 Yeah, thank you very much. Thank you for the introduction. Thank you for inviting me on this cold evening to London That's global warming obviously what we are Experiences here Indeed as you have already I Will talk a Bit about economics, unfortunately, I must say That's the bad thing about this lecture. The good thing is I'm not talking about traditional economics, but alternative economics so you will see that there are different approaches and I think these different approaches are extremely important the other bad thing about my lecture is that I Mainly talking about industrialized countries and even my own country Germany a bit That has two reasons one is that The data situation in many developing countries Unfortunately, and the unfortunately is with great emphasis is not very good So that for things that of the kind that I try to show to you It's very difficult to find the data for developing countries or the region. We are mainly here interested in the Oriental and African region that is in particular very difficult to find reasonable data But on the other hand, I think there is a Core of economics that is universally applicable and I try to talk a bit about what is university Universally applicable and what not because there are several things that are not applicable at all the other reason why I'm talking about industrialized countries and Germany is that Germany has gone through a unique experiment in the last 15 years and I would like to quote today's Financial Times About this German experience and then I going to to discuss and analyze this experience a bit So the Financial Times as many newspapers all of the time all of the place all of the globe more or less every day say German German For better or worse many Germans feel that they were duped into supporting the euro partly as a price for German Unification within a unified euro they have justifiable pride in the success of Germans own economic policy of the last two decades First in absorbing the East German wreck and later restoring the whole country's competitiveness So far reaching labor market reforms Does it sound familiar to you labor market reforms? That is what we are preaching what not we are but Some international institutions are preaching to the whole world that you need labor market reforms that you need flexibility of the labor market to Be successful in this in today's world in the globalized economy. This is the title of my Presentation namely, is it possible to have inclusion and participation in a world with flexible labor markets? And the answer will be no But this is not bad. This is good because The only thing we have to do then if the answer is no the only thing we have to add is that we need a new economic theory Not more but not less than a new economic theory at least a macroeconomic theory So this is the topic of what I'm going to Present tonight and I very much hope that it's not too much economics for all of you because you may not be economists and you may have only Marginally be marginally been touched by economics in the past, but nevertheless, don't worry and don't be frustrated It's not not very difficult the most important economic things are quite straightforward and understandable So I very much hope that everybody can benefit from this lecture so First of all what we are talking about this today's world is a very peculiar situation And this is again the industrialized world We have family income expectations in the industrialized world in the three big industrialized regions in this world Japan the Euro area and and the United States And why do am I starting with family income expectations? Well because we have reached for the first time a level of family income expectations that means the expectation of an average family in these regions That is extremely negative for a very long time and we have not only region in one region, but we have it in all the three regions So if you take together the United States the Euro area and Japan and you look at the overall GDP You find a peculiar thing and you find that For these three regions the famous exports everybody's talking about exports and trade Exports do not count very much. They're only eight or nine percent of the overall GDP Investment is very low around 10% So what is the bulk of the GDP of these three regions? Well, it's very simple. It's consumption It's mainly private consumption private consumption accounts for something like 80% And now if you look into the future of these three regions, you see this is up to January at least in Not in January to October last year. So If you look into the future of these three regions, you find that we are in a very specific situation Namely in all these three regions that are waiting so to say for growths to come that are waiting for a new Recovery to come in the next days. So to say everybody's waiting in Is on the financial markets everybody everybody is waiting now for the final signal that the recovery is there in These three regions you find that for the most important component of global of production and and income for private consumption the Signs are extremely bad. They're extremely bad. And why is that? Well, that is for a very simple reason Take the United States. We have a we had a Slowdown not a slowdown, but we had something close to a depression of a sharp recession in the United States In the course of the financial crisis in 2008 What happened during this financial crisis recession? Well as usual in these kind of recessions unemployment went up Unemployment went up in a in a country in a country And that is important to emphasize in a country where wages have not risen for something like well 20 years or 30 years depending a bit on the measure that you take Where the average real wage the median real wage has not risen for 20 for 30 years so we have a situation in the United States where The income expectations have been bad already long before long before the crisis then came the crisis the crisis increased unemployment and what is the solution then What is the way out? So now if you start look at neoclassical Economics, which is still mainstream economics, which is a dominant part of economic theory all over the world in all other International institutions with the one exception or maybe the two exceptions of Angtard and ILO Well, you find that the very simple recipe for overcoming such a Recessionary period in the United States. Well is flexibility of wages But wages are extremely flexible already and wages have never risen. That's the crucial crucial point wages have never risen before Going into the crisis was not a process that was accompanied by rising wages But the other way around it was a process that was accompanied by falling wages the falling wage share Nevertheless unemployment rose Though this fact this simple fact alone shows that something is fundamentally flawed with the Mainstream economic theory because the mainstream economic theory would only allow always only allow Unemployment to rise when wages are rising more than justified But wages have never risen and unemployment is high. So what happens now in the United States? Well, a very simple thing the United States are trapped They are trapped by high unemployment that puts enormous pressure on wages If wages do not rise Consumption will not rise if consumption will not rise growth will never recover At least as people as long as people keep their savings ratios constant What you have seen in the last two quarters in the United States was again a dramatic reduction of savings ratios So despite falling disposable income in the United States We have an increase of consumption But as the savings ratio is again down to three percent or something like that that cannot last forever So they are trapped in a in the so to say self-made trap They they produce this trap by their by their claim to the labor market that the labor market should be flexible And you see even even in this extremely highly flexible US labor market people are trying to to to So to say push out the unions even more although they are hardly existence in many areas so What happened this extremely flexible labor market leads into a situation where the United States cannot get out of the recovery and This is shown in the in the economic policy. So to say desperation that you have there you see Fisker policies anyway blocked for political considerations But if you look at monetary policy monetary policy has done something in the United States that Every reasonable person would have called three years ago something like socialism or communism Because what has the the Federal Reserve done? They have fixed the interest rate that they are asking From the banks for three years in advance This is a planned economy. You see there's no flexibility of prices anymore No flexibility of the interest rate anymore. So they have explicitly explicitly the Federal Reserve was hardly recognized in the rest of the world Unfortunately, but I was sitting close to Ben Bernanke in the last meetings of the IMF in autumn and you could feel his desperation You could feel his desperation about the situation because they did not know what to do anymore So they fixed it for three years in last summer But now they have even extended it to four years four years absolutely fixed nominal short-term interest rates in the United States This is the end of price flexibility And the interesting thing it's it's justified. It's justified because this is my main thesis here What we are talking about if we're talking about successful economies if we're talking about successful development Then we have to talk about inflexible prices Not about flexible prices, but inflexible prices What we need is just the other way around then the mainstream economic theory teaches us And we have to turn we have to create an economy where prices the main prices at least the macroeconomic prices are Rather inflexible, but quantities are flexible What the mainstream teaches us is that quantities are rather rigid, but prices should be flexible So at least for the for the lower income part the low-skill part of the of the population Rate wages so to say never rise so people can be happy if they get jobs by cutting their wages That should be sufficient for any kind of progress But it's not it's not and this shows quite clearly in my view that it cannot be we have gone into This problem some time ago I'm showing two or three charts from the trade and development report 2010 Where we have dealt with that question explicitly the question of labor market flexibility in Developed and developing countries because the paradox is what we have seen in the last Years not years, but decades. We have seen falling wage shares in many countries of the world Despite the fact that unemployment rates are high and getting or getting even higher and the most recent paradox as I've said was after 2008 so But the the crucial analytical thing of this work that we have done in 2010 was in my view this chart Unfortunately, I show it to you for developing countries, but as I said the data are very poor for developing countries But it's more or less It's more or less the same only for the developed countries the the structure the Relationship the correlation is much much clearer because we have consistent data This data shows something that is so to say breaks the neck of mainstream economic theory if you interpret it correctly because it shows that the mantra the idea the ideology that Employment has nothing to do with growth is wrong Because neoclassical economic employment to you would always say well It's not important whether you have 5% growth or 3% growth or no growth at all There's always a wage rate There's always a wage rate in this world if your prices are flexible enough at which you can have full employment There's always a wage rate. So just go for flexibility of wages Flexibilize your labor market Get rid of the unions so that you have individual contracts at best And then you're under in the best of all worlds then you will have no problems with with unemployment anymore This chart shows that it's plainly wrong You have for all the big industrialized countries in this chart. I think we have G7. It was G7 For the big industrialized countries you have the world is just the other way round Then you need growth to stimulate employment even in the United States This chart is absolutely clear and cannot be challenged It's absolutely clear that you need growth to stimulate employment. So it's a never never is wage flexibility sufficient sufficient to stimulate growth and stimulate In in stimulate employment. It's just the other way around if you have too much wage flexibility You will get into the situation in which the United States are now namely that through the falling wages You do not get the stimulus of demand that you need the stimulus from the from the workers demand and from private households Demand that you need to get a growing economy and get catching up in developing countries So this is extremely crucial to take note of and it is supported by another by another very clear Relationship that we have that we find for developed economies this time and for developing economies Exactly the same at least for a selection of developing economies where we have data namely this chart shows that Inflation which is an important constraint for many developing countries and has been the most important focus of economic policy in the so-called washing consensus Times of the last 20 30 years that inflation is not is not a monetary phenomenon That is again, what every good economist believes that inflation is a monetary phenomenon That is what monetarism has taught us over over the decades Milton Friedman and others have taught us that Inflation is a monetary phenomenon. It's always too much money. They said too much money chasing too few goods It's not true. It's not true at all money supply or what they call money supply. There is no such thing as money supply and no Normal economy. There's something like money supply. It's a fiction. It's just an idea. It doesn't exist Central banks fix interest rates and nothing else. So they do not steer in any way the money supply. That's one one One way to to justify this monetary phenomenon of inflation, but it's not not justifiable in principle So there is no money supply. So it's not money that determines inflation, but it's wages and Wages in relation to productivity. This is what this chart shows. Namely Wherever you go, you find that over Every Reasonable term short term medium term long term the inflation rate is determined by unit labor cost and more or less Nothing else in some countries very open economies You have some influence from imports and other things, but normally it's it's unit labor cost that determine inflation But if you meet like unit labor cost determine inflation Then it's absolutely clear that the Keynesian idea holds namely that you cannot by cutting wages you cannot even you cannot even get the The idea of the neoclassical TV going namely that you cut nominal wages and with the cut of nominal wages you get Real wages to fall and then when we rate wages for employment employment will rise It's wrong on two sides. It's wrong on the side of of say three four years you get a reaction of inflation to to wage cuts which Reduces at least significantly reduces the effect on real wages So that real wages are less cut than nominal wages But plus as I said before plus if you take the other effect that I mentioned before This is the so-called Keynes effect. I Allow you at the end to call the other effect the flasberg effect. That's okay So the other effect is that if you have falling real wages if you have falling real wages Then you have immediately falling demand and with this immediate falling demand You never get the kind of effects that the neoclassical theory And visages even if real wages fall but over the medium term We see that real wages do not fall but the only thing that happens is that you get lower lower rate of inflation So these two elements these two elements are absolutely crucial namely you have a Clear relationship between growth and employment as I've shown before you have growth and employment clearly highly correlated and you have Unit labor cost in inflation highly correlated if you put that together in a theory you will see that nothing More or less nothing of the neoclassical Edifice remains it will all collapse. It will all collapse and has to make place For a new theory, but why is it not happening? You may ask the question So why is not happening if it's so evident if it's so evident that these relationships told why are people still talking about money and inflation? Well for a simple reason for ideological reason because if and I have I fought this this the fight about this chart about the Relationship between unit labor cost and inflation in Germany for around 30 40 years. So something like that The other side so to say what what what does the other side do? They do not talk about it. They just ignore it They just ignore it They ignore this relation and continue speaking about Inflation as a monetary phenomenon because they know Once they would discuss that even they would have to acknowledge that there is a strong correlation that you cannot Fight inflation by by monetary policy and that would mean that you kill your own your own ideological Construct that you have built around you over the last 20 30 40 years including all the nice Gifts that you get from lobbyists of that part of the world so So one question remains then only one question remains in principle I cannot go into all of the details of this, but one question remains. So what is the How can then the the German success? The German success in the European Monetary Union that I've mentioned be explained This is the question of the Financial Times of yesterday. So why can a country that has Done exactly what the neoclassical theory asked them to do namely flexibilize their labor markets You may remember some people may remember to Germany five years ago was called the the laggard was the the The weakest country in the whole eurozone. So how can such a country come like Phoenix out of the ashes? and and dominate the whole of Europe in a in a in a short period of something like five years Well, the explanation is very simple But the explanation is exactly the opposite of what people like the leader writer in the Financial Times believe By the way, the only guy who gets it right in the Financial Times is Martin Wolf He took him a long time, but now he gets it right more or less So at least he is able to learn. That's a good thing so But most of the others not so what I want to demonstrate to you that my theory is absolutely right and the other theory is absolutely wrong by by way of the German example, so this is the most critical example for my Theoretical approach namely my own country has has done exactly what was asked for and is now is successful Whereas all the others are not so here's the simple explanation for that What happened? I'm preparing Germany with France and you see what happened Germany after a short while into the European Monetary Union had a quite strange development of the most important Components of of demand namely external demand, which is exports here Exploded so to say whereas domestic demand remained absolutely flat What does it mean? Well, that means on the one hand if you have flat domestic demand That means it shows exactly exactly what I said before Namely when you try to cut wages and that is exactly what Germany did Germany started to cut wages In the mid of the 90s when I came to the government I could interrupt it for a year or so But then I was fired and they went on with this kind of yeah Vice ministers are fired my minister left he could say I'm I'm leaving but I had to be fired So they fired me and then they could go on with this kind of policy. So What happened? They put an enormous pressure on the unions. They put They created what was called a tripartite agreement where the union leaders even agreed that from now on Germany would go for the experiment of cutting wages or having real wages lagging very much behind Productivity increase so up to that point Germany was really an economy where the real wages more or less follow productivity increase which created a normal normal domestic demand from that point on it was dramatically changed and you see Domestic demand in Germany never recovered So with this stagnation of real wages and it was really an absolute stagnation of real wages average real wages in Germany absolutely stagnated we had an absolute stagnation of domestic demand and That exactly proves my point that exactly proves my point Because if if the neoclassical say the substitution effect of neoclassical economics would have been there Then even on the internal demand you would never you would never see a reaction of internal of domestic demand to the wage restraint because because the neoclassical theory says and I had a long fight about this with the German Extremely neoclassical Council of Economic Advisers a couple of years ago and they argued well there can never be a negative demand effect of lagging wages behind productivity because the Negative effect of wages lagging behind productivity would always be fully compensated by the substitution effect Namely by more people being employed And they would have the income So per head the income the real wage would fall or would lag behind But overall the sum of real income would never fall and would never affect domestic demand. That's wrong That's absolutely wrong And this chart shows that it's wrong I show you a chart in a minute where I have tried well just for a sake of illustration What would have happened with domestic demand in Germany if wages would have risen? But the other thing what happened there's another effect that is for sure there You can't go back to Cain's famous I was what was it John John Weeks not better than me what was chapter 19 or so in Cain's the famous chapter about Unemployment and wages you can go back to that chapter. You can go back to Kaletsky or whatever you want. You will always find that all intelligent Cain'sians knew That if under certain external conditions One country cuts its nominal wages or its unit labor costs has lower unit labor costs than the rest of the world It will have for a time being at least a positive effect And what is that positive effect? Well that positive effect is an increasing competitiveness You increase your competitiveness because what you create with your falling wages or your lower increase of unit labor costs I show it in a minute you create so to say a devaluation you create a real a real a Fall of the what economists call the real exchange rate, which is a measure of competitiveness and This happened now under the specific particular conditions of the European Monitor Union The particular conditions of the European Monitor Union where that there is no Currency that could be devalued or revalued to compensate for such an advantage an absolute advantage Which has nothing to do with comparative comparative advantage or something like that But we could compensate for such an absolute advantage that one country is creating at the expense of its partners There is no reaction to that no way to react to that And only it is quite clear only after a long time you will realize The partners will realize oh something has gone fundamentally wrong and now here we are We are exactly there namely that the partners have realized that something has gone fundamentally wrong I come back to that in a minute. You see There are two effects that have to be clearly separated the one effect is the effect on external demand If under certain conditions, you do not have retaliation from your trading partners you can Beggar your neighbors by cutting wages This will create if nothing else happens a positive effect for the time being for a short time for a medium term depending on the on the monetary conditions on the overall exchange rate regime that you have but The positive on the internal side on the domestic side You will never have a positive effect and this is true for the world as a whole. This is true for Japan Euro area and and the United States together there can never be a positive effect a positive growth effect Coming from a wage cut or from flexibilization of the labor market. That is an extremely important Important point to be made so Let me show you what would have happened if you take make a very simple a very simple assumption, which is just a Calculation exercise you calculate that in Germany instead of stagnate domestic demand Consumption would have followed as in the past that can be shown quite nicely as in the past consumption would have followed The increase of real wages if there would have been an increase of real wages If wages would have followed the productivity increase of Germany That is this red line if the real wages would have followed the productivity increase and consumption would have followed the increase of real wages overall Under the condition that the external trade surplus is not there that external trade is absolutely balanced. We would have gotten in Germany such an increase of of consumption That would have been the consumption in Germany if we would not have had this real wages lagging behind Productivity, but we would have had real wages rising exactly with productivity So no distributive effect, but participation of the workers in the increase of productivity as before So to say a sharing a sharing of the overall income Between capital and labor a constant real a constant wage share and then if you Compare this to France you find Exactly what France has done France had This kind of policy France had I will show it in a minute. France had real wages following a productivity and This would have produced a consumption Exactly like in France. You may ask what would have that Implied for overall growth. Well exact again under these very primitive assumptions if you would have had higher consumption With a totally balanced trade. So no surplus in German trade then growth even under Otherwise sitarist paribus conditions would have been would have been higher Now the PowerPoint. Oh, here we go Sorry, oh, this is one too far. Oh, no my oh Something is fundamentally wrong now with the power point It's not working anymore Too bad. No, I show you on this chart at least you can see what I'm talking about. So what happened in emu What happened in emu? the non-participative German economy went into competition with the With the other economies where the the names have been changed. So look at the colors where southern Europe is blue France is is green and And Germany is black But there was a target There was a target to be followed inside the European Monitor Union and that was the inflation target There was an explicit inflation target inside the European Monitor Union and this inflation target was a Target of 2% this is the red line So if you compare and you look just to 2010 not up to 2022 that was Planned to be different in my PowerPoint, but nevertheless If you look at 2010 you see that there's a huge gap in the unit labor cost increase in Germany southern Europe and in France and This explained this is the core of the problem of the European Monitor Union. This is the core Forget about government deficits. They are a marginal problem The core of the problem is that we have a divergence of inflation rates a Divergence of unit labor cost and a huge gap in competitiveness. I do not want to go into The solution of this problem. I've painted here some charts to show how it could be could be solved It can only be solved only one word can only best solve by Dramatically changing the wage policy in Germany by having much higher wages for a number of years here in this example for ten years And the bit lower wages and the others if the inflation target is not violated if the inflation target is not This shows something Extremely important now. I stopped this because it's not working. I Come okay This shows an extremely important point Namely that Germany only under the extreme conditions of the Monitor Union where there was no Devaluation or revaluation possible. It could beggar its neighbors for some time This is now over as so to say Germans clients have exploited their their room of maneuver their policy space to buy German goods They are more or less bankrupt So the German policy of cutting wages was in so far successful as Germany was able to Produce the bankruptcy of most of its clients This you could call successful or not I would not call it a successful policy because the bill will come and the bill will be a huge bill and it will Be extremely expensive. Namely Germany will have to correct Fundamentally its whole its whole economic policy approach. So instead of being successful by Flexibilizing its labor market. It has done something that was One could call foolish policies that were only possible under the unique Historical circumstances of a monetary union. I want to mention another point. So my first point my first point is Flexibility of wages is wrong. What you need is Very stable wages and not wages as such but what you need is stable participation of wage earners in In the productivity progress in all economies of the world that is extremely important because this is A stabilizing factor. This is for economic reasons not for social reasons. I'm not talking. I'm an economist I'm not talking about social problems at all but For economic reasons, this is absolutely indispensable to have inflexible wages in a way that wages follow the productivity growth at least on the average we can discuss what is below the average in the during the discussion My second point that I want to make has to do with this chart The second point is about interest rates. I mentioned already that in the United States They have no fundamentally changed their policies about interest rates they have They have Fixed the interest rate at an extremely low level and for sure the level that they have fixed the policy Interest rate in the United States is much lower is much lower than the expected growth rate So the interest rate now is close to zero Nobody would say that the United States are not expecting positive growth rate. They're expecting two two and a half percent So they have Applied a rule that was never unfortunately never applied in most of the developing countries I've given you some examples. We have looked very carefully into that But the data situation is very very bad So we found some examples what wherever you look wherever you look you find over prolonged periods of in developing countries You find that the interest rates are too high to make it very blunt and simple Interest rates are too high if you look at Africa You have in Africa a number of countries a number of countries not only South Africa, but a country like Ghana country like Kenya Uganda John Weeks may have other examples in the discussion Where interest rates are all the time too high? so you have the funny situation that in many developing countries you have wages that are stagnating or falling because they're following the Flexibility the flexibility Proposal of the International Monetary Fund or the World Bank You have but on the other hand you have interest rates that are much too high So interest rates that at least are much higher than anyone in the United States would accept Would accept them to be following the old rule. You know that Don't don't do what we do just do what we say so Please don't cut your interest rates down to a level as we have it, but just listen to our to our Dogma That we try to sell to you So this is this is extremely important And if you compare if you compare this with a number of Asian countries You see a dramatic difference. You see a dramatic difference. You see that in most of the Asian countries the Clearest example is China, but in also in many many other Asian countries You had it just the other way around in the Asian countries at least up to the Asian crisis of 97 These countries were able to support the economy by extremely expansionary monetary conditions in particular very low low interest rates So we have a squeezing of Developing economies from two sides from the wage side where nothing happens more or less Where meanwhile many countries have sort of say given up to to think even about participation of wage earners in in the overall success and this is particularly true if you look at the Whole region of North and Africa where there was growth in the last years in the last 10 years But it was not it was not shared with workers and that is why surely We see so much frustration there But that has also brought up made the economies of these countries extremely vulnerable Because they were just dependent on exports and they never had a stable domestic demand But the third point I want to make without showing anything about that here. It's going bit too far We have we have a third extremely important price We have a third extremely important price in this world a macroeconomic price. We have wages the wage rate We have the interest rate and we have the exchange rate. I Don't want to go into that but it can be shown again that here many developing countries are have so to say a third squeezing factor factor that deprives them of of Getting into a normal a normal development and to a catching up process. We have created a world We have written extensively about that if you look into our late last trade and development report 2011 we have a long chapter about it. We have in 2009 a chapter about that that is so to say my Citeram sends you since I'm an uncle We have created a world where developing countries systematically are threatened by over valuation of the exchange rate Because we have totally liberalized capital flows and with this liberalization of capital flows developing countries are easy targets for speculation with currencies the so-called carry trade I don't want to go into that but that is a factor that is extremely important in many countries even in small countries where you would not expect it. I just had a conference with ambassadors from smaller Latin American countries in Geneva This Monday and they confirmed that all of these countries there was not one country that would not be affected by speculation of hedge funds and other so-called banks what we call nowadays banks which is Hedge fund in disguise so to say that that are doing nothing else but to speculate in currencies and commodities and So they are Producing systematically systematically for the one simple reason that sometimes or most of time the inflation rates in the developing countries are a bit higher Then in industrialized countries and the interest rates are a bit higher than industrialized countries They're producing systematic over valuation of many countries and so to say Put a third break on the on the development success of developing countries That brings me to the conclusion and the conclusion is very simple The conclusion is very simple and straightforward as I said before a New a new development model and a new economic policy model and it applies really for developing countries as well as for developed economies a New economic policy model has to have certain characteristics, but the most important one it can be Boiled down to one sentence is that these macroeconomic prices have to be favorable for growth and have to be rather inflexible So what you need is a wage wage rate that Supports domestic demand by at least following productivity systematically over Any kind of development process Including in commodity producer producing countries where the productivity Progress very often is shown up in terms of trade gains So a terms of trade gains is exactly the same as a productivity gain and should be distributed among the people in that country where second where second you have a pro-growth monetary policy monetary policy that is Stimulating investment in fixed capital which needs in some countries even in developing countries now regulation of the financial market so that the people are Not using the money that the center banks provide to go gambling in international casinos so You have to have a monetary regime that favors growth in terms of having very low interest rates and having stable and low interest rates and interest rates that are Systematically below the expected growth rate the growth rate that you can expect and third and third you need for the third macroeconomic price the exchange rate you need at least a slight undervaluation or you need a a Justified Valuation of the exchange rate at least you have to avoid by all means an overvaluation of the exchange rate if you want to have a fair chance to avoid debt crisis and Permanent balance of payment threat on your on your economic in on your economic policy So the the policy concept The policy concept is just the other way around as the traditional one the traditional one says you use monetary policy To stabilize prices you use wages to stabilize the labor market and the exchange rate You just leave to the market and they will find the reasonable value That's all plain wrong in my view We need monetary policy to stimulate investment We need wages to stimulate domestic demand to to stabilize domestic demand and we need an exchange rate that helps to stabilize the external account this is Sounds simple, but it's a revolution everybody who's fighting on these front Fronts and frontiers knows it's a it's a revolution. We have no Up to this point. I've been sitting the whole last year in the G20 and believe me We discussed three points. We discussed three points in the G20 just as an anecdote as my last word From coming from President Sarkozy who really engaged very much at the beginning of last year in the G20 process We discussed the global imbalances. We discussed commodity market Financialization I've not gone into that but we have worked extensively on that so we can discuss it and we have and we discussed the a new global monetary order including the volatility of short-term capital flows and and exchange rates in These whole discussions in the whole discussion My colleagues from other international institutions were never willing never and there were six institutions There was the International Monetary Fund the World Bank the OCD the BIS in Basel and the so-called financial stability board from the other five International institution no one was ever willing even to discuss one of these Pieces of evidence that we have presented that we have contributed on the demand of the developing countries in the G20 group But they ignored it they ignored it from the very beginning they ignored every piece of it and just the best the best the best Proof so to say is that in the whole discussion about Commodity the financialization of commodity markets or speculation with commodities in the whole discussion about capital short-term capital flow volatility and speculation with currency in the whole year 2011 I was the only person ever from an international institution who would have used the word speculation I was the only person ever who used the word speculation from my colleagues on the International Monetary Fund World Bank and so on No one would ever would ever even use the word because that does not exist It does not exist because if it would exist if they would Acknowledge that this kind of there is this kind of evidence around As I said the whole edifice would collapse and that has to be avoided at any price. Thank you very much