 It is time to get our second speaker of the evening up here. It is a privilege to introduce president and CEO of the Federal Reserve Bank of St. Louis, James Bullard. Bullard graduated from St. Cloud State in 1984 with degrees in economics, quantitative methods, and information systems. And he also holds a doctorate in economics from Indiana University. Prior to becoming president, Bullard was an economist in the research division of the Federal Reserve Bank of St. Louis and has also served as the deputy director of research for monetary analysis. As president, Bullard is a participant in the Federal Open Market Committee, which means regularly to set direction for monetary policy. During his time at the Fed, Bullard has proven to be an influential voice for change. Of note, he has successfully advocated for explicit inflation targets, which the Federal Open Market Committee has since adopted. He has also stressed the importance of monetary policy decisions being driven by incoming data. Furthermore, as an active community member, Bullard serves on the board of trustees of United Way USA, the board of directors of the St. Louis Regional Chamber, and on the St. Cloud State School of Public Affairs Advisory Council, just to name a few. Now without further ado, please join me in welcoming James Bullard. Thank you. Great, well, thanks very much. And thanks for having me out on this beautiful wintery evening, where we can all enjoy the Winter Institute here. I'm looking forward to a great session. I thought what I'd do here is just talk for a few minutes about some of my favorite themes in monetary policy. That'll give you a taste for what I do. And then we can talk about all kinds of other things during the Q&A that might not be in this particular presentation. So I know some of you pay more attention to day-to-day monetary policy, and some probably less. But that's OK, we'll just walk through three themes for monetary policy in 2019. This slide doesn't have a lot on it, so we're just going to go past this slide. You guys got to cheer up here, you know. Let's cheer up! OK, here's the three themes. The Federal Open Market Committee, that's the committee I'm on. That's the main policymaking committee of the Federal Reserve. May miss its inflation target to the low side for the eighth consecutive time in 2019. I'm going to talk about this with a couple of slides. This is based on current readings of what markets are saying about their expectations about inflation. The second point is that, as many of you might know, and I think it's already been talked about a little bit during this institute, US labor market is performing very well. But my point is that the feedback from labor market performance to inflation is actually quite weak, much weaker than Wall Street things, much weaker than you think, much weaker than everybody thinks. So I'll show you a chart that shows that as well. And finally, I like to talk about the yield curve. That's the difference between longer-term interest rates and shorter-term interest rates. That curve has flattened significantly. If that inverts, that would be a bearish signal for the US economy. And I've been concerned about that over the last year. I hope we don't get into a yield curve inversion. We're not there yet, so we still have time to rescue ourselves from that. So those are the three themes I'm going to talk about. So let's start with the market-based inflation expectations. Market-based inflation expectations are very important in macroeconomics. Expectations generally are very important in macroeconomics. But for monetary policy, which is mostly about inflation and inflation control, inflation expectations are kind of the key variable. So this is what makes economics different from physics. In physics, the particles don't know where they're going, and so they smash into each other. But in macroeconomics, the particles do know where they're going, and they avoid each other because of that, because they can see ahead. So market-based measures of inflation expectations is quite important benchmark for monetary policy. If you look at financial markets, and I know some of you don't, but if you do look at them, there's something. You have treasury securities that are nominally based and other treasury securities that subtract out the inflation component. If you subtract one from the other, you get a measure of what the market thinks inflation is going to be over various horizons looking forward. Two-year horizon, five-year horizon, even a horizon that's five years beyond that. So those expectations are based on consumer price index inflation. That is the inflation that you and I think of. It gets reported the most. The committee likes to talk about personal consumption expenditures in inflation. It's a little bit different measure. You have to translate between one and the other. I'm going to do that here by subtracting off about 30 basis points from one measure to get to the other. So just a technical point there. Now, the committee actually has an inflation target. The US did not have an inflation target until 2012. I was an advocate to try to get that. Basically, we announced it in January of 2012, and we haven't hit it since then. We missed it every year since then. Not by a lot, but by some. It's been basically inflation has been very low. Ever since 2012, core PC inflation, that means subtract out the energy and food components. Core PC inflation has averaged just 1.64%. So when I was on campus here in the early 80s, if you had told me that inflation would average just 1.64% over that long a period of time, I would have told you, you're crazy. That will never happen. But it has happened, and it shows you the low inflation era that we're living in, not just in the US, but all around the world in the current environment. So unfortunately, the market isn't very hopeful for the Fed, us guys on the committee, to actually hit our inflation target in 2019. They think we're going to miss it to the low side in 2019, and indeed for the next five years. Before I get to the picture here, I just want to say a really good thing about looking at this particular measure of inflation expectations is these guys are trading in financial markets. They have to take into account all available information, all kinds of theories, everything that's happening all around the world, and put their bet on the table about what they think US inflation is going to be. So I like that aspect of this metric to feed back to me and to the committee about how we're doing. So here's a picture. These things trade daily. This goes back to January of 2018. The blue line is, let's start with the gray line there. That's the two-year inflation expectation according to the market. It is very sensitive to incoming data. And that number's, if you're reading it here, if I can read it correctly, a little below 1.5%. The gold line is the five-year. This is what the market would think over the next five years. Inflation's going to be on a PCE basis. So that's also a little below 1.5%. And the blue line is not the next five years, but the five years after that. So way up in the future, and even there, they don't think the Fed is going to hit the inflation target according to current betting in global financial markets. That number is only about 1.7 if I'm reading it off the chart here correctly. So these are low. As just a general matter, you would take a negative signal from this. These should all be right at 2%. If we had perfect credibility as a committee, and we're, everyone said, yes, you're going to hit just the right policy, all these lines would be right on 2%. They're not. And you can see in the right-hand part of the chart that they fell precipitously from October of last year up until early January of this year. And you might have noticed in your 401k that there was a big sell-off in financial markets between about September 15th, September 30th, through the end of the year. And accordingly, these inflation expectations tended to drop. Markets tended to view the committee as pretty, having a pretty aggressive policy that was going to make inflation be too low. That vertical line there is our current leader, Chair Jay Powell. He actually came out after the first of the year at the American Economic Association meetings and made comments that suggested that the committee would move in a more accommodative direction. And sure enough, all these measures turned around on that news. So it shows you how sensitive my business is to what's going on every day, even words by the chairman, not actual actions, but just words by the chairman have a lot of impact on global markets. Now, a lot of people say, hey, Jim, aren't labor markets pretty strong? Doesn't that mean inflation is going to rise? And that would be the traditional Phillips curve theory of inflation. And indeed, our labor markets in the US are quite strong. But that feedback from strong labor markets to inflation has broken down. The long reliance on the Phillips curve dating back to the 60s in the US has broken down as a guide to US monetary policy, especially in the last two decades. So we're no longer getting this reliable signal from labor markets. When labor markets heat up, then there's going to be inflation. That isn't happening anymore. It's not happening here. It's not happening in Japan. It's not happening in Germany. It's not happening anywhere. It's a low inflation world. It doesn't seem to matter how tight labor markets are. So we can talk about this at length. But I think the basic message is that policymakers just have to look elsewhere if you want to make a prediction about where inflation is going to go in the future. You can't just look at low unemployment or rapid payroll growth. Here's a picture that suggests labor markets are performing very well. This is the year-on-year growth rate in US non-farm payrolls. So this is the job count that comes out once a month. I've done this in percentage terms. This is kind of our best current indicator of the strength of the real economy. In January of 2015, you can see that the pace of growth was up above 2%. So we were creating jobs at a 2% or better pace. It declined all the way up until January of 2018. And then since it's actually bounced back and moved higher in 2018. So these are all good numbers for the US economy. The fact that it's going up on the right-hand side of that chart is surprising. Most people think given population growth and other factors, immigration, as we're talking about here at this institute, and other factors, that labor force growth in the US would only be about 1% in the long run. So you'd expect this line to come down to the 1% level. It's not doing that. It's going the other way. And we could talk about reasons behind that. But my point here is just to emphasize this, which is the Phillips curve trade-off. So if I have a tight labor market, do I get higher inflation? And this is actually the negative of that relationship. So the black line is an estimate from a model that describes how strong that relationship is. On the left-hand side of this chart, you'd say something like if unemployment was 100 basis points, but below its natural rate, you're going to get something like 50 basis points or 1.5% of 1% of inflation. So if you have tight labor market, you would get inflation. That's on the left-hand part of this chart. But as you go to the right-hand part of this chart, that black line goes down very, very close to zero. Those shaded areas are the statistical confidence bands around that estimate. So you can't even rule out that it's actually zero, according to these numbers. So what that's saying is whether the unemployment rate is 4% as it is today or 3% or 2%, according to this, is not going to have very much of an implication for inflation. So it's just not a reliable signal the way it once was. And I think we all have to keep this in mind. So it's really over the last two decades, if you look at the right part of this chart, since about 2003, 2004, since that period, it has been declining to zero. And it's pretty close to zero today, especially post-crisis. All right, let me talk about yield curve. And then I'll open it up for questions. We do have a yield curve inversion threatening in the US. A meaningful sustained inversion of the Treasury yield curve would be a bearish signal for the US economy. It would suggest one way to think about the yield curve. So the yield curve is the longer term interest rates minus whatever the short term interest rates are. If you subtract those two, usually you get a positive number. Inversion means that you get a negative number. So it's unusual in financial markets to have an inversion. And one way to think about it that's easy is that the committee, the open market committee, which I'm on, has a lot of influence over very short term interest rates. Our policy rate is actually an overnight rate of interest, so the shortest of the short interest rates. And when you go out the yield curve, you get out to things like the 10 year Treasury yield. That's controlled more by global financial markets. So when the Fed disagrees with the market, that's when you get yield curve inversion. The market won't see as much inflation and growth ahead for the US economy compared to the FOMC. And in that case, you might get a yield curve inversion. And that can be a very bearish signal for the US economy. Inversions have been followed by recessions in basically all of the post-war episodes since the 1950s. So this is a very powerful signal in the US. So where is this today? Where is the Treasury yield curve today, or this interest rate spread? This is one of my favorite pictures. The blue line is you take the 10 year yield and you subtract off the one year yield. And this gives you some notion of the flatness of the yield curve. You can see in January 2014, it was a whopping 250 basis points, or 2.5%. By the time you get to today, we're down to just 12 basis points. So we're hanging on by our fingernails here. And if this thing goes negative, that's what we would call yield curve inversion. And that's the item that has preceded all recessions in the US since the 50s. So this has been declining on a fairly smooth pace since 2014. I've urged the Open Market Committee not to pursue such an aggressive policy that we would actually invert the yield curve. And I think this is a sort of market judgment that the committee has probably gone far enough already and does not need to go very much further. In the past, we have ignored this signal. As a staff member at the Fed, we ignored this signal in 2001. Again, in 2006, we ignored the signal. Both cases, we got a recession shortly thereafter. So I'd rather not get burned a third time on this. So I've taken the other side this time around and said that we should take some signal from this market-based measure here. Some people say that this previous chart is, well, that's just one measure of the yield curve because you're taking the 10-year yield and you're subtracting off the one-year yield. But there are lots of different ways you could do that. You could take the five-year yield and subtract the two-year yield or the seven-and-a-half-year yield and subtract the one-and-a-half-year yield. So there are many ways to do it. And people have said that some of those are more informative than others. But here's a couple of them. The gold line is the five-year two-year difference and the gray line there is the fed near-term forward which came out in a paper recently. But it turns out it doesn't matter. By the time you get to the right-hand part of this chart, these are all just barely above zero in the current environment. In fact, the five-year two-year did invert during December and that sent shutters across Wall Street and fed into the sell-off in U.S. equities and fed into pessimism about the future of the U.S. economy during December. It's still inverted today, I believe, by just a couple of basis points. So these various measures are all tending toward inversion. I will say, though, on an optimistic note, we're not actually inverted today across the board. What you would have to see is these would all have to go negative and stay negative for a while. If you got that situation, then you'd have the bearer signal that I'm worried about. I don't think we're quite there yet, so we've got some room to go here. All right, so I'm going to stop here and just give a few conclusions and then I'll open it up for comments on anything I've talked about or any other questions that you want to ask. I outlined three themes for U.S. monetary policy for 2019. First, I'm not going in order here, but labor markets have been performing very well and I think that's great news for the U.S. economy. That's been a very good thing. A lot of good things happening there. Among other things, you can, you know, you're pulling people into the labor force that are previously marginally attached, so you might be able to lower African American unemployment down to the same levels as Caucasian or white unemployment. Same thing for Hispanic unemployment. This is an era where you might be able to make progress on that kind of thing, but my point is don't point to tight labor markets and tell me it's going to feed into inflation. That correlation has not been strong over the last two decades. Then these market-based signals such as low market-based inflation expectations and a threatening yield curve inversion suggest that the committee I'm on, the FOMC needs to be very careful going forward about adjusting interest rates and we don't want to send pessimistic signals on the U.S. economy. And finally, I didn't really talk about this that much, but the Fed has already raised interest rates quite a bit. They used to be down right at zero, close to zero. We've already raised interest rates some 225 basis points off of that level, so this is quite a ways up. It seems like interest rates are still low, but that's because the whole global interest rate situation has very low interest rates. But we've moved up, we've normalized. That's a success story for the Fed and for the U.S. economy. We've been able to move interest rates off zero. We've been able to shrink our balance sheet a little bit and so those are normalization moves that have not been made in Europe or in Japan. And so I think we've had a lot of success with our normalization program, but we may be at a point where we can wait and see at this point going forward. So I'm going to stop there and I'm going to thanks for listening to me. I appreciate that and I'm happy to take your questions and talk at length about many other issues. So thank you very much. The ball is back, so... We're going to do a quick demonstration quickly before. So I meant to do this at the beginning, but we're just going to demonstrate the mic fall really quick and I need a little bit of help. Can I get any alumni that are in the room to please stand up? Okay, so I'm going to ask an alumni a question and then I'm going to throw it to one of you to answer it and then hopefully that will reiterate that this ball can be thrown and that everyone should be throwing it when we pass it from one to the next. What keeps you coming back to the Winter Institute after you graduated? Because I'm a great athlete. I used to play rugby really, I did. First female rugby team, thank you. Sure. Dr. Baller? Mr. Baller? Jim, please. Jim, thank you. All right. So, you know, we go in cycles. We go in these economic cycles. I tend to think we're headed towards kind of a recession coming in soon. But how do you think technology figures into that and the speed at which we live and how business is operating now? Is that going to create a shift, particularly in the next maybe 20 years to how we see these trends and these cycles go? I think it's a great question and I think a very salient question for the U.S. economy right now because our expansion has been going on for quite a while. And if we get to June of 2019 and there's no recession, this will actually be the longest expansion in the whole post-war era and maybe the longest expansion on recorded for the U.S. economy. So, this is something that's gone on for quite a while. I think for some of us, me at least, the memories of the big recession are so searing that it seems like it wasn't that long ago, but it's actually quite a while. So, the question is, do expansions die of old age? And the stock answer around the Fed is that expansions do not die of old age. They're caused by shocks. So, something else has to happen to knock you off the expansion track and it's only that that would cause a recession. And so, hopefully we've got, you know, as good a chance as ever to continue with the expansion going forward. You know, whether it'll play out that way or not, you know, nobody knows. I don't know and nobody knows. Would technology or the nature of technology would that make a difference this time? Maybe it does. I don't know. Certainly Silicon Valley has been leading away during this era. We have very large companies that have managed to build brand new business models that were not contemplated in the previous era. They can sell to a global market, not just to a U.S. market, almost instantaneously. So, that's a different world and maybe that'll feed into a longer expansion than we're used to in the post-war U.S. data. This is not an economic question, but more of a personal one. Don't you have to throw it over here? She did. You did that. I saw it. More of a personal question. So, Jim, how does a St. Claude State University student become president of the Federal Reserve Bank of St. Louis? No way. No way. More than that. I took a lot of econ on campus and I actually loved it. So, I thought that something in the water, the professors, but they really influenced me a lot to pursue economics as an area. And also encouraged me to go to graduate school, which I did when it was time for graduate school. I did a nationwide search with my lovely wife who's here who I can't see because of the lights, but she is here, Jane Callahan. And we went to graduate school together, but we chose a place that was good for both of us and both of our programs. And after that, when you graduate with a Ph.D., you find out a startling fact, which maybe you didn't contemplate going in, which is that your market is actually quite narrow because you are very, very specialized. But I was fortunate that I had a very good job market the year I was on. And I was fortunate to get hired by the St. Louis Fed where I was a researcher for many years. And then in 2008, I was named president of the bank. So that's my story. Yeah. Mr. Buber, I have the ball. Okay. My name is Blair Anderson. I'm the chief of police here in St. Cloud, which is inconsequential. Gail told me to tell you that she did throw the ball to me, not at me. So for this area diet group, my question might seem rudimentary. What causes inflation? I'm sure there's probably not one thing, but it's something that I've often wondered and wanted to know. Well, I love this question because it gives me a chance to show off my University of Chicago influence on my upbringing in economics. But the standard answer is that inflation is caused by too much money chasing too few goods. This came from Milton Friedman. That's essentially the right answer, I think, today, as much as it always has been the right answer. And we don't have a lot of inflation in the U.S. today, and so people don't really talk about too much money or money growth being too rapid or any things like that, the way they did in Friedman's Day. But there are other countries around the globe that have plenty of inflation. And one of them is Venezuela right now. Venezuela's, I think the IMF said they're going to have over a million percent inflation this year. So the devaluation of the currency is extraordinary. But there are other countries around the globe that have. Turkey is another one that lost confidence of markets and has higher inflation rate, not as high as Venezuela. Argentina is another one right now that's having trouble. So this isn't just something that happens back in the history books somewhere in the 19th century or something like that. It's very tangible, very real today for central banks that lose control of the inflation process. It runs away from them and you can't get the market confidence back, often associated with governments that are spending too much, do not have a good way to raise enough tax revenue. Resort to the printing press ends up causing a lot of inflation. So it's really too much money printing. But when we're talking about it in the U.S. day to day, the U.S. doesn't have these kinds of credibility problems and stuff and so things, all these other factors start to come in and maybe move inflation just a little bit here, this way, or that way. But markets care about that because they're trading on very small fractions of a percent and this is all very important, but you lose track of the big picture I think when you think about it that way. So anyway, I hope that's a little bit helpful in what causes inflation. I like this group because you clap after my answers. Usually they're throwing stuff at me by this point. Chase Larson, Falcon National Bank, and first I want to say I truly admire what you do and so thank you for what you do. What effect, if any, do you see that cryptocurrency will have on the future of our economy? I love the cryptocurrency question. Excellent. So I had a great experience in 2018. One of the great things about this job is you get invited to do great events like this one, and I also got invited to go talk to the cryptocurrency guys. They have a major conference every year and I talked at the, I guess it was May 2018, Coin Desk Conference, New York City. So the previous year that conference had attracted 2,000 people. When I went there it attracted 9,000 people and it wasn't because of me, it was because cryptocurrency had become a gigantic thing around the globe. So I had to think about what to say to these guys and they were a very hostile audience. I mean, not like this one, so they're very hostile. They don't like the Fed. They have a lot of rhetoric about doing away with central banks and I got on a stage with, you know, a good 3,000 people in the audience basically, none of whom like me. So if you want to see the whole, I tried to think carefully about what to say and I brought in some things about, that I know from monetary economics and tried to mesh it with things that are going on in the cryptocurrency world. And if you want to see the whole slide deck, you probably don't, but if you want to see the whole slide deck it is on my webpage and I do think it was a good set of comments, but the main issue that I tried to bring up was that when you have a paper currency and we're trading the paper currency around, the biggest issue in this is why am I taking the paper currency from you because I can't do anything with it unless I can use it to buy something else in the future. So it's critically important whether I think that this object will have value in the future. So all of monetary economics is about maintaining that credibility about the future value of this intrinsically worthless object that's being traded around. The computer science guys don't know anything about this. They never heard of this. So they don't understand that their value, their cryptocurrency has this same issue. It's still about, is the cryptocurrency going to be valued one year from now, two years from now? Because if it isn't and I'm holding it, I'm going to lose all my wealth that I'm holding in cryptocurrency and that indeed is what happened not too long after I gave this talk because most of the cryptocurrency started to crash later in 2018 and now into 2019. So I think that that's the critical issue, at least if you want to view the cryptocurrencies as a currency and there is currency in the title. So I think they've got a long ways to go. I think that blockchain is an interesting technology. There's a lot of cool computer science here, a lot of interesting things, but you still have to maintain the credibility of the value in the future and that has not been working very well for the cryptocurrencies in 2018 or 2019. Thank you. Okay, so I have one more. Okay. Did you prefer the red carpet or the press? No, I'm sorry. That's not really it. The red carpet. I get you! All right, so what were the best lessons, the best things you took from St. Cloud State into your career? Well, like I was saying, alluding to earlier, this is where I was really introduced to economics and I think for those of you that are involved and those of you that are teaching, you should always keep in mind that it's really a college level subject. It doesn't get taught in U.S. high schools, which makes me want to cry, but that's the situation. And so this was the place where, supply and demand and statistics and social science and all of this. This is a place where I got my grounding in all of this and also encouragement to do more in graduate school. So I think we should all keep this in mind because it was very influential on my life and my career. These are powerful ideas. They're very important. There's never been a time when they're more important than today. And I think it really shows in the public discussion that there isn't enough just basic knowledge about economics, about markets, sense about how markets work, the power of markets, what they can do and what they can't do, all important. But this is where I learned all that and so it's very influential in my career. I have the ball. It's actually really light. I thought it was going to be heavy. I'm Kelly and I'm a professor of anthropology at St. Cloud State and I actually did my PhD at Indiana University. Ah, great. Go Hoosiers. Yes. Yeah. And so as a non-economist, I'm trying to understand your talk and what I got from it is that job market strength does not equate with rising inflation. It used to but doesn't always. But that there still may be this inversion happening and so that could still lead to a recession which would lead to less jobs, like fewer jobs. Yep. And so I do have two questions. One, are you making an argument then for higher interest rates and is that what you just did? And then two, is there another kind of recession outside of just losing jobs? Is there a new world of recession? Sorry, what's that last part? A new world of recession that we could experience. It's just not losing jobs, it's something else. Okay, so what did I say? I guess for those people that follow financial markets, I'm one of the more dovish people on the committee and the committee has recently moved in a dovish direction so things are looking up for me. But what I did in this talk was just list three of the arguments that I've been using and I've been saying that we should play down this Phillips Curve relationship which you've picked up on and then we should take a little more direction from what markets are telling us because the markets have to assess the future of the U.S. economy the same way I have to assess the future of the economy. I might have a view, I might say well the economy looks pretty good I think we could raise rates more but the markets might not see it that way. They might see the economy maybe not going to be as strong in the future as it has been in the past. I say we should take some signal from that so I'm making an argument that we don't have to raise rates we don't have to do anything really we've got interest rates at a good level today. And that inflation is certainly under control today and we're not at risk of as we were in the 70s of inflation running away from us I just don't think that that's the situation that we're in today. What's so mind boggling about this is that people like me taking classes here in the early 80s and in Indiana in the later 80s it was all about inflation most of you probably don't remember it but it was all about, you know we had double digit unemployment and double digit inflation at the same time in the U.S. So Ronald Reagan campaigned on the misery index he added inflation and unemployment together they added up to 20 some percent that allowed him to roar into office and that was the whole mindset the whole set of analysis over the next couple of decades was all about how do you keep inflation down how do you keep inflation under control and we learned a lot about that and we had a lot of success but we've got the opposite problem since the financial crisis inflation's been low not just here but around the world and Japan, which is a big economy and a sophisticated economy has had inflation close to zero or less than zero for 20 or 25 years now so this is not just an aberration this is something that's really become endemic in the largest economies in the world Europe, U.S., Japan those are the biggest economies Emerging markets are a different story but for these four though the sort of very large and developed economies we've got very low inflation so this has been mystifying in the world of central banking because in the world of central banking it was always harkening back to the 70s let's make sure the 70s don't happen again I'm all for that we definitely don't want the 70s to happen again but on the other hand we should be able to hit our inflation target and when inflation is too low we have to find ways to get it a little bit higher so that we can hit our inflation target Jim, I have the ball here we also don't want the music of the 70s to come back so... thanks for coming back thanks for coming back to St. Cloud we're very proud to say that you have your roots here and I enjoy watching you on CNBC when you do the guest spots there one question that I've always had about the FOMC and I'm curious as to the dynamics of the meeting it's behind closed doors and that what goes on there and how are the meetings held and who leads and how does everybody get input in that well, it's very funny because I worked at the Fed for 18 years before I became president and I became president and I think like the very first day I got some email from the Board of Governors in Washington D.C. and my email had this column where it lists what the email is about the subject line for each email and who it's from and then what it's about and it said it was from Office of the Secret and I thought, what? but if I expanded that out, that window out it's at Office of the Secretary so it's okay so there actually are no secrets the committee is, I guess the first thing to remember about it is it's a very large committee at full strength there would be 19 people so if you just want to ask what everybody had for breakfast and you go around the room, that takes 90 minutes so you have to be very careful about the questions that you ask of the committee the chair has to be very organized otherwise it's going to take forever it's a very participatory discussion it's a very formal meeting but everyone gets to talk all the time so we get comments from all parts of the country and from the Board of Governors everyone gives their view the chair's job is to listen very carefully to what everybody's saying and lay down a policy that is likely to bring everybody on board and so it's a very tough job as you can imagine any 19 people talking about anything if you had to summarize what they're saying that would be tough so I think you have to have some appreciation for the difficulty of that you've got various people that have a lot of background in financial markets or in academia like I do or research like I do and they're going to have very strong opinions about how to read the tea leaves and how to make decisions so the chair has to sort through all that I think it's a consensus organization that's another thing they have to keep in mind so I'm a voting member right now but I always joke that the vote comes at the end of the meeting and the vote is I agree Mr. Chairman or it could be no other way Mr. Chairman or your wisdom is boundless Mr. Chairman so there's not you can dissent, I have dissented but I think the dissent would be if you felt like the committee was really not doing the right thing at that particular meeting because by the time you get to the end of the meeting it's a day and a half long you've talked about everything under the sun everyone's had a chance to make their points and to try to bring other people into their point of view so usually by the time you get to the end people feel like well my view was represented I see where everybody's coming from I think it's the right decision for today that's why you get a lot of unanimous votes or maybe just one or two dissents one way or the other so there's a lot of consensus and there's a lot of respect I think around the table for everybody's views and I've always appreciated the collegiality of the group and when new people come on they really respect each other's views and they don't really bring a lot to the table so that's some of what goes on Alright we have time for one more question Well I got the ball man The National Debt is a topic of discussion to some extent every election cycle and my one perspective I read about I found of interest but I didn't research it anymore was the comparison of GDP in the US and a ratio of national debt compared to Japan GDP and their ratio of national debt and I'm of the opinion from just a little I've read is that Japan has a much higher percentage of national debt if that's true doesn't that remove some of the doom and gloom discussion on our side of the pond? That's a great question and I think the assessment of how much debt a nation can carry is in flux so the previous notion was that the Europeans did this thing called the Maastricht Treaty and they started the European Central Bank this happened in the 1990s and they wanted to put down restrictions on how much debt each country could float at a time and they put a debt to GDP ratio of 60% that was enshrined in the Maastricht Treaty Today no country in Europe I don't think has a debt to GDP ratio that's 60% maybe Germany does I'm not sure if they've made it but they basically all went much higher than that and lots of things have happened in Europe and there are countries that seem to be pressing up against limits like Italy and Spain so markets are questioning how much debt they can carry but then you go and look at Japan as you point out Japan's at 240% debt to GDP ratio and US over 100% debt to GDP ratio so I think we might have to rethink a little bit how we want to assess what the various countries can do for a country like Greece which got into tremendous trouble once they went over 100% debt to GDP ratio markets lost confidence, it caused a crisis Greece went into recession for a long time they definitely got into trouble and a lot of emerging market countries couldn't get away with what Japan is getting away with today but it must be different for the very wealthy nations as opposed to the less wealthy nations so I'd like to think harder about this instead of just saying that such and such debt to GDP ratio has to be the right one for a particular country it's not a very good answer, not a very satisfactory answer but I think we have to be more subtle about this issue than we have been in the past if you do your thinking at happy hour I can help yes, well thanks very much you guys have been very kind thanks for having me up at the St. Claude State Windsor Institute everyone that concludes the presentations portion of our evening first I want to thank James Bullard for being here and for answering all of the audience's questions again I want to thank our sponsors for making tonight's events possible and again thank both of our speakers for being here and giving great presentations just a couple of announcements before we head into the networking reception one tomorrow is day two of the Winter Institute and it takes place at St. Claude State there's a full day of talks on immigration so I hope most of you are going to be joining us and registration for that opens up at 7.30 am for those of you who are at the Winter Institute tonight who are also planning on coming tomorrow please keep your name tags as you'll need those tomorrow we're going to head into the networking reception now it's located downstairs there's a ton of great food and opportunities to talk with others I would personally recommend the mashed potatoes seriously and lastly I just want to thank all of you for being here for braving the weather and for being a great audience thanks everyone