1 00:00:00,320 --> 00:00:04,160 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:04,200 --> 00:00:07,640 Speaker 1: their trust in independent registered investment advisors to the tune 3 00:00:07,640 --> 00:00:12,240 Speaker 1: of four trillion dollars. Why learn more and find your 4 00:00:12,280 --> 00:00:27,240 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,320 --> 00:00:31,320 Speaker 1: I'm Tom Keane. Always with Michael McKee. Daily we bring 6 00:00:31,360 --> 00:00:35,280 Speaker 1: you insight from the best in economics, finance, investment and 7 00:00:35,360 --> 00:00:41,519 Speaker 1: international relations. Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, 8 00:00:41,560 --> 00:00:47,120 Speaker 1: and of course, on the Bloomberg He is the book 9 00:00:47,159 --> 00:00:49,480 Speaker 1: of the Year for last year Hubrists. I can't say 10 00:00:49,560 --> 00:00:52,360 Speaker 1: enough about the effort of Magna Decide of the London 11 00:00:52,440 --> 00:00:55,920 Speaker 1: School of Economics. This is hugely readable about how we 12 00:00:56,040 --> 00:00:59,560 Speaker 1: got where we are within our economic history. Lord Decide 13 00:00:59,640 --> 00:01:02,280 Speaker 1: joins us this morning. I know Guy Johnson wants to 14 00:01:02,280 --> 00:01:05,360 Speaker 1: get to you on the British cabinet and domestic politics. 15 00:01:05,440 --> 00:01:08,480 Speaker 1: Lord Decide. I've been dying to ask you off of 16 00:01:08,600 --> 00:01:14,320 Speaker 1: Jacob Viner's nineteen forty six essay on mercantile ism. Are 17 00:01:14,400 --> 00:01:17,640 Speaker 1: we in a new mercantile age? Is there a shift 18 00:01:17,680 --> 00:01:21,520 Speaker 1: going like the social astronomy you've written about for decades? 19 00:01:22,120 --> 00:01:27,880 Speaker 1: You know it's a very interesting movement against customs unions 20 00:01:27,920 --> 00:01:32,040 Speaker 1: like the EU, as well as against sort of joint 21 00:01:33,080 --> 00:01:36,399 Speaker 1: treaties of people are trading and people are breaking out 22 00:01:36,440 --> 00:01:41,840 Speaker 1: to have uh pairwise free trade agreements between countries. We 23 00:01:42,040 --> 00:01:45,560 Speaker 1: just sort of like mercantilism, but we will we will say, 24 00:01:45,600 --> 00:01:48,280 Speaker 1: you know that there's a lot to go for in 25 00:01:48,480 --> 00:01:55,000 Speaker 1: current situation because manufacturing, the supply lines are go across countries. 26 00:01:55,440 --> 00:01:58,160 Speaker 1: It's very difficult for any conty to just be mercantile. 27 00:01:58,360 --> 00:02:01,640 Speaker 1: Right Well, within there do we really regional blocks? Do 28 00:02:01,800 --> 00:02:05,040 Speaker 1: you have within your reading of history, in particularly your 29 00:02:05,080 --> 00:02:09,040 Speaker 1: book marks is revenge? Do you feel that we're falling 30 00:02:09,160 --> 00:02:12,840 Speaker 1: back to the nineties thirties and a block is m 31 00:02:12,960 --> 00:02:18,760 Speaker 1: that we should fear? Absolutely? You know, Brexit gives a 32 00:02:19,040 --> 00:02:23,480 Speaker 1: notice just as Donald Trump gives a notice that the 33 00:02:23,560 --> 00:02:27,400 Speaker 1: days of globalization or people are it's no longer popular 34 00:02:27,520 --> 00:02:30,520 Speaker 1: with the voters. Whether they're right or wrong is not 35 00:02:30,600 --> 00:02:33,359 Speaker 1: the issue. And I think countries are going to scramble 36 00:02:33,440 --> 00:02:37,520 Speaker 1: around to break up regional alliances, not get into big 37 00:02:37,560 --> 00:02:40,880 Speaker 1: trade agreements and try and give the game to think fairwise. 38 00:02:41,200 --> 00:02:42,639 Speaker 1: I want to come and talk more about the Braxit 39 00:02:42,639 --> 00:02:44,320 Speaker 1: and multtil just to mind, But just a quick question. 40 00:02:44,320 --> 00:02:48,160 Speaker 1: More broadly, if we are to see governments picking out 41 00:02:48,200 --> 00:02:53,119 Speaker 1: the pattern from central banks and delivering fiscal policy, leakage 42 00:02:53,160 --> 00:02:54,800 Speaker 1: is going to be a big factor. And you just 43 00:02:54,840 --> 00:02:57,959 Speaker 1: wonder whether as you think about how governments are gonna spend, 44 00:02:57,960 --> 00:02:59,519 Speaker 1: they're not gonna want that money to leak out. They're 45 00:02:59,520 --> 00:03:01,400 Speaker 1: not gonna want to go else where, They're gonna want 46 00:03:01,440 --> 00:03:04,120 Speaker 1: to keep it centered on their own economy. Does protectionism 47 00:03:04,120 --> 00:03:06,960 Speaker 1: going past and passl with that? You know? I mean, 48 00:03:06,960 --> 00:03:09,280 Speaker 1: there are two things going on there. Said you're talking 49 00:03:09,320 --> 00:03:13,000 Speaker 1: earlier about monetary policy. It's a kind of monetary policy 50 00:03:13,240 --> 00:03:16,760 Speaker 1: that we have seen so far off central bank buying 51 00:03:17,200 --> 00:03:21,760 Speaker 1: bonds or some assets, and that has failed because that 52 00:03:21,800 --> 00:03:25,240 Speaker 1: money doesn't go beyond the bank's volts, or doesn't go 53 00:03:25,320 --> 00:03:30,200 Speaker 1: beyond corporate walls. Nobody is investing. They're all sitting on cash. 54 00:03:30,760 --> 00:03:33,640 Speaker 1: Your money is not transferring to the economy. So a 55 00:03:33,680 --> 00:03:36,760 Speaker 1: lot of people are saying, forget about central banks open 56 00:03:36,840 --> 00:03:40,480 Speaker 1: market operations, because that's what it is. We need helicopter money. 57 00:03:40,760 --> 00:03:43,360 Speaker 1: We need helicopter money in the sense either you just 58 00:03:44,280 --> 00:03:48,440 Speaker 1: financial deficiate with with monetary with with printing money, which 59 00:03:48,520 --> 00:03:51,000 Speaker 1: supposed to be anathema, but now it's come back inter 60 00:03:51,080 --> 00:03:56,440 Speaker 1: fashion or you basically showered the give give every every 61 00:03:56,480 --> 00:04:00,160 Speaker 1: individual in the country, you know, thousand dollars or whatever is. 62 00:04:00,560 --> 00:04:04,800 Speaker 1: People are looking for speeding up the transmission of money 63 00:04:04,800 --> 00:04:08,080 Speaker 1: into the economy. They're no longer worried about inflation because 64 00:04:08,080 --> 00:04:12,760 Speaker 1: that threat has gone well exactly and all they're talking 65 00:04:12,800 --> 00:04:18,440 Speaker 1: about infrastructure investment in part of fiscal policy. Borrowing what 66 00:04:18,640 --> 00:04:21,680 Speaker 1: the yields us so low? You know, you you just 67 00:04:21,760 --> 00:04:26,279 Speaker 1: finance a bigger expenitive program. I think Donald Trump, if 68 00:04:26,279 --> 00:04:29,360 Speaker 1: he were to win, he's one of those people who 69 00:04:29,480 --> 00:04:32,880 Speaker 1: is very unorthodox about debt. I've written about this, and 70 00:04:32,920 --> 00:04:36,320 Speaker 1: I think that is what may actually trigger a big 71 00:04:36,360 --> 00:04:40,919 Speaker 1: infrastructure boom if he were to become a well president. 72 00:04:41,120 --> 00:04:44,200 Speaker 1: Lord to say, you always surprised there are many that 73 00:04:44,240 --> 00:04:50,360 Speaker 1: would say you are supporting a Trump presidency. Is that true? Now? 74 00:04:50,480 --> 00:04:54,920 Speaker 1: I performed the task of a social scientist saying, if 75 00:04:55,800 --> 00:04:59,719 Speaker 1: Trump were to win, what would be the consequences. You know, 76 00:04:59,839 --> 00:05:02,360 Speaker 1: we have to not I'm not in a betting him. 77 00:05:02,600 --> 00:05:06,200 Speaker 1: I want to know analytically what will happen in case 78 00:05:06,320 --> 00:05:09,360 Speaker 1: Trump wins. Look, we lived through Brexit, you know, we 79 00:05:09,440 --> 00:05:14,680 Speaker 1: cannot neglect the improbable event any longer. Improbably may just happen. 80 00:05:14,920 --> 00:05:18,440 Speaker 1: So let's prepare for the improbable. The improbable maybe is 81 00:05:18,480 --> 00:05:21,000 Speaker 1: colored this morning by the lead news of the morning 82 00:05:21,000 --> 00:05:25,200 Speaker 1: that Secretary Clinton is ill with pneumonia. It's amazing, Lord Design, 83 00:05:25,279 --> 00:05:29,120 Speaker 1: You've got the history to understand his agism plays into 84 00:05:29,160 --> 00:05:32,640 Speaker 1: this for both Mr Trump and Secretary Clinton. What is 85 00:05:32,640 --> 00:05:40,360 Speaker 1: your reading of the short century on health in our leaders? Well, 86 00:05:40,360 --> 00:05:44,400 Speaker 1: you know, America is much more health conscious now than 87 00:05:44,480 --> 00:05:48,120 Speaker 1: it used to be. Uh. David Owen, who's who's colleague 88 00:05:48,120 --> 00:05:50,440 Speaker 1: of mine in the House of Loads, wrote a book about, 89 00:05:50,640 --> 00:05:53,800 Speaker 1: you know, how sick John Kennedy was. I mean, John 90 00:05:53,880 --> 00:05:58,320 Speaker 1: Kenny would never never make it to the presidential nomination now, 91 00:05:58,560 --> 00:06:03,039 Speaker 1: nor would Lindon Johnson. But they were perfectly capable president. 92 00:06:03,320 --> 00:06:06,800 Speaker 1: So I think the Americans exaggerated the need for a 93 00:06:07,000 --> 00:06:11,120 Speaker 1: twenty four seven fully healthy president. Come on, people come 94 00:06:11,200 --> 00:06:14,280 Speaker 1: to presidency when they're in the fifties or sixties, and 95 00:06:14,320 --> 00:06:17,560 Speaker 1: the body, you know, has its own imperatives. As long 96 00:06:17,600 --> 00:06:20,320 Speaker 1: as they can function as leaders, they don't have to 97 00:06:20,400 --> 00:06:24,040 Speaker 1: run the marathon eight years then it's a long time. 98 00:06:24,320 --> 00:06:30,040 Speaker 1: Four years at a time, fever years. Okay, but let's 99 00:06:30,080 --> 00:06:34,960 Speaker 1: assume that there's there's a desire for four more years, 100 00:06:35,040 --> 00:06:36,960 Speaker 1: and we tag four onto four and that in my 101 00:06:37,000 --> 00:06:40,760 Speaker 1: mass make say but but Reagan, Reagan and the right 102 00:06:40,839 --> 00:06:45,400 Speaker 1: idea he used to take his afternoon often sleep. Okay, 103 00:06:45,560 --> 00:06:50,640 Speaker 1: you know, I mean, I guess the way to run 104 00:06:50,680 --> 00:06:53,600 Speaker 1: their presidency is to delegate as much as possible to 105 00:06:53,720 --> 00:06:59,520 Speaker 1: people who trust and only take strategic decisions, don't micromanage, 106 00:07:00,240 --> 00:07:02,119 Speaker 1: and you know this this is the way to really 107 00:07:02,320 --> 00:07:04,920 Speaker 1: Now in the Hillary Clinton, I feel sorry for her, 108 00:07:05,320 --> 00:07:09,760 Speaker 1: but I'm feel more sorry if she was to drop out. Yeah, 109 00:07:09,880 --> 00:07:14,520 Speaker 1: let's say no probability and the Democrats found any other candidate. 110 00:07:14,760 --> 00:07:18,760 Speaker 1: Trump has no chance. Trump has no chance against, said 111 00:07:18,840 --> 00:07:24,880 Speaker 1: Joe Biden, because everybody likes Joe Biden, nobody likes Hillary Clinton. Okay, 112 00:07:24,920 --> 00:07:27,280 Speaker 1: I'm just kind of now thinking about different questions to 113 00:07:27,320 --> 00:07:30,120 Speaker 1: come off that. Okay, it isn't Trump's interest to keep 114 00:07:30,200 --> 00:07:32,200 Speaker 1: Hillary there, So that's why he's not saying anything at 115 00:07:32,200 --> 00:07:36,120 Speaker 1: this point at the moment, how big do you think 116 00:07:36,120 --> 00:07:37,640 Speaker 1: the wind would be if it would be to somebody, 117 00:07:37,640 --> 00:07:41,440 Speaker 1: would be somebody else? Absolutely right, Trump out right, So 118 00:07:41,480 --> 00:07:43,640 Speaker 1: this will be this will be a completely non viable 119 00:07:43,960 --> 00:07:46,920 Speaker 1: Republican Party going in and with that, with that feature 120 00:07:46,920 --> 00:07:48,240 Speaker 1: into the House as well. Do you think that would 121 00:07:48,280 --> 00:07:51,960 Speaker 1: have ramification? That is difficult. That is difficult because court tails. 122 00:07:52,040 --> 00:07:55,559 Speaker 1: You know, nobody is relying environment Donald Trump's court tails 123 00:07:55,680 --> 00:07:58,440 Speaker 1: right now in the Republican Party at least half to 124 00:07:58,480 --> 00:08:01,520 Speaker 1: theroubling parties not relying. Lord de sig, I'm glad you 125 00:08:01,680 --> 00:08:06,640 Speaker 1: endorsed the afternoon nap. It is a hallmark of Bloomberg surveillance. 126 00:08:06,680 --> 00:08:09,840 Speaker 1: It's very, very important to get the obligatory nap in 127 00:08:09,920 --> 00:08:12,840 Speaker 1: to get through the week. You make a distinction, Lord 128 00:08:12,920 --> 00:08:18,280 Speaker 1: to side about a businessman or a businesswoman is president 129 00:08:18,360 --> 00:08:21,360 Speaker 1: and we think look back to I think Coolidge, certainly 130 00:08:21,480 --> 00:08:24,160 Speaker 1: Mr Hoover as well. I'm not quite sure in the 131 00:08:24,200 --> 00:08:28,080 Speaker 1: British experience, but what is the distinction of a businessman 132 00:08:28,680 --> 00:08:33,199 Speaker 1: as president? I think you know, a businessman, especially Trump, 133 00:08:34,000 --> 00:08:38,960 Speaker 1: understands that borrowing for growth, it's perfectly a normal thing. 134 00:08:39,800 --> 00:08:43,360 Speaker 1: Debt is not a problem. I like, I'm fascinated about 135 00:08:43,360 --> 00:08:46,000 Speaker 1: Trump because he had said debt is not a problem. 136 00:08:46,640 --> 00:08:50,480 Speaker 1: For the last thirty thirty five years, we haven't told 137 00:08:50,840 --> 00:08:54,840 Speaker 1: debt is about degit predation should be controlled. And here's 138 00:08:54,640 --> 00:08:57,559 Speaker 1: what you know. I'll get into a debt, I'll expand 139 00:08:57,559 --> 00:09:00,960 Speaker 1: the economy, I'll get out of it. It's a you know, 140 00:09:01,000 --> 00:09:05,240 Speaker 1: it's a different angle on public financiers from the angle 141 00:09:05,320 --> 00:09:08,480 Speaker 1: of a private finance. Normally, if we think of businessmen 142 00:09:08,520 --> 00:09:11,880 Speaker 1: know how to run business and and and bureaucrats are 143 00:09:11,880 --> 00:09:16,560 Speaker 1: irresponsible in borrowing, here we are and right now. You know, 144 00:09:16,640 --> 00:09:20,839 Speaker 1: as Larry Summer says today in the Financial Times, America 145 00:09:21,040 --> 00:09:25,120 Speaker 1: needs a lot of infrastructure investment and Hillary Clinton has 146 00:09:25,160 --> 00:09:29,160 Speaker 1: not really shown her hand on that. But Donald Trump 147 00:09:29,200 --> 00:09:31,640 Speaker 1: has well point on point of debate here as we 148 00:09:31,720 --> 00:09:47,800 Speaker 1: get to that debate on September. Douglas Hall teaken, long 149 00:09:47,880 --> 00:09:54,839 Speaker 1: time expert on all things political, budget economic, is um 150 00:09:55,000 --> 00:09:57,559 Speaker 1: the former director of the Congressional Budget Office. He was 151 00:09:57,600 --> 00:10:00,520 Speaker 1: the chief economic policy advisor to John McCain two thousand 152 00:10:00,520 --> 00:10:02,920 Speaker 1: and eight presidential campaign. He's currently president of the American 153 00:10:02,960 --> 00:10:06,520 Speaker 1: Action for Him and he is joining the National Association 154 00:10:06,559 --> 00:10:10,400 Speaker 1: for Business Economics annual meeting to talk about the gig economy, 155 00:10:10,440 --> 00:10:12,880 Speaker 1: and that is a big deal these days. We've talked 156 00:10:12,880 --> 00:10:16,880 Speaker 1: a lot about this with Alan Krueger on the show Tom, 157 00:10:16,920 --> 00:10:19,520 Speaker 1: But we'll get to that in a moment, because I've 158 00:10:19,520 --> 00:10:23,640 Speaker 1: got to bring up it's the major story everybody in 159 00:10:23,679 --> 00:10:27,040 Speaker 1: Washington is talking about. Of course, that's the Redskins tonight 160 00:10:27,040 --> 00:10:29,000 Speaker 1: playing the Steelers. But the story the rest of the 161 00:10:29,000 --> 00:10:33,320 Speaker 1: world is. The story the rest of the world is 162 00:10:33,320 --> 00:10:35,600 Speaker 1: talking about is Hillary Clinton gets sick and it may 163 00:10:35,679 --> 00:10:38,120 Speaker 1: change the completely the dynamics of the race here. Nobody 164 00:10:38,120 --> 00:10:41,920 Speaker 1: knows what's going to happen. Uh. It kind of raises 165 00:10:41,960 --> 00:10:46,719 Speaker 1: the question of ken Donald Trump actually win. It does 166 00:10:47,080 --> 00:10:50,120 Speaker 1: that question, and the political experts have always said something 167 00:10:50,240 --> 00:10:52,920 Speaker 1: very simple, which is, if he can make this race 168 00:10:53,080 --> 00:10:57,360 Speaker 1: about her, about her emails, about her history, about her 169 00:10:57,559 --> 00:10:59,839 Speaker 1: as a candidate, he has chanced to win. This is 170 00:10:59,840 --> 00:11:01,800 Speaker 1: a real opening for that. This is about her basic 171 00:11:01,840 --> 00:11:04,800 Speaker 1: health and our ability to conduct the office. I think 172 00:11:04,800 --> 00:11:07,840 Speaker 1: it's the biggest opening scene so far. Interestingly enough, he 173 00:11:07,920 --> 00:11:10,360 Speaker 1: has been very untrumped. Like this morning, He's appeared on 174 00:11:10,400 --> 00:11:12,400 Speaker 1: a couple of television programs and said he hopes she 175 00:11:12,480 --> 00:11:14,480 Speaker 1: feels better soon and we'll see her at the debate. 176 00:11:14,640 --> 00:11:17,800 Speaker 1: He has not said anything nasty uh this morning. What 177 00:11:17,880 --> 00:11:21,720 Speaker 1: he has done is talk about the economy, and Uh. 178 00:11:21,760 --> 00:11:25,040 Speaker 1: In terms of the economy, he's been saying that, um, 179 00:11:25,160 --> 00:11:29,200 Speaker 1: the US is a victim of regulation, that that's the 180 00:11:29,200 --> 00:11:34,120 Speaker 1: biggest thing that is holding back the economy and also trade. 181 00:11:34,160 --> 00:11:36,480 Speaker 1: He he says NAFTA is a one way street to 182 00:11:36,480 --> 00:11:41,400 Speaker 1: the poorhouse. Uh. You've were John McCain's economic advisory When 183 00:11:41,440 --> 00:11:46,200 Speaker 1: you look at what he is advocating for the economy, Uh, 184 00:11:46,520 --> 00:11:48,240 Speaker 1: do you think it makes a lot of sense? Well, 185 00:11:48,440 --> 00:11:51,000 Speaker 1: I think objectively it's pretty incoherent. UM. I have a 186 00:11:51,000 --> 00:11:53,120 Speaker 1: lot of sympathy for his views on regulation. One of 187 00:11:53,160 --> 00:11:54,800 Speaker 1: the things we do with the American Action Forum is 188 00:11:55,160 --> 00:11:58,800 Speaker 1: keep track of every federal regulation issued by every agency. 189 00:11:58,880 --> 00:12:02,240 Speaker 1: And if you look at the the cumulative regulatory burden 190 00:12:02,280 --> 00:12:05,400 Speaker 1: by the obaministration, it's over eight billion dollars. That's about 191 00:12:05,400 --> 00:12:07,920 Speaker 1: a hundred billion dollar tax increase every year. That has 192 00:12:07,960 --> 00:12:10,280 Speaker 1: to have a substantial impact on the economy. On the 193 00:12:10,360 --> 00:12:12,560 Speaker 1: other hand, I think he's on the wrong side of 194 00:12:12,960 --> 00:12:15,600 Speaker 1: the facts on on NAFTA for sure, On the Korean 195 00:12:15,600 --> 00:12:17,880 Speaker 1: Free Trade Agreement, I think he's wrong about the the 196 00:12:17,920 --> 00:12:20,480 Speaker 1: t P P and and and international e comic relations. 197 00:12:20,480 --> 00:12:23,600 Speaker 1: In general. His proposals are not pro growth proposals, and 198 00:12:23,640 --> 00:12:26,240 Speaker 1: we need more rapid growth, more than anything else. So 199 00:12:26,800 --> 00:12:29,840 Speaker 1: would he be a better choice than Hillary Clinton? I 200 00:12:29,880 --> 00:12:33,520 Speaker 1: assume you don't like her economic proposals either. She appears 201 00:12:33,559 --> 00:12:35,520 Speaker 1: and the Democratic Party in general appears to have given 202 00:12:35,600 --> 00:12:38,280 Speaker 1: up on growth. You can't find anything that looks like 203 00:12:38,679 --> 00:12:42,120 Speaker 1: policies to improve long term trend growth in her platform. 204 00:12:42,200 --> 00:12:45,559 Speaker 1: So I find that incredibly disappointing. Uh, and and something 205 00:12:45,679 --> 00:12:48,640 Speaker 1: I just don't support. Um, she's a You know that 206 00:12:48,760 --> 00:12:50,880 Speaker 1: this is the classic investment decision. Do you want the 207 00:12:51,840 --> 00:12:55,280 Speaker 1: low risk, low return Clinton presidency or do you want 208 00:12:55,280 --> 00:12:58,280 Speaker 1: the high risk, potentially high return from presidency. And that's 209 00:12:58,280 --> 00:12:59,760 Speaker 1: the decision that we're faced with. What would be the 210 00:12:59,800 --> 00:13:02,360 Speaker 1: high return from a Trump presidency? Well, I think you 211 00:13:02,400 --> 00:13:06,000 Speaker 1: could imagine a scenario where he really leaves the policymaking 212 00:13:06,040 --> 00:13:08,800 Speaker 1: to the Congress and says, for example, you, Paul Ryan 213 00:13:08,840 --> 00:13:11,120 Speaker 1: in the House, please initiate an agenda that will make 214 00:13:11,120 --> 00:13:15,120 Speaker 1: this economy grow more rapidly, deliver less poverty, higher standards 215 00:13:15,160 --> 00:13:17,800 Speaker 1: of living. Uh, see what you can get through the Senate, 216 00:13:17,800 --> 00:13:20,160 Speaker 1: and knowing that there won't be sixty votes, and then 217 00:13:20,240 --> 00:13:24,400 Speaker 1: I'll sign And um an Nba a farebroker and a dealmaker, 218 00:13:24,640 --> 00:13:27,360 Speaker 1: which is his history of course. Uh, that's that's the 219 00:13:27,800 --> 00:13:33,679 Speaker 1: good scenario. Donald Trump this morning in a number of appearances, Uh, 220 00:13:33,679 --> 00:13:36,400 Speaker 1: he was asked about the FED, and he said that 221 00:13:36,520 --> 00:13:39,600 Speaker 1: Janet yell And is political and only doing what Obama wants. 222 00:13:39,640 --> 00:13:42,560 Speaker 1: The FED should be ashamed of it. She should be 223 00:13:42,640 --> 00:13:46,920 Speaker 1: ashamed of herself on rape policy. And the FED is, obviously, 224 00:13:47,080 --> 00:13:52,800 Speaker 1: he says, not independent. Uh what do you think of that? Uh? 225 00:13:53,679 --> 00:13:57,680 Speaker 1: Is there any chance the FED is doing the administration's bidding? No. 226 00:13:57,960 --> 00:14:01,080 Speaker 1: I think this is an unfortunate route to go down 227 00:14:01,559 --> 00:14:05,880 Speaker 1: since Reagan, UH basically just told Republicans we're not going 228 00:14:05,880 --> 00:14:08,520 Speaker 1: to discuss the FED. It's independent agency and gave Paul 229 00:14:08,600 --> 00:14:11,240 Speaker 1: Volker raine to deal with the inflation of the late 230 00:14:11,280 --> 00:14:14,040 Speaker 1: seventies early eighties. I think that served the US very well. 231 00:14:14,320 --> 00:14:16,360 Speaker 1: It made the FED the pre eminent monetary authority. And 232 00:14:16,360 --> 00:14:18,800 Speaker 1: there's no reason to go back to any other way 233 00:14:18,840 --> 00:14:21,160 Speaker 1: of thinking about doctor holds. He could come on in 234 00:14:21,240 --> 00:14:25,440 Speaker 1: battleground states. Is it just as simple as Mr Trump 235 00:14:25,560 --> 00:14:29,120 Speaker 1: can win marginal voters if he acts more like Dr 236 00:14:29,240 --> 00:14:32,200 Speaker 1: run Paul. It is true that the FEDS very unpopular 237 00:14:32,280 --> 00:14:35,040 Speaker 1: right now. It is perceived as having you know, bailed 238 00:14:35,040 --> 00:14:37,800 Speaker 1: out Big Wall Street banks had having acted on behalf 239 00:14:37,840 --> 00:14:40,600 Speaker 1: of them. But that's a problem the FED, I think 240 00:14:40,640 --> 00:14:43,800 Speaker 1: should be dealing with in terms of its public image. 241 00:14:44,160 --> 00:14:47,040 Speaker 1: I don't think it's a wise thing for a president 242 00:14:47,120 --> 00:14:50,560 Speaker 1: to be as as Trump would hope to exploit, because 243 00:14:50,600 --> 00:14:53,680 Speaker 1: he's then gonna have to turn around make appointments and 244 00:14:53,840 --> 00:14:56,840 Speaker 1: have those suffered the same suspicion that they're just acting 245 00:14:56,880 --> 00:14:59,920 Speaker 1: on his bath. Help us here with this odd thing 246 00:15:00,040 --> 00:15:04,320 Speaker 1: I know being discussed in Atlanta policy. If and when 247 00:15:04,520 --> 00:15:08,760 Speaker 1: policy actually becomes part of the campaign, what is your 248 00:15:08,800 --> 00:15:14,520 Speaker 1: briefing to both candidates on the urgency of our future challenges? 249 00:15:14,760 --> 00:15:17,440 Speaker 1: Right now? We're sitting pretty aren't we. Oh. I would 250 00:15:17,440 --> 00:15:19,480 Speaker 1: not say that. I would say that the near term 251 00:15:19,520 --> 00:15:22,480 Speaker 1: out look for the economies mixed. We've had a fairly 252 00:15:22,480 --> 00:15:26,720 Speaker 1: solid household sector. Everything else looks real weak. That can't persist. 253 00:15:26,840 --> 00:15:29,760 Speaker 1: So you hope the business community sort of takes the 254 00:15:30,600 --> 00:15:33,040 Speaker 1: cash off the balance sheet and starts investing. But if 255 00:15:33,120 --> 00:15:36,200 Speaker 1: it doesn't, um you can't maintain the household spending. So 256 00:15:36,400 --> 00:15:39,360 Speaker 1: I'm worried about the state of the economy longer term. 257 00:15:40,000 --> 00:15:42,240 Speaker 1: The notion that we are going to settle for two 258 00:15:42,320 --> 00:15:44,160 Speaker 1: percent growth for as far as I can see, it's 259 00:15:44,200 --> 00:15:48,360 Speaker 1: just to me incredibly sad. We need to, you know, 260 00:15:48,720 --> 00:15:51,520 Speaker 1: deal with the structural problems in the budget, the task code, 261 00:15:51,600 --> 00:15:55,840 Speaker 1: the regulatory world, immigration, education, and get trend growth back 262 00:15:55,920 --> 00:15:59,560 Speaker 1: up that that's an essential thing for greater prosperity for America. 263 00:15:59,800 --> 00:16:03,520 Speaker 1: I think there is probably agreement among the economists here 264 00:16:04,040 --> 00:16:08,280 Speaker 1: that whatever you think of Janet Yellen, those things she 265 00:16:08,400 --> 00:16:12,560 Speaker 1: can't address, they're not within monetary policies. Perview, you're in 266 00:16:12,600 --> 00:16:15,280 Speaker 1: touch with all of the Republicans on Capitol Hill, is 267 00:16:15,320 --> 00:16:18,960 Speaker 1: there any chance we get a fiscal measure in the 268 00:16:19,040 --> 00:16:22,680 Speaker 1: next year? Certainly the House Republicans have put out a 269 00:16:22,680 --> 00:16:26,440 Speaker 1: whole series of task Course reports on tax reform, anti 270 00:16:26,520 --> 00:16:30,960 Speaker 1: poverty measures, healthcare reform, all of which would have fiscal implications, 271 00:16:31,000 --> 00:16:34,240 Speaker 1: would put the budget in better order going forward, and 272 00:16:34,320 --> 00:16:37,120 Speaker 1: I think would have progrowth features. The question is can 273 00:16:37,160 --> 00:16:39,920 Speaker 1: you turn those task force reports into legislation that a 274 00:16:39,960 --> 00:16:42,200 Speaker 1: president will sign? And and that's what's at stake in 275 00:16:42,200 --> 00:16:44,440 Speaker 1: the selection. Well, from your point of view as somebody, 276 00:16:44,480 --> 00:16:46,600 Speaker 1: I mean, you were the head of the Congressional Budget Office, 277 00:16:46,720 --> 00:16:49,760 Speaker 1: as somebody who has had to deal with politics, navigate 278 00:16:49,800 --> 00:16:52,680 Speaker 1: the world of politics, in Washington. What one thing do 279 00:16:52,720 --> 00:16:56,680 Speaker 1: you think could get through both sides and get signed. 280 00:16:57,160 --> 00:17:00,000 Speaker 1: What could be done fiscally to help the economy get 281 00:17:00,040 --> 00:17:03,160 Speaker 1: past that two? I think in the near term there's 282 00:17:03,360 --> 00:17:06,160 Speaker 1: uh the highest prospects would be a deal that included 283 00:17:06,200 --> 00:17:09,600 Speaker 1: international tax reform, fixing the tax treatment of our our 284 00:17:09,680 --> 00:17:14,760 Speaker 1: largest multinationals, and some infrastructure spending. Clinton's running heavily and 285 00:17:14,800 --> 00:17:17,359 Speaker 1: that Trump has mentioned that that appears to be something 286 00:17:17,640 --> 00:17:20,000 Speaker 1: that both parties would support. And then there's a wide 287 00:17:20,040 --> 00:17:22,199 Speaker 1: recognition that the corporate code is just broken and we 288 00:17:22,240 --> 00:17:24,160 Speaker 1: need to do something about it. So that's the most 289 00:17:24,160 --> 00:17:27,880 Speaker 1: promising near term piece of legislation I could see. Tell 290 00:17:27,960 --> 00:17:33,480 Speaker 1: us about the responsiveness, almost the elasticity of our guesses 291 00:17:33,680 --> 00:17:38,119 Speaker 1: on g d P and our budget. I mean, we 292 00:17:38,200 --> 00:17:41,320 Speaker 1: haven't its three point two percent real GDP since time begin. 293 00:17:41,880 --> 00:17:45,800 Speaker 1: Where is that plug in number now? And what's the 294 00:17:45,920 --> 00:17:49,080 Speaker 1: confidence you have that we know what we're doing when 295 00:17:49,119 --> 00:17:52,879 Speaker 1: we plug in g d P. Well, I think you 296 00:17:52,880 --> 00:17:55,840 Speaker 1: know you raise a really important point, which is these 297 00:17:55,920 --> 00:17:59,439 Speaker 1: numbers are very difficult to measure. The measurement issues are 298 00:17:59,480 --> 00:18:02,920 Speaker 1: hard and too into forecast even harder. Yet I've always 299 00:18:02,960 --> 00:18:05,280 Speaker 1: thought on the budget front that you should really budget 300 00:18:05,359 --> 00:18:07,920 Speaker 1: for years one two in year fifty. Uh, you know 301 00:18:08,200 --> 00:18:10,480 Speaker 1: it's pretty hard to hit have anything like a sensible 302 00:18:10,960 --> 00:18:14,120 Speaker 1: eight year forecast. But we know that the fifty year 303 00:18:14,400 --> 00:18:16,680 Speaker 1: UM budget is so badly out of whack. It doesn't 304 00:18:16,680 --> 00:18:19,040 Speaker 1: matter what the numbers are. We have to get it fixed. 305 00:18:19,359 --> 00:18:21,960 Speaker 1: And on the economy, I think we know that the 306 00:18:22,440 --> 00:18:25,120 Speaker 1: the upside is just too low right now. Right we're 307 00:18:25,160 --> 00:18:27,720 Speaker 1: not going to see a quarter that that breaks in 308 00:18:27,840 --> 00:18:29,280 Speaker 1: there there at four or four and a half percent. 309 00:18:29,400 --> 00:18:31,960 Speaker 1: We just we aren't seeing that kind of behavior and 310 00:18:32,359 --> 00:18:34,600 Speaker 1: that's what we typically gotten a recovery. Let me bring 311 00:18:34,640 --> 00:18:38,080 Speaker 1: it to your presentation today to gig economy. Obviously we're 312 00:18:38,119 --> 00:18:41,359 Speaker 1: seeing secular changes in the way the economy works. Uh, 313 00:18:42,080 --> 00:18:44,479 Speaker 1: how do you account for that? One of the questions 314 00:18:44,520 --> 00:18:46,679 Speaker 1: that came up in the productivity debate yesterday was how 315 00:18:46,720 --> 00:18:49,479 Speaker 1: you measure the contributions people in the gig economy make 316 00:18:49,520 --> 00:18:52,159 Speaker 1: to GDP. Yeah. I think this session is going to 317 00:18:52,240 --> 00:18:55,439 Speaker 1: be more um a learning and listening session. I mean, 318 00:18:55,480 --> 00:18:57,919 Speaker 1: this is a panel discussion on the issues. I think 319 00:18:57,960 --> 00:19:00,000 Speaker 1: there's something real here. There are a lot of people 320 00:19:00,080 --> 00:19:03,320 Speaker 1: who would argue that we've always had so called contingent workers. 321 00:19:03,760 --> 00:19:05,600 Speaker 1: You know, we have folks who are part time, or 322 00:19:05,640 --> 00:19:08,680 Speaker 1: we have folks are indevented contractors. That's not new. But 323 00:19:09,160 --> 00:19:12,240 Speaker 1: we are seeing consumer benefits from the ubers and the 324 00:19:12,320 --> 00:19:16,120 Speaker 1: airbnb s and the variety of gig economy players. That's say, 325 00:19:16,200 --> 00:19:18,680 Speaker 1: this is not just how you arrange the production of services. 326 00:19:18,840 --> 00:19:21,600 Speaker 1: And I think we do have to figure out where 327 00:19:21,640 --> 00:19:24,640 Speaker 1: do these workers fit in the regulatory framework the Fairly 328 00:19:24,680 --> 00:19:27,639 Speaker 1: with Standards Act. Are we going to impose an employer 329 00:19:27,720 --> 00:19:30,920 Speaker 1: employee relationship or not. Um My own take on it 330 00:19:31,080 --> 00:19:33,440 Speaker 1: is They're not a large part of the labor force 331 00:19:33,520 --> 00:19:36,080 Speaker 1: right now, so we don't yet have to make strong 332 00:19:36,160 --> 00:19:38,800 Speaker 1: decisions on this and some regulatory forebearance to be wise. 333 00:19:38,960 --> 00:19:41,639 Speaker 1: But they are growing rapidly. I mean, if Alan Krueger's 334 00:19:41,720 --> 00:19:44,199 Speaker 1: estimates are to be believed, between two thousand and two 335 00:19:44,200 --> 00:19:46,720 Speaker 1: thousand and fifteen, all of the net employment growth came 336 00:19:46,800 --> 00:19:49,560 Speaker 1: in contingent workers. That's remarkable. Well, I mean you have 337 00:19:50,600 --> 00:19:52,879 Speaker 1: on both sides, you have a question. One is how 338 00:19:52,920 --> 00:19:54,760 Speaker 1: do we count with their contributing to the economy, But 339 00:19:54,800 --> 00:19:57,159 Speaker 1: the other is how do you help those workers? And 340 00:19:57,400 --> 00:20:00,159 Speaker 1: maybe this gets to political philosophy to do you make 341 00:20:00,240 --> 00:20:03,399 Speaker 1: sure that they are paid a living wage and that 342 00:20:03,520 --> 00:20:06,000 Speaker 1: sort of thing, because the essence of the gig economy 343 00:20:06,080 --> 00:20:08,200 Speaker 1: is you'll work for whatever I will pay you because 344 00:20:08,240 --> 00:20:11,359 Speaker 1: it's your choice. Um. I think the key here is 345 00:20:11,640 --> 00:20:14,720 Speaker 1: how do we fit this into the social stafetion that 346 00:20:14,840 --> 00:20:17,560 Speaker 1: going forward? We we had a model at the end 347 00:20:17,600 --> 00:20:20,080 Speaker 1: of World War Two where the employer was the well 348 00:20:20,160 --> 00:20:22,560 Speaker 1: of all the social benefits. They provided the pensions in 349 00:20:22,640 --> 00:20:24,520 Speaker 1: the health care and and all the things that the 350 00:20:25,000 --> 00:20:28,760 Speaker 1: employees wanted. I don't think that's a viable model for 351 00:20:28,840 --> 00:20:31,440 Speaker 1: the twenty one century, but we haven't help with an alternative, 352 00:20:31,640 --> 00:20:34,879 Speaker 1: and I think that's the crucial policy question. And getting 353 00:20:35,240 --> 00:20:37,520 Speaker 1: the same kinds of tests in the I R S 354 00:20:37,640 --> 00:20:39,920 Speaker 1: and the Labor Department and sort of cleaning out the 355 00:20:39,920 --> 00:20:42,720 Speaker 1: regulatory of rass around them would be a good idea. DOC. 356 00:20:42,800 --> 00:20:45,480 Speaker 1: Thank you so much, Dr Holts. He can folks with 357 00:20:45,640 --> 00:20:49,080 Speaker 1: us from the National Association for Business Economic Meetings in Atlanta. 358 00:20:49,920 --> 00:20:53,760 Speaker 1: Who you put your trust in matters. Investors have put 359 00:20:53,800 --> 00:20:57,200 Speaker 1: their trust in independent registered investment advisors to the tune 360 00:20:57,240 --> 00:21:01,639 Speaker 1: of four trillion dollars. Why they see their role is 361 00:21:01,720 --> 00:21:05,719 Speaker 1: to serve, not sell. That's why Charles Schwab is committed 362 00:21:05,760 --> 00:21:09,360 Speaker 1: to the success of over seven thousand independent financial advisors 363 00:21:09,760 --> 00:21:14,119 Speaker 1: who passionately dedicate themselves to helping people achieve their financial goals. 364 00:21:14,880 --> 00:21:24,520 Speaker 1: Learn more and find your independent advisor dot com. We 365 00:21:24,640 --> 00:21:27,800 Speaker 1: are with William White. He is the Chairman of the 366 00:21:27,840 --> 00:21:30,280 Speaker 1: Economic and Development Review Committee of the o E c D. 367 00:21:30,440 --> 00:21:35,000 Speaker 1: But basically he's uh the man for economics at the 368 00:21:35,600 --> 00:21:38,840 Speaker 1: bastion of the thirty biggest economies in the United States, 369 00:21:38,920 --> 00:21:42,320 Speaker 1: and he received the Adam Smith Award from the NAB 370 00:21:42,840 --> 00:21:44,880 Speaker 1: yesterday and gave an address that well, let me put 371 00:21:44,920 --> 00:21:47,960 Speaker 1: this way, I walked into the building and everybody was 372 00:21:48,000 --> 00:21:51,679 Speaker 1: wearing hard hats. The survey that we just talked about 373 00:21:52,160 --> 00:21:55,280 Speaker 1: of NAB members said that the peak of the economic 374 00:21:55,320 --> 00:21:58,760 Speaker 1: cycle wouldn't come in until two eighteen. I think it's 375 00:21:58,800 --> 00:22:03,680 Speaker 1: safe to say that Mr disagrees is rather pessimistic about 376 00:22:03,720 --> 00:22:06,680 Speaker 1: the global outlooks. So we've invited him on to to 377 00:22:06,800 --> 00:22:10,200 Speaker 1: depress our listen, to explain to our listeners exactly what 378 00:22:10,359 --> 00:22:14,920 Speaker 1: he sees. You do see problems in the global economy 379 00:22:15,000 --> 00:22:19,120 Speaker 1: out there? Oh? Absolutely, Um, I think there's all sorts 380 00:22:19,160 --> 00:22:21,800 Speaker 1: of things that one should be concerned about. Um. Not 381 00:22:22,080 --> 00:22:25,879 Speaker 1: least I think is that there's been a cumulative build 382 00:22:25,960 --> 00:22:30,480 Speaker 1: up of debt um started I think with the advanced 383 00:22:30,520 --> 00:22:33,639 Speaker 1: market economies, but now it's spread to the emerging market economies. 384 00:22:34,560 --> 00:22:38,280 Speaker 1: Mackenzie did a survey a little while ago the Global 385 00:22:38,320 --> 00:22:43,840 Speaker 1: Institute that basically indicated the global debt levels, that's to say, 386 00:22:44,560 --> 00:22:48,440 Speaker 1: households plus corporates plus sovereigns are up twenty percentage points 387 00:22:48,480 --> 00:22:52,520 Speaker 1: of GDP since two thousand nine. So if one thinks 388 00:22:52,520 --> 00:22:56,600 Speaker 1: about the crisis as a period of deleveraging after a 389 00:22:56,720 --> 00:23:00,320 Speaker 1: period of excessively reaching, the deleveraging hasn't even are did 390 00:23:01,000 --> 00:23:03,680 Speaker 1: now you made a reference a moment ago to the 391 00:23:04,119 --> 00:23:06,880 Speaker 1: timing of one was when is all of this going 392 00:23:06,960 --> 00:23:09,760 Speaker 1: to stop? The honest truth is that nobody has got 393 00:23:09,840 --> 00:23:13,560 Speaker 1: the slightest idea of how long these processes can continue. 394 00:23:14,160 --> 00:23:16,200 Speaker 1: But what you do know, and this is a famous 395 00:23:16,240 --> 00:23:18,920 Speaker 1: line of herb Stein's you remember where Herbstein says, it's 396 00:23:18,960 --> 00:23:22,720 Speaker 1: something something is unsustainable, it will stop, and Rudy Dornbush 397 00:23:22,760 --> 00:23:25,320 Speaker 1: apparently responded, it will go on a lot longer than 398 00:23:25,359 --> 00:23:28,040 Speaker 1: you imagine. And that's the way it is. So I 399 00:23:28,280 --> 00:23:33,479 Speaker 1: I think that essentially we have got a problem here 400 00:23:33,560 --> 00:23:36,800 Speaker 1: going forward. Debt is the most important thing, but it's 401 00:23:36,840 --> 00:23:40,240 Speaker 1: not the only thing. Uh. There are all sorts of 402 00:23:40,320 --> 00:23:43,639 Speaker 1: other imbalances that are out there, uh, not least of 403 00:23:43,680 --> 00:23:46,879 Speaker 1: which in the financial markets. I guess I believe that 404 00:23:47,000 --> 00:23:51,640 Speaker 1: virtually all financial assets are very, very sort of aggressively priced. 405 00:23:52,240 --> 00:23:55,199 Speaker 1: That includes the risk spreads, It includes the stock market. 406 00:23:55,840 --> 00:24:01,240 Speaker 1: Negative interest rates are clearly totally unsustainable as an ongoing 407 00:24:01,400 --> 00:24:06,359 Speaker 1: as an ongoing um reality. So yeah, I think there's 408 00:24:06,400 --> 00:24:09,879 Speaker 1: some problems, and I can talk about specific problems specific 409 00:24:10,000 --> 00:24:13,120 Speaker 1: regions as well. But when when will the hammer fall? 410 00:24:13,800 --> 00:24:18,080 Speaker 1: Nobody could possibly know? Why is William R. White with us? Folks? 411 00:24:18,480 --> 00:24:22,000 Speaker 1: Maybe we can go back three years to September two 412 00:24:22,080 --> 00:24:25,000 Speaker 1: thousand thirteen. I just put out on Twitter one of 413 00:24:25,080 --> 00:24:28,679 Speaker 1: the two papers Dr White wrote for the Feller Reserve 414 00:24:28,760 --> 00:24:34,040 Speaker 1: Bank of Dallas. It is absolutely must read. It is 415 00:24:34,720 --> 00:24:38,320 Speaker 1: the required paper I give when I lecture students. Is 416 00:24:38,480 --> 00:24:42,560 Speaker 1: monetary policy, policy of science. Can't say enough about it? 417 00:24:43,040 --> 00:24:46,520 Speaker 1: And and build what you nail in footnote one ten, 418 00:24:47,680 --> 00:24:53,359 Speaker 1: page thirty one of your September Every word of this paper, folks, 419 00:24:53,760 --> 00:24:58,040 Speaker 1: footnote one ten. You were so out front on negative rates? 420 00:24:58,720 --> 00:25:03,080 Speaker 1: What if you learn on negative rates, says you wrote 421 00:25:03,160 --> 00:25:07,720 Speaker 1: footnote one ten on Denmark three years ago. Oh yes, 422 00:25:07,800 --> 00:25:11,680 Speaker 1: I I hard for me to remember footnote when then 423 00:25:12,280 --> 00:25:18,600 Speaker 1: I was children. This weekend, I can see you have 424 00:25:18,800 --> 00:25:24,320 Speaker 1: lively breakfast conversations in your housetown. Um, I guess right 425 00:25:24,359 --> 00:25:26,920 Speaker 1: at the beginning, I mean, the Danes expressed some concern 426 00:25:27,200 --> 00:25:31,440 Speaker 1: about negative interest rates, not not least of which, and 427 00:25:31,520 --> 00:25:35,440 Speaker 1: I think this is materialized more recently, was that if 428 00:25:35,560 --> 00:25:41,040 Speaker 1: if the negative interest rates starts squeezing the profits of 429 00:25:41,200 --> 00:25:46,119 Speaker 1: the banks, and the concern was that, um, you couldn't 430 00:25:46,160 --> 00:25:49,040 Speaker 1: lower the deposit rate any lower. So if you wanted 431 00:25:49,080 --> 00:25:51,800 Speaker 1: to get your profits back again, okay, given that you 432 00:25:51,880 --> 00:25:54,360 Speaker 1: were being paid in negative interest rate on your reserves 433 00:25:54,400 --> 00:25:57,359 Speaker 1: the central bank, maybe the only alternative was to raise 434 00:25:57,440 --> 00:26:00,280 Speaker 1: the lending rate to get the profits back again. That's 435 00:26:00,280 --> 00:26:03,040 Speaker 1: the very opposite of the purpose for which the policy 436 00:26:03,160 --> 00:26:05,840 Speaker 1: was designed. And uh, I think I said at the 437 00:26:05,880 --> 00:26:08,119 Speaker 1: time in an interview with somebody, it's a bit like 438 00:26:08,240 --> 00:26:12,440 Speaker 1: quantum mechanics. You know that you think of Newtonian physics 439 00:26:12,520 --> 00:26:15,959 Speaker 1: where bodies in motion and everything is just fine as 440 00:26:16,040 --> 00:26:18,600 Speaker 1: long as the bodies aren't moving too fast or the 441 00:26:18,680 --> 00:26:21,720 Speaker 1: bodies aren't too small, in which case you're into general 442 00:26:21,760 --> 00:26:25,760 Speaker 1: relativity or quantum mechanics. It's a different world. And maybe 443 00:26:25,960 --> 00:26:28,280 Speaker 1: maybe that's what's happening with negative rates, and we should 444 00:26:28,320 --> 00:26:30,879 Speaker 1: think about this possibility that there might there might be 445 00:26:30,920 --> 00:26:33,800 Speaker 1: a kind of phase change here that gives you a 446 00:26:33,880 --> 00:26:36,960 Speaker 1: result that's not the result that was intended. So I 447 00:26:37,040 --> 00:26:38,920 Speaker 1: saw that age as and ages go. But it's only 448 00:26:39,000 --> 00:26:42,159 Speaker 1: more recently, since bigger central banks have done it that 449 00:26:42,280 --> 00:26:46,160 Speaker 1: there's been a more widespread discussion of whether these things 450 00:26:46,200 --> 00:26:48,399 Speaker 1: are helpful or whether they're not helpful. Well, the folks 451 00:26:48,440 --> 00:26:50,920 Speaker 1: are the Fed seemed to agree with you at this 452 00:26:51,040 --> 00:26:54,760 Speaker 1: point after studying it. They don't seem enthusiastic as enthusiastic 453 00:26:54,800 --> 00:26:57,160 Speaker 1: as other central banks. But that still leaves them short 454 00:26:57,160 --> 00:27:00,359 Speaker 1: of tools, doesn't it. If you're correct, if we do 455 00:27:00,520 --> 00:27:03,560 Speaker 1: see a downturn, And Larry Summers went on record last 456 00:27:03,560 --> 00:27:06,480 Speaker 1: week saying it's going to happen reasonably soon without putting 457 00:27:06,480 --> 00:27:09,600 Speaker 1: a time on it. Uh, And the Fed funds rate 458 00:27:09,840 --> 00:27:13,320 Speaker 1: is at fifty or seventy five basis points. Everybody looked 459 00:27:13,359 --> 00:27:16,600 Speaker 1: at this Dave Rischneider paper from the Board of Governors saying, well, 460 00:27:16,640 --> 00:27:19,439 Speaker 1: the FED. You know, at three percent, uh, they can 461 00:27:19,720 --> 00:27:21,240 Speaker 1: they would have enough room to cut. But if they 462 00:27:21,240 --> 00:27:24,320 Speaker 1: don't get to three what do they do? Well? I 463 00:27:24,520 --> 00:27:28,560 Speaker 1: I guess, um, I suspect what they'll do is they'll 464 00:27:28,600 --> 00:27:31,520 Speaker 1: double down on the stuff that they're already already doing. 465 00:27:31,680 --> 00:27:36,800 Speaker 1: So they we'll get into more quantitative easing, UH, qualitative easing, 466 00:27:37,200 --> 00:27:39,600 Speaker 1: all of the different things that that people have spoken 467 00:27:39,640 --> 00:27:44,960 Speaker 1: about before. Um My worry about it is that it 468 00:27:45,040 --> 00:27:49,440 Speaker 1: won't work, and secondly that it will have still more 469 00:27:49,520 --> 00:27:52,879 Speaker 1: of the unintended consequences of the policies that we've followed 470 00:27:52,920 --> 00:27:55,840 Speaker 1: to date. And I think we those policies have had 471 00:27:55,880 --> 00:27:59,080 Speaker 1: a lot of undesired consequences, the imbalances that I was 472 00:27:59,080 --> 00:28:02,679 Speaker 1: speaking about just if of minutes ago. So there's always 473 00:28:02,760 --> 00:28:05,680 Speaker 1: room for the Central Bank to buy more stuff. I 474 00:28:05,760 --> 00:28:09,000 Speaker 1: mean in the in the limit. UH. You can go 475 00:28:09,119 --> 00:28:11,920 Speaker 1: out and buy all the cars that GM is producing, 476 00:28:12,000 --> 00:28:13,960 Speaker 1: you can buy all the stuff, you can buy the 477 00:28:14,040 --> 00:28:16,600 Speaker 1: E T F, you can buy whatever. But the question 478 00:28:16,800 --> 00:28:21,440 Speaker 1: is will it do more good than harm? And I'm 479 00:28:21,480 --> 00:28:24,639 Speaker 1: suggesting that we should be thinking much more seriously about 480 00:28:24,760 --> 00:28:27,400 Speaker 1: those questions. But Dr White, this is the second time 481 00:28:27,440 --> 00:28:29,680 Speaker 1: in the conversation. You've brought up in the limit the 482 00:28:29,840 --> 00:28:33,440 Speaker 1: idea of the limitations of Newtonian calculus. Can you bring 483 00:28:33,600 --> 00:28:37,720 Speaker 1: Newtonian calculus over to people's behavior when they have to 484 00:28:37,840 --> 00:28:41,360 Speaker 1: pay a bank to give to give them their money? 485 00:28:43,120 --> 00:28:45,280 Speaker 1: Absolutely not. I mean one of the things that does 486 00:28:45,360 --> 00:28:49,840 Speaker 1: concern me when we start talking about will monetary policy 487 00:28:49,920 --> 00:28:54,120 Speaker 1: work to stimulate aggregate demand, which is a fundamental assumption 488 00:28:54,240 --> 00:28:57,320 Speaker 1: underlying the policies of the central banks, is that maybe 489 00:28:57,400 --> 00:29:00,120 Speaker 1: it doesn't work the way that people think it works. Now, 490 00:29:00,120 --> 00:29:03,000 Speaker 1: I'll give you two to two examples. One of them 491 00:29:03,120 --> 00:29:05,800 Speaker 1: is um and this is in my earlier paper, but 492 00:29:05,880 --> 00:29:09,440 Speaker 1: people are now talking about it more. Is maybe a 493 00:29:09,560 --> 00:29:14,640 Speaker 1: low interest rates UH could have a perverse effect through 494 00:29:14,720 --> 00:29:17,800 Speaker 1: older people in particular who are dependent upon who are 495 00:29:17,840 --> 00:29:21,560 Speaker 1: dependent upon UM a certain amount of savings, let's say, 496 00:29:21,560 --> 00:29:23,560 Speaker 1: to buy an annuity or the equivalent, you know, to 497 00:29:23,920 --> 00:29:26,960 Speaker 1: to finance a reasonable retirement. If the rate of interest 498 00:29:27,040 --> 00:29:31,360 Speaker 1: at which they can roll up their savings goes down, UH, 499 00:29:31,760 --> 00:29:34,040 Speaker 1: then they have really only two choices. One of them 500 00:29:34,080 --> 00:29:35,920 Speaker 1: is they can work more and longer, which I think 501 00:29:36,000 --> 00:29:40,120 Speaker 1: is a good choice but for everybody. But the second thing, 502 00:29:40,200 --> 00:29:42,760 Speaker 1: of course, is they save more, not less, because they 503 00:29:42,800 --> 00:29:45,239 Speaker 1: need to save more to get the requisite target at 504 00:29:45,280 --> 00:29:47,480 Speaker 1: the end of their their their working life. And you 505 00:29:47,520 --> 00:29:49,920 Speaker 1: can tell very similar stories on the corporate side too. 506 00:29:50,320 --> 00:29:52,840 Speaker 1: This is a problem for us is we are running 507 00:29:52,840 --> 00:29:54,120 Speaker 1: out of time. But we've got to get you back 508 00:29:54,160 --> 00:29:55,920 Speaker 1: to talk about this very soon. I know you got 509 00:29:56,040 --> 00:29:57,920 Speaker 1: back to Switzerland. Maybe Tom and I'll come over there 510 00:29:58,400 --> 00:30:01,680 Speaker 1: to Uh to talk to you. But this has been terrific, 511 00:30:01,760 --> 00:30:04,400 Speaker 1: Bill White, William White from the O E c D, 512 00:30:04,560 --> 00:30:20,680 Speaker 1: thanks for joining us on surveillance. On Friday, Golden Tacks 513 00:30:21,120 --> 00:30:24,160 Speaker 1: Quitty strategist Dave Coston put out a note saying that 514 00:30:24,480 --> 00:30:27,720 Speaker 1: sentiment in the equity markets was higher than it had 515 00:30:27,800 --> 00:30:31,120 Speaker 1: been in years, and that suggested that stock markets were 516 00:30:31,120 --> 00:30:33,400 Speaker 1: going to continue to go down. Well, I had the 517 00:30:33,440 --> 00:30:37,520 Speaker 1: opportunity to sit down with his counterpart on the commodities side, 518 00:30:37,640 --> 00:30:41,479 Speaker 1: Jeff Curry, had come out his research for Goldman Sachs 519 00:30:41,640 --> 00:30:45,040 Speaker 1: here at the National Association for Business Economics meeting, and 520 00:30:45,120 --> 00:30:48,480 Speaker 1: I asked him, first of all, what are commodities markets 521 00:30:48,680 --> 00:30:52,160 Speaker 1: telling him, you look at most of these markets, they're 522 00:30:52,160 --> 00:30:55,520 Speaker 1: sitting pretty close to their equilibrium values. You take oil, um, 523 00:30:55,760 --> 00:30:58,520 Speaker 1: we would say long term oil prices are in that 524 00:30:59,680 --> 00:31:01,760 Speaker 1: range back into the forward curves peg there, and so 525 00:31:01,840 --> 00:31:04,600 Speaker 1: it's kind of a boring outlooking commodities right now. Our 526 00:31:04,680 --> 00:31:08,000 Speaker 1: base cases forty five to fifty right now. Um, with 527 00:31:08,160 --> 00:31:12,160 Speaker 1: the expectations at this market in a very slow rebalancing 528 00:31:12,240 --> 00:31:14,920 Speaker 1: process gets tied enough at the end of next year 529 00:31:15,440 --> 00:31:17,280 Speaker 1: for the need to turn the U S shail machine 530 00:31:17,320 --> 00:31:19,120 Speaker 1: back on and that gets you to that fifty five 531 00:31:19,160 --> 00:31:21,880 Speaker 1: to sixty. But over the next nine to twelve months 532 00:31:22,360 --> 00:31:25,640 Speaker 1: it's a relatively benign outlook of forty to fifty oil. 533 00:31:25,800 --> 00:31:28,080 Speaker 1: Big game this week on the big inventory drop, but 534 00:31:28,120 --> 00:31:31,080 Speaker 1: everybody seems to think that's just temporary. Well, obviously there 535 00:31:31,200 --> 00:31:34,520 Speaker 1: was the hurricanes that are the tropical storms down in 536 00:31:34,600 --> 00:31:38,160 Speaker 1: the Gulf Coast that led to the disruption and supplies 537 00:31:38,240 --> 00:31:40,760 Speaker 1: into the Gulf Coast. Um, when we look at the 538 00:31:40,840 --> 00:31:44,360 Speaker 1: market more broadly, it is in a modest deficit. Um. 539 00:31:44,840 --> 00:31:49,080 Speaker 1: We do see significant increases in low cost supplies from 540 00:31:49,120 --> 00:31:51,680 Speaker 1: the likes of Russia and Saudi Arabia, but that's being 541 00:31:51,800 --> 00:31:55,360 Speaker 1: offset by declines in places like China Venezuela, and the 542 00:31:55,440 --> 00:31:58,000 Speaker 1: net of it is this market is in a slight deficit. Yeah, 543 00:31:58,120 --> 00:32:01,720 Speaker 1: last week probably exaggerated it UM, but the overall market 544 00:32:01,880 --> 00:32:05,280 Speaker 1: is in a modesty deficit. Some recent news in your sectors, 545 00:32:05,600 --> 00:32:09,680 Speaker 1: OPEC members walking around talking about trying to impose sort 546 00:32:09,680 --> 00:32:13,720 Speaker 1: of a price ceiling as opposed to a production freeze. 547 00:32:14,280 --> 00:32:16,320 Speaker 1: Is there is that a distinction without the difference? Is 548 00:32:16,400 --> 00:32:19,600 Speaker 1: there a difference? Can OPECT do anything that would really 549 00:32:19,680 --> 00:32:21,960 Speaker 1: affect the price of oil right now? We like to 550 00:32:22,000 --> 00:32:24,719 Speaker 1: say we have more confidence in the production thaw than 551 00:32:24,760 --> 00:32:27,880 Speaker 1: the production freeze UM. In terms of thinking about the 552 00:32:28,280 --> 00:32:31,880 Speaker 1: the idea of the freeze or a ceiling UM, it's 553 00:32:31,920 --> 00:32:34,120 Speaker 1: really uncertain what it would mean to supply. In fact, 554 00:32:34,160 --> 00:32:36,080 Speaker 1: we find in terms of some of the numbers they're 555 00:32:36,080 --> 00:32:38,760 Speaker 1: batting around right now, we would lead us to raising 556 00:32:38,840 --> 00:32:41,400 Speaker 1: our supply forecast, which is why we like to focus 557 00:32:41,480 --> 00:32:44,040 Speaker 1: on the thaw. When we think about the thob we're 558 00:32:44,080 --> 00:32:47,440 Speaker 1: seeing big low cost producers that have had supply off 559 00:32:47,480 --> 00:32:50,120 Speaker 1: the market for quite some time beginning to re enter 560 00:32:50,200 --> 00:32:53,200 Speaker 1: this market, whether if it's Libya, Iraq, up in Kurdistan 561 00:32:53,720 --> 00:32:56,560 Speaker 1: UM as well as Nigeria UM. You know, the one 562 00:32:56,640 --> 00:32:58,920 Speaker 1: that's added the most right now so far is Iraq. 563 00:32:59,360 --> 00:33:01,719 Speaker 1: But there's at ntil for large increases out of both 564 00:33:01,800 --> 00:33:04,800 Speaker 1: Libya and Nigeria going forward. That's why we would argue 565 00:33:05,240 --> 00:33:08,160 Speaker 1: the risk or likely skewed to the downside further out 566 00:33:08,240 --> 00:33:10,280 Speaker 1: from these low cost players. Everybody don't want to know 567 00:33:10,360 --> 00:33:12,480 Speaker 1: what you're thinking about gold these days. I should. I 568 00:33:12,520 --> 00:33:15,640 Speaker 1: could frame questions just by throwing out the word gold. 569 00:33:16,160 --> 00:33:19,600 Speaker 1: You told us sort of a base case price back 570 00:33:19,640 --> 00:33:23,160 Speaker 1: in July. Since then, we've been in a range between 571 00:33:23,560 --> 00:33:29,800 Speaker 1: thirteen and we stay. Well again, you know, tactically we 572 00:33:29,880 --> 00:33:31,960 Speaker 1: really don't like gold for you know, the reasons you 573 00:33:32,080 --> 00:33:35,040 Speaker 1: just cited, But strategically we do like gold in the 574 00:33:35,160 --> 00:33:37,400 Speaker 1: sense of, you know, I like to say, and being 575 00:33:37,560 --> 00:33:40,600 Speaker 1: long gold is the same thing as being short politicians 576 00:33:40,680 --> 00:33:43,880 Speaker 1: and this type of environment. There is political risk out there. 577 00:33:44,320 --> 00:33:47,080 Speaker 1: Um So in terms of thinking about owning gold and 578 00:33:47,120 --> 00:33:51,880 Speaker 1: a portfolios that diversifying asset against the other financial instruments, 579 00:33:51,920 --> 00:33:53,720 Speaker 1: we would argue there is a case to be made there. 580 00:33:54,000 --> 00:33:56,760 Speaker 1: But you know, as you point out, tactically, all else 581 00:33:56,800 --> 00:34:01,480 Speaker 1: equal to relatively benign type of environment. What have you 582 00:34:01,600 --> 00:34:04,880 Speaker 1: heard from the politicians, the presidential candidates that you think 583 00:34:04,920 --> 00:34:08,960 Speaker 1: would affect commodities markets. The elephant in the room that 584 00:34:09,160 --> 00:34:11,480 Speaker 1: most people are focused on as the potential for fiscal 585 00:34:11,560 --> 00:34:13,719 Speaker 1: policy UM and I don't think there's a lot of 586 00:34:13,760 --> 00:34:17,560 Speaker 1: a differentiation between the two candidates, but that would be 587 00:34:18,040 --> 00:34:20,960 Speaker 1: really the game changer for commodities in terms of thinking 588 00:34:21,000 --> 00:34:24,120 Speaker 1: about big fiscal policy SPEN because obviously would be tied 589 00:34:24,160 --> 00:34:28,000 Speaker 1: to infrastructure development and be quite bullish for the industrial 590 00:34:28,080 --> 00:34:30,919 Speaker 1: metals complex. UM. So that's really where the focal point 591 00:34:31,040 --> 00:34:33,640 Speaker 1: is from a political perspective, with what are the odds 592 00:34:33,719 --> 00:34:36,440 Speaker 1: of seeing fiscal policy now in terms of thinking about 593 00:34:36,480 --> 00:34:39,960 Speaker 1: what our economists say and and just reading the teles out, 594 00:34:39,960 --> 00:34:41,840 Speaker 1: there's not something that's going to be any time in 595 00:34:41,840 --> 00:34:45,120 Speaker 1: the immediate future, something very further off into the distance. 596 00:34:45,480 --> 00:34:48,480 Speaker 1: But from perspective of commodities, that's really what people are 597 00:34:48,480 --> 00:34:51,160 Speaker 1: focused on. Jeff Curry, thank you very much for joining us. 598 00:34:51,320 --> 00:34:55,640 Speaker 1: Thank you for having me. Jeff, of course the head 599 00:34:55,640 --> 00:34:58,600 Speaker 1: of commodities research for Goldman Sachs. Tom and I thought 600 00:34:58,640 --> 00:35:01,520 Speaker 1: it was interesting the short position for gold that he 601 00:35:01,640 --> 00:35:05,399 Speaker 1: talked about UH and the idea that we could see 602 00:35:05,440 --> 00:35:10,640 Speaker 1: a game changer if either candidate made a serious infrastructure proposal. Yeah. 603 00:35:10,880 --> 00:35:13,680 Speaker 1: I assume that fiscal stimulus in many different ways would 604 00:35:13,719 --> 00:35:16,360 Speaker 1: change things around. But what I find fascinating, Mike is 605 00:35:16,440 --> 00:35:22,120 Speaker 1: the new humility of people that were wrong at a hundred, 606 00:35:22,200 --> 00:35:24,480 Speaker 1: and even those that were quiet at a hundred just 607 00:35:24,719 --> 00:35:28,560 Speaker 1: mystified by the valuation there. Of course, to remind everyone, 608 00:35:28,680 --> 00:35:33,359 Speaker 1: Mr Curry uh migrated well south of forty and look 609 00:35:33,400 --> 00:35:37,839 Speaker 1: good at a barrel. And even now there's some real 610 00:35:37,960 --> 00:35:40,080 Speaker 1: question about this range we're in. I don't have a 611 00:35:40,120 --> 00:35:44,399 Speaker 1: strong opinion either way, but nevertheless we are range bound. Yeah, 612 00:35:44,600 --> 00:35:47,600 Speaker 1: he's not looking for a big breakout either. Thanks for 613 00:35:47,719 --> 00:35:52,040 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 614 00:35:52,200 --> 00:35:57,320 Speaker 1: interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 615 00:35:57,920 --> 00:36:01,359 Speaker 1: I'm on Twitter at Tom Keane. Michael McKee is at 616 00:36:01,520 --> 00:36:05,759 Speaker 1: Economy Before the podcast, you can always catch us worldwide. 617 00:36:06,160 --> 00:36:15,960 Speaker 1: I'm Bloomberg Radio. Who you put your trust in? Matters 618 00:36:16,640 --> 00:36:20,440 Speaker 1: Investors have put their trust in independent registered investment advisors 619 00:36:20,520 --> 00:36:24,520 Speaker 1: to the tune of four trillion dollars. Why learn more 620 00:36:25,000 --> 00:36:27,120 Speaker 1: and find your independent advisor dot com.