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  • take us back to July in 1944.

  • It's the 75th anniversary now.

  • Bretton Woods.

  • Where was Alan Greenspan in July of 1944?

  • I was a tomorrow Washington hotel and Bretton Woods, New Hampshire.

  • I didn't have a clue what All that noise around me Waas and somebody said there was a big convention here.

  • I said, Oh, Too bad, huh?

  • I didn't I didn't think about it again for 75 years on.

  • What were you doing that you were not part of the delegation?

  • No accusation.

  • I was in a small band span.

  • Serving is entertainment for the people who went to the hotel.

  • And so I had a clue where I was missing out on the floor below.

  • Andi.

  • It was historic news.

  • It was assortment.

  • And it came out of a particular time when you had the Allies still a year away from the war being over, but thought they were on their way getting together.

  • And there was a general consensus we needed to cooperate internationally going forward.

  • And then we had a monetary policy.

  • What is left of that?

  • I mean, you had cooperation.

  • Certainly.

  • When you were running the Fed.

  • But now, since the great financial crisis, it's harder to find that sort of coalition building well.

  • One of things about the IMF and World Bank group on the individuals who represented a toothy organizations is that we would meet periodically and discuss world affairs.

  • And it also made another vendor.

  • You know, I spent a goodly did a good deal of term on Switzerland, for example, same group of people, and some of them are still around.

  • John Courtney Shane Bunk frosts.

  • Uh, it was the most interesting experience in my life.

  • Everything I remember going into puzzle.

  • We had meetings, dinner meetings on Sunday night, which, which shows wonderful ships.

  • And it was the elite of the international financial community, the head of Abundance Bank, the head of the Bar Difference Bank Italia.

  • There's about 12 of us.

  • I'm really often met different, different places, and I learned more from them interacting especially, and I did by any other means of communication.

  • Is it possible to replicate anything like that today?

  • Because, as you described that those were all Western powers on many of them, It shared commitment to fighting frankly, Germany and Japan back in those days.

  • Now we have China clearly a rising economic power.

  • Is it possible to still have the same sort of cooperation?

  • Maybe in a different guys?

  • Well, the irony is, China.

  • I got to know the premiere on the president of China in the 19 nineties.

  • Uh, a little bit of it century Have they did 10 years of change and political on dhe, I would say from 18 93 not maybe 2001 or something.

  • I was very close to the Chinese hierarchy.

  • One of the fascinating shocks I had joins him in was President Andi.

  • I was having a conversation with him, and he's saying my favorite composer is her on a parish in True Burt, I don't I mean, I would think of Chinese and doing all sorts of peculiar instruments.

  • And not only that, but Georgie, who was premier.

  • I'm not gonna look up, gets into each other very well.

  • Um, he told me we are trying to replicate the United States for manufacturing the way you do it on way.

  • We're not quite there yet.

  • You know, I would say, Well, what would you try this?

  • That we'd like to, But we're not up to it yet It was an extraordinary different change after they all came out of Deng Xiaoping 10 several decades earlier.

  • I was 10 years.

  • They kept moving toward towards the idealism.

  • There is a more idealistic in all context and as a result I kept saying for a minute.

  • So oh, they're gonna become the United States.

  • There's a population in the life event.

  • Something happened in the Power Bureau on, uh, I actually maybe 1998 summer of that nature because starting in the next generation ever increasing it more towards freer society in China, huh stopped cold.

  • And then 20 years after that, we had prison who could not find somebody to replace him, so he'd have just have to stay.

  • I knew something has happened but even know.

  • See, I said I was very close runs say here are part of the power I never want indicated that what went on within that group.

  • And I, for example, are saying that we were sufficiently close that when I left, Jew basically left conch that most should be the last time I'd see these people.

  • They took me in.

  • He and his family took me to dinner.

  • They call him.

  • We're all over here.

  • Senior members of the government live.

  • Um uh, It was extraordinary.

  • Like letting everybody see your counters, Member.

  • I'm, uh, stool.

  • You wrote a book, uh, which I couldn't really over.

  • Bark eventually got published by the Brookings Institution.

  • But as you say, that impetus to become more United States at some point took a different direction.

  • If you look at President G now, if anything, there's more state control way.

  • Certainly have a huge balance of trade deficit.

  • That doesn't seem to be reforming itself.

  • Is there any alternative to really confrontation economic confrontation with China?

  • Because that's what we're seeing to some extent, with the Trump administration presidency right now over the trade dispute.

  • Well, back then, there was not, huh?

  • I don't know, disgusted expressively terms on attacks and their attacks.

  • Not on your opponent, but on your own people.

  • They pay the tax on.

  • The question has always been taxes, our deflationary.

  • And so it was never true.

  • That's somebody won a trade war.

  • To be sure, there was a winner and a loser.

  • Apart from a point of view, how much economic activity that changed?

  • They both lost.

  • It's the one who lost the least was declared the winner.

  • So we have tariffs Now that most tariffs on China, China's imposed a retaliatory attack.

  • Cool.

  • Are we seeing that in the economies of the United States and China in slowing them down?

  • Well, I concede it in certain of the industries.

  • We don't have enough overall data on China to make much of a judgment, but it has to be a I mean, it's your questions, your taxes on something there's less in it.

  • And so that certain statistics you don't need to calculate you could just no wire your nature of the product.

  • I find it.

  • China is drifting off.

  • You know we're free way.

  • Had Mao originally, I've done, uh, dumb shell.

  • Peak came in.

  • It was a major change, and every president thereafter was more liberal.

  • I was about to qualification.

  • We got to Rogie.

  • Hey said, I wish we were the United States.

  • I mean, that was extraordinary comment for Chinese to tell an American, uh, it's not that way anymore and assume is that sure that President Xi was having difficulty finding a replacement?

  • I said, Yeah, so let's talk about monetary policy, something you know terribly well, where the time.

  • I think it's fair to say very low interest rates.

  • And it seems you're going south.

  • We have almost $13 trillion in negative yielding debt right now at the center.

  • We're having some growth challenges.

  • Are lower interest rates a way to address lack of growth?

  • More important questions.

  • How in the world did we end up with negative interest rates?

  • I mean, I've been an economist since they left the music business.

  • Interest rates are a major component of what kind of called time preference.

  • It's the extent of discounting human beings make about values today versus values tomorrow.

  • And, for example, when Apple had those extraordinary expensive, huh?

  • Machines for everyone, of course.

  • Huh?

  • People would rather go around the block, get in the list.

  • The ideal measure of time preferences.

  • What would you pay somebody who is number five on the list for the 55th floor?

  • How much?

  • What would you pay?

  • That is time preference?

  • No, I have a negative time preference.

  • It makes no sense.

  • So I am.

  • I don't know what the answer is, but I will say this that it is the only thing that has come along and generations, which I find inexplicable.

  • I know how it works.

  • And I know why it works.

  • And I know why certain, How are you?

  • Um, toe, Hold bonds, say Switzerland or Germany or something.

  • They will yield X percentage points above spraying every but had never contemplated tractor.

  • You never get negative because that's what it is.

  • You would be trading something in which you're losing in the process.

  • It can't exist.

  • Hello?

  • Who interest rates in the United States Now?

  • I'm in China.

  • I'm not all that much different from where they were several 100 years ago.

  • Human nature has not changed.

  • Time preference has not changed on dhe way have the data.

  • And then we run into this particular phenomenon in recent What is, ah, strange sort of technical aspect of the bond market?

  • Or does it tell us something more basic about expectations for the future on people's part?

  • Well, our this is exactly the issue which I spent more time on every time I got somebody.

  • My No, it's very now.

  • I asked him that question when I find astounding his healthy people.

  • Carol huh?

  • It's not good but it's not evidently destroying anything yet, but certainly interest rates.

  • They've got to have a critical fact because they they always do.

  • It's a key part of the measure of ah, what evaluation of property is, huh?

  • So I know less now about the economy that I did 50 years ago.

  • Speaking of interest rates right now, there's talk about a possible so called insurance cut in rates in 1998 a cz.

  • I understand it.

  • You cut three times when we had the Asian crisis developing.

  • Does it make sense to make an insurance guy?

  • Because after that, you came back and raise rates.

  • But is that his sensible thing for the Fed to be thinking about is an insurance rate cut?

  • Oh, forecasting Missouri Tricky certain forecast outcomes, far more negative fact senators.

  • So in that sense, you will act to reduce the risk those types of events.

  • And that's a valuable thing to do.

  • I mean, I remember very distinctly I don't number of occasions.

  • Oh, we cut rates not because we thought that, uh, it was highly probable that it would be necessary, but the probability, But what would happen if indeed it did happen.

  • It was very large.

  • Roads of the other events were so it's a relative balance.

  • You consider that there are certain small probability events which could be very dangerous.

  • It pays toe act to see if you can fend it off.

  • One thing's been talking about now is the need, perhaps to cut rates both because of trade uncertainty.

  • Chair Pile talked about that, his testimony quite specifically as well as anemic or slowing global growth.

  • Not even so much United States but globally do lower rates help former remedy for trade, uncertainty and or slowing growth are good, Not something I recall being active in that type of activity.

  • Uh, but that might and they might not.

  • I don't think that in and of itself is a reason to act.

  • But there is a relative Trader Joe's to get to this day when we talk about growth, Fiscal stimulus is another alternative.

  • Thio monetary stimulus.

  • While where we come up with its terms, I don't know.

  • Well, whatever we call it, we just have had a new deal made bipartisan deal here in Washington to raise the debt ceiling to raise the spending caps to spend more money a lot of defense.

  • So the domestic basil for fiscal stimulus is that likely to lead to greater growth when you're talking about?

  • No.

  • One of the reasons remember is when you increase the deficit different.

  • It's prolonged, as in collusion.

  • No one, huh?

  • Over the death is when, uh, people were became very responsible.

  • What would happen if you get inflation?

  • Would you meant no innocents?

  • People would be discarding money on amount of which affects prices.

  • Um, uh, I'm more here about what's going on with the moment work going on.

  • So why aren't we seeing inflation?

  • I mean, the Fed actually has a target of 2%.

  • They can't get up to the target 2% with really pretty low interest rates.

  • We've got a lot of fiscal.

  • Seems a lot of borrowing.

  • So why aren't we getting to inflation?

  • Same issue as negative rates.

  • You go from negative, positive or semi positive.

  • Two more positive relationship is the same.

  • But the whole structure is down on.

  • We have not yet really answer the question.

  • Mr what has happened.

  • Human nature has not changed.

  • Rates of discount of future values haven't changed that significantly.

  • Something is going on.

  • No, I've asked that to a question toe large number.

  • A very prominent economists who was using I expect my nose is enhanced zero way here.

  • Talk about two possible phenomena that could change the paradigm.

  • Really change it.

  • For the first time since Bretton Woods.

  • 75 years, one of globalization and another is technology.

  • The advent of the digital world has just changed the way we generate goods service is value, not really fundamentally value preferences, our human preferences.

  • It's very little to do or should have detective logical structure.

  • And indeed, that's one of the aspects of Wyatt's find negative or interest rates so peculiar because human nature has not changed at the point where we were talking, uh, very little rates at these rates.

  • The probability based on past history of them going higher ground lower is very high.

  • But I've been saying that for months.

  • I bit my tongue so often on this issue that these recon in these resuscitation people have been talking about the danger of the debt deficit, but also debt overall, dead United States for some time predicting the bond market would correct the situation.

  • We haven't seen it.

  • Why is that are you still concerned about the overall deal?

  • United States?

  • Well, just remember.

  • But one of the reasons Oh, why your word about that is that ultimately it leads to a monetization of the debt, which in turn means the money supplies accelerating faster than the economy, which very remains inflation.

  • And we've had no inflation.

  • No inflation is related to the issue of interest rates in this regard, huh?

  • I literally feel is Oh, my level of mallards sunk saves competitively as I don't know anybody who has done any better.

  • Well, let's talk about something else that you may know about crypto currency.

  • And it's really been talked about a lot of particulars recently.

  • Facebook talking about this liberal that they could potentially expand to plus 1,000,000,000 people through Facebook.

  • There've been these hearings on the Hill and part of it.

  • We actually heard again from Chair, Powell said says he's concerned about what it could do to stabilization of the economy and the money supply, because maybe they'd be outside of the control of the Fed.

  • Well, number crypto currencies for basically have value.

  • All bonds, without any backing, have the reason, essentially, is somebody Well, let's take a take A really stressful, for example, you are when this country began Way could not afford the armaments that George Washington needed shorted do re printed money.

  • However, point here is the true value of that is zero.

  • But they were numberless accepted at par for a couple of years after printing in the sort of continental's, which is what they call them.

  • Actually had value or Portmore exactly that they weren't discounted it 100%.

  • You raise the question.

  • Well, come, uh uh, basically together, a negative effect on the sense that there's no late 18 hundreds on.

  • The answer is, uh, account in other words, huh?