Transcripts For CSPAN3 Jeanna 20240706

Us this evening journalist gina. Here to talk about her very timely and informative new book limitless. The Federal Reserve takes on a new age of crisis. Now weve all been hearing a lot about the fed in recent, whether helping to stave off total economic collapse during the 28 financial meltdown or countering the shocks of the covid 19 pandemic or most struggling to lower. As gina makes clear in her new book, these crises along with the actions of some pivotal central bankers like, the current fed chairman, jay powell, have fundamentally changed the feds purpose and function in american society. The fed has taken its Emergency Powers to new, gina writes, stretching its mission as lender of last resort and purchasing backed debt in massive sums. Its gone from insisting that social issues are not in its domain to flying pride, flags and shaping conversations about racial, gender and, geographic inequity with research and expert advice. Fed officials often talk about staying in their lane, but lane, gina observes, has into an avenue. Gina is very well positioned to tell the story of the feds extended and its and its vast influence. Shes been covering the fed and economic for more than a decade. First for Bloomberg News and for the past four years for the New York Times. Kirkus gave her book high praise, saying its the best book on the fed in our time and a model of financial and Publishers Weekly called it a timely and insightful. On one of americas most powerful and least understood institutions. And we have a great discussion partner for gina this evening, another very experienced financial neil irwin who used to write for the New York Times and the washington post, and now as chief economic correspondent at axios. Hes also the author of two books, the alchemists the worlds key central bankers, who dealt with the Global Financial crisis a decade and a half ago. And to win in a winner all world. So ladies and please join me in welcoming gina smiley and neil irwin. Thanks so, brad. I keep looking around, see if any of the subjects of your book jay powell, Lael Brainard, janet yellen or the room, i think they all live not too far from here. I do not see any of them. So we can have a nice free conversation. They didnt agree. They didnt. They didnt show up. Maybe. Gina, its a wonderful book. Im going to start with the most basic question possible. Why should anyone give a flying flip about the Federal Reserve . Oh, good question. I think the actually the point of the book really is that everybody should care about the Federal Reserve that you know, i think we spent a long time and i think i spent a lot of my career sort of treating the fed as, the specialist interest. That is something that sort of the super nerds really care about and really understand that everybody else can kind of, you know, treat it as such that its something that a small segment of Society Needs to know about. But the fed has really expanded in power in such fundamental ways that. It really shapes our day to day lives. It sort of matters for democracy. Think in a way that wasnt previously true. That means that, you know, as informed citizens think, we all need to be paying attention to what its doing. So so the Global Financial crisis happened 15 years ago. I wrote a book about it that came out ten years ago. A lots happened since then. And part of what you do in this book is kind of us up to up to the moment. Tell us about the pandemic to just start there and and what was. Three years ago this month that that really had lasting consequences this institution. Yeah, well, you and i werent sleeping, so that was an important that was an important part of it. But no, i think i think is so interesting because i think when you wrote the alchemists on the financial crisis and when we doing this look back period on the 2008 crisis, we thought that was a once in a lifetime event. We thought that the things the fed did would never happen again. And instead, in march 2020, we found out that 2008 was a prelude to what ended up being a much more expansive, much more sweeping rescue of really entire Financial System. Everybody sort of forgets. I think it sort of fell by the wayside because there was just so much happening during that period. You know, we were all adjusting to life at home. Many people have lost their jobs. Everybodys stocks were crashing. And everything just seemed so sort of bad. And there was so much on with the pandemic that i think people missed that there was basically a financial crisis in march of 2020 and the fed came in with really all guns, all guns blazing and snuffed it out before it got so bad that. It became part of the fabric of. How we remember that period. They bought bonds in huge. They rolled out emergency facilities that saved markets that they had never saved before. And just really for two months, every they pretty much unveiled something that saved some corner of markets that some of which many had never even heard of before. And it was really this expanse of sort of just absolutely sweeping, all encompass rescue that i think, you know, really worked but also opened a lot of questions about what kind of power the fed. So group of people in a building down on constitution avenue there, hundreds of billions of dollars, trillions total to do different things. What are some of those things that really pushed boundaries now raise questions about what they might do in the future and how these authorities might be used down the road . I think maybe the most interesting one. So ill start there is the Municipal Liquidity that mlf opponents call it. You know, these arent arent named to be fun to talk about. But the was a really interesting one because and i talk about this at length in my book but because i found a year everything started going sideways with covid. We had a jay powell, the fed chair was testifying up on capitol hill and he got asked this question by rashida tlaib, who was at the time freshman in the house. And she last crisis all bailed out the banks. You did all these rescue programs for the banks next time what about detroit could you save a municipality . Could you offer some sort of cheap lending option that can help states and cities to through a tough patch. And he was basically like. Tldr no like we absolutely cannot do that. We dont want to do that. State and local government lending is just so political that the fed would never want to get into that. And i think what was really interesting is within a couple of weeks, the crisis starting in 2020, we saw them cross right over that line. Municipal had completely dried up. States and localities couldnt issue bonds because. The market just wasnt functioning. Somebody to do something to get it. To open back up. Theres a lot of pressure coming from congress to do something to get it to open back up. And the fed. The fed did it. They did. They a Municipal Liquidity facility and they really did they didnt actually end up lending to that many entities. They only lent to illinois and mta in new york. But the fact that they even offered it huge deal compared to what was previously thought possible. So so you write in the introduction that you do not. This is not a diatribe. This is not youre a ron paul in the fed. Thats not where youre coming from, but youre also not somebody who would reflexively defend them by a long shot. Explain kind of where youre coming at this from and what what your point of view is ultimately. Yeah, i was trying to come at it like a journalist you know, i was trying to not have super strong opinions about where this should all end up. But i do think that, you know, as a journalist, part of your role is to say, heres what society should be talking about. Heres where we havent really paid enough attention. Heres where we maybe arent shining enough of a light. And like i said, in 2020, there was just so going on that i think that all of this was pretty well covered in the but maybe we dont really remember happened. And i think we certainly havent really had a conversation about what happened, what kind of political pressures the fed came under, what kind of precedent all set out. And so i think that the of point of the book is hopefully that, you know, these things are worth talking. This is a period that a lot happened, a lot of precedents were laid out. And we should probably think about what those precedents mean. So lets dive into one thing i like about your book. Its its about its about economic policy. But it is driven by characters and lets talk about a few of them. Well start with the big guy. So, jay powell, Jerome Powell, who is he . Where did he come from . For people who only heard of him a few years ago when he became fed chair. Tell us about his background. He ended up in the position hes in. Yeah. So Jerome Powell is a local hes from this area. He grew up and grew up in georgetown or chevy chase, and he was the child of a fairly family in the area. They were catholic. He went to georgetown and he went to the same school that Brett Kavanaugh went to. Actually, he went private here. He went to georgetown afterwards. He went to princeton. Then he went to georgetown for law school lawyer, worked in sort of law for a little bit, but then kind of made the jump to finance. Spent a lot of his career in finance worked in private equity for a while and of flit in between the private and Public Sector for much of its career. So we saw him working at treasury sort of in the domestic finance arms. We saw him working at the fed a governor before he became chair and tell real quickly the story of how he ended becoming a fed governor, because that really wasnt anybodys radar until it. No, it wasnt it wasnt actually. And we this is this is one of the places where my book breaks a little bit of news, because he was actually early working on the bipartisan policy center. So he was working at a think tank for no money. It made a lot of money in private equity. It made a lot of money. Hes hes worth, i think, something in the realm of like 20 to 50 million. Its hard to tell at any because these government forms are reported. But so he had made a lot of money in the private sector, particularly in the private equity sphere. And he is decides that he wants to come back to washington, he wants to work in policy again. And so he decides to take a job at the bipartisan policy center. So hes working at the bbc. He really focused on one issue in particular, and thats the debt limit. Topical, obviously, given the current discussions. Debt limit. Hes really worried about the debt. Hes hes a pretty hes fairly conservative. Hes a registered republican. And is pretty conservative. Hes very worried the size of the national debt. But he also is very worried about the sort of the the showdown we have every couple of years over the debt ceiling breaching it. And we were for a debt ceiling debate this 20 yes. 2011 this is 2011. Hes worried about the debt and limit debate. And so he up basically wearing out the rugs, capitol hill going up and doing presentations on the date at, the time, which is the day that you cross the actual sort of limit and you like you really borrow any more and take the extraordinary measures dont work and youre past the point of being able to to solve the governments problems. And so he is giving these briefings and the government is not actually producing this number at this time. And so are using his number that he is producing in his briefings and hes talking to all these senators on capitol hill and hes just super effective people listening to him. Republicans are talking to him and he sort of ends up becoming this sort of weird emissary for the Obama Administration on capitol hill, which is funny because is a republican and he would not be the most expected member to become an emissary for the Obama Administration on capitol hill. And so the Obama Administration needs to nominate a fed governor. Theyve had a couple scrapped because couldnt pass the senate and they are looking around to find whos kind of centrist and who would fit that bill. And theyre like, why not jay powell know hes a republican. So the republicans will probably for him and hes just basically helped us out big time. On getting debt limit deal done. And so theyd send around letters, emails to each other, basically saying this is not qualified from an economic perspective, but we think that hes pretty you know, hes pretty smart and he did really did you know a lot help us here. Ive got some of that detail in my book and the end conclusion is that they ended up nominating jay powell to a governor role. He they were a little worried. He wasnt ph. D. Economist, but they were like, you lets go for it. And he got confirmed and, you know, rest is history. And so he spent several years as a fed governor. Theres seven of them under janet yellen. Donald trump gets elected. How does he end up in the in the big office . Yeah. And so, again, this is one of those instances. Hes just, you know, hes just kind of the sort of person whos been at the place at the right time. But i think hes also the kind of person who opens him up to himself, up to like joining the Bipartisan Policy Commission during the debate. Exactly kind of moment when when this kind of thing would happen. But hes sitting, hes out. Hes a governor hes been extremely helpful as a governor he kind of chaired every committee under janet yellen. You know, the the back story here is that fed governors absolutely detest chairing committees. Theyre like a ton of work. Theyre very thankless theyre not glamorous. Nobody gets any kudos externally for doing it. And jay powell did a lot of committee chairing. He did a lot of Committee Work while he was at the fed. He was a workhorse. He was a workhorse. People liked him internally. People liked him internally. He was very well liked. Youd like it would be a regular thing during this period that you would talk to somebody who had just left the fed and they would say like, that guy will sit. You and let you give him a briefing and ask you 96 questions and take careful notes. Then remember your name and your kids birthday, you know, like he was that kind of person. So people really liked him internally, he was in the right place in the right time. And he was a republican. And it was the Trump Administration. And so they wanted to pick somebody who was already at the fed who they thought would be confirmable. They wanted to pick somebody, president or secretary mnuchin, steve mnuchin, the trump treasury secretary had some comfort with. And jay powell was just in that position at that time. He was he was the clear candidate. So im guessing a lot of people in the room remember trump insults and attacking jay powell for raising Interest Rates too much. 2018 2019. How did you deal with that . How did he handle the the kind of intensity of the pressure that came from the white house during that time . Yeah. So it was interesting. It started out. It started out that trump liked jay powell. He was kind of recommended to him by people in his staff and he obviously got the job. But like a year we saw the chair powell kind of press forward with the feds campaign of raising Interest Rates. Trump absolutely freaked out at him on twitter, on tv shows everywhere. And interpol really just kind of ignored it. He didnt talk about it in public in any really any case that i can remember. He tried to bother them behind the scenes. Yeah, i mean it clearly did bother them behind the scenes actually. In fact i forward some emails ive freedom of information act requested some emails after what i think was im curious if you agree with this but i think probably the single worst attack that trump launched in jay powell was during g8 has most important speech of the year at, jackson hole, which is the feds big conference. Trump tweeted, whos the bigger enemy, jay powell or xi jinping checking out, which is obviously was not. And it was like while powell was speaking, was on stage when this happened. And so it was it was pretty like it was a crazy moment. Nobody paid any attention to anything that happened after that at the conference. It was kind of sad for the next panel. I think youre about to tell the story that his communications what did she email to. Yeah and so his vice chair Richard Clarida got an email from Communications Advisor michelle smith. She sent an email to everybody saying, hey fbi, this just happened and the vice chair just emailed back two words ug, hgh and so i think we did get some sense that they werent completely thrilled with how things going down, but they really worked hard not let that seep out too much. The moment it was obvious that they unhappy, but they really didnt think that if they showed sort any resistance or i think any sense of bowing it would be really bad fed independence. And theres this real belief that you need to be independent from the white house in order to set good policy. The Federal Reserve. So were going through the characters. Lael brainard in the news lately. Shes now joe, Top White House economic adviser. Whos Lael Brainard . Yeah, Lael Brainard is a super nerd, i think is the first and most important thing maybe to know about brainard. So she is she economist on how she was vice chair of the fed until very vice chair of the fed until very recently which is why shes relevant to this book. She was a sort of superstar professor at mit and decided to come down to washington and work in the work in the white house. And she ended up becoming president clintons sherpa, a negotiator in international issues. Shes been quite a bit of time at the treasury and ended up at the fed versus governor by the end of the book as vice chair. But she was really at the fed for a while before the in this book kicked off. And she had kind of by the time that 2020 rolled around taking on this very interesting role of the fed she was the lone democrat during the Trump Administration and she kind of took upon herself to make herself like the sort of person who was going to stand in the way of regulatory rollbacks. And so she was really interesting. She was just constantly odds with her republican counterparts at the we think of the fed is this sort of non institution. But when it comes to things like regulation, partizan, identity is really matter there and she was. Of she was just ideologically quite from the rest of the fed and i think actually one of the reasons that shes an interesting character study because it it shows you how partizanship within an institution that is its policy setting pretty nonpartisan and she dissented many times from regulatory decisions in that era dozens of it which normally doesnt happen normally they theyre usually unanimous on these. Yeah it was very weird. It was like a very practice because. Not only is it unusual, but its kind of frowned upon. Within the fed, theres this real that you should be collegial, you should work out your differences through negotiation. That is the way things are done. And i think not only was she dissenting, but she was really laying out a roadmap of somebody could go back and undo everything that was getting. So you would get i mean, i was finra, right during this period and the way would work is they would put out a Financial Regulation change. Randy corales, vice chair for supervision, would be the person it and she would put a statement alongside her dissent, the statement alongside the would be like, what . Why you be unhappy about the change that just happened and how you might reverse it in the future. So it was not it was it was a quite a contentious moment all. Right. Tell us about randall corals name. Most people dont know but he was a very powerful Bank Regulator for several years there. Yeah. And also, i think one of the spiciest speech givers in central banking. I think we can all thats a standard is pretty low though is the thing and is it its a High Standard but you know you take what you can get in the fed corps. I feel like randy corales is is utah and hes from Salt Lake City. Very proud of it. Hes a mormon. And he is interestingly the great nephew. Marriage of miracle he was one of the most important figures in fed. And hes very proud of this he calls him uncle mariner. So so its a fun quirk of him. Hes a very colorful speaker. Hes a very person. He flies planes, his free time, and he likes to give speeches comparing Monetary Policy, aviation. The problem that is that most of us dont fly planes for everyone who doesnt like planes crash wants. Yeah, right. There are multiple problems with this style speech giving. But in a in an actual like you know the real biographical he went to columbia. Hes a lawyer. He spent some time in new york. He actually spent most of his time living in new york and working big law commuting to Salt Lake City on the weekends because thats how much he likes west and thats how much he hates manhattan. He took one weekend trip to the hamptons, got stuck in traffic the entire way out, and was like, never again, never again. Im a im a Salt Lake City guy. And so he spent most of his life commuting between some city on the east coast and Salt Lake City. And he has worked in much like chair, worked in and out of government a lot, often chair powell, actually, theyre friends. Theyve known each other for a long time. He worked at treasury. He worked in his worked in fin reich for a long hes worked at banks. Hes sort of done similar rounds, private equity. But he ends up at the fed in the Trump Administration to be vice chair for supervision and people were really apprehensive about his appointment. He was first ever vice chair for supervision. The role was new was created by doddfrank it was supposed to be sort of the person who would coordinate all big Bank Regulation and we hadnt actually had one. We only had daniel under the Obama Administration, but he had never actually been confirmed to the post. And so its a very powerful job. Hes the first guy in it. We kind of knew he had some libertarian leanings and there was this expectation that he might go and try and roll back regulation pretty aggressively we definitely saw him rolling back regulation, but it was interesting to watch it as a journalist because the banks were just constantly angry with, this guy and like real angry. I think theres always this sort of performative. Im angry with my regulator kind of angry and when youre a reporter, you do all of your rounds, you try and figure out if thats real or if theyre just trying, say like, oh, regulation so tough because they want regulation to be working. The yeah, exactly, exactly. And i dont think they were the refs in this case. I think they were actually angry. Randy quarrels, which was interesting. He was a very interesting person to cover and it made him interesting when 2020 hit because he was sort of the person who was sitting at the nexus between fed all of the institutions that it and so he was fascinating to watch during that period. So lets talk about uncle mara you you spend the first few chapters of the book really diving into history which i think is a great choice and really creates an arc and helps us understand where the more recent fits in. Who is Mariner Eccles . Why is he an important historical figure on on and what did you spend so much space in him on the book. Yeah well i feel like mariner i read a lot of books in order to write this fed book. I read all the fed books. So dont have to. And you should not read all the fed books would highly recommend mine except you should read the alchemist because it is written very well. It is a great fed book, but i will say not a lot of the fed books give mariner much time. I think. Think hes maybe the most underappreciated the former fed officials we spent a lot of time talking about some of the other titans of fed history like volcker. And i think spend less time on mariner articles. But he was a fascinating human and he also was really important to the feds sort of historical, and hes really important to sort of the power accumulation that i wanted to talk about in the book. So i spend a lot time on him. Mariner was child of a family of immigrants. They had basically just been poor in scotland. They not been mormon, but they converted to mormonism to get over to america and. Then they became pretty dedicated. They were pretty dedicated latterday saints. And so they based themselves in utah, Salt Lake City, sort of like not settler, not o. G. Settlers, but not off. Its pretty developmental this stage, and his dad just establishes huge Business Empire basically off the sort of the sweat of his brow. He works very hard, his business, empire and mariner when in his early twenties takes it over and builds it up more, built it into banking empire. So hes in his thirties when the Great Depression hits and the depression is obviously terrible for many reasons, but its particularly terrible for small banks and bank holding companies, which is what Mariner Scott and, most of them crumble, most of them fail. But he manages to very theatrically off a run on the bank at his institution. And so he gained some amount of fame out of that. And washington basically him over to capitol hill to testify. And hes supposed to be talking about how he saved his bank and instead he lays out a several point plan that actually ends up the rescue plan from the Great Depression. And so he is really sort of instrumental in sort of like setting out what ends up becoming eventually the deal and he ends up becoming take it and he gets taken into the government he starts advises, as i understand one of the few kind of business who really supported fdr and his program. Yeah, yeah, absolutely. And he that he was really the only one. Fdr was listening to at the time as well which is relevant. And so fdr is like this guy is smart. We want him in government. Mariners like im passing out and, getting back to utah like i do not live here much like randy quarrels. Theres a lot of parallels here. Mariner has no intention. Mary nichols has no of staying here and he is prevailed upon to think about the fed job. And so hes like the fed. The feds a new institution. It was founded in 1913. It didnt exactly just cover itself in glory with. The whole Great Depression thing, you know like, the whole point with stabilizing the financial. This is not going well. I will only take this job as fed chair if you me fundamentally reform the whole institution and he. Sure, obviously fdr is going to tell him no. And instead fdr is like, yeah, sure, do it. Like reform, reform. The fed have fun. And that is what happens mariner nichols completely reforms the whole fed prior mary nichols reforms the fed was a really diverse really dispersed institution. There were 12 Regional Banks. The Regional Banks were really powerful. There were still governors in washington, but they were basically powerless. The fed, which just sort of an organization like he was he was a figurehead. He wasnt really powerful in any way. And the secretary of treasury sat on the board of the fed and really sort of ran the show mariner kind of changes all that up secretary of treasury and comptroller off the board the board of governors is now seven people, including fed chair and the Regional Banks are completely demoted, used to be called governors. Now theyre president s. We kind of dont care about them anymore. And its not. And thats a huge oversimplification to any Regional Bank watching this. We know youre very important, but now. No, seriously they are important. They still vote on Monetary Policy. Whats neat is theres this Straight Line from Mariner Eccles was doing in the thirties, forties, fifties, to the things that jay powell and will brainard and randy corales did in 2019. Yeah, absolutely. So because he really sort of solidified the power structure, centered it in washington and thats really important when we get later in history and i think the other thing he did it sort of in a later period that was really important to what we saw in 2019 and 2020 is in the 1950s, he was instrumental in solidifying independence from the white house because. That wasnt always a given. And in fact it wasnt even existent in any way. The great in World War Two period. So during World War Two, the fed is keeping Interest Rates artificially low to help the government find itself and. Then in 1951, were through the war and eccles and his colleagues on the fed want to raise those Interest Rates. Eccles gets from chair still not completely. If that was about the right thing, it might have been about Financial Regulation. But in any case hes removed and he just stays on as a governor, you know, he refuses to leave basically, wont see the floor and he helps to wrestle the Truman Administration into agreeing to give the fed some amount of independence and then ultimately ends up being pretty significant independence. The fed now sets policy completely separate from the white house. The white house has really no say, and that is sort of his legacy. So jump back to the contemporary times. All right. They do all of these things in 2020 during the early days of the pandemic that break a lot of precedents. Theyre theyre coming under pressure from all Different Directions on areas that dont seem like traditional Monetary Policy Bank Regulation at all. Lets about a few of those and how those pressures look and how they might unfold in the years to come. So Climate Change, what role does the Federal Reserve in climate . Yes. So i think that this is so interesting and i in my book, i draw a pretty clear line between the things that the fed has been doing in recent and the pressures its now under. You know, i think the fed has become this really powerful entity in society that can do a lot huge research organization, huge powerful shaper of how much interest, not just in general in society, also for specific sectors, as we saw in 2020, in times of trouble. And so theres this really interesting sort of new set of ideas popping, cropping up like, you know, Central Banks could be involved in shaping Climate Transition and making sure that institutions that are helping to sort of put forward the climate tradition can borrow cheaply and this push is really underway mostly europe. You hear a lot about green qe. Is this idea that you dont buy oil and gas companies, you do buy the bonds of institutions that could be helpful to Climate Transition. You dont hear about it as much because the fed can only do that with this emergency. Powers it doesnt have the ability to buy sort of all a card like that with its traditional cleared up in 2020, correct . It absolutely should the fed theyre buying Corporate Bonds should. They buy bonds of oil and gas companies, for example. Absolutely. And so its really hard for the fed to stay as historically neutral as it has been in todays modern society, where everything basically comes back to financial markets. You know, we are a very financialized society. Its just kind of pushing the fed, which has traditionally been sort of this referee for finance into corners that it hasnt previously explored. And its the fed is, you know, really grappling with this in real time. These are these issues are pretty unresolved. And i think its really interesting. The fed is currently in the process of rolling out scenarios for climate. Do not call them tests. They are not stress tests. But basically these going to put Bank Balance Sheets through different scenarios and see how safe the banks would be the event of a crisis. This is kind of the most vanilla version of. What a fed could do or a central bank could do climate. Everyone basically that the fed should not just like let the banks lend billy willy without thinking about the climate risk they might be incurring. But i think its also probably a first step. I think were probably going to see pressure on the fed to do more than this. And i think we dont we dont actually know how theyre going to respond to that yet. So what is the feds role with Racial Equity and racial divides in the economy . Yeah. So i think one thing that i wanted to talk about at some length in the book partially i think its just such an urgent question, partially because i think its often talked in a kind of simplistic way, is what role the feds policies actually play in inequality. You know, i think its almost become like a meme in the media that people will say like low rates qe worsen inequality and i think thats just too simplistic a statement and i think its often applied in a racial sense because anytime you talk about things that are bad for inequality, theyre typically for racial inequality. Just because the divides we already have sort of as a baseline. And so i have a whole chapter in here kind of going through the around this. But upshot is you need to think about wealth and income inequality when you think these issues, wealth being the amount of money youve accumulated over time and income being just not your earnings every day. And that policys working kind of directions in those things. You know, qe obviously up asset prices, but at the same time, qe pushes down Interest Rates if it does lead to lower unemployment over time, which is kind of the the goal, it could potentially mean that has a job that they wouldnt otherwise have. And thats the ability to build wealth. And so its really hard to say anything super definitive about the role the fed is playing here. Doesnt mean we shouldnt be asking the questions, but i just think the conversation deserves a little more nuance than it typically gets. So so jay. Powell, this patrician wall street veteran, republican, actually became very focused on full employment and, people getting jobs. And some of these equity questions in 2018, 2019. Tell us about that. Yes. So this was such an interesting to watch. So in 2018 and 2019, the fed is coming off of this long of very, very low inflation like super low to low fact they wanted inflation to be higher. Sounds a little counterintuitive, right . Right. Like we did, you could have a job, but it sounds a little counterintuitive. But when you dont have some inflation sort of all the gears get messed up a little bit. You want a little bit so that people get wage gains. And so the economy just runs a little bit more smoothly. And so the fed is thinking about, you know, do we need set policy the way weve always done, which is preempt or flee to choke off inflation before it really flares up and the sort of flip side of that question is, have we been too hard on the labor . Could we have let the labor market run a little hotter in the 2015, 2016, 2017 era and maybe the answer is yes. And so the fed decides to take this big review of its Monetary Policy, it decides to couple that with big outreach push. And so they and this is very much chair pals baby rich claire two leads it hes the vice chair but chair bells and they really go out into a bunch of communities and they do these fed listens events where they sort meet with organizations and they really just sort of engage in a way i dont think weve ever seen the fed do historically. The Regional Banks typically do engage with communities. You dont see the board just like going out and talking to community groups. And it was interesting watch in many ways. One of them was people were surprised at what they were hearing, which is kind of surprising and made me appreciate why i was actually pretty relevant for fed like some of the economists would tell you afterwards. Wow, i didnt know that was happening. And as a journalist, thats surprising to you. But it was interesting to watch how much of that push can we for the mistakes they made, letting inflation get out of control last couple of years know its like everyones favorite question these days right and so in 2020 the fed introduces this whole new framework and the framework is basically a little bit more ambitious on the employment side than it previously was. It says effectively, we cant figure out with any amount of precision where the rate of full employment lies. And so were not going to try and do that anymore. Like thats basically just not thats an oversimplification of what they did but that is basically what they said. And the argument that youll hear sometimes now is that the fed was so concerned with employment and so hesitant to declare the market overheating or the economy overheating that it ended up being very slow to the draw. When it came to the inflation burst that we saw in 2020 and 2021, that if they had not instituted new policy approach, that they would have raised Interest Rates sooner. I think that requires a little bit of historical rewriting. I think actually a lot of the problem was probably that misdiagnosed the inflation entirely. It wasnt the inflation that we got time and i talk about this a bit much and much length in the book, obviously, but the and im curious to hear your thoughts here, but the inflation we got this time was very much supply shock driven. It didnt come from the labor market initially. I think in basically any analysis find. And so i always those arguments a little interesting. So last question for me then go to you if you want to ask a question. The microphone is right there. How so . You titled the book limitless. You know, you raise the specter that all of these limitless theyve now deployed twice in the last 15 years in the wrong hands with the wrong mission could be antidemocratic and really problematic for for the united states. Why what what are the risks and concerns here, this limitless power . Yeah, so i think the thing that we saw happen at the end of 2020, the sort this sequence that we watch that i recall, the book is really the answer this question and that is in 20 at the end of 2020, it seemed pretty clear that joe biden had won the white house. But was not at all clear that the democrats were going to take the senate. And so there this moment where it seemed really possible that we werent going to get any more state and local health. And i was hearing from a lot of my sources at the time, and i report in the book that there was going to be a push try and pressure the fed to use the municipal facility to really sort of make that states and localities could get really good loans for really terms, have really low rates. And i dont think the fed would have said yes to that. I dont think they would capitulated to that kind of pressure. It was the kind of political pressure that would have pushed the fed almost into a policy role, almost never to doing the kind of policy the congress does. And it would have been totally plausible under the the sort of laws that govern the fed. They could have done it. They absolutely could. And i think that thats really interesting. I think it didnt happen there. A big republican backlash actually. The republicans kind of tried to take away these powers temporarily and we basically ended up in a place where the powers stayed because the republicans realized sort of came to agree that you actually want to take them away, because then the fed cant do anything in times of crisis. But i do think it also sort of the specter thats going to come again in another crisis, you the fed can do almost sort of quasi fiscal policy and it can do it with a less democratic consensus, or they dont need to do sort of like the messy negotiation that goes with passing actual legislation, but they can then kind of make the decisions that look very similar. What you would do through that messy negotiation process. And i think thats something worth reflecting on. Thank you. Was a question for gina. You have a question, please. We well, i think on several, actually, but depending on the line i only ask one you mentioned there kind of emerging role clear role in things like climate and race relations, so forth. So its one thing for the fed to recognize that their decisions, you know, have an impact on these issues. Another for to be actively involved. What my question is, though, is when do they discuss discuss. The influence of fed decision on Climate Change and so forth at what do they do this during the. Course of the governors meetings . And so forth . Or is it more done back at the kind, the Research Level and through just, you know, how and how transparent is the is the any that goes on on that of issue. Yeah. Is a really interesting question. So the fed is a really big research. Obviously, 12 Regional Banks around the country all of them have big Research Staffs. The board in washington has a Research Staff. And so what weve really is that the fed has started to sort of discuss climate issue and discussed how it how it relates to Monetary Policy in a research forum. And so the San Francisco fed held the first ever conference on climate, i believe it was in 2018. But check me on that and that kind of kicked off what has been a pretty Robust Research agenda from them. And so weve seen them holding a lot of conferences. They typically release the papers. Theyre often live streamed where they do talk about sort of both what Climate Change is going to mean for the economy, but also what sort of Economic Activity and things are in the feds domain. I mean, for climate. And i think thats sort of the primary venue at this point. We dont see it popping up too much in minutes, which is how we sort of get an of the meetings. We do get it. It has started to show up. Interestingly, in the Financial Stability report that the fed releases two times a year, thats really new development. We didnt previously have that and so theyll do a little climate risk section where they talk about risk to the Financial System emanating from Climate Change. It sounds like you know one thing distinction is its more the climate of race, whatever is more to long term thinking about could come our way in the future rather than how should we act now in our Decision Making currently. Yeah, i think thats definitely true. I think. Hello, thanks so much for the interesting talk tonight. You spoke about the characters, the fed with such wonderful familiarity. But what we as members of the public about how chair relates to the press is what we see in fomc press conferences. And he can seem kind of standoffish and a bit tight. So what do we not see . How do you build the kind of trust and rapport that you need with them to write a book like this . Yeah, well, you know, neal and i have both been doing this for forever, so ive been, i think, covering these guys in one way or another for about ten years now. And so a lot of it is just over the years, you know, i spend a lot of conferences with them. I know, i know all of their friends. Also, im a journalist, so i know really all of their friends, even the ones that they might or maybe would prefer that i didnt know. And so a lot of i think lot of actually fed officials, obviously are not as sort of in the everyday mix as a lawmaker for example might be theyre not a as accessible. And so i do spend a lot of my time just trying to talk to people who know them, trying to get a feel for what theyre like in real life, trying to talk to former students, people whove worked with them before and where a lot of the color comes from in the book. And, you know, i think i think the interesting challenge of being a fed official is there every moves to markets. And so i think of the standoffish is comes from that you know there is a real concern like if you want to be friendly and plainspoken. When chair powell came in, he certainly tried to do that. His first couple of speeches, he actually in a very plainspoken way and markets reacted absolutely, horribly to that. And so he quite, quite pointedly started reading off of no cards when things were important and started reading it almost like i think of it as his robot voice when wants to communicate something very clearly, hell be talking to you be answering his question, and then well all of a sudden say, thats a very interesting question. Let me read from my notes. Yet he was a very important conference one time where he had to deliver very clear message. And he literally brought out a sheaf of papers and like held them so the camera could see what he was doing. It was. It was quite funny. But yeah, so i think a long answer i think for these guys. You one time you give a speech and Say Something a bit wrong and the dow drops 800 points. It has a way of searing in your memory yeah and religion thank you thanks. Thank you for a very interesting talk and book when i saw your talk coming up i read the book i think its a real contribution in kind of putting a human face on these complex issues. And i think for young civil servants, thats very helpful actually to be able to kind of read this is background that said, i have a comment and a question my is that at about the time of Mariner Eccles 70 years ago milton friedman, nobel prize winner, a university of chicago, made a what i think is a very persuasive case that manipulating Interest Rates and manipulating the money supply is the problem, not the solution. He used to tell a story about a man who had a lot of Car Accidents and people were very sympathetic to begin. But after a while they decided that his wife decided that he really liked to have Car Accidents. I think its probably true that the are constituencies for for crisis is. I think the government thinks that it can manipulate the timing of the economy. Theres kind of a folk wisdom that if you get Interest Rates low enough about eight months before a president ial election, it takes about six months to work through the economy and end up, you know, going to an election with with a good a good economy. And i think its also true that the some of the big banking kind of like crises to because they can make a lot more money if theyre good and lucky in a major than they can in kind of businesses usual. So i think that with that kind of background my question is having read the book. Um do you think theres a theres a danger in over glamorize seeing these people kind of you know the cowboy approach to you know theres a wonderful cry theres a terrible crisis or some say wonderful a terrible crisis and these guys kind of ride to the rescue where, you know, theres a real question about whether the fed is doing the right thing in the first place. Um, weve just seen a, you know, year when Interest Rates went from nothing to, to what they are now, thats very volatile. You know if milton was right, this is the problem, not the solution. So they were i thought i thought reading the book that it was extremely interesting. They thought it probably does over glamorize people somewhat. Yeah so i will ill take on the glamorization and question and leave the monetarist theory aside, the view would be a long answer, but on the glamorization point, i think i think one thing i tried to do and i hope i achieved in the book is paint these people as people, not as like heroes. Writing to the rescue. As you said. I think that were really grappling with some real challenges. I think the way they grappled with them actually, a lot of the conversations thats happening, government that are happening in government right now. And i think that theres a real relevance there. And i think its much easier to learn about those issues, people, than it is to learn about them sort of through a dry academic. And there are plenty of dry academic papers talking about every issue that i talk about in this book. You know, like academics have covered. But i think that its its i think the fed is an increasingly important part of civic education, not just education. It shouldnt be just the ph. D. Economists who understand the issues that are part of sort of the bread, butter, everyday work of the fed. And i think that realistically, if you want to communicate whats happening at that institution in a way that a wide audience finds accessible, almost need to use characters. You need to tell it through personalities. Sort ooh good. Im a professor at Howard School of law teaching Environmental Justice after a in the department of justice environmental law but a few years ago i remember there was a series that was put out by npr radio which got my attention about the and diversity or the lack of diversity, should i say. And then there was a period where there was some attention to this. I have not seen any real change. I think the number of people of color that you can find, at least that ive been able to see im not there. And in this particular day age and the problems with with disparate impacts, im im wondering if i when you mentioned in your book now ive to get the book to read it, but do you know what is the fed doing . Diversity. These days of any import . And i love chapter 13, but yeah, no actually i think this is an area where the fed has been really focused and its really interesting and ive actually written quite a bit on this topic. Its something that ive always been really interested in as a journalist, and there was a period where they had a pretty track record where they were just not even though youre some numbers on a number of economists in the system. Yeah, so i did i did the raise actually phds there hardly any pages in the system for a while its gotten much better recently but when it comes to the rise the Research Staff it was just extremely extremely slim when it came to people of color hispanic people, black people, etc. And the yeah, the presence of minorities within the fed sort of economic ranks just wasnt very good. But this is something really sort of conservatively been working on in the last of years. Theyve begun to hire pretty aggressively at with a sort of or i guess the way to think about it is more theyve begun to recruit much more when it comes to thinking, hiring people of color. And so that means is theyre showing up spaces in places where they think that theyre going to find diverse students. Theyre talking to people at howard university. They actually have a thing where people from the board will come out and teach a class at howard occasionally, which has been a really recruitment tool for them. Theyve had several hours from howard in recent years, from what i understand. And yeah, and so this has been a pretty concerted push. The idea there is our Research Assistants often go on to get phds and then they often come back to the fed. And so its a long process to build a ph. D. But they seem to be working on the pipeline and theyve recently done some pretty important. I mean, this is not the feds hiring, this is the president s hiring. But they recently appointed two black members to the board of governors. And so i think theres also representation the top. And ill note that one of the people appointed to the board of governors, dr. Lisa cook, whos formerly of, has been really instrumental to sort of diversifying the sort of pipeline i think she is a real champion of the ada summer program, which often sort of moves people from their undergraduate programs and into some sort of pre doctoral pathway. Is there any of metric or reporting system would numbers on break down and not only for phds or the upper management of the fed, but im talking about the lower ranks, the career, the data, the people who sweat it out. Yeah, you know, i dont if they have it for the non phds after i did that story on, lack of diversity, they actually did start releasing diversity numbers their in their ranks. And so that something that i had actually requested from all of the fed banks individually and they now do it themselves and put it out every year because that Public Document it is a Public Document. They put it the website. Okay. Thank you. Youre welcome. Some questions, jim. Given the chance at double and to do that. Were the comments about Milton Freeman actually made me think of this question we used to hear so much about the money supply back in the days with high inflation and when when the money supply was a big topic of of interest in the different sectors of the money supply and so forth. And that has died out. So theres a sort of philosophy, fickle change, im sure wondering if you can sort of quickly give the history of of worrying about the money supply, reporting on the money supply, what is into right now . Yeah. What right when is m2 actually talked with mervyn king ad nauseum . I probably could answer that question, but mervyn king is formerly the bank of england and a big big fan of monetarism, or at least follows it closely. I think that you do still hear of officials talking about the money supply, particularly, i think of the Federal Reserve bank of st louis. They are still pretty focused on the money supply as an important input to how theyre thinking about the policy process. But i think a big part of the reason why the went away from talking about the monetary money supply is its complicated and its difficult to predict whether money circulates in the economy, a function of many things bank lending, you know, an appetite for cash, etc. , things like that. And its just those are tough measures follow whereas Interest Rates have a much more of full effect on. The economy i think the place where you can see that most clearly that transition i think thing that most elucidated what actually happened here for me because there actually arent a lot of great histories of this that i have found at any rate but paul volcker in his biography goes into this at some length and then he actually did an oral with the fed probably a decade ago now where he talks about this at length. And its really interesting. He actually describes the monetarist period you alluded to sort of the period when he presided over the fed, when they really did focus on those monetary aggregates as sort of sort of a practical shift that didnt actually fundamentally change what they were doing. You know, they were still targeting interest at the end of the day, but it was easier to communicate it as we dont want the money to be expanding so quickly and so that of communication is really why they shifted if you talk to some cynics, theyll say that actually it obscured what they were doing because it had they pushed Interest Rates into double digit levels, people would have absolutely rebelled. And so the switch helped them to avoid having to that so painfully. But i think that the answer at the end of the day is this all all still kind of talking about the same thing Interest Rates the way talk about the tool is different but it has a lot of the same after effects on the economy we were out of time weve got time for at least one more question mine so gina talk a bit about the challenge that a journalist who has a beat faces when you decide to write a story thats focused on that beat, i mean, were there things you discovered while reporting for the book that, you know, you thought, well, do i keep it in the book or do put it in the New York Times and then how did that conversation with your editors go . Yeah, i published everything. And that was that was how i that was and solve that problem. I was i did come across i broke several stories over the course of the time that i was publishing or writing book that came from book reporting. But at the end of the day, i realized that they werent going to be that additive to the book as individuals. And the fact that i put them into the ether and got people to talk about them actually ended up making them more valuable as inclusions in the book. You know, i think the the with the book in my mind, goal with this book was less to sort of break a story or break break news and more to sort of chronicle a moment in history. And so i thought that if i published it, it was more likely that goal was going to get fleshed out. So actually, the the diversity numbers that was originally something i was spoiling for the book and it ended up being newsy that i decided to publish it right away. And that was really useful because i had so many people get in touch with me after that that ended up making it into the book in some format. Did you have an understanding with your editors when you started project about how this would work you know, i think people do that on case by case basis. I think my editors know me well enough to know that i would never be capable like im temperamentally incapable of sitting on a story. So we didnt have to have that covered. But i imagine other reporters probably would have. I dont know if you found this when i did a journalistic book where was the same subject i reported on . Reporters often arent going to have newsmakers or sources and that thing that happened two years ago. Walk me through what really happened always whats going to happen next. And so it can be really good to do that kind of yeah. And i will say i there are some things in the book that are totally that youve never read before, but they not have been new stories in the New York Times because nobody is interested. The fact that the Obama Administration thought that was bad, that jay powell didnt have a ph. D. , i think thats kind of irrelevant in the but its pretty interesting. It is a piece of and with that, were out of time. Jeanna smialek limitless is the book. 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