Transcripts For CSPAN3 Alex 20240706

Today is december 7th, a most appropriate day to welcome the authors of surprised again, the covid crisis and the new market bubble. Ive read this book cover to cover twice, once in its early stage before it was in print and again in the past week. Its not only an excellent account of the financial crisis that gripped the country as it recognized the severity of the covid crisis. But a very interesting discussion of the Government Policies enacted to counter the economic consequences of the pandemic. After the authors discuss their new book, chris demuth, distinguished fellow at the Hudson Institute and i will react to some of the issues and events. Alex howard discuss in surprised again. Then well turn to the audience for questions, including the online audience who can send in their questions. And if my past interactions with these scholars, any guide, i would not be surprised at. All if we have a lively discussion. Alex pollock is a senior fellow of the macys institute. Between november 2019 and february 2021. He served as Principal Deputy director of the office of financial research. The u. S. Treasury, prior to his governments service. He was a senior fellow at our street, a senior fellow at the American Enterprise institute, and the president and ceo of the Federal Home Loan Bank of chicago. From 1991 to 2004. He has also served as a director of the Chicago Mercantile Exchange group, a sending him Education Group and the great books foundation. Alex his work includes the study of Financial Systems and their recurring crisis the politics of finance risk and uncertainty, central banking and housing finance. Hes a graduate of williams college, the university of chicago, princeton university. Hes the author of two previous books, finance and philosophy. Why . Were always surprised and boom and bust financial cycles and human prosperity. Howard b adler is an author, attorney and former Government Official from may 2019 two through january 20, 21, he serves as Deputy Assistant secretary of the treasury for the Financial Stability oversight council. He was responsible for monitoring the Financial Stability of the United States during the first year of the covid 19 crisis. He was awarded treasurys distinguished Service Award for his efforts by the secretary of treasury. Mr. Adler was a partner for over 30 years at gibson, dunn and crutcher llp law firm where he served as cohead of both the firms Corporate Transactional Practice Group and route practice group. Prior to joining gibson and dunn, he served as executive Vice President of the Riggs National bank of washington, dc. He has also served as the treasurer of the washington d. C. Bar and is on the board of governing trustees of the american ballet theater. His hes a graduate to Johns Hopkins university and the New York University school of law. Please join me in welcoming alex pollock. Many thanks to aei for hosting this event to paul for organizing it and for your introduction to chris to youth for participate. Our publisher, paul dry is here. Thank you, paul. And also Dan Sulzberger is here. Ben was our Research Assistant for this book and did all of the graphs. So which so clarify the various issues throughout the book. Now surprised to get as three fundamental elements. The first is a history of the totally. Unexpected 2020 financial panic. Then the aftermath of that panic, including its massive finance sink by government deficits and Federal Reserve money printing. The subsequent asset price and the everything bubble and the emergence of runaway Consumer Price inflation. All in all, its a fascinating story for present and hope future students of crises. The second part is a macro or a philosophical reflection on the nature of fundamental financial uncertainty, which cannot be eliminated. Id consider for example, that there were no less than 30 official Systemic Risk analysis by all kinds of Government Agencies here and abroad, and many multinational agencies. All of these were published in 2019, trying to say what might be ahead . Well, not one of them got. 2020, right . Not one. And thats because they were not dealing with risk to make a fundamental distinction here. That is to say, theyre not dealing with probabilities which can be calculated, but with uncertainty, incalculable and ineluctable, all in the fog of future financial and economic events. The third part of the book is an examination of a number of key financial problems, all still unresolved. In his remarks, howard is going to discuss issues of cryptocurrencies, insolvent, multiemployer Pension Funds and the utterly failed federal Student Loan Program. Among the other issues, we take up a runaway inflation in house prices now deflating, and the hugely important phenomenon we call central banking. To the max, starting with the 2020 financial panic, the covid Health Crisis turned into a financial crisis. Although great expert efforts, as we said, had gone into trying to assess Systemic Risk. In fact, everybody was surprised again. The constant attempts to foresee the next big crisis failed to see the one that came. And the reason for this was they failed to link the outbreak of the new deadly virus. The possibility or even probability of which was well known to science, that if such a thing happened, it would be linked to a financial collapse and a financial and economic contraction. With more with the prices and Financial Markets all dropping like stones. We start the book with a discussion and i had in december. Of 2019, three months before the crisis began, in which we reviewed all of the issues around and the Financial System looking for the next crisis and agreed. We couldnt see one. We couldnt see that crisis coming at the end of this discussion. However, i said to howard nonetheless, when it does come. We want to see it coming. That turned out to be a good forecast. We didnt see it coming and neither anybody else. And the key reason why we didnt and neither did anybody else is that all finance is political. All finance. And the link, the emergence in china of a new virus to International Financial disaster required forecasting the intermediate step of pull litical actions. Governments locked down huge sectors of the economy. As we know and however necessary. Those actions were financial actors suddenly had to guess what that meant for growth, employment, cash flows, present values, prices of financial assets, and for defaults on debt, all of which just a little while before had seemed so benign. Everybody feared the unknown. So in our book, we ask our readers and we ask all of you this evening, as we wrote, did you excellent readers. And you distinguished audience, a imagine such a link between the emergence of a virus and a financial panic. In 2020. No, you didnt. Did you put even a tiny probability on it as one of your socalled tail risks . No, you didnt. You were, we guess, completely surprised. Again, along with all the experts that we discussed in detail the numerous travails and fears of that time in chapter two, the panic of 2020, in particular, we discuss how financial actors rediscovered the permanent truth that asset prices are ephemeral, prices seem very real, but in fact, theyre ephemeral and they can go down more than you thought possible. They can go up more than you thought possible to. But the going down part is more painful. In april of 2020, wall street journal proclaimed in capital letters that march was the month that changed everything and wrote march with a booming economy and ended with giant companies begging for bailouts by silver. Asian not only giant companies, but everybody else was begging for a government bailout. And the bailouts came in common with the last crisis. The governments and the Central Banks. In the words of former secretary of the treasury paulson had no choice but to fly by the seat of their pants, making it up as they went along. And they did indeed make up a lot of things as they went. Now, walter badgett was, a seminal financial thinker whose major book appeared in 1873. In 2020, governments applied one part of walter graduates theory of how to deal with a crisis, which is lend freely a money printing central bank, in fact, is most handy in the financial crisis. The Federal Reserve was hyper active. If you look in the book table, 3. 4 shows you 49 special financial programs. The Federal Reserve introduced in 2020 and the National Treasury can greatly expand its spending to finance a crisis as long as it has a central bank to print money in order to buy its debt. And table 3. 1, well show you 22 special u. S. Treasury programs invented by the treasury in 2020. These were wild and frightening days, but with the passage of time, now that we know how the recovery unfolded and finally were sold, its already becoming difficult, isnt it, to remember how bad and how frightening it was at the time, how intense the uncertainty was. How dizzying was the sense of collapse . Seeing market prices, and how opaque the future seemed as Financial Markets went into freefall with seemingly no bottom . Now we hope the will help the group memory in the future of what it was like in those frightening days and those days. Certainly included uncertainty, as we said. And thats the second point i want to talk about. And we discuss in the book how a highly placed political officer and a top financial ceo both predicted that another this was after the. 2007 to 2009 crisis. Both predicted that another crisis would not happen, quote, in our lifetime, unquote. Well, that was a really odd call, because the average frequency of financial crises is once about every ten years on average. And they had plenty of decades in their lives. And so they were wrong. Interestingly, once every ten years was the frequency financial crises in pagets time as well as it is in ours. And as paul volcker once wittily said about every ten years we have the greatest crisis in 50 years. Oh, no, the the events of 2020 were hardly the first to demonstrate that highly intelligent, highly knowledge able people in positions of Great Authority may still be unable to anticipate what crises future may bring. And John Maynard Keynes in 1937 described the uncertainty very well or knowledge of the future, he wrote, is fluctuating, vague and uncertain about these matters. There is no scientific basis which to form any calculable probability. Whatever note, all financial models run on calculable probabilities. Keynes continued that our expectation of the future being based so flimsy a foundation is subject to sudden violent changes. The practice of certainty and security suddenly breaks down new fears and hopes will, without warning, take charge of human conduct. The year 2020 certainly brought such and violent changes and new fear marked the first half of the year as people were afraid not only for their lives but also for their money. At the same time, now, a key problem with uncertain, as the book discusses, is that always there whether we feel it or not. The way i feared Federal Reserve staff study of uncertainty, for example, says this large uncertainty, such as those appearing concurrently with the outbreak of covid. Appear cyclically. But note thats the uncertainty that somebody has felt or the whole country has. But the real uncertainty is there. Whether we feel it or not, its there before the when no one was worried about it as well as during the panic, when everyone was worried about it. And its there. And may not even be felt by people who are diligently looking for the next crisis. So we can say the roman poet claudius wrote 6000 years ago is still usefully applied to the economic financial future of today of all times. To wit or race hominem tactical ligne of all, we that is Human Affairs are surrounded by so much fog and the financial future certainly is that and no late in 19 2022 we know that air is coming out of the great everything bubble that Federal Reserve and other major Central Banks and the treasuries intend inflated. And this experience of the deflation of the bubble is a cost of the bailouts. And the key thesis of our book is nothing is free and this is indeed, in my opinion the single most important principle in economics. Nothing is free. And the bailout wasnt free either and were paying the cost. Now, as i said. The book also discusses numerous key problems, as youll see if you peruse the table of contents. I have short comments on just two of them. One on mortgages and the Mortgage Market in the wake of the covid crisis, the United States experienced a runaway inflation in house prices, stoked all the way along by the Federal Reserve, which was still buying and making itself into the biggest savings and loan in the when the when the inflation was roaring in. Amazing. And to me inexplicable practice what we said in the book is, well, if Mortgage Rates go back to normal, which we said would be five or 6 , that would be the end of the house Price Inflation and the house prices would fall. Now, mortgages are about 6 at the moment, and house prices are falling. How far will they fall . Well, one reputable forecast from aei to be precise, is will get a fall of 10 to 15 next year in house prices on a National Average basis, may just make one comment to central banking to the max, which was completely unanticipated and astonishing. This we show in table 12. 7 of the book that six major Central Banks ended the last crisis in 2008. They had im sorry, were at the time of the last crisis in 2008 they had 3. 8 trillion of assets. By 2021. With this crisis, they multiplied their assets by seven times. To 26. 7 trillion. And how that will all play out is still unsure and and they and we are working on it. Well, what next . A nice turn of phrase. One financial analyst said this year we have a six stew of uncertainties. The editors of the Financial Times said the staccato of recent events has created astonishing uncertainty. Well, yes, but nothing nearly as astonishing as the covid panic in spring of 2020. And its the bail outs, the amazing boom, the everything bubble, runaway Consumer Price inflation, and now the deflation of the bubble. Well, in the book, we have an appendix which was polarized. Great idea. Its called your own update, which when you get to the end of the book, you can take set of key analytics that we talk about in the book and put in what they were like. The price bitcoin and the rate of the 90 day treasury and whether or not theres big war going on and what the assets of the Federal Reserve are. And you can put your own numbers in when you read the book. We also recommend that on the other side of that page, its all blank. So you should write down your own summary forecast of what is to come so that in the future you could read what you were thinking then and see how did with that paul, thank you very much again for having us to talk about our book. Thanks so. Please join me in welcoming howard adler to give us the second part of the. Thank you very much. First, let me express my appreciation to for having us here today. Very, very nice of you guys. An amazing institution and its an honor to be here this evening. In the book we look at several sectors of the Financial System in terms of where they stand after covid and the government response to covid. I will focus on three of those sectors cryptocurrency multiemployer Pension Funds and Student Loans emphasize housing. Some Key Takeaways from the book. Cryptocurrency. Cryptocurrency began as a libertad in revolt against government monopolies on money, the intellectual forefather. Cryptocurrency is hayek, who wrote in 1976 that people should be free to choose any form of money in which they have confidence. Private is not new. It has been used throughout history as early as the night the Knights Templar during the crusades. Private banks issued their currencies in the United States in the early 19th century. Cryptocurrency adds the technological innovation using the blockchain, a distributed Ledger Technology to record and store trends, actions in the cloud without the need for a financial intermediary. In chapter six of the book, we tell the story of facebooks cryptocurrency libra. The story is incredibly instruct live and understanding the relationship between governments and cryptocurrency. In june 2019, facebook announced that it would sponsor libra, a global that was a stablecoin because it would be backed by a basket of existing currencies and supposedly have a stable price. It would potentially only be used by facebooks over 3 billion users. Thats 3 8 of the global population of the world. Instead of National Currency is like the dollar in the euro. Libra would be headquartered administered in switzerland arguably outside the reach of u. S. Jurisdiction. This announcement caused concern and consternation in washington and governments worldwide. Libra was perceived as a to the us dollar and other establish currencies. The dollar is the worlds reserve currency, which means that foreign currencies at central must keep most of their foreign reserves dollars in the form of u. S. Treasury. This creates demand for such debt and in turn enables the united to borrow more cheaply, which subsidizes the us economy. In the 1960s, the french described this as an exorbitant privilege and it is. Treasury and the fed. The protection of the primacy of the dollar as essential to the us economy and. Their mission. For this and other reasons, libra faced great hostility from us and foreign regulators documented in chapter six of the book, which caused facebook to abandon the project. Essentially the key takeaway is that governments may not allow the creation of private currency that truly threatens their monopoly over money. Looking at stablecoin coins in any interim other stablecoins like tether proliferated. They seemed to promise immediate redemption existing currencies. But you read the fine print. Such redemptions often limited in size and be at the discretion of the issuer. There was no assurance that reserves existed to back stablecoins. Cryptocurrency is essentially unregulated in the United States unless it is considered a security. In which case the sec has some jurisdiction. There is not even a requirement for audited financial statements. So investing in cryptocurrency is very risky. As the recent ftcs debacle demonstrates, and there have been numerous recent legislative proposals to federally regulate cryptocurrency, meanwhile, governments have gotten into the crypto biz more. A majority of Central Banks worldwide are exploring their own Central Bank Digital currencies. Arguments for cbdcs include making International Payments more efficient and providing a way. Bank the 1. 7 billion unbanked people in the world. China is well down the road to establishing a digital yuan. Its purpose seems to be twofold to better control its people by making all of their Financial Transactions and subject to control by the Chinese Communist party. And to challenge the challenge the dollars primacy as the currency most often used in international transaction. The latter is a real threat, even though it seems rather crazy for people outside of china to give the Chinese Communist Party Control over their money regimes and individuals to u. S. Sanctions may trust china and the digital yuan more the United States and the dollar. China has enormous leverage a number of developing countries through its belt and road program and might try compel them to use the digital yuan as well. The digital the Federal Reserve is also considering a cbdc the digital dollar. There are many downsides to a digital dollar, including significant primary embassy concerns and making all transactions visible to the federal government. It would the feds power and vote its already Balance Sheet as massive new deposits are added to its books offset these deposits. The fed would have to invest in assets which raises the potential for it to invest politically favored industries and allows it to cut off credit to industry that are out of favor at its most extreme. A digital dollar has the potential to nationalize the Banking System and to make private banks obsolete. It would be hard for private entities to compete with the government, which does not have to show a profit despite these problems. Alex i think that the desire of the fed protect the dollar from competitors like the digital yuan would eventually drive it to recommend a digital dollar to. Congress. Worldwide creation of cbdcs would lead to the delicious irony that cryptocurrency, a medium established as a liberator, an alternative to government and central bank monopoly over money, could eventually wind up vastly. Central banks and create an absolute government monopoly over money, credit and the Financial System. In chapter 11, we talk about taxpayer bailout of multiemployer plans, and in chapter 12, we talk about Student Loans to troubled financial programs. When we the book President Biden had not yet proposed the student loan bailout, but we mention that possibility now that he has implemented it. It struck me that there were some similarities between the two situations that were worth, which i will now do. Both multiemployer plans and Student Loans were deeply underwater. Both had inherent structural flaws, and both bailouts had similar characteristics. Multiple Pension Plans are a creation of organized labor. Their Employee Benefit plans maintained under collective Bargaining Agreements to which more than one employer contributes. The plans are generally found in parts of the country where a number of employees, employers have collective Bargaining Agreement with a union whose members perform tasks for more than one of the employers. For example, were members of the teamsters union. May be involved in shipping groceries to a number of different grocery chains or. Were employers too small to have their own plans are too small to have their own plans and so combined as of 2008 there are 2472 multiunit player plans. With 15. 5 million participants and beneficial trades. These plans were vastly under water to the tune of 757 billion, according to the pension benefit guaranty corporations 20 projections. Many of these plans were projected to become insolvent in the next 20 years. The pbgc was supposed to guarantee these benefits itself had a 64 billion deficit, and the funds supposed to ensure these plans. Many of the problems were due to structural issues with the plans themselves. The plans existed in declining industries where employers going out of business resulting in employee employers to share, and employees were being laid off, resulting in fewer employees to. Make contributions to the plan and a higher ratio of those receiving than making payments. The plans are run by boards of trustees with equal representation from labor and management. A perfect recipe for increasing pensionable gains, but not funding them and making it almost impossible to contributions or decrease in bad times. During the 1990s, many of these plans, said significant asset. But rather than using these assets to preserve current benefits over time, they elected to increase benefits which resulted in further problems. When the surpluses disappear, wages in the following decade, along came the American Rescue plan in 2021, supposedly a covid relief measure which bailed out these plans even though their troubles predated, had very little to do with covid. The act provided the troubled plans b paid enough for them pay all benefits through the end of 2051. In other words, congress elected to subsidize these plans for 30 years and an estimated of 86 billion, according to the Congressional Budget Office. Is no cap on the amount of assistance provided by the act. The cbo number is likely to be understated because, as the book explains, multiemployer plans have accounting rules that allow them to understate the amounts by which they are underfunded regardless of the cost of the bailout. These plans are being set up to fail again because, no Structural Reforms were made. The boards of trustees are still structured, dysfunctional. Benefits are still unlikely to be decreased or contribute increase during bad times. Most taxpayer bailouts the past have been accompanied by attempts at structural reform. Doddfrank is a good example. Whatever you think of doddfrank here, there were no Structural Reforms before the bailout. The pbgc estimated that its Multiemployer Plan Insurance Program would be installed. In 2026, four years from now, after the. It estimated the program would be insolvent in 2055. Four years from the end of the bailout, if the democrats are in power 2051, look for another taxpayer bailout. The student loan bailout has striking similarities to the multiemployer loan bailout. The student loan market is a enormous. 1. 8 trillion outstanding. Adding debt in 2000, 21 of which 1. 6 trillion is guaranteed by the federal government. Federally guaranteed loans are a legacy of the Johnson Administration successful loan programs are supposed to show a profit, but this one never did again be because of inherent structural problems. First, under the program, loans could be obtained with little no credit underwriting. The proceeds of the loans went to universities, which did not have to guarantee any portion of the loans fueled by the revenues from these easy credit loans, educational institutions built buildings, raised tuition, and hired armies of administrators. The cost of which was paid by an ever increasing amount of Student Loans. Universities had no incentive to keep costs down because they know loss on the loans, the increasing amount of Student Loans needed to pay skyrocket. Adding tuition made them unpayable by an increasing number of borrowers. Guaranteeing a loss to the federal government and thus the taxpayer. This Program Failed from the outset, largely because it imposed no incentive on schools to stop spending. A structural fix seems relatively simple have universities responsive for a percentage of the losses and make them approve all loans that would incentivize them to lower costs. Before covid Student Loans were in the red, with some estimates of losses as high as 500 billion. Covid exacerbated the student loan problem by leading the government to defer payments on Student Loans and stopping the accrual of interest, a giveaway which still continues today. In january 2022, the wall street journal estimated the cost of this moratorium to that date at 100 billion with an ongoing cost of 4 to 5 billion a month until payments and accruals, interest accruals. President biden further worsened the situation by implement to buy administrative fiat a Loan Forgiveness Program of up to 10,000 poor student loan borrower and up to 20,000 for those with pell grants subject to income caps. The Congressional Budget Office estimates it would cost an additional 400 billion, but relief of 10,000 per borrower would still be many loans default for which the taxpayer would remain on the hook and not come to causing this problem to break. President bidens actions have been challenged in the courts. If his actions are sustained, the student loan taxpayer or hell hole would be well over half trillion dollars and counting. Once again, no Structural Reforms are made with this bailout. So even after half a trillion in taxpayer funding, loans will continue to be made under these terms and the loans will get and hole will get ever deeper. The parallels between the multiemployer pension plan and the student loan bailout striking. In both cases, amounts of taxpayer money were poured into inherently flawed programs with no attempt at structural reform, thereby guaranteed guarantee the taxpayers in the future will be asked to build these programs again. It should be axiomatic that there should never be a bail out without reform, but that seems to be the governments specialty. As 2022 ends. The economy, war and economic war. Massive inflation, rising rates, a reversal of central bank policies, a diminution in the value of many assets as air comes out of the everything bubble and still the covid crisis, which has not gone away despite. The optimistic pronouncements of politicians with potential new variants ever lurking in the back ground. As always, the future is uncertain. The only thing we can say for certain is that we are likely to be surprised again. Thank. Thank you, howard i have to. Things i need to mention introducing our other discussion tonight. One is that after our discussion this evening that alex and howard be signing books weve acquired a stash of surprised again books that are available and for you and alex and howard will be signing them. And then for those of you online who want to email in questions, i neglected to mention how you do that. You can email them to beatrice dot leigh at aei dork or. You can use twitter and its hashtag ask aei econ. Either either of those will get your questions to us and ill be able to read them on this high tech little device. So joining me in discussing surprised again is christopher demuth. Krista muth is a distinguished fellow at the institute. Hes also the past president of this institution, American Enterprise institute, and a former senior zero fellow here at aei after harvard and the University Chicago law school. He serves as a staff assistant to president nixon. He also practiced after that, he practiced regulatory, antitrust in general, Corporate Law with sidley and austin, chicago. He was then associate general counsel of conrail and philadelphia, pennsylvania. He was a lecturer in Public Policy at Harvard Kennedy school of government, director of the harvard faculty on regulation. In 1981, chris returned to government and served in the u. S. Office of management and budget. And as the executive director of the president ial task force on regulatory relief during president reagans first term in office. He was a managing director lexicon inc, a law and economics consulting firm. A big one, and publisher and editor, chief of regulation magazine. Please join me in welcoming chris to mood. Thank you, paul. This is a this is a magnified sent book and it is so deep and varied and there is so much original analysis combined with lucid writing that is hard to summarize. I think just theres just one thing i want to say in summary. Everyone in the room and everybody listening in would have had to pay very attention to know. This book was written by two senior officials of the federal government who were in office. Well, all of these events took place. This is an account of the governments handling a major. Crisis by two of the people who were at the center of Crisis Management headquarters. And yet there is no in the whole book, theres no bombast. There is no and tell. Theres no of scores. There is no bragging about heroism and brave insights that either people accepted or didnt accept. It is a book that is devoted to being instructive. It is centered, not on the authors and their magnificent posts at the center of power. When a crisis was being handled. It is intended to illuminate the the the the readers of the book. And it is, in fact, filled with references to that reader. They they point to some chart or some analysis and they say, well, reader, what you think about that . And youll look. You will encounter the skeptical reader, the thoughtful reader, the excellent reader. And thats you. And it is all intended to draw you in and make a good student of this amazing tale that they have to tell in a way that is more detached and disinterested than any memoir of Government Service ive ever seen. Surprised again. The people who were surprised were not not just average. Thats not the focus. The people who were surprised were the central bankers, treasury officials, legislators, and others as financial officials who supposed to be responsible for the safety and soundness and stability of our Financial System. None of whom saw this coming. They didnt see it coming weeks before it arrived. And this this is typical, as our authors show us, for Government Officials to be to be completely flummoxed by, amazing events that nobody else that nobody saw. Not just average folks, but the people who are. But the people are supposed to be protecting us. Average folks from these financial vicissitudes. What i want to press upon our authors is what lesson do we draw from what the government did next . In the midst of these times of, march through the summer of. 2000. When i look back at the two previous big financial crises, we got a lot of smaller ones, but the big ones in my lifetime were the snl crisis in the. 1980s and then the financial collapse in 2007 through 2009. I think the lesson of both of those collapses for anybody who was paying attention was that they had been caused by Government Policies themselves. Government policies had shown the seeds of instability which when the financial worm turned, when asset prices changed, it exposed. Those problems that the government had been. I dont think we see that lesson here. Covid was not caused by Government Policies. It was not the result of anything that was ill considered. If we simply look at the Public Health. We see that were not anticipated, that were mistakes were made. That is not what this book is about. This book is about the reaction to the panic and eventual lockdowns of the economy. Which put Financial Markets and commercial markets into into freefall. Im always looking ways to blame the government when big problems come along, but i really cant. The government for the covid pandemic and the public panic business panics that eventuated so what i get im going to get to a question, gentlemen. So youve given us this extra ordinarily detailed and convincing account of what the government is. Okay. Stipulate. Big surprise. You two, you were sitting over in the treasury building. You were surprised. Everybody was surprised. But what did you do . And what i want to say is, as i read this book, it was a masterful performance by the congress, by the federal board, by the estimable officials of the United States, treasury department, through the extension of lending and provision of liquidity, a enormous amount of money put into the hands of households. It ended the panic quickly. Its stable sized markets. It minimized what would otherwise have been enormous personal hardship. And there was a. There was a price. And the price had to be paid for these great exertions. And as of today, the price was two years of 7 inflation. And an asset a series of asset price, asset bubbles and bursts. And when you get these run ups and rundowns and when inflation picks up, a lot of people get hurt. There are costs. People pay. Those costs. If this program been designed and advanced at aei, we would have done it through taxes afterwards and saw there would have been a cost. But within 2020 and 2021, it looks to me like in reading your book, it was a big success and there were costs afterwards and we were paying those costs. Now. But should this tell us that we should be happy with our institutions and maybe we shouldnt care that much if were surprised again . If you guys and your confederates could do so well regaining your equipoise so quickly. Even the congress got in the game, which did very little to be helpful in 2008. They seem have been helpful. So is this is this a a Success Story . Well, in part it is. What we dont have is a crystal ball to know where we would be today in terms of inflation and in paying the cost. If if, if if the government had followed what alex has written about in its prior books and discussed in this book as a cincinnatus principle, which is basically getting out of dodge when the crisis is over. Thats, i think, where the government failed at the end of 2021, in the waning days of the trump administration. Secretary treasury was basically looking to put an end to the covid to. The massive infusions of to the yacht formula for fixing and to go back to normal. Would we have been in better shape than if we had done that . But we didnt do that instead in 2021. You had the American Rescue plan, which drew a 1. 9 trillion on top of the problem. Further, in my view, to leading to leading to further inflation and spent a lot of money on things that really had very little to do with covid, the multiemployer pension bailout being only one of them as well. As we mentioned but i think we got right but the problem is we didnt stop soon enough and thats i think i want to give you something here. Thats where the government did fail us, i think. Id like to make few comments. In addition. Its interesting. I think that only a very rich society could have adopted the Public Health strategy, that the rich societies adopt, which is to close down big parts of the economy, have to be rich to do that. A traditional society, people are too working to stay alive. Couldnt do it. Let us say. We are rich. We we did do it. And then you get this problem of the Financial Markets trying to anticipate what that means and we in the book how in every in this 2020 panic and in every panic always in history and always in the future. Im sure you get a a. What was called this time a dash to cash or a movement into cash which Balance Sheets are trying to compress. And we ask the question, can everybody Balance Sheet shrink at the same time . Can everybody go cash at the same time . And the answer is no, unless youre willing to an utter collapse of asset prices. If you dont want that, then somebody elses Balance Sheet has to expand. And who is that going to be . Will in a crisis . Its going to be and it always is. Every time the government so pollacks empirical law of crises is the government always intervenes. For better or for worse, it doesnt matter. Every finance minister and central Bank Chairman will always intervene in the panic because somebody a Balance Sheet has to expand. So that other peoples Balance Sheet can strike, can shrink. And then we get to the point howard breaks up, which is, however, that should only be an response. So and we. Let me just finish the thought. And then when the, when the crisis is over, you have to turn off the emergency response. That did not happen. The Federal Reserve was still buying mortgages in the spring of this year. So still pushing pushing the bubble up. And one final point just to to stress the point howard made. If you have a bail out, there should be reform. In 1989, there was substantial may not have been all right, but it was reform with the us. No bail. 2010, same thing. It was a bailout, but there was reform. This time we get bail out basically without reform. And thats what you dont want do. So im going to take issue a little bit with the analogy to 2008 in in this one. So it was a dash to cash. In 2008, the markets melted down. The government did respond. Tarp as you remember, and it was much maligned. In fact, the government made money on tarp. In the end, they made a profit on the banking part of it. Okay. They lost on the auto industry. That was, again, the auto and but overall tarp was actually profitable. It wasnt a giveaway. This time they shut down the economy and they gave away money. They printed money. So, you know, was was this better than first of all, they should have never shut down the economy. And and that i think, was a disaster. But people felt obliged to give away money because, they stop forced them to stop working. But the book doesnt really compare this outcome to the 28 outcome, but they were the dash for cash was handled quite differently in both cases and im im not sure which was the better what we away a lot we gave away a lot of free money this time to a lot of things that didnt get reformed. The politicians didnt let a good crisis go to waste, bailed out, you know, illinois and and and Pension Funds and when we get back to central bank to the max the fed played huge part here and and the authors want to want to relate it to too bad its dictum on on lending but but in fact the fed blew it they didnt really follow badge it badge it was very clear when he said the goal of lending is is stay the panic and for this purpose there are two rules. First, these loans should be made only in a very high rate of interest. These are his words. These will operate as a heavy fine on unreasonable timidity and will vent the greatest number of applications by persons who do not require it. But the fed charged didnt a penalty rate. It funded gave away pgp loans. I mean, the gave away pgp loans. The fed was protected for loss and back the time of badghis time the bank of england. The discount window operated a profit. The bank of england made a profit on the discount window and. After every crisis you could see their profits going up because they lent at a high higher rate of interest and freely at a high rate of interest. The second aspect that they kind of blew is the fed bought long maturity assets. They bought the long treasuries and Mortgage Backed securities and then badgered stay. You only discounted short term self liquidating paper. They wouldnt buy paper longer than 95 days in tenor. So the paper just rolled right off. So you have the centennial problem like you mentioned. So i mean, it was central bank to the max but you know maybe they should have read lombard street a little more carefully before they they jumped in there with some of these programs. I mean, youre absolutely right. What was i think i tried to say it carefully. My remarks tonight, the the Central Banks and it wasnt only the fed, now its the Central Banks all over world or all the major Central Banks. Yeah. I mentioned the six, you know, the the fed, the europeans bank, the bank of england, the bank of canada the National Bank of switzerland, the bank of, japan all did the same thing. And i suspect a lot of them cited walter badgett. But they only cited i think i said in my remarks and tried to say it carefully. One part, one part of badgett, which was lend freely. They remember the lend freely part, the only on good collateral only at a high rate, not so much, but that you know what is good collateral and what rate do we have to lend that and when when the seems to be survival of those become vague or whereas the lend freely is is. But but comments about not following the entire badgett program are certainly right. But we should imagine we should. We should realize this was all being done all over the world at the same at the same time. And one of the results now of having bought all these long assets and we dont discuss this in the book because we werent quite there in history yet but is that Central Banks all over the are now sustaining substantial losses on these portfolios of long a very long term bonds and in this country and in some countries Equity Securities they bought are now taking very big mark to market maybe unreal sized maybe not on the books but losses and thats going on all over as well. Well, let me also respond. I think you make a very good point. Lending on common good security and high Interest Rates is crucial part of measures program and these are two things that we didnt do. Theres really a difference in kind between 2008 and 2020. In 2008, the crisis which originated in the housing sector, you had a lot of of of assets housing assets, banking assets that were very, very quickly devalue. You they lost liquidity. Their price came way down. There was a a good a good at least possibility as it turned out, that if somebody could could add liquidity, could lend on those assets for some fixed period of the assets, would increase in value. What happened in 2020 is really something the world hasnt seen since the black death, when you really have didnt have any of economy to bail out, i suppose. But you had people who just couldnt work anymore. They were unable to work and couldnt. They werent getting paychecks and they couldnt live from paycheck to paycheck. So something had to be done. Some mechanism had to be found to put money into their pockets. I dont think thats i think thats a i think government reacted reacted well to that. The problem is that after the shutdowns ended and things started to return, we continued with this with this payment into the system which which resulted these inflationary these inflationary trends we see today and my you know, id argue that had we stopped little bit, it was necessary to get people to get people to have money. People couldnt pay their rent. So yeah, you had on on rent. People couldnt buy groceries. So you gave them money to put in their pockets to buy groceries. But that the shutdown and the in 2008 was not fully shut down but the but but that shutdown something extraordinary necessary and they did it but after those shutdowns it should have been stopped. Thats what i would say. Let me just mention to since howard brought up the black death in a paragraph toward the end of the book, we compare the mortality of the covid pandemic first to the 1918, 19, 19 influenza pandemic and then to the black death. And this was much more moderate than those horrific experiences were. But it was certainly bad enough and it was bad enough to cause the fear which triggered all the other events. Did sweden, i think famously didnt shut down and is reputed to have one of the Better Outcomes of this . Did there did they have to bail out . Do you do you guys does anybody here know sort of what happened financially and economically in sweden and i, i dont, you know, they they didnt shut down their economy they didnt close businesses they people went to school and yeah. So their covid experience was not better or radically worse than others. Their economic and social experience was radically better. Better, yeah. So thats not surprising because it was really the shutdown which led to all of these fed fed programs and and the lending rather than the, you know, than the covid disease itself. So one of the long term cost that that really worries me is the corrosive effects that all of these government responses have on our credit culture. Now, everybody thinks they deserve a bailout. Everybody thinks they shouldnt pay their rent. There should be, you know, should get tax rebates, you know, bigger for having kids. They want to bring those back. I mean, theres theres this whole destructive, in my view, impact its had on our in our credit culture. And one of the things that that made the united. Ability to grow and prosper was contracts you could you could borrow, you could you you could get you could be paid back or you could foreclose on collateral and weve become a lot more like latin america where you never make a mortgage. If they dont pay the mortgage, you cant foreclose on the house for 30 years. Weve really it seems to me, accelerated that the that problem in america with with with this response, i dont know if you guys have any thoughts on that. I think thats true. One of the classic arguments in financial theory over the couple of centuries, at least in its been debated, is that the socalled moral hazard that when you when the central bank and the government creates financing and bailout programs, it convinces people that they can be more risky, less careful, less responsible. They dont have to pay their debts. You say, paul. And so shouldnt do it. On the other hand, there is the problem of the moment of surviving when it looks things are are collapsing. And thats where i always tell the story. If the Central Bank Governor and the finance minister or the chairman of the fed and the secretary of the treasury are gazing over a cliff and imagining that the Financial System is going to go over the cliff and crash. They will be they will do the bailout now and theyll worry about the moral hazard later. Every time. And so we do have the moral hazard problem is real, but it always loses the immediacy of the crisis and can you replace it later . Well, maybe and maybe you can if you the right kinds of reforms. Thats a great example of that is occurs in the student loan area. I was sort of horrified to read in the papers a couple of months ago that. Financial advisors were telling their clients who could well afford to repay their Student Loans dont do it. Dont repay the loan that you owe because youre going to be bailed out, be throwing money away, and that was probably, you know, i dont know if this this program be struck down by the courts or not, but was probably good financial advice. But it was also sort of horrifying. Yeah, terrible advice. And it was worse. That is. Then you become a sucker. All youre paying, youre a sucker. You could have gotten off. And those are very bad social trends. I agree. Oh, im supposed to say something. The mere thought got more. But i wont. But attentive reader reader. I one thing that occurred to me in reading this book is one reason the especially the Federal Reserve board was so quick to set up all of these special credit things and this that is that the Federal Reserve board is now an act of day to day partner with the centrally every Important Financial Institution in the market, every so alex said, the book says finances political. Its always been the case because politicians have to finance wars and highways and so they get involved in it. But but we now have a much more than at any or any earlier time this this deep penetration into every aspect and ive noticed that banks going to the bank is more and more like going to the dmv. You know, you cant get anything done by filling out forms to do some minor thing waiting in line and so forth. And its almost like the whole Financial System has been politicized and oh, and the the political effect is were taking risk its like moral hazard is everywhere now were taking risk out of every part of life, but were concentrating it in government. And the when i read when i read the last chapter of this book before the epilog, i was kind of surprised it wasnt there. When i read the book, what i thought the next surprise is going to that we have become that the federal government has become such a risky enterprise without our realizing it. We see this through the constant, this very, very high debt. Im surprised with the debt we had 2020 that we got through this one as well as we did 7 inflation. Heck, i saw that when i was a kid. No big deal. But the level of debts we have now, you combine that with some Financial Health surprise, military necessities where we need vast amounts of of the government itself needs vast amounts of money quickly that to me thats thats the most worrisome next that i see because of this centralization of risk that the government longer can provide the most important kind of Risk Protection that it is supposed to provide and and so that thats that thats the thing that that i worry about and i dont know if the you have your check off list. Let me put that in. But but that would be i, i would predict next surprise is going to be a big serious crisis that we actually cant contend with because of the things that weve done including the long sequelae of what we did in the past just the past few years. Heres a question. I think thats a really profoundly important point, chris. We can see if you look at relatively recent financial history by relatively reasonably in the last 50 years, you see pieces of the government which absorbed risk, couldnt absorb, couldnt stand the risk failed. For example, the federal savings and loan insurance corporation, which was a government deposit guarantor for the savings and loans which absorb risk from the savings and loans. And when saving whole savings and loan industry collapsed, remembering more of more than a thousand formerly collapse and basically the whole industry on average was insolvent. The governments own deposit insurer was also massively insolvent and collapsed but was bailed out by the treasury now with the multiemployer Pension Funds. The government organization, namely pension benefit guaranty. Which was dreamed up as an idea by United Auto Workers in 1960 or so as a as a political idea. Anyway, it was set up to absorb the risk and it did. But the risk got so big that not only did Pension Program become completely insolvent, but the u. S. Pension guarantor in its Multiemployer Program was completely insolvent and then was bailed out. So if the pieces clearly pieces of it. Well, lets think of Social Security administration as another another example. So now if you if you would want to accelerate that is then a case where the whole government itself, the us treasury and the Federal Reserve, which really bert ely taught me years ago, bert i there we briefly taught me years ago the Federal Reserve and the treasury really have to be viewed as one thing the governments financing operation can you get to a place where it itself cant handle the risk that taken on by becoming, lets say, the biggest savings and loan in the world which which it has then i think the answer is you get a hyperinflation, which is just a way of defaulting, which is a way of the governments defaulting on its obligations in another form. So i have a throw this one your way in chapter one, you say theres Something Like 60 or more official of Financial Stability reports regularly published. So my question is why what whats the point can an official government stability report ever say that the countries the precipice of a financial crisis without a financial crisis. I want to remind you of something that happened back in 2008. Indymac stock sunk to a new low, raising serious questions about the banks ability to remain solvent. Then senator Chuck Schumer expressed these concerns in, letters he wrote to the fdic, the office of thrift supervision, the Federal Home Loan Bank of San Francisco. And then he made the letters public. Well, indymac immediately suffered a bank run in which 1. 3 billion in deposits were withdrawn a matter of weeks. And indymac failed. So can can Government Officials announce that, hey, hey, were about to have a financial crisis . No. And thats why these things have a fundamental in flaw that the people put in charge of saying are about to have a crisis. Cant ever say were about to have a crisis at same way the Federal Reserve cant say were about to have a crisis because they fear that saying it will bring on the thing, they fear its a fundamental contradiction in in the whole idea. I think youre youre absolutely right. And thats why, as jeanclaude juncker, who was the head of the european ministers and then the head of the european council, said central banking in a crisis quote, when it becomes you have to lie, i knew that was coming. Paul, you raised an absolutely excellent point. One of the socalled remedies for the problem for the financial in 2008, 2009 was a renewed emphasis on Financial Stability among not only the United States government, but Financial Stability agencies have proliferated. The fsa, which i ran the step up for for two years, was created by doddfrank is reaction to the 2007 and 2008 crisis. And, you know, they publish a really, really good report in looking at every aspect of the economy and trying to assess risk but youre absolutely right you have to learn to read these things because they dont you cant exclamation points. I think you cant say, wow, is that a problem . And they dont they talk about moderate and they talk it is it is a very. Yes, it is. It is a very, very nuanced thing. And you have to be learned how to read these things and read between the lines to really understand them. Its its a bit of an arc. Dan sells, berger reports. Howard is referring to have great graphs and, great tip tables, but the projections never do what the real does occasionally, which is this. And which our drafts do do they do . And as i, as i always point out to alex, the Federal Reserve board never predict that a recession is coming at every fomc meeting the staff has to project and lay out the Monetary Policy path keeps us from having a recession. Exactly. You cant come in six weeks later and say, oops, we really missed that one. You know, weve got wait for the data to come in for another night. We wont know for nine or ten months unless that we had a recession, you know. So its the that is quite in getting back to what what what chris said about that the and the fed and what we say in the book that all finance is political. I mean, if you read in the new york times, they might tell you that the fed is not Political Agency because its stands apart, blah, blah, blah. I would put it to you that. Any agency heads the board of governors get appointed by a political official is by its very definition, a political age agency, and they are an intensely Political Agency, regardless of what what you might read and what they might say. So i, i think its about time since we need to leave time decide books and chris you but were going to take some questions from the audience and i have some on line here too wait maybe you could say who you are and wait for the mic. So weve got bert. Bert the back there bert ely of bert. Ely and company. Thank you. And my apologies for being late. But a very interesting discussion, a comment and a question. My recollection is that in the aftermath of the snl, maybe somewhere around 2010, there was a legislation that supposedly reform from the federal credit act to try and have a better pricing, you will, of the credit risk that the government undertakes in these various programs. Be interesting comments. You might have that. But you know in a more basic how realistic is it from a political practical standpoint point to a expect the government or any government to do a better job of pricing in the credit risks that it takes on in such things for example is a Student Loan Program program or is the reality that government just never going to do a very good job of that and therefore they tend to a solution at all its to keep as much credit risk as possible in the private sector. I learned from chris the myth that the thing that always is done wrong by governments and they never do well at is price of any kind and setting and regulating prices. And thats certainly applies to the price of credit risk. So i think you ask, is it unrealistic i think its the way you put the question. Yes its unrealistic. Nothing can be done about it. Whats done about it is you dont have the government in charge of prices. If you can help it. Excuse me, alex, if this is not quite a question of the extent, how can you ensure that your book is extended not just to those who are making financial decisions, but those who are making a page on my logical decisions and if i might briefly give you a little background here, professor Neil Ferguson of imperial college. Was the one who used his models to and said that covid would lead to 2. 2 Million Deaths in the us and 500,000 in the uk. Given as he is hubris, he made sure hes a good operator from that point of view. He made sure that that was published in the new times in march and the same figures for the uk were published at the same time, but it put politicians a difficult position. But if they had checked his record, they would have found that every single prediction that he made, which unfortunately were acted upon in the case of foot and mouth disease since the year 2000, were 49. None of those predictions proved any thing near the truth. And with covid deaths, of course, we do have to remember the distinction in between from and with but i wont go into that further. My argument in an article i wrote in the times that appeared malodorous models should be given the same as basil go models after collapse of the financial show after 2008. So please make sure that your book is required. Reason get it into their heads. That uncertainty is the order of the day. Thank you, oona. Went over here. Please, bonnie walk tell im in the securities and a long time follower an admirer of several of those of you the stage you my head is going in exactly the same direction and i think is the comment we just. When we study in hindsight what was done from the Health Establishment of government. It certainly makes the treasury and the and the fed look like a bunch philosopher kings and putting this aei speak there was a panel on this just a few days ago because apparently the flag is up now that its all right to criticize and review the cdc and what was and i might add pauls comment about sweden really encapsulates everything about what was done incorrectly in the United States. So the one thing everyone agreed on on panel which was democrats and republicans, both sides of the aisle was, you know, we really need some economists to get into these decisions. So we can have some cost benefit analysis. They all agree we had absolutely none. And that assumes that the science was correct in the first place with respect to the epidemiology. So which it wasnt, i here behind me. So getting to getting to the question for alex and howard, now that we learned that your absence from aei for a while is because you were striding the corridors of power, is it for the treasury for someone to get into that conversation in the future because we could have another you know, another pandemic next week to be saying, look, we really cant afford to do this again the way you did it last time. So let us provide some economist for you so that we can possibly get right. Thats all. Of course, after you stem. The panic, which was done admirably and in six weeks and, you know, there are a lot of its just the inflation. Were also permanently changed the labor and the way people vote which is very which kind of distressing. And if you want to answer that question, ill throw in another one, which is so how much confidence, the basis of all of this background you have in the feds reaction to continuing the fight against inflation and to the extent of actually winning that battle . Thank. Any any bonnie. I would say dont want to be too confident in ability of economists to know what to do either but it obviously makes sense in such discussions as you talk about to have both trying to understand financial and economic. Consequences of what one was doing. You would think that was that was basic with any action as well as the as the health effects. I just like you would want to understand the National Security and effects of different programs but just dont overestimate the ability of economists to know what theyre doing either. I used to when i was in at aei, which i enjoyed greatly, used to have this this joke with my who are economists because im not an economist im a financial type and i my joke was the difference between economists between economics and finance is that in finance we know some things things. Yeah, i dont i dont have a lot of confidence in cost benefit analysis either, but but your point is. Well taken in and it the government seemed to really get out of control and then the treasury and the fed were willing to fund that for, you know, without didnt seem like there was a lot of discussion and forth. So whats all this going to cost us us . So if we have a question online, you have a question out. Okay, then well go to the online question after that. Then i see in your index that you dont list Climate Change as searchable. So im wondering with the 27 claps, im triggered the 4 gas for the climate and of course consumer change. How are you dealing with left wants to lock out supply and demand and all the energy and maintain a floor for green to be affordable. How do you address that for covered where do you have the political economy forces like blocking out supply and demand and market forces. All finance political you see it and you see it absolutely clearly in the in the you raise you know address your point and to bonnies excellent point im afraid we go back to past skull basically we live in a universe where it is very hard to hold on to anything that is firm we live in quicksand its its bit of a morass. The science of covid was it turns out was very flawed they didnt know what they were talking about. They still dont know what they were talking about. The economics of covid also flawed nothing. No real. I mean, follow the science. If only we could. I mean if there were only some real facts, some some certainty that we could hang on to and that we could we could base our future actions on, but you dont find that in the medical of covid. You certainly dont that in the economics, science the largest employer of economics phds in the country is, of course, the Federal Reserve. They have hundreds of brilliant. And yet we are in the inflationary mess that we are now in in today. So i wish and Climate Change is another another thing ive only i knew the truth about Climate Change how bad is it which science is which science is correct how much of it is political . How much of it is isnt . And i read and i like to think im a reasonably bright person. I try to think about it, but im im left completely and to some people are to some people, the right. Climate change is a word that you should should never mention at all. And is is is is anathema man, thats probably wrong to some people on the left climate. Change is a religion and that is almost certainly wrong. So i dont really know. I dont really know what to say to either of you except that the only thing we do have, even if it is medical science or economic is common sense and we should all try to exercise as much of that as we possibly can, it seems like we lost our common sense this last crisis to me. I have one question and then were going to i think need to go to book signing. So you gentlemen have time to decide the book. This is from johnson online. Thats a long question. I might shorten it a little bit. It seems that fear all levels from the most personal to the National Paralyzed everyone from, dealing rationally and clearly with events as they unfolded. Ive never been a fan of fdr, but i keep waiting. During the recent virus era for some politician and to basically take the fdr moment and say all we to fear is fear itself with Something Like this have injected some and common sense to the governments actions. Those fraught times. Or i guess another way. Where did the government prey on the fears of people some way to pass some of these very expensive bills with, bailouts for unions, illinois and new York City Transit authority, other things that normally wouldnt pass pass. I had a debt at the end. Well, you know, ill have a comment good after howard all i can say is to go back to what alex said from the podium is that you forget how we were. We were all petrified asset prices plummeting, the economy was shut down. There was a lot of fear. The government didnt have to create that fear. I think the the fear was wrong. And they and they you know, they we i guess, our best to try to respond to that fear at the time and i think that, you know, ill say all the things we didnt say in the book and that we commended for not saying i think we did a pretty good job in 2019 of on the short of of of of a total catastrophe and i hope that we that that that government hasnt created the the seeds of a of what may be just as big a catastrophe going forward, let me say. Yeah. Thanks for that question. The problem is that there really is a lot to fear in the world there was in the 1930s, to be sure, and there is now one of the tactics that Central Banks and governments invariably use as a financial crisis is develop is to assure everybody that really everything is okay. But it doesnt work if you really going down and there is this hope, it comes a little bit back to the problem of what do you say if youre the Financial Oversight Council or the central bank or the secretary of the treasury, can you speak the truth about how bad . It is when youre still not sure that it might be that bad. And so its very common them to have all kinds of of assurance, really. No problem. Remember, the subprime problem is contained. And as as an infamous example of it. Well this inflation is transitory. Is another. These are attempts to do that. But if the problem are are really there, then it wont work. Oh, please. The the pollock ad or report on the economy when when they write the financial situation its going to be theres a lot of risk out there that we cant do anything about. So better be really, really careful. Itd be the opposite of the current ones. And in response to this question me say that i, i dont my you know if my understanding of the situation, both the financial side and the Public Health side is not there was a lot of deliberate fear mongering as she fears there might have been. But i thought i think that once things got going, people took advantage of the situation. I think the twin 21 legislation versus, the 2020 legislation is a very good example of that. There were, you know, good and bad parts to the 228 legislation, but the one was just all pork being and there was a certain amount of fair amount. You know, there were still this were still in the middle of this. The President Bidens student loan action was justified. We still are dealing with the aftershocks of the covid. You know. So its being used to justify a lot of things. The the initial shutdowns of schools, retailing offices and so forth. That was not done by cdc or anybody. Washington, these were local decisions and they were taken march it was actually in the middle of march. There hadnt been shutdowns in washington. It was 15 days to flatten the curve and then it was another 30 days to flatten the curve. There were no shutdowns there, and there was a little about we should pay careful attention to schools. Nothing about masks. It was social and a lot of things cleaning surfaces that we didnt. It turned out it wasnt important, but you know, they were just getting to know it. The first shutdown came in. The San Francisco bay, and it was by people were Public Health people, but they were county officials and. It was, i think, the 14th of march, and they were in a situation of there was panic everywhere. And what they knew is Public Health officials was that there was this virus that was spreading in the northeast, seattle and around San Francisco. So they didnt know anything about they didnt know how it was spreading. They didnt know who had it they couldnt find out who had it because they couldnt get the testing apparatus approved from washington. The second thing they knew was that by in large numbers, people were dying in gurneys, in hospital corridors in italy, where, you know, it was a that was thats were going to be in a few weeks. So they just shut down everything. And some of these people have written about this. The knowledge they had is the knowledge that i have just said but thats all they knew. But they had the local police to shut things down in two weeks. It had gone all and new york the mayor and the governor were arguing who was in charge. But by the end of by april, it had essentially gone nationwide. But then i think the Public Health authorities, both national and local when they saw we can actually these things i mean it suddenly there was an enormous amount of day to day power that governors and mayors had and i think that one saw from that point going on a lot of abuses when people realized that they had the ability to do things and maintaining the fear was really important. If youre going to say its illegal to play golf, you know, youve got to really exaggerate. Theres no knowledge that would tell that that the knowledge we had, we should have said, if you dont know how to play golf, learn how to golf, go out and play golf. But people wanted to shut down everything. And so a lot of politics insinuated itself into it and it was it not a happy story, but it was not story some people like to tell that the government saw this problem, came in and scared people because the at the beginning it was people themselves were scared. And the government was, i think, being being to those fears. But then an enormous amount power, as alex said, have done this in 1919. And suddenly we, the people in government realized that they had an enormous amount of latitude and that became dangerous. Ive gone on a little too long, but i think i think she makes a good point. But its its a pretty nuanced story. I think, both in finance and public, where a lot of things started out okay. But then there was a pretty rapid corruption that seeped, i think i think its certainly true people were very frightened first for their life and then for their money for both. And but if i could go back the first part of your comments because i think its absolutely right to contrast the 2020 bailout legislation with the 2021. And there you see i think i agree a perfect example of the violation of what i call the cincinnati and doctrine which is that you have the intervention in the crisis and when the crisis over you stop a lot and thats a perfect example of where that was not done. And then the cost of the of the intervention became greater with the second set of interventions when in fact the crisis was already. So i want to say this is really a very interesting book. Its very well done. Its has, as i mentioned, alex on called him a couple of days ago and i said, alex just finished your book for the second time. So its really well written, but its really depressing depressing that Pension Funds have to be built up over, over and the and the it just but its but its but its written. Its very easy to read. Its very well done. I highly recommend it to you and and i really thank you guys for a great discussion. And i want to let you go sign some books for your for your fans out here. Chris, thank you very much. This was wonderful. Thank you very much, paul and chris,