Both in the construction and execution of Monetary Policy. Following on one of the data points, trade, i guess were going to talk a little bit about Monetary Policy. As part of that discussion, the fed has started to talk about that being the role of its Balance Sheet. Well talk about that in a little bit. So randy, i think all of you know both of these folks. University of chicago, former governor at the fed, now with the university of chicago. And john foust, a number of years at the fed, now at john hopkins but on leave back to the fed. You just cant quit the fed. So were now in the third longest economic expansion that weve had. One of the questions is will policy change which has been discussed both in monetary and fiscal policy extend that expansion or not. In light of the discussion about the Mortgage Backed component of the feds Balance Sheet, ive been looking we at fannie mae look at the tenyear treasury all the time. That actually started to rise back in july with the ecb Holding Steady post brexit in the second half of july and then with the d. O. J. Saying that it was going to reassess negative rates at the end of july. The tenyear started a gradual rise at that point and of course it accelerated with the president ial election and it peaked at about 2. 6. I think right now its about 2. 48 or Something Like that. So the fed hiked in december and it looks like now the market is prepped for a rise in march. Well find out about that before too long. So lets start, if i could get each of you to address first whats your view of current Monetary Policy, how is the fed doing, how have they been doing up to this point. And then what should we expect Going Forward from here, how fast will they go, how far will they go or should they go. Whats your view on up to the present and then what we should think about Going Forward. Maybe well just go across the panel here. Great. Im absolutely delighted to be back here at nabe where many years ago i had been on the board and was delighted to be a part of that. And i can see that the conference has grown Even Stronger and even bigger so im really delighted to see that. I wish the economy had grown Even Stronger and bigger than it has, but i think we have had a fairly consistent recovery if not an exciting recovery. Part of that is because of the fundamentals. Ultimately Economic Growth comes down to the number of hours worked and output per hour. Because of demographic reasons its going to be harder to get as many labor hours as we had in the good old days, and productivity has been puzzlingly slow, not only in the u. S. But worldwide. So thats why weve been getting about 2 growth or so. The inflation rate obviously has been consistently 0 below the feds target of 2 for expenditure index, although were starting to move there gradually. So i think the fed has done basically what it could to try to provide the necessary conditions for growth, but Central Banks cant do everything. I think theres often a thought and especially post crises that Central Banks should be able to do everything. They should be able to create jobs, create inflation. They should be able to create whatever growth rate they want. And they cant do that. They are one important piece of the puzzle but theyre only one piece of the puzzle. I think the fed has been trying to make sure that we avoid the deflation outcome, avoid deflation expectations. The key thing that Central Banks can do, they can then try to provide some increase in inflation and Inflation Expectations which the fed very gradually and gingerly has done. Now were starting to come closer to our 2 level. And so i think the fed has made reasonable progress on that. No surprise, the fed has made it very clear that unless something really radical happens between now and next week, that they will raise rates in march. I think that would get them on a math to raising rates further this year. So rather than having one rate hike at the end of each of the last two years, were going to start a little earlier, giving us an opportunity for more rate hikes. Well see how the economy evolves. Well see how inflation evolves. But i think most things are pointing to continued reasonable growth, not extraordinary growth but reasonable growth at least in the Short Intermediate run, continued slight increases in inflation and Inflation Expectations which i think really mean that the fed needs to continue on the path that they said that they are going to be on for two or three rate increases this year to try to stay ahead of the challenge of inflation. We also said where are they likely to continue to go over the next few years, thats of course an important question that people at the fed and i think john has been helping them to think through this. Where is that magical star, where is this neutral Interest Rate of in the long run where would the Interest Rate be if there were no fed, if there were no interventions. Where would the economy go naturally. And i did some work with some former central bankers from charlie bean and christian, one of my former colleagues who works in emerging markets. There have been complaints that Interest Rates are so low due to Central Banks behaving crazy. If you look at the last 30 or 40 years worth of data, you see Interest Rates falling subtly, both nominal and real rates since the 1980s. They come down very gradually. This is all before the financial crises. The question is what was driving that broader change, not just in the u. S. But worldwide. Its emerging markets, developed countries. We argued that it was the role of china, china being very high savings economy being integrated into the world economy, effectively shifting out the supply of savings curve, so this has some elements of the global savings glut explanation to it. So all the things being equal, shipped out in the supply of savings is going to be driving down Interest Rates, china has become more integrated and a larger economy with very high savings rate, 40 savings rate, astonishingly high in some cases, so thats going to shift down the supply of savings. The question is whats going to happen Going Forward. China is in a demographic transition. They just passed their peak working age population. Coming back to demographics. And so theyre going to start to age rapidly. They had this one child policy. Theyve now relaxed that but it doesnt look like theres much of a response in terms of fertility and thats 20 years off before its going to have any impact on the population. So were going to see a rapidly aging workforce, much like japan from 30 years ago, the worlds second largest economy growing rapidly, a rapidly aging workforce. They had a very high savings rate around 15 to 20 . Their savings rate is now 4 . I dont think the chinese are going to go that low but its suggesting that were going to see fundamental forces independent of Central Banks driving rates back up. And exactly where they will go, this analysis isnt precise enough to be able to tell us that. I think what it suggests is were going to have offsetting forces, not just forces from Central Banks wanting to start moving rates up but fundamental economy forces beyond Central Banks that will be driving rates back up. Will they go back to where they were in the 80s . Probably not because we still have more savings coming in. Even if china is saving less, theyre still going to be saving a lot and theyre a large economy, but well probably see rates move or so the fundamentals push rates back up from the zero area that theyve been in globally probably back up to at least 1 or 2 real, whereas in the past many of the longer rates have been higher than that. So economists put decimal points in their forecast to demonstrate their sense of humor . Yes. I guess i have no sense of humor. Exactly. It doesnt make much, does it. Decimal points being their best joke. You want to share your thoughts with us . I agree very much with pretty much everything randy said, and he gave a nice background about the role of Monetary Policy in the economy and during the response to the crises in the short run and in the longer run what he wrapped up with, so id like to i was at the fed a little more recently than randy so id like to focus a little more on the nittygritty, whats happening tomorrow to fill out that fill picture. So i guess its clear to pretty much everybody the feds gone out of its way to signal that another rate increase is likely in march. And the thing thats kind of surprised me is that people have decided that this is a surprise, that its quite strange that theyre doing that, and then as always the case, when youre surprised thinking about the fed, you assume theres been a tech tonic shift in thoughts of the fed and that everything is going to be different Going Forward. So thats always nonsense. Let me explain the nonsense in this particular case. I think and by the way, i put this kind of analysis along with my colleagues at the center for financial economics at Johns Hopkins on our website is sort of a Public Service and you can all google that and try and read these little pearls of wisdom if you like. Let me say my perspective on what the feds been doing, say, for the last three, four, five years, about three of those that i was advising the chair during. And thats, you could encapsulate it in essentially one little bit of wisdom which is normalized policy as rapidly as is prudently possible. Prudently possible is obviously a loaded phrase but i think its important to think that way, that the fed is very much inclined towards normalizing policy and would like to do it would just as soon be back to normal. So whats the problem, why do we have a rate increase once a year . Well, the economy has made it pretty clear over the last couple of years that as fast as prudently possible is unbelievably slow, and thats up until recently. So let me compare the situation right now to the situation around the time of the march fomc a year ago. So a year ago december, in december, they did the first rate increase. They published a forecast that showed robust growth, inflation rising, and four rate increases in the next year. Let me be clear, i think they would have been perfectly happy to deliver four rate increases had they gotten the robust economy and the rising inflation that is inflation rising back towards 2 . But what happened by the time of the march fomc . Well, immediately in the new year, Financial Markets all around the world went crazy with volatility, as you may know. China, japan, europe all seem to be faltering economically. Japan pushed rates negative and took another bunch of other significant steps. The ecb lowered rates again, accelerated their asset purchases, looking pretty grim. About that time the u. S. Faltered pretty significantly in the beginning of the year as well. So what happened to the four rate increases . Well the economy said no. And the fed listened in and we didnt get the rate increases. So lets compare that to whats happened. In december the fed raised Interest Rates 25 basis points. Were getting to the march fomc. The stock market has boomed. The u. S. Macro data has been at least fine. Theyre always kind of mixed but theyve been at least fine. The Previous YearInflation Expectations by some measure have been slipping, now theyve been rising and inflation has been moving back to 2. Thats true not only in the u. S. But also in europe and in japan. So it looks to me like you could make a pretty good case that if we had seen that in the previous march, that they would have seriously considered raising rates then too. Theres no shift here. We dont need any intrigue or fundamental shift in leaps about the economy to realize why a rate increase might be likely. Would it have been as likely as it is now a year ago . I dont know. The economy has moved on a bit, so its a little stronger. But still it wouldnt have been odd to see a rate increase, and that would have been perfectly consistent with these four rate increases they put in their survey of Economic Projections if the economy grew robustly with inflation rising. So in december of this year they were a little more reticent and put three rate increases in. What do i think . If the economy continues like this or booms like this, said for quite some time they will to deliver four or more. Thats a good thing. I dont think the economy probably will boom like that, and so like randy, maybe a baseline of three but thats not a statement about the fed. Thats a statement about an economic forecast. Now randy and i are both know a bit economics and about the fed but go talk to your forecaster. Thats how youll find out how many rate increases there will be. We may be good but were no better than anybody else at the forecast piece. The fed would still like to normalize policy as rapidly as pl prudently possible and theyll raise rates unless the economy says no. So whats different . The economy has moved on a bit. In other words, employment is in a better situation than it was a year ago. Those are all modest. Inflation is in a better situation than a year ago. It seems to be moving up. All those are good things and gives the fed more leeway, but those are pretty modest. Now, the main big thing thats changed, we all know, and thats the situation at the other end of constitution avenue from the fed which is whats going to happen with tax and spending and trade and regulatory policy. Now, theres all sorts of theories that the fed is raising rates in order to take some strategic position against the government that shot across the bow i heard. That kind of stuff is i just want and we think that we dont know anything about politics. So we are not good at it, but we are good enough to know the tis is this a plital environment that you could manipulate by doing something clever, manipulate to your own advantage . Ooh, we are sure that we are not goodt at that. And nobody in their right mind would try to adjust an Interest Rate by a few basis points to send some potent political signal that is going to be somehow constructing something that the other end is going to be constitutionally asking. That is insanity. There are mandates that says they are not supposed to do that, but the good sense says to run the other direction. Both of you made some reference to Global Factors as the Savings Rates traced to other Central Banks. How much of the decline was actually a function of Global Economic activity and how much will that push up on rates if the Global Economy starts to pick up. And in that context, how important is Global Central Bank coordination . So, there were longer run forces that have been driving the rates down for over a decade. That is important in that. But obviously n the crisis response, and we saw potential for deflation when many countries, and the Central Banks responded very strongly. I think that everyone has learned the lesson of freedman and schwartz that if the central bank stands idly by as the money supply is collapsing, and the Unemployment Rate is spiking, and gdp is falling. That can translate a negative shock into the great depression. It is really h inaction is which is what Freedman Schwartz blamed on the great depression, because obviously, a number of negative shocks that have been going on many years before we had the fed, but they did not turn into great depressions, because of some other stabilizing forces and the fed stood idly by. That is a lesson worldwide. Certainly slow Economic Growth is going to be something that is going to be weighing on the u. S. To export. It is going to have an impact on the short run measures of the inflation, and the headline numbers, because it will affect the commodities and prices and such, and obviously, some wild swings in the Energy Prices until recently, and that has really fallen very, very dramatic from the astonishing highs in 2007 to 2008, and so all of those play a factor, and they are all factors in the Economic Activity issue, and then the savings issue. I think that it is when i was in the fed and the crisis was first really heating up. In the fall of 2008, there was a world bank imf meeting. And president bush convened a meeting of the g20 to say how are we going to respond to this globally . This is not a u. S. Issue or single country issue. I think those are the peak years of international coordination. Many much the top lines are no longer there and they exist and are no longer actively used. And people are going in different directions. It is in negative territory. Theyre very much aware of what each other are doing but theyre aware of their local conditions and those are the ones that drive the domestic policy choices. When you think where youd like to the rates to be. Everybody likes to think of the ten year as normal, i think, but thats going to happen within the context of a world in which the twoo year rate in europe minus 75 basis points, youre paying the government a good deal of money. Good deal of money to hold your money for you there, so with rates so low and negative around much around the world theres only so much you can expect on that difference between u. S. Rates and foreign rates without the dollar really rising in value. So whether or not the dollar is overvalued now if u. S. Rates rose sharply the rest of the world or other significant areas of the world that are still fairly week economically didnt raise rates, the dollars going to go up and the trade deficit we just talked about is going to get worse almost independent of policy because its very difficult to overwhelm those fundmental forces when the dollar changes in value just by economic strength so you can feel how you feel about the trade policy issues and we like good trade policy but if the u. S. Economy keeps growing and the rest of the world, the dollar is going up and the trade deficit is getting worse and thats almost it would be very difficult to not have that happen. I want to pause and remind you if you have questions the last ten or 15 minutes we will field questions, so staff will come around and pick them up. Both have mentioned policy tools. Theres an array a lot more policy tools today than there were precrisis, so are there any guide posts or anything for folks to think about when different policy tools should be appropriately applied, how they should expect that . One of the thing that is the fed does is Forward Guidance, thats just one of the tools, how should we put all tools in context as Business Economy economists in the market . I think forward guy answer where a number of policymakers have spoken and theres a good deal of common sense, during the crisis the fed was doing unprecedented things in unprecedented situations and there was no sense that you could get by with well do what we usually do at times like these. There werent any times like this and wasnt what we usually do, so a lot of communication was necessitated. Now, some Forward Guidance may remain Going Forward. Theres a great commitment to transparency, but if we happen to be so fortunate as to get back to a normal times, it will play a much less prominent role and look more like it did from might be 1995 to 2005 where even if you cared deeply about what the fed was going to do you didnt need to listen that carefully because they were going to do what they usually did at times like these and hopefully we get back to that kind of situation. Now the Balance Sheet and a large scale asset purchases and how that will go, thats a much trickier issue, some people would say that having stuck their toes in these waters and gotten in kind of hip deep that Central Banks around the world maybe you have gotten good to not keep using these. I dont think theres a lot of taste for that at the fed. I think they would just assume if there was some value to that they would just assume get back to something more standard in operating procedures which would involve the Balance Sheet shrinking back to something much smaller exactly whats the right number right now is not a matter we even have to think about for another year or two, so how will they add just the Balance Sheet . I think the preferred approach is to do something really systematic, really predictable, not disrupt markets and have that not be the way policy is adjusted. That is, when they change how the Balance Sheet is being used, thats a Technical Choice to get them back to normal. Its not a Monetary Policy choice to signal they want more or less accommodative financial conditions, so whatever pace they choose they would like i think the Interest Rate to be the main signal of policy, and to have the Balance Sheet be a side show. Now, we of course could have a whole new f1c or new set of governors soon and there are views on that. If folks wanted to reduce the Balance Sheet much more quickly as some people do, i think that just means that the Interest Rate the feds short term Interest Rates would rise a little more slowly. In other words if you are taking away accommodation more rapidly from the Balance Sheet, you raise the federal funds rate a bit more slowly and thats just a balancing act that nobody knows how to do perfectly and thats my view of how that might go. So i think i very much agree that the fed doesnt want to use quantitative measures, that was one done boldly at least the fed wanted to and i think many Central Banks have been reluctant about this and would like to get Balance Sheets back to quote normal. At the Kansas City Fed that was part of the debate. Clean and lean debate. Should the fed go back to having lean Balance Sheets and clean Balance Sheets short term treasury securities and nothing else . And certainly before the crisis Central Banks had different approaches. The u. S. There was a paper presented by someone from the dcp, you can imagine the german approach, the precrisis was seen as optimal so the liabilities were basically just cash, a few other things but just cash on the liability side so nothing exotic there and then on the asset side basically short term treasury securities that was it and that gets you to lean and clean. Obviously were pretty far from that in the u. S. And if you go to japan where theyre going long and where they are also starting to buy corporate debt you are seeing things a little less clean and lean is no longer a term you would associate with these Balance Sheets so i want to separate out the two piece. I think theres a very strong desire on the members of the fmoc and the staff to get the Balance Sheet as clean as possible as quickly as possible and that relates to mortgages which our moderator might be a little bit interested in. You could see this back in 2010 when the fed was trying to get out and normalize, seemed like the economy was coming back and they allowed the portfolio to run off rather than sell it into the markets because they were concerned about disruption and saying as people are repaying their mortgages as they are naturally shrinking, we wont replace them, that changed when they didnt want the Balance Sheet to shrink further and wanted it to grow. I think thats the most likely way in which they would do that that once they do start to normalize the Balance Sheet they would like to have something both lean and clean, and that gets you there, but i think the concern is more about the lack of cleanliness, but it also gets you to something that is a little bit more lean. And lean. So what is the optimal size of Central BanksBalance Sheet . Well, we dont really have a good theory for that. One could argue that the precrisis was a good benchmark but it would be very hard to turn to a model and said the feds Balance Sheet, thats the optimal one exactly how Central Banks should operate. I think there are reasons for having a lean and clean Balance Sheet. I think when you dont have a lean and clean Balance Sheet that leads to all sorts of political issues what are you doing, why are you doing this, oh, if you can buy this why cant you buy that, ive got get in my district. Try to think about the debt purchases across all the Different Countries of europe and the bank of japan consistently buying equities, if you thought that was a temper tantrum when ber necky said there was a chance imagine whats going to happen to nika when the bank of japan says were going to stop buying equities, so its going to be quite difficult to get out of those but thats why the fed wanted things to be clean. But whats the right amount . And so basically that relates to how much should the Financial System be running with excess reserves . So obviously we went in the u. S. With a system with virtually no excess reserves to 100fold increase, at least 100fold increase to having now 23 trillion dollars excess reserves in the system, so i think most Central Banks after the scarring of what happened in the Global Financial crisis in the mid to late 2000s, the fed has the Interest Rate on reserves, and i guess we will continue to use that and will use that to set the short term Interest Rates and using that for a cushion for excess reserves, 2 trillion . Probably not. But tens of billions . Probably not either. Thats probably going to be the debate in 2018. How much cushion should we have in terms of excess reserves . My guess is everyone will be saying we really need to clean things up but then how lean should we be . How lean we were before didnt leave enough of a cushion but dont need to have 2 trillion worth of reserves either. Let me excellent on a couple of those things because i think i want to maybe clarify or disagree, but you can be the judge or randy can be the judge. Very diplomatic. Its just a clarification. In this case its actually sincere, so randy said would like to get back to normal as quickly as possible. That would be selling it off, but thats not going to happen, so if you heard as quickly as possible, no, its going to be allowing for sure. I just wanted to clarify that. If i misspoke, thats the way in which they would do it but in a rate raise environment it would actually be a slow process. So if i can continue, the second point is that just to make sure Everybody Knows this and this isnt at all. The fed can only buy treasury securities and Agency Securities, so its not like the fed could have ever been as for good or for ill ever been as messy or as not clean as dcb cant buy corporate debt cant by equities so not only now is there a desire to exit the mortgage side of the back security, Agency Securities more rapidly than the treasuries . I think there was at one time but im not so sure thats still there. If randy said it is true that as the Interest Rates rise you get less mortgage prepayments and those mortgage back securities live longer and so theyre naturally going to be living longer as rates increase as we all hope and then there will be a question whether the fed wants to sell some and could have a bit of a long tail and so far the fed has more recently said that its unlikely to sell just because they dont want to disrupt the market except maybe residual that once it gets to be so small that it couldnt affect the market. So those are little amendments. Sure. Obviously something thats on peoples mind. Five of the first ten questions that came in were about the feds portfolio. All right. But one of the comments is the feds ability duration to change its portfolio another Monetary Policy tool. Is that actually a tightening because theres been some shift in duration . In the feds way of thinking i agree thats a tightening that the main effect of quantitative easing was taking a large stock of Long Duration securities out of the market and as the duration of the portfolio moves down that is a bit of a tightening. Thats why i said if it moves down more quickly the fed is more likely to believe its more appropriate to raise rates a little more slowly to keep the financial conditions about where they like it. The question might partly have been some people including governor stein have argued that that manipulation of the duration to have portfolio maybe an active policy tool every day. And thats true, it could be, but randy and i both have said i think theres no taste for that, really. Not much practically no taste at most Central Banks that im aware of it will naturally happen as it runs off but not for policy purposes, but no taste in active times for using that tool. The key is how effective is the yield curve and were not quite sure, because it should be if the fed stops one of the things we wanted to make sure when we were there making all the asset purchases to make sure that changes in short term rates were very rapidly translate into lower long term rates and then buying the mortgage back securities to make sure they were translate into Lower Borrowing costs to make the mechanism make it more rapid and make it tighter so we will see exactly what happens as this exit occurs because obviously the yield curve has not really gotten steep as the fed has started to talk about these things the yield curve has flattened, so will they get significant steeping of the yield curve, thats one of the key issues Going Forward so we have a very different shape to have yield curve than precrisis. One question of the mortgage component of the portfolio, my understanding there was a experiment in the late 1990s when we ran what some of you may not recognize was a federal Budget Surplus and the question was if that were to continue, what kind of securities would be traded to conduct Monetary Policy and there was a synthetic experiment related to mortgage related assets terminated because of the concern something you pointed out which was youre indicating some preference to some industry. The temper tantrum also affected the housing market. The tantrum dropped sales i think by 6 from what was projected. Is the fed comfortable now that the housing sector is in good enough shape that theyre going to when they make a decision theyll simply start a structural shift to treasuries away from Mortgage Securities . So i think you put it quite well. I think they will do that only when they feel comfortable and Economic Conditions permit that. So i think the discussion about the portfolio will be a discussion later this year into 2018 and my hunch is late 18 early 19, they want the elusive r star and then say the economy continues to recover, the markets are Strong Enough that we can start to pull back from some other areas because the last thing they want is something very rapid. If you want to search for the word gradual and its synonyms from fed speakers i dont think theres any word that they have used more frequent than that, so the last thing they want to do and i think these are the lessons of the taper tantrum, that they dont understand how markets will respond to even mild statements about how the Balance Sheet is going to change which could lead to very sharp increases in both short and long rates so thats a discussion that will occur i think over the next year but i think will be far off. Adding a couple of things, i think the fed does not now see a pressing need to once they have made a decision to act immediately in this regard. They believe that they can try to implement a sort of more technical and side show approach and that means not only do they need to make the decision, think the time is right. Theyre going to communicate it very clearly in advance because there isnt a big need to hurry, so i think you will know a good deal about this well before it happens. Now, the other thing that we havent really mentioned though is that if those happen a year from now as were talking about, could be a very different fomc and so you should take everything randy and i have said about what the fed is likely to do more than a year or so in the future with a bit of a grain of salt. Its really going to depend on we have two governor slots to be filled right now. Governor tarullo is leaving in april. Yellens position is up in february next year, vice chair fishers position is up in june of next year, so thats a whole new ball game. And all of these things are things that in many areas Monetary Policy in normal times most folks agree on that and doesnt matter that much who is running the fed, but these things are well i wouldnt go quite that far. Thats a little strong. Relative to these questions right now those issues are much more settled so questions about lean and clean, that could change depending on the particular folks who actually get to make those decisions. You touched on the second five questions, which all had to do with who is going to be on the board Going Forward . Without selecting names, you might reflect on what you think might change in terms of policy inclination on people that might be might represent the incoming administration. You dont have to if thats uncomfortable, but you might. [ laughter ] i think the administration has not made their intentions very clear with respect to the fed. Obviously they have very publicly said its very important for them to pick a vice chair for supervision regulation and you know many names keep getting floated. And i have no insight into where theyre going to go there, but my guess is that they will focus on that first an then the other pieces will fall into place. Yeah, i think many of the regulatory questions which havent been our focus today are likely to be the most important and that choice will when governor tarullo leaves and a new vice chair comes in those will be big issues, but as far as the sorts of folks that are likely to be appointed, i dont have any special information or insights. As i said, i think its really important that there theres been talk about not so many academics, there are plenty of nonacademics that have been Great Central bankers, somebody who has a conventional understanding and is sensible will be able to handle the needs of Monetary Policy and handle it in largely similar ways. The regulatory side is much more contentious and would be a whole different session and one that im not particularly qualified to speak on. There are a couple of questions tying back to prior panel on trade. And, a question with regard to how u. S. Monetary policy might impact emerging markets if at the same time there are structural change as take place within trade. Thoughts on how that might affect Monetary PolicyDecision Making . U. S. Monetary policy making . Right. Usually their mandates are to focus on their domestic Economic Activity, so to the extent that International Activity affects the domestic activity thats usually the filter through which the focus is for Central Banks, they also try to avoid economic tumult because thats an effect on the real activity side. But as john has said fed has very well telegraphed the direction its going in and gaining credibility that its going to move more than just once at the end of each year and that is playing out in emerging markets, but unlike a few years ago where it seemed to cause a lot of tumult in the markets, those markets seem to be doing okay, theres an impact on Foreign Exchange policies but if we look at the globe, we look at equity markets around the world, so i think the fed might take notice of those particularly as they might have affects on the u. S. , but just like other banks shouldnt be focussing on other countries but the countries they have mandate for. Yeah, i agree. Okay, this is the rapid round here. Are sub 50 oil prices good or bad for the economy and i guess how would the fed feel about that . Let me start, john. Long or short oil . Yeah. I would say like with the strong dollar, weak dollar and any other discussion of a price, they help some folks and hurt others. If you said in the long run would you rather have cheaper sources or in resource or expensive resources, cheaper resources is the answer if that means that it can be supplied plentifully at low cost as an input. Im guessing the question is so overtime you adjust that and thats then that would be the first answer. We love i love everything that i buy to be cheap, so thats a positive but you have to look at the broader impacts, the underlying structure of supply and demand and the market. I guess the question was the Trump Administration had suggested that they intended to ease Energy Policy to thinking about regulatory barrier to affect operation of markets is having very important because that gets back to the first discussion we had about productivity. I agree if there are counter availing issues and whatever they are you take account of those and people have very different views on it but in general if you can make the market work better, setting aside those issues and the price of energy goes down, thats a winner over all for the economy. I agree. Question on speaking to the stimulative on reserves, thoughts on that would be impact. Raise the Interest Rates, Interest Rates on savings goes up. Oh, okay, what the impact of that is. Theres an impact not only on savers, but theres a big impact on Pension Fund Insurance companies so a lot of savings is done indirectly through those institutions and many of those institutions have made nominal commitments and they made the nominal commitment when they thought the tenyear rate was going to be between 46. Or above 2. This is europe an japan although in japan the number rates have been low for a long time. But europe theyre getting very low rates even negative rates on their investments, thats where the real challenges are that can lead to disruptions that if many of these organizations that have been made cant make good on, so as Interest Rates normalize thats less of a challenge but to the extent that nominal Interest Rates stay low because of the nominal rigidity, i think thats where the real challenge would be. Theres been a common feeling im sure that its widespread in this audience that raising rates would be stimulative and i guess like the question about low oil prices, theres always it certainly would have certain stimulative affects in helping out safers on fixed incomes and the Life Insurance industry pension funds, those are really important and well be in a lot better shape if the allows those companies and savers to be in a savings position, does that mean that this was the wrong policy over the last several years, historians will figure that out but they will low rates were warranted on net despite the fact that there were some positives on raising rates and hopefully were at that turning point and the economy warrants letting them rise at more than the glacial pace we have seen over the last couple years, it would be nice to see the rates at 1 point a 1. 5. The big debate and is all in the transcripts. Its all public, not necessarily around zero, but would we say for some time would be the phrase used, we got agreement to say that, but i dont think anyone was sitting around that table in 2008 even the most pessimistic thought it was going to be eight or nine years where we were debating are we going to start the process . And so its been much, much longer than we had expected. I think this has something to do with the bigger demographic forces, part of it also is just the economy did not respond as strongly as we had hoped and as i had said at the beginning there are a lot of other things besides the fed that make for the strength and weakness of the economy. Lets wrap this up with a quote from mark twain tradition is a very difficult art especially with respect to the future. Please join me in thanking our panelists. [ applause ] thank you very much to ron, and dan, fannie mae. I would like our next panelists to come up to the stage and take their seats, please. Well, were going to move straight on. Tonight, we visit the state of the net conference and speaker with the Senior Adviser to House Majority leader Kevin Mccarthy and lior div on how theyre addressing questions of cybersecurity. Its so funneled. Ally challenging. And they have no choice but to reflect that reality. And it will. Weve been through. This i dont think weve ever been through the schedule that weve been through on this democracy. The democracy was created in this society. And it survived and thrived and, in fact, i was argue in a lot of ways improved upon itself as we go into industrial society. Were at that same Inflection Point today between informational economy and that creates an amazing opportunity to not just survive as a democracy but to create the, you know, a more perfect union. I believe that the cybersecurity agenda in general, this is super, soup every important agenda that need to be pushed. And the reason is that cybersecurity is not a problem that it was hyped in technology and then it will be gone. Cybersecurity is a problem that is here to stay. Watch the communicators tonight at 8 00 eastern on cspan2. Voices from the road, we recently visited 17 historically black colleges and universities asking students what issue would you Like Congress or the administration to address in the first 100 days . Hello. I am a student at North Carolina central university. And in trumps first 100 days in office, i would love for him to grasp an understanding and although that we didnt all vote for him weeshgs all represented under him. I would also like him to work on building and main take the relationships with other countries that we developed over the years as our commander in chief. Thank you. My name is darrell, im a senior here. I like to see for the first 100 dafz the Trump Administration is just taking care of our schools, better the education. Free education. I would also like to see in the first 100 days better medicare and standard to obamacare started. So as a student and as a black man, i would like to see that. Hello. Im a senien p. R. Major at howa university. Nifrt 100 days of trumps presidency, would like for him and congress to address the issues with federal funding towards women in services because those that affects people like myself and other middle class and definitely lower class people. Hi. My name is michael manigold. Im a junior. For the first 100 days, i believe that trump should improve his i will inauguration policy. For one, the muslim ban is, i dont agree with the muslim ban. For one, i have a friend who is muslim and he is not a terrorist. And as for the wall policy, i dont think its going to work either. I do believe that illegal immigration shouldnt, its an issue and all. But building a wall isnt going to help. My name is mia ball. Im a communication major and also a junior at bowie state university. My message is for donald trump, i know a lot of president s i know a lot of candidates make a lot of promises. But i would like him to lower the rate of unemployment. Voices from the road on cspan. And here on cspan3sh, live coverage of apac. The Group Meeting in washington, d. C. , for three days. Today hearing from House Speaker paul ryan and u. S. Ambassador to the u. N. Nikki haley as well as others. Youre watching live coverage here on cspan3. From california state university, sam lewis paul