In this special episode of The Weeds, Ezra interviews former Federal Reserve Chairman Ben Bernanke about what it's like to manage the most powerful economic policymaking institution in the world during a financial crisis. They also talk about Bernanke's views on the Republican party, what he learned from George W. Bush and Barack Obama, and what happened when he went to Texas.
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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
They weeds fancies. I am as recline that one of the hosts of lock stock coms and patently networks, podcast weeds and I'm here with a special, extremely weak episode. I got a chance recently to sit down and interview member Nike, the former Federal Reserve German. He just released a really great memoir, actually of his time running with photos are called college to act. I recommended, if you, if you like, leading members of financial crisis. This is definitely one of the ones you should read. This is a very in the weeds interview we sat down and talked about what it is like to be the Federal Reserve, german sort of how the mechanisms of control work, what the staffing is like how'd, you get the information during something that is fast pace to end very opaque,
a financial crisis, so this is really down deep.
The mechanics of his job, which,
I found really interesting to hear- and I hope you will do so here-
Ben Vranitzky former photos of german hope you enjoy. I'm gonna start with
questions actually a little bit simple. What does the Federal Reserve to do well of multiple jobs?
important job, of course, is managing monetary policy, which means following the economy,
very closely following financial markets closely and then consulting with and talking with the members of the fair Market committee, the power
the committee and in managing that those efforts see meetings when they come around eight times a year as the greater part of the job. But there are other parts.
That is, of course also a regulator regulates the banking system, and so the chair has to be sure that that process
is going smoothly there, many internet
she'll dimensions to FED activity,
When I was chair, I frequently consulted with central bank governors from around the world finance ministers attended. International meetings
try to make sure people understood. We received the economy. What we were thinking then, of course,
The future is the head of a government instant.
in the Federal Reserve, which.
As thousands of employees and provides a lot
different services to the financial system. For example, you know it's a big job and has arranged responsibilities
we have, as those of chair is, does a lot of the operational work fallen? You are you trying to keep good staff economists from going off to other jobs, I mean how much of the actual running of the institution is part of you.
You did well dated day not that much to the chair has oversight responsibility, but there are
It is an and also board members who have specific areas in which they focus. For example,
on the board that usually one governor who is most directly response.
For the internal workings of the board as as an institution, issues of employee benefits and things of that sort.
There is also a division into FED.
Which also has oversight from the board that looks at their functions in reserve banks around the country, the vice chair,
plays a very important supporting role, currently Stanley Fischer in terms
making assignments to board members and making sure that all the major activities are covered? So the chair
It has brought oversight responsibilities. I was kept well informed about what's going on, but not too.
The day really falls on Monday in operational issues, so your book is not solely, but it is largely about your time as venture during the financial crisis,
and they talked a lot about the different solutions and policies that defend put in place, but I'm interested in the precursor to those policies. My recollection financial crisis as a journalist was it was a period when the information filtering Bab bed. The information we were getting was confusing misleading. It was often wrong. It felt like
with following events in it at a real lag when you were trying to make decisions in real time, what kinds of information, what kinds of informational channels where you relying on and which didn't you have
wish you had the FED has ongoing, has always had ongoing relationships in the private sector.
Is your back in New York, for example, often functions as the feds eyes and ears on Wall Street
The leadership that President furniture beckoning Iraq is in constant contact with, while street executives and leaders who
aware what's going on in their companies, there
A division of the tourism equity work, which
operation responsibilities for buying and selling securities in making monetary policy, but is part of that that those
your staff also talked to market participants on a regular basis, and so we get obviously lots of day
and we get less have information about what's happening to interest rates, indifferent credit markets like, but we also got a good bit
market shattered commentary and in informal informal thinking from people in the world
it's. What was missing
now there's some data which are better than others before the crisis
in quite relevant since information,
housing was not. All we would like is actually improve. What a bit since then, with things like the case,
Pillar House price index, for example, area.
the autonomy like small business and business start. Ups are very poorly represented in the data, so the data are their income
and they lag it takes time to construct. We still talking now about dinner gdp of a quarter to go, watch it.
to do as in practice as you try to use whatever information sources, you have whether its weekly,
climate claims or even more high frequency things like credit card liabilities, in how much people are charging on their cars as they buy goods and services,
the art, but the issues were really not just information issues and newer conceptual issues and, for example, trade
the judgment in two thousand seven
two? How serious the financial crisis was could be, we
de the data? We knew the data we knew what was happening in markets, but but understanding the causes relationships required,
analysis and and judgment. When you came into the job, you had been an academic from US vicar. You done some government services well and it seems to me reading the book at all of a sudden. You have to have a tremendous amount of expertise and make generally life or death decisions with at farm level on Wall Street. And how did you go about
trying to figure out what's a fairly complicated and strange sector. How did you go about trying to figure out what would make sense in terms of one company acquiring another or what balance sheets really looked like what
apparently, for that or what do so. I never made any those decisions in isolation, their lot, a very capable people, the FED career, staffers and senior policymakers, so, for example, in air stirred serve some decision. Life
The broad decision making I had Paulson the recourse to Wall Street veteran TIM Gardner, experienced crisis fight
And many senior staff like Don Cold and others, a senior staff at senior policymakers like Don called who had
All that information relevant knowledge about these that these things, and so my job in some sense.
to get the information
in coordinating information, coordinate the activities, the actual
negotiations, the actual
termination of of the details of contracts alike.
performed by the feds legal staff in the feds financial experts. So
My job was to know everything that could be known.
there's no way, I could do that my job
to make use of the instruments, resources that the FED has access to what
believe about Wall Street and the financial industry? Now that maybe you didn't when you came into the job? Where did you learn about that part of the economy? Whilst credit
I think that one thing that was impressed on us was Wall Street before the crisis, in particular,
did not have as good a grip of the risks it was taking itself as it should
and as the regulator should have insisted that they have so, for example,
for the crisis. If you were to ask a large bank hypothetically suppose that house prices would
all twenty percent to thirty percent. What would that duty?
balance, you alluded to jeer, credit extension and like, and they struggled to get a good
answer within a reasonable amount of time.
these firms a large and complex and they are exposed in mid.
Four way shoe derivatives through securitized assets they buy or sell so
that was made when the FED perform
so called stress test now and banks which requires that receive they couldn't survive? Even a very severe crisis,
in addition to showing they have enough capital. They also have to show that they have good information systems and they can tell you plausibly quickly how their balance sheets would be affected by the hypothetical scenario-
the said comes up with there's been during since financial crisis. A lot of scepticism about whether financial innovations have been met. Positive for the economy is a lot practically right now about high frequency trading. Are you confident that the sort of more complex corners of all street are providing value in ways it may be, are now being dismissed,
the reaction in the crisis or or do you put yourself with us get well, I think it's case by case. I don't think you can make a generalization
we had an amusing com, any said. The less useful innovation in Wall Street was the atm machine. I think that's a bit of an overstatement of seeing some of the complex derivatives and other financial instruments can provide useful,
functions in terms of spreading risk and customizing assets for the investors who want to hold them, but one thing
bout. The financial system is that its very complex, and sometimes they can be unattended connections, unintended consequences and,
this is a challenge to the regulators and the Congress.
their stand. Those understand those connection everywhere
another change that was made in the
inventory system after the crisis was to create
stability for the system as a whole and before the crisis there was no regulator, no institution that felt any particular responsibility. Look
at the entire financial system and look for possible weaknesses anywhere in that system. Now the
specifically, and also the financial Stability Oversight Council, which is a council of regulators, created by Dodd Frank, do have that response,
quality, and so there is, there is now active efforts to identify.
To the system,
polluting risk that might arise when it cut across different markets and different institutions. I think,
That gives a more chanced understand these complex side effects that sometimes are created.
but I dont believe that every innovation is good by any means, but I
that some of them are and is important for us as a country important for them,
leaders to make sure that these,
innovations are not ways of taking excessive risk. One thing: that's
I'm impressed on me in both reporting you can studying extended crises in government is that there is a human physical dimension to them that over long periods of time, people's exhaustion, the time away from families, the amount of stress and pressure that it ends up actually being a right
oh force in how these things do we don't get resolved is often a little bit invisible to the people reporting on it are thinking about it. So can you walk me through a day for you
during the financial crisis, and instead of starting when you wake up and and including not just what you did at the Federal Reserve, but also
What did you do around that to try to keep some amount of insulation so that you'd also be able to do it again,
next, so there's a normal schedule. That involves a variety of things, including meeting visitors, perhaps media,
yeah yeah. You want to maintain relationships with other institutions with the financial sector, with groups that are interested in what the feds doing, including consumer groups, and, like you, may be thinking about a speech or testimony you have to give which means preparing or writing the text of whatever it is.
Presenting the basic task of following the economy requires a certain amount of
pension to data the second
the analysis behind them. The financial market developments and the like there would be internal things like meeting with the staff person or group of staff people about some project.
Under way, and it would be time in the office so so with its variety of things during the day is a reason
travel involves going to the various reserve banks around the country. I made an effort in my first years, chairman to visit all twelve of the reserve
scattered around the United States. I made it to eleven, and then there was a last minute trip to China
in December and I didn't get to Atlanta, but so his lot of that also
National Travel like the international meetings, for example, so
The ordinary routine is is pretty fall is like going on certain men of talking on the phone to members of Congress to people and the business sector.
The main feature of the crisis was that things were happening that were obviously not scheduled well in advance, the most extreme
example of that would have been the lemon weakened
what followed where there was a
and if we see meeting that Tuesday after
and failed- and so I've been preparing for that in that meeting- headed
place, but overlying that was in the whole week
and that was engaged in
with lemon and energy situations. A conference call on
Tuesday morning that made me late the if meeting, which is an unheard of saying, ad hoc meetings with Congress,
calls the legislators a visit to the White House
Those things that were coming on top
what ordinarily you would have to be worried about, and so it was a very chaotic time
during the most intense phases of the crisis from August to probably even the end of the year. Two thousand and eight was working.
all the time, basically all weekend late into the night sometimes- and I even slept my office sometimes
so that was very difficult,
generally over night,
his. I did try to make sure I had time off that I had dinner at home with with my wife, when I could. I would continue to be
books on a avid reader, and I like to read things other than economics, but fiction nonfiction whatever might be exercised,
just trying to take care of myself. I agree with you that the fiscal element and psychological element does become important in
season. I was aware of that enough aware of that to try to make sure that I wasn't wasting my energy and things that could be
again the somebody else or try to make sure that when possible, I could get home and have a decent man. What's best book, you read in financial crisis, I'm not sure exactly
I mean but a book that I read while he was chair, which I think was very informative, very interesting
was lords of finance by Leon.
Ahmed who have known here because yes M connections to Brookings. It's about the experience of the world's central bankers during the nineteen thirties and mistakes and and problems they made an encounter.
And so that that doesn't quite qualifies non economic spoken with a history book. That's pretty on point yet much on point was a really interesting engaging book, communiques examples of things that would read it we're unruly
were I'm a big fan of baseball statistics analytics I
lucrative of correspondence during the crisis, James, who is the boolooroo of private, called Sabre, metrics and and he's written some interesting books, including, what's called historical abstract, which is an analysis of not just pert baseball but based
going back to the nineteenth century, so that was an example of something that I checked. I had my shelf ready to go, but I miss you thing.
Interfered sleety rate is broken on trying to solve your crime. Yes, I did actually I did, but I read it because I like his work so much, but I particularly appreciate his stuff on baseball, so you were appointed by President George, W Bush in than reappointed by President Obama, and I think it's fair to say those are two leaders with different peppermints different ideology.
different approaches. What you learn from both of them? I learned it being president's really difficult job, exhausting job
It makes me wonder sometimes line by would want to be present of not lot of people do they had some
different styles, but they shared
I think the willingness two's, but was very important to me, was that they, both
were willing to support the feds actions to even when they were quite unpopular. They respect the independence of the FED, but I had a very good
friendly and sound relationship with both of them and a new President Bush, is better because I actually worked in the White House with him and so on.
often with President Obama, would work through his advisers like
right now, the treasure secretary or Larry Summers, but in both cases
and we had very respectful, thoughtful conversations about the economy, but the financial system,
and again I really appreciate the fact that they were both willing, as Truman said, the boy
stops here. They both ruling to stand up and do it was necessary to tackle what was. It was one of the worst financial crises and followed by very deep recession that required strong responses, something that is a theme in the Balkans is, I think,
implicit. What you just said is that you were only able to do what you need to do, because the fad has levelled insulation. I think very early on in your book. You talk about the FED is a group that that we act when others can't do you think that american government needs more institutions like the FED, but have insulation form an increasingly dysfunctional political system and our cape
acting incapable of doing difficult things in moments of crisis. What's a fine balance you wanna have today
you respond in situations where fast actions
The serious so an example would be foreign policy or military matters
the same time you need to have a process by which action taken in the public's name is accountable, that that the public has a chance to express its opinion,
and have input to those decisions we don't want have agencies which are not subject to democratic oversight either. So, let's that's the fine balance. I think,
financial crises are kind of on the line between sort of a military
type model where rapid response
the central and oversight should take place over time versus
sort of a domestic economic policy model where speed is not quite as important and a lengthy debate. Discussions is a viable way to go. I guess I think that
financial sector that it would make sense to give some emergency
hours, maybe too the president, much as the president has responsibilities and powers that he or she can invoke
in a military situation, but that well
Emergency actions can be taken that, in within the region,
at a time as with declarations of war and the like that, Congress would have oversight over those decisions.
so you can balance the need for rapid ACT
in four forceful action with them
medic oversight, if you take a properly into account that the time frames associated with different kinds of diseases,
when speed is of the essence, it is important that there be a mechanism for solving the problem in appropriate timeframe, but that's also accountable to the legislation and make one model of american government right now. That has some validity to it is that the institutions
capable of responding to acute crisis, not always easily not always smoothly, but they did pass tarp. They were able to execute the rescues, not just of the financial sector but of the auto sector. A lot happened during the depth of the crisis that, in normal times you couldn't have imagined. At the same time, there does appear to be a long term. Trend towards less productive congresses is measured by the number of laws passed. There is more partisan dysfunction war with Iraq there we can measure these unloaded if ways, and I think one reason want reputation, isn't it american government can deal with
since, but it has more trouble than in other times in its history doing forward looking legislating even as we were, we did shrubbery things like sequestration and ended up cutting a fair amount of spending. In autumn we raising some taxes. It was sort of all done through doomsday mechanisms and cliffs, and
checkers and so forth. You worry about the political systems, ability to make the prospect of changes that keep an economy improving running growing as opposed to just the sort of acute emergency mechanism, since it keep it from collapsing. Absolutely we have for better or worse, we have from the constitution. We have a system of divided powers which has a strong status quo bias which, from a conservative point of view, has its benefits. You don't wanna, be taking me
major actions that extend discussion debate so that that's understandable, but when you have a political situation like we have now where, where the politics,
polarized, and you have people on the left wing or right wing and very few people in the middle, then only
with the abyss looming. Is there enough motivation for the two sides to get together?
take action, but unfortunately a lot of the things that are important for our economy,
medium and long term are not Christ.
that will lead to disaster
Oh, but rather are sort of mighty Feldstein. Ninety
the sort of the termites in the basement kind of problems that need to be addressed but can be addressed, overtime, issues of of education and skills, training skills and
training, for example, it is worrying that Congress doesn't see.
the able, from a political perspective, to manage
the more routine but very important economic policy decisions that are needed to help the economy be healthy over the next couple.
Decades, you won't in the bucket, you came into office, say Republican and left an independent, and you said that you felt the Republican Party had left you and not the other way around. How do you feel the party is changed over your adult life or your time in
public service. While this been a general trend towards populist rhetoric and
and populist policies which, in some ways was predictable, is really comes from both short term and long term? Factors on this,
term till it was a reaction to the crisis itself to the response to the crisis, to bail out the whole phenomenon, everything that was
putting in that periods that Chile's stimulated some of the patent
reaction, but also there's also long term trends
putting the trend to greater inequality, the pork and
some of the working class Sarah that has has also created fertile ground for populist types of activity and get it was kind of predictable.
in that financial crises and attend to generate populism? The populism
has been somewhat more and the right instead of the tea party type of area
it also exists on the left. You know, unfortunately,
he had his Minero institutional point of view. The FED central bank tends to be one of the targets of populist rhetoric, and in that respect it was
more republicans democratic that were attacking me personally during say that two thousand twelve election
but again you know you have people on both sides. I don't think it's just republican thing. I think he did have people in both extremes who are convinced that the fattest par
some kind of global conspiracy or otherwise cynically distorting the feds activities for power
This benefits new ever end up, incidentally, are purposely meeting brick Perry after the twenty Twond Lenny
no. I had met him once prior to that just by accident.
No, I have it. I haven't met him, but I did shortly after his comments about me. I
It is true to texas- and I had a very good time to do. Anything else did have anything ugly happened to me in some of my best. Friends are Texans as they say, so I don't take that.
Particularly seriously. But you know what my concern me about
those kinds of comments was not that I was
need any danger, but
yesterday a calculation
on the part of some
politicians that antagonism toward the FED was was about winner and that, of course, both in a badly for the independence of the FED and its ability to perform its critical function,
in the future. You're talking a moment ago about how, particularly in periods of economic from enter or unrest, there can be an impulse to see the FED is part of a global conspiracy and something
First, reading coverage and fed, and also getting a lot of emails coverage of the FED is did what
seems to really unnerved people about the institution is the idea that member Nike can walk into some room somewhere and press, presumably a very large?
red button and a trillion dollars of money appears. I was hoping you could walk me through in a very tangible, concrete way.
when the FED the size of more money, more quitted, he is needed in the system. What does it do decree that money? How does not actually work is very o pagan, very hard to conceive of process for
people does a lot of misconceptions to attack here. I think we need to start by saying that the FED has no fiscal authority whatsoever. The FED does not spend taxpayers money, but the FED is doing is providing short term loans. Central banks throughout history have responded to bank
panics by providing short term loans to banks that they could finance themselves until the depositors came back. Basically, this is
has been going on since the seventeen hundreds, so dear
the crisis has short
financing was being withdrawn from financial institutions, and this was electronic financing rather than depositors lining up at the window. These incidents
since needed financing in and what the FED did was made
collateralized loans make love
these institutions took collateral.
That allow them survive the panic
things calm down, they repaid the loans and they got back to normal financing that that's what happened. So there was no spending of the taxpayer
money involved with short term loans.
Every single one of them was paid back with interest, so in fact the feds activities have been pretty profitable for for the government,
the FED also has been involved as a separate matter. I was involved in which called quantitative easing, which
was a monetary policy tool used once short term interest rates got close to zero, can be lowered anymore
Native easing just involves the FED buying Treasury securities in the open market. Basically,
case. The open market desk at the New York FED tells the Treasury
it is a whole many participants in that market that the FED is interested
buying so many billions of treasure securities and is an auction process and purchases made and their paid for by crediting the bank accounts of the
dollars, and so they end up appearing as reserves the banks hold with the FED. So it sir, a circuit of process. In that respect, it does not
already money, printing, demonic currency speculation is determined
what people want to hold it does not involve
spending of the taxpayers money because its purchase of it
ass at a security which pays it
wrist and which has value and at the appropriate time that
dirty either matures
can be sold back and monies recovered. In fact, again, the FED is very profitable
situation. It's been in the sense that it earned.
a lot of money on the assets that it holds the interest and the assets that are holes and all that money after expenses
you know, after the cost of running the FED, it is taking care of the great bulk of that money goes back to the treasury and reduces
deficit, so it's actually a profit centre for the
rather than a drain on on the fisk. But when the
There bound she goes much much much higher compressed period, so I cannot, unfortunately, if I want to start offering people tremendous allowance in in
of liquidity crunch. I think that thing that I notice in discussions of this is a confusion over what is happening at the centre of that process. How is fed able to execute these large maneuvers when, a month ago, you didn't see them on the balance sheet? Where does that money come from? Where was it before that allowed? For all
From us again with the FED is doing, and we took him a quantitative easing: are we talking about lending in the crisis? Can talk about other
I just think I just want to get the talk about quantitative easing in this case, because I think that I think that's the one where you get a lot of fear. This idea that the FED is doing some
as the numbers are tremendous and they must be kind of inventing money out of nowhere so weak
cynically. What the FED is doing is increasing its assets and liabilities in tandem, so it just sixteen
its balance sheet?
doing so in a way that does not affect the overall networks of the institution in some sense and
Finally, as I was saying what what the fair would do in a quantitative easing operation would be as follows: a federal from Market Committee, which is to monetary policy, can be
would say. Well, we need to do something to provide more monetary support for the economic recovery and so
open market desk is authorized by whatever eighty five billion dollars in entrenching securities. So again, what what the open market s does at the behest the uniform C is. It tells the private market and there
the participants in the private market who trade of securities among themselves all the time. So we,
a billion dollars worth of government debt. U S Treasury securities for purposes when the sellers
here what the propositions just a market operation, but the purpose of courses for monetary policy but in any case,
so again. The FED would say the New York FED desk would say
so we're having an auction and tell us what you know, what price yield
I urge for showing Aussies Treasury securities at you out
option takes place in the FED desk vices securities at the best price they can get, every every commercial bank has got an account.
The FED basically say where you haven't account at a quarter bank banks have accounts at the FED, so the way.
Securities are paid for is by discrediting the accounts that the banks have
the FED by the same amount by the purchase price, and that
turn appears in the checking accounts or whatever of the sellers. So that's house paid for its all electronic. Interestingly, when we
think about this is that suppose you,
about the government is a whole think about
the Treasury and the FED as one single institution,
what is happening is that this collective of the FED in the Treasury is
doing the same amount of overall borrowing the government has to do, but doing it.
more in short term borrowing, rather than longer term borrowing so
What it's quantitative easing is basically, is that the FED is swapping out
egg reserves, which are very short term liquid Assets
change for longer term. Five. Ten year Maturity Treasury securities. It.
just as if the Treasury had announced that it was going to borrow more in the short term market in the long term market. That's all it is nothing
is going on,
it's not anything
carrier or I'll bet unusual, and indeed the FED back
sheet today, after all, the quantitative easing is as about normal relative to other central banks in terms of the size of the balance sheet. Relative GDP.
And then there is the more traditional tool which is raising lowering interest rates, one of them.
faculties during the crisis, was that we were already pray much a zero percent ordinary caused, much of it.
Are our folks who argue Larry Summers is one of them did for reasons related to underline drivers in the economy,
have unusually low interest rates historically for a very extended period of time. We already have enough can continue. If that's true, are there things? The federal reserve needs to do in a broadway in terms of its own financial position or the tools it gives itself
Congress for that allow it to have more fire power if the zero bound, as can be near for the coming decades.
this is an important issue, if interest rates are gonna be lower and market, certainly
you're gonna, be low for a long time, because you can see that even thirty
securities are priced at very low interest rates. If
it can be lower than the risk of defence
during a recession coming again
the zero, lower bound and interest rates, could happen more often than it has in the past.
As you know, I think some serious discussions are.
Various ways to deal with that
One of them is to use the non standard policy tools like quantitative easing but
The better solution, although it may not be feasible for the political reasons we were talking before, the better solution is to have some contribution from fiscal policy during a deep recession is fed, can't cut interest rates anymore to Congress, could approve spending on infrastructures or attacks cut that would solve the problem. To a large extent,
If that doesn't work, that's not feasible that, yes, it is something that the feed and the Congress need to think about over time, because it is likely to be more of a problem. Then we saw a few years ago, although,
This was something I just personally, I was concerned about the night when it became
governor. Two thousand too will, in the very first speeches that I wrote a governor.
Governor at the foot of the fisheries are bored another with one of the seven people who oversees the FED. When I, when I joined the FED Board in two thousand to one of the very first speeches that I wrote presented publicly was about
What the FED can do when you hit the zero lower bound and they talk about quantitative easing some of these other other strategies. So there are things affected, do when interest rates at zero, and it would also be good to have some cooperation from fiscal policy, but I think it's a problem that has not yet been.
Fully addressed in our present idea. There, which is obviously politically unlikely, but what about
Interesting, is a thought experiment at the very least, and it's been pushed by, among others, economies, Mouse Kimball, which is, if you could have. Instead of the paper dollar, being store value sort of an electronic dollar. We can really move on some other to China.
Only then will essentially be easy, as a matter of technical and operational work to have negative interest rates as well as positive ones. Are you familiar with these proposals only occurs. We think of the I think, there's something like that would work in this sense that it could help get interest rates negative, so it would give the FED more ability to cut rates. Even when Rachel started out
very, very low level. But I first of all this it's kind of route Goldberg in it in the sense that the simpler solution would just be to have regional fiscal policy that the tax at the appropriate time.
And secondly, as you point out, I think that is not something that miracle public would be to interact with. I think politically, it would be very, very difficult to get approval for that, so as not to know as it's not something that I see as high under
Party list, putting aside whatever its whatever the theoretical crossing benefits might be. It doesn't seem like something that politically is feasible.
Anytime, soon Racine up pretty sharp drop in unemployment at this point since the beginning of the recession took longer than anybody wanted, but it's now down to a five percent in the latest numbers
we also see signs of some weakness. Room
ages around Labour force participation. There is a debate that has gained a fair amount of force recently in an economic,
about whether what we are seeing is the aftermath of a deep financial crisis or whether the financial crisis,
This is in some ways distracted us from a more long term weakening within the american economy. I'm curious when you look for ten or fifteen years, whether you think that something fundamental has changed in the engines and the american economy or whether were simply recovering for
a very large bubble and a very large bust. Well, I think a lot of the things that concern people rising inequality, lower participation, people being sort of alienating from the workforce in various ways that's been going on for a long time and it's a function of very powerful. Underlying forces like
globalization. Technical change, you know at the? U S, economy overall is actually do,
pretty well, certainly compared to other industrial economies around the world and looking forward, we have a lot of strengths, including our leadership and technology, for example.
But what's been happening for quite a long time. Is that the benefits of gross and an economic progress, and not being felt broadly and a significant number of people are being left behind, which leads to things like low participation rates because earn a good jobs for
with low skills and inequality of income and wealth, wild of financial crime,
I wish you didn't help those
in the long run trends
By the way, it is it's unfortunate that the FED has been.
really the only game in town in terms of providing support for economic recovery, both substantively because you get
well balanced and stronger recovery if they did more support from from other policymakers number one, but never to be
does this this view out there that, because,
the fantasy Homey agency, which is really doing much about recovery that anything that bad about the economy, even as things are, the FED is actually no control over, like growing
equality in income, for example, that we must be the feds vault? And that's that's bad, I'm sorry for the institution in bed for economic policy making. You mentioned the income inequality a couple times and in this
And there is, I think, an interesting debate as to whether income inequality itself a separate
from simply median wage stagnation or social mobility is something we should be worried about. So
Do you worry about income inequality on its own terms, and if so, why? I'm more inclined to think about it as lack of opportunity? I don't think people
necessarily care that there
bloom society with very high income, so long as they themselves have an opportunity to prosper in advance and there have the children have better living standards and they did so
you can think about is inequality if you want, but it seems to me that in some
It isn't just the Genie coefficient the measure of inequality. That's the problem is the fact that so many people who-
have very low social mobility or economic mobility that they start off without fear
without much education or without much with low income.
Your chances of breaking out of that are not what we would like to know. The dominican dream
is that people should be able to through the gent of their own efforts in town,
should be able to move up, and that happen sometimes, of course, but the many people who feel like games rate against them and they really can't make progress. So
for me opportunity. Mobility is the key thing:
and we ve always had rich people. I don't have that in itself is a problem with the main problem is making sure everybody has a chance to participate in the good aspects of these, but Bernanke it very much. Thank you
Hope you enjoy that. I certainly did. I feel, like I know, a lot more about how it is to be the most powerful economist any entitle her hope we can make a mistake. Everything goes health appeared
listening to that will be back on Friday with a regularly scheduled episode from box. Now comment patently network. Please read us,
Itunes, please tell all your friends about us feel free to email, me or or the rest of the team at weeds at fox dot com and will see you soon.
Transcript generated on 2021-09-15.