Latest / Trumponomics / Writing a Book With Paul Volcker

Transcript

Writing a Book With Paul Volcker · Trumponomics

0:02
Speaker 1: Paul Vulker is a giant of global finance, literally and figuratively.
0:07
Speaker 1: At six ft seven inches or about two meters tall,
0:10
Speaker 1: he towered over most everyone around him, and as Chairman
0:13
Speaker 1: of the Federal Reserve in the nineteen eighties and in
0:16
Speaker 1: countless other roles in public service, he made his mark
0:19
Speaker 1: on the world. Now, at age ninety one, he's published
0:23
Speaker 1: a new memoir called Keeping at It, and his collaborator
0:26
Speaker 1: happens to be one of our Bloomberg colleagues, Christine Harper.
0:30
Speaker 1: This week on Benchmark, we'll talk with Christine about why
0:33
Speaker 1: he wrote the book and what it was like to
0:34
Speaker 1: work with him. Welcome to Benchmark. I'm Scott Landman, economics
0:48
Speaker 1: editor with Bloomberg News in Washington, and now I'm Daniel Moss,
0:51
Speaker 1: columnist at Bloomberg Opinion in New York. Were joined by
0:56
Speaker 1: Christine Kappa, editor of Bloomberg Markets the same She's been
1:01
Speaker 1: a reporter and editor with Bloomberg for twenty years. I
1:05
Speaker 1: first met Christine in the early aughts in the London office,
1:08
Speaker 1: when she was wrestling with stories about Merrill Lynch's bond desk.
1:15
Speaker 1: We're recording this on Tuesday. The book Keeping at It
1:19
Speaker 1: should be available wherever you buy good books. Christine, welcome
1:22
Speaker 1: to Benchmark. Thanks for having me. It's a it's a pleasure, Christine.
1:26
Speaker 1: Congratulations on the book. How did you come to work
1:29
Speaker 1: with Paul Wolker on it? Well, it really does a
1:32
Speaker 1: hugely lucky break. Unlike the two of you, I'm not
1:35
Speaker 1: an economics expert, as you know, I have been covering
1:39
Speaker 1: the financial industry here for a long time at Bloomberg,
1:43
Speaker 1: and I happen to know a man named Peter Osenos
1:46
Speaker 1: who runs a publishing firm called Public Affairs. He's quite
1:50
Speaker 1: close to Paul Volker, having having published Mr Walker's book
1:54
Speaker 1: in h called Changing Fortunes. So Peter called me up
1:58
Speaker 1: one day and said that Paul Wolker was interested in
2:01
Speaker 1: writing a memoir. But at that point he was a
2:04
Speaker 1: vettor ninety and Peter, who's been in publishing for a
2:09
Speaker 1: long time, thought it might make sense to have somebody
2:11
Speaker 1: work with him, And it might make most sense if
2:14
Speaker 1: it was somebody in New York City who could easily
2:18
Speaker 1: get back and forth to Paul's office and um to
2:23
Speaker 1: his home to work with him. So was I interested,
2:27
Speaker 1: and I said, let me think about it for one
2:29
Speaker 1: day and pretty quickly realized this was a once in
2:32
Speaker 1: a lifetime opportunity. Even though I had never written a
2:34
Speaker 1: book and I was an expert economics, I couldn't imagine
2:37
Speaker 1: there was any downside and getting to spend time with
2:39
Speaker 1: Paul Walker and learned all his stories and just see
2:42
Speaker 1: what that was like. So, um, that's what I did.
2:46
Speaker 1: And uh, and I think Peter's view was that there'd
2:49
Speaker 1: be some kind of chemistry that we would work well together.
2:52
Speaker 1: I'm not really sure why he had that insight, but
2:53
Speaker 1: it proved to be correct. Paul didn't know me from Adam.
2:58
Speaker 1: When he was introduced to me, he immediately was very
3:00
Speaker 1: friendly and very willing to work with me, and we
3:03
Speaker 1: started having regular meetings where I would record these interviews
3:06
Speaker 1: with him, with the thought being that I would eventually
3:09
Speaker 1: take the transcripts and blend them all into a book.
3:12
Speaker 1: But of course, you know, even though he was kind
3:14
Speaker 1: of in and out of the hospital with various health issues,
3:17
Speaker 1: he ended up started churning out pages and pages on
3:20
Speaker 1: a yellow pad of basically the manuscript and having his
3:25
Speaker 1: assistant typed them up. And I looked at them and said, well,
3:27
Speaker 1: these are really good. Keep going. So I would get
3:30
Speaker 1: these emailed files his assistant would you know, send them
3:34
Speaker 1: along to me, and I would work with Paul and
3:37
Speaker 1: them and he was just great. And I kept waiting
3:39
Speaker 1: for him to become in some way, you know, difficult
3:44
Speaker 1: to our dolimineering or stubborn or something, and he was.
3:48
Speaker 1: He never was. We just had a great time. I
3:49
Speaker 1: never went to a meeting with him, and we we
3:52
Speaker 1: we've been meeting now for more than a year, several
3:54
Speaker 1: times a week. I never left a meeting with him
3:57
Speaker 1: not feeling happier than when I went into it. He's
4:00
Speaker 1: just a wonderful guy. And I learned so much every
4:03
Speaker 1: every meeting. Okay, now, twice in that answer, you've mentioned
4:09
Speaker 1: that you're not an economics expert. You don't have a
4:12
Speaker 1: background in economics. I think you're selling yourself a little
4:14
Speaker 1: short here. You have run finance reporting at Bloomberg News.
4:18
Speaker 1: But to the core of that question, did that make
4:21
Speaker 1: your role easier or harder not having formal qualifications in economics.
4:28
Speaker 1: I think it was probably a little bit of both.
4:30
Speaker 1: So I I didn't have the familiarity with some of
4:33
Speaker 1: the um stories that both of you I'm sure would
4:36
Speaker 1: have had, so I had to do more research to
4:39
Speaker 1: understand them. But I also sort of forced him to
4:41
Speaker 1: explain things that maybe somebody who was very comfortable with
4:45
Speaker 1: economics wouldn't have needed explained and might have been just
4:49
Speaker 1: more willing to fall into sort of a jargony insider voice. Um.
4:54
Speaker 1: That said, he his natural inclination is to be pretty
4:57
Speaker 1: plain spoken. So a lot of the out of the
5:00
Speaker 1: book is very readable just because he writes in a
5:02
Speaker 1: very readable way. He doesn't like to um to use jargon.
5:07
Speaker 1: He really doesn't. I mean, I don't. I don't know
5:10
Speaker 1: if can I tell the story about how we came
5:12
Speaker 1: up with the title. Okay, So we really struggled with
5:17
Speaker 1: the title, and it was very telling about him because
5:21
Speaker 1: but we were coming up with all these titles that
5:23
Speaker 1: sounded like, you know, the titles of a great man's book,
5:26
Speaker 1: you know, um, Mr Chairman, and you know, things with
5:30
Speaker 1: great sort of august themes, and he couldn't stand that.
5:34
Speaker 1: He really was opposed to anything that sounded pompous. He
5:36
Speaker 1: didn't want anything like, for instance, Ben Bernanke's book The
5:40
Speaker 1: Courage to Act. He was allergic to that type of
5:43
Speaker 1: tone in his in in a book title. So we
5:47
Speaker 1: kept going back and forth, and there's a story if
5:49
Speaker 1: you read the book that he starts out with a joke,
5:51
Speaker 1: and the joke is about a parent. And so he
5:54
Speaker 1: wanted the title to be, and he was quite serious
5:56
Speaker 1: with this. He wanted the title to be The Wise
5:58
Speaker 1: Parrot Speaks, and the publisher and I and everybody around
6:03
Speaker 1: him sort of said, well, that's very funny, but I
6:05
Speaker 1: don't think anybody will understand it. They don't really necessarily
6:08
Speaker 1: recognize what that's about. And he said, yeah, but that'll
6:10
Speaker 1: that'll intrigue people. People buy it anyway. So we had
6:13
Speaker 1: a lot of we had a lot of discussion that
6:16
Speaker 1: this was probably the most difficult thing. And then finally
6:18
Speaker 1: one day I said, well, there's this phrase in some
6:20
Speaker 1: of the minutes sustained commitment, which I think sort of
6:24
Speaker 1: sums up your description of your life and you're fighting
6:28
Speaker 1: against inflation. And he looked at me and said, keeping
6:31
Speaker 1: at it, and I realized, like, that's the simplest way
6:36
Speaker 1: to say sustained commitment. So that's that became the title.
6:39
Speaker 1: So he gave up on The Wise Parrot Speaks, and
6:43
Speaker 1: UH gracefully suggested the title that we have now. Um,
6:49
Speaker 1: I'm glad to hear that. I'm curious also, Christine, you
6:53
Speaker 1: know some more about the collaboration process that you were
6:55
Speaker 1: starting to go into. Yeah. I think he refers to
6:59
Speaker 1: in his book that that that you were checking and
7:02
Speaker 1: rechecking some of his anecdotes. I mean, as someone in
7:06
Speaker 1: his forties now, I think it would be difficult for
7:08
Speaker 1: me to write my own memoir. And yet at age
7:12
Speaker 1: he was recalling things from his childhood, you know, all
7:15
Speaker 1: sorts of events early in his life, a lot of
7:18
Speaker 1: his work life in the fifties, in sixties at the
7:21
Speaker 1: Treasury and and the Fed. How were you able to,
7:26
Speaker 1: you know, to flesh out some of these stories that
7:28
Speaker 1: he told. Well, one thing that's so remarkable about his
7:31
Speaker 1: life is almost every chapter there are stories that have
7:35
Speaker 1: entire books written about them. So my my home office
7:39
Speaker 1: right now is stacked from from Florida ceiling with various books,
7:43
Speaker 1: which in many cases are just to sort of do
7:46
Speaker 1: more research on a few paragraphs in one chapter of
7:50
Speaker 1: his book. So you know, I just wentn't to find
7:53
Speaker 1: any kind of source material, I shood there are a
7:55
Speaker 1: lot of it was and you if you look at
7:57
Speaker 1: the notes, a lot of it is looking back at
7:58
Speaker 1: news articles from the time. You know, there are great
8:01
Speaker 1: archives on the New York Times website, for instance, which
8:04
Speaker 1: really help, and then newspapers dot com things like that
8:07
Speaker 1: where you can find news articles about events as they
8:10
Speaker 1: were happening, and that's that was a pretty helpful way
8:12
Speaker 1: to check things. Many people would recognize Vulcar as the
8:17
Speaker 1: central banker that broke the back of inflation, of course
8:21
Speaker 1: in the United States. How comfortable is he with this
8:26
Speaker 1: kind of canonization, Well, I he appreciates that, with the
8:31
Speaker 1: fact that people um sometimes still come up to him
8:34
Speaker 1: on the street and thank him for what he did,
8:36
Speaker 1: He's humbled by it, but he's grateful, and he feels
8:42
Speaker 1: so strongly about serving the country that to know that
8:47
Speaker 1: he's done something that people feel made a difference, I
8:49
Speaker 1: think matters a lot to him. I think he's constantly
8:53
Speaker 1: coming up with new things he wants to fix in
8:55
Speaker 1: the country, and he's also quite humble about ways in
8:57
Speaker 1: which he failed to do things. I mean, there's a
8:59
Speaker 1: lot of the beginning of the book is about his
9:01
Speaker 1: failure to basically create an international monetary system, and once
9:07
Speaker 1: Breton Woods broke down and he was really he was
9:10
Speaker 1: really upset about that. So um, there's a combination in
9:14
Speaker 1: the book of I think him telling the sort of
9:17
Speaker 1: heroic story of Paul Wolker, which you can't avoid but
9:20
Speaker 1: admit is heroic in many respects, but also being quite
9:24
Speaker 1: self critical at points. He doesn't always come off as
9:28
Speaker 1: an amazing superhero. Do circumstances create the man or does
9:35
Speaker 1: the man shape the circumstances. Would anyone serving as chair
9:41
Speaker 1: of the FADE, given the inflation landscape at the time,
9:46
Speaker 1: have taken the steps he took. Well, that's interesting thing
9:49
Speaker 1: that he likes to talk about. So obviously he followed
9:54
Speaker 1: two FED chairman who didn't take the action that was required.
9:59
Speaker 1: When he was brought in, the problem was so acute
10:02
Speaker 1: that he felt that he had great support in doing
10:05
Speaker 1: things that were very difficult. So he he does sort
10:09
Speaker 1: of admit that as much as he gets credit for
10:12
Speaker 1: being strong and fighting back against politicians who wanted to
10:16
Speaker 1: impeach him, he always felt there was this reserve of
10:19
Speaker 1: public support from him because things had gotten so bad
10:22
Speaker 1: and they were at such a point of crisis. So Um, however,
10:26
Speaker 1: I mean, he did have to be very clever and
10:28
Speaker 1: how he did that, and there's a section and how
10:30
Speaker 1: he where he describes the decision to target the money
10:34
Speaker 1: supply as effectively sort of lashing the FED to the mast.
10:39
Speaker 1: They had no choice but to follow through, and that
10:42
Speaker 1: inoculated him against some criticisms because he could say, we're
10:46
Speaker 1: just looking at the money supply. We're sorry, he and
10:49
Speaker 1: he admits if if he had ever been told interest
10:52
Speaker 1: rates were going to go up, he might have just
10:54
Speaker 1: run away immediately, but he sort of he sort of
10:56
Speaker 1: created a system where he almost had had an ability
11:01
Speaker 1: and the Fed had ability to say, it's out of
11:03
Speaker 1: our hands. We're just we're just looking at something else.
11:05
Speaker 1: Interest rates are not under our control anymore. We'll get
11:09
Speaker 1: back to the issue of targets in a minute. It
11:11
Speaker 1: seems like Christine that you know, there are so many
11:15
Speaker 1: interesting stories about his early life and his childhood, and
11:19
Speaker 1: one of them in there may even have informed his
11:23
Speaker 1: thinking when he was at the FED in the late
11:25
Speaker 1: seventies without him even knowing it. And it seems like
11:29
Speaker 1: it that that comes from his mother's economics textbook that
11:33
Speaker 1: he found from all the way back in nineteen eleven
11:36
Speaker 1: and the notes she wrote in the margins. Can you
11:39
Speaker 1: tell us a little bit about that part of the story. Yeah,
11:42
Speaker 1: this is this is this was an amazing discovery. I mean,
11:45
Speaker 1: we talked a lot in the book about his father
11:47
Speaker 1: and they influence his father and his father's career in
11:50
Speaker 1: public service had on Paul. But what was really interesting
11:54
Speaker 1: was right towards the end when that we already actually
11:57
Speaker 1: put out the Galley version of the book and we're
11:59
Speaker 1: making final corrections to it. I was at his home
12:02
Speaker 1: and I was looking through He has this room with
12:04
Speaker 1: the you know, bookcases all around the room, and I
12:07
Speaker 1: was looking for a book that he said I could
12:09
Speaker 1: find somewhere, and I found another book and it was
12:12
Speaker 1: a tiny, little hard wound volume which was printed in
12:17
Speaker 1: in the early nineteen hundreds. It was it was his
12:20
Speaker 1: his mother's Vasser economics text book from nineteen eleven. It
12:25
Speaker 1: had a lot of her handwriting in it. All all
12:27
Speaker 1: the margins were covered with her handwriting, and including on
12:31
Speaker 1: page eight, I think there was a sentence where she
12:34
Speaker 1: had scrawled economic laws cannot be dependent upon if we
12:38
Speaker 1: disregard psychology, et cetera. And I showed this to him
12:42
Speaker 1: and he was, first of all, he'd just dunfounded, he'd
12:44
Speaker 1: forgotten he had it. It reminded him that his mother
12:47
Speaker 1: had been I guess, really passionate about economics, studying it
12:50
Speaker 1: before the FED was created in nineteen eleven. Anyway, he
12:54
Speaker 1: he had completely forgotten how much his mother cared about economics,
12:57
Speaker 1: and also that people were having this in site about
13:00
Speaker 1: the importance of psychology even before. He sort of feels
13:03
Speaker 1: that he had that insight during his career at the fact,
13:06
Speaker 1: in the understanding that you had to find a simple
13:09
Speaker 1: way to communicate with the public about what you were
13:11
Speaker 1: doing and the money supply with the way to do it.
13:50
Speaker 1: He appointment in nineteen sev nine by Jimmy Carter can
13:56
Speaker 1: also be seen as the start of the quote unquote
13:59
Speaker 1: model an era in central banking. Uh thereafter inflation not
14:06
Speaker 1: so much of a problem, but also the idea of
14:09
Speaker 1: policy and the controversy that it's sometimes courted being associated
14:14
Speaker 1: with a single figure, and it sort of helps that
14:17
Speaker 1: he's this towering guy. Do you think Carter knew what
14:23
Speaker 1: he was getting into when Volka was appointed? How big
14:27
Speaker 1: a job was the Federal Reserve chairman back in the day. Well,
14:32
Speaker 1: he describes how there was a lot of controversy he
14:35
Speaker 1: knows about appointing him, and there was a camp in
14:38
Speaker 1: the Carter White House that was very opposed to appointing
14:40
Speaker 1: him because they recognized he would be independent, they wouldn't
14:43
Speaker 1: be able to control him. He was likely to raise
14:45
Speaker 1: interest rates a lot. That was not going to be
14:48
Speaker 1: good for Carter and his reelection chances. And they were right,
14:52
Speaker 1: But there were obviously other voices that persuaded him. It
14:55
Speaker 1: was important he was going to be popular and Wills
14:57
Speaker 1: read for instance, and and Carter realized the problems were
15:01
Speaker 1: so bad he couldn't get anything done that he had
15:04
Speaker 1: to deal with this inflation problem and basically took a bullet,
15:07
Speaker 1: basically agreed to do this. And it was one of
15:09
Speaker 1: the things that perhaps cost some re election. But yes,
15:13
Speaker 1: so you have this FED chairman who's got the willingness
15:17
Speaker 1: of the President and also his successor, Ronald Reagan, who
15:20
Speaker 1: supported him publicly all the time to do what what
15:23
Speaker 1: needed to be done. And uh, and he did it.
15:26
Speaker 1: And that was a big difference because a lot of
15:28
Speaker 1: other FED chairman had had I mean, Arthur Burns had
15:31
Speaker 1: a great you know, he was very well respected figure,
15:33
Speaker 1: he was very well known, but he just didn't do
15:38
Speaker 1: what was required. Through the eighties when you and I
15:42
Speaker 1: were growing up, there was a narrative that the Carti
15:44
Speaker 1: years were sort of a shorthand for American weakness and
15:48
Speaker 1: American failure. That view, you know, has come into some
15:52
Speaker 1: scrutiny lately, and President Carter looks better with a couple
15:56
Speaker 1: of decades hindsight. How does folk feel about President card Well,
16:01
Speaker 1: so early in our discussions, early in our meetings, he
16:03
Speaker 1: was reading the early version of Stuart Eisenstadt's book about Carter,
16:07
Speaker 1: and there's a big chapter in there about Vulcar and uh,
16:10
Speaker 1: and he was very pleased by that, you know, because
16:12
Speaker 1: Stewart Eisenstadt was one of those people who opposed Vulcar
16:15
Speaker 1: back in the day. He was, you know, more on
16:17
Speaker 1: the liberal wing. He was afraid about high interest rates.
16:20
Speaker 1: But now in hindsight recognized and recognizes that one of
16:22
Speaker 1: the great things that President Carter did was named Paul Wolker.
16:26
Speaker 1: And President Carter has always said that as well. So
16:30
Speaker 1: I think, you know, obviously Paul Wolker loves that, and uh,
16:33
Speaker 1: and I think he really respects Carter and and his
16:36
Speaker 1: willingness to do the difficult things. Um and and sort
16:40
Speaker 1: of the way he also has behaved in his post
16:42
Speaker 1: presidency He sees him as a really great public servant
16:45
Speaker 1: who hasn't quite gotten his due. He recognized this, that
16:47
Speaker 1: he made mistakes, and there are reasons that, you know,
16:50
Speaker 1: Reagan was able to achieve things that Carter wasn't. But
16:54
Speaker 1: you know, I think he considers Carter one of the
16:57
Speaker 1: presidents he admires. For sure. It sounds like he thinks
17:00
Speaker 1: or is still underwrited. Yes, I would say that's true, Christine.
17:04
Speaker 1: In the thirty years since Vulcar left the chairmanship of
17:09
Speaker 1: the FED, he's rarely set still. He served on many
17:15
Speaker 1: public commissions, reparations for Nazi victims, the the Obama uh
17:22
Speaker 1: financial regulation initiative that eventually became the Vulcar Rule. He
17:26
Speaker 1: even expresses some amusement that his name always became attached
17:30
Speaker 1: to these commissions, like the Vulgar Commission, the Vulcar this
17:34
Speaker 1: the Vulgar that does any of these? Do any of
17:38
Speaker 1: these particular roles stand out for him as the most
17:43
Speaker 1: memorable or the most important in his post FED career. Uh? Well,
17:47
Speaker 1: I mean he talks about how pretty much the first
17:50
Speaker 1: thing he left he left to do after leaving the
17:53
Speaker 1: FED was to serve on a national commission for public service,
17:56
Speaker 1: and then he immediately served on another one, and he
18:00
Speaker 1: has devoted his career in the last few years to
18:04
Speaker 1: an organization called the Vulkan Alliance, which is trying to
18:06
Speaker 1: improve public service. So I think that, above all is
18:10
Speaker 1: the thing that he cares about the most. Obviously these
18:13
Speaker 1: other things. Trying to end corruption is incredibly important to him,
18:17
Speaker 1: and he feels very proud of what they did, um
18:19
Speaker 1: with getting some money back for the families of Holocaust victims, um.
18:23
Speaker 1: But you know the thing, that thing that really strikes
18:26
Speaker 1: me about all of that is that he he did
18:28
Speaker 1: a lot of these very difficult, very controversial jobs that
18:32
Speaker 1: required somebody of great integrity, and he wouldn't take money
18:35
Speaker 1: for that. And I sort of mentioned this to him
18:38
Speaker 1: while we were working on the book, that should we
18:39
Speaker 1: mention you didn't take money. He said, now, so we
18:42
Speaker 1: don't even have that in the book. But he he
18:44
Speaker 1: really felt that it was important to do and he
18:47
Speaker 1: didn't want to get renumerated for it. I want to
18:50
Speaker 1: get back to this issue of his chairmanship and the
18:53
Speaker 1: dawn of the modern central bank. I mean, again partly
18:58
Speaker 1: helped by the break of inflation and the fact that
19:01
Speaker 1: Vulcar is physically a very big guy. Do you think
19:06
Speaker 1: that the cult of personality surrounding many central bankers in
19:11
Speaker 1: the world today is a good thing, and more importantly,
19:17
Speaker 1: does Vulca think it's a good thing. Well, I I
19:20
Speaker 1: don't think we ever talked about the cult of personality,
19:22
Speaker 1: but I'll tell you a few things that he said
19:24
Speaker 1: that sort of connected to that. One is that it
19:27
Speaker 1: bothers him that he's sometimes criticized for being having been
19:31
Speaker 1: secretive at the FED. And he will point out that
19:34
Speaker 1: there was one year he testified in front of Congress
19:36
Speaker 1: something like thirty four times. He felt he was on
19:39
Speaker 1: things like the Sunday Morning Meet the Press shows, which
19:42
Speaker 1: you don't see the FED chairman do anymore. He was
19:45
Speaker 1: very out there, So it bothers him that he's sort
19:48
Speaker 1: of sometimes tagged with the secrecy thing. He also feels
19:52
Speaker 1: very strongly that it's helpful to have central bankers who
19:55
Speaker 1: aren't just academic economists. He reserves a little bit of
19:59
Speaker 1: scorn for the academic economists in the book, and things
20:03
Speaker 1: like econometrics he's not a fan of. Well. He talks
20:05
Speaker 1: about how how he was going to get his PhD
20:08
Speaker 1: but kept putting it off and putting it off. Yeah, yeah,
20:10
Speaker 1: he never He never did his dissertation, and he really
20:13
Speaker 1: feels what he what he learned about economics that served
20:16
Speaker 1: him well was understanding the psychology of the market from
20:19
Speaker 1: sitting on the trading desk at the New York FED
20:22
Speaker 1: and from being a chase for two stints in his
20:25
Speaker 1: early career and working in the Treasury department. So he
20:28
Speaker 1: is very supportive of having people at the FED who
20:32
Speaker 1: aren't just academic economists. So I'd say, you know, the
20:35
Speaker 1: current FED chairman who served in the Treasury, he served
20:37
Speaker 1: in business. He's he likes that about him. That's what
20:41
Speaker 1: I would say. More than anything, he thinks you should
20:45
Speaker 1: have people who really understand the markets in the real world. Christine,
20:49
Speaker 1: on a lighter note, I learned some new words in
20:52
Speaker 1: this book, and there was one in particular on page
20:54
Speaker 1: one oh nine called disappeal. I guess it's a French
20:58
Speaker 1: word and it means the state of being dressed only
21:00
Speaker 1: partially or nightclothes. And it doesn't that make the book
21:04
Speaker 1: sound sexy? Don't you want to run into that? Central
21:08
Speaker 1: Banking is sexy, but full of words like that that
21:12
Speaker 1: doesn't really use it in a in a sexy ways
21:14
Speaker 1: us to refer to some people protesting the FEDS monetary policy.
21:19
Speaker 1: But I understand that he did have a very fascinating vocabulary.
21:24
Speaker 1: Can you tell us a little bit about that. Yeah,
21:26
Speaker 1: I mean that. One thing that was interesting to me
21:28
Speaker 1: as sort of the professional writer who came into that
21:30
Speaker 1: exercise and him being a you know, central banker and
21:35
Speaker 1: government official, was how often I would come across these
21:39
Speaker 1: words that he would use that I'd say, Wow, that's
21:42
Speaker 1: an interesting, unusual word, and I'd look it up and
21:46
Speaker 1: and he'd nailed it. He'd find that he'd find these
21:49
Speaker 1: uses of words that I wouldn't. And I did look
21:51
Speaker 1: in this book because I wanted to talk about it.
21:53
Speaker 1: I couldn't find any quick examples. But that's a good
21:55
Speaker 1: one that dil. We had a whole debate about whether
21:58
Speaker 1: that was really the right word. We looked it up
21:59
Speaker 1: in various dictionaries. But he cared immensely about word choice,
22:04
Speaker 1: and he would go back and forth and come up
22:06
Speaker 1: with exactly. You know, we we discuss what is the
22:09
Speaker 1: best word to describe this person? You know? And and
22:12
Speaker 1: when you read Minutes, you see how much of the
22:17
Speaker 1: discussion often comes down to how do we communicate this
22:20
Speaker 1: particular idea and what what wording should we use in
22:23
Speaker 1: the statement, because so much about how central bankers communicate
22:28
Speaker 1: and and do their job is through word choice and
22:32
Speaker 1: writing and communications and and so so he does have
22:35
Speaker 1: this gift for language, which I hadn't really anticipated when
22:39
Speaker 1: I went into it. I've written thousands of words about
22:42
Speaker 1: one or two words in the FED statement. I can
22:44
Speaker 1: exactly agree with that. On the subject of the minutes.
22:47
Speaker 1: Back to the transparency issue, it is also true we've
22:50
Speaker 1: become accustomed two minutes of each Federal Open Market Committee
22:54
Speaker 1: meeting coming out three weeks after that meeting. That didn't
22:59
Speaker 1: used to be the case, and certainly was not the
23:01
Speaker 1: case in the Volka era. Right. No, and actually in
23:04
Speaker 1: his early years, I mean or actually through his career,
23:07
Speaker 1: they never they never stated what the FED funds rate
23:10
Speaker 1: was going to be. They would state what they were
23:11
Speaker 1: doing in the money supply, and people in the market
23:14
Speaker 1: were paid a lot of money to try to figure
23:16
Speaker 1: out what the FED funds rate was going to going
23:18
Speaker 1: to do. And it's only more recently and he and
23:21
Speaker 1: he's not completely convinced that that's better, you know. So,
23:24
Speaker 1: there's some ways in which this transparency has gone maybe
23:27
Speaker 1: beyond what he thinks is right, and he and he
23:29
Speaker 1: admits maybe he's wrong. Maybe it's just he's used to
23:31
Speaker 1: the way it was, but he thought there was a
23:34
Speaker 1: certain flexibility they had and not having to come right
23:36
Speaker 1: out and say here's what the Fed funds rate is
23:38
Speaker 1: going to be. Now he reserves some special scrutiny for
23:43
Speaker 1: a very small country on the far side of the world.
23:48
Speaker 1: And I'm not talking about Australia. I am talking about
23:51
Speaker 1: the place right next door. What is his bugaboo with
23:54
Speaker 1: New Zealand. Well, his bugaboo is not so much with
23:57
Speaker 1: New Zealand, which he commends for its excellent fishing. But
24:00
Speaker 1: he talks in the end of the book about this
24:02
Speaker 1: idea of targeting two percent inflation, which, as somebody who
24:07
Speaker 1: fought inflation, he doesn't like the idea of trying to
24:09
Speaker 1: create inflation of any number. And so it puzzles him
24:14
Speaker 1: and frustrates him that everybody is obsessed with trying to
24:17
Speaker 1: get inflation up to two percent. Getting inflation up is
24:21
Speaker 1: anathemat Now he's for down, He's for down, easy, for
24:26
Speaker 1: lower inflation, no inflation. But he so he has this
24:30
Speaker 1: whole section which we ran on Bloomberg opinion as well
24:34
Speaker 1: about how that number came to be. How the where
24:37
Speaker 1: the two percent come from? And he said, he thinks
24:39
Speaker 1: it's from the Reserve Bank of New Zealand, which decided
24:43
Speaker 1: they needed to take drastic action on inflation back in
24:45
Speaker 1: the early nineties, late eighties, and they set a two
24:50
Speaker 1: percent target and got there and found it was a
24:53
Speaker 1: very effective means of fighting inflation. And so it's been
24:57
Speaker 1: adopted by other countries. Not least target have proliferated. I mean,
25:02
Speaker 1: the US has a version of two, European Central Bank,
25:05
Speaker 1: Bank of Japan, Sweden, you name it, far and wide.
25:10
Speaker 1: How much do these numerical targets and the almost sacramental
25:16
Speaker 1: quality that they've taken on hinder good policy in his
25:21
Speaker 1: view greatly the policy should be. You know, it's kind
25:26
Speaker 1: of the difference between principles based regulation and rules based regulation,
25:31
Speaker 1: which is another bugaboo of his. He likes things to
25:33
Speaker 1: be based on principles. You know, let's let's have inflation
25:37
Speaker 1: that doesn't you know, price stability, you know, you know,
25:42
Speaker 1: when prices are reasonably stable because they don't effect of
25:45
Speaker 1: business or consumer decisions. That's what he wants. He doesn't
25:49
Speaker 1: like this idea of being so precise on the numbers,
25:51
Speaker 1: because he thinks it's ridiculous. The data is not that precise,
25:54
Speaker 1: and there's this kind of false belief in precision that
25:58
Speaker 1: troubles him. Christine just wants to wrap up with a
26:02
Speaker 1: couple of final questions here. You know, there's this sense
26:05
Speaker 1: of public service under current of his commitment to good government,
26:09
Speaker 1: like like you were talking about that that really runs
26:12
Speaker 1: throughout the book. And yet you know, someone might think,
26:15
Speaker 1: is this a screed against Donald Trump? And it's it's
26:17
Speaker 1: really not. The words Donald Trump only appear once in
26:21
Speaker 1: the book, that the Trump administration has mentioned only a
26:24
Speaker 1: handful of times. He even even positively once or twice.
26:28
Speaker 1: And Folker says several times he's often labeled as a Democrat,
26:33
Speaker 1: but he actually gave up his political affiliation many decades ago,
26:37
Speaker 1: and he really tries to be a political And yet
26:41
Speaker 1: and yet we can sense that he's really no big
26:44
Speaker 1: fan of President Trump. Why did he not go any
26:49
Speaker 1: further in this book. Well, he at his root does
26:52
Speaker 1: not believe in being political. His father wasn't a political
26:56
Speaker 1: city manager who executed excellent management of the city of
27:01
Speaker 1: t Neck, New Jersey and helped turn it around and
27:04
Speaker 1: it as FED chairman, he didn't think you should be political.
27:07
Speaker 1: He's been so much of his career in the in
27:09
Speaker 1: the FED, he served under Democrats and Republicans. He doesn't
27:12
Speaker 1: think that the issues for him are about which party
27:15
Speaker 1: is in office. It's really about are they running things well?
27:19
Speaker 1: How can it be better effective government? And so to
27:25
Speaker 1: the degree that the Trump administration is not effective and
27:28
Speaker 1: is not running things well, he's obviously unhappy, but he
27:31
Speaker 1: also sees that there have been other administrations, both Democratic
27:35
Speaker 1: and Republican, who have done the same, and he he
27:38
Speaker 1: specifically calls out Ronald Reagan for having started this kind
27:41
Speaker 1: of language about government being the problem that has infiltrated
27:46
Speaker 1: are our discourse in this country and reduced the trust
27:50
Speaker 1: in government. You know, looking back over old magazine covers,
27:55
Speaker 1: Vulker is often pictured surrounded by these clouds of smoke.
28:01
Speaker 1: Now were they from cigars? Were they from pipes? What
28:06
Speaker 1: did he like to smoke? And it's inconceivable we would
28:09
Speaker 1: see that today. Does he think society has become too sanitized? No? Actually,
28:14
Speaker 1: I mean most of the photos you'll see in stock
28:17
Speaker 1: photography of him or him with this big cigar. He
28:19
Speaker 1: was famous for his cheap cigars. He'd never liked to
28:23
Speaker 1: smoke expensive cigars because he, you know, was very frugal
28:26
Speaker 1: at heart, And so I actually persuaded him to include
28:32
Speaker 1: a few a short little section on his cigars, because
28:35
Speaker 1: he has an interesting story about how he decided to
28:38
Speaker 1: quit right around the time he left the FED, and
28:41
Speaker 1: he really is so glad he quit and feels so
28:44
Speaker 1: guilty actually for subjecting so many people to the cigar
28:47
Speaker 1: smoke for so long. It was I think in part
28:50
Speaker 1: of prop you know, it helped calm him down. He
28:54
Speaker 1: um recognizes that society changed. He's in no way trying
28:57
Speaker 1: to persuade anybody to smoke ours. Christine. Finally, this book
29:04
Speaker 1: was actually not supposed to come out for a few
29:06
Speaker 1: more weeks. The publisher moved it up to, uh, the
29:10
Speaker 1: end of October. Can you tell us a little bit
29:13
Speaker 1: about that decision. Yes, that was pretty unusual for the publisher,
29:18
Speaker 1: and we're grateful they were able to do that. Paul's
29:20
Speaker 1: pretty sick. He was in great shape and still going
29:23
Speaker 1: to the office until mid August, and you know, really
29:26
Speaker 1: worked hard, hard, hard, often staying later in the office
29:29
Speaker 1: and his assistant or I would working away on his
29:33
Speaker 1: draft and taking the bus and going to uh fishing
29:37
Speaker 1: trips and things like that. And then in August he
29:40
Speaker 1: was diagnosed with pretty serious illness. So he's been he's
29:44
Speaker 1: been home and he's you know, fighting this and you know,
29:49
Speaker 1: he's ninety one, so he's doing his best to keep going,
29:54
Speaker 1: keeping at it, so to speak, exactly all right. Christine Harper,
29:58
Speaker 1: editor of Bloomberg Markets magazine and collaborator with Paul Vulker
30:02
Speaker 1: on the new book Keeping at It. We're very grateful
30:05
Speaker 1: that you were able to join us on Benchmark. Thank
30:09
Speaker 1: you so much, Christine, Thank you so much for having me.
30:14
Speaker 1: Benchmark will be back next week. Until then, you can
30:17
Speaker 1: find us on the Bloomberg terminal, Bloomberg dot com, our
30:21
Speaker 1: Bloomberg app, as well as podcast destinations like Apple Podcast,
30:26
Speaker 1: Spotify or wherever you listen. We'd love it if you
30:29
Speaker 1: talk the time to rate and review the show so
30:31
Speaker 1: more people can find us. You can follow me on
30:34
Speaker 1: Twitter at moss Underscore Echo, I'm at start Lammin and Christine,
30:42
Speaker 1: you are d r under Poor Harper. Benchmark is produced
30:46
Speaker 1: by Topah Foreheads, the head of Bloomberg podcasts is Francesca
30:51
Speaker 1: lev thanks for listening, See you next time. Four