Great attendance with the wonderful diversity in her field. But today we come to one of our two major events of the year, our summer signature program. And i need to think to friends who sponsor and made todays great event worthwhile. First of all my friends and forum. In forum is a research and consulting progra firm that hasn open for 52 years and very much embodies the great tradition of innovated Economic Research at the university of maryland. Secondly our friends at the National Association of realtors, since 1908, they have been the voice of the Real Estate Community of washington and provided valuable Economic Data and research and the critical sector of the economy. With that in mind, with those organizations supporting us and with the large and distinguished audience behind us, we have come to a moment and i have to tell you, i cannot imagine a better marriage of a moment and a speaker then what we have today. Jim is really a man who embodies best the bark field. One of the joys of doing this, it was a hassle putting together and about like this but one of the joys of doing it is not just introduce the speaker but to think about what makes a person unique. He has used economic theory, highlevel economic theory to powerfully propel the thinking of the Federal Reserve forward in a way that will benefit all of america. That is benefiting all americans. At the same time, he is very much a man of his community. Hes a man of the people who are affected by his policies. He is the president and ceo of the st. Louis Federal Reserve. He also oversees the federal receipreserve including activitf headquarters and its branches in little rock arkansas, louisville kentucky and memphis, tennessee. I did not realize it had that many branches. He then noted economist. Every time he publishes a paper i think sinking moves forward. Only in his tenure, he talked about the possibility of a japanesestyle deflation in the paper. He argued strongly for something that may seemed like common sense but i never heard before that f moc deliberation on the calendar but by the data and need. During the crisis he advocated for inflation targeting, something that may have saved a lot of us. He is an active member in his community, he sits on the board of trustees of the united way. The board of directors of the st. Louis Regional Chamber and the board of directors on the academy and the leadership. And a list of other things that we simply do not have time to get into. He is a native of minnesota. He received a doctorate in economics in Indiana University in bloomington and holds a bachelor of science in economics and quantitative and Information Systems from st. Cloud university in st. Cloud minnesota. Now, let me tell you how a program is going to work today. He is going to speak and after that, my colleague is going to do an interview with him. Ed is a noted correspondent, a longtime Federal Reserve expert and a past president of the National Economy club. After that were going to spend some time taking audience questions, we asked respectfully because his time is limited and that you keep your questions concise. And we will do our best to address them respectfully. For now we are grateful for your time, we are very aware of the weightiness of the moment and we look forward to your insight. Ladies and gentle men jim mueller. [applause] gosh, what a great introduction. I think ill sit down. [laughter] because there can only be downhill from here. I do appreciate the opportunity being here at the National Press club in front of the nac and i am looking forward to hearing your comments on current Monetary Policy or whatever else you want to talk about about the u. S. Economy. I call this a seachange in u. S. Monetary policy so hopefully i can convince you of the dramatic changes that have already occurred in 2019 with respect to u. S. Monetary policy above and beyond the rate cut that we had last week. If you dont want to listen to the whole talk you can just read the slide. We made significant changes and Monetary Policy which many of you are aware beginning in january of this year, those changes were made in anticipation of Slower Growth in the u. S. Economy during 2019 which is materializing. I will talk about that during the talk. But also in anticipation of heightened and certainty with respect to trade policy, so i think we anticipated the idea that trade policy was going to be volatile, currently and Going Forward across the forecast horizon. I think we could do more at this point but we also have done a lot and what i would like to do is take some stock of what we had overly done and see how that impacts the economy and make decisions Going Forward. Thats my main point here in the third bullet point and we will talk about that in detail as they go through this talk. In the meantime inflation pressures certainly are muted in the u. S. Economy, ill talk a little bit about that we also have yield curve issues which are still with us. So were looking for those to get better as we go through the rest of this year and 2020. Let me talk about the argument of a change in u. S. Monetary policy and review what is happened since late 2018 when the story begins. In 2018, the interestrate environments are much different than it is right now and thats my point and gas. To the extent that i have one. I want you to focus just on the two year yield the treasury yield because that embodies both the current level of the policy rate but also the immediate outlook for the policy rate. If you look at the twoyear as of november, early november last year it was almost 3 . The ten year treasury was creating a yield of three and a quart a percent so the very different interestrate environment but the 3 Interest Rate reflected back that the policy rate had been increasing to 2017 and 2018 and the committee was projecting further increases in 2019 and 2020 and we still had a positive spread between the two year and the tenure. That was the situation at the beginning of the story. We raise the policy rate at the december meeting and projected further increases in 2019 but the story began to change with turp owls comments at the American Economics Association meeting in atlanta on january 4 and gradually through the First Six Months of 2019 the committee started project less and less of policy rate increases and also put together a plan to cease the runoff of Balance Sheet which now fully being implemented as of our last meeting decision. We did not change the policy rate at the june 19 meeting but we strongly suggested that rate reduction was forthcoming and the meeting we had last week we went ahead and followed their on that rate reduction. So, the main point here is that the whole interestrate structure is dramatically lower given the change. And if you look at the twoyear treasury it was trading about one and three quarters percent and that would be a decline of almost 125 basis points from early november reading. So i am pushing back against people, maybe some of you who said the 25 basis points, thats not enough in this environment and thats a small change and thats not going to move anything. That is not the way to read this. There has been as sh see changen Monetary Policy every large movement which are characterized this change in the twoyear period not only is a level change the outlook has to. That is what the twoyear is telling you. Its combining the two together. 125 basis points lower in the twoyear tenure trading deal, 186 on august 2, things are moving quickly here. Even today, the twoyear, tenure spread is still positive and that is because markets are expecting more action from the committee but the point is that the structure of shortterm rate dropped by 125 basis points to appoint the action, the longerterm rates fell in tandem and most the time when were describing the clients and customers we would say that the longerterm rates are more important for investments. It isnt but this is the case where the longerterm rate came in tandem with the shortterm rate and here were providing more monetary accommodations we did late last year. So, bottom line, u. S. Monetary policy quite a bit more accommodative than it was furthermore, lets off channel the fremont, the long and variable lags and the effect of Monetary Policy on the economy so these are developments that just happened over the last six months or so and you would not expect them to show up in the data right away. But i would expect them to begin to show up in the second half of 2019 about where we are now or later this year in the first half of 2020, thats when the maximum impact and military policy would occur. I think here is a picture and it shows the whole sequence of events, you guys have this picture etched in your mind so you know this. It goes to november 8, 2018 on the first vertical line all the way up to june 19 decision in the due 19th decision we did not actually lower the policy rate but we sent a strong signal that we would lower the policy rate at the next meeting which we follow through july 31 so i would not necessarily say that the right things didnt happen after the july 31 meeting. That decision was effectively made or less at the due 19th meeting. Anyway, no matter how he went to look at this its a big change in u. S. Monetary policy. Now, let me talk about some of the conditions that drove this, the biggest one is probably best that as we have been anticipating for a long time the u. S. Economy would probably slow down to its potential growth rate, were talking about an economy that is growing above the natural thing and im sure youre all predicting it to and it will probably slow down to the potential growth rate Going Forward in the revised figures on gdp have the economy growing at 2. 5 in 2018, 2019 growth has been expected to be slower although i will hold out a little bit of idea that maybe 2019 will be worse than 2018 as far as growth, theres some potential for growth to be 2. 5 or look better in 2019. We will see if the hold up or not. Part of that might come from more accommodative monetary policies. We have had a key risk on the horizon and all of you have coped with this that trade uncertainties might cause the natural slowdown to be sharper than anticipated and you get something skirting around 1 growth or Something Like that. So heres a picture, i love this picture, im going to dwell on it for a while. This is a picture starting in march of 2017 and continuing out over the forecast horizon, this is the u. S. Real gdp growth rate measured from one year earlier that is moved out compared to the way we usually look at it. The blue line is actual data in the dotted line on the lefthand side is the march 2017 f 17 fmod they gdp growth. So what to they think in the first half of 2017 and probably many of you thought the economies would drop to present as far as i can see. But that is not on the righthand side, there is the dotted line with the sep projections from where we are today so you can see the blue line obvious a ratchet up but a bit during 2017 and 2018, the year over Year Growth Rate reached 3 , the middle of last year year over Year Growth Rate has been declining since and as predicted and as we would have expected the growth will come back to the potential growth rate in the dotted line on the right says its expected to continue to decline back to the potential growth rate. Look at the upside surprise compared to march 2017 how much growth we got in the u. S. Economy than what was expected at that time. That was a surprise in the righthand side is expected slowdown. The risk is that the blue line goes down more than you think and possibly because of trade uncertainty and thats why the fed has taken out some insurance against the possibility by providing an accommodative Monetary Policy over the last six month. It certainly seems based on recent developments that it will be very hard to get a stable trade regime environment over the nearterm or over the forecast horizon which i would describe as to 3 years. This is a question that this is chile Global Investment and flowing the Global Growth rate that is factored into almost everyones forecast. If you see trade restrictions into a model you will get out that the trade restrictions direct effect are probably small but there can be other effects mostly coming through Financial Markets and other sources that can be much larger. Theres risk and uncertainty about what the effects of the increased trade uncertainty will be. I would stress this, were in a titfortat trade war and it is not in any titfortat trade war that each side will make threats and counter threat at any point in time. This might be daily, weekly, monthly, but the nature of a titfortat is that there is threats encounter threats occurring all the time, some of these might be implement it, some might actually get implemented but the nature of the war you have titfortat going on all the time. It is not reasonable for Monetary Policy to respond to all the threats encounter threats. If you do that you would get a volatile Monetary Policy and begin shooting to the volatility being caused in the first base. I do not think thats the right way to think about how Monetary Policy can take the situation into account. I want to think instead trade regime uncertainty as being high. Its high and going to be high for the foreseeable future because its going to be hard for the various sites to repair trust and to get back to a stable trade regime over the forecast horizon. We have taken that into account, trade regime uncertainty is high and we are putting that into the Monetary Policy calculus. We use that in reaction to that. Through the accommodation that i described earlier. Particular threats encounter threats are not news because that is part of the way the uncertainty plays out over time in a trade war and im not expecting this uncertainty to go away. Weve already tried to take out insurance against the possible damage that the trade war could do to the u. S. Economy. Here is a picture, this uses the baker bloom and davis measure of policy uncertainty with respect to trade, it was low, low, low, high. Thats how every this picture. So it was low through 2000 or even before that. I would describe the postwar as the u. S. Leading the drive to trade. The culminated in the entry of china into the wto in 2001 and sense in a fairly stable trade regime with reasonable search to about what theyre going to be and what the tariff is going to be. That has exploded since trade has become much bigger political issue. Not just in the United States and not just in the Republican Party both Political Parties in the u. S. And politics all around the world now questioning global trade arrangements. Thats why i do not think this is going away. You open pandoras box and these are difficult issues you will not be able to put them back in the box. We will have trade regime uncertainty as described on the righthand side for as far as the eye can see. Like i say from our point of view as Monetary Policymakers we have to take that into account which we have done and bought insurance against the effects that this might have on economic growth. Okay we have other concerns meanwhile better bubbling in the background in one is inflation, we have a 2 inflation target in the u. S. We measure this is pc inflation, headline inflation. A lot of times we will look at court inflation to get an idea of an underlying gauge of inflation pressure, both inflation and Inflation Expectations are below target. I think this is surprising because this is occurring despite the upside surprise in the economy i described earlier which is been ongoing from 2017 to 2018 and the first half of 2019. All of that has been about potential growth in the u. S. Economy with stellar performance in the u. S. Economy and never the less our core inflation measure from one year ago was only 1. 6 . I think this is a concern, we would like to see inflation at or above target in this environment, there is a picture, i am experimenting with the feds to your expected inflation measure minus 30 basis points because the inflation expected inflation measure is cpi inflation so to translate it over to pc inflation subtracted 30 basis point in the short horizon like that should correspond to actual inflation pretty tightly and it does appear to correspond pretty tightly in this picture and they both below target, both expected inflation and actual inflation at 1. 5, 1. 6, 1. 4 range. Why are we seeing more i think thats a great question for the committee. This is something i would like to cs move back toward target. More quickly. And hopefully our accommodation is helping us do that. Let me touch on yield curve issues and ill conclude and will start, i guess i get grilled twice i get grilled by ed and then by all of you. On the yield curve, yield curve contains Important Information for Monetary Policymakers, i have talked a lot about yield curve inversion, it predicts the onset of recession however, there is a big lag between inversion and whatever else might actually happen so that is something we keep in mind. You do have some inversion today because the tenure is trading below the three month yield or the federal funds rate so that is concerning but the twoyear tenure is not inverted at this point because the twoyear is taken into account future actions of the committee so i would say thats omitting factor in my mind and we are now seeing intensification of yield curve inversion so far based on anticipated future policy from the fed. So i dont think this is gotten any worse. Here is a picture of various breads, you have the tenure, twoyear which i labeled as still positive and the others i have inverted but only slightly, some has gotten worse in the last day or so. I am concerned about this issue and i would like to see a healthier upward yield curve. If you look at the second half of the 1990s, where the fed made policy adjustments in the 95, 96. To find the right level of policy rate, then the yield curve was upward sloping all through the second half of the 1990s, one of the best periods of the performance in the postwar era and the slope average 50 basis points, 100 basis points during that period and would like to get back to some. This is too flat for my taste here. But with the accommodation coming on board if we see inflation start to pick up and expectations pick up you might get a natural slope to the yield curve and we would be in better shape if that happens. Let me conclude, it continues to face a slowing economy, naturally slowing economy i would say with some risk from trade regime uncertainty, we have an inflation rate that continues to fall short both in actual inflation and expected inflation continues to fall short of the 2 target and on the other hand we also have a lot of accommodation that is just now coming on board from the first half of the Monetary Policy in the first half of 2019, that should push inflation back faster and maybe even above target. Over the forecast horizon. And its possible we could take additional action but i do want to see how the effects of our previous actions play out in the economy Going Forward before we make those decisions. Thank you very much you have been kind to have me here today. Im looking forward to your questions. [applause] can never but hear me okay . Thanks jim for doing this. We really appreciate it. Im going to first start off by talking about the trade issues that you highlighted. Since the interestrate decision last week, we have seen summary intensification of the trade tensions that have gone on throughout the year, does this reintensification of fact how youre seeing the economic outlook, are you walking down the forecastle . As a result the announcement of additional tariffs both Financial Market reaction to the announcement customer. I do think the trade regime uncertainty can clear earlier this year, especially it became clear that trade regime uncertainty was just going to be high. And you say intensification but i would say a manifestation of trade regime uncertainty in the last few days. So you would certainly expect if youre going to be in a titfortat trade war that the two sides are going to be trading threats and trying to get riverside to come to the table and do all kinds of things, thats maybe natural in negotiating setting. But i would not describe that as intensification. That is just ongoing trade war, that the nature of the trade war. In my mind anyway, we have already adjusted for the fact that this is going to be high, we put in a more accommodative policy and now its time to see if we bought enough insurance against the negative effects. One other aspect. The next round of tariffs against imports from china, a lot will apply to consumer goods whereas until now a lot has been applying against media. Do you see that changing the dynamic of how you think of what the effects on the economy . Like i said, if you put tariffs into a macroeconomic model and change in what you will get is relatively small effects, macroeconomic effects. For the extent the larger effects and i think they will come in for instance Global Manufacturing in the Global Manufacturing pmi has declined into negative territory, u. S. Manufacturers are scrambling to reorient their supply change. It seems to me, and chilling Global Investment because investors are not sure where to invest that will give them shelter from ongoing trade war so i think those kind of effects might be bigger than the effects directly on consumers. Consumers certainly arent going to set back and pay higher prices, they will ship that to other substitute goods, thats the kind of thing that happens inside a model and mitigates some of the effects. There would be some effects depending on what the goods are that we are talking about. Im not sure i would go from the idea that theyre being applied to consumer goods to automatically assume that is very large effect on the u. S. Economy. Last week chair powell described the administration cut and suggest that the feds not currently anticipating a very long series of rate cuts. And yet Financial Markets still appear to be into speeding considerable further using. When i looked this morning it was implying about another percentage point of cuts. How do those expectations square with the Overall Economic outlook and what we need to get that amount and what would you need to see . I think, ill give you my take on the idea of a midcourse correction. If you look at the 1985 experience, and 94 we read the policy rate and in early 95 we read the policy rate 300 basis points in a single your products it was the worst year for bond markets of the postwar era. I believe then later in 1995 in early 1996, the committee struggled to find exactly the right level for the policy rates. It looked like the economy was slowing down a lot in the first half of 1985 based on realtime data, the committee ended up adjusting down slightly, got to the right rate and set up the economy for great secondhalf of the 1990s. I hope we can pull that off. We raised the policy rate during 2017 and 2018, not 300 basis points but maybe 225 basis points so thats a normalization in the level of rate is way lower and that as Global Trends and Interest Rates. Now what youd like to do after you finish the normalization is to see if we can find the right level of policy rate. I think that is how i would think of this as a midcycle correction, like i say we have already put a lot of the outlook for Monetary Policy has to changed dramatically in the last six months to have a lot of implicit accommodation coming back to the economy that should affect us in the second half of 2019 and 2020. It is not clear you want to pile unnecessarily at this function you want to see how the previous moves are affecting the economy but i would not rule out more changes. This is how im thinking about. I do not predict recession on the horizon so i do not think were in a situation where one recession mode. In midcycle, thats why i like the midcycle language but you still want to find the right level of Interest Rates for this environment and hopefully set us up to continue to expansion for many more years to come. One other question. In the runup to the last meeting, there was a debate of whether it should be 25, quarter, or halfpoint cut. And one point you suggested halfpoint which would oppose overdone. In thinking about the question of the size of any cuts to do Something Like a halfpoint cut which tends to be pretty aggressive pride what will be need to see to do Something Like that. When i look at the Financial Market, there is some element of risk proceed for halfpoint cut. You can look historically where the committee has moved with that kind of move. I dont really see us as being in a situation where that was true. One that i can think of off the top of my head is late 2007, early 2008, so there you had really the financial crisis has started in earnest in august 9, tenth in 2007, the committee had done a lot of things in the fall and then we had worse data around that time. In the committee met out of cycle and lowered the policy rate dramatically in 2008. We are not in that situation. The economy is growing above under above potential rate and has been for the last two and half years, the labor markets are super unemployment at a fiftyyear lot, i think a lot of good things going on and our economy even though you have risks out there as we always do. I dont agree in a situation where we have to be quite as dramatic like that would suggest. In your speech you touched upon the lowinflation environment inflation being below target. So we had a situation in recent years which has affected other Central Banks as well. Were not withstanding strong growth and labor markets inflation are below 2 to see structural factors that are in place that are likely to keep inflation suppressed and if so does that limit the ability of the fed and other Central Banks to get fission back up to target . Theres a hypothesis and i read about it a lot. Im not sure i have a real solid theory in my head about this. But it certainly does seemed Like Technology has become a lot more important somehow as a fraction of the economy and went to a note about technology prices, they tend to drop overtime and so somehow that is feeding it into the inflation process. I think it is not unusual if you disaggregate, you know better than i do. It is not unusual if you disaggregate Inflation Numbers with trends and medical prices are good example. Technology prices are good example, housing prices, housing rents are good example. It seems like the overall price level is going up at this rate but it does not mean all the subsectors are going up at the same rate because relative prices are changing over longrun trends over time and if one of those becomes more important than that could have a distant inflationary impact. I would hesitate to say i really been able to nail that down in a way that is convincing and i was up there without. Also, following up on the question about inflation, the fed is undergoing a statue review and there has been suggestions made on how to enhance their credibility inflation target. Theres been talk of moving to average inflation target and principal targeting and other ideas have come up. What are your thoughts on those customer. Those that are interested you might check out your chicago conference that we had on freemarket issues, that is all available online. And you also might check out the conference that occurred a month before that at stanford university. At there i gave one of the many presentations and you can check out what i said was about nominal gdp targeting is a possible framework Going Forward. I think you should think about evolution rather than revolution in the feds policy framework. I think theres a lot of ideas that are related to price level targeting because price level targeting and a lot of different models turns out to be the best thing that you can do and so i think those ideas trying to make up for past mrs. On the inflation rate in the low side then you might miss on the highside on the future or vice versa. That tends to work well at least inside models. And so that thinking is becoming more prevalent across Central Banks around the world and i think we will eventually carry that in its more evolution then all of a sudden waking up one day and the fed has radically changed its framework. I dont think that will happen. It is very hard to get these things to move. So i think there will be some movement in that traction at least implicitly coming out of the framework review. One more question before we turn to the audience. This relates to the question of the fed and earlier today the secretary of church voted on article in the wall street journal for fed independence, we have seen situations where the executive branch has been more directly critical at least for a number of years that i can remember. About the feds decisionmaking. Is there any concern on your part that the confidence and independence of the fed is at risk from what is happening here . I certainly appreciate the former tears coming out without i thought it was great. So even though theyre retired and we quit paying them they are still working and i appreciate that. [laughter] so i think, my reading of the editorial was reiterating why american Monetary Policy is set up the way it is because there was all Lessons Learned from earlier eras when it did not work out so well especially in the 1970s and because of that we made the changes that we did. I think it worked pretty well, have a very Large Committee and a lot of viewpoints that are expressed, you have to get the committee to center and the Committee Makes better decisions of the committee than any one individual member would so theres the wisdom by having the Committee Structure and i think were really just making decisions the way we have and we look at the data on the economy and make adjustment and goahead. Its true that maybe there is more buzz around this then there was but my experience in the fed is that theres always a debate going on and theres always people talking about the f1 they should do. Im so used to it that i like getting input from all different angles in all directions. But then the Committee Sits down and makes a decision. I think its working pretty well. I think we will open it up for questions. Why dont we go over here and then over here next. If you can state your name and affiliation and ask your question in the form of a question. National association of realtors, the component of the cti where its accelerating the component with the equivalency is due to the housing shortage. And homebuilders especially small builders who have been reliant on construction loan from Community Banks, im not sure if its loosening up but the lack of housing start is causing housing shortage as well as accelerating and housing rent. Is anything that the president can do to stimulate the lending of Construction Loans small tumblers . I thick the market obviously was shaken by the crisis were ten years past that now. I think the reaction to it seemed to be, you can tell me more probably but the reaction seemed to be more multifamily and less singlefamily, some of the numbers that i see suggest plenty of multifamily. Also, taste seem to change to some degree as household newly formed household are as eager to get into a house as they wouldve been historically and because of that i think builders have pulled back a little bit. We are not trying to im certainly not what the hal limit Community Bank exposure to housing but i think this is been somewhat of a market response as opposed to a policy. Claim retired federal government economist. I have a question, i want to pick up on the disaggregated price series youre talking about. What about asset prices, after inflation there seems to be stock et cetera that is driving on a market activity. That does not seem to factor into any of the conversation we have had whether or not we have inflation. Can you speak to that . There is a long standing debate which certainly goes back into the 1990s and well before that as to whether you should include asset prices and the measure of standard of living or the cost of living. I think the answer to that is no. I thick the asset prices are Something Else but you can certainly make that case and certainly they have made the case over time. I dont think as a general rule i dont think it proves us to react to stock prices, lets say equity prices to Monetary Policy. It is a losing game to get involved in that. The market moved rapidly, we prices everyday by a percent or something. I think the wisdom has been that the market is trying to assess the future of the u. S. Economy and the Global Economy. But the fed is also trying to assess the future of the u. S. Economy and Global Economy if they start what the hal assess each other then you get into circular movements. I think it is better to think about the goods and Services Prices that the consumer actually pays. Gentlemen in the back one of the things that has puzzled me is a lowinflation as global. Central bankers around the world have been spiking the punch bowl with everything they can get their hands on. And nobody is getting any tips. One of the reasons ive seen explaining this is to willow for too long is affecting the solvency for lending institutions and they are cutting back, could that be an expedition and in that case at what point does the situation turn from too low, being stimulative to being restrictive . I think its very provocative point. Global inflation is low so if you added up all the Central Banks of the world and made them into one central bank, that central bank is somehow targeting a very low interestrate which is just the opposite of a 1970s. In the 1970s obviously inflation got the doubledigit levels in the u. S. But also global inflation, global inflation was very high all around the world so there the unified central bank of the world had too high of inflation target and to keep inflation under control. But to put together models of exactly how that works and taken to an account Exchange Rate and many other features of the Global Environment is beyond what we can do. You do have a big player, china which is managing to the u. S. Dollar and so typically what you would think is that china is importing the u. S. Monetary policy because there managing to the dollar which is keeping inflation low in china where other circumstances you would think a big developing economy would be contributing to global inflation but instead inflation is pretty low in china. So many things to consider here. Im not sure we have great models of how this all works. Hi, u. S. Bureau of statistics. Argued that the issue of the fed is facing Monetary Policy has to do with the changing framework. In the sense that the fed funds is no longer the main driver for Monetary Policy decisions but the interest paid on reserves. And also the change from the system of one policy system and the Monetary Policy. Can you address that . One thing that you might check out we have a series of blogs at the st. Louis fed that is talked about facilities to complement the reverse facility. We think that would be a good idea. In my have some benefits to how we operate Monetary Policy and this is something that may be gaining traction at the fed and i think could service while Going Forward. But as far as the impact Monetary Policy on raids i think it is pretty clear we are still influencing the short end of the curve very dramatically. And some would say too much or too far off the curve. The shortterm yield that are marketbased are closely tied to actual policies. I think that part is working the same as noise has. Hi elliott. What are your feelings about student debt right now which seems to be out of control and how that might impact the economy in the future. I have a son that will be starting at the university in two weeks,. [laughter] so as student debt considers to grow, how do you factor that in the road . With rates on student debt are ridiculous. 11 12 . I would like to see reform of the student debt situation. I think it is getting out of control, i do not like the idea of lending to a Prospective Students who really should not be taken the money and agree that they might be getting and will not be able to repay it because theyre still going to be stuck with garnished wages in the be stock for a long time. There should be a process around that initial disbursement. I dont know about you guys, when i got my student loan there is hardly any questions asked at all because it was guaranteed student loan. There was no questions asked and i couldve been a good student, crappy student, they did not check. I think this is become more concerning situation and very form and i dont see why they cant be market determine rates is that of legislative rates. Id like to see movement on this. Its been going on too long. [inaudible question. When i talk to people on capitol hill they talk about it but i dont see anything happening. [laughter] [inaudible question] susan from the government accountable the office. We seem to be in a worldwide negative interestrate or heading that way. At some point there will be another recession. You see what that implies for the ability of Monetary Policy to be a useful tool in that situation . I think it is a great point in one of the successes of Monetary Policy during that era is we been able to normalize rates as much as we have, i know its not as much as other people mightve looked for but we been able to move off the 0 bound and get the policy written up somewhat and i think that will help if we get into recessiona recessionary, will have an ability to react. Other countries have not been able to do that like japan and europe and when they go back into recession they will have less ability to react in the have to use policies. Pat lawler. With all the other reasons for lowering Interest Rates, you talked a bit about the shape of the yield curve and you recognize the fed has some effect that some people may anticipate future fed actions but potentially one of the dynamics could have to do that the fed change and his portfolio runoff decisions and with running them off and built a set of expectations and took them away so you have the announcement of the in the actual fact of it or the dawning realization. As well as the fact youve never been in this kind of a situation where you run the stuff off and change the rules. Do you think that couldve had an effect on the changes in the yield curve that weve seen . Yeah, i guess what im thinking about the yield curve on a practical level, theres a lot of models out there that are not so practical. But lets think about that the fed has a lot of influence at the short end of the curve in the market has a lot on the long end of the curve that the traditional Monetary Policy thinking. It is true that there has been really global qe and because of that people have said that the longer rates are lower and if you look at the evidence on that, the magnitude of that is not so large and should be dissipating because various countries around the world have stopped when the qe part and it was priced in initially so now should be going the other way and im not seeing that aspect of it. So i think i would like to see a young girl. It strikes me from the levels of the tenure that i talked about today are low. Work i would say that it looks to me just looking at the last two days here that the chinese, correct me if im wrong, they did not fix above the seven level or fixed below. It seems to me the policy has not changed that they want to contain the Exchange Rate movements and the same rate they had before. I think that makes sense because its their policy and that was their policy and i dont think that would change the Exchange Rate policy in reaction to the trade threats coming from the u. S. Because the whole reason to have that policy they want to provide stability for the chinese economy. Im not sure i would expect them to abandon that policy in this situation. But we will see. Maybe they would it seems to me they tried to fix under seven suggest they return to the policy and not how i would interpret current events. I think i will ask to take the moderators prerogative. In your remarks you stress that this trade policy uncertainty will remain with us for quite a while. Does that have applications Going Forward as to what we should think of as equilibrium level for Interest Rates . If anything, it would moderate Interest Rates slightly compared to what you would otherwise have so yeah, i would think that would be a factor in how big that factor really is compared to Everything Else going on in the economy is a good question so we will have to monitor the situation and keep track of it Going Forward. I will close things out here for a bit. President , we have a gift for you. Its an expression of our gratitude. [applause] on behalf of me, my team and members thank you for making this panel an exciting one. We think it will appreciate five10 a year. I like to think my colleague who did a wonderful job and to our members we will be announcing the big annual dinner soon and programs for the fall and we will have a new website and you can hear about that soon but for now thank you for coming and have a good afternoon. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] here on cspan2 the communicators is next with a look at allegations of censorship by social media platforms. Book tv features several biographies starting with george packers book about the life and career of american the black, richard holbrook. The followed by Martha Sexton biography of George Washingtons mother. Later josh levine tells the story of linda taylor, a criminal whose exwife made the term wealthy queen common in the United States. House will be in order. For 40 years cspan has been providing america unfiltered coverage of congress, the white house, the Supreme Court in Public Policy events from washington dc and around the country. Make up your own mind. Created by cable in 1979 cspan is brought to you by your local or cable i satellite provider. Cspan, your unfiltered view of government. There is no doubt in my mind that i should have many millions of people, so many people i would not believe it but i know that weve been blocked. People come up to me and say sir, i cant follow you. They make it impossible. These are people really good at what they do and they say they make it absolutely impossible and i have watched and watched some of the scenes that have been taped and got through, talented people by the way, gotten through it gotten to the public where you see the hatred of our party