1
00:00:02,520 --> 00:00:08,680
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. So here's the license.

2
00:00:08,760 --> 00:00:11,520
Speaker 2: This morning, the New York Fed President John Williams pushing

3
00:00:11,560 --> 00:00:14,760
Speaker 2: back against hawkish commentary from the FMC and Wall Street

4
00:00:14,960 --> 00:00:17,720
Speaker 2: now pricing in better than fifty percent odds the Fed

5
00:00:17,720 --> 00:00:20,640
Speaker 2: will cut race in December. FED Governor Stephen Marram was

6
00:00:20,680 --> 00:00:22,640
Speaker 2: the loan to sent for a fifty basis point raid

7
00:00:22,720 --> 00:00:26,000
Speaker 2: cut at last month FMC meeting, and Governor Maron joins

8
00:00:26,079 --> 00:00:26,560
Speaker 2: us now for more.

9
00:00:26,600 --> 00:00:27,440
Speaker 1: Governor Maron, good.

10
00:00:27,280 --> 00:00:29,440
Speaker 2: Morning, Good morning once again, thanks for being here, Thanks

11
00:00:29,480 --> 00:00:30,800
Speaker 2: for having me back. We've got to start with the

12
00:00:30,840 --> 00:00:33,639
Speaker 2: labor market. Your reflections on what we saw yesterday. Does

13
00:00:33,680 --> 00:00:34,919
Speaker 2: it lean one way or the other?

14
00:00:35,280 --> 00:00:37,120
Speaker 3: Yeah, I mean I think the implications of yesterday were

15
00:00:37,120 --> 00:00:39,159
Speaker 3: obviously dubvish, and if anyone was on the fence, I

16
00:00:39,320 --> 00:00:40,960
Speaker 3: would hope that this would move them in the direction

17
00:00:41,000 --> 00:00:43,320
Speaker 3: of cutting. I mean, you saw the unemployment rate edged

18
00:00:43,400 --> 00:00:46,200
Speaker 3: up a bit. You know, you saw some other indicators

19
00:00:46,280 --> 00:00:49,680
Speaker 3: like an increase in permanent layoffs. You know, those are

20
00:00:49,720 --> 00:00:53,000
Speaker 3: indications that the labor market has been affected by restrictive

21
00:00:53,080 --> 00:00:55,880
Speaker 3: FED policy. And given the outlook for inflation, there's not

22
00:00:55,920 --> 00:00:57,760
Speaker 3: really much of a need to be as restrictive as

23
00:00:57,760 --> 00:00:58,280
Speaker 3: we are, and.

24
00:00:58,320 --> 00:00:59,840
Speaker 1: Yet on the committee we have pushedback.

25
00:01:00,400 --> 00:01:03,000
Speaker 2: Maybe after that, FED Governor Michael Bach had this to say,

26
00:01:03,040 --> 00:01:06,520
Speaker 2: I'm concerned that we're seeing inflation still around three percent.

27
00:01:06,720 --> 00:01:09,080
Speaker 2: Inflation's closer to three that it is to two. What

28
00:01:09,120 --> 00:01:11,600
Speaker 2: do you make of that argument? How percisive is it?

29
00:01:11,600 --> 00:01:14,199
Speaker 4: It's not persuasive to me. And I'll tell you why.

30
00:01:14,760 --> 00:01:17,039
Speaker 3: All of the inflation excess, sorry, almost all of the

31
00:01:17,040 --> 00:01:20,440
Speaker 3: inflation excess is a mirage. It's not indicative of supplied

32
00:01:20,440 --> 00:01:22,400
Speaker 3: demand in balances. And so, for example, if you look

33
00:01:22,440 --> 00:01:25,280
Speaker 3: at the housing market, right, market rents have been running

34
00:01:25,280 --> 00:01:27,760
Speaker 3: at about one percent for a couple of years. Measured

35
00:01:27,800 --> 00:01:30,480
Speaker 3: inflation in the index is actually much higher than that

36
00:01:30,520 --> 00:01:32,520
Speaker 3: because it takes a really long time for the index

37
00:01:32,520 --> 00:01:33,360
Speaker 3: to converge down.

38
00:01:33,200 --> 00:01:34,200
Speaker 4: To where market rents are.

39
00:01:34,440 --> 00:01:36,680
Speaker 3: That's a statistical artifact, right, That's an artifact of the

40
00:01:36,720 --> 00:01:39,920
Speaker 3: statistical measurement process. It's indicative of a supplied demand in

41
00:01:39,959 --> 00:01:43,160
Speaker 3: balance that was there in twenty twenty two, twenty twenty three.

42
00:01:43,440 --> 00:01:45,600
Speaker 3: Monterre policy works with lags. It has to be set

43
00:01:45,680 --> 00:01:48,920
Speaker 3: now for twenty twenty seven. So when you look at

44
00:01:48,920 --> 00:01:51,480
Speaker 3: the housing data, right, you see market rents running about

45
00:01:51,520 --> 00:01:53,120
Speaker 3: one percent for a couple of years. There's no supply

46
00:01:53,200 --> 00:01:56,040
Speaker 3: demand in balance there. We should not be setting policy

47
00:01:56,080 --> 00:01:58,360
Speaker 3: for twenty twenty seven based on a supply demand in

48
00:01:58,400 --> 00:02:00,600
Speaker 3: balance that existed in twenty twenty two or twenty twenty three.

49
00:02:00,680 --> 00:02:01,600
Speaker 4: That doesn't make any sense.

50
00:02:01,760 --> 00:02:04,680
Speaker 3: There's other things too, like portfolio management services which confuse

51
00:02:04,720 --> 00:02:07,400
Speaker 3: quantities for prices. This stuff is all well known. If

52
00:02:07,440 --> 00:02:09,680
Speaker 3: you look at market based measures of inflation, they're much

53
00:02:09,680 --> 00:02:11,320
Speaker 3: closer too than they are to three. So I think

54
00:02:11,360 --> 00:02:13,960
Speaker 3: that the excess the overage is a mirage, and it's

55
00:02:13,960 --> 00:02:16,480
Speaker 3: a mistake to ask people to lose their jobs because

56
00:02:16,480 --> 00:02:18,040
Speaker 3: of course of the statistical measurement process.

57
00:02:18,040 --> 00:02:19,760
Speaker 2: And you've got to put out new forecasts on December

58
00:02:19,800 --> 00:02:21,600
Speaker 2: tenth as well, which is going to be complicated by

59
00:02:21,600 --> 00:02:24,400
Speaker 2: the fact we've had limited data more recently. How relevant

60
00:02:24,400 --> 00:02:26,639
Speaker 2: do you think the Canida actually is, because I'll I'll

61
00:02:26,639 --> 00:02:28,480
Speaker 2: offer you the perspective on more straight At the moment,

62
00:02:28,480 --> 00:02:30,720
Speaker 2: it goes something like this. The meeting's on the tenth,

63
00:02:30,840 --> 00:02:32,800
Speaker 2: you don't get the dates fro until the sixteenth. The

64
00:02:32,840 --> 00:02:35,000
Speaker 2: Fed's kind of constrained by that. They can't do anything

65
00:02:35,160 --> 00:02:36,240
Speaker 2: what's your perspective on that.

66
00:02:36,480 --> 00:02:38,359
Speaker 3: Yeah, so, as I said moment ago, monter policy works

67
00:02:38,360 --> 00:02:39,919
Speaker 3: with lags. It'ld be much easier if it hit the

68
00:02:39,919 --> 00:02:42,720
Speaker 3: economy immediately, but it doesn't. It works with lags, So

69
00:02:42,760 --> 00:02:45,359
Speaker 3: you have to set policy based on the forecast. So

70
00:02:45,560 --> 00:02:48,640
Speaker 3: the data matter insofar as they affect your forecast. It

71
00:02:48,639 --> 00:02:50,639
Speaker 3: doesn't make sense to be setting policy for where the

72
00:02:50,720 --> 00:02:53,160
Speaker 3: economy was three or six months ago. We should be

73
00:02:53,200 --> 00:02:55,000
Speaker 3: setting policy based for where the economy is going to

74
00:02:55,000 --> 00:02:57,760
Speaker 3: be twelve to eighteen months from now. And so if

75
00:02:57,760 --> 00:02:59,639
Speaker 3: we have data, it gives us the ability to update

76
00:02:59,639 --> 00:03:02,480
Speaker 3: our four K. But the lack of data doesn't mean

77
00:03:02,520 --> 00:03:04,600
Speaker 3: that we don't have a forecast. We did have a forecast.

78
00:03:04,600 --> 00:03:06,880
Speaker 3: It all gives us as opportunities to falsify a forecast.

79
00:03:07,160 --> 00:03:10,079
Speaker 3: And there hasn't been anything in the data in the news,

80
00:03:10,240 --> 00:03:13,200
Speaker 3: in media stories, in private sector data, alternative data that's

81
00:03:13,200 --> 00:03:15,000
Speaker 3: available to us that would make us think that the

82
00:03:15,000 --> 00:03:17,760
Speaker 3: forecast has somehow nullified. And there's been a big shock

83
00:03:17,840 --> 00:03:20,160
Speaker 3: to it. So, if anything, all the information that we've

84
00:03:20,200 --> 00:03:24,519
Speaker 3: gotten in the interim since September FMC has inclined to

85
00:03:24,520 --> 00:03:27,280
Speaker 3: the Duvish side. You know, we got weaker inflation than

86
00:03:27,280 --> 00:03:30,880
Speaker 3: people expected, and we got a higher unemployment rate than

87
00:03:30,880 --> 00:03:33,400
Speaker 3: folks were expecting. So all of that information should push

88
00:03:33,440 --> 00:03:34,480
Speaker 3: one in the Duvish direction.

89
00:03:34,600 --> 00:03:36,360
Speaker 5: But there are still FED officials that are looking for

90
00:03:36,520 --> 00:03:38,880
Speaker 5: more data, and they have said they're data dependent. They

91
00:03:38,960 --> 00:03:41,120
Speaker 5: want that insurance that they're cutting right now and it's

92
00:03:41,160 --> 00:03:44,000
Speaker 5: the right time. Potentially the unemployment rate might be moving

93
00:03:44,080 --> 00:03:46,640
Speaker 5: up to four point five percent on December sixteenth. Would

94
00:03:46,680 --> 00:03:49,240
Speaker 5: you be in favor of just moving the meeting if

95
00:03:49,240 --> 00:03:52,760
Speaker 5: it meant others felt more reassured to cut interest rates

96
00:03:52,760 --> 00:03:53,280
Speaker 5: in December?

97
00:03:54,000 --> 00:03:56,520
Speaker 3: So you know, I haven't really thought about that, and

98
00:03:56,560 --> 00:03:58,640
Speaker 3: it's not a conversation that It's not a conversation that

99
00:03:58,640 --> 00:04:01,560
Speaker 3: I've been part of. I mean, I agree the meeting dates,

100
00:04:01,560 --> 00:04:04,560
Speaker 3: see the meeting dates seem kind of arbitrary, But at

101
00:04:04,560 --> 00:04:06,200
Speaker 3: the same time, there's a lot of there's a lot

102
00:04:06,200 --> 00:04:08,200
Speaker 3: of stuff that gets done as a result of those

103
00:04:08,240 --> 00:04:12,480
Speaker 3: meeting dates, and you know, people have investments and contracts

104
00:04:12,480 --> 00:04:15,720
Speaker 3: and other decisions that are tied to the timing of

105
00:04:15,760 --> 00:04:17,800
Speaker 3: the meeting date, and I don't know to what extent

106
00:04:17,920 --> 00:04:19,920
Speaker 3: moving those dates would be disruptive for all that. So

107
00:04:20,720 --> 00:04:25,279
Speaker 3: it's something that I'm not sure about. But this ultimately

108
00:04:25,279 --> 00:04:27,640
Speaker 3: comes down to the question of data dependence. Is what

109
00:04:27,720 --> 00:04:29,920
Speaker 3: you do when you don't have a forecast or when

110
00:04:29,920 --> 00:04:32,080
Speaker 3: you don't have any confidence in your forecast. Right, we

111
00:04:32,120 --> 00:04:35,800
Speaker 3: should be forecast dependent, not data dependent. Being excessively data

112
00:04:35,800 --> 00:04:37,800
Speaker 3: dependent is to be too backward looking. And if you're

113
00:04:37,800 --> 00:04:40,160
Speaker 3: too backward looking, you necessarily are going to have the

114
00:04:40,200 --> 00:04:40,839
Speaker 3: wrong policies.

115
00:04:40,920 --> 00:04:42,680
Speaker 5: Neil Daughter rights and he says, the only question that

116
00:04:42,760 --> 00:04:45,120
Speaker 5: matters for you is will you descend for fifty if

117
00:04:45,120 --> 00:04:47,280
Speaker 5: you believe it means not being able to push through

118
00:04:47,600 --> 00:04:49,279
Speaker 5: a twenty five basis point cut.

119
00:04:49,560 --> 00:04:51,479
Speaker 4: Yeah, so absolutely not.

120
00:04:51,760 --> 00:04:53,640
Speaker 3: I would absolutely vote for for a twenty five basis

121
00:04:53,680 --> 00:04:56,560
Speaker 3: point cut if I vote were the marginal vote, There's

122
00:04:56,560 --> 00:04:57,480
Speaker 3: no question about that.

123
00:04:58,600 --> 00:04:58,840
Speaker 4: You know.

124
00:04:59,440 --> 00:05:01,640
Speaker 3: To do other wise would be to cause real harm

125
00:05:02,120 --> 00:05:05,880
Speaker 3: to the economy for purposes of vanity.

126
00:05:05,920 --> 00:05:07,080
Speaker 4: And that's not who I am.

127
00:05:07,040 --> 00:05:09,920
Speaker 6: Going into next year talking about the forecast of what's

128
00:05:09,960 --> 00:05:11,919
Speaker 6: going to happen. A lot of economists to come on

129
00:05:11,920 --> 00:05:15,000
Speaker 6: the show expect a reacceleration on the backs of the

130
00:05:15,080 --> 00:05:18,640
Speaker 6: tax refunds and some of the other stimulative measures that

131
00:05:18,720 --> 00:05:21,600
Speaker 6: could come early next year. How do you factor that

132
00:05:21,800 --> 00:05:25,559
Speaker 6: into your forecast for ongoing weakness in the labor market

133
00:05:25,560 --> 00:05:26,200
Speaker 6: and the consumer.

134
00:05:26,800 --> 00:05:30,320
Speaker 3: Yeah, so I think that, you know, I have not

135
00:05:30,560 --> 00:05:36,840
Speaker 3: been a what I would think of as excessively pessimistic

136
00:05:36,920 --> 00:05:40,159
Speaker 3: on the economy. I do think policy is restrictive, and

137
00:05:40,200 --> 00:05:42,720
Speaker 3: I do think that it's too restrictive, and we don't

138
00:05:42,760 --> 00:05:44,960
Speaker 3: need to be And the longer we remain restrictive, the

139
00:05:45,000 --> 00:05:47,400
Speaker 3: greater the chances that we are the source of an

140
00:05:47,400 --> 00:05:50,080
Speaker 3: economic downturn, which we should not seek to be.

141
00:05:51,440 --> 00:05:52,080
Speaker 4: I think that.

142
00:05:52,080 --> 00:05:55,400
Speaker 3: Many of the many of the factors that will be

143
00:05:55,480 --> 00:05:57,200
Speaker 3: kicking in over the next twelve months that might be

144
00:05:57,200 --> 00:06:00,120
Speaker 3: supportive of GDP growth are things that miss is. They

145
00:06:00,200 --> 00:06:03,760
Speaker 3: really don't have hawks implications for Monterey policy because they

146
00:06:03,839 --> 00:06:06,719
Speaker 3: affect the supply side. And when you think about things

147
00:06:06,800 --> 00:06:09,480
Speaker 3: like relaxing regulations, and I think that that has been

148
00:06:09,480 --> 00:06:13,840
Speaker 3: going on at actually an impressive pace, these are things

149
00:06:13,880 --> 00:06:15,600
Speaker 3: that push out the supply side of the economy and

150
00:06:15,640 --> 00:06:20,320
Speaker 3: therefore don't necessarily create a demand excess of supply. Right,

151
00:06:20,520 --> 00:06:23,200
Speaker 3: Montere policy should be tight if demands is too much

152
00:06:23,240 --> 00:06:25,040
Speaker 3: an excess of supply, and if you push out the

153
00:06:25,040 --> 00:06:27,120
Speaker 3: supply side of the economy, then that's not something you

154
00:06:27,160 --> 00:06:27,680
Speaker 3: worry about.

155
00:06:27,720 --> 00:06:30,360
Speaker 6: There's a duration mismatch here though, the idea that if

156
00:06:30,400 --> 00:06:33,400
Speaker 6: you reduce regulations and you allow people to build supply,

157
00:06:34,560 --> 00:06:36,400
Speaker 6: that it takes a longer time than say, if you

158
00:06:36,440 --> 00:06:39,200
Speaker 6: give people two thousand dollars checks right up front that

159
00:06:39,240 --> 00:06:41,840
Speaker 6: they can spend immediately, or if they get a rebate

160
00:06:41,920 --> 00:06:44,919
Speaker 6: that's a lot bigger from their tax from the tax filings.

161
00:06:45,400 --> 00:06:47,880
Speaker 6: How do you factor in that timing mismatch? Would you

162
00:06:47,920 --> 00:06:51,160
Speaker 6: look through any bump up in inflation next year from

163
00:06:51,160 --> 00:06:53,680
Speaker 6: both stimulative measures as well as a price increases that

164
00:06:53,680 --> 00:06:56,320
Speaker 6: we're hearing from a lot of retailers that they're going

165
00:06:56,360 --> 00:06:57,000
Speaker 6: to pass along.

166
00:06:57,560 --> 00:07:00,200
Speaker 3: So you know, I wouldn't look through I wouldn't look

167
00:07:00,240 --> 00:07:04,360
Speaker 3: through bumps from uh from from checks like.

168
00:07:04,320 --> 00:07:06,000
Speaker 4: That, right, you know, I don't think that. I don't

169
00:07:06,000 --> 00:07:06,800
Speaker 4: think that you'd be able to.

170
00:07:06,839 --> 00:07:10,160
Speaker 3: However, a policy like that has been hasn't been formalized,

171
00:07:10,200 --> 00:07:12,960
Speaker 3: it hasn't been introduced, We don't know the parameters of it.

172
00:07:12,960 --> 00:07:15,000
Speaker 3: It's too early to sort of think about basing a

173
00:07:15,040 --> 00:07:19,160
Speaker 3: forecast on something like that. What we do know is

174
00:07:19,240 --> 00:07:21,520
Speaker 3: that the is that the labor market data have been

175
00:07:21,560 --> 00:07:23,160
Speaker 3: coming in not as strong as we'd like them to

176
00:07:23,200 --> 00:07:24,560
Speaker 3: be in that policy is too restrictive.

177
00:07:24,680 --> 00:07:26,360
Speaker 2: Governor, if we can stay on inflation. Do you know

178
00:07:26,400 --> 00:07:28,920
Speaker 2: when we're going to get some inflation data? When are

179
00:07:28,920 --> 00:07:30,960
Speaker 2: we going to get that? Because we've heard about the

180
00:07:30,960 --> 00:07:33,920
Speaker 2: payroll schedule. I haven't really heard anything about the CPI schedule.

181
00:07:34,000 --> 00:07:36,040
Speaker 2: You've got any indication whatsoever when it's coming.

182
00:07:36,160 --> 00:07:38,520
Speaker 3: Yeah, the BLS put it out on its website this week.

183
00:07:38,560 --> 00:07:41,160
Speaker 3: I think that we're not going to get the November

184
00:07:41,680 --> 00:07:44,600
Speaker 3: CPI data until after the next FMC, so we've got

185
00:07:44,600 --> 00:07:46,600
Speaker 3: to wait for that too. We've got we've got to

186
00:07:46,640 --> 00:07:46,960
Speaker 3: waste that.

187
00:07:47,080 --> 00:07:48,560
Speaker 1: Do you see that, Lisa, Yes, I did.

188
00:07:48,600 --> 00:07:50,360
Speaker 6: I saw that we have to wait and it's not

189
00:07:50,400 --> 00:07:52,280
Speaker 6: clear exactly when we're going to get it, but there's

190
00:07:52,320 --> 00:07:54,360
Speaker 6: a real question going forward about when we might get.

191
00:07:54,200 --> 00:07:55,400
Speaker 1: We don't have the DACE ship, but we don't have.

192
00:07:55,400 --> 00:07:57,560
Speaker 4: The data are on the website.

193
00:07:57,680 --> 00:08:00,520
Speaker 3: Yeah, the BLS has a has a as a list

194
00:08:00,560 --> 00:08:01,320
Speaker 3: of the release dates on.

195
00:08:01,520 --> 00:08:03,600
Speaker 1: The payrolls one. But I've missed the CPI one.

196
00:08:03,680 --> 00:08:06,000
Speaker 2: Which doesn't that just make it an even stronger case

197
00:08:06,080 --> 00:08:07,640
Speaker 2: just to wait and have this meeting when we've got

198
00:08:07,680 --> 00:08:08,320
Speaker 2: all this data.

199
00:08:08,760 --> 00:08:10,360
Speaker 1: Why is it that we have to wait so much

200
00:08:10,360 --> 00:08:11,800
Speaker 1: long before at governor.

201
00:08:11,840 --> 00:08:12,679
Speaker 4: Wait for the data.

202
00:08:12,840 --> 00:08:16,640
Speaker 3: Yes, well, because the government shutdown introduced a whole number

203
00:08:16,640 --> 00:08:19,240
Speaker 3: of snags into the data collection process, and so that

204
00:08:19,440 --> 00:08:22,080
Speaker 3: those snags mean extra time to collect the data, extra

205
00:08:22,160 --> 00:08:24,600
Speaker 3: time to process the data. People have a log gym

206
00:08:24,680 --> 00:08:26,440
Speaker 3: of work to get back to. I mean, we just

207
00:08:26,600 --> 00:08:30,080
Speaker 3: you know, sort of spent several years talking about talking

208
00:08:30,160 --> 00:08:33,480
Speaker 3: about bullwhips from supply chains, right and you know, gets

209
00:08:33,559 --> 00:08:35,560
Speaker 3: pulled in at once. And when you have a government shutdown,

210
00:08:35,640 --> 00:08:37,720
Speaker 3: all the government employees aren't working and they come back

211
00:08:37,720 --> 00:08:39,000
Speaker 3: to work and they've got a ton of work to do,

212
00:08:39,040 --> 00:08:41,000
Speaker 3: all at once. And so you know, we have those

213
00:08:41,559 --> 00:08:45,120
Speaker 3: those bullwhips in government data right now. And you know,

214
00:08:45,120 --> 00:08:47,079
Speaker 3: if that were a market, you'd see some inflation in

215
00:08:47,160 --> 00:08:48,000
Speaker 3: the price of data.

216
00:08:48,040 --> 00:08:49,000
Speaker 4: But it's not a market.

217
00:08:49,080 --> 00:08:50,920
Speaker 2: So give me for coming out with the hawkish hits.

218
00:08:50,960 --> 00:08:52,600
Speaker 2: But we got another one in the last twenty four

219
00:08:52,600 --> 00:08:54,960
Speaker 2: hours two and it came from Beth Hammock laring interest

220
00:08:55,000 --> 00:08:57,319
Speaker 2: rights to support the labor market risk prolonging this period

221
00:08:57,360 --> 00:09:00,480
Speaker 2: of elevated inflation, and it could also encourage risk taking

222
00:09:00,520 --> 00:09:02,959
Speaker 2: and financial markets. Can we finish on that last point,

223
00:09:03,120 --> 00:09:06,400
Speaker 2: risk taking and financial markets. How excessive is it and

224
00:09:06,440 --> 00:09:09,000
Speaker 2: should it be on the ritar of the f WEBC sure.

225
00:09:09,040 --> 00:09:11,200
Speaker 3: So, first of all, as I said before, the excess

226
00:09:11,240 --> 00:09:14,000
Speaker 3: of inflation is a quirk of the statistical process. And

227
00:09:14,040 --> 00:09:15,800
Speaker 3: it is a mistake to ask people to lose their

228
00:09:15,880 --> 00:09:17,760
Speaker 3: jobs as a result of a quirk of the satistical

229
00:09:17,800 --> 00:09:20,960
Speaker 3: process on financial markets. You know, Look, I think that

230
00:09:21,000 --> 00:09:24,160
Speaker 3: lots of things affect financial markets. Tax policy does, regulation

231
00:09:24,320 --> 00:09:28,160
Speaker 3: does technology like artificial intelligence does. It's a mistake to

232
00:09:28,240 --> 00:09:30,880
Speaker 3: conflate the stance of the status of financial markets with

233
00:09:30,920 --> 00:09:33,559
Speaker 3: the status of montary policy. Right, even when you look

234
00:09:33,559 --> 00:09:37,600
Speaker 3: at us something as a financial market as deeply connected

235
00:09:37,640 --> 00:09:41,880
Speaker 3: to mantary policy, like interest rates, We've lived through periods

236
00:09:41,920 --> 00:09:45,640
Speaker 3: of conundrums, right, We're passing through of the Fed funds

237
00:09:45,679 --> 00:09:48,800
Speaker 3: rate into longer term interest rates was confusing to people.

238
00:09:48,880 --> 00:09:50,520
Speaker 3: So it's just a mistake to do a one for

239
00:09:50,600 --> 00:09:53,040
Speaker 3: one mapping of these things. And I think that when

240
00:09:53,040 --> 00:09:55,560
Speaker 3: you look at financial conditions, the financial condition that matters

241
00:09:55,559 --> 00:09:58,120
Speaker 3: most for the real economy is and remain, has been

242
00:09:58,160 --> 00:10:00,400
Speaker 3: and remains housing, right, And this this is an area

243
00:10:00,400 --> 00:10:03,079
Speaker 3: where financial conditions are not tight, so are not loose.

244
00:10:03,280 --> 00:10:05,760
Speaker 3: This is an area where financial conditions are still quite

245
00:10:05,800 --> 00:10:08,160
Speaker 3: tight going out getting a mortgage. You know, this is

246
00:10:08,640 --> 00:10:11,320
Speaker 3: not something that's not a financial condition that I would

247
00:10:11,320 --> 00:10:14,600
Speaker 3: consider to be excessively easy. And so I think it's

248
00:10:14,640 --> 00:10:16,640
Speaker 3: a mistake. And I think it's also a mistake, as

249
00:10:16,679 --> 00:10:22,160
Speaker 3: I said before, to ask people to experience job losses

250
00:10:23,040 --> 00:10:25,000
Speaker 3: because you think the stock market is too high. I

251
00:10:25,000 --> 00:10:26,840
Speaker 3: don't know what the right level for the stock market is,

252
00:10:27,760 --> 00:10:30,280
Speaker 3: and I think that it's a very challenging question to

253
00:10:30,440 --> 00:10:31,760
Speaker 3: be able to answer credibly.

254
00:10:32,040 --> 00:10:34,000
Speaker 4: And to say that we need to create job.

255
00:10:33,840 --> 00:10:37,000
Speaker 3: Losses in order to sort of restore the stock market

256
00:10:37,000 --> 00:10:38,839
Speaker 3: to some level that we think is more reflective of

257
00:10:38,880 --> 00:10:41,320
Speaker 3: fair value is just not a policy view that I hold.

258
00:10:41,559 --> 00:10:43,040
Speaker 6: A lot of people have come on this show and

259
00:10:43,080 --> 00:10:45,400
Speaker 6: said that right now the FED is stuck between a

260
00:10:45,400 --> 00:10:48,080
Speaker 6: conundrum of the K shaped economy where you have people

261
00:10:48,120 --> 00:10:50,079
Speaker 6: at the upper end who are doing just fine and

262
00:10:50,120 --> 00:10:52,760
Speaker 6: are supporting consumption, and people on the lower end who

263
00:10:52,800 --> 00:10:55,959
Speaker 6: are experiencing lack of wage gains and they're experiencing those

264
00:10:56,040 --> 00:11:00,719
Speaker 6: job losses more significantly. How concerned are you about sort

265
00:11:00,760 --> 00:11:03,160
Speaker 6: of your dual roles of trying to help prop up

266
00:11:03,600 --> 00:11:06,439
Speaker 6: and prevent some of those job losses from really escalating,

267
00:11:06,920 --> 00:11:10,320
Speaker 6: while at the same time, potentially cutting rates would exacerbate

268
00:11:10,360 --> 00:11:13,720
Speaker 6: that case shape, and you only exacerbate what you're seeing

269
00:11:13,920 --> 00:11:15,719
Speaker 6: with respect to the wealth divide.

270
00:11:16,040 --> 00:11:21,640
Speaker 3: So Congress didn't task us with addressing all social problems

271
00:11:21,640 --> 00:11:23,800
Speaker 3: in the world, in equality one of them. They tasked

272
00:11:23,840 --> 00:11:28,160
Speaker 3: us with tackling aggregate maximum employment and stable prices. And

273
00:11:28,200 --> 00:11:31,439
Speaker 3: so therefore the right policy to take is to stabilize

274
00:11:31,440 --> 00:11:34,520
Speaker 3: employment and prices, and that's the policy.

275
00:11:34,559 --> 00:11:35,840
Speaker 4: That's the policy that I support.

276
00:11:36,200 --> 00:11:38,960
Speaker 3: I do think though, while discussing the subject of inequality,

277
00:11:39,200 --> 00:11:41,160
Speaker 3: it would be much worse for the people at the

278
00:11:41,160 --> 00:11:43,920
Speaker 3: lower end of the income distribution if the unemployment rate

279
00:11:43,960 --> 00:11:46,520
Speaker 3: continued to go up as a result of our policies.

280
00:11:47,160 --> 00:11:48,360
Speaker 4: That's not something that they.

281
00:11:48,320 --> 00:11:50,000
Speaker 3: Would be that they would welcome, and it's not something

282
00:11:50,000 --> 00:11:50,880
Speaker 3: that I would welcome either.

283
00:11:51,000 --> 00:11:52,640
Speaker 5: Governor arts with the President this week and you have

284
00:11:52,640 --> 00:11:54,760
Speaker 5: an office and I asked them about the FED interviews.

285
00:11:54,880 --> 00:11:55,880
Speaker 4: It says lots of names.

286
00:11:55,880 --> 00:11:58,079
Speaker 5: We may go the standard way quote, it's nice every

287
00:11:58,080 --> 00:12:00,640
Speaker 5: once in a while to go politically correct. Out of

288
00:12:00,720 --> 00:12:03,400
Speaker 5: the names that we know that are being interviewed, who

289
00:12:03,480 --> 00:12:04,520
Speaker 5: is politically correct?

290
00:12:05,320 --> 00:12:06,720
Speaker 4: You know? I don't really know the n work.

291
00:12:07,240 --> 00:12:09,080
Speaker 5: You worked for the president, so you understand how his

292
00:12:09,080 --> 00:12:11,120
Speaker 5: mine works. Do you think it means someone that is

293
00:12:11,160 --> 00:12:14,679
Speaker 5: currently on the board, like a Governor Waller or someone

294
00:12:14,679 --> 00:12:17,160
Speaker 5: that's very close to him in your former colleague Kevin

295
00:12:17,200 --> 00:12:17,480
Speaker 5: has it.

296
00:12:17,960 --> 00:12:19,680
Speaker 3: Yeah, So I mean it should be pretty clear that

297
00:12:19,720 --> 00:12:21,360
Speaker 3: I just always say what's on my mind, and therefore

298
00:12:21,360 --> 00:12:23,520
Speaker 3: I don't even know what politically correct is. So I

299
00:12:23,520 --> 00:12:25,680
Speaker 3: don't even know how to begin addressing that, you know,

300
00:12:25,679 --> 00:12:27,320
Speaker 3: but look, don't I don't make being.

301
00:12:27,200 --> 00:12:28,559
Speaker 5: Too politically correct right now?

302
00:12:28,600 --> 00:12:31,400
Speaker 3: Actually am I've never been accused of that before, so hey,

303
00:12:31,559 --> 00:12:33,040
Speaker 3: you know, I'm happy to have it first.

304
00:12:33,240 --> 00:12:35,120
Speaker 2: Govin a very diplomatic it's going to see you, thanks

305
00:12:35,120 --> 00:12:36,920
Speaker 2: for dropping by, Thanks for having me, Thank you, sir,

306
00:12:36,920 --> 00:12:37,560
Speaker 2: Thank you very much.

307
00:12:37,600 --> 00:12:39,240
Speaker 1: The fact Govin is Stephen Myron