WEBVTT - Surveillance: Modi's Cash Move Is Radical, Rogoff Says 0:00:00.320 --> 0:00:04.160 Who you put your trust in matters. Investors have put 0:00:04.200 --> 0:00:07.640 their trust in independent registered investment advisors to the tune 0:00:07.640 --> 0:00:12.240 of four trillion dollars. Why learn more and find your 0:00:12.240 --> 0:00:29.040 independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 0:00:29.440 --> 0:00:33.120 I'm Tom Keene with David Gura. Daily we bring you 0:00:33.200 --> 0:00:38.200 insight from the best in economics, finance, investment, and international relations. 0:00:38.640 --> 0:00:43.239 Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 0:00:43.280 --> 0:00:50.680 of course, on the Bloomberg Princie The Quad in London. 0:00:50.720 --> 0:00:52.879 I'm Tom Keene in New York and listening now. We 0:00:52.920 --> 0:00:56.040 know are so much of Asia, and particularly the people 0:00:56.120 --> 0:00:59.800 of India. Kenneth Rogoff of Harvard University wrote A Little 0:01:00.040 --> 0:01:04.440 Look a year or so ago about cash, about corruption, 0:01:04.800 --> 0:01:09.000 about the underworld, about suitcases of cash going to no good. 0:01:09.080 --> 0:01:11.399 It is my book of the year. It is without question, 0:01:11.760 --> 0:01:15.800 the most controversial book of economics in decades. Professor Rogoff 0:01:15.880 --> 0:01:18.840 joins us now on India. Let's first start with what 0:01:18.959 --> 0:01:22.560 Mr Modi is trying to do. What was his change 0:01:22.560 --> 0:01:25.960 in policy for India. Well, on the same day that 0:01:26.000 --> 0:01:28.880 we were electing President Trump, the Prime Minister went on 0:01:28.920 --> 0:01:31.639 the air and said the two largest notes in India, 0:01:31.720 --> 0:01:35.520 the five thousand rupea note four hours from now will 0:01:35.560 --> 0:01:39.399 be no longer youthful boom and you have fifty days 0:01:39.400 --> 0:01:42.840 to turn it in for other cash. That is radically 0:01:42.880 --> 0:01:45.640 different than the policy I propose, which is doing it 0:01:45.720 --> 0:01:50.160 over say five to seven years, trying to avoid collateral damage. 0:01:50.680 --> 0:01:53.440 Within the collateral damage. What would be your advice to 0:01:53.480 --> 0:01:57.480 the Prime Minister now to move forward after this announcement, 0:01:57.520 --> 0:02:00.560 I mean away from the debate about cash. What's ken 0:02:00.640 --> 0:02:04.600 rogos to do list for India this morning? Well, that's 0:02:04.600 --> 0:02:07.600 a tough question. I mean, the Prime Minister cites a 0:02:07.680 --> 0:02:09.680 lot of the reasons, all the reasons that I've given 0:02:09.720 --> 0:02:14.800 the book of why cash is pernicious, uh, you know, corruption, crime, 0:02:15.200 --> 0:02:18.560 tax of Asian terrorism. But on the other hand, I 0:02:18.600 --> 0:02:20.919 mentioned as tactics are very different. And by the way, 0:02:20.960 --> 0:02:24.360 my book states again and again very carefully, if you're 0:02:24.360 --> 0:02:27.760 a developing economy, don't try this at home. You need 0:02:27.760 --> 0:02:30.600 financial inclusion. He's done a lot of things. I think 0:02:30.639 --> 0:02:33.520 India's reached a point where implementation is very important. There 0:02:33.560 --> 0:02:38.239 could be long run beneficial effects, but it really involves, 0:02:38.280 --> 0:02:40.720 you know, doing things to assure people that in the 0:02:40.760 --> 0:02:44.120 long run, we're fighting crime, we're fighting corruption, which is 0:02:44.160 --> 0:02:47.320 a huge problem in India. In many ways I have learned, 0:02:47.360 --> 0:02:50.280 and this goes back to one of your great mentors, Jagnaguadi, 0:02:50.360 --> 0:02:53.000 that India is, in each and every case, always about 0:02:53.040 --> 0:02:56.840 domestic politics. What would the RBI, their central bank do, 0:02:57.360 --> 0:02:59.720 and could rob and rog and their former leader at 0:02:59.720 --> 0:03:03.040 the Bank of the Boot School Chicago, could ragu have 0:03:03.240 --> 0:03:08.519 stopped this tough po is bad pos well. I suspect 0:03:08.560 --> 0:03:11.639 they were overridden. Initially, when I heard about this, it 0:03:11.760 --> 0:03:14.560 seemed that the rb I was behind it, a joint 0:03:14.919 --> 0:03:17.240 you know push. But I think as time went on, 0:03:17.400 --> 0:03:20.600 we didn't see Governor Patel. The governor replaced where John 0:03:20.680 --> 0:03:23.399 speak for a couple of weeks, which kind of made 0:03:23.400 --> 0:03:26.000 it clear that they weren't um It doesn't mean that 0:03:26.040 --> 0:03:28.720 they don't agree with the broad idea, but they might 0:03:28.760 --> 0:03:31.000 not have agreed with the tactics. They might have wanted 0:03:31.040 --> 0:03:34.600 to do it slowly and gradually, as others, say myself 0:03:34.639 --> 0:03:37.200 would suggest. And by the way, India doesn't have a 0:03:37.280 --> 0:03:41.480 large note. Their largest notes fifteen dollars. To introduced a 0:03:41.520 --> 0:03:44.560 bigger one in this to replace the old ones, which 0:03:44.560 --> 0:03:47.120 again is a hundred eighty degrees opposite to what I 0:03:47.160 --> 0:03:51.680 would advise for advanced economies. If we focus on the 0:03:51.720 --> 0:03:54.440 news right that we have had overlast to two weeks, 0:03:54.440 --> 0:03:57.040 we had a record load from repee extreme volatility will 0:03:57.080 --> 0:04:01.320 dis continue well. I think the thinking is eventually they 0:04:01.320 --> 0:04:04.440 will come out of this. They hadn't printed enough currency. 0:04:05.080 --> 0:04:07.800 We just don't know all the considerations why this was 0:04:07.800 --> 0:04:10.840 so sudden. Evidently word leaked that they were going to 0:04:10.960 --> 0:04:14.320 do it. I suspect that will all settle down. And 0:04:14.400 --> 0:04:17.960 you know, it's surprising how many Indian economists people think 0:04:17.960 --> 0:04:21.800 in the long run making this statement against corruption, which 0:04:21.839 --> 0:04:25.000 of course as India's number one problem, will have you know, 0:04:25.080 --> 0:04:28.360 good effects, but they have to get there. There have 0:04:28.440 --> 0:04:32.599 been really a lot of problems, really poor planning implementation, 0:04:33.320 --> 0:04:35.080 uh in the short run. But I think that will 0:04:35.160 --> 0:04:38.839 probably sort out. But it isn't done yet. And I 0:04:38.880 --> 0:04:41.440 know the RBI, for example, put some limits on withdrawals 0:04:41.440 --> 0:04:44.479 from no frill bank accounts. I mean, is it always 0:04:44.480 --> 0:04:48.040 a bad idea it can to limit withdrawals. Yeah, I 0:04:48.040 --> 0:04:51.200 mean they were very awkward position that they hadn't printed 0:04:51.320 --> 0:04:53.760 enough currency. It's actually not that easy to print currency. 0:04:53.920 --> 0:04:56.400 It could take a year. I kind of wonder why 0:04:56.440 --> 0:04:59.360 they didn't do maneuver like the Greeks had considered a 0:04:59.440 --> 0:05:03.360 stamp the old currency to create the new currency temporarily. 0:05:03.680 --> 0:05:06.120 I just don't know what the planning was. They haven't 0:05:06.120 --> 0:05:09.479 really described it. It's clear what the goals were, which 0:05:09.560 --> 0:05:13.760 I think are laudable, but the implementation and execution, they 0:05:13.839 --> 0:05:16.800 haven't really explained why they did it this way. There 0:05:16.800 --> 0:05:19.720 are people who recommended sudden currency moves. There was an 0:05:19.720 --> 0:05:22.839 economist in the mid seventies, James Henry, who said, let's 0:05:22.880 --> 0:05:25.800 do a sneak attack on the criminals and the drug dealers. 0:05:26.400 --> 0:05:29.400 I think the collateral damage is just too great. In 0:05:29.440 --> 0:05:31.200 the case of the U S, it looks too much 0:05:31.240 --> 0:05:34.640 like a default. Again, what is the you know, the 0:05:34.680 --> 0:05:38.680 lessons learned. We've seen you know, panics or volatility of 0:05:38.760 --> 0:05:40.839 whatever you want to call it in other countries, and 0:05:40.920 --> 0:05:43.240 as long as there's one or two lessons that you 0:05:43.320 --> 0:05:46.359 don't repeat, then the country will be Okay. What's it 0:05:46.400 --> 0:05:49.760 in this case, Well, it's about implementation and planning and 0:05:49.800 --> 0:05:54.520 again and developing economies. The issue of financial inclusion is huge. Uh, 0:05:54.600 --> 0:05:57.680 you know in the US, it's very easy to cover that. 0:05:57.800 --> 0:06:00.640 My book explains how to do that. And Indie a 0:06:00.720 --> 0:06:03.279 Prime Minister Modi has taken a lot of steps. He's 0:06:03.320 --> 0:06:06.640 taken biometric data for almost a billion Indians and you 0:06:06.680 --> 0:06:08.960 can get a bank account if you have that, but 0:06:09.160 --> 0:06:12.640 they're way away from doing that. This was a very 0:06:12.760 --> 0:06:15.080 radical step to take. One of the strengths of your book, 0:06:15.080 --> 0:06:18.000 The Curse of Cash is you put out front your 0:06:18.000 --> 0:06:22.120 critics amersing on page seven, Lord Summers, you're calling at 0:06:22.120 --> 0:06:25.880 Harvard on page one two, the Greatest sing of Germany, 0:06:25.920 --> 0:06:28.680 the Great Summers of Cambridge. They pushed back against Ken 0:06:28.760 --> 0:06:33.440 Rogoff describe their caution about the curse of cash in 0:06:33.480 --> 0:06:37.039 your formula. Well, actually, Larry Summers has come around to 0:06:37.080 --> 0:06:39.800 be a big champion of getting rid of hundred and 0:06:39.839 --> 0:06:44.320 fifty dollar bills and that's been fantastic Admares saying, you know, 0:06:44.520 --> 0:06:48.160 sites of Dusty Jevsky and says, you know, money is 0:06:48.279 --> 0:06:51.840 coined freedom. Uh, but I think there's a big difference 0:06:51.920 --> 0:06:54.320 between you know, getting rid of big notes and getting 0:06:54.360 --> 0:06:57.160 rid of all cash. I am for less cash, not 0:06:57.360 --> 0:07:01.839 no cash. Is money a repress seditive of freedom. In Mr. 0:07:01.920 --> 0:07:06.599 Modi's India. Well, it's how a lot of the economy functions. 0:07:06.640 --> 0:07:10.240 It's transactions I think he would like, and many steps 0:07:10.280 --> 0:07:13.320 that officials are so corrupt. I had a colleague who 0:07:13.440 --> 0:07:16.880 told me about her father sold an apartment just recently 0:07:17.240 --> 0:07:20.160 in a rural India. He gets back the deed that 0:07:20.320 --> 0:07:22.960 list half the price that he paid because the official 0:07:23.040 --> 0:07:26.520 was paid off. This is routine business India. Modi wants 0:07:26.560 --> 0:07:29.920 to stamp it out. Francine, the Curse of cash and India. 0:07:29.960 --> 0:07:32.120 Of course, I'll put this out on social again today. 0:07:32.200 --> 0:07:35.320 Ken Rogoff joins US now cabinet Professor of Public Policy, 0:07:35.320 --> 0:07:38.160 professor of economics at Harvard, the author of Tom's Book 0:07:38.200 --> 0:07:40.480 of the Year, much Ballyhood book of the Year by Time, 0:07:40.520 --> 0:07:42.680 the Cursive Cash. We will talk about that in a 0:07:42.760 --> 0:07:44.800 little bit, but some news at first, Ken Rogoff, good 0:07:44.800 --> 0:07:46.040 to have you with us, Thanks for being thank you 0:07:46.080 --> 0:07:48.120 good to be here. I'm very curious and I've been 0:07:48.120 --> 0:07:50.720 asking a lot of people about this, the definition of 0:07:50.960 --> 0:07:53.880 Trump economics, what Trump and omics is, and and here 0:07:53.920 --> 0:07:55.480 a few weeks after the election, are you went it 0:07:55.520 --> 0:07:58.600 closer to to coming up with to having a definition 0:07:58.600 --> 0:08:02.080 of what it is? No, I'm not. I mean, also, 0:08:02.360 --> 0:08:05.640 bear in mind everybody's watching these appointments and saying, who 0:08:05.680 --> 0:08:08.360 is he going to point he isn't locked in. This 0:08:08.440 --> 0:08:11.120 is a guy who made his living by firing people. 0:08:11.520 --> 0:08:14.080 And it wasn't so long ago, back in the Jimmy 0:08:14.120 --> 0:08:17.520 Carter days, even you know Lynton Johnson, where they routinely 0:08:17.720 --> 0:08:21.080 fired people all the time. So what I'm expecting is 0:08:21.120 --> 0:08:24.800 not just have a parade of candidates. I'm expecting a 0:08:24.840 --> 0:08:27.920 parade of appointees. He'll have a meeting, He'll have the 0:08:27.920 --> 0:08:31.960 three guys you know shamefully lined there. He'll go you're fired, 0:08:32.080 --> 0:08:35.199 you know, or however he says that line. So I 0:08:35.600 --> 0:08:38.560 think he will recalibrate if he's not happy how things 0:08:38.600 --> 0:08:42.680 are going. I expect just as he recalibrates his comments, 0:08:42.720 --> 0:08:45.760 he'll recalibrate as appointees to looking for some some drama 0:08:45.800 --> 0:08:48.320 there in the appointments, at least not immediately down the line. 0:08:49.040 --> 0:08:52.680 What power does does a president? Does a Treasury secretary, say, 0:08:52.679 --> 0:08:54.960 have to to influence the trajectory of the the U. 0:08:55.040 --> 0:08:59.360 S economy right now? The Treasury secretary's power comes a 0:08:59.480 --> 0:09:02.640 lot from their ear having the ear of the president, 0:09:02.800 --> 0:09:05.120 and to the extent they do. Of course, they have 0:09:05.160 --> 0:09:08.840 a lot of influence over legislation, especially with the Republican 0:09:08.960 --> 0:09:11.320 controlled Congress. And I've got to say, there's a lot 0:09:11.360 --> 0:09:14.840 of talk about, well, Trump wants this, Congress wants this. 0:09:14.960 --> 0:09:17.760 He won't get his policies through. Yes, he will when 0:09:17.760 --> 0:09:20.600 he decides what they are. I think in the short 0:09:20.679 --> 0:09:23.679 run there will be a honeymoon with the Republican Congress. 0:09:23.840 --> 0:09:26.439 A lot of them opposed Trump or didn't support him. 0:09:26.640 --> 0:09:28.840 They'll support him here. They'll give him what he wants 0:09:29.320 --> 0:09:31.880 and you know, see how it goes. So I do 0:09:32.000 --> 0:09:35.640 think we'll see a pretty dramatic stimulus plan. I don't 0:09:35.679 --> 0:09:38.160 know if it'll be completely coherent, but I think we'll 0:09:38.160 --> 0:09:41.720 see something very dramatic. All this stuff about the Republicans 0:09:41.760 --> 0:09:45.160 won't go along with deficits, that's just nonsense. They wouldn't 0:09:45.200 --> 0:09:48.120 go along with deficits when they're spending it on what 0:09:48.200 --> 0:09:52.120 President Obama wanted. But if you talk, if President Obama 0:09:52.160 --> 0:09:54.920 had proposed tax cuts to get deficits, he would have 0:09:54.960 --> 0:09:58.360 got it passed in an afternoon. Also, So I'm but 0:09:58.559 --> 0:10:01.960 exactly what shaped this will take. I think, you know 0:10:02.320 --> 0:10:05.720 is constantly Morphing, There's no doubt about it. We're beginning 0:10:05.760 --> 0:10:08.520 to hear something of a debate here about the timing 0:10:08.559 --> 0:10:11.240 of those tax cuts or or an infrastructure spending plan, 0:10:11.280 --> 0:10:13.839 whether or not now is the time to do those things. 0:10:13.880 --> 0:10:16.560 Do you expect that to be a robust debate in Washington? 0:10:16.640 --> 0:10:19.960 You mentioned the support he'll likely have from the Republican Congress. Well, 0:10:20.000 --> 0:10:22.280 I think I really think he can do whatever he 0:10:22.360 --> 0:10:25.079 wants to do. We really haven't seen someone come in 0:10:25.160 --> 0:10:29.319 with this, you know, kind of support for a long time. 0:10:29.400 --> 0:10:31.520 I'm not you know, in terms of having Congress in 0:10:31.600 --> 0:10:35.200 the Senate. Uh, it's been a while, and I suspect 0:10:35.200 --> 0:10:37.000 he'll do what he wants to do. Yes, they'll be debate, 0:10:37.040 --> 0:10:40.240 they'll be bad articles, they'll be complaints, They'll people say 0:10:40.280 --> 0:10:42.400 that I voted for even though he didn't mean too. 0:10:43.160 --> 0:10:46.320 I think the infrastructure has bipartisan support. If he can't 0:10:46.360 --> 0:10:48.760 get the Republicans to support it, he'll get the Democrats 0:10:48.800 --> 0:10:52.120 to support it. Uh. That's something everyone agrees on. We'll 0:10:52.160 --> 0:10:54.640 finally get it done. The tax cuts are a whole 0:10:54.760 --> 0:10:56.840 another matter, and I don't even know what they're gonna be. 0:10:57.440 --> 0:10:59.920 I don't think it's the most effective form of stimulus, 0:11:00.080 --> 0:11:03.320 but it's been you know, red meat for the Republican Party. 0:11:03.559 --> 0:11:05.480 He's going to give it to them, maybe to get 0:11:05.520 --> 0:11:07.800 support in other areas. Ken roll Off with us of 0:11:07.880 --> 0:11:10.760 Harvard University will speak of India and the curse of 0:11:10.800 --> 0:11:13.840 cash his book and my book of the year, I 0:11:13.920 --> 0:11:16.880 might point out, we'll do that here in a bit. Ken, 0:11:17.000 --> 0:11:19.640 You're in the class, you're you know, manque's got a headache, 0:11:19.640 --> 0:11:22.800 you've gotta teach at ten are in the basic undergraduate 0:11:22.840 --> 0:11:27.240 class teaching at Harvard, and somebody says to you, Vice 0:11:27.320 --> 0:11:29.800 Chairman Fisher, he's of a college down the road. M 0:11:29.800 --> 0:11:34.000 I T. Vice Chairman Fisher says, we're almost fully employed. 0:11:34.400 --> 0:11:38.640 Donald Trump got elected because we're not fully employed. Is 0:11:38.679 --> 0:11:42.480 it to America's? And do we do our macro economics 0:11:42.520 --> 0:11:47.520 just chair yelling, do our macroeconomics as one America one 0:11:47.679 --> 0:11:51.560 mathematical distribution? Or do we need to always consider that 0:11:51.600 --> 0:11:54.839 there's two America's in every discussion. Well, first of all, 0:11:54.880 --> 0:11:57.960 you're not gonna get me sharply agreeing with Stan Fisher, 0:11:57.960 --> 0:12:00.080 who's you know, a great a great man, and I 0:12:00.120 --> 0:12:03.080 think you know, really understands the data. But it's sort 0:12:03.080 --> 0:12:05.920 of a definition of what it doesn't mean to be employed. 0:12:05.960 --> 0:12:08.480 And I think the quality of jobs, the quality of 0:12:08.520 --> 0:12:11.280 life for many people hasn't improved at the rate that 0:12:11.320 --> 0:12:14.080 they thought, and I think Trump got elected on the 0:12:14.120 --> 0:12:16.559 back of that. That's the core of the populism with 0:12:16.640 --> 0:12:19.920 the middle class. But the policies to fix that are 0:12:20.120 --> 0:12:25.199 really much more about improving education. They're conceivably infrastructure, things 0:12:25.280 --> 0:12:28.520 you can do with the tax system. One area where 0:12:28.800 --> 0:12:32.400 I think maybe there's cause for some optimism is that 0:12:32.480 --> 0:12:35.960 business investment has just been awful all across the world. 0:12:36.520 --> 0:12:39.720 And if there is a coherent policy, almost any coherent 0:12:39.800 --> 0:12:42.920 policy going forward, I think we could see a big 0:12:42.960 --> 0:12:45.760 pick up in business investment. That's the key. If you 0:12:45.800 --> 0:12:47.960 don't see that it's not going to be great for 0:12:48.040 --> 0:12:52.240 long from your reading of history. Can we migrate policy 0:12:52.360 --> 0:12:56.600 to create incentives for domestic investment? Can we do tax 0:12:56.720 --> 0:13:00.240 credits to make Jeff Emil invest in David gur Is 0:13:00.840 --> 0:13:05.560 Ithaca versus Malaysia. I love Ithaca. I grew up in 0:13:05.640 --> 0:13:10.680 Rochester like you, Tom, but I think they're much more important. 0:13:10.840 --> 0:13:13.959 Much more important in Trump's policies are the how he 0:13:14.040 --> 0:13:18.560 handles regulation because there's, you know, a lot of needed regulation, 0:13:18.720 --> 0:13:20.680 but at the same time, there there's a lot of 0:13:20.720 --> 0:13:23.720 it's hard to interpret. I certainly know some of the 0:13:23.760 --> 0:13:28.080 regulation that's come on universities has been dramatic changes, difficult 0:13:28.120 --> 0:13:30.800 to interpret. If it's been in other industries like that, 0:13:30.920 --> 0:13:34.320 it's hard to function and where there's confidence, where there's 0:13:34.360 --> 0:13:38.520 optimisms coming from that. More than anything, I get the 0:13:38.520 --> 0:13:41.319 sense that, you know, when when Congress takes up a 0:13:41.360 --> 0:13:42.839 tax plan, it's a tax plan that's on the shelf. 0:13:42.880 --> 0:13:45.080 Republicans have been talking about tax cuts and reforming the 0:13:45.120 --> 0:13:48.240 tax code for for a long time. With regulation, I 0:13:48.280 --> 0:13:50.679 lived in Washington for a long time. I heard Republicans 0:13:50.720 --> 0:13:53.280 mostly decrying Dodd Frank for years and years and years. 0:13:53.280 --> 0:13:56.600 But it was all about removing that law, not replacing it. 0:13:57.280 --> 0:13:59.160 How nuanced do you think the conversation is going to 0:13:59.160 --> 0:14:01.599 be about about what regulation looks like here under the 0:14:01.640 --> 0:14:05.560 new prison We're seeing anything but nuanced conversation and the 0:14:05.600 --> 0:14:08.880 debate in America today. But I mean, Dodd Frank has 0:14:08.920 --> 0:14:12.080 a lot of problems. I think Dodd Frank uh does 0:14:12.160 --> 0:14:15.520 need to be fixed. Uh they've known that. President Obama 0:14:15.559 --> 0:14:18.040 knew that, but they couldn't get anything through Congress. Usually 0:14:18.040 --> 0:14:20.640 when you pass a law, there's a whole sequence of 0:14:20.680 --> 0:14:23.560 fixes that you do, little technical fixes. They couldn't do 0:14:23.600 --> 0:14:26.240 it because there was so much difficulty. So at a 0:14:26.320 --> 0:14:29.280 minimum they're going to do that. I think we need 0:14:29.320 --> 0:14:32.479 to make the path for small and medium sized businesses 0:14:32.520 --> 0:14:35.920 to get loans much better than it's been. They are 0:14:35.960 --> 0:14:39.160 the core of productivity in this economy. I think the 0:14:39.720 --> 0:14:44.280 that's where we've slowed down, particularly the businesses that eventually 0:14:44.320 --> 0:14:49.040 get big. Obviously, and you know, improving innovation, improving investment 0:14:49.160 --> 0:14:52.840 and Dodd Frank you know, stopped us from having the 0:14:52.840 --> 0:14:57.320 financial crisis of two thousand and forty, but didn't necessarily 0:14:57.480 --> 0:15:00.800 generate the recovery we needed just to going overseas here 0:15:00.840 --> 0:15:02.240 for a bid. Looking at Europe, we had the President 0:15:02.240 --> 0:15:04.760 of the Eurogroup this morning saying that the UK would 0:15:04.760 --> 0:15:07.160 likely get access to internal markets in the European univer 0:15:07.160 --> 0:15:09.640 We saw sterling strength and on that news, what do 0:15:09.680 --> 0:15:11.120 you make of how this has played out, how indeed 0:15:11.160 --> 0:15:14.560 this is playing out, this Brexit process, and and what 0:15:14.600 --> 0:15:17.520 it what it what it portends here for the UK economy. 0:15:18.120 --> 0:15:22.120 I'm very leary about the longer term they want it. 0:15:22.200 --> 0:15:25.320 There's no precedent for this of having this tightly net 0:15:25.360 --> 0:15:28.480 trade deal and pulling out short of a war, civil war, 0:15:28.560 --> 0:15:31.760 revolution or something. It's not that easy to do. And 0:15:31.840 --> 0:15:34.680 by the way, negotiating the new treaties is not that 0:15:34.720 --> 0:15:37.920 easy to do. Usually a trade agreement takes five years 0:15:37.960 --> 0:15:41.600 to negotiate, five years to implement, and that's fast track. 0:15:42.160 --> 0:15:44.560 And here they're trying. They haven't only two years to 0:15:44.600 --> 0:15:48.520 negotiate it, then you know, three years for implementation. There's 0:15:48.560 --> 0:15:51.040 going to be a long period of accodus from the 0:15:51.120 --> 0:15:55.080 UK economy of people, firms. Uh, they face a very 0:15:55.160 --> 0:15:58.920 difficult road ahead. I think the Braxitters seem to have 0:15:59.080 --> 0:16:02.600 no idea what they're doing. I had been assuming they 0:16:02.640 --> 0:16:05.280 would back down. I've been assuming there was going to 0:16:05.360 --> 0:16:08.680 be a soft Braxit, but at least term, you know, 0:16:08.760 --> 0:16:11.560 won't brook that it could all change. I really would 0:16:11.560 --> 0:16:14.440 hold the possibility that they'll just you know, pull out 0:16:14.480 --> 0:16:16.920 at the last minute, though the French chemed to be 0:16:16.920 --> 0:16:19.960 pushing them out the door. Ken Rogoff with us because 0:16:20.000 --> 0:16:22.280 we got we could go with the Professor Rogoff here 0:16:22.320 --> 0:16:24.440 for five or six hours, maybe get to the Italian 0:16:24.840 --> 0:16:28.800 referendum by ten am Wall Street time this morning. We 0:16:28.840 --> 0:16:31.160 will not do that. Coming up, what many of you 0:16:31.240 --> 0:16:34.800 been waiting for, particularly our listeners in Asia in India. 0:16:35.200 --> 0:16:38.800 Ken Rogoff on the history making effort by Mr Mody 0:16:38.840 --> 0:16:43.000 to limit cash in Indian society. Coming up, Ken Rogoff 0:16:43.480 --> 0:16:46.520 on the curse of cash, the curse of cash. What 0:16:46.600 --> 0:16:48.840 did Mr Modi get wrong in India? He tried to 0:16:48.880 --> 0:16:52.240 apply Rogolf one oh one, and you made clear you 0:16:52.320 --> 0:16:54.880 can't do that in an emerging market. What did he 0:16:54.920 --> 0:16:57.600 get wrong? Well, I mean the first thing, I don't 0:16:57.600 --> 0:16:59.160 know if he got it wrong because I don't know 0:16:59.200 --> 0:17:02.040 all that it tail. But I view the right way 0:17:02.080 --> 0:17:05.600 to do phasing out large bills is very slowly to 0:17:05.720 --> 0:17:09.480 void collateral damage. It's not technically easy to do there. 0:17:09.480 --> 0:17:11.359 You know a lot of people that you heard in 0:17:11.400 --> 0:17:13.920 addition to the tax of aiders and criminals. He did 0:17:13.920 --> 0:17:17.600 it overnight. Uh. He really wanted to lash out. He's 0:17:17.720 --> 0:17:21.239 very angry about corruption. And of course India didn't have 0:17:21.280 --> 0:17:24.120 any big bills. Their biggest bill was about fifteen dollars, 0:17:24.800 --> 0:17:27.440 which is you know, basically where I'm hoping to end 0:17:27.600 --> 0:17:30.560 up with countries like the United States, and the euros 0:17:30.840 --> 0:17:32.879 twenty or thirty years and now, by the way, no 0:17:33.280 --> 0:17:36.600 time soon. And he was taking away these bills that 0:17:36.960 --> 0:17:41.280 the particularly five rupe notes seven dollars and fifty cents 0:17:41.280 --> 0:17:44.640 that ordinary Indians use. One more question is what can 0:17:44.680 --> 0:17:47.560 we learn from Sweden? In your book you drop in 0:17:47.600 --> 0:17:51.199 these nations that are affecting your plan. What can the 0:17:51.280 --> 0:17:55.160 United States learn from Sweden? Again, my book is really 0:17:55.200 --> 0:17:57.800 about the issues with cash and what surrounds it. And 0:17:57.840 --> 0:17:59.720 there's more than one way to skin a cat. I 0:17:59.760 --> 0:18:02.560 try to propose something very simple. Sweden does it on 0:18:02.800 --> 0:18:06.240 many dimensions. You can't easily find an a t M 0:18:06.320 --> 0:18:09.119 machine in Sweden. Their places in all of the Nordic 0:18:09.160 --> 0:18:11.840 countries where you might have to go a hundred kilometers 0:18:11.880 --> 0:18:14.840 to find ATM machines. Well, they were very worried about crime. 0:18:14.920 --> 0:18:17.040 They stripped cash out of a lot of the banks 0:18:17.080 --> 0:18:19.320 that had a lot of violent crime. There's a lot 0:18:19.320 --> 0:18:22.600 of support in society. They also have very very good 0:18:22.760 --> 0:18:26.960 mobile person to person apt way more sophisticated than ours. 0:18:27.040 --> 0:18:29.040 We need to rip up the script and David Gurry, 0:18:29.080 --> 0:18:31.720 you're going to help her with this. You gave that 0:18:31.840 --> 0:18:35.320 you had the ceremonial first move at the Chess Championships, 0:18:35.720 --> 0:18:38.600 and then Mr Teal Peter Teal did the same thing. 0:18:38.640 --> 0:18:42.440 I believe yesterday we have a newly minted chess champion veteran. 0:18:43.359 --> 0:18:45.960 Is he as good as you were? Is he different? 0:18:46.440 --> 0:18:48.679 Is it like tennis where we don't even know what 0:18:48.720 --> 0:18:52.720 the game was? First of all, Carlson is was the 0:18:52.800 --> 0:18:56.320 champion and defended it. He's just turned twenty six years old. 0:18:56.680 --> 0:18:58.639 As good as I was, he's so much better than 0:18:58.640 --> 0:19:00.880 I was. I mean, I couldn't like a handle to him. 0:19:01.280 --> 0:19:04.960 He's an incredible player. His Russian opponent put up a 0:19:05.000 --> 0:19:08.600 big fight. Putin followed very closely. They weren't couldn't do 0:19:08.640 --> 0:19:11.280 the Olympics, of course, so they were very excited about 0:19:11.359 --> 0:19:14.080 the chess match. This opponent played great. But I have 0:19:14.119 --> 0:19:16.560 to say when I made the first move, uh, you know, 0:19:16.640 --> 0:19:19.800 I shook both their hands. Carlson was smiling and relaxed. 0:19:19.960 --> 0:19:22.159 Karyakin looked like he was about to be fed to 0:19:22.240 --> 0:19:26.480 the wolves. Here Professor of Public Policy, Economic international grandmaster 0:19:26.960 --> 0:19:30.040 as well. David ger and I played chess. Was embarrassing. 0:19:30.040 --> 0:19:33.199 He beat me in seven moves, David. When you watch it, 0:19:33.240 --> 0:19:35.600 when you watch matches likely when somebody who is skilled 0:19:35.600 --> 0:19:37.359 at chess, who's played chess for a long time watches, 0:19:37.960 --> 0:19:40.159 is it for pure enjoyment or is is he or 0:19:40.280 --> 0:19:43.479 she learning new new opens, learning new moves? How does 0:19:43.520 --> 0:19:46.840 one watch a match like this? I mean watching Carlson 0:19:47.080 --> 0:19:52.000 is just such a pleasure. Um. He manages to press 0:19:52.080 --> 0:19:56.440 in these creative ways. He wins positions where Bobby Fisher, 0:19:56.480 --> 0:19:58.880 who arguably might have been the greatest player of all 0:19:58.960 --> 0:20:02.159 time until be cast prov in Carlson. I mean, Bobby 0:20:02.160 --> 0:20:04.959 Fisher would have given me a draw. Where's Carlson's just 0:20:05.080 --> 0:20:08.440 starting to go to work? Uh? And it's just beautiful. 0:20:08.520 --> 0:20:12.080 And his opponent, by the way, was incredibly creative. He 0:20:12.760 --> 0:20:15.719 defended positions where he looked like he was dead, and 0:20:15.760 --> 0:20:17.880 he did these risky, creative things. It was a really 0:20:17.960 --> 0:20:20.760 fantastic match. What's your sense of the health of the 0:20:20.760 --> 0:20:23.399 game these days? Down at the Full Market building in 0:20:23.440 --> 0:20:25.280 Lower Manhattan they had a V I P lounge. This 0:20:25.440 --> 0:20:28.959 was streamed worldwide. How do you gage the interest in chess? Right? 0:20:29.040 --> 0:20:31.160 I mean, the interest in this match was just phenomenal. 0:20:31.160 --> 0:20:34.280 You have to remember chess as an online game even 0:20:34.320 --> 0:20:37.000 more than say football, as a TV sports so they 0:20:37.040 --> 0:20:40.639 had you know, certainly millions of people just watching every 0:20:40.680 --> 0:20:44.639 move online paid subscribers, and then it was shown live 0:20:44.680 --> 0:20:47.840 on television in many countries of particularly Russia. You read 0:20:47.880 --> 0:20:50.719 square was just filled with people like it was New 0:20:50.800 --> 0:20:53.960 Year's Eve watching the games. It's still very very popular. 0:20:54.280 --> 0:20:59.680 It's interesting despite computers coming in, chess as as popular 0:21:00.000 --> 0:21:03.000 as ever and just very quickly. This lasted many weeks. 0:21:03.040 --> 0:21:06.120 How do these how are these matches structured? Well, I mean, 0:21:06.240 --> 0:21:10.119 I just say the physical components very very important. Carlson 0:21:10.240 --> 0:21:13.080 always has trained physically, and this was really the first 0:21:13.119 --> 0:21:15.320 time he came up against opponent who was in the 0:21:15.400 --> 0:21:18.639 kind of shape he was think of taking. If a 0:21:18.720 --> 0:21:22.639 six hour exam every day for several weeks in a row, 0:21:22.680 --> 0:21:25.280 it's gonna grind anybody down. Plus you gotta study for 0:21:25.400 --> 0:21:28.840 the exam, let's not forget. So there's a huge physical component. 0:21:28.960 --> 0:21:31.760 Carlson tip typically tears people up in the fifth and 0:21:31.800 --> 0:21:34.760 sixth hour, and this guy, karayak In was just right 0:21:34.840 --> 0:21:38.760 with him. We're going to leave it there. Thank you. 0:21:39.880 --> 0:21:42.399 The book my book of the year. Read it. It 0:21:42.560 --> 0:21:48.200 is controversial. The Curse of Cash Daniel Jurgen next. This 0:21:48.280 --> 0:22:03.320 is Bloomer. This is Bloomberg Surveillance on Bloomberg Radio. David 0:22:03.320 --> 0:22:06.119