupt into a 0:10:26.920 --> 0:10:31.160 town that was cited by the United States Army in 0:10:31.200 --> 0:10:34.480 the occupied countries after the war as the model community 0:10:34.960 --> 0:10:38.560 that they should base their democracies on. It was touted 0:10:38.559 --> 0:10:42.480 in the Saturday Evening Post as the crime free town. 0:10:43.000 --> 0:10:46.400 It was just a sort of amazing success. So Paul 0:10:46.440 --> 0:10:51.760 Wolker Jr. Grew up believing there was no higher calling 0:10:51.840 --> 0:10:55.760 than helping to make your community and your government better, 0:10:56.520 --> 0:10:59.440 and he went to the He went to Princeton at 0:10:59.440 --> 0:11:02.120 a time when the university was run the president of 0:11:02.120 --> 0:11:05.720 the university was a professor of public administration. He went 0:11:05.760 --> 0:11:08.480 to the Littower Center, which is now the Kennedy School 0:11:08.520 --> 0:11:12.040 at Harvard, which was all about government. Everybody there wanted 0:11:12.080 --> 0:11:15.880 to go into government. Um, all the economists he was, 0:11:15.920 --> 0:11:18.240 who were his classmates, they all wanted to go into government. 0:11:18.280 --> 0:11:21.320 That was kind of seen as the highest calling. And 0:11:21.400 --> 0:11:25.319 so everything he's done in his career has been informed 0:11:25.360 --> 0:11:29.640 by this idea that there's a really noble um pursuit 0:11:29.800 --> 0:11:35.520 and helping make government work better. And uh. He documents 0:11:35.520 --> 0:11:36.920 in the in the book all the ways in which 0:11:36.920 --> 0:11:40.840 he failed, Like he feels very depressed about how he 0:11:40.880 --> 0:11:44.080 wasn't able to save Breton Woods. He tried really hard 0:11:44.120 --> 0:11:47.160 to create a new monetary system that would replace it 0:11:47.559 --> 0:11:49.400 and never was able to and kind of writes A 0:11:49.840 --> 0:11:51.960 nice part of the of the book is where he 0:11:52.600 --> 0:11:55.679 he sort of explains why he now realizes it was 0:11:56.200 --> 0:12:00.520 never gonna work, but he really wanted it. He really 0:12:00.520 --> 0:12:03.560 believed in trying to he he's kind of almost the 0:12:03.600 --> 0:12:08.800 ultimate technocrat, and his he's seen over the last few decades, 0:12:09.080 --> 0:12:11.599 and he sort of traces it back to Reagan, this 0:12:11.800 --> 0:12:14.840 sort of belief that government is the problem, that you know, 0:12:14.920 --> 0:12:19.160 government isn't worth investing in, really sort of corrupt our system. 0:12:19.200 --> 0:12:21.959 And he's he's been fighting against it since he left 0:12:22.000 --> 0:12:27.319 the FED, but he hasn't you know, succeeded. And uh 0:12:27.520 --> 0:12:30.040 now I think he and a lot of people would agree, 0:12:30.400 --> 0:12:32.880 we're at a point of almost crisis in this in 0:12:32.920 --> 0:12:39.840 this respect. So on that note, I'm curious, you're clearly 0:12:39.840 --> 0:12:41.920 painting a picture of a guy who cares very much 0:12:41.960 --> 0:12:46.920 about public service. How did he balance that care of 0:12:47.000 --> 0:12:51.600 public service with independence of the central bank? Because, of course, 0:12:51.960 --> 0:12:54.160 you know, when he came into the FED, I think 0:12:54.200 --> 0:12:58.520 it was nine nine, inflation was running incredibly high and 0:12:59.080 --> 0:13:02.880 Jimmy Carter complaining a lot about it. So how did 0:13:02.920 --> 0:13:07.480 he make sure that he sort of paid attention to 0:13:07.720 --> 0:13:11.640 the needs of the American population while simultaneously maintaining the 0:13:11.679 --> 0:13:14.800 independence of the central bank. Well, he was brought in, 0:13:14.880 --> 0:13:18.240 as he describes, at this time of such crisis. It 0:13:18.360 --> 0:13:20.760 was almost like being a general called in to help 0:13:20.840 --> 0:13:24.800 fight a war. I mean, there was nothing that was 0:13:24.920 --> 0:13:27.719 more important to helping get the country back on its 0:13:27.720 --> 0:13:30.040 feet at that point than making sure we did something 0:13:30.080 --> 0:13:34.800 about inflation. So even though he recognizes that it caused 0:13:34.840 --> 0:13:37.320 a lot of pain for a lot of people to 0:13:37.480 --> 0:13:40.880 have interest rates go up so much and monetary policy 0:13:40.920 --> 0:13:44.440 gets so tight, he also will assert, and he does 0:13:44.520 --> 0:13:47.120 over and over again, that there was no way to 0:13:47.240 --> 0:13:51.360 help people other than get the inflation right down. If 0:13:51.360 --> 0:13:54.040 you didn't get the inflation right down, all was lost. 0:13:54.559 --> 0:13:56.840 So he had to do it. He had to do 0:13:56.880 --> 0:13:59.520 what he did, and a lot of it was psychological. 0:13:59.640 --> 0:14:02.360 He tell the story. And there about after he'd been 0:14:02.360 --> 0:14:05.880 fed chairman for m you know, just a little while, 0:14:06.320 --> 0:14:08.840 he was called to a meeting at the American Stock Exchange, 0:14:09.160 --> 0:14:11.040 I think, hosted by Arthur Levitt, and there are a 0:14:11.040 --> 0:14:15.199 whole bunch of businessmen and he gave his spiel. Vulker 0:14:15.280 --> 0:14:17.480 gave his spiel about how he was gonna it was 0:14:17.480 --> 0:14:19.160 gonna be a tough fight, and he was going to 0:14:19.240 --> 0:14:21.480 get inflation down, and he promised that it was gonna 0:14:21.520 --> 0:14:23.320 be good for the economy and down the road everything 0:14:23.360 --> 0:14:26.680 would be fine. And one of the businessmen sitting next 0:14:26.680 --> 0:14:29.320 to him. Afterwards piped up and said, that's all very 0:14:29.360 --> 0:14:32.160 well and good, but I just finished my negotiations with 0:14:32.240 --> 0:14:35.160 my workforce and I'm giving them thirent raise a year 0:14:35.280 --> 0:14:37.800 for the next three years. And he writes, you know, 0:14:37.840 --> 0:14:39.800 I wonder how that guy. How it worked out for 0:14:39.840 --> 0:14:42.160 that guy, you know, because people really didn't believe him. 0:14:42.200 --> 0:14:44.160 By the time Vulcan got in there, people thought it 0:14:44.200 --> 0:14:46.560 was lost. I mean, Arthur Burns gave a speech in 0:14:46.680 --> 0:14:51.040 nineteen seventy nine at the Pair Jacobson Lecture, the Anguish 0:14:51.040 --> 0:14:54.200 of Central Banking like it was basically, it was saying 0:14:54.200 --> 0:14:57.040 that politics were too difficult, it was impossible for central 0:14:57.080 --> 0:15:01.000 bankers to do anything about this. And at that very moment, 0:15:01.720 --> 0:15:04.240 Paul Vulker was flying back from Belgrade where the I 0:15:04.360 --> 0:15:07.360 m F meeting was, to the to the Fed to 0:15:07.440 --> 0:15:10.960 have these emergency meetings to come out with the Saturday 0:15:11.080 --> 0:15:15.200 Night Surprise October nine, where they announced that they were 0:15:15.280 --> 0:15:18.200 changing how they targeted. They were going to start targeting 0:15:18.200 --> 0:15:21.360 the money supply instead of the interest rate. And that 0:15:21.440 --> 0:15:23.840 was a big psychological shift to that He sort of 0:15:23.920 --> 0:15:27.720 engineered too in a way and oculate them from criticism 0:15:27.720 --> 0:15:31.200 that they were raising rates because but up to until then, 0:15:31.600 --> 0:15:35.160 the Fed always sort of shied away from the rate 0:15:35.200 --> 0:15:37.920 increases that were needs. So inflation was was ahead of 0:15:37.960 --> 0:15:41.960 the of the interest rates. So in order to do 0:15:42.040 --> 0:15:45.200 something about it and and sort of prevent the Fed 0:15:45.280 --> 0:15:49.600 from having to take the heat in a way from itself, Hey, 0:15:49.880 --> 0:15:51.440 they just sort of he he described it as being 0:15:51.520 --> 0:15:54.120 lashed to the mast. They were. They just said, we're 0:15:54.160 --> 0:15:56.560 just we're all about the money supply. Rates are going 0:15:56.640 --> 0:15:58.560 to do what they are are going to do. It's 0:15:58.560 --> 0:16:01.200 not it's not what we're doing. We're kind of like, 0:16:01.240 --> 0:16:05.000 we're not responsible for rates. And uh, that was kind 0:16:05.040 --> 0:16:10.000 of a great psychological instinct he had. I'm curious about 0:16:10.040 --> 0:16:14.400 the lessons for today, because if you hear central bankers now, 0:16:14.720 --> 0:16:18.640 they talk a lot about inflation and the importance of 0:16:18.680 --> 0:16:24.240 guarding against any sort of uplift and inflation or inflation expectations. 0:16:24.640 --> 0:16:27.880 They talk about the sort of hard one credibility of 0:16:27.920 --> 0:16:30.680 the Federal Reserve, which I think definitely starts with Vulcan. 0:16:31.440 --> 0:16:36.600 On the other hand, unemployment has been extremely high even 0:16:36.680 --> 0:16:40.440 up until very recently, and arguably it's still elevated when 0:16:40.440 --> 0:16:44.040 you look at various measures of inflation, and so to 0:16:44.200 --> 0:16:47.560 sort of push back against Volker's legacy a little bit, 0:16:47.880 --> 0:16:51.080 I'm wondering what you think of the argument that central 0:16:51.080 --> 0:16:54.400 bankers have become so focused on inflation that in the 0:16:54.520 --> 0:16:57.320 last decade they sort of threw their hands up about unemployment, 0:16:57.360 --> 0:16:59.640 the other half of their mandate and said, you know, 0:16:59.720 --> 0:17:01.880 just the same way that Arthur Burns may have said, look, 0:17:01.880 --> 0:17:04.520 there's nothing you know, central banks, we can't do anything 0:17:04.560 --> 0:17:07.879 about inflation anymore because of politics, whether in the post 0:17:07.920 --> 0:17:13.159 crisis period everyone was like, oh, central bankers like unemployment 0:17:13.240 --> 0:17:15.520 is other people's problem, or it's fiscal policy makers, or 0:17:15.560 --> 0:17:18.879 it's the problem of the skills gap, and sort of 0:17:19.160 --> 0:17:22.200 ignoring the fact that maybe there was something they could 0:17:22.200 --> 0:17:24.800 have done about that. Well, I'm not an economist, so 0:17:24.800 --> 0:17:27.840 I'm not a good, good, good person to comment on that. 0:17:28.000 --> 0:17:31.000 I know what he would say, which is that he 0:17:31.040 --> 0:17:35.399 feels ultimately the number one, almost moral requirement of the 0:17:35.440 --> 0:17:37.600 central bank is to make sure that the value of 0:17:37.640 --> 0:17:42.800 money isn't isn't eroded, and that over history, you know, 0:17:42.840 --> 0:17:45.439 that's been the easiest way for governments to kind of 0:17:45.480 --> 0:17:50.199 try to, you know, appease the masses, is to just 0:17:50.320 --> 0:17:52.879 you know, cut the value of the currency. And uh, 0:17:52.960 --> 0:17:56.760 and so he strongly objects to I mean he there 0:17:56.800 --> 0:17:59.679 he has a section in there about how and this 0:17:59.800 --> 0:18:03.920 was uh excerpted on Bloomberg Opinion a few weeks ago 0:18:04.359 --> 0:18:07.159 about what he considers the folly of the targeting of 0:18:07.200 --> 0:18:09.760 the two percent, the two percent inflation rate. I mean, 0:18:09.800 --> 0:18:13.600 he it drives him absolutely insane to see people as 0:18:13.600 --> 0:18:18.159 they were this summer, sort of agonizing over you know 0:18:18.200 --> 0:18:20.600 that we have inflation of only one point seven percent, 0:18:21.400 --> 0:18:23.520 and how do we get it to two percent? And 0:18:23.520 --> 0:18:25.640 he's like, first of all, none of these measures are 0:18:25.920 --> 0:18:29.320 so precise. It's it's it's absurdity to try to act 0:18:29.320 --> 0:18:31.959 as though you can do that with such precision. Second 0:18:31.960 --> 0:18:37.000 of all, once you decide that two is your target, 0:18:37.119 --> 0:18:41.600 you're essentially agreeing to double prices every generation. And you're 0:18:41.640 --> 0:18:44.720 also going to fall into a slippery slope of, oh, 0:18:44.760 --> 0:18:47.240 what if two percent doesn't get us the unemployment we want, 0:18:47.240 --> 0:18:49.040 then maybe let's just raise it to three percent. And 0:18:49.080 --> 0:18:51.359 it just makes it too easy. He believes in a 0:18:51.400 --> 0:18:56.080 more principle based idea of sort of instead of targeting 0:18:56.080 --> 0:19:00.359 a number, just targeting, you know, when business and consumer 0:19:00.400 --> 0:19:05.119 decisions are not affected by inflation. Okay, here's what I 0:19:05.160 --> 0:19:07.560 really want to know. In the course of all your 0:19:07.600 --> 0:19:13.359 meetings with Vulcar, did he ever tell you stuff that 0:19:13.440 --> 0:19:17.040 he didn't want put into the book? Are there things 0:19:17.080 --> 0:19:20.159 that he would rather sort of keep out of his 0:19:20.240 --> 0:19:23.880 own story. I'm not asking for specifics. I'm just curious 0:19:23.920 --> 0:19:27.400 if there are certain controversial things that he wouldn't go into. 0:19:27.880 --> 0:19:30.800 He told me some stories that when I when I 0:19:30.840 --> 0:19:33.320 reminded him of them, he said, no, let's not let's 0:19:33.320 --> 0:19:36.320 not bother with that one. Yes, I mean, in part 0:19:36.400 --> 0:19:38.400 because he didn't want the book to be so long. 0:19:38.960 --> 0:19:42.560 He's sort of a funny, uh, you know, very self deprecating, 0:19:42.600 --> 0:19:44.359 and he doesn't He didn't want a book that was, 0:19:44.760 --> 0:19:47.400 you know, this gigantic tone. He didn't want something that 0:19:47.560 --> 0:19:50.600 sounded really pompous in terms of the title or anything. 0:19:51.280 --> 0:19:53.879 He wanted to keep it pretty short and to the 0:19:54.000 --> 0:19:56.399 to the point. And uh, and yeah, there were some 0:19:56.480 --> 0:19:58.920 stories that are amusing. He loves I mean, one of 0:19:58.960 --> 0:20:01.120 the things people don't know about him if they haven't 0:20:01.119 --> 0:20:03.399 spent time with him, is that I certainly didn't know 0:20:03.440 --> 0:20:07.199 this is that he's incredibly funny. He loves to tell stories, 0:20:07.280 --> 0:20:11.239 and he's really really funny, and he's very right, and uh, 0:20:12.160 --> 0:20:15.879 you know, kind of he loves gossiping. I'm curious thinking 0:20:15.920 --> 0:20:19.840 about it, the book coming out now, and obviously we 0:20:20.000 --> 0:20:22.679 live in an interesting time for central bankers, but you 0:20:22.760 --> 0:20:26.399 sort of I said this earlier. The bigger picture is 0:20:26.440 --> 0:20:29.399 that we live in a very interesting time for governance. 0:20:29.840 --> 0:20:34.359 And I'm curious how much the very current government set 0:20:34.400 --> 0:20:38.000 up in the US, whether it's the attacks on the 0:20:38.080 --> 0:20:41.840 federal reserves, independence from President Trump, or just the sort 0:20:41.840 --> 0:20:46.119 of unconventional nature of the Trump presidency, or the various 0:20:46.119 --> 0:20:49.840 things we've seen in Congress in recent years, whether it's 0:20:50.080 --> 0:20:52.919 the dead sailing things like that of sort of naked 0:20:53.119 --> 0:20:57.680 a attempt to get political advantage by sort of weakening 0:20:58.240 --> 0:21:01.639 governance in this country. How much that was on his 0:21:01.800 --> 0:21:04.439 mind with the book coming out right now. Well, I 0:21:04.480 --> 0:21:06.960 think it's you know, it's definitely on his mind. He's 0:21:07.040 --> 0:21:10.960 very disturbed about how, you know, Washington is being managed 0:21:11.000 --> 0:21:13.520 these days. And as he says sort of throughout the book, 0:21:13.960 --> 0:21:16.760 this lack of trust in government, which is really corrosive 0:21:16.760 --> 0:21:21.159 to a democracy, is sort of rooted in the fact 0:21:21.200 --> 0:21:24.840 that people have over time loss of faith that government 0:21:24.840 --> 0:21:27.840 can do what they expected to do. And and in 0:21:27.960 --> 0:21:30.959 part it's because the government is just kind of responsible 0:21:30.960 --> 0:21:32.679 for more and more. First of all, the population has 0:21:32.680 --> 0:21:35.560 gotten much bigger. There's many more things we expect government 0:21:35.840 --> 0:21:37.639 to do for us than when he was growing up. 0:21:38.119 --> 0:21:42.080 But also just this a willingness to invest in government 0:21:42.160 --> 0:21:44.800 has really been eroded over time, back to the sort 0:21:44.840 --> 0:21:46.600 of Reagan sort of like, oh, we got to cut 0:21:46.640 --> 0:21:50.200 the government. So this idea that like government is the problem, 0:21:50.440 --> 0:21:52.879 start of the government, and then complain that government is 0:21:52.880 --> 0:21:54.800 no good, so let's start of the government some more. 0:21:54.840 --> 0:21:56.480 It's sort of been going on for a long time, 0:21:57.119 --> 0:22:00.560 and you know, the consequences are obvious. His he has 0:22:00.560 --> 0:22:02.480 this thing called Vulgar Alliance, which is all about trying 0:22:02.520 --> 0:22:05.560 to train people for government, make government run more efficiently, 0:22:05.960 --> 0:22:08.960 and he really believes passionately and just making sure people 0:22:09.119 --> 0:22:11.640 in the government know how to do their jobs. Well. 0:22:11.680 --> 0:22:15.360 I mean, so much of government nowadays is outsourcing, and 0:22:15.400 --> 0:22:19.359 if you aren't trained to deal with, you know, managing 0:22:19.480 --> 0:22:22.480 loads of people externally who are handling things for you, 0:22:22.520 --> 0:22:24.960 if you're not good at good at all. That if 0:22:25.000 --> 0:22:28.080 everybody who gets that kind of training goes into business 0:22:28.119 --> 0:22:31.439 and not into government. Then you know you're gonna end 0:22:31.520 --> 0:22:33.640 up with a pretty bad system. So this is sort 0:22:33.680 --> 0:22:36.040 of his his passion. And then in terms of the 0:22:36.080 --> 0:22:39.479 attacks on things like the FED, obviously you know that 0:22:39.560 --> 0:22:42.120 disturbs him. But you know he's got this great sense 0:22:42.160 --> 0:22:44.080 of history. I mean, he's seen it. You know, he 0:22:44.119 --> 0:22:47.359