1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,880 --> 00:00:11,880 Speaker 2: There seems to be an excess of communication right now. 3 00:00:12,039 --> 00:00:16,360 Speaker 2: Everyone is talking at the FED, within the administration. How 4 00:00:16,360 --> 00:00:19,160 Speaker 2: do you interpret how everybody has to get out there 5 00:00:19,320 --> 00:00:21,759 Speaker 2: and speak, speak, speak well. 6 00:00:22,320 --> 00:00:24,720 Speaker 3: One of the criticisms that's been leveled at the FED 7 00:00:24,880 --> 00:00:28,280 Speaker 3: for a long time is we engage in groupthink. Every 8 00:00:28,320 --> 00:00:32,040 Speaker 3: policy decision is a twelve nothing vote. There's no dessens, 9 00:00:32,640 --> 00:00:34,920 Speaker 3: and that if you're all going to do exactly the 10 00:00:34,960 --> 00:00:37,639 Speaker 3: same thing and think the same way, we don't need 11 00:00:37,760 --> 00:00:41,600 Speaker 3: nineteen of you. We need one. But what I always 12 00:00:41,600 --> 00:00:44,240 Speaker 3: try to point out is it's through speeches, in public 13 00:00:44,280 --> 00:00:47,000 Speaker 3: speaking that everybody presents their views and you can go 14 00:00:47,040 --> 00:00:50,479 Speaker 3: out listening and they're not the same. So all the 15 00:00:50,520 --> 00:00:52,879 Speaker 3: public speaking, the speeches are the way for us to 16 00:00:52,960 --> 00:00:55,720 Speaker 3: show a diversity of opinions, have thought about the direction 17 00:00:55,760 --> 00:00:57,920 Speaker 3: of policy. This is a good thing. It's not a 18 00:00:57,920 --> 00:01:01,520 Speaker 3: bad thing. Despite people saying it's a cornucopy of noise. 19 00:01:02,080 --> 00:01:05,319 Speaker 3: It's actually signaling where people stand when you come to 20 00:01:05,360 --> 00:01:07,880 Speaker 3: the meeting. And I always try to stress this to people. 21 00:01:07,920 --> 00:01:10,120 Speaker 3: We have to make a decision every six weeks. We 22 00:01:10,160 --> 00:01:12,280 Speaker 3: do not get to kick the can down the road, 23 00:01:12,520 --> 00:01:16,199 Speaker 3: and what that implies is that to get a reasonable 24 00:01:17,000 --> 00:01:20,480 Speaker 3: consistent opinion, we have to kind of compromise. You have 25 00:01:20,520 --> 00:01:22,600 Speaker 3: to come to decision. And that's why our votes are 26 00:01:22,600 --> 00:01:26,000 Speaker 3: often twelve to nothing, eleven to one. It's because we 27 00:01:26,040 --> 00:01:29,200 Speaker 3: all understand we have to compromise someone on our positions 28 00:01:29,560 --> 00:01:33,200 Speaker 3: to have a clear, consistent policy setting for markets and 29 00:01:33,240 --> 00:01:34,000 Speaker 3: American people. 30 00:01:34,200 --> 00:01:38,640 Speaker 2: Larry Meyer, Washington University Saint Louis had a small book 31 00:01:38,680 --> 00:01:41,240 Speaker 2: out of his time with green Span, a term at 32 00:01:41,240 --> 00:01:44,400 Speaker 2: the FED, and he was heated about the consensus vote, 33 00:01:44,440 --> 00:01:47,640 Speaker 2: the need for consensus. Should we be more like the 34 00:01:47,680 --> 00:01:50,320 Speaker 2: Bank of England, which seems like a fist fight every 35 00:01:50,360 --> 00:01:51,040 Speaker 2: six weeks. 36 00:01:51,840 --> 00:01:54,040 Speaker 3: You'd like to avoid the fist fight every six weeks. 37 00:01:54,200 --> 00:01:58,360 Speaker 3: But I mean, I personally think there's nothing wrong with dissents. 38 00:01:58,720 --> 00:02:02,760 Speaker 3: It's a way to communicate differences in policy stances. You know, 39 00:02:02,920 --> 00:02:06,560 Speaker 3: the whole complete consensus largely comes out of a Greenspan 40 00:02:06,680 --> 00:02:08,240 Speaker 3: era where it was like, if you have a twelve 41 00:02:08,240 --> 00:02:11,000 Speaker 3: to nothing both, there's no doubt about what policy should be. 42 00:02:11,840 --> 00:02:14,280 Speaker 3: Everybody agreed with the chair at that time and with 43 00:02:14,400 --> 00:02:16,919 Speaker 3: that kind of tradition continued. But as the Bank of 44 00:02:16,960 --> 00:02:19,760 Speaker 3: England has showed there's no point of having nineteen of 45 00:02:19,840 --> 00:02:22,760 Speaker 3: us if we always do the same thing. So at 46 00:02:22,760 --> 00:02:25,120 Speaker 3: that point, what's wrong with having a few decent I 47 00:02:25,120 --> 00:02:27,560 Speaker 3: don't actually personally, I just sent it at the July meeting. 48 00:02:27,840 --> 00:02:31,240 Speaker 3: I don't personally think that shows anything about loss of 49 00:02:31,400 --> 00:02:34,280 Speaker 3: faith in the chair or not the right policy. 50 00:02:34,320 --> 00:02:34,799 Speaker 2: But that's the. 51 00:02:34,760 --> 00:02:37,520 Speaker 3: Whole point is to say, look, I'm on this committee 52 00:02:37,600 --> 00:02:39,920 Speaker 3: to have my own independent view and make these points, 53 00:02:40,080 --> 00:02:41,120 Speaker 3: and that's what people are doing. 54 00:02:41,960 --> 00:02:45,320 Speaker 2: We welcome all of you again, particularly worldwide, with Christopher 55 00:02:45,760 --> 00:02:48,400 Speaker 2: Waller into this audience. Ed, can I call on you 56 00:02:48,480 --> 00:02:51,480 Speaker 2: first for the first question? In a bit, I'll let 57 00:02:51,520 --> 00:02:52,880 Speaker 2: you come up with it, but I think we need 58 00:02:52,919 --> 00:02:53,360 Speaker 2: to hear from. 59 00:02:53,720 --> 00:02:55,160 Speaker 3: You've giving you a little time to think of it. 60 00:02:55,160 --> 00:02:57,160 Speaker 2: He's got a little time to think about it. You know, 61 00:02:57,440 --> 00:02:58,840 Speaker 2: maybe I don't want to get in the way of 62 00:02:58,880 --> 00:03:01,440 Speaker 2: his good first question. I'm going to ask some questions 63 00:03:01,480 --> 00:03:04,400 Speaker 2: about the speech. I got to keep the assembled press 64 00:03:04,400 --> 00:03:06,880 Speaker 2: happier or they won't show up again. It counts on 65 00:03:06,960 --> 00:03:09,160 Speaker 2: foreign relations. But I want to come out of this 66 00:03:09,800 --> 00:03:13,640 Speaker 2: with a little bit more knowledge about who is Christopher Waller. 67 00:03:13,680 --> 00:03:16,120 Speaker 2: We'll get to that in a minute. Number one question. 68 00:03:16,240 --> 00:03:20,840 Speaker 2: I get the unemployment rate's four point x percent. Is 69 00:03:20,880 --> 00:03:24,639 Speaker 2: a four point x percent unemployment rate now the same 70 00:03:24,840 --> 00:03:27,120 Speaker 2: as a four point x unemployment rate when you were 71 00:03:27,160 --> 00:03:28,120 Speaker 2: at Washington State. 72 00:03:29,200 --> 00:03:31,639 Speaker 3: No, I think this is where we're in this unusual 73 00:03:31,720 --> 00:03:35,360 Speaker 3: situation where we have this kind of zero net immigration 74 00:03:35,680 --> 00:03:39,560 Speaker 3: instead of roughly say four hundred thousand a year, actually 75 00:03:39,600 --> 00:03:42,440 Speaker 3: people leaving the country, and this is kind of I've 76 00:03:42,480 --> 00:03:45,160 Speaker 3: said to this point, and it's masking this decline in 77 00:03:45,240 --> 00:03:49,040 Speaker 3: labor demand. So just think about if it's all immigration 78 00:03:49,160 --> 00:03:51,400 Speaker 3: and you have a decline in labor supply, then the 79 00:03:51,440 --> 00:03:55,720 Speaker 3: following thing should happen. Employment will go down, wages should 80 00:03:55,760 --> 00:03:58,720 Speaker 3: be bid up. If you have a labor shortage, vacancy 81 00:03:58,800 --> 00:04:01,960 Speaker 3: should go up, should go up. That's what you should 82 00:04:01,960 --> 00:04:04,760 Speaker 3: see with a very tight labor market and declining labor supply. 83 00:04:05,120 --> 00:04:09,720 Speaker 3: When did we see that twenty twenty two, twenty twenty one, 84 00:04:09,960 --> 00:04:11,400 Speaker 3: That's what we saw, and that was a very tight 85 00:04:11,480 --> 00:04:14,400 Speaker 3: labor market. If things are driven by a decline in 86 00:04:14,440 --> 00:04:16,760 Speaker 3: labor demand, I'm just kind of thinking about labor supply 87 00:04:16,880 --> 00:04:20,919 Speaker 3: is constant. You'll see jobs fall, there'll be downward pressure 88 00:04:20,960 --> 00:04:25,880 Speaker 3: on wages, there'll be downward pressure on vacancies, quits rates 89 00:04:25,880 --> 00:04:28,480 Speaker 3: will fall. That sounds to me more like what we're 90 00:04:28,480 --> 00:04:31,200 Speaker 3: seeing in the data. So all that's happening with all 91 00:04:31,240 --> 00:04:33,640 Speaker 3: the labor supply stuff is it's kind of masking the 92 00:04:33,680 --> 00:04:36,839 Speaker 3: weakness of labor demand. And I've seen some estimates that 93 00:04:36,839 --> 00:04:39,200 Speaker 3: if you had just kept the labor force participation rate 94 00:04:39,640 --> 00:04:42,800 Speaker 3: where it was, or unemployment would be four point nine 95 00:04:42,760 --> 00:04:43,440 Speaker 3: to five percent. 96 00:04:43,560 --> 00:04:46,480 Speaker 2: Okay, well, that's an important touch point. I would suggest 97 00:04:46,480 --> 00:04:48,800 Speaker 2: five percent is a much bigger number than four point 98 00:04:48,880 --> 00:04:51,880 Speaker 2: nine percent. Do you see an immediacy at the Central 99 00:04:51,920 --> 00:04:55,960 Speaker 2: Bank and among the staff that the real unemployment rate 100 00:04:56,160 --> 00:04:58,599 Speaker 2: is five ish and not four point x percent? 101 00:04:58,839 --> 00:05:01,520 Speaker 3: Well, where you got to take a position on what 102 00:05:01,560 --> 00:05:04,040 Speaker 3: do you think the labor supply is doing. Is it 103 00:05:04,240 --> 00:05:07,480 Speaker 3: fine that it's four point three because the fact that 104 00:05:07,480 --> 00:05:09,479 Speaker 3: people leave or drop by the labor force, that's just 105 00:05:09,520 --> 00:05:12,960 Speaker 3: a natural part of the economy and therefore four point 106 00:05:13,000 --> 00:05:16,039 Speaker 3: three is exactly reflecting things? Or do you think like 107 00:05:16,160 --> 00:05:19,039 Speaker 3: I do, which is like we're seeing falling labor demand 108 00:05:19,360 --> 00:05:21,719 Speaker 3: and if it wasn't for this decline and labor supply, 109 00:05:22,160 --> 00:05:24,640 Speaker 3: we would be hurting and there'd be no doubt about 110 00:05:24,720 --> 00:05:28,719 Speaker 3: cutting rates, absolutely no discussion about it. So that's where 111 00:05:28,760 --> 00:05:30,960 Speaker 3: they were in this weird thing. We've never seen falling 112 00:05:31,000 --> 00:05:33,440 Speaker 3: labor demand with a big fall and labor supply at 113 00:05:33,440 --> 00:05:35,640 Speaker 3: the same time, at least not in my career that 114 00:05:35,720 --> 00:05:36,400 Speaker 3: I can remember. 115 00:05:36,839 --> 00:05:39,320 Speaker 2: And that speaks to the technology. I'll get to that minute, 116 00:05:39,320 --> 00:05:42,240 Speaker 2: and the AI AI AI. The thing you mentioned one 117 00:05:42,279 --> 00:05:45,000 Speaker 2: hundred basis points, four rate cuts, five rate cuts maybe 118 00:05:45,080 --> 00:05:47,840 Speaker 2: is modeled in. You have to see what happens out there. 119 00:05:48,360 --> 00:05:52,799 Speaker 2: Quote despite more than three years of restrictive monetari policy, 120 00:05:53,240 --> 00:05:56,200 Speaker 2: how many rate cuts do we need to get? Krystal 121 00:05:56,839 --> 00:05:59,360 Speaker 2: Waller away from the dreaded our word restrictive. 122 00:06:00,320 --> 00:06:02,000 Speaker 3: Well, that's what I said. You have to kind of 123 00:06:02,040 --> 00:06:04,360 Speaker 3: pick a what you think is the neutral rate, which 124 00:06:04,360 --> 00:06:07,880 Speaker 3: means you're neither stimulating or contracting the economy. That's the 125 00:06:07,920 --> 00:06:11,880 Speaker 3: simplest way I describe what the neutral rate is I have. 126 00:06:12,680 --> 00:06:14,800 Speaker 3: I just typically look at the SEP, the Survey of 127 00:06:14,800 --> 00:06:18,560 Speaker 3: Economic Projections, and the median is around three percent. So 128 00:06:18,640 --> 00:06:21,240 Speaker 3: for the committee as a whole, if it's three percent, 129 00:06:22,440 --> 00:06:23,960 Speaker 3: you know, and you've still got one hundred and twenty 130 00:06:23,960 --> 00:06:25,880 Speaker 3: five basis points to go to get to neutral. If 131 00:06:25,920 --> 00:06:29,920 Speaker 3: everything starts coming back closer to target, and that's where 132 00:06:29,920 --> 00:06:30,880 Speaker 3: I think things are going to be. 133 00:06:30,920 --> 00:06:33,440 Speaker 2: But the challenge is you allude to in your speech, 134 00:06:33,480 --> 00:06:35,520 Speaker 2: and I'm going to be aggressive here. I think of 135 00:06:35,600 --> 00:06:39,240 Speaker 2: John Edwards and two America is basically there's two hours 136 00:06:39,279 --> 00:06:41,719 Speaker 2: starts out there right now. There's an UR start for 137 00:06:41,760 --> 00:06:45,560 Speaker 2: the haves including everyone on Park Avenue assembled, and there's 138 00:06:45,600 --> 00:06:47,960 Speaker 2: an OUR start for the have nots who are flat 139 00:06:48,000 --> 00:06:51,159 Speaker 2: on their back, including farmers in your Dakotas. Yeah, there's 140 00:06:51,160 --> 00:06:55,080 Speaker 2: two our starts. How do you manage that forward in 141 00:06:55,160 --> 00:06:56,680 Speaker 2: a divided America? 142 00:06:56,800 --> 00:06:59,200 Speaker 3: Yeah, So that's actually an interesting way of thinking about 143 00:06:59,279 --> 00:07:02,000 Speaker 3: I never have but typically when people talk about our star, 144 00:07:02,880 --> 00:07:05,640 Speaker 3: I mean, how many interest rates are there? It's not 145 00:07:05,680 --> 00:07:08,919 Speaker 3: like there's one that this is the unique our star. 146 00:07:09,720 --> 00:07:12,679 Speaker 3: So I gave a speech at last May twenty twenty 147 00:07:12,680 --> 00:07:15,520 Speaker 3: four on our star in Iceland, and I always have 148 00:07:15,560 --> 00:07:17,720 Speaker 3: to look at it this way. For me, our star 149 00:07:17,840 --> 00:07:21,280 Speaker 3: is a policy rate. I control reserves in the banking system. 150 00:07:21,560 --> 00:07:25,800 Speaker 3: What's the closest substitute short term liquid government debt? So 151 00:07:25,920 --> 00:07:28,280 Speaker 3: for me, that's the real our star that I should 152 00:07:28,280 --> 00:07:30,880 Speaker 3: be attention not to return on capital, not the return 153 00:07:30,920 --> 00:07:34,200 Speaker 3: on AI, not the return on corporate debt, the return 154 00:07:34,240 --> 00:07:37,000 Speaker 3: on safe liquid government debt. That's the R star I 155 00:07:37,000 --> 00:07:41,240 Speaker 3: look at, and that's driven by global demand for treasuries 156 00:07:41,320 --> 00:07:45,480 Speaker 3: versus the global supply of treasuries. That's how I view 157 00:07:45,480 --> 00:07:48,120 Speaker 3: our star. I mean, your point is actually a very 158 00:07:48,160 --> 00:07:50,760 Speaker 3: good one, that what's restricted. If you think about our 159 00:07:50,760 --> 00:07:53,840 Speaker 3: star as being restrictive, it's more restrictive for some groups 160 00:07:53,880 --> 00:07:56,240 Speaker 3: than it is for others. That's probably always true, it's 161 00:07:56,280 --> 00:07:58,960 Speaker 3: not just now, but it seems to be very stark 162 00:07:59,040 --> 00:08:03,640 Speaker 3: this time that upper income groups everything's fine. Wealth is booming, 163 00:08:03,640 --> 00:08:07,160 Speaker 3: the stock market's booming. They've got no problem financing stuff. 164 00:08:07,200 --> 00:08:10,200 Speaker 3: I hear this from retailers. We pass tariffs through to 165 00:08:10,280 --> 00:08:13,040 Speaker 3: high income customers. They don't bat an eye about it 166 00:08:13,440 --> 00:08:16,760 Speaker 3: because they can afford it. Low income households they can't 167 00:08:16,760 --> 00:08:19,320 Speaker 3: pass them through. The don't walk out the door. So 168 00:08:19,680 --> 00:08:22,080 Speaker 3: that's the tension again, one of these tensions that we have, 169 00:08:22,200 --> 00:08:24,920 Speaker 3: kind of this dichotomy and the economy between the upper 170 00:08:24,920 --> 00:08:26,280 Speaker 3: income groups the lower income. 171 00:08:26,560 --> 00:08:31,680 Speaker 2: Off the script, off the speech. Three esteemed market economists 172 00:08:31,680 --> 00:08:35,800 Speaker 2: that I spoke to also the same thing away from 173 00:08:35,840 --> 00:08:40,480 Speaker 2: a typical monetary policy speech. They're looking at qt QE, 174 00:08:40,880 --> 00:08:45,040 Speaker 2: the state of our monetary policy forward, and the Fed's 175 00:08:45,200 --> 00:08:48,400 Speaker 2: unique balance sheet. Give us an update on where you 176 00:08:48,600 --> 00:08:52,480 Speaker 2: stand with the Fed's balance sheet and quantitative to the 177 00:08:52,600 --> 00:08:53,800 Speaker 2: end of quantitative tightening. 178 00:08:53,880 --> 00:08:55,760 Speaker 3: Yeah, I mean I think we're at the point where 179 00:08:55,880 --> 00:08:58,240 Speaker 3: we run an ample reserves. I gave a speech in 180 00:08:58,320 --> 00:09:00,680 Speaker 3: July on our balance sheet. We run an ample reserves 181 00:09:00,679 --> 00:09:04,360 Speaker 3: to ensure that there's sufficient liquidity in the banking system, 182 00:09:04,440 --> 00:09:07,320 Speaker 3: in the financial markets that people don't have to at 183 00:09:07,320 --> 00:09:09,360 Speaker 3: the end of the day go scrambling around looking for 184 00:09:09,440 --> 00:09:12,880 Speaker 3: nickels and dimes in the couch to cover their reserve positions. 185 00:09:12,920 --> 00:09:16,560 Speaker 3: That to me is idiocy. So you have ample reserves, 186 00:09:16,640 --> 00:09:18,840 Speaker 3: the reserves are there, nobody has to spend the whole 187 00:09:18,840 --> 00:09:23,040 Speaker 3: evening looking for money under the cushions. We're about at 188 00:09:23,040 --> 00:09:27,320 Speaker 3: that point. We had an excessively large balance sheet due 189 00:09:27,320 --> 00:09:30,400 Speaker 3: to the quantitative easing. We ended that. We've been on 190 00:09:30,440 --> 00:09:35,280 Speaker 3: a quantitative tightening policy since May of twenty two, and 191 00:09:35,360 --> 00:09:37,480 Speaker 3: we're basically back to where we think we should be. 192 00:09:37,600 --> 00:09:40,400 Speaker 3: Just for ample all the QES stuff is taken out 193 00:09:40,520 --> 00:09:43,320 Speaker 3: in terms of how much liquidity it still has affected 194 00:09:43,320 --> 00:09:45,360 Speaker 3: the composition of our balance sheet. Which was part of 195 00:09:45,400 --> 00:09:48,760 Speaker 3: my speech I gave in July. QUEA really distorted the 196 00:09:48,800 --> 00:09:52,080 Speaker 3: maturity structure of our balance sheet and our next choice. 197 00:09:52,080 --> 00:09:54,720 Speaker 3: Even though we get the level right, our next job 198 00:09:54,800 --> 00:09:56,920 Speaker 3: is trying to get the composition right, and that'll take 199 00:09:56,920 --> 00:09:57,280 Speaker 3: some time. 200 00:09:57,360 --> 00:09:59,960 Speaker 2: I sure the stage of Jason Furman up at Harvard 201 00:10:00,120 --> 00:10:03,600 Speaker 2: boring because an act ten in basic economics, and you 202 00:10:03,640 --> 00:10:05,680 Speaker 2: had a brilliant tweet the other day here he said, 203 00:10:05,720 --> 00:10:09,000 Speaker 2: we need to fold in the wealth effect into our consumption. 204 00:10:09,120 --> 00:10:12,200 Speaker 2: You have brilliant consumption numbers in here of the haves 205 00:10:12,200 --> 00:10:16,199 Speaker 2: the Upperdessa. They're trading one block over on Madison Avenue. 206 00:10:16,520 --> 00:10:21,679 Speaker 2: Explain the wealth effect and how it boosts monthly consumption. 207 00:10:21,840 --> 00:10:25,440 Speaker 2: You mentioned luxury travel and others. How wealth effect is 208 00:10:25,480 --> 00:10:26,520 Speaker 2: America right now? 209 00:10:27,200 --> 00:10:29,280 Speaker 3: Yeah? So, I mean, if you go back to some 210 00:10:29,559 --> 00:10:32,120 Speaker 3: kind of some basic economic theory, one kind of rule 211 00:10:32,160 --> 00:10:36,120 Speaker 3: of thumb is for every one dollar of wealth you 212 00:10:36,240 --> 00:10:39,760 Speaker 3: get the real interest rate a three percent, two percent, 213 00:10:40,200 --> 00:10:42,440 Speaker 3: your consumptions should go up by two to three percent 214 00:10:42,800 --> 00:10:44,520 Speaker 3: for every dollar in wealth you get so like two 215 00:10:44,640 --> 00:10:47,679 Speaker 3: or three cents for every dollar of wealth. That's what 216 00:10:47,760 --> 00:10:50,079 Speaker 3: mean by the wealth tech. Now, those numbers also mean 217 00:10:50,080 --> 00:10:53,640 Speaker 3: that wealth increases permanent, it's not a one time. If 218 00:10:53,679 --> 00:10:55,079 Speaker 3: it's just a one off, you're not going to change 219 00:10:55,080 --> 00:10:58,240 Speaker 3: your entire consumption path. So this is always kind of 220 00:10:58,280 --> 00:11:01,600 Speaker 3: the challenge with the wealth effect because it's not that 221 00:11:01,679 --> 00:11:03,880 Speaker 3: big of a number in terms of a dollar increase. 222 00:11:03,880 --> 00:11:07,000 Speaker 3: It's only like three cents of consumption. But that also 223 00:11:07,000 --> 00:11:08,960 Speaker 3: has to be permanent. It's not like a one off 224 00:11:09,000 --> 00:11:12,800 Speaker 3: and then comes back down. So wealth ficks often sometimes 225 00:11:12,800 --> 00:11:15,920 Speaker 3: are smaller than that. But the run we've had for 226 00:11:15,960 --> 00:11:20,240 Speaker 3: the last few years, that's looking pretty permanent and pretty big. 227 00:11:20,320 --> 00:11:21,800 Speaker 3: It's not just a one dollar increase. 228 00:11:22,040 --> 00:11:24,320 Speaker 2: I'ming a couple more questions, you know. This one's from 229 00:11:24,360 --> 00:11:26,440 Speaker 2: the first. David Gurrah gave me this question over at 230 00:11:26,440 --> 00:11:30,160 Speaker 2: Bloomberg News because he's vicious in his questions. Should we 231 00:11:30,200 --> 00:11:31,160 Speaker 2: get rid of the dots? 232 00:11:33,679 --> 00:11:39,240 Speaker 3: That's a good question. I mean, I personally have doubts 233 00:11:39,280 --> 00:11:42,640 Speaker 3: about whether we should have the SEP at all, But 234 00:11:42,840 --> 00:11:45,360 Speaker 3: I've been told that what are you trying to hide? Then? 235 00:11:45,640 --> 00:11:48,080 Speaker 3: Why would you take him away? Why would you not 236 00:11:48,280 --> 00:11:49,360 Speaker 3: be as transparent? 237 00:11:49,760 --> 00:11:51,400 Speaker 2: What would happen if the dots went away? 238 00:11:52,000 --> 00:11:54,800 Speaker 3: Well, you'd kind of be back to twenty eleven and 239 00:11:54,840 --> 00:11:57,040 Speaker 3: then you know, we would say that, now you could 240 00:11:57,080 --> 00:11:59,880 Speaker 3: change the dots. I personal believe you should get rid 241 00:11:59,880 --> 00:12:03,280 Speaker 3: of the calendar dating, get rid of the long run numbers, 242 00:12:03,480 --> 00:12:06,480 Speaker 3: and just say, look, what's the next optimal policy over 243 00:12:06,520 --> 00:12:10,120 Speaker 3: the next six, twelve, eighteen months. That's as good as 244 00:12:10,120 --> 00:12:13,640 Speaker 3: we can do. So then it's a rolling number and 245 00:12:13,679 --> 00:12:16,640 Speaker 3: you get away from this crazy thing. It's like, wow, 246 00:12:16,720 --> 00:12:18,480 Speaker 3: there's three meetings left in the year. How many more 247 00:12:18,559 --> 00:12:22,280 Speaker 3: rcuts this year? Who cares the media? 248 00:12:22,440 --> 00:12:23,360 Speaker 2: We wouldn't have a job. 249 00:12:24,480 --> 00:12:26,800 Speaker 3: So if I said, okay at the September he said, 250 00:12:26,800 --> 00:12:29,400 Speaker 3: here's how many over the next six months, that's what 251 00:12:29,440 --> 00:12:31,760 Speaker 3: the focus would be, not the end of the calendar year. 252 00:12:32,559 --> 00:12:34,240 Speaker 3: So I would do that and then get away from 253 00:12:34,240 --> 00:12:36,440 Speaker 3: the long run stuff. Just the best we can do 254 00:12:36,559 --> 00:12:39,440 Speaker 3: is six twelve, maybe eighteen months out any kind of forecast, 255 00:12:39,440 --> 00:12:42,640 Speaker 3: We're no, we don't have any genius insights over everybody 256 00:12:42,640 --> 00:12:45,040 Speaker 3: else on Wall Street who does this, So that would 257 00:12:45,040 --> 00:12:46,680 Speaker 3: be one of the critical things I would do is 258 00:12:46,760 --> 00:12:49,200 Speaker 3: change the calendar dating and shorten the horizon that we 259 00:12:49,240 --> 00:12:50,319 Speaker 3: actually do it. 260 00:12:50,360 --> 00:12:53,199 Speaker 2: One of my hallmarks is who are these guys literally 261 00:12:53,240 --> 00:12:55,480 Speaker 2: like Butch Cassidy, And so we're going to find out 262 00:12:55,480 --> 00:12:59,040 Speaker 2: who Christopher Waller is. I mentioned you were accounting major 263 00:12:59,080 --> 00:13:01,240 Speaker 2: and you got bored because a professor was putting, so 264 00:13:01,280 --> 00:13:05,520 Speaker 2: you switch to economics. The Waller of nineteen ninety one 265 00:13:05,880 --> 00:13:09,040 Speaker 2: is a spectacular thirteen page paper. I think it is 266 00:13:09,760 --> 00:13:13,320 Speaker 2: on prodigious game theory. And what he didn't know in 267 00:13:13,400 --> 00:13:16,800 Speaker 2: nineteen ninety one is he would be describing the game 268 00:13:16,880 --> 00:13:19,719 Speaker 2: theory of twenty twenty five. I'm not going to get 269 00:13:19,720 --> 00:13:23,480 Speaker 2: you in trouble with the Secretary of Treasury right now, 270 00:13:23,520 --> 00:13:25,960 Speaker 2: but I'm going to review this you set up in 271 00:13:26,040 --> 00:13:30,200 Speaker 2: nineteen ninety one off of James Baker's word Bashing of 272 00:13:30,240 --> 00:13:35,320 Speaker 2: where administrations bash the Central Bank and there's corrosion involved. 273 00:13:35,360 --> 00:13:38,760 Speaker 2: The title of the paper, Bashing and Corrosion, you sub 274 00:13:38,760 --> 00:13:43,360 Speaker 2: out strong administrations and weak administrations. No, I'm going to 275 00:13:43,520 --> 00:13:46,520 Speaker 2: not ask you what this administration is, but I want 276 00:13:46,559 --> 00:13:50,040 Speaker 2: to take it forward to the present day. If we 277 00:13:50,240 --> 00:13:55,880 Speaker 2: have bashing and corrosion, and we have to be ex 278 00:13:55,960 --> 00:13:58,520 Speaker 2: antew're trying to get out front of the debate, the fence, 279 00:13:58,559 --> 00:14:01,400 Speaker 2: trying to glean what's going on, or we go true 280 00:14:01,520 --> 00:14:05,400 Speaker 2: ex post literally in a Georgia school, where we wait 281 00:14:05,559 --> 00:14:08,640 Speaker 2: for the data to come in. How does the bashing 282 00:14:08,760 --> 00:14:14,640 Speaker 2: and coercion affect the monetary challenge of ex ante versus 283 00:14:14,760 --> 00:14:18,240 Speaker 2: ex post? Do we become more do we become more 284 00:14:18,880 --> 00:14:23,120 Speaker 2: x post with an administration going after a central bank? 285 00:14:23,400 --> 00:14:25,600 Speaker 3: Well, like I said, I wrote this paper back because 286 00:14:25,640 --> 00:14:27,320 Speaker 3: at the time there was a lot of discussion about 287 00:14:27,360 --> 00:14:31,040 Speaker 3: central bank independence and institutional design, and the kind of 288 00:14:31,040 --> 00:14:34,400 Speaker 3: presumption was once you picked a central banker, that's the policy, 289 00:14:34,920 --> 00:14:37,560 Speaker 3: and every other external influence just kind of went away. 290 00:14:38,320 --> 00:14:40,120 Speaker 3: And I was kind of looking around, going that's not 291 00:14:40,160 --> 00:14:42,720 Speaker 3: what I'm hearing. That's not what I'm seeing. Back in 292 00:14:42,720 --> 00:14:46,000 Speaker 3: the eighties, right, there was a lot of criticism, and 293 00:14:46,040 --> 00:14:49,280 Speaker 3: so this idea of Baker's was, look, the administration can 294 00:14:49,480 --> 00:14:52,480 Speaker 3: push the FED one way or the other by publicly 295 00:14:52,720 --> 00:14:55,400 Speaker 3: criticizing the feed. Now, when I wrote this paper in 296 00:14:55,840 --> 00:14:58,000 Speaker 3: nineteen eighty nine, nineteen nine, I didn't think I'd be 297 00:14:58,040 --> 00:15:00,600 Speaker 3: the one receiving it twenty five years, thirty years later. 298 00:15:01,280 --> 00:15:03,920 Speaker 3: So it was when I reread the intro the other day, 299 00:15:03,960 --> 00:15:07,640 Speaker 3: I was like, wow, what was I thinking? So, but 300 00:15:07,800 --> 00:15:10,120 Speaker 3: I mean, that is kind of this situation and it's 301 00:15:10,120 --> 00:15:12,320 Speaker 3: not just the curt administration. This has been done forever. 302 00:15:12,400 --> 00:15:17,640 Speaker 3: I mean George Bush, bash Greenspan in him costing in 303 00:15:17,680 --> 00:15:20,800 Speaker 3: the election. Criticism had come out, and this was a 304 00:15:20,880 --> 00:15:23,560 Speaker 3: norm until basically Bob Rubin came along and then it 305 00:15:23,600 --> 00:15:26,000 Speaker 3: was like, don't talk about the FED and that kind 306 00:15:26,000 --> 00:15:30,680 Speaker 3: of became the rule through serious sequence of administrations until 307 00:15:31,720 --> 00:15:35,560 Speaker 3: President Trump came in in twenty eighteen started criticizing the 308 00:15:35,600 --> 00:15:38,160 Speaker 3: FED more publicly than had been done in along. 309 00:15:38,280 --> 00:15:42,000 Speaker 2: Does it change the behavior of a given central bank? 310 00:15:43,520 --> 00:15:47,440 Speaker 2: If we have bashing, you're trying to get out front 311 00:15:47,840 --> 00:15:51,840 Speaker 2: the public. The media want you to be out front, omniscient, 312 00:15:51,920 --> 00:15:54,680 Speaker 2: have a crystal ball, or do you have to slam 313 00:15:54,720 --> 00:15:59,600 Speaker 2: back to a massively expost data dependency because you're getting crushed. 314 00:16:00,200 --> 00:16:02,760 Speaker 2: Whatever the executive branch is, whatever the nation is. 315 00:16:03,640 --> 00:16:05,240 Speaker 3: I mean, at the end of the day, this is 316 00:16:05,240 --> 00:16:07,480 Speaker 3: what I tell everybody. I just go to work and 317 00:16:07,520 --> 00:16:09,320 Speaker 3: I try to do my job the best I can. 318 00:16:09,880 --> 00:16:12,360 Speaker 3: That's all I can do. A lot of this is 319 00:16:12,400 --> 00:16:18,560 Speaker 3: just out of my control, you know, whether the administration's 320 00:16:18,640 --> 00:16:22,120 Speaker 3: views drive people to push one way or the other. 321 00:16:22,280 --> 00:16:24,200 Speaker 3: And you know, I can't speak for anybody else, but 322 00:16:24,720 --> 00:16:26,400 Speaker 3: I just try to do the best job I can. 323 00:16:27,200 --> 00:16:29,720 Speaker 3: Using the theory that I know, the models of the 324 00:16:29,720 --> 00:16:31,880 Speaker 3: economy that I use and the data that I use. 325 00:16:33,240 --> 00:16:36,240 Speaker 3: So you know the call I made in June, which 326 00:16:36,360 --> 00:16:38,960 Speaker 3: was I was saying the labor market is not as 327 00:16:39,000 --> 00:16:41,920 Speaker 3: good as it looks, and I was accused of being 328 00:16:41,960 --> 00:16:47,560 Speaker 3: political August first, that suddenly didn't look so political. The 329 00:16:47,680 --> 00:16:49,720 Speaker 3: data came in exactly the way i'd said it was 330 00:16:49,840 --> 00:16:53,760 Speaker 3: going to. So what sometimes looks like people say, ah, 331 00:16:53,840 --> 00:16:57,000 Speaker 3: they were interpreting this as purely a political position. Suddenly 332 00:16:57,080 --> 00:16:59,120 Speaker 3: the data said, maybe it's not political. Maybe it was 333 00:16:59,160 --> 00:17:01,880 Speaker 3: actually the right call. And so that's how I kind 334 00:17:01,880 --> 00:17:03,640 Speaker 3: of think of this. You can always look at something 335 00:17:03,640 --> 00:17:06,960 Speaker 3: and interpret it as political when it's not. That's kind 336 00:17:06,960 --> 00:17:08,800 Speaker 3: of the problem and what we decided what we do. 337 00:17:09,320 --> 00:17:11,840 Speaker 2: One more question. I'm going to go to the floor 338 00:17:11,920 --> 00:17:14,399 Speaker 2: and also out on Zoom worldwide with the Council on 339 00:17:14,720 --> 00:17:17,280 Speaker 2: Foreign Relations. I want to get this one question, and 340 00:17:17,359 --> 00:17:20,520 Speaker 2: I have to ask, with your heritage of the Dakotas 341 00:17:20,560 --> 00:17:23,280 Speaker 2: in the old Northwest, how bad is it for the 342 00:17:23,359 --> 00:17:27,640 Speaker 2: farmers right now? Soybeans is a news, but French Hill 343 00:17:27,840 --> 00:17:30,919 Speaker 2: down in Arkansas is telling me guess what. They're flat 344 00:17:30,960 --> 00:17:34,320 Speaker 2: on their back reporting that police well. Back in the 345 00:17:34,560 --> 00:17:40,159 Speaker 2: first Trump administration, there was a you know, tariffs on 346 00:17:40,240 --> 00:17:44,000 Speaker 2: China and tariffs. China immediately responded by not buying US soybeans. 347 00:17:44,400 --> 00:17:46,639 Speaker 2: And I was at the Saint Louis fad some of 348 00:17:46,640 --> 00:17:49,600 Speaker 2: the biggest soybean producers were in our district. I heard this. 349 00:17:50,320 --> 00:17:54,040 Speaker 3: We had barges of soybeans lined up on the Mississippi 350 00:17:54,160 --> 00:17:56,920 Speaker 3: River that were never going anywhere, and they only have 351 00:17:57,000 --> 00:17:59,600 Speaker 3: a certain shelf life before they rot and they're gone. 352 00:18:00,240 --> 00:18:03,880 Speaker 3: So we saw this. China was I think, don't quote 353 00:18:03,920 --> 00:18:05,840 Speaker 3: me exactly, but this is in the ballpark, but China 354 00:18:05,880 --> 00:18:08,600 Speaker 3: has sort of bought like seventy five percent of US soybeans. 355 00:18:09,560 --> 00:18:14,000 Speaker 3: Even later when some of this came off, soyvings never recovered, 356 00:18:15,359 --> 00:18:17,720 Speaker 3: China was only buying like thirty five Again don't quote 357 00:18:17,720 --> 00:18:20,440 Speaker 3: me on the exact but like thirty five percent, and 358 00:18:20,520 --> 00:18:24,000 Speaker 3: now it's back down to basically zero. So they've just 359 00:18:24,040 --> 00:18:28,840 Speaker 3: shifted their entire supply chain to Brazil and South America 360 00:18:29,280 --> 00:18:32,000 Speaker 3: and they never came back. And so that's the one 361 00:18:32,000 --> 00:18:33,800 Speaker 3: thing you want to be a little careful of, is 362 00:18:33,920 --> 00:18:36,600 Speaker 3: just because the supply scene gets disrupted and then you 363 00:18:36,680 --> 00:18:39,400 Speaker 3: reverse something, it doesn't necessarily mean it comes back. Once 364 00:18:39,440 --> 00:18:44,119 Speaker 3: it's changed, it's changed. So yeah, solving farmers are typically 365 00:18:44,160 --> 00:18:47,000 Speaker 3: getting hammered and China buying. 366 00:18:47,359 --> 00:18:50,120 Speaker 2: I've seen the new Foreign Affairs magazine. It is brilliant. 367 00:18:50,240 --> 00:18:54,680 Speaker 2: Shannon O'Neill with a great article on supply lines, which 368 00:18:54,720 --> 00:18:57,320 Speaker 2: to me is the discussion of Q one next year. 369 00:18:57,520 --> 00:19:00,200 Speaker 2: Edward Cox, please, sir with our first question. 370 00:19:01,520 --> 00:19:05,080 Speaker 4: Ed Cox can be for economic development of the conference board. 371 00:19:05,960 --> 00:19:09,560 Speaker 4: Governor Waller, your excellent presentation. I appreciate it very much 372 00:19:09,680 --> 00:19:13,240 Speaker 4: about the data, but there's several mega things out there 373 00:19:13,240 --> 00:19:16,159 Speaker 4: for which the FED is not responsible that I'm sure 374 00:19:16,359 --> 00:19:19,640 Speaker 4: are in the background or part of your consideration, and 375 00:19:19,720 --> 00:19:23,320 Speaker 4: that's the extraordinary deficits, fiscal deficits going forward, and the 376 00:19:23,440 --> 00:19:26,400 Speaker 4: value of the dollar. Would you explain how those might 377 00:19:26,560 --> 00:19:31,280 Speaker 4: enter into your considerations as to the what monetary policy 378 00:19:31,320 --> 00:19:31,719 Speaker 4: should be. 379 00:19:32,520 --> 00:19:34,280 Speaker 3: Yeah. When you know, we have a kind of a 380 00:19:34,320 --> 00:19:38,679 Speaker 3: long standing view that we don't, you know, praise or 381 00:19:38,720 --> 00:19:41,800 Speaker 3: criticize fiscal policy. We take it as a given for 382 00:19:41,920 --> 00:19:45,399 Speaker 3: doing our own job. But when you're running six percent 383 00:19:45,480 --> 00:19:49,240 Speaker 3: deficits three percent primary deficits, we know that that's just 384 00:19:49,280 --> 00:19:52,199 Speaker 3: not sustainable in the long run. How long is the 385 00:19:52,240 --> 00:19:54,760 Speaker 3: long run. I don't know the old joke, I'll be 386 00:19:54,800 --> 00:19:58,119 Speaker 3: dead before we find out, but we just know what 387 00:19:58,200 --> 00:20:01,080 Speaker 3: economicy you can do it persistently just not going to happen. 388 00:20:01,800 --> 00:20:05,919 Speaker 3: So that has general concerns. The our Star speech I 389 00:20:05,960 --> 00:20:10,480 Speaker 3: gave back in Iceland was if you think about our 390 00:20:10,520 --> 00:20:12,720 Speaker 3: Star and government debt, which is the closest thing to 391 00:20:12,720 --> 00:20:15,639 Speaker 3: should matter for me, and reserves, it's a race between 392 00:20:15,680 --> 00:20:19,159 Speaker 3: the growing demand for US Treasury debt and the growing supply. 393 00:20:19,920 --> 00:20:23,040 Speaker 3: For the last forty years, demand has outstripped supply. And 394 00:20:23,080 --> 00:20:25,720 Speaker 3: what does that mean. Prices go up, yields go down. 395 00:20:26,760 --> 00:20:29,920 Speaker 3: At some point. If that reverses and the supply starts 396 00:20:29,920 --> 00:20:31,800 Speaker 3: succeeding demand, the only way you're going to get the 397 00:20:31,800 --> 00:20:33,840 Speaker 3: markets in the world to hold this stuff is you 398 00:20:33,880 --> 00:20:37,080 Speaker 3: lower the price, which means the yield's going to go up. 399 00:20:37,560 --> 00:20:42,080 Speaker 3: So for me, having good stable fiscal policy is the 400 00:20:42,119 --> 00:20:44,439 Speaker 3: best way to ensure that you don't have that happen. 401 00:20:45,240 --> 00:20:48,080 Speaker 3: But again this is not under my control. That's up 402 00:20:48,160 --> 00:20:51,840 Speaker 3: to the Congress, White House to think about fiscal policy. 403 00:20:53,200 --> 00:20:55,040 Speaker 3: That's it. That's just my view on it. 404 00:20:55,119 --> 00:20:59,119 Speaker 2: Chris Sir Mock raising adventure in Great capital. 405 00:21:01,400 --> 00:21:05,280 Speaker 5: Alna Walla, you talked about AI, and you said that 406 00:21:05,320 --> 00:21:08,040 Speaker 5: you thought short term it could have some risks for 407 00:21:08,119 --> 00:21:11,159 Speaker 5: the labor market. Long term is good for productivity, but 408 00:21:11,240 --> 00:21:15,280 Speaker 5: a lot of forecasters are predicting that it will be 409 00:21:15,440 --> 00:21:19,120 Speaker 5: negative or the labor market longer term, that it will 410 00:21:19,119 --> 00:21:23,400 Speaker 5: reduce jobs. How does that impact monetary policy, how does 411 00:21:23,440 --> 00:21:26,440 Speaker 5: it impact your dual mandate? And how do you think 412 00:21:26,440 --> 00:21:27,280 Speaker 5: about it generally? 413 00:21:28,119 --> 00:21:30,879 Speaker 3: Right? So that's what I'm saying, is this a structural 414 00:21:30,960 --> 00:21:34,000 Speaker 3: or a cyclical phenomenon with AI? So if you think 415 00:21:34,000 --> 00:21:38,240 Speaker 3: about labor demand and employment just over time just grows 416 00:21:38,320 --> 00:21:41,440 Speaker 3: with the economy, what I worry about is AI being 417 00:21:41,440 --> 00:21:45,480 Speaker 3: a structural is there's this one time, permanent drop in 418 00:21:45,520 --> 00:21:48,520 Speaker 3: the level of demand. The question is does it continue 419 00:21:48,560 --> 00:21:50,520 Speaker 3: to grow at the same rate as before, in which 420 00:21:50,560 --> 00:21:53,560 Speaker 3: case it's just a level effect employment growth and everything 421 00:21:53,560 --> 00:21:56,439 Speaker 3: will continue on in the future. Or does it drop 422 00:21:56,520 --> 00:21:59,080 Speaker 3: and then it just tastes flat. It not only drops 423 00:21:59,080 --> 00:22:00,600 Speaker 3: in the level, but it has a lot or growth 424 00:22:00,680 --> 00:22:04,520 Speaker 3: rate of employment. I as a policymaker cannot do anything 425 00:22:04,560 --> 00:22:06,760 Speaker 3: about that latter case. If it's just the fact that 426 00:22:06,760 --> 00:22:10,320 Speaker 3: there's this kind of cyclical movement in labor Evan, that's 427 00:22:10,320 --> 00:22:13,639 Speaker 3: what I'm designed to have some influence over. But if 428 00:22:13,680 --> 00:22:16,200 Speaker 3: it's a sharp structural drop, you know, lowering the FED 429 00:22:16,240 --> 00:22:19,320 Speaker 3: funds right fifty base points isn't going to overcome that. 430 00:22:19,720 --> 00:22:21,199 Speaker 3: And that's what we're trying to figure out is going 431 00:22:21,240 --> 00:22:24,840 Speaker 3: to happen now. In the past, whenever we've seen technological change, 432 00:22:24,840 --> 00:22:28,159 Speaker 3: I gave a speech yesterday down to Amazon. You know, 433 00:22:28,760 --> 00:22:30,919 Speaker 3: you see jobs going away, you know which ones are 434 00:22:30,920 --> 00:22:32,359 Speaker 3: going to go away, but you never know which jobs 435 00:22:32,359 --> 00:22:35,399 Speaker 3: are coming. And usually there's a kind of enough of 436 00:22:35,440 --> 00:22:38,160 Speaker 3: a gap where there's the jobs are slowly going away, 437 00:22:38,320 --> 00:22:40,880 Speaker 3: new ones are coming on. This time when I worry 438 00:22:40,880 --> 00:22:43,399 Speaker 3: about it's so fast. It's happening so fast that the 439 00:22:43,480 --> 00:22:45,760 Speaker 3: jobs go a way faster than we can figure out 440 00:22:46,040 --> 00:22:48,160 Speaker 3: what the new jobs are. The new jobs will show up. 441 00:22:48,359 --> 00:22:50,679 Speaker 3: I have no doubt about that. It's just the timing 442 00:22:50,880 --> 00:22:54,080 Speaker 3: may be a little more disruptive than technology we've seen 443 00:22:54,080 --> 00:22:54,480 Speaker 3: in the past. 444 00:22:54,520 --> 00:22:56,760 Speaker 2: Thank you for that question. I forgot to ask that 445 00:22:56,840 --> 00:23:00,680 Speaker 2: you saved me there with that question. Here's a footnote 446 00:23:00,760 --> 00:23:04,919 Speaker 2: from this speech this morning. Technology that improves labor productivity 447 00:23:05,400 --> 00:23:09,639 Speaker 2: leads firm to demand more labor, not less a huge 448 00:23:09,680 --> 00:23:12,440 Speaker 2: body of America doesn't agree with that. And to your 449 00:23:12,440 --> 00:23:16,439 Speaker 2: point on innovation with a Nobel prize, the celebration of 450 00:23:16,480 --> 00:23:19,560 Speaker 2: the last forty eight hours of Schumpad and across profit 451 00:23:19,880 --> 00:23:23,760 Speaker 2: of innovation, this new innovation, the gains are going to 452 00:23:23,840 --> 00:23:27,080 Speaker 2: go to a narrow group or do you think they 453 00:23:27,119 --> 00:23:28,639 Speaker 2: will This is a truche word. 454 00:23:28,880 --> 00:23:32,720 Speaker 6: They will diffuse out across America. Well, the history of 455 00:23:32,760 --> 00:23:36,159 Speaker 6: technology is that they do diffuse. I mean, one of 456 00:23:36,200 --> 00:23:38,200 Speaker 6: the things I pointed out the speech yesday. If you 457 00:23:38,240 --> 00:23:41,160 Speaker 6: look back to Karl Marxist year of capitalism. 458 00:23:41,240 --> 00:23:45,160 Speaker 3: Machines robots would replace labor to produce all the output. 459 00:23:45,520 --> 00:23:48,240 Speaker 3: Everybody would lose their jobs, be unemployed. There'd be this 460 00:23:48,400 --> 00:23:51,400 Speaker 3: mass army of the unemployed, there'd be a social revolution, 461 00:23:51,760 --> 00:23:56,200 Speaker 3: Capitalism would die, and we'd have a socialist utopia. That 462 00:23:56,359 --> 00:24:00,480 Speaker 3: doesn't happen, right, I mean, when capital goes out, machines 463 00:24:00,520 --> 00:24:05,080 Speaker 3: and technology go up, it makes labor more productive, and 464 00:24:05,200 --> 00:24:08,080 Speaker 3: firms like productive workers and that's why they want to 465 00:24:08,440 --> 00:24:11,440 Speaker 3: hire them, because they don't want to keep their output constant. 466 00:24:12,000 --> 00:24:14,520 Speaker 3: They want to produce more and they need both of 467 00:24:14,560 --> 00:24:16,680 Speaker 3: these things to breach more output. This is what we've 468 00:24:16,720 --> 00:24:19,200 Speaker 3: seen in the history, certainly of the US. In the 469 00:24:19,280 --> 00:24:21,640 Speaker 3: last two hundred years, the capital stock in the US 470 00:24:22,160 --> 00:24:24,959 Speaker 3: is seven times larger than it was in nineteen fifty 471 00:24:25,359 --> 00:24:29,320 Speaker 3: in terms of machines, equipment, everything. The unemployment rate is 472 00:24:29,400 --> 00:24:33,879 Speaker 3: exactly the same. So employment grows with technology, it doesn't 473 00:24:34,000 --> 00:24:34,800 Speaker 3: go negative with it. 474 00:24:34,920 --> 00:24:39,000 Speaker 2: But to the President's point, and arguably his election, a 475 00:24:39,160 --> 00:24:42,840 Speaker 2: huge body of America feels let down. We had productivity, 476 00:24:43,200 --> 00:24:46,399 Speaker 2: we had capital deepening of an extraordinary amount, and the 477 00:24:46,560 --> 00:24:51,600 Speaker 2: jobs went to China. That's his theme with AI. Are 478 00:24:51,640 --> 00:24:54,879 Speaker 2: we going to replicate that in some unknown way and 479 00:24:55,000 --> 00:24:56,960 Speaker 2: the jobs are going to go to you name the place. 480 00:24:57,440 --> 00:24:59,720 Speaker 3: Well, even with the China shock, totally, employment in the 481 00:24:59,800 --> 00:25:02,879 Speaker 3: US has grown ever since the China Shock. It hasn't 482 00:25:02,920 --> 00:25:06,280 Speaker 3: gone negative or falling. It's just go look at say 483 00:25:06,520 --> 00:25:09,080 Speaker 3: the employment right, go to fred my favorite data series, 484 00:25:09,760 --> 00:25:14,600 Speaker 3: pull up employment. Look what it does. It just goes up. So, yes, 485 00:25:14,760 --> 00:25:17,919 Speaker 3: there are reallocations. Jobs get lost and they go somewhere 486 00:25:17,960 --> 00:25:21,119 Speaker 3: else or they get eliminated. But that's my point. New jobs, 487 00:25:21,320 --> 00:25:24,520 Speaker 3: new things came up, people reskilled going to new areas. 488 00:25:25,040 --> 00:25:27,479 Speaker 3: So when the China shock was hitting manufacturing, we had 489 00:25:27,520 --> 00:25:33,960 Speaker 3: a whole it software, phone technology, information technology that created 490 00:25:34,080 --> 00:25:35,560 Speaker 3: thousands and millions of jobs. 491 00:25:36,160 --> 00:25:38,680 Speaker 2: Is FRED an unfair advantage for the Saint Louis fed 492 00:25:38,880 --> 00:25:41,359 Speaker 2: Do they wake up every day different than any other bank? 493 00:25:41,720 --> 00:25:44,680 Speaker 3: FRED is one of the greatest gifts from the Federal 494 00:25:44,720 --> 00:25:45,719 Speaker 3: Reserve to the planet. 495 00:25:46,280 --> 00:25:47,360 Speaker 2: There we go, ma'n. 496 00:25:47,480 --> 00:25:49,520 Speaker 7: Please hi, Ginger Color. 497 00:25:49,520 --> 00:25:53,000 Speaker 1: I'm to remember cfr Overwall or just what you just 498 00:25:53,080 --> 00:25:56,200 Speaker 1: said about how unemployment is the same as it was 499 00:25:56,240 --> 00:25:59,040 Speaker 1: in nineteen fifty and the China Shock didn't really necessarily 500 00:25:59,080 --> 00:26:02,680 Speaker 1: affect employment. I guess I want to harken back to 501 00:26:02,800 --> 00:26:07,760 Speaker 1: what you said about where wealth is concentrated in the 502 00:26:07,880 --> 00:26:10,720 Speaker 1: hands of Americans, right, and how you said that what 503 00:26:10,920 --> 00:26:13,879 Speaker 1: the bottom sixty percent of households owned fifteen percent of 504 00:26:14,080 --> 00:26:17,400 Speaker 1: wealth and forty five percent of spending. I'm curious how 505 00:26:17,480 --> 00:26:21,480 Speaker 1: that figures into what you just said about unemployment being 506 00:26:21,720 --> 00:26:23,480 Speaker 1: the same as it was in nineteen fifty and the 507 00:26:23,600 --> 00:26:27,560 Speaker 1: China Shock ultimately not really having an effect on the 508 00:26:27,640 --> 00:26:30,440 Speaker 1: labor market. I'm curious how inequality factors into that. 509 00:26:31,040 --> 00:26:32,560 Speaker 3: Yeah, so, any like it was just trying to get 510 00:26:33,000 --> 00:26:36,560 Speaker 3: with employment. You get sectoral shifts. Some sector goes down, 511 00:26:36,680 --> 00:26:39,880 Speaker 3: some other sector goes up. In my speech yesterday said look, 512 00:26:39,920 --> 00:26:42,880 Speaker 3: when automobiles came up, if you were making saddles or wagons, 513 00:26:42,920 --> 00:26:46,120 Speaker 3: your jobs were going away. But those same skills got 514 00:26:46,160 --> 00:26:50,280 Speaker 3: transferred over to precy chassis for cars, making car seats, 515 00:26:50,480 --> 00:26:53,520 Speaker 3: the same skills they just had to transfer. So those 516 00:26:53,640 --> 00:26:55,840 Speaker 3: jobs went away, but other jobs came up that took 517 00:26:55,920 --> 00:26:58,080 Speaker 3: their place. That's why you can't just look at one 518 00:26:58,160 --> 00:26:59,680 Speaker 3: sector and say, oh, that's going to kill the entire 519 00:27:00,280 --> 00:27:02,160 Speaker 3: I don't believe that's going to happen with AI either. 520 00:27:03,280 --> 00:27:05,240 Speaker 3: In terms of wealth and income and equality, this has 521 00:27:05,280 --> 00:27:06,920 Speaker 3: been an issue in the US for the last forty 522 00:27:06,960 --> 00:27:09,639 Speaker 3: to fifty years. There's been a tremendous increase or a 523 00:27:09,720 --> 00:27:14,359 Speaker 3: reasonable increase in wealth inequality, income inequality. For me, as 524 00:27:14,359 --> 00:27:18,760 Speaker 3: a policymaker, I have one instrument. I can't deal with inequality. 525 00:27:18,800 --> 00:27:21,720 Speaker 3: It's really not in my toolkit. I can't say, here's 526 00:27:21,720 --> 00:27:23,960 Speaker 3: an interest rate for this group, as Tom was saying, 527 00:27:24,160 --> 00:27:26,080 Speaker 3: I can't say here's an interest rate without our star, 528 00:27:26,200 --> 00:27:29,280 Speaker 3: and here's an industrate without our star. That's not in 529 00:27:29,400 --> 00:27:31,560 Speaker 3: my set. I have to look at the aggregate. It's 530 00:27:31,640 --> 00:27:35,360 Speaker 3: really my only choice. Can I look at these discrepancies 531 00:27:35,440 --> 00:27:37,240 Speaker 3: and think how I might want to lean one way 532 00:27:37,320 --> 00:27:39,440 Speaker 3: or the other. Sure, I can. You know, we kind 533 00:27:39,440 --> 00:27:41,880 Speaker 3: of got criticized for that before with our last framework, 534 00:27:41,960 --> 00:27:46,560 Speaker 3: that we were kind of leaning a particular way. There's 535 00:27:46,600 --> 00:27:50,320 Speaker 3: nothing wrong with it, it's just we only have we 536 00:27:50,359 --> 00:27:52,280 Speaker 3: there's very little we can do about it, and that 537 00:27:52,480 --> 00:27:55,000 Speaker 3: was my issue with our last framework. I could care 538 00:27:55,040 --> 00:27:56,840 Speaker 3: about this, but there's very little I can do with 539 00:27:56,920 --> 00:27:58,360 Speaker 3: it for particular. 540 00:27:58,000 --> 00:28:01,680 Speaker 2: Groups I think we have here in the digital world. 541 00:28:03,280 --> 00:28:05,479 Speaker 2: We'll take the next question from Chris Thomas. 542 00:28:06,880 --> 00:28:09,520 Speaker 8: Good morning, Governor Wallert, Thank you for the time today. 543 00:28:09,840 --> 00:28:13,640 Speaker 8: Ex Intel X McKenzie. Now, I help global companies think 544 00:28:13,640 --> 00:28:17,480 Speaker 8: about their global footprint and where they put advanced manufacturing facilities, 545 00:28:18,400 --> 00:28:22,480 Speaker 8: and the constant refrain is that no matter how high 546 00:28:22,560 --> 00:28:26,560 Speaker 8: the tariff, the US is just completely uncompetitive and now 547 00:28:26,600 --> 00:28:28,840 Speaker 8: it's the most expensive place in the world to do business, 548 00:28:28,960 --> 00:28:32,280 Speaker 8: especially if you're building something. To what extent does this 549 00:28:32,600 --> 00:28:35,960 Speaker 8: matter for the growth and success of the US economy 550 00:28:36,040 --> 00:28:38,000 Speaker 8: and is there anything that could be done about it. 551 00:28:38,560 --> 00:28:40,800 Speaker 8: I've heard that even if it's one hundred percent tariff, 552 00:28:40,880 --> 00:28:44,200 Speaker 8: it's still cheaper to manufacture in Taiwan or Vietnam, or 553 00:28:44,320 --> 00:28:46,560 Speaker 8: Japan or Korea or China than. 554 00:28:46,480 --> 00:28:47,000 Speaker 2: In the US. 555 00:28:48,720 --> 00:28:51,480 Speaker 3: Yeah, I mean, this is this is way outside my wheelhouse, 556 00:28:51,560 --> 00:28:55,600 Speaker 3: I have to say on trade policy, you know, particularly 557 00:28:55,640 --> 00:28:59,320 Speaker 3: worrying about one sector over another, manufacturing versus others. This 558 00:28:59,520 --> 00:29:02,720 Speaker 3: is just something I can't make those decisions. That's what 559 00:29:02,800 --> 00:29:05,480 Speaker 3: the president got elected to do, and he's following through 560 00:29:05,560 --> 00:29:09,720 Speaker 3: on his promises. Whether you get stuff on shoring or not, 561 00:29:10,360 --> 00:29:12,640 Speaker 3: I don't know. We'll see. We did learn something with 562 00:29:12,760 --> 00:29:17,080 Speaker 3: the pandemic that supply chains stretched across the globe are 563 00:29:17,120 --> 00:29:19,960 Speaker 3: pretty fragile, and there was a lot of emphasis on 564 00:29:20,080 --> 00:29:23,360 Speaker 3: getting near shoring. Maybe not on shoring, but near shoring 565 00:29:23,960 --> 00:29:27,800 Speaker 3: as a result over time, you know, if tariff's were 566 00:29:27,800 --> 00:29:30,760 Speaker 3: big enough, I'm pretty sure you bring your factory back. 567 00:29:31,000 --> 00:29:32,920 Speaker 3: There is a price at which you will bring it back. 568 00:29:33,000 --> 00:29:36,280 Speaker 3: It's not infinite, So that's what I don't know. We'll 569 00:29:36,280 --> 00:29:38,239 Speaker 3: see how this all works out, whether there's a lot 570 00:29:38,280 --> 00:29:41,400 Speaker 3: of incentives to bring stuff back or not, or whether 571 00:29:41,520 --> 00:29:43,640 Speaker 3: the people that you know, you bring these jobs back, 572 00:29:43,840 --> 00:29:45,680 Speaker 3: whether people want to do them or not. I mean, 573 00:29:45,800 --> 00:29:47,600 Speaker 3: in the US we've moved into much more of a 574 00:29:47,720 --> 00:29:52,440 Speaker 3: service sector mentality and the idea of screwing lugnuts on 575 00:29:52,520 --> 00:29:54,720 Speaker 3: the tire for eight hours a day is not something 576 00:29:54,760 --> 00:29:56,080 Speaker 3: most Americans typically want to do. 577 00:29:56,200 --> 00:29:57,760 Speaker 2: Well. I'm not going to ask you about bananas and 578 00:29:57,840 --> 00:30:01,440 Speaker 2: terrorifts because I don't think we're growing bananas. Sir over here, please. 579 00:30:05,280 --> 00:30:07,760 Speaker 7: Andrew Watchers is Morgan Stanley, Governor Waller. Thank you for 580 00:30:07,840 --> 00:30:10,320 Speaker 7: your comments. I want to ask you to say a 581 00:30:10,360 --> 00:30:13,960 Speaker 7: little bit more about what you are intending to convey 582 00:30:14,040 --> 00:30:16,840 Speaker 7: with the phrase to a more neutral stance of policy. 583 00:30:18,080 --> 00:30:20,840 Speaker 7: In a sense, if you're restrictive just cutting once, is 584 00:30:20,920 --> 00:30:24,000 Speaker 7: moving to a more neutral sense of policy? Or is 585 00:30:24,120 --> 00:30:28,120 Speaker 7: this describing sort of a process where over several meetings 586 00:30:28,160 --> 00:30:30,600 Speaker 7: you have an idea of a range in mind that 587 00:30:30,800 --> 00:30:34,000 Speaker 7: is more neutral, and you're describing a process of moving 588 00:30:34,040 --> 00:30:34,840 Speaker 7: towards that range. 589 00:30:35,280 --> 00:30:37,600 Speaker 3: Yeah, I'd say it's the latter. It's really the process. 590 00:30:38,520 --> 00:30:40,720 Speaker 3: So if you're at neutral and you think you're restrictive 591 00:30:40,760 --> 00:30:43,280 Speaker 3: and your policy ready to set up here, what's going 592 00:30:43,320 --> 00:30:45,240 Speaker 3: to cause you to bring it down? You think inflation 593 00:30:45,360 --> 00:30:48,240 Speaker 3: is coming back to target, you think the labor market 594 00:30:48,440 --> 00:30:51,600 Speaker 3: is either stable or weakening, you want to kind of 595 00:30:51,640 --> 00:30:53,960 Speaker 3: bring it back towards neutral. It doesn't mean you go 596 00:30:54,120 --> 00:30:56,920 Speaker 3: below and you want to stimulate the economy. Things would 597 00:30:56,960 --> 00:30:58,480 Speaker 3: have to really get bad. We're not seeing that in 598 00:30:58,520 --> 00:31:00,560 Speaker 3: the labor market that we want to go below netrol 599 00:31:00,960 --> 00:31:03,240 Speaker 3: or I'm not seeing it. I can't speak for anybody else. 600 00:31:03,320 --> 00:31:07,440 Speaker 3: But and the debate right now is about inflation. Inflation 601 00:31:07,520 --> 00:31:10,000 Speaker 3: is running three percent, it's way over our target. It's 602 00:31:10,040 --> 00:31:13,920 Speaker 3: been above target for five years, four years. Why are 603 00:31:13,960 --> 00:31:16,120 Speaker 3: you lowering rates? So you have to say what is 604 00:31:16,160 --> 00:31:19,440 Speaker 3: the outlook for inflation? And that's what I've argued, that 605 00:31:19,600 --> 00:31:21,840 Speaker 3: any teriff effects are going to be temporary. You look, 606 00:31:21,960 --> 00:31:24,680 Speaker 3: this is a classical line in central banking. You look 607 00:31:24,760 --> 00:31:27,600 Speaker 3: through those things. You think about what is it going 608 00:31:27,680 --> 00:31:30,240 Speaker 3: to be inflation twelve months from now? When the next 609 00:31:30,280 --> 00:31:33,440 Speaker 3: twelve months. So that's what I'm doing. And in that world, 610 00:31:33,520 --> 00:31:35,800 Speaker 3: I see inflation coming back down to target. I see 611 00:31:35,840 --> 00:31:38,240 Speaker 3: a softening labor market. So I want to bring things 612 00:31:38,360 --> 00:31:40,640 Speaker 3: back to target. I don't want to go below target 613 00:31:40,680 --> 00:31:42,440 Speaker 3: right now because inflation is above target. 614 00:31:42,920 --> 00:31:44,320 Speaker 2: We in Q and A, we go to tens of 615 00:31:44,400 --> 00:31:47,360 Speaker 2: a percentage point. You were talking whole numbers up there. 616 00:31:47,480 --> 00:31:50,000 Speaker 2: You say two percent is where the FED is right now? 617 00:31:50,440 --> 00:31:53,080 Speaker 2: What is the latest thinking you see around the raging 618 00:31:53,200 --> 00:31:57,160 Speaker 2: debate to take a tailor roll, look at the output gap, 619 00:31:57,160 --> 00:31:59,440 Speaker 2: look at Nahru and all the rest of the mumbo jumbo, 620 00:32:00,040 --> 00:32:03,960 Speaker 2: and plug in a more normal two point two or 621 00:32:04,040 --> 00:32:07,920 Speaker 2: two point four or two point six percent run rate 622 00:32:08,360 --> 00:32:11,640 Speaker 2: versus the decades long hope for a two percent. 623 00:32:12,000 --> 00:32:13,120 Speaker 3: Change the inflation target. 624 00:32:13,280 --> 00:32:13,480 Speaker 2: Yeah. 625 00:32:13,880 --> 00:32:15,920 Speaker 3: Yeah, I mean there's always a good argument or debate 626 00:32:15,920 --> 00:32:18,200 Speaker 3: about what should you pick a point or pick a range. 627 00:32:18,800 --> 00:32:20,600 Speaker 3: A lot of central banks in the world they run 628 00:32:20,680 --> 00:32:24,760 Speaker 3: with a range. They don't seem to have big problems 629 00:32:24,800 --> 00:32:27,960 Speaker 3: with that, you know, like the bank a Canna is 630 00:32:28,000 --> 00:32:31,320 Speaker 3: a range of one to three percent, So you know, 631 00:32:31,720 --> 00:32:34,120 Speaker 3: there's often a question you're just as happy with three 632 00:32:34,160 --> 00:32:35,720 Speaker 3: percent inflation as one percent? 633 00:32:36,600 --> 00:32:38,800 Speaker 2: Should we be? Ah? Should we we want two? 634 00:32:38,920 --> 00:32:41,040 Speaker 3: But they're not going to do crazy stuff to get 635 00:32:41,080 --> 00:32:43,880 Speaker 3: it to two. That's the key point. You'll get there. 636 00:32:43,960 --> 00:32:45,320 Speaker 3: You'll take your time, but you're not going to do 637 00:32:45,480 --> 00:32:49,480 Speaker 3: drastic policies to drive it to exactly two. I think 638 00:32:50,040 --> 00:32:53,240 Speaker 3: two is a good thing. I'll give you my spiel 639 00:32:53,320 --> 00:32:56,280 Speaker 3: on what's the real value of having a two percent 640 00:32:56,400 --> 00:32:59,200 Speaker 3: target with a particular price index. It holds you accountable. 641 00:33:00,360 --> 00:33:04,479 Speaker 3: If I just said inflation in general somewhere between one 642 00:33:04,560 --> 00:33:07,760 Speaker 3: and three percent. There's a lot of loose things that 643 00:33:07,880 --> 00:33:10,840 Speaker 3: go on in there that I could always slippery slide, say, 644 00:33:10,880 --> 00:33:13,480 Speaker 3: I did my job. What are you talking about? That 645 00:33:13,560 --> 00:33:16,440 Speaker 3: happened with the money growth targeting back in the early eighties. Yeah, 646 00:33:16,560 --> 00:33:18,840 Speaker 3: and one was pretty good, but M two was lousy. 647 00:33:18,920 --> 00:33:22,360 Speaker 2: But next month two, Remember how the world stopped. I 648 00:33:22,440 --> 00:33:25,240 Speaker 2: think it was Thursday and whenever it was three thirty 649 00:33:25,280 --> 00:33:26,280 Speaker 2: for M one M two. 650 00:33:26,440 --> 00:33:29,480 Speaker 3: And it is money growth. So I like two percent 651 00:33:29,520 --> 00:33:32,240 Speaker 3: because it holds me accountable. Okay, now you want to 652 00:33:32,280 --> 00:33:35,320 Speaker 3: hold me accountable because it's two point two instead of two. 653 00:33:36,280 --> 00:33:39,320 Speaker 3: Come on, that's where a range kind of helps. I 654 00:33:39,400 --> 00:33:43,920 Speaker 3: always like to tease my friends and things. Is in 655 00:33:44,040 --> 00:33:46,080 Speaker 3: the year two thousand, if I had told you the 656 00:33:46,160 --> 00:33:48,640 Speaker 3: FED would keep inflation between one and two percent for 657 00:33:48,760 --> 00:33:52,880 Speaker 3: a decade, everybody in the year two thousand, that is 658 00:33:52,920 --> 00:33:57,120 Speaker 3: a phenomenal monetary policy success. But because it ran one 659 00:33:57,200 --> 00:34:00,880 Speaker 3: point seven, we didn't hit two, it was a failure. 660 00:34:02,680 --> 00:34:06,440 Speaker 3: Think about that. One point seven, not two was a failure. 661 00:34:06,480 --> 00:34:09,200 Speaker 3: But if I'd asked you before any specific two percent 662 00:34:09,280 --> 00:34:12,360 Speaker 3: target you said one to two, that's amazing. That is 663 00:34:12,480 --> 00:34:15,840 Speaker 3: phenomenal monitoring. So that's the danger with the two percent. 664 00:34:16,360 --> 00:34:18,320 Speaker 3: It's so precise that if you don't hit it, you 665 00:34:18,400 --> 00:34:21,640 Speaker 3: start saying you're failing and hitting your target. That's why 666 00:34:21,680 --> 00:34:23,400 Speaker 3: I actually kind of like arrange myself. 667 00:34:24,120 --> 00:34:27,720 Speaker 2: I want to talk one final questionnaire for me about 668 00:34:28,080 --> 00:34:31,359 Speaker 2: the culture and the fabric of America and are economics 669 00:34:32,000 --> 00:34:36,160 Speaker 2: there is such a conceit and bias in a distrust 670 00:34:36,520 --> 00:34:40,399 Speaker 2: back to nineteen oh seven or even before of three 671 00:34:40,520 --> 00:34:43,960 Speaker 2: zip codes in Manhattan or maybe the corridor from Washington 672 00:34:44,480 --> 00:34:49,440 Speaker 2: up to Boston. You represent a part of America, some 673 00:34:49,520 --> 00:34:53,560 Speaker 2: would say the backbone of America from Bimidgi, the Dakota's 674 00:34:53,560 --> 00:34:56,040 Speaker 2: Bimigi all the way out to Washington State and then 675 00:34:56,120 --> 00:35:01,040 Speaker 2: to Saint Louis. How would the Federal Reserves system change 676 00:35:01,719 --> 00:35:07,440 Speaker 2: under a Chairman Waller given that cultural geography versus every 677 00:35:07,560 --> 00:35:11,000 Speaker 2: day the East Coast certitude. It's the heritage of the 678 00:35:11,080 --> 00:35:12,279 Speaker 2: modern economic FED. 679 00:35:12,520 --> 00:35:15,520 Speaker 3: Well, I mean, this is one of the brilliant aspects 680 00:35:15,560 --> 00:35:17,800 Speaker 3: of the design of the FED. I've studied the structure 681 00:35:17,800 --> 00:35:21,600 Speaker 3: of the FED for forty years now. The whole idea 682 00:35:21,719 --> 00:35:24,760 Speaker 3: was to say, look, you need some political accountability in DC, 683 00:35:25,200 --> 00:35:27,239 Speaker 3: but you want to have a lot of this outside 684 00:35:27,280 --> 00:35:30,719 Speaker 3: of DC. That was the typical grassroots get people away 685 00:35:30,760 --> 00:35:34,480 Speaker 3: from DC talk to the American public. I always say, 686 00:35:34,760 --> 00:35:38,799 Speaker 3: we're the one government agency that has contact with all 687 00:35:38,920 --> 00:35:44,920 Speaker 3: parts of the US. Who are are twelve districts and 688 00:35:45,040 --> 00:35:48,640 Speaker 3: all the branches in those districts. Everybody can come talk 689 00:35:48,680 --> 00:35:50,480 Speaker 3: to a president of the Bank, they go out, they 690 00:35:50,560 --> 00:35:52,440 Speaker 3: go out regularly speak to the public. You can come 691 00:35:52,520 --> 00:35:55,320 Speaker 3: talk from me. You can have a conversation with somebody. 692 00:35:55,880 --> 00:35:57,600 Speaker 3: I mean, the only other institution is they have that 693 00:35:57,719 --> 00:35:59,960 Speaker 3: kind of contact, or the IRS and the Post Office, 694 00:36:00,480 --> 00:36:02,320 Speaker 3: and we typically don't want to have them knocking on 695 00:36:02,400 --> 00:36:06,120 Speaker 3: our door. So that's when the big advantage of the 696 00:36:06,160 --> 00:36:08,760 Speaker 3: FED in our structure of having people on the outside. 697 00:36:09,040 --> 00:36:13,000 Speaker 3: There has been debates forever of moving more political accountability 698 00:36:13,040 --> 00:36:16,400 Speaker 3: to the FED or moving in a way. Sometimes people's 699 00:36:16,480 --> 00:36:19,040 Speaker 3: viewship back and forth depending on what the situation is. 700 00:36:19,600 --> 00:36:22,000 Speaker 3: But I believe the basic structure that we have has 701 00:36:22,120 --> 00:36:26,440 Speaker 3: served the country well by representing all the country in 702 00:36:26,560 --> 00:36:29,360 Speaker 3: the decision making process, just not a few handful of 703 00:36:29,440 --> 00:36:33,880 Speaker 3: elites in Washington, Washington, DC, So that I think is important. 704 00:36:34,120 --> 00:36:35,960 Speaker 3: I would say, like I said, for me, one of 705 00:36:36,000 --> 00:36:39,200 Speaker 3: the critical things i'd changed the SVP. I would encourage 706 00:36:39,239 --> 00:36:41,560 Speaker 3: the sense. I'm not somebody who's afraid of like, oh, 707 00:36:41,600 --> 00:36:45,360 Speaker 3: if you're dissenting against what I'm pushing, that lowers my 708 00:36:45,520 --> 00:36:47,000 Speaker 3: confidence or min It'll. 709 00:36:46,800 --> 00:36:50,759 Speaker 2: Be so much better for us, you know, it'll be 710 00:36:51,000 --> 00:36:54,759 Speaker 2: I highly recommend lots of dessense. It'll make the FED 711 00:36:54,840 --> 00:36:55,359 Speaker 2: show better. 712 00:36:55,600 --> 00:36:57,279 Speaker 3: Well, I just think that's the whole point of it. 713 00:36:57,400 --> 00:36:59,600 Speaker 3: That was the idea of the structure was you put 714 00:36:59,719 --> 00:37:02,480 Speaker 3: nineteen members so you get this diversity of views from 715 00:37:02,520 --> 00:37:06,080 Speaker 3: around the country coming in different points of views. If 716 00:37:06,120 --> 00:37:07,840 Speaker 3: everybody comes in, no matter what part of the country, 717 00:37:07,920 --> 00:37:10,200 Speaker 3: no matter what the situation is, and you always say 718 00:37:10,280 --> 00:37:13,960 Speaker 3: the same thing, we don't need it, you know, just 719 00:37:14,080 --> 00:37:16,160 Speaker 3: have four or three governors and that's it. It's the 720 00:37:16,200 --> 00:37:17,520 Speaker 3: board and you're done with everything. 721 00:37:17,800 --> 00:37:19,920 Speaker 2: Governor Waller, thank you for joining the hustle and