Latest / Masters in Business / What Went Wrong in Great Financial Crisis Stimulus with Reporter Jon Hilsenrath

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What Went Wrong in Great Financial Crisis Stimulus with Reporter Jon Hilsenrath · Masters in Business

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio News. This is Masters in
• 0:11
  Speaker 1: Business with Barry Ritholtz on Bloomberg Radio.
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  Speaker 2: This week on the podcast, another extra special guest. John
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  Speaker 2: Hilsenrath was a reporter for the Wall Street Journal, covering
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  Speaker 2: everything from September eleventh to the Federal Reserve for twenty
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  Speaker 2: six years. His coverage at the Journal of the Fed
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  Speaker 2: got him nicknamed the Fed Whisperer for his many, many
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  Speaker 2: page one scoops. He's now running Serpa Pinto Advisory, multiple
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  Speaker 2: Pulitzer Prize nomination, author of a book about Janet Yellen,
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  Speaker 2: just a whirlwind of information about the economy, markets, and
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  Speaker 2: the Fed. I thought the conversation was absolutely fascinating, and
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  Speaker 2: I think you will also with no further ado, my
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  Speaker 2: conversation with the Wall Street Journals. John Hilson Rath.
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  Speaker 3: It is my extra special honor to be here.
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  Speaker 2: Does it does it feel like you're in the enemy's territory? Competitive?
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  Speaker 3: Uh, I've crossed over. I've crossed over.
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  Speaker 2: Here now on the private side.
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  Speaker 3: Yeah yeah, yeah, yeah. So I want to tell you,
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  Speaker 3: and I should say on the Wall Street Journal page
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  Speaker 3: one story as it was his, I'm a former editor too,
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  Speaker 3: I had that many. I don't have that many anymore
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  Speaker 3: because I've I left the journal.
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  Speaker 2: Well, but those those headlines, like that number isn't growing anymore, right,
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  Speaker 2: but it's but it's not going down either. That number
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  Speaker 2: is a permanent record.
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  Speaker 3: Yeah, I appreciate.
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  Speaker 2: So you you have that many, you know, that many
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  Speaker 2: pole positions and you're you're good to go.
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  Speaker 3: And there were that many battles with editors at the
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  Speaker 3: Wall Street Journal over you know, structure that story and
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  Speaker 3: what headline to put on it.
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  Speaker 2: That's a whole nother conversation we're going to get to.
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  Speaker 2: I am constantly reminding people, Hey, you know, the writer,
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  Speaker 2: they don't get to pick the headline. That's the editor.
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  Speaker 2: And people seem shocked by that.
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  Speaker 3: Yeah, it's a process. Let's just let's say the least,
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  Speaker 3: it's definitely a process.
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  Speaker 2: Before we get to your writing and editing, let's talk
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  Speaker 2: a little bit about your background. Duke University, undergrad eventually
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  Speaker 2: an NBA from Columbia. What was the career plan?
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  Speaker 3: The career plan for me was always journalism. I actually
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  Speaker 3: like you. I'm a Long Island boy. Are you from
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  Speaker 3: Long Island?
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  Speaker 4: Or?
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  Speaker 2: From sixth grade on?
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  Speaker 3: From sixth grade? On Okay I grew I grew up
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  Speaker 3: there to Manhasset, Long Island.
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  Speaker 2: And Welcus Valley. That's we could play Jewish geography. That's
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  Speaker 2: twenty fifteen, twenty minutes from.
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  Speaker 3: Me, although Manhasset was a Catholic town. But like, the
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  Speaker 3: career plan for me was always journalism. I started writing
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  Speaker 3: for the Manhasset Press when I was sixteen years old.
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  Speaker 3: I was I started out as a sports writer. The
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  Speaker 3: original plan was sports writer, ah, and then the next
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  Speaker 3: plan was war correspondent, and then somehow I ended up
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  Speaker 3: becoming an economics writer. But I stuck to the plan
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  Speaker 3: of journalism.
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  Speaker 2: So if journalism was always the plan, why an MBA,
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  Speaker 2: why not journalism are well?
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  Speaker 3: So I about excuse me. About five years into my
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  Speaker 3: journalism career, I went back and did a fell When
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  Speaker 3: I decided I want to do economics and finance, I
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  Speaker 3: went back and did a fellowship at Columbia. It's called
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  Speaker 3: a night Badget fellowship. Ye great program. And what they
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  Speaker 3: did is they took a few working journalists and then
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  Speaker 3: they put them through the business school for a year.
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  Speaker 3: And then after a year that I decided to do
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  Speaker 3: a few extra courses and get the NBA, But I
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  Speaker 3: was really there for the fellowship to kind of to
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  Speaker 3: Basically what I wanted to do was learn how a
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  Speaker 3: balance sheet worked, learn how corporate finance worked. I had
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  Speaker 3: spent a bunch of years covering like Macro, but I
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  Speaker 3: didn't understand anything about what made Wall Street go. So
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  Speaker 3: that was why I went back there.
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  Speaker 2: So what was it that drew you to journalism? Oh?
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  Speaker 3: Wow, I just you know, so I hated English class
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  Speaker 3: in high school. I don't know how you felt, but
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  Speaker 3: you know these four and they're still teaching it the
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  Speaker 3: same way. By the way, these four paragraph essays of
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  Speaker 3: you know, introduction, supporting paragraph one, supporting paragraph.
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  Speaker 2: That was never a problem is always subject, predicate, what's
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  Speaker 2: an adverb?
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  Speaker 3: Why do I need to? And then it's like why
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  Speaker 3: am I? You know, why am I learning to do
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  Speaker 3: literary reviews? To kill a mocking bodker? Anyway, I never
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  Speaker 3: thought I would have anything to do with writing, but
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  Speaker 3: then I got involved in covering the local sports teams
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  Speaker 3: and I was like, this is really interesting, this is fun.
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  Speaker 3: I'm like right in the middle of the action and
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  Speaker 3: like right on the sideline, and people are paying attention
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  Speaker 3: and they care about it, and it just felt it
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  Speaker 3: was just I had I had, I had fun, and
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  Speaker 3: I've come to see over my career that like the
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  Speaker 3: great thing about journalism and like here we are in
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  Speaker 3: the Bloomberg newsroom is like you're always surfing right on
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  Speaker 3: the edge of history, right, And so that's really what
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  Speaker 3: ended up drawing it to me. I mean, there's the
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  Speaker 3: reporting aspect and the writing aspect, but just the idea
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  Speaker 3: of being like right in the middle of things as
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  Speaker 3: they're happening and trying to make sense of them and
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  Speaker 3: explain them was an addiction that I didn't get over
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  Speaker 3: for a long time.
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  Speaker 2: And right out of Columbia straight to the Wall Street
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  Speaker 2: Journal was that your first gig?
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  Speaker 3: Well, so I started out at a newswires service in
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  Speaker 3: the early nineteen nineties. Here we are back in Bloomberg.
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  Speaker 3: It was called right Night rit or Financial No sure, yeah,
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  Speaker 3: And like.
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  Speaker 2: Any relationship to the Night big a hot, No, there
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  Speaker 2: was no.
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  Speaker 3: There was no relationship except for the fact that the
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  Speaker 3: Knight family was really rich and could fund something. Right, Okay,
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  Speaker 3: But Bloomberg was like up and coming at the time,
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  Speaker 3: and people weren't taking it as seriously as they should have.
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  Speaker 3: But I did that a few years, moved to Hong
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  Speaker 3: Kong with a newly wed on an extrege with my
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  Speaker 3: newly wed on on an exchange program with Columbia, and
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  Speaker 3: then I signed up with the journal over there.
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  Speaker 2: How long were you in Hong Kong for five years?
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  Speaker 3: About five years? Yeah, And that was a place.
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  Speaker 2: This was when the UK was running the city and
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  Speaker 2: before I was.
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  Speaker 3: There right for the handover, so you know, so it's
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  Speaker 3: I mean, there's another great thing about journalism is wherever
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  Speaker 3: I went, it seemed like stuff started blowing up. So
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  Speaker 3: I started with the Wall Street Journal in Hong Kong
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  Speaker 3: in July of nineteen ninety seven. That was the week
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  Speaker 3: that the UK handed the city over to China, and
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  Speaker 3: it was also the week that the Taibati valued and
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  Speaker 3: started the Asian financial crisis. So I got in there
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  Speaker 3: and I was like flying from day one on these stories.
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  Speaker 3: It turned out that the Asian financial crisis, particularly in
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  Speaker 3: given what I was doing, was a much bigger event
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  Speaker 3: than the handover. The handover was had much had long
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  Speaker 3: term implications obviously, but yeah, so I was there for
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  Speaker 3: all of it.
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  Speaker 2: So how long after the handover did you start seeing
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  Speaker 2: the heavier hands of China in day to day life
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  Speaker 2: in Hong Kong.
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  Speaker 3: You know, I think it's been a very slow and
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  Speaker 3: corrosive process. And frankly, when I was there from ninety
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  Speaker 3: six through two thousand, it was really the economic events
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  Speaker 3: that were driving the city at the time. So the
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  Speaker 3: first one was the Asian financial crisis and a property
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  Speaker 3: crisis that swept through Asia. One of my formative experiences
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  Speaker 3: as journalists was covering an investment bank called Paragrine Investments
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  Speaker 3: that blew up, and I learned some really important lessons
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  Speaker 3: that came back to help me in two thousand and
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  Speaker 3: eight about how banks explode and you know, were implode.
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  Speaker 2: So when you came back to tell you it was Paragrine.
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  Speaker 3: Yeah. So one of the formative experiences of my career
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  Speaker 3: in Hong Kong was covering the collapse of an investment
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  Speaker 3: bank called Paragrine Investments, and you know, I saw, you know,
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  Speaker 3: why banks collapse and what causes these kinds of runs.
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  Speaker 3: It came in really handy ten years later when Bear
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  Speaker 3: Stearns and Lehman Brothers were blowing up, and I had
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  Speaker 3: insights that kind of got me ahead of those stories
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  Speaker 3: in ways that surprised some people at the journal. I
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  Speaker 3: would you know when I don't know if you remember
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  Speaker 3: when those bear Stearns hedge funds blew up.
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  Speaker 2: Oh? I remember.
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  Speaker 3: I told my Colly Kate Kelly, who was all over
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  Speaker 3: that story. I said, they're going to blow up this weekend.
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  Speaker 3: We need to have a two thousand world story ready
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  Speaker 3: to go Saturday. She's like, you're overreacting. I was like,
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  Speaker 3: watch because I saw what happens when creditors of banks
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  Speaker 3: get nervous. And I learned all that in Asia. The
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  Speaker 3: other big event in Asia in the late nineteen nineties
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  Speaker 3: was of course the handover. But for people in Hong Kong,
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  Speaker 3: it's a very entrepreneurial city. They were thinking, well, how
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  Speaker 3: do we get money? How do we make money off
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  Speaker 3: of this? You know, how do we tire? You know,
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  Speaker 3: the Chinese economy had been booming, it was a growth story,
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  Speaker 3: and so people were looking for ways to advance themselves economically.
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  Speaker 3: I think what we've seen happen to Hong Kong since,
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  Speaker 3: and this is perhaps a lesson, is that, you know,
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  Speaker 3: these attacks on democracy have been and free speech and
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  Speaker 3: all that have been slow and corrosive, and it's a
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  Speaker 3: different city today than it was twenty five years ago,
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  Speaker 3: but after the handover, it was just people trying to
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  Speaker 3: make better lives for themselves.
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  Speaker 2: Right, really really fascinating. How do you get from Hong Kong.
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  Speaker 3: To d C to DC? Well there was a stop
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  Speaker 3: in the middle in New York. So I was in
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  Speaker 3: Hong Kong for five years. Moved back to the US
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  Speaker 3: in early two thousand and one, right in time for
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  Speaker 3: the tech bubble to burse and of course nine to eleven. Again,
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  Speaker 3: wherever I went it seemed like terrible things were going on.
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  Speaker 4: You seem to be an unlucky charm and you know,
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  Speaker 4: and I used to joke that like Wall Street should
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  Speaker 4: just pass its hat around to retire me, because you know,
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  Speaker 4: then I just get out of everybody's bad news.
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  Speaker 3: But yeah, came back. I was in the New York
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  Speaker 3: office for seven years writing about economics. I was our
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  Speaker 3: markets editor during the credit bubble and the credit bust
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  Speaker 3: and learned a lot in that experience about the interactions
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  Speaker 3: of economics and final.
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  Speaker 2: Where was your office in two thousand and one?
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  Speaker 3: Our office was across the street front.
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  Speaker 2: Right, not the the Fox Wall Street Journal office.
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  Speaker 3: On that you moved up there after Murdoch took over.
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  Speaker 2: That's right, this was you guys were right in the
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  Speaker 2: middle of it.
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  Speaker 3: We were, yeah, so what So we were across the
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  Speaker 3: street in the World Financial Center, the southernmost tower, I
• 10:13
  Speaker 3: guess that was World Financial Center three. So I would
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  Speaker 3: walk across the West Side Highway on this land bridge
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  Speaker 3: every day, right.
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  Speaker 2: Next to the Palm Court, if I recall correctly, that
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  Speaker 2: big glass.
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  Speaker 3: Yeah, yeah, yeah, yeah, we were across the street from
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  Speaker 3: that too. Anyway, I happened to be in early that
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  Speaker 3: morning trying to finish a story, and I was heading
• 10:33
  Speaker 3: over to the World Trade Center for NABE conference. And
• 10:41
  Speaker 3: you know, journal reporters tended to get in a little
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  Speaker 3: bit after nine because we tended to have late deadlines.
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  Speaker 3: I was in early, was there for the first plane
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  Speaker 3: to hit, and then I ran out into the street
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  Speaker 3: with a notebook. Second plane flew right over my head.
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  Speaker 2: Wow. Yeah, And were you interviewing? People were like, what
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  Speaker 2: did you do that day?
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  Speaker 3: So well, so I'll tell you exactly what I did.
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  Speaker 3: The first thing I did when I saw the inferno
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  Speaker 3: from the first plane is I ran downstairs to I
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  Speaker 3: was where the reporters were stationed. I knew the top
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  Speaker 3: editors were down a floor. So I ran down there
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  Speaker 3: to see who was here and who was organized organizing things.
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  Speaker 3: I ran to Paul Steiger Oh, I was the managing
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  Speaker 3: editor of the paper. I said, hey, I'm here, I'm
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  Speaker 3: here early. You know, I'm on it. What do you
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  Speaker 3: want me to do? And his advice was go figure
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  Speaker 3: out what happened and don't get yourself killed. So like
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  Speaker 3: he immediately understood that something serious was at hand. So
• 11:39
  Speaker 3: I grabbed a notebook and ran over that pedestrian bridge,
• 11:43
  Speaker 3: saw a lot of carnage in the street, and started
• 11:46
  Speaker 3: kind of writing. Well. The next thing I did was
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  Speaker 3: call my wife to let her know that there was
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  Speaker 3: a fire. And I was okay because I figured it
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  Speaker 3: was going to be on the news within a matter
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  Speaker 3: of minutes and she knew where I was, so I
• 11:58
  Speaker 3: called her to let her know I was okay. And
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  Speaker 3: then a few minutes later, as I'm in the street,
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  Speaker 3: the cops are trying to clear me out. They're saying,
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  Speaker 3: you can't be here. This is a dangerous place, so
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  Speaker 3: they're trying to move me out of the street. I walk,
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  Speaker 3: and then as I'm walking kind of to follow the
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  Speaker 3: police's orders, the second plane flies right over my head.
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  Speaker 3: And you know, I stuck around and interviewed witnesses and bystanders,
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  Speaker 3: and it was a pretty harrowing day.
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  Speaker 2: Yeah, to say, to say the very least, let's bring
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  Speaker 2: it back to something a little less arrowing or more traditional.
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  Speaker 2: You have a really unusual career trajectory at the Wall
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  Speaker 2: Street Journal. You start, you know, fairly green, and eventually
• 12:43
  Speaker 2: you're running what's probably the hottest desk in economics, which
• 12:48
  Speaker 2: is covering the FED, showing up at meetings, interviewing FED governor's,
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  Speaker 2: FED presidents and the chair of the f O and c.
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  Speaker 2: What was that process like to get there?
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  Speaker 3: Yeah, well, you know, like my goal at the journal
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  Speaker 3: was always well, I just wanted to write good stories, right,
• 13:06
  Speaker 3: And the journal back when I started at the place
• 13:10
  Speaker 3: was ironically you think of it as a finance, economics
• 13:15
  Speaker 3: markets kind of paper. And that's how I you know,
• 13:18
  Speaker 3: I grew up reading the New York Times and watching
• 13:20
  Speaker 3: my dad read the Wall Street Journal, and like that
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  Speaker 3: stuff just didn't interest me. But what I discovered over
• 13:26
  Speaker 3: time was that the you had to be able to
• 13:28
  Speaker 3: write long feature stories to succeed page one stories. We
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  Speaker 3: called them leaders. So like that's what I was focused
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  Speaker 3: on doing what happened was by two thousand and eight,
• 13:40
  Speaker 3: I had I had learned a lot, basically in part
• 13:44
  Speaker 3: from my experiences in Asia, you know, where I covered
• 13:49
  Speaker 3: these banks collapsing and I saw financial crisis, and I
• 13:53
  Speaker 3: kind of felt like I had a roadmap for how
• 13:54
  Speaker 3: it worked. And then obviously in two thousand and eight,
• 13:58
  Speaker 3: I mean, the US markets were employed and it was
• 14:01
  Speaker 3: very complicated. It was kredit, it was credit driven. Our
• 14:04
  Speaker 3: star fed reporter left the paper that summer to go
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  Speaker 3: to the economist magazine, greg Ip. It was a legend YEP.
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  Speaker 3: And the guy that my future boss really wanted for
• 14:18
  Speaker 3: the paper had just moved to London, a guy named
• 14:20
  Speaker 3: Mark Whitehouse, who's a Bloomberg Opinion, brilliant, brilliant guy, and
• 14:26
  Speaker 3: he was I think seen as the heir apparent. But
• 14:28
  Speaker 3: he had just moved to London, so they had no
• 14:30
  Speaker 3: one else. And like I had learned a lot about markets,
• 14:34
  Speaker 3: I had been writing about economics. I was just well placed.
• 14:37
  Speaker 3: So they asked me to go to move down to
• 14:39
  Speaker 3: Washington in the summer of two thousand and eight to
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  Speaker 3: cover the FED, and my first week on the job,
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  Speaker 3: Lehman Brothers blew up, so I'm on the phone that
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  Speaker 3: weekend with the top leadership of the FED, trying to
• 14:53
  Speaker 3: understand you know, when Tim Geitner is talking to me
• 14:56
  Speaker 3: about foam on the runway after like these day of
• 15:00
  Speaker 3: intense meetings collapsed, you know, some of these officials wanted
• 15:04
  Speaker 3: to talk to reporters to kind of keep us informed
• 15:08
  Speaker 3: because the next day was going to be a big deal,
• 15:12
  Speaker 3: and they just kind of wanted to have their story
• 15:13
  Speaker 3: out there. So I was talking to top people six
• 15:16
  Speaker 3: days into the job.
• 15:18
  Speaker 2: You're the perfect person to ask this question that I
• 15:21
  Speaker 2: have never gotten a good answer to, which was why
• 15:26
  Speaker 2: was it that AIG was saved and Lehman was not.
• 15:30
  Speaker 2: I have my own theory, yeah, but I haven't spoken
• 15:33
  Speaker 2: to very many FED officials in real time.
• 15:36
  Speaker 3: I think it was sequential, I mean remarkably right. So,
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  Speaker 3: I mean what they were telling me Sunday night was
• 15:44
  Speaker 3: that they hoped that they had enough of these facilities
• 15:49
  Speaker 3: rescue facilities in place. You know, boy, I can't even
• 15:52
  Speaker 3: remember all the acronyms anymore, but you know, the liquidity
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  Speaker 3: that they were pumping into the other investment banks, and
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  Speaker 3: they hoped that they had enough of these facilities in
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  Speaker 3: place in order to keep the system stable. The next day,
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  Speaker 3: you know, people forget the FED had a policy meeting
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  Speaker 3: on Tuesday. They didn't cut interest rates two days later,
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  Speaker 3: Like Bernaki had a view that he thought that he
• 16:15
  Speaker 3: had the situation under control, and they realized, you know,
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  Speaker 3: before AIG on Tuesday. On Monday, there was the money
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  Speaker 3: market mutual funds that broke the boss, that's right, and
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  Speaker 3: then all hell broke loose, and they realized that if
• 16:28
  Speaker 3: they didn't do something, that things were going to get
• 16:31
  Speaker 3: much worse. So it was the markets weren't a panic,
• 16:34
  Speaker 3: and I think the policy makers panicked and at that
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  Speaker 3: point they just were doing whatever they could to put
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  Speaker 3: out fires, whatever they go.
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  Speaker 2: I have two pet theories on Lehman, and I want
• 16:42
  Speaker 2: to run them by you, Okay. One is they looked
• 16:46
  Speaker 2: at the balance sheets, the whole repo one oh five
• 16:48
  Speaker 2: and moving money off. Someone looked at the balance sheets
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  Speaker 2: and said, hey, you could rescue these guys, but they're insolvent.
• 16:55
  Speaker 2: And not just a little insolvent. Yeah, they're tens of
• 16:57
  Speaker 2: billions of dollars insolvent.
• 16:59
  Speaker 3: Yeah.
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  Speaker 2: That was the Lehman brother issue. Bear Stearns. It's like
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  Speaker 2: they weren't insolvent. They just had too much money tied
• 17:06
  Speaker 2: up in a liquid assets. Was a liquidity issue, not
• 17:10
  Speaker 2: a solvency issue.
• 17:11
  Speaker 3: Yeah. And the rules that the FED was trying to
• 17:14
  Speaker 3: abide by at the very edge of its authority was
• 17:17
  Speaker 3: that they had to lend against good collateral, right and
• 17:20
  Speaker 3: if it was bad collateral, they couldn't do it. And
• 17:22
  Speaker 3: then the other problem that weekend was that they were
• 17:25
  Speaker 3: starting to worry about who was going to be the
• 17:27
  Speaker 3: next one.
• 17:28
  Speaker 2: To fail AIG because a.
• 17:30
  Speaker 3: Lot of I mean, you know, if if they bailed
• 17:33
  Speaker 3: out Laman, then the market's target was going to point
• 17:35
  Speaker 3: to Meryl Lynch, right like, So they were just happy
• 17:38
  Speaker 3: to get Meryl Lynch bought that week right, right.
• 17:40
  Speaker 2: Right, So that John saying that was a great last
• 17:43
  Speaker 2: minute deal he pulled off and it worked out well
• 17:44
  Speaker 2: for everybody.
• 17:45
  Speaker 3: Yeah, and they and and and they survived. So uh,
• 17:49
  Speaker 3: you know, it was coming at them fast and furious,
• 17:52
  Speaker 3: and I mean, what's kind of remarkable is that they
• 17:53
  Speaker 3: had all summer to prepare for it and it still
• 17:56
  Speaker 3: blew up in everybody.
• 17:57
  Speaker 2: The other the other thing that I would have to
• 18:00
  Speaker 2: be a fly on the wall for was, at one
• 18:03
  Speaker 2: point in time, one Buffet reached out to Dick Fold
• 18:07
  Speaker 2: at Lehman Brothers, and we don't really know the details,
• 18:10
  Speaker 2: but it kind of looks like Buffett made an offer
• 18:14
  Speaker 2: to Leman and he kind of to Fold and he
• 18:16
  Speaker 2: kind of turned up his nose at a low ball offer. Eventually,
• 18:20
  Speaker 2: Buffett makes the similar offer to Goldman Sachson. Goldman was
• 18:23
  Speaker 2: smart enough to take it. So you can imagine how
• 18:26
  Speaker 2: BERNANKI was thinking, Wait, they turned down Buffett.
• 18:29
  Speaker 3: Why do we have to get well, I mean, I
• 18:31
  Speaker 3: think a lot matters and kind of went at what price? Right?
• 18:34
  Speaker 3: So I know that they were working very hard all
• 18:36
  Speaker 3: summer to raise capital, and a number of deals, including
• 18:39
  Speaker 3: with Korean investors, failed to develop.
• 18:42
  Speaker 2: So we mentioned three hundred and nineteen page one bylines.
• 18:49
  Speaker 2: What stands out as some of your favorite pieces?
• 18:52
  Speaker 3: Well, I am most attached to those longer magazine feature stories.
• 18:59
  Speaker 3: One of my favorite ver It's was a piece I
• 19:01
  Speaker 3: wrote in two thousand and five. The spring of two
• 19:04
  Speaker 3: thousand and five, I actually had just been beaten badly
• 19:07
  Speaker 3: by the New York Times on another story and was
• 19:10
  Speaker 3: a little frustrated and disappointed with myself that I had
• 19:14
  Speaker 3: gotten beaten.
• 19:14
  Speaker 2: What was the topic that you were beaten on.
• 19:16
  Speaker 3: Oh that's I mean, that's that's a long story. It
• 19:19
  Speaker 3: was about an academic economist with an unusual background that
• 19:23
  Speaker 3: it's it's too complicated to get into. I mean, if
• 19:26
  Speaker 3: you want to, we can get into it. But it's
• 19:29
  Speaker 3: a all right, I'll it's a long story. But anyway,
• 19:33
  Speaker 3: I worked on a story with a colleague in Thailand
• 19:36
  Speaker 3: about how there was a global housing boom going on
• 19:40
  Speaker 3: that was being funded by a global credit boom and
• 19:45
  Speaker 3: increasingly complex credit not just through banks but through more
• 19:51
  Speaker 3: sophisticated vehicles and sophisticated investor groups. And I quoted Robert
• 19:56
  Speaker 3: Schiller in it. This is in June maybe of two
• 19:59
  Speaker 3: thousand and five, saying this was going to end in
• 20:01
  Speaker 3: a global recession. So and it connected the dots on
• 20:04
  Speaker 3: something that was building, and it took a couple more
• 20:07
  Speaker 3: years for it to really develop. I did another story,
• 20:11
  Speaker 3: and the stories I love were the ones that were
• 20:13
  Speaker 3: kind of looking around corners. But I did a piece
• 20:16
  Speaker 3: I think it was maybe two thousand and three, two
• 20:19
  Speaker 3: thousand and four looking at US China trade. I had
• 20:24
  Speaker 3: figured out an economists had told me, you know, everyone's
• 20:29
  Speaker 3: talking about all these imports coming from China and how
• 20:31
  Speaker 3: damaging it is for the US. You should look at
• 20:33
  Speaker 3: what the US is exporting to China. Our exports to
• 20:37
  Speaker 3: China are booming, and you should do a story about.
• 20:39
  Speaker 2: That agriculture, right.
• 20:41
  Speaker 3: So I looked at what was booming, and it turned
• 20:44
  Speaker 3: out that our number three export in value and our
• 20:47
  Speaker 3: number one export in volume was trash. We were the
• 20:52
  Speaker 3: Saudi Arabia. Well, we were sending them recycled paper, we
• 20:56
  Speaker 3: were sending them recycled plastic. We were sending them recycled
• 21:01
  Speaker 3: and they were turning that into the boxes and containers
• 21:05
  Speaker 3: and packaging that all the toys and books in microwoven
• 21:09
  Speaker 3: microwave ovens came back in And I kind of pieced
• 21:13
  Speaker 3: this together and actually used a little boy's piece of
• 21:18
  Speaker 3: trash to tell the story I found. I went to
• 21:20
  Speaker 3: a recycling facility in New Jersey where I still remember
• 21:26
  Speaker 3: their name, the Zizarro Brothers in New Jersey. Right near
• 21:29
  Speaker 3: the chipping containers. They had a container of recycled paper
• 21:33
  Speaker 3: that was going off to China. That let me pick
• 21:36
  Speaker 3: through it find a little boy's homework assignment that I
• 21:39
  Speaker 3: made a photocopy of. I put the homework assignment back
• 21:42
  Speaker 3: in the container where it belonged, and I tracked the
• 21:44
  Speaker 3: kid down, and then I was able to track this
• 21:47
  Speaker 3: one boy's homework assignment from the Zizarro Brothers backwards and
• 21:52
  Speaker 3: then all the way to a paper newsprint facility in
• 21:59
  Speaker 3: China and of us this boy's homework assignment to tell
• 22:01
  Speaker 3: how global trade was changing the face of the economy.
• 22:06
  Speaker 2: Coming up, we continue our conversation with John Hilson Wrath,
• 22:10
  Speaker 2: former chief economics correspondent for the Wall Street Journal. Today
• 22:15
  Speaker 2: he runs Surpa Pinto Advisory, discussing his Wall Street Journal
• 22:21
  Speaker 2: experience and Surpa Pinto. I'm Barry Ridults. You're listening to
• 22:25
  Speaker 2: Masters in Business on Bloomberg Radio. I'm Barry Ridults. You're
• 22:44
  Speaker 2: listening to Masters in Business on Bloomberg Radio. My extra
• 22:47
  Speaker 2: special guest today is John Hilson Wrath. He is the
• 22:50
  Speaker 2: former chief economics correspondent for the Wall Street Journal, where
• 22:54
  Speaker 2: he was dubbed the Fed Whisperer for all his many
• 22:57
  Speaker 2: scoops on the Fed. So let's talk about that. You
• 23:02
  Speaker 2: were thought of as the Fed Whisperer. What does that mean?
• 23:05
  Speaker 2: How do you get that nickname?
• 23:08
  Speaker 3: Well, it's funny you ask. It actually used to really
• 23:11
  Speaker 3: bother me when people said that, because I thought, you know,
• 23:15
  Speaker 3: my feeling when I was covering the FED is it
• 23:17
  Speaker 3: kind of trivializes what we're trying to do here and
• 23:20
  Speaker 3: the hard reporting that went into getting stories out of
• 23:24
  Speaker 3: the institution and you know, following the journalistic mission. So
• 23:30
  Speaker 3: maybe I was a little righteous about being called the
• 23:32
  Speaker 3: FED whisperer back then. You know, Wall Street loves to
• 23:36
  Speaker 3: attach these kind of two word names and everything. So
• 23:40
  Speaker 3: when I was covering the FED, it was like the
• 23:42
  Speaker 3: Taper tantrum and Qui infinity, the terrifying, and the FED
• 23:47
  Speaker 3: pivot and you know, so for me, it was the
• 23:49
  Speaker 3: FED Whisperer. But you know, since I left journalism and
• 23:53
  Speaker 3: started my own business, now I'll use whatever I can
• 23:55
  Speaker 3: to my advantage. So now I'm like, yeah, you can
• 23:57
  Speaker 3: call me the FED whisperer. I'll take that. Back in
• 24:00
  Speaker 3: the day when people.
• 24:01
  Speaker 2: Said it, I was like, I don't think Fed whisper
• 24:05
  Speaker 2: is as trivial as something like do you remember the
• 24:08
  Speaker 2: green span briefcase indicator how thick or thin hit? It
• 24:11
  Speaker 2: was just a dumb thing. Yeah, I don't remember seeing
• 24:13
  Speaker 2: MEC started it. Somebody started it, and it was just
• 24:16
  Speaker 2: one of those dumb like really are we really doing this?
• 24:19
  Speaker 2: But you were the one that was getting all the
• 24:21
  Speaker 2: FED scoops that when they wanted to publicize something, they
• 24:26
  Speaker 2: had a variety of outlets that they would reach out to,
• 24:30
  Speaker 2: So ten outlets would all get the same story, but
• 24:33
  Speaker 2: one outlet would have a much more in depth personal detail.
• 24:38
  Speaker 3: Here's where we got to mystify.
• 24:40
  Speaker 2: So okay, so let's see.
• 24:42
  Speaker 3: Yeah, I mean, we could talk for a long time
• 24:44
  Speaker 3: about that, but I wouldn't say that that was exactly
• 24:46
  Speaker 3: the way it worked. So, you know, and this is
• 24:50
  Speaker 3: kind of why I had, you know, was a little
• 24:52
  Speaker 3: upity about the FED whisperer thing is it wasn't like
• 24:55
  Speaker 3: there was some bat phone sitting at my desk and
• 24:58
  Speaker 3: like the phone rang and it was like, oh yes,
• 25:00
  Speaker 3: Chairman Bernanky, what would you like me to say today?
• 25:03
  Speaker 3: There was you know, and my successor, Nick Timros is
• 25:08
  Speaker 3: great at this. There was a lot of reporting that
• 25:10
  Speaker 3: went into this work. It wasn't it wasn't like a
• 25:13
  Speaker 3: spoon feeding kind of process. It was a very kind
• 25:16
  Speaker 3: of It was a process is a keyword, and it
• 25:19
  Speaker 3: was dynamic and complex. So I mean, we could we
• 25:25
  Speaker 3: could talk in some more detail about that, But it
• 25:28
  Speaker 3: wasn't that it wasn't the kind of thing that well,
• 25:31
  Speaker 3: first of all, that they only started doing press conferences
• 25:34
  Speaker 3: sometime after I guess it was around it was twenty twelve,
• 25:39
  Speaker 3: who was posed four years? Four years into the beat,
• 25:43
  Speaker 3: Maybe it was twenty ten. I can't even remember anymore.
• 25:45
  Speaker 3: But what went into the process of writing a FED
• 25:48
  Speaker 3: story was like you had to do a lot of reporting,
• 25:52
  Speaker 3: a lot of triangulation. You had to figure out where
• 25:54
  Speaker 3: the debate was going inside the room and put enough
• 25:57
  Speaker 3: pieces of the puzzle together in order to say this
• 26:01
  Speaker 3: is what they're likely to do. And it was also
• 26:03
  Speaker 3: very important. You know, people used to say, oh, how cold,
• 26:07
  Speaker 3: How could his stories always be right? He's clearly being
• 26:09
  Speaker 3: spoon fed stuff. Well, there's like there's a reason for that,
• 26:12
  Speaker 3: because I didn't report stuff I didn't know. So, you know,
• 26:16
  Speaker 3: you had to do a lot of reporting to get
• 26:17
  Speaker 3: to a point where you could say, all right, this
• 26:19
  Speaker 3: is where they are and what they're going, and where
• 26:22
  Speaker 3: you could say, you know, this is what we know
• 26:24
  Speaker 3: about the kind of state of the debate, or how
• 26:27
  Speaker 3: certain you know, there were some meetings where they weren't
• 26:28
  Speaker 3: sure what they were doing going into it, and I
• 26:31
  Speaker 3: wasn't going to get over my skis on that stuff.
• 26:33
  Speaker 3: So it was, uh, you know, so there was reporting
• 26:37
  Speaker 3: that went into that, there was understanding the institution. I
• 26:41
  Speaker 3: became very good friends with the New York Giants Beat.
• 26:44
  Speaker 3: I'm a big football fan New York Giants Beat reporter
• 26:46
  Speaker 3: in those years, and we used to compare notes, like
• 26:49
  Speaker 3: I saw my job in some way similar to what
• 26:52
  Speaker 3: she was doing it, Like I needed to know what
• 26:54
  Speaker 3: was going on in the locker room right right, and
• 26:56
  Speaker 3: I needed to know kind of who the players were,
• 26:59
  Speaker 3: what the game plan were, who the trainers were, like
• 27:02
  Speaker 3: every angle of the locker room in order to get
• 27:05
  Speaker 3: a whole picture and in order to say with authority
• 27:08
  Speaker 3: what I thought was happening and what was going to
• 27:11
  Speaker 3: go on next to that. You know, by game day
• 27:14
  Speaker 3: was an FOMC meeting. By then I had already done
• 27:16
  Speaker 3: the hard reporting. It was just a matter of saying,
• 27:18
  Speaker 3: all right, here's what happened on the field.
• 27:20
  Speaker 2: FED reporting as a sports analogy.
• 27:23
  Speaker 3: Well, I started out as a sports writer, so yeah.
• 27:25
  Speaker 2: It makes perfect sense. So let's talk a little bit
• 27:28
  Speaker 2: about the FED today versus when you were covering them.
• 27:33
  Speaker 2: Now you're covering them as a researcher and an analyst,
• 27:36
  Speaker 2: then you're covering them as a reporter. You wrote the
• 27:40
  Speaker 2: era of consensus and comedy at the US Central Bank
• 27:45
  Speaker 2: is ending.
• 27:46
  Speaker 3: Explain well, So, I mean the FED is a very
• 27:51
  Speaker 3: consensus driven institution. When I was covering the FED back
• 27:57
  Speaker 3: in the financial cris period two thousand and eight two
• 28:01
  Speaker 3: thousand and nine, there was actually a lot of disagreement
• 28:04
  Speaker 3: at the time. The disagreement was internal and mostly in
• 28:08
  Speaker 3: the regional Fed banks. So I actually spent a lot
• 28:11
  Speaker 3: of time talking to these regional Fed bank hawks to
• 28:14
  Speaker 3: understand what their case was against programs like QWE and
• 28:19
  Speaker 3: interest rate cuts and things like that repression, and there
• 28:24
  Speaker 3: were a lot of unknowns, for sure, there were a
• 28:27
  Speaker 3: lot of unknowns. So and bernanky and yelling, and then
• 28:31
  Speaker 3: Powell spent a lot of time trying to building processes
• 28:34
  Speaker 3: to build consensus around their decisions. What's happening now is
• 28:39
  Speaker 3: is it's the disagreement and division is politically driven, right,
• 28:43
  Speaker 3: we all know that. But what the President has a
• 28:48
  Speaker 3: clear view of where he wants interest rates going. He
• 28:50
  Speaker 3: wants all interest rates going down. It's I'm afraid a
• 28:55
  Speaker 3: little more complicated than what he perhaps thinks he's going
• 28:58
  Speaker 3: to get out of that because he might cut short
• 29:01
  Speaker 3: term interest rates and get higher long term interest rates, which.
• 29:03
  Speaker 2: Which happened very recently.
• 29:06
  Speaker 3: It happened with the FEDS cuts last year. And so
• 29:09
  Speaker 3: you know, he's putting on people in the institution who
• 29:12
  Speaker 3: were you know he expects to be loyal to him.
• 29:14
  Speaker 3: Stephen Miron is the latest. So we're and there's a
• 29:18
  Speaker 3: lot at stake, and there's turnover happening at the FED
• 29:21
  Speaker 3: right now. We all know there's going to be a
• 29:24
  Speaker 3: new chairman appointed by the President next year. There are
• 29:28
  Speaker 3: tests of loyalty. The really big issue is if the
• 29:31
  Speaker 3: president gets four people who are loyal or even closely
• 29:34
  Speaker 3: loyal to his views, he has an opportunity to remake
• 29:38
  Speaker 3: the entire system because with a majority on the FED
• 29:41
  Speaker 3: Board there are seven Board governors. With a majority of
• 29:45
  Speaker 3: four on the FED Board, then the Board can start
• 29:49
  Speaker 3: firing and restructuring the regional banks that might oppose some
• 29:52
  Speaker 3: of the policies that the President wants to pursue. So
• 29:57
  Speaker 3: there's a lot of stake right now. Two levels, one
• 30:00
  Speaker 3: with the succession of j. Powell and two with the
• 30:03
  Speaker 3: construction of who the other governors are going to be
• 30:06
  Speaker 3: on the FED board and how loyal they'll be to
• 30:09
  Speaker 3: the President's vision of how monetary policy should be running
• 30:12
  Speaker 3: the end.
• 30:12
  Speaker 2: So let's talk about that. You wrote a piece early
• 30:15
  Speaker 2: in the summer of twenty twenty five, the fourth seat,
• 30:19
  Speaker 2: meaning once the President gets a hold of that fourth seat,
• 30:23
  Speaker 2: he is essentially running the supposedly independent FED. Tell us
• 30:29
  Speaker 2: a little bit about that, and we'll eventually talk about
• 30:31
  Speaker 2: Lisa Cook. Yeah, and what this pretense firing really looks
• 30:36
  Speaker 2: like an attempts to get an early grib at that
• 30:38
  Speaker 2: fourth seat.
• 30:39
  Speaker 3: Yeah, and I'm actually going to go straight into Lisa
• 30:41
  Speaker 3: Cook in a moment. But so there's the President appointed
• 30:45
  Speaker 3: Chris Waller, he's a FED governor, he might get the
• 30:48
  Speaker 3: chairman's job. He appointed Michelle Bowman. These were in his
• 30:51
  Speaker 3: first terms, and she was given a promotion to Vice
• 30:56
  Speaker 3: sheriff supervision. He's now appointed Stephen Miron, who's made the
• 31:02
  Speaker 3: President's case for much lower interest rates just last week.
• 31:05
  Speaker 3: And so he's in theory one set away from having
• 31:09
  Speaker 3: four governors and a majority on the board and an
• 31:12
  Speaker 3: opportunity to move the FED in a whole new direction
• 31:15
  Speaker 3: and what's happened. It looked like that fourth governor job
• 31:18
  Speaker 3: might be j Powell's job next year when his chairmanship ends.
• 31:22
  Speaker 3: But what happened is now, and this gets a little complicated,
• 31:27
  Speaker 3: But the chair of the FHFA is accusing the Federal
• 31:35
  Speaker 3: Home Finance Administration or agency is accusing Lisa Cook, another
• 31:40
  Speaker 3: FED governor, of fraud and mortgage applications that she submitted
• 31:45
  Speaker 3: to her banks in twenty twenty one. It's an unproven allegation,
• 31:49
  Speaker 3: but if they're trying to remove her for costs, the
• 31:53
  Speaker 3: President has effectively announced that he's firing her for cause,
• 31:56
  Speaker 3: and she's challenging that it could be in the Supreme Court.
• 31:59
  Speaker 2: Now there's a whole concept of FED independence, and the
• 32:04
  Speaker 2: FED board can fire someone from cause. There doesn't seem
• 32:08
  Speaker 2: to be any precedent for the president fire. Let's hold
• 32:12
  Speaker 2: aside of fact. Wink wik nudge, nudge. We all know
• 32:15
  Speaker 2: that this mortgage thing is nonsense and it's just a pretense.
• 32:19
  Speaker 2: Let's just hold that aside. We're talking about governmental power.
• 32:25
  Speaker 2: Who has the power to hire and fire FED government?
• 32:29
  Speaker 3: The President has power the power to fire a FED
• 32:32
  Speaker 3: governor for cause. Then we get to it hasn't happened.
• 32:36
  Speaker 3: No president has tried. But then you get to our
• 32:39
  Speaker 3: question was of well, how A, how do you define cause?
• 32:43
  Speaker 3: And b what is the what is the process for
• 32:47
  Speaker 3: defining cause? And then going through the process of firing
• 32:50
  Speaker 3: a FED governor. This is all on chartered ground, and
• 32:53
  Speaker 3: it's moving to the Supreme Court to make some decisions. Now,
• 32:56
  Speaker 3: there are a whole other set of decisions the Supreme
• 32:59
  Speaker 3: Court has made where it has found that the president
• 33:02
  Speaker 3: can fire heads of other agencies at his discretion. And
• 33:05
  Speaker 3: one of the questions is whether firing a FED official
• 33:09
  Speaker 3: for cause is held to a higher standard than you know,
• 33:12
  Speaker 3: firing a participant in the National Labor Relations Board, and
• 33:17
  Speaker 3: the Supreme Court for reasons I can't say I fully understand,
• 33:21
  Speaker 3: seems to be ready to draw a circle around the FED.
• 33:24
  Speaker 3: But there are big questions of how do you define
• 33:26
  Speaker 3: cause and what's the process, And we don't know where
• 33:30
  Speaker 3: they're going to go with it. They need to kick
• 33:31
  Speaker 3: it back.
• 33:32
  Speaker 2: It's not just putting out something on social on any
• 33:36
  Speaker 2: social media order. You actually have to have a process.
• 33:40
  Speaker 3: Well, I don't know. I mean, the Supreme Court might
• 33:43
  Speaker 3: decide that the president can do it at his discretion
• 33:46
  Speaker 3: on X.
• 33:47
  Speaker 5: So if it's that discretion as but but then what
• 33:50
  Speaker 5: is Lisa Cook's argument is that, well, so there's a
• 33:54
  Speaker 5: definition of for a cause, and I don't have the
• 33:57
  Speaker 5: specific language in front of me, but it has to
• 33:59
  Speaker 5: be for discreet malfeasance or neglect.
• 34:03
  Speaker 3: On the job. And one of her one of her
• 34:08
  Speaker 3: defenses is that he isn't accusing me of doing anything
• 34:11
  Speaker 3: wrong on the job. These were applications I submitted years ago,
• 34:15
  Speaker 3: or and but then there's some fuzzy language that you know,
• 34:18
  Speaker 3: or or the like or something to that effect. And
• 34:21
  Speaker 3: so there's a question of whether there's enough gray area
• 34:25
  Speaker 3: for the president to define what fore cause means on
• 34:29
  Speaker 3: the first two things of you know, you know, malfeasance
• 34:32
  Speaker 3: on the job or neglect on the job, they don't
• 34:33
  Speaker 3: seem to hold up. But there's some gray area on
• 34:36
  Speaker 3: the third piece of that, you know, And that's that's
• 34:39
  Speaker 3: kind of legal precedent that's been said over many years.
• 34:42
  Speaker 2: It's fascinating because the government, when they were defending the
• 34:46
  Speaker 2: tariffs kinda said, well, AIPA says emergency, they don't say
• 34:51
  Speaker 2: anything about tariffs. What's an emergency? In the government's position
• 34:55
  Speaker 2: was whatever the President says it is. Yeah, all these
• 34:58
  Speaker 2: words that uretically have actual meaning. Once you start saying
• 35:03
  Speaker 2: it's subjective at the president's discretion four cause emergency, things
• 35:08
  Speaker 2: like that go out the window. It's going to be
• 35:10
  Speaker 2: interesting to see if the Supreme Court contorts themselves to
• 35:15
  Speaker 2: acquiesce to the president or follows what we think of
• 35:19
  Speaker 2: as traditional legal theory.
• 35:22
  Speaker 3: It's another big year court for sure. And I mean,
• 35:27
  Speaker 3: if you want to get really philosophical and pull the
• 35:30
  Speaker 3: lens way back, I mean, I personally think we're living
• 35:32
  Speaker 3: through revolutionary times kin to the French Revolution in the
• 35:36
  Speaker 3: American Revolution. And one of the things we know is
• 35:40
  Speaker 3: that in revolutionary times, standards and norms get thrown into
• 35:44
  Speaker 3: the air and redefined.
• 35:46
  Speaker 2: Which can first, Did did the throwing of the norms
• 35:51
  Speaker 2: away lead to the revolution? Or was the revolutionary set
• 35:57
  Speaker 2: up in place and norm are just collateral.
• 36:01
  Speaker 3: The revolution has been building for years. And I'll take
• 36:04
  Speaker 3: this back to my FED beat. It's a little off
• 36:06
  Speaker 3: the subject, but when I was covering the FED by
• 36:10
  Speaker 3: twenty thirteen twenty fourteen, I was regularly getting emails from
• 36:14
  Speaker 3: really angry readers who saw the FED as being at
• 36:18
  Speaker 3: the center of America's problems an example of an elite
• 36:23
  Speaker 3: Wall Street institution hurting the little guy in favor of
• 36:28
  Speaker 3: rich guys, an insiders game. And they saw me as
• 36:33
  Speaker 3: a reporter at the Wall Street covering the institution theater
• 36:37
  Speaker 3: as yeah as carrying their water. And I routinely got
• 36:40
  Speaker 3: emails from people saying there's a revolution coming, and like
• 36:44
  Speaker 3: they told me and like as a warning, they said,
• 36:47
  Speaker 3: there's a revolution coming, and when we come, you're going
• 36:51
  Speaker 3: to be one of the people we string up on
• 36:54
  Speaker 3: on you know, on pitchforks, on pitchforks they were, they
• 36:59
  Speaker 3: used injury of the French Revolution. I was seeing this
• 37:02
  Speaker 3: back in twenty fourteen. It actually led me to write
• 37:05
  Speaker 3: a series of collection of stories with actually the most
• 37:07
  Speaker 3: prolific Wall Street Journal Page one reporter of all time,
• 37:11
  Speaker 3: a guy named Bob Davis, about the economic roots of
• 37:15
  Speaker 3: what we call the economic roots of political discontent by
• 37:18
  Speaker 3: twenty sixteen. By twenty fifteen, like I was getting death threats,
• 37:21
  Speaker 3: and we saw that there was like something going on
• 37:24
  Speaker 3: in the country that was kind of deeper than your
• 37:27
  Speaker 3: normally agitated reporter, And so we went out and wrote
• 37:31
  Speaker 3: a bunch of stories called The Great unraveling in twenty
• 37:34
  Speaker 3: six I recall that I recalled that it was all
• 37:37
  Speaker 3: about how kind of trade had gone the wrong way
• 37:40
  Speaker 3: for many Americans, how finance had gone the wrong way
• 37:43
  Speaker 3: for many Americans, and technology, and that people were angry
• 37:47
  Speaker 3: and they were angry at the elites. And so to
• 37:50
  Speaker 3: answer your question, the revolution started a long time ago,
• 37:54
  Speaker 3: and I think we're pretty well into it. And you know,
• 37:58
  Speaker 3: I think a lot of this revolution has been and
• 38:01
  Speaker 3: you know, we have digital guillotines now right where like
• 38:06
  Speaker 3: where we'll cut off your head by your reputation. But
• 38:11
  Speaker 3: sadly and disturbingly, it's now getting somewhat bloody.
• 38:17
  Speaker 2: Yeah, no, to say the very least. You know, it's
• 38:19
  Speaker 2: kind of fascinating. When I was writing Bailout Nation, one
• 38:24
  Speaker 2: of the things that kept coming up when you look
• 38:26
  Speaker 2: at the history of who is Treasury secretary, they seem
• 38:32
  Speaker 2: to be pulled, pulled from two different groups. They were
• 38:35
  Speaker 2: either pulled from Wall Street and banking, or they were
• 38:39
  Speaker 2: pulled from manufacturing and industry. And throughout history, if you
• 38:44
  Speaker 2: had an industrialist as Treasury secretary when things hit the fan,
• 38:49
  Speaker 2: well a whole bunch of banks are going to have
• 38:50
  Speaker 2: to go under sorry, flip that when you have someone
• 38:55
  Speaker 2: from Wall Street, well, then we're going to rescue the banks.
• 38:59
  Speaker 2: And ironically, I don't disagree with anything you said about
• 39:05
  Speaker 2: the history. I think some of the anger is misplaced
• 39:09
  Speaker 2: because it wasn't the FED basically stepped in when Congress
• 39:13
  Speaker 2: threw their hands up and said, we can't do anything.
• 39:16
  Speaker 3: Oh and it was a financial crisis, right. It is
• 39:19
  Speaker 3: the lender of last resort, right, it's their role.
• 39:22
  Speaker 2: They were supposed to do that.
• 39:24
  Speaker 3: That's where they were creating in nineteen thirteen.
• 39:26
  Speaker 2: That's right. What didn't happen during a normal financial crisis
• 39:31
  Speaker 2: is fiscal stimulus along with monetary stimulus. Monetary stimulus benefits
• 39:36
  Speaker 2: the holders of capital. You on stocks, bonds, real estate
• 39:40
  Speaker 2: rates go down, you do great. When the government does
• 39:43
  Speaker 2: a big fiscal stimulus that tends to land on the
• 39:45
  Speaker 2: middle class. Hey, we're going to build an interstate commerce system,
• 39:50
  Speaker 2: an interstate highway system. We're gonna you know, create weaponized
• 39:55
  Speaker 2: kingsingism and build up defense. That tended in pass to
• 40:00
  Speaker 2: find its way to the middle class. What happened in
• 40:03
  Speaker 2: the twenty tens were you had all that monetary stimulus,
• 40:07
  Speaker 2: very little fiscal stimulus at least until the pandemic, and
• 40:12
  Speaker 2: for a brief period of time it looked like the
• 40:15
  Speaker 2: middle class was bought off.
• 40:16
  Speaker 3: Yeah, well, there's I mean, there's a lot of economics
• 40:19
  Speaker 3: in history here. What I'll say is, I agree with you.
• 40:22
  Speaker 3: We got fiscal policy exactly one hundred and eighty degrees
• 40:26
  Speaker 3: wrong after the financial crisis, in the sense that what
• 40:30
  Speaker 3: we needed was and there was some fiscal stimulus right
• 40:33
  Speaker 3: after the fact, but it wasn't sustained. We went, you know,
• 40:36
  Speaker 3: we went to fiscal austerity within a year or two.
• 40:40
  Speaker 3: What we needed was short term stimulus, right and long
• 40:43
  Speaker 3: term fiscal austerity in order to get the budget under control.
• 40:49
  Speaker 3: And what they did was short term austerity and nothing
• 40:52
  Speaker 3: about the long term. And I'm still waiting, by the way,
• 40:56
  Speaker 3: for the bond market to recognize this, and it doesn't
• 40:59
  Speaker 3: seem to do that.
• 41:00
  Speaker 2: It's kind of fascinating that the bond vigilantes. I keep
• 41:05
  Speaker 2: hearing those names come up, and they don't really seem
• 41:08
  Speaker 2: to exist anymore.
• 41:09
  Speaker 3: They seem to flutter their eyes and wake up and
• 41:11
  Speaker 3: then go back to sleep again.
• 41:13
  Speaker 2: I have a pet theory that there's just a shortage
• 41:15
  Speaker 2: of quality sovereign paper and so even a damaged, high
• 41:21
  Speaker 2: debt United States is still going to make good on
• 41:23
  Speaker 2: its debts.
• 41:24
  Speaker 3: So they're still appetite, right, And I think that helps
• 41:26
  Speaker 3: you explain why spreads are so tight right now, because
• 41:29
  Speaker 3: people will buy whatever paper they can.
• 41:31
  Speaker 2: Get, right, right, absolutely true.
• 41:33
  Speaker 3: Hey, I know that you have a bunch more things
• 41:35
  Speaker 3: you want to ask about the FED. Can I you
• 41:37
  Speaker 3: were asking a few minutes ago about the about covering
• 41:41
  Speaker 3: the fat and being the Fed whisper right and being
• 41:44
  Speaker 3: spoon fed so to speak.
• 41:46
  Speaker 2: Right, You didn't know no shoe leather, no heavy research,
• 41:49
  Speaker 2: no investigative jenneralism. They just handed you your stories.
• 41:53
  Speaker 3: And I pushed back, and see, there's a lot there's
• 41:55
  Speaker 3: a lot of there's a lot of reporting that went
• 41:58
  Speaker 3: into those stories. I just wanted to I don't know
• 42:00
  Speaker 3: if this was among the things he wanted to ask,
• 42:02
  Speaker 3: but I just wanted to describe, for a second, like
• 42:05
  Speaker 3: what my mentality was about, like what my job was, right. So,
• 42:10
  Speaker 3: and I used to preach this to colleagues all the time.
• 42:13
  Speaker 3: As a beat reporter, I felt like this is really
• 42:15
  Speaker 3: important to me. I had three responsibilities. One responsibility was
• 42:19
  Speaker 3: to break stories, right, that was those Fed scoops, and
• 42:23
  Speaker 3: it mattered. You know, if people were going to pay
• 42:26
  Speaker 3: to subscribe to the Walls regional all, they want something
• 42:29
  Speaker 3: different in there. The other responsibility I had was to
• 42:32
  Speaker 3: explain a complicated world. There were a lot of complicated
• 42:35
  Speaker 3: things going on when I was covering the FED with
• 42:38
  Speaker 3: QI and zero interest rates, and I had to understand
• 42:41
  Speaker 3: it and try to explain it to people. But then
• 42:43
  Speaker 3: the third piece was holding powerful people and institutions accountable.
• 42:49
  Speaker 3: And you know, I think that from the outside, maybe
• 42:52
  Speaker 3: people would look at this and say, oh, he's getting
• 42:54
  Speaker 3: spoon fed these scoops and he's pulling his punches. He's
• 42:58
  Speaker 3: not holding them accountable. But that third part was important
• 43:00
  Speaker 3: to me, and I mean, I'd be happy to talk
• 43:02
  Speaker 3: about stuff that we did on that front. And you
• 43:06
  Speaker 3: know what we did to try to hold the FED account.
• 43:09
  Speaker 2: Well, let's zoom in.
• 43:10
  Speaker 3: And there's also the sense that those that those two
• 43:12
  Speaker 3: things are in conflict right that well, you know, if
• 43:15
  Speaker 3: you're holding their feet to the fire, they're not going
• 43:17
  Speaker 3: to you know, they're not going to give you the
• 43:18
  Speaker 3: next scoop. And my response is, first of all, they
• 43:20
  Speaker 3: weren't spoon feeding these scoops. I had to work to
• 43:23
  Speaker 3: get the information and put them in positions where they
• 43:26
  Speaker 3: would tell me things that didn't happen by accident. I
• 43:30
  Speaker 3: had to leverage information how I could. But also, you know,
• 43:35
  Speaker 3: I had a responsibility to do the accountability stuff, and
• 43:38
  Speaker 3: I couldn't, let you know, fear get in my way
• 43:40
  Speaker 3: of doing that that it was going to undermine. And
• 43:43
  Speaker 3: you know, there were times when I made them uncomfortable
• 43:45
  Speaker 3: and I just had to do that.
• 43:46
  Speaker 2: So let's let's zoom out and take like a ten
• 43:49
  Speaker 2: thousand foot view. A FED chair has a story he
• 43:54
  Speaker 2: wants to inform the market of. And that's always been
• 43:58
  Speaker 2: my thought process. When the FED is communicating, it's not
• 44:01
  Speaker 2: about image or pr They want the market to do
• 44:04
  Speaker 2: some of their work for them, or at least not
• 44:08
  Speaker 2: shock or surprise the market. They want the market to
• 44:12
  Speaker 2: understand what's coming and be prepared for it. So how
• 44:17
  Speaker 2: would a BERNANKI or yelling go about communicating, Hey, you
• 44:22
  Speaker 2: guys don't understand there are after you left in twenty
• 44:27
  Speaker 2: twenty two, there was a bunch of increases coming. But
• 44:30
  Speaker 2: let's stick with the twenty tens. Hey rates are going
• 44:34
  Speaker 2: to are low and they're going to stay low for
• 44:36
  Speaker 2: the next for the foreseeable future. How does that get
• 44:40
  Speaker 2: disseminated out to the public and then to the bond
• 44:43
  Speaker 2: traders so that the street knows what's coming up next?
• 44:48
  Speaker 4: Right?
• 44:49
  Speaker 3: Yeah, Okay, So there are a lot of pieces to this.
• 44:51
  Speaker 3: The first one is you're right, there are two really
• 44:54
  Speaker 3: important imperatives from their perspective, especially in the twenty tens,
• 44:59
  Speaker 3: because the interest rate had gotten to zero. What they
• 45:02
  Speaker 3: realized was the only way they're going to like affect
• 45:05
  Speaker 3: financial conditions in a way that helps the economy is
• 45:08
  Speaker 3: if they convince the markets that they're going to keep
• 45:11
  Speaker 3: interest rates really low for a long time, then you
• 45:13
  Speaker 3: get long term rates down in addition, and so projecting
• 45:18
  Speaker 3: a stance of dubbishness for a long time became part
• 45:21
  Speaker 3: of the mission, right, And that was part of what
• 45:24
  Speaker 3: they wanted to do to influence the economy and financial conditions.
• 45:27
  Speaker 3: But then the other thing, as you said, is they
• 45:30
  Speaker 3: don't want to freak the markets out because that causes
• 45:33
  Speaker 3: in their mind, unnecessary turbulence that can be really damaging,
• 45:36
  Speaker 3: and they're still haunted to this day. By nineteen ninety four,
• 45:41
  Speaker 3: when Greenspan raised rates i think by three quarters of
• 45:45
  Speaker 3: a point and the market started pricing in a succession
• 45:47
  Speaker 3: of three quarter point increases, and then the next thing,
• 45:50
  Speaker 3: you know, Orange County, California blew up, in Mexico blew up, right,
• 45:54
  Speaker 3: So like they want their view of the world to
• 45:59
  Speaker 3: be under stood, and they do a lot of different
• 46:01
  Speaker 3: things along those lines. They give speeches. They've become more
• 46:05
  Speaker 3: you know, back in the early nineties when I started
• 46:07
  Speaker 3: on this beat, the FED didn't tell anybody anything.
• 46:10
  Speaker 2: Right there, It's so funny, I've told people this. You
• 46:14
  Speaker 2: get an announcement, we've raised rates. The only way you
• 46:16
  Speaker 2: knew the Fed did something was from the open market
• 46:19
  Speaker 2: activity in the bond market. Oh, the Fed must have
• 46:21
  Speaker 2: done something. What's going on?
• 46:23
  Speaker 1: Yeah?
• 46:23
  Speaker 3: Right, yeah, that was that was going to say, like
• 46:25
  Speaker 3: they weren't putting out announcements in nineteen eighty nine. When
• 46:29
  Speaker 3: they did something, you had fed watchers, that's what the
• 46:32
  Speaker 3: original term fed watcher, and you had people in the
• 46:34
  Speaker 3: markets who looked at what were going on with money
• 46:37
  Speaker 3: market rates and the FED injected X billion dollars and
• 46:40
  Speaker 3: they're like, oh, they just pushed up interest rates. And
• 46:42
  Speaker 3: then it took you three days to figure out if
• 46:45
  Speaker 3: that was their intention or an accident and then so
• 46:47
  Speaker 3: over a course of thirty plus years, they've become more
• 46:50
  Speaker 3: and more transparent, right, so they started green Span started
• 46:53
  Speaker 3: putting out statements. Oh and by the way, you know,
• 46:56
  Speaker 3: Alan Greenspan just delighted in how obscure he could be
• 47:00
  Speaker 3: and what he said, because he wanted to confuse people.
• 47:03
  Speaker 3: And they came to see over time that there was
• 47:05
  Speaker 3: a benefit to just being clear. So they put out statements.
• 47:10
  Speaker 3: They you know, they put up minutes. Obviously, they started
• 47:13
  Speaker 3: doing press conferences. Is there interaction between FED officials and
• 47:19
  Speaker 3: reporters that doesn't show up, you know, like onto, Yes,
• 47:23
  Speaker 3: FED officials talk to reporters on background in certain circumstances,
• 47:29
  Speaker 3: and so like yeah, we did talk to FED officials,
• 47:31
  Speaker 3: you know, not for attribution, but it was part of
• 47:35
  Speaker 3: a very dynamic process. When I like when I was
• 47:37
  Speaker 3: writing stories about for instance, Q two, stands out to
• 47:41
  Speaker 3: me like that was that was a situation where like
• 47:45
  Speaker 3: they were moving towards making a decision about Q two
• 47:48
  Speaker 3: over several months. It took them like six to nine
• 47:51
  Speaker 3: months to get there. And that was a case where
• 47:53
  Speaker 3: I was putting pieces very kind of I was putting
• 47:59
  Speaker 3: pieces of a puzzle together to be able to figure
• 48:02
  Speaker 3: out how they didn't even know where they were going
• 48:04
  Speaker 3: at the time, and so there was a lot of
• 48:06
  Speaker 3: reporting that had to go into understanding what was going
• 48:10
  Speaker 3: on behind the scenes, and which words that they used
• 48:13
  Speaker 3: matter mattered, and how they and how they used them.
• 48:16
  Speaker 2: My recollection of q E two, and this is ten
• 48:20
  Speaker 2: plus years ago, was I think it was before where
• 48:24
  Speaker 2: I even launched my own firm. We had maybe it
• 48:28
  Speaker 2: was a double line bond fund that was primarily mortgage back,
• 48:33
  Speaker 2: and it used to be ninety percent mortgage backed, and
• 48:36
  Speaker 2: then it was eighty percent, then it was seventy percent.
• 48:38
  Speaker 2: And what was going on is the FED was just
• 48:40
  Speaker 2: sucking up all of the mortgage back bonds out there,
• 48:43
  Speaker 2: yeah that the private sector had very little of it.
• 48:48
  Speaker 2: And eventually this went from a substantially mortgage back fund
• 48:52
  Speaker 2: to just another treasury fund.
• 48:55
  Speaker 3: And that was quey exactly what they wanted to tappen.
• 49:00
  Speaker 3: It's kind of crazy because it brought it took down
• 49:02
  Speaker 3: risk free rates they wanted. And so I don't know
• 49:07
  Speaker 3: if you or others and other investors in your funds decided,
• 49:11
  Speaker 3: all right, well, if we want to get a return,
• 49:12
  Speaker 3: we got to move further out on the risk card.
• 49:14
  Speaker 3: That was exactly what they were trying. You just you
• 49:16
  Speaker 3: just explained QUI to an action like the way they
• 49:20
  Speaker 3: wanted to do it.
• 49:21
  Speaker 2: And the ironic thing is the first person who said
• 49:25
  Speaker 2: that to me about risk capital was Jim Bianco summer
• 49:31
  Speaker 2: of nine in a canoe, maybe it was ten in Maine.
• 49:37
  Speaker 3: You're you're at the David Kotok.
• 49:39
  Speaker 2: That's right, And he had said the purpose of quantitative
• 49:43
  Speaker 2: easing is to get people out of the safe all
• 49:47
  Speaker 2: of the risk aversion that people developed during the financial crisis,
• 49:51
  Speaker 2: flooding into money market and bonds. Hey, in order for
• 49:54
  Speaker 2: the economy to work, we need this money to.
• 49:56
  Speaker 3: Move and the right of way. The purpose, this is
• 49:59
  Speaker 3: another thing is like I was always amused by how
• 50:02
  Speaker 3: like people on Wall Street reacted to stories because they
• 50:05
  Speaker 3: very often thought the stories were foreign about them. But
• 50:08
  Speaker 3: the purpose wasn't to get like the end goal wasn't
• 50:11
  Speaker 3: to get you guys to move out the risk curve.
• 50:14
  Speaker 3: It was to ease financial conditions in a way that
• 50:18
  Speaker 3: economic activity that was being put off for five years
• 50:21
  Speaker 3: from now would take place now instead. Right, it was
• 50:25
  Speaker 3: to get people to it was to generate economic activity
• 50:29
  Speaker 3: today that was being deferred because people were so underwater
• 50:32
  Speaker 3: or uncertain.
• 50:33
  Speaker 2: So it's funny to use the word underwater. I always
• 50:37
  Speaker 2: assumed that the way to recover from a crisis is
• 50:42
  Speaker 2: the mistake wasn't letting Lehman Brothers collapse. The mistake was
• 50:46
  Speaker 2: many more banks should have been allowed to collapse. Right,
• 50:50
  Speaker 2: tear the band aid off, have the government provide veteran
• 50:54
  Speaker 2: possession financing, so all these companies, you know, the joke was,
• 50:58
  Speaker 2: there's no such thing is toxic paper, only toxic prices
• 51:03
  Speaker 2: at the right price. These pools have bid, mortgages, had balance.
• 51:06
  Speaker 3: That's the age old debate in finance, right is you know,
• 51:10
  Speaker 3: if you bail them out, you're putting off all these
• 51:13
  Speaker 3: hard decisions. Basically, I remember talking to Bill Dudley about this.
• 51:18
  Speaker 3: But you know, basically, what you're doing is trying to
• 51:20
  Speaker 3: smooth smooth out the curve so that there isn't as
• 51:23
  Speaker 3: much damage today. You're bringing forward some activity, but by
• 51:27
  Speaker 3: by design, you're actually putting off some of the damage
• 51:31
  Speaker 3: for the future. The alternative is you tear the band
• 51:34
  Speaker 3: aid off, you get to the right price. But the
• 51:36
  Speaker 3: worry at the FED at the moment was that they
• 51:38
  Speaker 3: were replaying the Great Depression. And in the Great Depression,
• 51:42
  Speaker 3: what happened was the price didn't correct and readjust the
• 51:46
  Speaker 3: whole process of destruction fed on itself and it became
• 51:52
  Speaker 3: its own self feeding equilibrium that took a decade to
• 51:55
  Speaker 3: get out. And so that's the choice they made, was
• 51:58
  Speaker 3: that they didn't they didn't want to go down on
• 52:00
  Speaker 3: this path where banks start collapsing, there's no credit, Businesses
• 52:04
  Speaker 3: start collapsing, people get laid off, people have no money
• 52:07
  Speaker 3: to spend. More, banks collapse more, you know, So like
• 52:10
  Speaker 3: they were trying to short circuit that kind of process.
• 52:13
  Speaker 2: Although obviously we have the FDIC, we have all these
• 52:16
  Speaker 2: other structures in place to prevent.
• 52:19
  Speaker 3: That, but that wasn't enough. Lehman Brothers wasn't FDIC insurance, right,
• 52:22
  Speaker 3: And that was so here's my analogy.
• 52:24
  Speaker 2: But City, Chase, Wells Fargo go through all the lists.
• 52:28
  Speaker 2: There were plenty of banks. Chase was fine, but Wells
• 52:32
  Speaker 2: Fargo ran it's trouble and yeah, well but they're insured
• 52:36
  Speaker 2: not a bank, right.
• 52:36
  Speaker 3: But that's what I'm That's what I'm saying. The thing,
• 52:39
  Speaker 3: what they what they recognized was that they were replaying
• 52:43
  Speaker 3: the potentially the Great Depression, but the old story of
• 52:47
  Speaker 3: a bank run had been had been altered, and now
• 52:51
  Speaker 3: we're dealing with very exotic instruments and institutions that didn't
• 52:56
  Speaker 3: fall under the institutions that were that didn't fall under
• 52:59
  Speaker 3: the calls that were created during the Great Depression. And
• 53:05
  Speaker 3: you know, they were potentially going back.
• 53:06
  Speaker 2: So as we were speaking earlier, and it's a little
• 53:08
  Speaker 2: ironic they avoided the Great Depression, but sort of an
• 53:13
  Speaker 2: unintended consequence was they helped lead us to the French Revolution.
• 53:18
  Speaker 3: But yeah, yeah, in fact, you know, I remember a
• 53:20
  Speaker 3: conversation I had with with Bernanky way back then, where
• 53:24
  Speaker 3: you know, he said like he expected a populous blowback.
• 53:27
  Speaker 3: Really yeah, he expected it, just not as far as
• 53:30
  Speaker 3: it went well. I mean, I think he was surprised
• 53:32
  Speaker 3: by where it came from, right. I don't think he
• 53:34
  Speaker 3: would have expected it to have come from the right.
• 53:36
  Speaker 2: Well, that whole Rick Santelli, you know, tea party nonsense.
• 53:41
  Speaker 3: I had run in with Rick during that hotey.
• 53:43
  Speaker 2: I mean, wait, we're bailing out banks to the tunes
• 53:46
  Speaker 2: of tens of billions of dollars, but the people who
• 53:50
  Speaker 2: applied for mortgages, you're just gonna cut them loose. That
• 53:53
  Speaker 2: seemed to be what yeah.
• 53:55
  Speaker 3: And yeah, and there were a lot of consequences that
• 54:00
  Speaker 3: It's funny you mentioned Rick because Rick I went on
• 54:03
  Speaker 3: with Rick on CNBC and he lectured me that I
• 54:05
  Speaker 3: needed to be more opinionated in my questions at press
• 54:09
  Speaker 3: conferences and reporting, like.
• 54:10
  Speaker 2: You don't understand what that's not right? It's like that
• 54:14
  Speaker 2: you miss you seem to think.
• 54:15
  Speaker 3: I'll give you one little analogy since we're talking about
• 54:18
  Speaker 3: My analogy for Ben Bernanke is imagine that you are
• 54:22
  Speaker 3: a Civil War historian at at wake Forest University, and
• 54:29
  Speaker 3: you're an expert on the battlefields of the Civil War.
• 54:33
  Speaker 3: Actually let's call University of Virginia, because Virginia was more
• 54:36
  Speaker 3: center places. And you're an expert on the artillery and
• 54:39
  Speaker 3: the battlefields and the personnel, and you know everything about
• 54:42
  Speaker 3: the Civil War. And then you got a job as
• 54:44
  Speaker 3: a consultant at the at the Pentagon, and you did
• 54:47
  Speaker 3: such a good job as a consultant at the Pentagon
• 54:50
  Speaker 3: that they made you the Defense Secretary. And then a
• 54:53
  Speaker 3: new Civil War broke out, but it was being fought
• 54:56
  Speaker 3: with drones and laser guided miss That's what happened to
• 54:59
  Speaker 3: Ben Bernanke. He was a great depression historian who knew
• 55:04
  Speaker 3: about all the battles and wrote decisive histories of it.
• 55:07
  Speaker 3: And then he got the job at the FED, and he,
• 55:10
  Speaker 3: you know, he was fighting. He was refighting what he
• 55:13
  Speaker 3: thought was a great depression moment. But he was doing
• 55:16
  Speaker 3: it with these really high tech financial instruments like credit
• 55:18
  Speaker 3: default swaps and credit you know, clatteralized dead obligations and
• 55:24
  Speaker 3: the like.
• 55:25
  Speaker 2: Coming up, we continue our conversation with John Hilsenrath, former
• 55:30
  Speaker 2: Wall Street General reporter and current research advisor at Serpa
• 55:34
  Speaker 2: Pinta Advisory, discussing rates, politics, and the FED. Today, I'm
• 55:39
  Speaker 2: Barry Ridults. You're listening to Masters in Business on Bloomberg Radio.
• 55:58
  Speaker 2: I'm Barry Ridult's. You're listening to Masters and Business on
• 56:01
  Speaker 2: Bloomberg Radio, and some of you are watching us on YouTube.
• 56:06
  Speaker 2: My extra special guest today John Hilson Wrath, former chief
• 56:09
  Speaker 2: economics correspondent and FED whisperer for The Wall Street Journal,
• 56:14
  Speaker 2: now an analyst and researcher at his own shop, Surpa
• 56:18
  Speaker 2: Pinto Advisory. So let's talk about where we are today
• 56:22
  Speaker 2: in the world. Starting with a quote of yours, The
• 56:25
  Speaker 2: old normal is dead, the new normal is here? What
• 56:28
  Speaker 2: does that mean?
• 56:30
  Speaker 3: Wow, I'll be honest with you, I don't even remember
• 56:33
  Speaker 3: writing that, all right, so let me remove that, but
• 56:36
  Speaker 3: I mean we could, but let me redefine that. Okay,
• 56:39
  Speaker 3: you go back to our French Revolution story. Sure, which
• 56:42
  Speaker 3: is I think there's a new old normal setting in
• 56:45
  Speaker 3: which is that? You know? I mean I think we're
• 56:48
  Speaker 3: living through historically changing times on several levels. So one
• 56:57
  Speaker 3: of those is just is information right? And this brings
• 57:00
  Speaker 3: me again. But I've become I've been obsessed with the
• 57:02
  Speaker 3: French Revolution ever since people started telling me they're going
• 57:05
  Speaker 3: to stick my head into the eighteen But you know,
• 57:08
  Speaker 3: there was an information revolution happening during the French Revolution too.
• 57:12
  Speaker 3: There were printing presses everywhere knew, there were pamphleteers. I mean,
• 57:16
  Speaker 3: the printing press had been around for a couple of centuries,
• 57:19
  Speaker 3: but it wasn't being mass produced. And in every village
• 57:22
  Speaker 3: and every you know, neighborhood in Paris.
• 57:26
  Speaker 2: But sent you read.
• 57:29
  Speaker 6: Histories, If you read histories of the French Revolution, there
• 57:32
  Speaker 6: were pamphleteers everywhere giving their version of events on every
• 57:36
  Speaker 6: street corner, and they were basically tearing down the old
• 57:40
  Speaker 6: institutions of the church and the aristocracy who defined the
• 57:43
  Speaker 6: story for the public as they saw fit.
• 57:47
  Speaker 3: And you know the United States too, The Declaration of
• 57:50
  Speaker 3: Independence was a pamphlet. They signed the thing in Philadelphia,
• 57:55
  Speaker 3: they fled because the British were coming, found their way
• 57:58
  Speaker 3: to a printing facility in Baltimore and started mass producing
• 58:02
  Speaker 3: the Declaration of Independence. So, you know, I think we're
• 58:05
  Speaker 3: going through something like that now, where the old institutions
• 58:09
  Speaker 3: of power in the media or are being redefined. I mean,
• 58:13
  Speaker 3: for goodness sake, podcasters had a bigger influence on the
• 58:17
  Speaker 3: last election than see and ended. It's amazing to me, Yeah,
• 58:21
  Speaker 3: no doubt about it. So I think that, you know,
• 58:23
  Speaker 3: that's an old normal, but the new normal is you know,
• 58:26
  Speaker 3: this technological revolution, in my mind is mind boggling. I mean,
• 58:30
  Speaker 3: I'm happy to sit at the table with a contemporary.
• 58:34
  Speaker 3: When you and I were young men, if you wanted
• 58:36
  Speaker 3: to take a picture.
• 58:38
  Speaker 2: You know, you had to get a camera. You had
• 58:40
  Speaker 2: a black.
• 58:40
  Speaker 3: Box called a camera with something called film, a canister
• 58:43
  Speaker 3: called film in it, and then you know, you would
• 58:46
  Speaker 3: take thirty six snaps and then you had to take
• 58:49
  Speaker 3: it to a store.
• 58:50
  Speaker 2: Or a photo Matt a little yellow booth.
• 58:52
  Speaker 3: Yeah, yeah, and it had to get you know, it
• 58:54
  Speaker 3: took a week in the store to get developed, and
• 58:57
  Speaker 3: you had to pay some amount of money. If you
• 58:59
  Speaker 3: wanted to do a search, you went to a library.
• 59:01
  Speaker 3: If you wanted to write a letter, you wrote it
• 59:03
  Speaker 3: with a piece of pen on a paper. You stuck
• 59:05
  Speaker 3: it in an envelope, put a stamp on it, put
• 59:07
  Speaker 3: in a blue box, and waited a month for All
• 59:10
  Speaker 3: of that stuff is now instantaneous, infinite, and practically costless.
• 59:17
  Speaker 3: And so you know, and like I've ride the subway
• 59:19
  Speaker 3: in New York, you look like every every you know,
• 59:23
  Speaker 3: three out of every four people sitting next to you
• 59:25
  Speaker 3: was staring at their phone. I think the information we're
• 59:29
  Speaker 3: living through right now is quantums of magnitude of what
• 59:36
  Speaker 3: they were going through, I think during the French revolutions.
• 59:39
  Speaker 3: So it's an interesting time to be alive, doing well.
• 59:42
  Speaker 2: To say nothing about bad information, misinformation, propaganda.
• 59:49
  Speaker 3: Bad information. The word libel has its root in part
• 59:52
  Speaker 3: in the French wordly bell, which were these scandalous pamphlets
• 59:56
  Speaker 3: that were being put out about Marie Antoinette. And I
• 59:59
  Speaker 3: think it was called rub Street in London. Huh, So Yeah,
• 1:00:02
  Speaker 3: an abundance of information includes an abundance of really bad
• 1:00:06
  Speaker 3: information and misinformation. So we're living through all of that
• 1:00:10
  Speaker 3: right now. So let's talk about quite the central bank stuff.
• 1:00:14
  Speaker 2: You're not quite, but let's talk about what all this
• 1:00:17
  Speaker 2: means for the economy, which, as you have noted, has
• 1:00:22
  Speaker 2: proven to be much more resilient than most forecasters have predicted.
• 1:00:27
  Speaker 2: Where are we, uh in the economy today? What sort
• 1:00:30
  Speaker 2: of job does the FED have to do balancing their
• 1:00:34
  Speaker 2: dual mandate in the in the post pandemic economy we
• 1:00:38
  Speaker 2: are living through.
• 1:00:39
  Speaker 3: Yeah, I mean I think I think the FED is
• 1:00:42
  Speaker 3: in a tough spot and it's prone to making some
• 1:00:46
  Speaker 3: costly mistakes right now.
• 1:00:47
  Speaker 2: Do you think they make mistakes or are they just
• 1:00:50
  Speaker 2: always late to the party.
• 1:00:52
  Speaker 3: No, I think they missed. I think they make mistakes.
• 1:00:54
  Speaker 3: They clearly made a mistake after COVID, and I understand
• 1:00:57
  Speaker 3: and understand what happened. So this is the thing, like
• 1:01:00
  Speaker 3: people attacked the KIWI programs that BERNANKI did. I think
• 1:01:03
  Speaker 3: you know, in the moment that he implemented them, they
• 1:01:07
  Speaker 3: were the net benefits were greater than the net costs
• 1:01:11
  Speaker 3: in those moments. What happened I think was we went
• 1:01:14
  Speaker 3: into another shock after COVID, and I think, you know, J.
• 1:01:18
  Speaker 3: Powell made a mistake. He's frankly, he's not an economist,
• 1:01:22
  Speaker 3: and he misread a supply shock to the economy as
• 1:01:25
  Speaker 3: a potential demand shock. So we took all these tools
• 1:01:29
  Speaker 3: off the shelves that Bernanki and yelling it created and
• 1:01:32
  Speaker 3: threw them at the COVID shock, which was a supply shock,
• 1:01:35
  Speaker 3: overstimulated demand and we got inflation. So, yes, that was
• 1:01:39
  Speaker 3: a mistake.
• 1:01:39
  Speaker 2: You're putting more of that on the FED than the
• 1:01:42
  Speaker 2: massive fiscal stimulus from Karzact one and two under Trump,
• 1:01:46
  Speaker 2: Karzac three, and all the various spending bills under Biden.
• 1:01:50
  Speaker 2: You think that was more monetary than fiscal.
• 1:01:52
  Speaker 3: I think it was all of these things combined.
• 1:01:54
  Speaker 2: Okay, that's fair.
• 1:01:55
  Speaker 3: It was. And by the way, the other thing that
• 1:01:57
  Speaker 3: the FED and the Trump administration did intentionally was decided
• 1:02:02
  Speaker 3: we're not just going to bail out the banks this time,
• 1:02:04
  Speaker 3: We're going to bow out the little guys. That's why
• 1:02:06
  Speaker 3: everybody got those checks. Everyone was reliving the trauma of
• 1:02:10
  Speaker 3: the two thousand and eight financial crisis when they made
• 1:02:12
  Speaker 3: these decisions that created a whole new trauma. My mom
• 1:02:16
  Speaker 3: was a historian and she talked about the kaleidoscope of history.
• 1:02:20
  Speaker 3: So the configuration is constantly turning and growing out of
• 1:02:24
  Speaker 3: whatever last configuration we were in. The FEDS made a mistake,
• 1:02:28
  Speaker 3: a discreete mistake, and the mistake in two thousand and
• 1:02:32
  Speaker 3: I'm sorry twenty twenty twenty twenty one was over stimulating
• 1:02:35
  Speaker 3: in the face of a suppleas shock, but to get
• 1:02:39
  Speaker 3: to come more to you know. And I think one
• 1:02:41
  Speaker 3: of the problems that economists have is they call certain
• 1:02:44
  Speaker 3: things like a law or a rule, and they think
• 1:02:48
  Speaker 3: when they once it's called a law or rule, then
• 1:02:50
  Speaker 3: it must always be true, right the psalm rule. Claudia
• 1:02:53
  Speaker 3: Sam brilliant economists, wonderful person, you know, she noticed a
• 1:02:58
  Speaker 3: correlation between that's, you know, a certain moments when the
• 1:03:00
  Speaker 3: unemployment rate rises a certain amount of i think a
• 1:03:03
  Speaker 3: half percentage point over a six month period, it tends
• 1:03:06
  Speaker 3: to keep going up. That's like in a historical observation.
• 1:03:10
  Speaker 3: It's not a law written into rules about never.
• 1:03:13
  Speaker 2: From a zero percent interest rate and a sub four
• 1:03:16
  Speaker 2: percent unemployment rate, like when yeah, where some rule didn't
• 1:03:21
  Speaker 2: work was coming from levels that historically had never existed.
• 1:03:25
  Speaker 3: Yeah, so yeah, you have to look at the situation
• 1:03:30
  Speaker 3: you're in right now, and these rules of thumb and
• 1:03:33
  Speaker 3: people do you know, they're like, oh, GDP contracted, you know,
• 1:03:36
  Speaker 3: we're close to it. I think you have to look
• 1:03:38
  Speaker 3: at the situation you're in and make the most sense
• 1:03:42
  Speaker 3: of it that you can. So where are we right now?
• 1:03:44
  Speaker 3: So growth has proven to be more resilient than a
• 1:03:47
  Speaker 3: lot of people expected. But employment is slowing down, inflation
• 1:03:52
  Speaker 3: is above the FEDS two percent target. What sense do
• 1:03:57
  Speaker 3: I make of this? I think that the economy has
• 1:04:00
  Speaker 3: slowed down a little bit. But coinciding with all this
• 1:04:03
  Speaker 3: uncertainty from the tariff shock is we're going through an
• 1:04:06
  Speaker 3: investment boom. We're going through, you know, a technology driven
• 1:04:10
  Speaker 3: investment boom right now, which by the way, could hurt
• 1:04:13
  Speaker 3: labors and workers in the long run, and maybe we're
• 1:04:16
  Speaker 3: seeing some of that as we speak. By the way,
• 1:04:19
  Speaker 3: I also think that if the demand for capital is
• 1:04:22
  Speaker 3: rising for investment in AI and data centers, higher demand
• 1:04:27
  Speaker 3: for capital should mean a higher equilibrium interest rate, a
• 1:04:30
  Speaker 3: higher cost of capital. Right, If the demand for capital
• 1:04:33
  Speaker 3: is higher, then the price for capital should be higher.
• 1:04:36
  Speaker 3: And you know, but the FED is being asked to
• 1:04:38
  Speaker 3: respond to a labor market that's softening. You know. My
• 1:04:43
  Speaker 3: own concern is that the FED, is that the FED
• 1:04:48
  Speaker 3: is going to ease into the slowdown in the job
• 1:04:50
  Speaker 3: market when the financial markets are on fire, when it
• 1:04:55
  Speaker 3: thinks the risk free rate is lower than it actually is,
• 1:05:00
  Speaker 3: and when they're still an inflation problem, and they're gonna
• 1:05:03
  Speaker 3: light even more of a fire into these markets, which
• 1:05:06
  Speaker 3: might feel good for a few months for you know,
• 1:05:09
  Speaker 3: as we saw, and they're only two thousands, late nineties,
• 1:05:11
  Speaker 3: go on for years, but those situations often don't end well.
• 1:05:15
  Speaker 2: So you I want to combine two of the things
• 1:05:18
  Speaker 2: you said. You mentioned we're above the feds two percent
• 1:05:21
  Speaker 2: inflation target, But why is that a rule? If you
• 1:05:25
  Speaker 2: look at the two thousands, two thousand and ten tens era,
• 1:05:30
  Speaker 2: two percent was an upside monetary target. Yeah, from below.
• 1:05:35
  Speaker 2: Now we've kind of pivoted into a fiscal stimulus era. Yeah,
• 1:05:40
  Speaker 2: two percent is a downside target.
• 1:05:42
  Speaker 3: Yeah.
• 1:05:42
  Speaker 2: Should you have the same inflation target in the twenty
• 1:05:46
  Speaker 2: twenties that you had in the two thousands and twenty tens.
• 1:05:49
  Speaker 3: Yes, one hundred percent. It should be immutable, so it
• 1:05:53
  Speaker 3: should always be percent, because it is now and it's
• 1:05:57
  Speaker 3: in everybody's interest to keep it there. And here's why.
• 1:05:59
  Speaker 3: So we have a fiat currency, right and so you know,
• 1:06:04
  Speaker 3: if you go back two hundred years, three hundred years,
• 1:06:06
  Speaker 3: the anchor for that currency was was gold. You know,
• 1:06:12
  Speaker 3: people would say your money is as good as gold
• 1:06:14
  Speaker 3: if you if you had a dour today, you could
• 1:06:16
  Speaker 3: buy x number of ounces with that door today. That
• 1:06:19
  Speaker 3: was the anchor for the currency. Gold doesn't work as
• 1:06:22
  Speaker 3: an anchor for the currency. In my humble opinion, do
• 1:06:24
  Speaker 3: you know that Americans spend about the last time I
• 1:06:28
  Speaker 3: looked at this, about as much money every year on
• 1:06:30
  Speaker 3: dry cleaning as they spend on gold. And do you
• 1:06:34
  Speaker 3: know that the that the that the largest producers of
• 1:06:37
  Speaker 3: gold in the world include countries like Russia and South
• 1:06:42
  Speaker 3: Africa and Venuzu not the most stable producers. So like,
• 1:06:46
  Speaker 3: so why would we anchor our currency to to an
• 1:06:50
  Speaker 3: idea like like gold? What you want to have an anchor? Now,
• 1:06:54
  Speaker 3: so the inflation target, what inflation is is an anchor
• 1:06:59
  Speaker 3: that you know you're dollar is going to be worth
• 1:07:03
  Speaker 3: a known and set amount every single year. It is.
• 1:07:07
  Speaker 3: The two percent inflation target is the gold standard of
• 1:07:10
  Speaker 3: the past. And in my mind, it's a more sensible
• 1:07:13
  Speaker 3: gold standard because it touches a wider array of what
• 1:07:16
  Speaker 3: it costs us to live. So then the question becomes, well,
• 1:07:19
  Speaker 3: hy two percent? Well, so the answer is because that's
• 1:07:23
  Speaker 3: what they chose because and you know, and this actually
• 1:07:26
  Speaker 3: I go through this in my book about Yellen. But
• 1:07:28
  Speaker 3: you know, well, why shouldn't it be zero? Well, the
• 1:07:30
  Speaker 3: fear is. The fear was that if your anchor is zero,
• 1:07:34
  Speaker 3: then interest rates are always very low. And when you
• 1:07:37
  Speaker 3: get to a point where the economy is slow is
• 1:07:39
  Speaker 3: slowing down like a depression or recession, unemployment is rising,
• 1:07:43
  Speaker 3: the central bank can't do anything exactly what we live
• 1:07:45
  Speaker 3: through in the eight period. You need to have the
• 1:07:48
  Speaker 3: inflation number a little bit above zero. We want you
• 1:07:53
  Speaker 3: want it low, but you wanted something above zero so
• 1:07:55
  Speaker 3: that the Fed has a little wiggle room to support
• 1:07:57
  Speaker 3: the economy in a crisis. That's the idea. So you
• 1:08:00
  Speaker 3: could say, well, it should have been three percent, it
• 1:08:02
  Speaker 3: should have been four percent, okay, but we chose two percent.
• 1:08:05
  Speaker 3: And once you've chosen it, then it's very hard to say, like,
• 1:08:09
  Speaker 3: we choose something else. Now.
• 1:08:11
  Speaker 2: I read a paper by former FED Vice chair Roger
• 1:08:15
  Speaker 2: Ferguson about the two percent target, and Ferguson said, it's
• 1:08:21
  Speaker 2: a random number that came out of New Zealand's where
• 1:08:24
  Speaker 2: someone just happened to be talking about inflation in the
• 1:08:28
  Speaker 2: nineteen eighties and they tossed out two percent. And that's
• 1:08:32
  Speaker 2: the history of it. It traces to a New Zealand
• 1:08:34
  Speaker 2: banker discussion first fifty.
• 1:08:36
  Speaker 3: Years, first mover advantage. There was, there was, there was
• 1:08:39
  Speaker 3: certainly an element to it. But I want to say
• 1:08:41
  Speaker 3: something else about it because people sometimes make this argument that,
• 1:08:44
  Speaker 3: you know, why should you accept any inflation where we're
• 1:08:47
  Speaker 3: debasing our currency. The currency today is worth five percent
• 1:08:51
  Speaker 3: of what it was worth ten percent of what it
• 1:08:53
  Speaker 3: was worth, you know in nineteen thirteen when the Fed
• 1:08:57
  Speaker 3: was creative. But like you had, like in my mind,
• 1:09:00
  Speaker 3: what matters is the purchasing power of an hour of
• 1:09:03
  Speaker 3: your labor. Right, So exactly, if inflation is going up
• 1:09:06
  Speaker 3: two percent a year, okay, that's one thing. If you're
• 1:09:09
  Speaker 3: earning three percent of year for your labor, if you're
• 1:09:12
  Speaker 3: earning five percent a year for your capital, then you're
• 1:09:16
  Speaker 3: getting ahead. And it would be impossible for anyone to
• 1:09:19
  Speaker 3: argue to me that the human condition is I mean
• 1:09:23
  Speaker 3: on many levels, maybe psychological. I can't make this case,
• 1:09:26
  Speaker 3: but the human condition is worse today than it was
• 1:09:30
  Speaker 3: in nineteen thirteen. Of course, well like America became a
• 1:09:33
  Speaker 3: world superpower in nineteen So it's just it doesn't make
• 1:09:36
  Speaker 3: sense to me when people say you're debasing the currency,
• 1:09:39
  Speaker 3: Like what I want to say is against what measure.
• 1:09:43
  Speaker 3: Here's another Like when I was covering the.
• 1:09:45
  Speaker 2: Dollar is not supposed to be a permanent store of value.
• 1:09:49
  Speaker 2: It's a medium of exchange. If you're holding on to
• 1:09:51
  Speaker 2: a dollar for a century, you've made some financial errors.
• 1:09:55
  Speaker 2: That's not what you're supposed to do.
• 1:09:57
  Speaker 3: People used to always say to me, and I used
• 1:09:59
  Speaker 3: to hear them say when I was covering the FED,
• 1:10:01
  Speaker 3: that the FED is destroying the value of the dollar,
• 1:10:04
  Speaker 3: And like, I spent a lot of time. This gets
• 1:10:06
  Speaker 3: to something I think we're going to think about, like, well,
• 1:10:08
  Speaker 3: so what does that mean when the Fed? Like one
• 1:10:11
  Speaker 3: of my principles for writing was like I need to
• 1:10:14
  Speaker 3: be able to break things down to their to their
• 1:10:17
  Speaker 3: like their their core, meaning, like, what does it mean
• 1:10:20
  Speaker 3: when you say that the FED is destroying the value
• 1:10:23
  Speaker 3: of the currency.
• 1:10:24
  Speaker 2: They're dimasing it?
• 1:10:25
  Speaker 3: Yeah?
• 1:10:26
  Speaker 2: Yeah, but like a metal, precious metal.
• 1:10:28
  Speaker 3: But you know, so you couldn't say that like kind
• 1:10:30
  Speaker 3: of relative to other currencies, because the dollar was going up.
• 1:10:33
  Speaker 3: And while it's you know, the purchasing power of a
• 1:10:36
  Speaker 3: dollar today was going down. The purchasing power of your
• 1:10:38
  Speaker 3: income exactly is long. And this again brings me back
• 1:10:42
  Speaker 3: to the revolution, because this is also technological revolution. A
• 1:10:46
  Speaker 3: lot of working class Americans got left behind during this
• 1:10:50
  Speaker 3: era of technology and globalization. And what happened was the
• 1:10:54
  Speaker 3: purchasing power of their labor declined. It wasn't the FED
• 1:10:59
  Speaker 3: that did that from inflation. Inflation was very stable. The
• 1:11:02
  Speaker 3: purchasing power of the labor declined because they were competing
• 1:11:05
  Speaker 3: against you know, low wage workers in Mexico and China,
• 1:11:09
  Speaker 3: and because they were competing against machines that were replacing
• 1:11:11
  Speaker 3: them in the workplace. And so it is true. It
• 1:11:14
  Speaker 3: is a fact, and this is another part of the
• 1:11:16
  Speaker 3: revolution which is related and potentially intensifying. We've lived for
• 1:11:22
  Speaker 3: twenty five years into this kind of post industrial information
• 1:11:27
  Speaker 3: driven economy, and what we know about this is that
• 1:11:32
  Speaker 3: it exaggerates inequality, It concentrates wealth among very few people,
• 1:11:37
  Speaker 3: and a lot of people are being left behind. And
• 1:11:40
  Speaker 3: the question is and how do you like preserve the
• 1:11:42
  Speaker 3: value of the dollar. It's how do you preserve the
• 1:11:45
  Speaker 3: value of an hour of your work? You know, how
• 1:11:48
  Speaker 3: do you find work that's going to keep you keep
• 1:11:51
  Speaker 3: your family fed and get your kids through school and
• 1:11:53
  Speaker 3: you know, get you your trip to Disneyland.
• 1:11:56
  Speaker 2: You know, the federal government dropped the ball. And we
• 1:11:59
  Speaker 2: see it in some specific industries like if you're shutting
• 1:12:03
  Speaker 2: coal mines in West Virginia, well you have to retrain
• 1:12:06
  Speaker 2: those people to do something else. And if you work
• 1:12:10
  Speaker 2: in a furniture factory, a garment factory, any of the
• 1:12:14
  Speaker 2: low end manufacturing businesses that all left, those people have
• 1:12:19
  Speaker 2: to be retrained.
• 1:12:20
  Speaker 4: Well.
• 1:12:20
  Speaker 3: But so yes, so, I mean I kind of I wrote,
• 1:12:22
  Speaker 3: I wrote a lot about this, and we did, but
• 1:12:24
  Speaker 3: it's not It wasn't as if we didn't recognize we
• 1:12:30
  Speaker 3: I mean, all right, I'll just say it. The elites
• 1:12:33
  Speaker 3: who were driving the bus, uh didn't recognize that there
• 1:12:37
  Speaker 3: was a challenge there. You know, there was a Trade
• 1:12:41
  Speaker 3: Adjustment Act, right, there were facilities that were meant to
• 1:12:44
  Speaker 3: get people retrained.
• 1:12:47
  Speaker 2: Uh.
• 1:12:48
  Speaker 3: And then and there was a vast American community college
• 1:12:50
  Speaker 3: system which was meant to be a vehicle to get
• 1:12:53
  Speaker 3: people retrained. But I talked to people from manufacturing, you know,
• 1:12:56
  Speaker 3: from furniture plants and Hickory, which is one of my
• 1:12:59
  Speaker 3: favorite and nowlogies for America because Hickory, North Carolina is
• 1:13:03
  Speaker 3: right next to Charlotte. One's a banking center, one was
• 1:13:05
  Speaker 3: a furniture center. One went one way, one went red,
• 1:13:08
  Speaker 3: one went blue, one did better, one did worse. Anyway. Yeah,
• 1:13:12
  Speaker 3: I talked to people in these plants and Hickory, and
• 1:13:14
  Speaker 3: they're like, you know, I didn't finish high school. Now
• 1:13:17
  Speaker 3: you're telling me to go out. I'm fifty years old.
• 1:13:20
  Speaker 3: I got I gotta go and re educate myself. And
• 1:13:23
  Speaker 3: then like for the people who actually went through it
• 1:13:25
  Speaker 3: and did it, You're like, I was making twenty five
• 1:13:28
  Speaker 3: dollars an hour with bent, with a pension and health benefits.
• 1:13:32
  Speaker 3: Now I'm a phlebotomist. You know, I'm pulling blood out
• 1:13:35
  Speaker 3: of people's veins, making twelve dollars an hour at a hospital.
• 1:13:40
  Speaker 3: It didn't work for them, and the you know, this
• 1:13:44
  Speaker 3: was one of the great errors of the economics and
• 1:13:47
  Speaker 3: economic policy profession of the last twenty five years is
• 1:13:50
  Speaker 3: they didn't think that stuff through and the politics didn't
• 1:13:54
  Speaker 3: really weren't conducive to addressing that problem, but it and
• 1:13:58
  Speaker 3: this is my this is one of my kind warnings,
• 1:14:01
  Speaker 3: warnings for politicians, say, I don't see how anyone is
• 1:14:04
  Speaker 3: fixing that underlying problem that we live in a post
• 1:14:07
  Speaker 3: industrial economy that bifurcates wealth and income. And frankly, I
• 1:14:12
  Speaker 3: don't think it's realistic to expect we're going to reindustrialize
• 1:14:16
  Speaker 3: this country.
• 1:14:17
  Speaker 2: Even if we do, it'll be automated.
• 1:14:19
  Speaker 3: It's going to be exactly it's it's it's going to
• 1:14:21
  Speaker 3: be machines, and we're moving out of an industrial ear,
• 1:14:25
  Speaker 3: you know. So the so my question is like, how
• 1:14:28
  Speaker 3: do you I talk to an economist David Otter, who's
• 1:14:31
  Speaker 3: thought a lot about this stuff. He wrote the papers
• 1:14:34
  Speaker 3: about the China shock. You know, our work is not
• 1:14:38
  Speaker 3: only a source of kind of fulfillment and income, but
• 1:14:41
  Speaker 3: but the way we work is also the way we
• 1:14:43
  Speaker 3: distribute wealth and income. And so if the whole nature
• 1:14:47
  Speaker 3: of work is changing because of technology, then like, are
• 1:14:51
  Speaker 3: we thinking about how we're going to manage the distributional
• 1:14:54
  Speaker 3: effects of that? And I'm not like saying this as
• 1:14:56
  Speaker 3: some kind of you know, screaming, bleeding hord liberal. I
• 1:15:01
  Speaker 3: mean Donald Trump actually got elected because of the disaffected
• 1:15:05
  Speaker 3: American working class. And I don't think either party has
• 1:15:08
  Speaker 3: has actually gotten their hands around it. I wrote a
• 1:15:11
  Speaker 3: book about Jenny All, and I talked a lot of time,
• 1:15:13
  Speaker 3: spent a lot of time talking to Democrats about this.
• 1:15:16
  Speaker 3: I don't think any of these people have gotten their
• 1:15:18
  Speaker 3: hands around how do we navigate this, like this revolution
• 1:15:21
  Speaker 3: that we're going through the economic post industrial revolution.
• 1:15:25
  Speaker 2: So so I have one last question I'm going to
• 1:15:28
  Speaker 2: ask you before we get to our favorite questions we
• 1:15:31
  Speaker 2: ask old guests. Okay, but you've been alluding at it,
• 1:15:33
  Speaker 2: so feel free to go back to a previous conversation.
• 1:15:38
  Speaker 2: What do you think investors are not talking about but
• 1:15:42
  Speaker 2: should be. It could be a policy issue, an asset class,
• 1:15:46
  Speaker 2: a data point.
• 1:15:47
  Speaker 3: That that's it.
• 1:15:48
  Speaker 2: But I think it's yeah, that's why it's the it's.
• 1:15:50
  Speaker 3: The inequality issue because and when I said, I don't
• 1:15:53
  Speaker 3: want to use I don't want to use the word
• 1:15:55
  Speaker 3: inequality in like the kind of conventional politically divisive way.
• 1:16:00
  Speaker 3: What what I mean is that you know, an economy
• 1:16:04
  Speaker 3: creates income and wealth, and how that income and wealth
• 1:16:08
  Speaker 3: is distributed distributed across the population is a result of
• 1:16:12
  Speaker 3: the way. And and by the way.
• 1:16:14
  Speaker 2: There is for a chart on this exact.
• 1:16:16
  Speaker 3: There is there is no law. There is no rule
• 1:16:19
  Speaker 3: in economics that says that wealth and income will be
• 1:16:26
  Speaker 3: distributed in a fixed or predictable way. You know, the
• 1:16:30
  Speaker 3: agricultural era, uh what did not create an economic system
• 1:16:36
  Speaker 3: or that that distributed wealth and income equally. It was
• 1:16:41
  Speaker 3: very unequal. You had kings and queens and peasants, right.
• 1:16:45
  Speaker 3: It just so happened that the industrial economy distributed created
• 1:16:48
  Speaker 3: a vast middle class because you needed people attached to
• 1:16:51
  Speaker 3: machines to make the stuff that made our lives more comfortable.
• 1:16:55
  Speaker 3: But there's no rule that I see that says, moving
• 1:16:57
  Speaker 3: into a post industrial, high tech world, that this whole
• 1:17:01
  Speaker 3: new world is going to distribute income and wealth in
• 1:17:04
  Speaker 3: the same way. And so my question is what are
• 1:17:06
  Speaker 3: we doing about that? And by the way, I think
• 1:17:08
  Speaker 3: the institutions we talked about norms before, the institutions that
• 1:17:13
  Speaker 3: we've created over the last two hundred years, we're built
• 1:17:16
  Speaker 3: for an industrial economy. Our tax base, our voting systems,
• 1:17:21
  Speaker 3: everything is built for an industrial you know. So to me,
• 1:17:23
  Speaker 3: the big existential question is, you know, how are we
• 1:17:27
  Speaker 3: going to manage the distributional effects of income and wealth
• 1:17:33
  Speaker 3: creation and a high tech, high information economy.
• 1:17:36
  Speaker 2: I saw a table this morning. I can't I can't
• 1:17:39
  Speaker 2: find it now, but it basically shows a number of
• 1:17:43
  Speaker 2: industrialized countries and what percentage of their workforce is below
• 1:17:52
  Speaker 2: the median income and the US and UK are substantially
• 1:17:59
  Speaker 2: I think something like twenty three twenty four percent substantially below.
• 1:18:03
  Speaker 2: You look at other countries like Japan, the difference between
• 1:18:06
  Speaker 2: the mean and the median isn't that big. And when
• 1:18:10
  Speaker 2: you have a very skewed distribution like you're describing, that
• 1:18:14
  Speaker 2: gap gets bigger and bigger. So I'll dig up that table.
• 1:18:17
  Speaker 3: Well, you said it to me, I'd love to see.
• 1:18:18
  Speaker 2: I'll say, I'll share it with you and I'll post
• 1:18:21
  Speaker 2: it when we when we this goes live. But it's
• 1:18:24
  Speaker 2: kind of fascinating because you don't think of the country
• 1:18:27
  Speaker 2: that way. And when you look at what was it
• 1:18:30
  Speaker 2: the Z one flow of funds that the Fed puts
• 1:18:32
  Speaker 2: out good one, you can see that gap getting bigger
• 1:18:37
  Speaker 2: and bigger, especially since the nineties. I mentioned unintended consequences.
• 1:18:43
  Speaker 2: Some legislation passed by the Clinton administration to cap executive
• 1:18:47
  Speaker 2: compensation at I want to say it was a million
• 1:18:49
  Speaker 2: dollars or two million dollars that just led to massive
• 1:18:53
  Speaker 2: equity compensation.
• 1:18:54
  Speaker 3: Right, help drive and by the way, accounting fraud, that's right,
• 1:18:58
  Speaker 3: that's right.
• 1:18:59
  Speaker 2: So not only did you are you driving people to
• 1:19:01
  Speaker 2: hyper focus on the quarterly calls leading to some quarterly
• 1:19:04
  Speaker 2: yearnings leading to some monkey business, but people getting paid
• 1:19:09
  Speaker 2: in equity we're making and so that.
• 1:19:11
  Speaker 3: From political perspective, for Republicans, how are you going to
• 1:19:14
  Speaker 3: take care of the working class? Are these promises about reindustrialization?
• 1:19:21
  Speaker 3: Can you realize them? And for the Democrats, how are
• 1:19:23
  Speaker 3: you going to win people back? Because they lost them
• 1:19:25
  Speaker 3: Donald Trump took them from him. Well, the question is,
• 1:19:28
  Speaker 3: and by the way, is terms of the FED. All
• 1:19:29
  Speaker 3: the FED can ever do is make a mistake. It's
• 1:19:32
  Speaker 3: like his job is to prevent financial crises and keep
• 1:19:35
  Speaker 3: inflation stable. Like people love to attack the FED because
• 1:19:40
  Speaker 3: you know, you only notice it when it's screwing something up.
• 1:19:44
  Speaker 2: So and and by the way, for getting things right.
• 1:19:46
  Speaker 3: One other thing about the FED is, you know, I
• 1:19:50
  Speaker 3: live in Washington, d C. It's this place where like
• 1:19:55
  Speaker 3: people like ninety percent of people, what they're doing you know,
• 1:20:00
  Speaker 3: time is spinning you and trying to get you to
• 1:20:03
  Speaker 3: believe his story that's in their personal or institutional economic interests.
• 1:20:09
  Speaker 3: The Fed is out there trying to tell people what
• 1:20:11
  Speaker 3: it thinks it's going to do. Like you could give
• 1:20:13
  Speaker 3: them a hard time for making mistakes. I've just said
• 1:20:16
  Speaker 3: I think J. Powell made mistakes, but like, at least
• 1:20:20
  Speaker 3: they're trying to be honest about what they're up to.
• 1:20:22
  Speaker 3: I got to answer, and so many other people in
• 1:20:24
  Speaker 3: Washington are trying to mislead you. You know, I admire
• 1:20:26
  Speaker 3: them for trying to be straight.
• 1:20:28
  Speaker 2: I got to ask you a question. You've lived in
• 1:20:29
  Speaker 2: New York, you've lived in Washington, d C. Which town
• 1:20:33
  Speaker 2: is more transactional.
• 1:20:35
  Speaker 3: Oh oh, that's a good question. I didn't think you
• 1:20:37
  Speaker 3: were going in that. They're both transactional. But the difference
• 1:20:40
  Speaker 3: is in New York is a transactional town, and everyone's
• 1:20:44
  Speaker 3: looking out for their own interests, and everybody knows that, right,
• 1:20:49
  Speaker 3: and everybody knows that and accepts that is like the
• 1:20:51
  Speaker 3: rules of the game. Right in Washington, it's all transactional
• 1:20:56
  Speaker 3: and everyone's out for their own interests. But they're trying
• 1:20:58
  Speaker 3: to make you believe that they're doing it for you,
• 1:21:01
  Speaker 3: and and and that's why it all looks so hypocritical,
• 1:21:05
  Speaker 3: because like they're yes, they're totally transactional, and they're totally
• 1:21:08
  Speaker 3: trying to advance their party or their power or their
• 1:21:12
  Speaker 3: their you know, fundraising, but they're trying to make you
• 1:21:15
  Speaker 3: believe that they're doing it for you, to help you
• 1:21:17
  Speaker 3: so that your children will be better off.
• 1:21:19
  Speaker 2: Right.
• 1:21:20
  Speaker 3: And I'm sorry, I've got I've grown a little cynical
• 1:21:22
  Speaker 3: about No, I m I much prefer being in New York.
• 1:21:25
  Speaker 2: I asked that question because I had a feeling you're
• 1:21:27
  Speaker 2: going to go that way. New York. There's no pretending Yeah,
• 1:21:31
  Speaker 2: it's transactional because it's the center of US capitalism. DC
• 1:21:37
  Speaker 2: is something else.
• 1:21:37
  Speaker 3: Yeah, And like New York is traders, and it always
• 1:21:40
  Speaker 3: has been, Washington is lawyers. Here's my other New York
• 1:21:43
  Speaker 3: Washington analogy. If you're driving down the street in New York,
• 1:21:47
  Speaker 3: although you can anymore because there's so much traffic, if
• 1:21:50
  Speaker 3: you kind of move in and out of one lane,
• 1:21:52
  Speaker 3: if you kind of overstep your bounds, someone will honk
• 1:21:55
  Speaker 3: the horn, give you the finger, and keep driving. Right.
• 1:21:58
  Speaker 3: If you do that in Washington instead of giving you
• 1:22:01
  Speaker 3: their middle finger. They'll point their pointing finger. They'll wag
• 1:22:04
  Speaker 3: their finger at you and tell you you broke a
• 1:22:06
  Speaker 3: rule and then like threatened to turn you in. And then,
• 1:22:09
  Speaker 3: by the way, there are speed cameras everywhere. It's a
• 1:22:12
  Speaker 3: little bit more oppressive ever place.
• 1:22:14
  Speaker 2: I think, really amusing. All right, so I only have
• 1:22:17
  Speaker 2: you for a certain amount of time. Let's jump to
• 1:22:19
  Speaker 2: our favorite questions we ask all of our guests, starting
• 1:22:22
  Speaker 2: with who are your mentors who helped shape your career?
• 1:22:27
  Speaker 3: Well, so, I'd have to say one of my most
• 1:22:29
  Speaker 3: important important mentors at the Journal was a guy named
• 1:22:32
  Speaker 3: David Wessel, who covered the David Wessel covered the fad
• 1:22:37
  Speaker 3: in the nineteen nineties, was just like an institution in
• 1:22:40
  Speaker 3: economics and economic policy coverage. He gave me chances and
• 1:22:44
  Speaker 3: he was usually nice to me. So yeah, he's a
• 1:22:48
  Speaker 3: tough boss too. Dave Wessell was a great guy and
• 1:22:50
  Speaker 3: my best friend at the Journal all those years was
• 1:22:54
  Speaker 3: a guy named Bob Davis. Gentleman, good guy, great reporter.
• 1:22:58
  Speaker 2: Number one in terms of one bylines.
• 1:23:01
  Speaker 3: Yeah, man, I And and by the way, Nick tim
• 1:23:03
  Speaker 3: Rose is going to pass me pretty Oh really, I'm
• 1:23:05
  Speaker 3: sure I have I don't know the numbers, but I'm Nick.
• 1:23:08
  Speaker 3: Nick is my successor, uh covering the FED. He'll pass me,
• 1:23:13
  Speaker 3: but I don't know he's gonna catch Bob Davis.
• 1:23:15
  Speaker 2: That's amazing. Let's talk about books. What are some of
• 1:23:18
  Speaker 2: your favorites. What are you reading?
• 1:23:19
  Speaker 3: Well, I've been reading. I've alluded to this. I've been
• 1:23:21
  Speaker 3: reading a bunch about the French Revolution. I'm also reading
• 1:23:24
  Speaker 3: the book Sapiens, but I can't remember his full name. Harari. Yeah,
• 1:23:29
  Speaker 3: you'v all Harari. It's a pretty bleak perspective on humanity,
• 1:23:33
  Speaker 3: very I think I. I think I. I'm a little
• 1:23:36
  Speaker 3: more optimistic about our species and its intentions, but there's
• 1:23:42
  Speaker 3: interesting insights in there. Like I The reason I picked
• 1:23:45
  Speaker 3: it up is I think that humans have these kind
• 1:23:49
  Speaker 3: of primitive brains with primitive mcdowah and emotion centers. We
• 1:23:55
  Speaker 3: have an industrial area era economic and political structures, and
• 1:24:01
  Speaker 3: we're living with twenty third century technology, and I'm trying
• 1:24:06
  Speaker 3: to understand the primitive parts and how that might interact
• 1:24:09
  Speaker 3: with all this other thing.
• 1:24:10
  Speaker 2: You keep bringing stuff up. I have chapters in a
• 1:24:13
  Speaker 2: book for you that you're going to love. What do
• 1:24:15
  Speaker 2: you remember the name of the French Revolution book. You
• 1:24:19
  Speaker 2: know you're putting email to me, I'll dig it up
• 1:24:21
  Speaker 2: and you crack me up. Comparing DC to a city
• 1:24:25
  Speaker 2: of lawyers versus New York as a city of traders.
• 1:24:29
  Speaker 2: I'm going to share a book title with you called
• 1:24:32
  Speaker 2: Breakneck China's Rush to Build the Future by Dan Wang,
• 1:24:38
  Speaker 2: and he compares China versus the US. The US as
• 1:24:42
  Speaker 2: a country of lawyers, China as a country of engineers,
• 1:24:47
  Speaker 2: which is why they could put up as much stuff
• 1:24:50
  Speaker 2: as they do, as fast as they do.
• 1:24:53
  Speaker 3: But we're also a country of entrepreneurs.
• 1:24:55
  Speaker 2: For sure, for sure, and we're not just a lot
• 1:24:57
  Speaker 2: of state dictated although I was going to say not
• 1:25:00
  Speaker 2: a state dictated of industrial policy, but that's.
• 1:25:03
  Speaker 3: Just so, you know, So this is another thing that
• 1:25:05
  Speaker 3: I just have them having a hard time getting my
• 1:25:07
  Speaker 3: head around. So, like, China's economy is really struggling right now.
• 1:25:10
  Speaker 3: They definitely pushed us, they challenged us. You know, we
• 1:25:14
  Speaker 3: were our workers were hurt by the incursion of china imports.
• 1:25:19
  Speaker 3: But we're you know, on many measures. You know, we're
• 1:25:23
  Speaker 3: still doing all right and winning, but we basically conceded
• 1:25:26
  Speaker 3: to China's economic model. It's like we're loving we're moving
• 1:25:30
  Speaker 3: towards the state run capital is state run capitalism, which
• 1:25:33
  Speaker 3: is you know, it's it's hard for me to get
• 1:25:36
  Speaker 3: my head around the idea that we've given up on
• 1:25:39
  Speaker 3: a system and a project of democratic capitalism, and that
• 1:25:44
  Speaker 3: that's especially is democratic change, I should say, democratic free
• 1:25:48
  Speaker 3: market capitalism. You know, we seem to be having our
• 1:25:52
  Speaker 3: doubts about it. I guess what I would hope is
• 1:25:54
  Speaker 3: that we don't give up on it too fast.
• 1:25:57
  Speaker 2: I'm curious, is this a permanent it or is this Hey,
• 1:26:02
  Speaker 2: let the president have his ten percent of intel. But
• 1:26:06
  Speaker 2: he's this is his second term and he's almost eighty
• 1:26:09
  Speaker 2: and this is an aptive change, Like I've heard that
• 1:26:12
  Speaker 2: sort of vibe from people, and I don't know how
• 1:26:15
  Speaker 2: serious I think.
• 1:26:16
  Speaker 3: I think he and his followers and his lead the
• 1:26:19
  Speaker 3: leaders who were working with him are vulnerable on the
• 1:26:22
  Speaker 3: issue of inflation in the cost of living. Got he
• 1:26:25
  Speaker 3: got in there and in part because people were angry
• 1:26:28
  Speaker 3: about the inflation of the post COVID period. Back then
• 1:26:31
  Speaker 3: it was we're now doing a lot of We're doing
• 1:26:33
  Speaker 3: a lot of things right now. It's not just tariffs,
• 1:26:36
  Speaker 3: but with monetary policy pushing I guarantee you. If we
• 1:26:40
  Speaker 3: get the interest rate down to where the President wants it,
• 1:26:42
  Speaker 3: we're going to have inflation. And if we don't get inflation,
• 1:26:44
  Speaker 3: there's going to be an asset price boom. Where again,
• 1:26:47
  Speaker 3: this inequality thing, there's a few people who are going
• 1:26:49
  Speaker 3: to make a lot of money off of that. So
• 1:26:52
  Speaker 3: I mean, I think that they have a little bit
• 1:26:56
  Speaker 3: of an achilles heel in that issue.
• 1:26:58
  Speaker 2: Let's talk about street. What are you listening to in
• 1:27:01
  Speaker 2: terms of podcasts or watching on Netflix or Amazon product.
• 1:27:05
  Speaker 3: I watched a really cool show called Tehran, which was
• 1:27:08
  Speaker 3: about Israeli Mosat agents infiltrating Tehran. It was put out
• 1:27:13
  Speaker 3: a couple of two three years ago infiltrating Tehran to
• 1:27:18
  Speaker 3: blow up their nuclear reactors. I watched it like a
• 1:27:22
  Speaker 3: couple of months before they went and blew up their
• 1:27:25
  Speaker 3: you know, so that was really interesting. I'm also just
• 1:27:28
  Speaker 3: I'm a sports fanatic, so I don't really I don't
• 1:27:33
  Speaker 3: have to. I'll tell you what. I've stopped watching cable
• 1:27:35
  Speaker 3: television after been participating in it for a long time,
• 1:27:40
  Speaker 3: but if there's a game on them, yeah, I'm a
• 1:27:44
  Speaker 3: football fanatic.
• 1:27:46
  Speaker 2: Final two questions, what advice would you give a recent
• 1:27:49
  Speaker 2: college grad interested in a career in financial journalism.
• 1:27:54
  Speaker 3: Financial journalism. All right, so I've had this talk. This
• 1:27:57
  Speaker 3: is getting back to the whole printing press French revel thing.
• 1:28:00
  Speaker 3: I mean, I think it's clear that the journalism is
• 1:28:06
  Speaker 3: going through a period of exceptional disruption right now, right,
• 1:28:10
  Speaker 3: And so the choices that I was looking at when
• 1:28:13
  Speaker 3: I was coming into the field of like, you know,
• 1:28:15
  Speaker 3: how do I get to the Wall Street Journal? How
• 1:28:17
  Speaker 3: do I get to the New York Times? Like, it's
• 1:28:18
  Speaker 3: a different set of choices, And if you use the
• 1:28:22
  Speaker 3: kind of pamphleteers and analogy, you know, when you see what's
• 1:28:25
  Speaker 3: going on, look at you. You know you started a
• 1:28:28
  Speaker 3: podcast and you know this has become this great thing
• 1:28:31
  Speaker 3: for you. I say this to young people all the time.
• 1:28:34
  Speaker 3: Be think expansively and creatively about where these interests might
• 1:28:42
  Speaker 3: take you. You know, the core skill set of getting information,
• 1:28:48
  Speaker 3: distilling and making sense of the information and conveying information,
• 1:28:52
  Speaker 3: like that's the core of journalism. That's like that's more
• 1:28:54
  Speaker 3: essential than ever. But the way you're going to practice
• 1:28:58
  Speaker 3: those skills is going to be different than what I did.
• 1:29:01
  Speaker 3: And you know, like I had a young student that
• 1:29:04
  Speaker 3: I was working with and talking to with Duke a
• 1:29:07
  Speaker 3: few years ago. You know, she was going down the
• 1:29:09
  Speaker 3: whole newspaper route. She's now doing a true crime prodcast
• 1:29:12
  Speaker 3: in the Midwest, and so, you know, I think that
• 1:29:15
  Speaker 3: there's a lot of opportunity out there for people who
• 1:29:19
  Speaker 3: are willing to kind of take chances and be nimble.
• 1:29:21
  Speaker 3: And it's scary, but there's a lot of opportunity for
• 1:29:24
  Speaker 3: people who can be flexible and find the opportunities and
• 1:29:27
  Speaker 3: go for it. And I love being a journalist. I
• 1:29:31
  Speaker 3: would not take There's this ritual that journalists go through
• 1:29:34
  Speaker 3: where like experienced journalists are constantly trying to tell young
• 1:29:38
  Speaker 3: journalists don't do this, it's a terrible field, it's a
• 1:29:41
  Speaker 3: dying profession, and go become a lawyer, you know, blah blah.
• 1:29:44
  Speaker 3: I had a great experience, like I'm never going to
• 1:29:46
  Speaker 3: tell someone not to pursue that that dreamer, that interest
• 1:29:51
  Speaker 3: because it was so good to me. But you've got
• 1:29:54
  Speaker 3: to be willing to, you know, kind of take chances
• 1:29:56
  Speaker 3: and go down some roads you might not expect to go.
• 1:29:58
  Speaker 2: Down, recognize how the as this model has changed. Yea,
• 1:30:01
  Speaker 2: and our final question, what do you know about the
• 1:30:04
  Speaker 2: world of economics finance? Central banks today might have been
• 1:30:08
  Speaker 2: helpful twenty five or so years ago when you were
• 1:30:10
  Speaker 2: starting out thirty years ago.
• 1:30:12
  Speaker 3: Well, I mean, I guess the basic thing is just
• 1:30:14
  Speaker 3: that it's so much more interesting than I expected. I
• 1:30:16
  Speaker 3: didn't want to get into economics writing. I did. I
• 1:30:19
  Speaker 3: did by accident, and I stayed in it. I wanted
• 1:30:24
  Speaker 3: to be a war correspondent, and what I came to
• 1:30:28
  Speaker 3: see was that, like or a sports writer, that the
• 1:30:31
  Speaker 3: great battlefields and the great arenas that really affected the
• 1:30:35
  Speaker 3: human condition were in markets and economics. So I guess
• 1:30:41
  Speaker 3: what I would tell myself now was to go into
• 1:30:44
  Speaker 3: it with even more conviction because it turned out to
• 1:30:47
  Speaker 3: be so fascinating.
• 1:30:49
  Speaker 2: Really really interesting. Thank you, John for being so generous
• 1:30:52
  Speaker 2: with your time. We have been speaking with John Hilson Wrath,
• 1:30:56
  Speaker 2: former chief economics correspondent for The Wall Street Journal. Today
• 1:31:00
  Speaker 2: he runs Serpa Pinto Advisory. If you enjoy this conversation,
• 1:31:06
  Speaker 2: check out any of the five hundred and sixty seven
• 1:31:08
  Speaker 2: we've done over the past eleven years. You can find
• 1:31:11
  Speaker 2: those at Bloomberg, iTunes, Spotify, YouTube, wherever you find your
• 1:31:16
  Speaker 2: favorite podcast. Be sure to check out my new book,
• 1:31:20
  Speaker 2: How Not to Invest The ideas, numbers and behaviors that
• 1:31:24
  Speaker 2: destroy wealth and how to avoid them, how not to
• 1:31:27
  Speaker 2: invest at your favorite bookseller. Now, I would be remiss
• 1:31:31
  Speaker 2: if I didn't thank the Crack team that helps with
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  Speaker 2: these conversations together each week. Alexis Noriega is my video producer.
• 1:31:39
  Speaker 2: An A. Luke is my audio producer. Sean Russo is
• 1:31:43
  Speaker 2: my head of research. Sage Bauman is the head of
• 1:31:45
  Speaker 2: podcasts here at Bloomberg. I'm Barry Retultz. You've been listening
• 1:31:49
  Speaker 2: to Masters in Business on Bloomberg Radio.
• 1:32:00
  Speaker 1: Bass back