 Okay, so welcome everyone and thank you for being here for this Lowy Institute in conversation event with Professor Raghuram Rajan, one of the world's foremost economists who will be joining us live via video link from the United States. My name is Roland Rajan and I'm the lead economist here at the Lowy Institute. And let me begin by acknowledging the traditional owners of the land in which we meet and pay my respects to their elders past, present and future. I'd also like to acknowledge that we have several senior members of the diplomatic community in the audience. So thank you very much for joining us today. The way today's session will run is that I will first conduct a 30 minute or so discussion with Professor Rajan over the video link. And then I'll also be leaving plenty of time at the end for questions from our live audience. So please be ready at that moment with your questions. So of course, amid the COVID-19 pandemic, these are of course extraordinary times. So it's a real privilege for us to be able to hear from someone like Professor Rajan's stature and also intellect. He is not only one of the world's top academic economists, but he's also been one of the world's most important policy makers and he's played a very prominent role in influencing the global economic policy debate for some time. Currently he is the Catherine Dusukh Miller Distinguished Service Professor of Finance at the University of Chicago's Booth School. Previously he was the 23rd Governor of the Reserve Bank of India from 2013 to 2016. Before that he served as Chief Economic Advisor to the Indian government and from 2003 to 2006 he was Chief Economist of the International Monetary Fund. He's also the author of several bestselling books including Fault Lines, How Hidden Fractures Still Threaten the World Economy, which was published in 2010, and The Third Pillar, How Markets and the State Hold the Community Behind, published in 2019. So Ragu, welcome to the Lowy Institute virtually and thank you for joining us today to share it with us, your perspectives. Thanks for having me. So Ragu, just to start off, I mean you've had a very interesting and varied professional life. I was wondering whether you could just share with us a little bit about what that's taught you and how your thinking has evolved as you've traversed all these different roles as not only a public intellectual but also an actual top policymaker in India, but also something in between when you were a Chief Economist at the IMF trying to shape the global policy debate and influence leaders. So can you tell us, what do you sort of take away from all that in terms of your own thinking about real world economics but also policymaking? Well I think what you learn over time is humility. You learn that whatever theories you may have, they help you understand the world but the world has a mind of its own. There's a lot of stuff which is not covered by your theories and policymaking is really quite difficult because you've got to make decisions under uncertainty. You have no real sense of how it'll pan out. You have to be prepared to react in real time to actions going off course and you have to pile up all the policies that will help you get towards your goal, not saying this is enough but make sure you've got enough to actually bend the world to where you wanted to go, at least the world that you have any iota of control over. So what does that mean in terms of my own sort of intellectual evolution? I certainly sort of come from a relatively poor country, India, which has been trying to develop into a middle income country. So the first question is when we started, why are we so poor? What is it that we're doing wrong? And in some ways the answer wasn't obvious. Over time, depending on where you were, you got a flavor of what the problem might be. When I was at MIT, it was we're not doing the right kind of development. As I moved to Chicago, it was we've got too much government. And really the problem is excessive government. And then going to the IMF, it was more a balance. How do we get a balance between markets and the government? And then we had the global financial crisis and somehow neither came out particularly well from that. And that's when the sense of what about everything else beyond the markets, beyond the government? How do we get civil society to participate in a way that you can get the best out of both the economic institutions you have as well as the political institutions you have? And somehow it's that delicate balance between the social, the political, and the economic that results in successful societies. And even when you're there, it can all break down. I mean, we've seen the case of Argentina, which was a rich country in the early part of the 20th century and has gone downhill since then. But even many industrial countries can't take it for granted today, given their politics, that they will stay where they are. And the politics has its roots in social dysfunction. And so everything to some extent is interlink. Going back to my earlier point, you can't really have a model, an all-encompassing model of the world. You only have models of little bits of it. And that guides policy, but it's an incomplete guide. I mean, it is very interesting that your last book, The Third Pillar, was all about the importance of the community and what can be done to strengthen it. And yet, of course, you're a finance professor, which most people would say is pretty far away from that. And that was written in 2019. And one can point to obvious sort of the rise of populism, Donald Trump and Trumpism and these sorts of things as probably part of the kind of motivation. But can you just expand me, what was the thinking there? And more importantly, now we're trying to come out of the COVID-19 pandemic. Things have changed in America, but these sorts of issues are common in many countries. There's also fairly divisive politics in your own home country, in India as well. How are you seeing that situation in terms of right now, how it's evolving, and whether or not, say, Biden is trying to do something about it at some level now, are people heading in the right direction? Well, to some extent, the book obviously was written before the pandemic, but it built on some of the dysfunctionality that was emerging in industrial countries. And essentially saying, with the enormous technological change that was happening, societies were not prepared. And I mean, you could see it in the divide within society. One segment has access to high-powered jobs, well-paying jobs, caters to a global market. And the other segment finds its opportunities dwindling, and the middle-income jobs disappearing and basically being relegated to low-skilled, low-income jobs. This is happening in country after country, whether you're an emerging market or a developed country, but it hits the most in developed countries where there was a sense that the pathway to a comfortable life was open to everyone. And as people realized that both their pathway as well as the kids' pathway was increasingly under threat, you start getting a lot more anxiety. And a lot more dysfunctional politics of the kind that usually is seen in poorer countries, which leads you to believe that it's not the poverty of the country that's the problem. It's sort of these different views depending on where you stand of future possibilities which drives the dysfunctionality. The question then is, how do you remedy that? And the answer to some extent is the obvious one, bring opportunity within the reach of everyone. The problem, of course, is that when you say that, the left thinks, that means a lot more government and the right thinks a lot more market. But in fact, I mean, neither is a complete solution. To some extent, we've seen a lot of money being poured into education, for example, in the United States with very little impact on the communities that are falling behind. And the question is why? And sometimes the answer is these communities simply don't have the ability to take advantage of that because the fundamental problem is not so much education locally, but it's the lack of economic opportunity which leads to crime, which leads to broken families, social dysfunction. You need to remedy some of that first before you can get people paying attention to schools, to community colleges, to the educational path that will take them out of there. It's sort of in many ways a developmental problem in many industrial countries that areas of disadvantaged people are falling behind so far, they would not be out of place in a developing country. And low interest rates of fiscal stimulus doesn't really help them because the pathway for those flows to come into those communities are broken. You need to first think how you're going to develop them to the point where they can actually benefit from those flows and access the national and even international market. That's a developmental problem. How do you elevate a community to the point where it can take advantage of that? And some of that is fixing the immediate problems. So the third pillar was really about how do we start treating the problem of inequality as a developmental problem in industrial countries? And that means going down to the community level rather than thinking this is a rich country and therefore there shouldn't be a problem. It's in many ways a poor country in some parts and we need to figure that out. But also it was saying that we need to find a new balance between markets, the state and the community in order to make it successful again. And that's to some extent what we have to look for, this new balance. And I just like to stick with the advanced economies and the United States for a second. Just connect that to the sort of macro picture as well. I mean, I think people are now, we're in the era of a return of big government, Keynesianism, big spending, that sort of thing. I think in a lot of your writings and commentary, you've been on the more sort of cautious certainly side of that equation. You're not against stimulus but you want to done right, so to speak. I think going to these issues about the community level problems, part of the motivation saying the Biden administration is thinking along the lines of they want to run the economy hot in order to. They're sorry, run the labor market hot in order to reach the most disadvantaged components of the labor market, the most disadvantaged people. They want to spend a lot of money on things like childcare and investing in families and education, these kinds of things. I mean, connecting these two sort of agendas, what do you make then of the Biden sort of policy agenda and where it's headed? Sure, I think obviously they are cognizant of some of the problems. And want to try and fix them. To some extent, the problem is wanting to fix them from the center. Almost immediately means these massive undifferentiated tools. Let's spend enormous amounts on infrastructure. Let's spend enormous amounts on community colleges, etc. And there is some virtue to an untargeted approach. Then you don't pick winners and losers. You try and engage the middle class. The middle class is often very vocal in ensuring quality. I think Larry Summers often says that programs targeted at the poor programs. Because the poor don't have the ability to stand up for quality, engage the middle class and then the poor will benefit from having the middle class fight on their behalf. The problem, however, in this massive, everybody but the rich kind of program is that it is enormously wasteful in terms of spending. And if you're not quite sure what the channel is, what the right approach should be and development is really hard, you ask any development economist, what's the magic, you know, and the answers, there's none. We don't know. We don't know how South Korea got rich and while Congo stayed poor. We don't know the magic recipe, but we do recognize it when we see it. But if that's what's going to be the case, you need to have, you know, in the words of Mao, let a thousand flowers bloom, see various experiments, allow for a certain amount of decentralization of what can be decentralized. And unfortunately, that's not the approach for the most part. It is this massive centralization of spending. And you also, you know, have determined the direction of the spending. We're going to build community colleges. We're going to build this and that and something else. So my worry is that, you know, they have the right sort of intent. It is an execution that there's an enormous amount of spending. And of course, the immediate fear in the United States is not so much that the spending will result in a debt crisis for the United States. It still has enormous capacity to sustain more debt. It is that this result in, you know, inflation, inflated asset prices, which may risk tumbling, all those yields aside from default, which essentially bring the program to an end. And that's sort of the worry that if we don't target better, if we don't, if we're not conscious of resource constraints, if we believe that MMT, modern monetary theory, is the name of the game, not Keynesian. It's a modern monetary theory. Spend until you get restricted by inflation. Well, we can, we can go a lot off track. I think what you're saying is that there are real constraints out there. And if those constraints are there, then if you don't do this kind of intervention in the best way, then there's a huge opportunity cost. And you may not get to where you need, you need to go where you're trying to get to. You said it better than I could. You said it better than I could. That's absolutely right. That, you know, don't treat the resource envelope as unrestricted because it will get restricted at some point. And in the meantime, there's so many pressing needs. You need to prioritize, you need to design well, and you need to decentralize the, the execution to the extent possible because each community, each area has different needs. Don't sort of have this one size fits all sent from the center. And that's, that's why, that's where I would be a little cautious about what's going on. Can I just get you to tease out back now on to looking at the macro picture and the financial sector? I mean, you were of course, you know, very prescient with your warnings in 2005 and about the financial sector risks. And then you were sort of proven right in hindsight. One of the few people that can claim that, that kind of that track record. Now, you know, when you look at things, you know, are there any sort of big concerns? I mean, you've already said, of course, that of the default question is so far off. At this point, there are other issues. But, you know, are there any particular sort of macro financial risks that that were you at this point? Well, I mean, to some extent, it's connected to the spending. I think that for a long time, the Federal Reserve was the only game in town and acted as such. How do we get activity up when we're at the zero lower bound? We have to get real interest rates down. So we need to get people to have reasonable inflation expectations. In a sense, many central banks were trying to do what Paul Krugman suggested, which is you have to commit to being irresponsible. Despite your, you know, inflation targets and so on, you have to commit in some way that you will overlook them. Even when you reach those targets, you're going to be sort of accommodative for far longer. That's the only way you're going to get inflationary expectations up. You're going to get activity up. And I think, you know, this notion of targeting inflation over the targeting average inflation over an unspecified horizon is a way of telling the public, look, we will be patient and we will not raise interest rates the first time we see inflation hit 2%. We're going to, you know, wait, wait, wait at least for a while and only then will we act. So it's sort of committing to be at least irresponsible, according to the old metric of, you know, a precise number for the inflation target. Now, that said, I think the Fed was, you know, very vocal on this at a time when you had both adverse economic conditions but also modest spending. At least, you know, there was a sense that, okay, these were one-offs. I think since the Fed started articulating the average inflation target and we will hold for the foreseeable future, as well as making statements about, you know, we want to see maximum employment. That means we want to see the minorities also employed because they get employed at the fag end of the labor cycle. After having said all that, you see this enormous amount of spending coming down the line. And so when you add the two together, you have a financial market reaction which is of glee, lots of spending, lots of activity, and the Fed is going to stay on hold. So we're going to discount high future profits at a low discount rate forever. And so we get, you know, everything being valued at really high prices. Now, the Fed, therefore, to some extent, is perhaps, and I don't want to put, I don't want to surmise their thinking, but I think they've gotten more than they wanted. And now it's hard to back off because the financial markets have essentially climbed on to what the Fed sort of said and have reacted. And if the Fed changes its tone at this point, the financial market reaction both domestically but also internationally could be substantial. So to some extent, I believe the Fed is a prisoner of circumstances. It will wait and see. I mean, that's the only thing it can do without sort of reversing itself. But also, you know, in the best of worlds, the inflation we see will be one-off, a function of the recovery of the economy and so on and some supply constraints. But over the next year or so, by the time people start asking, is the Fed going to act or not, it will revert and the Fed will then be proven right. That is the best of all circumstances for the Fed and that will sort of support asset prices. You know, Chairman Powell will come out looking like a genius much as Alan Greenspan looked like a genius when he predicted, you know, strong productivity growth in 95, 96 and so on. If, however, inflation takes off and expectations get unhinged, wages start moving up faster because labor market conditions are tight, especially given the enormous spending, the Fed may be behind the curve. When it decides to act, the financial market consequences, financial market will of course try and second guess the Fed and bring up whatever it expects the Fed to do. But whenever the financial market turns, you have a very, very sort of strange dynamic that will be happening. The financial market will be pushing pressure down on activity which will then mean the Fed doesn't need to act but as soon as there's a sense the Fed doesn't need to act, there will be, you know, a movement upwards again in inflation and so on. So you can, I mean, what that means is a lot of volatility. How that plays out, I think is anybody's guess but that would mean a lot of volatility at that point. And you mentioned as you were saying that there would be, there's gonna be an international or could be an international dimension to that and in particular I think possibly for the emerging markets that have sort of had some help from the low interest rate, you know, abundant global liquidity environment. But just before we sort of pivot to those sort of issues, just a quick sort of question, zooming back up to the big level, you know, we're of course coming through the biggest sort of economic shock say since the Great Depression, just in general, how are you seeing things from here advance countries first but then let's shift to emerging markets and of course India at some point. Yeah, the story of emerging markets hasn't come out as much during the last few months with the focus on the new US administration as well as some of the sort of dealings between China and the rest of the world. The Northern Asian emerging markets thus far have done quite well. Now everything we say about growth is virus willing, right? Because the virus has a mind of its own and you know, could upset all calculations if new variants come which are more virulent. It seems to be finding interesting ways of combining virulence across variants. I think the, you know, first the tragedy of emerging markets is certainly on par in terms of being affected by the virus, on par with the tragedy in the industrial countries. My guess is there's a lot more undercounting in the emerging markets, but the hard-hit emerging markets and the ones with reasonable statistics suggest that, you know, they've been really badly mauled by the virus. So this is a tragedy in and of itself. But add to that that the amount of financial support, fiscal and financial support that they've been able to give their households, their small and medium enterprises has been much more limited than the support the industrial countries have to give. Now the rich in the emerging markets have accumulated savings. So when the virus died down in many countries last year, you saw some emergence in growth. But I think that when it came back, you know, even the rich got a little anxious about spending, but the true real story in terms of sustainability is the middle income, is the middle class as well as the poor who've been, you know, thwacked by the virus in many ways. And they haven't had the kind of support that industrial countries have been able to afford. The third blow is of course the vaccines that many of these countries don't have access to sufficient vaccine production to vaccinate their populations for a long, long time. Many emerging markets till sometime next year, many developing countries on current path probably in 2023. That's a long time to be anxious, to see the waves of the virus and the notion that, you know, South Asia and Africa would be immune to the virus, which was, you know, these are people who've been hit by all sorts of viruses in their youth and therefore are hardy. That has been put to bed with what happened in India. And so my sense is that if we are not more forthcoming in the industrial world about what is happening in the emerging markets and developing countries and being a lot more sympathetic to the need to distribute vaccines widely to, you know, the break between industrial countries and poorer countries will be significant. There is no point talking about a coalition of democracies when, you know, the word on the African street is are you gonna vaccinate your dogs before you send the vaccines to us? That is, I mean, is a recipe for a disastrous break. And, you know, I think we need global leadership on this. I'm glad the G7 is talking about it, but we need more action on how some of the frontline people in these countries can be vaccinated early so that they have some resilience, doctors, medical personnel. And it may mean more than just sending the vaccine, it may mean helping organize the distribution of the vaccine. Many countries have their own ability to do that. Some don't, but it also means organizing the production. Can we spend some of the money in getting some of our vaccine manufacturers to up their game and invest much more? I think the IMF came out with a paper recently suggesting the returns to such an investment would be huge. I think the returns to such an investment would not just be economic, it would be political. It would suggest there is still hope in global cooperation. I mean, there's a lot more that I'd love to talk to you about on some of those issues, but I'd like to bring you to India in particular, of course. I mean, obviously it's a very tragic and sad situation there at the moment. I mean, just to start off with, I mean, how do you see this affecting the country and, you know, what's the way out for them? Well, I think the second wave certainly caught much of the country by surprise. I think the prevailing view was something had protected us and therefore we were relatively immune to fresh waves and the second wave, you know, put paid to that belief. I think the, you know, I mean, we can go back and see the various ways we should have prepared better. Hindsight is 2020, but you know, there were certain aspects of vaccine acquisition. To India's credit, it distributed the vaccine to a number of countries before vaccinating its own population, perhaps under the belief that its population was relatively well protected. Nevertheless, this is more than many countries have done. Now, of course, we are seeing that perhaps it was better to vaccinate your own population earlier on, certainly from a political aspect that would have made more sense. But I think, you know, again, India's a big country. There are some states, Kerala, for example, that and, you know, even Maharashtra, which had a very, very bad attack, which also have managed in adversity in ways that sort of are an example to the rest of the country, centralizing resources, distributing them fairly, and so on. Going forward, I think, you know, this is a wake up call that our old ways of doing business don't work. And we need, you know, to rethink what has gone wrong. And hopefully the silver lining will be that, this prompts a dramatic rethink of India's policies. And we get back both on the, certainly on the medical side, you're seeing some bottoming out, certainly in the cities, in the villages and rural areas, harder to count what exactly is going on. But hopefully we're seeing some attenuation of the virus right now. And India will be much more wary going forward and is certainly pulling out all stops to get the population vaccinated. What about then, you know, just when you think about the economy, obviously on the short-term side of things, I mean, it's gonna be very negative. The financial system's already in a bit of a mess, not a lot of fiscal space either. So just short-term, but also, you know, just long-term, I mean, India was supposed to be growing, hopefully at least 6%, maybe 7% plus, depending on whose expectations. You know, what's your own feeling about India's outlook now, given what's happened? Well, you know, I think the temptation is to be very bleak and to say, you know, there's a lot of scarring which we haven't quite measured. And when you look at demand, especially consumption, the latest numbers don't look great. It grew relatively slowly compared to the other measures. And going forward with the middle class being scarred by the lockdowns, by the deaths, maybe they maybe tempted more to save rather than spend. And the poor don't have the purchasing power and have been, many of them sort of live from hand to mouth. And without the buffers, it looks relatively bleak. As I said, I mean, India is a democracy. Democracies tend to have self-correcting mechanisms. And so the hope is that the self-correcting mechanism will start and our leaders will start paying attention to what's going wrong. And therefore you get course correction. Now, remember India wasn't growing particularly fast, even before the pandemic, after 20 plus years of 7% plus growth for the last seven or eight years, we have not been growing that fast. And that suggests the old sort of pathways are not proving as fruitful. We need to think about a new generation of reforms. And so along with all the sort of learning from the pandemic, including what India needs to do on the medical front, as well as on the Social Security Fund front, the picture of migrants running from the cities because there's no social support there. I mean, those things we need to remedy, but at the same time, we also need to reinvent our growth path. And I think that there are ways that India can, I mean, one interesting way this might, you know, India is obviously a player in services. And we have a lot of very capable accountants, consultants, doctors, et cetera. But high tech services require a lot of confidence in rule of law, in privacy, in the fact that governments can't get at your information and so on. If India played its cards right, it could be a strong alternative given the relatively cheap services that it can provide, but at the same time, assuring some institutional sort of support. And that's an important path that we can take, but we do need to reform our structure so that we can give people that confidence that they can come by Indian services without their details being available to parties who shouldn't have it. Might turn to our audience if we have any questions, to put to Professor Rajan. Yeah, we'll just go to David at the front. Just usual rules, just stat your name, any affiliation and stick to a question. Look, thank you very much, Ragu. My name is David Osman from Macquarie University. I want you've touched at several points on your discussion, very deep discussion on economic and social trends, on essentially populism. Now, in crude terms, you can think about when we've seen populism in the past, Latin America, you get three phases. The first is the enthusiasm as everyone thinks this is the new Nirvana. The second is the realization of incompetence in dealing with the economy, social issues and so forth. And then the third is the fading away of populism towards something different. We've certainly seen in many countries the first two of those processes in several countries around the world. Are we seeing the third with the fading of populism in the exposure of the mismanagement of social and economic trends that come from that? And if not, then why not? I think we're seeing some of it, right? I mean, certainly in the United States, many would credit President Biden's victory to the mismanagement of COVID by the Trump administration. I think there are some populists who have managed it reasonably. Urban, you could argue has done a reasonable job, but there are other populists who haven't. And this is certainly something which you may argue is a feature of populism, the belief that you know that the experts don't and therefore you've got it right. And all it takes is the will of the people expressed in you to make dramatic moves, which often can be more problematic and exacerbate the situation. Bolsonaro's let's not vaccinate. This is not a serious thing. And you only have to be manly to avoid the disease. I'm obviously oversimplifying his views. But I mean, those things people latch onto. The question is, is there a viable alternative? Sometimes these populists essentially crush the opposition. And often they are very, very charismatic politicians themselves. And so it appears that there's nobody who can stand up to them. I think bad events in competence tends to highlight the fact that these are not omniscient, omnipotent politicians. But it requires an opposition which has the capabilities and is not silenced to highlight this. And in some countries, there's not really much of an opposition. Take Russia, for example. So to your point, I think in some places where there has been substantial incompetence, you are seeing a change. Now, the last thing I will say is, as you well know, the often the populist leader espouses an anti-elite view and to some extent it's also possible to argue your fate. Why you're doing so badly is because you're not part of the elite. See, I give you the goodies and these other guys want to take it away from you, continue trusting me and I will still continue to giving you the goodies. And don't worry about COVID. Nobody could have prevented that and don't blame me for it. None of these guys could also. That can still resonate. So you need a clever political opposition to make the point that there is a viable alternative and we could have done better. And I think because we don't have that in some countries, you see the continuance of populists despite underperformance. So another question over here. Hi, I'm Alyssa Lange from the Lowe Institute. I'm just going back to the US. I know you talked about some risks around wastage and inadequate targeting of stimulus under current policy settings, but taking them as given, how likely do you see the prospect of overheating or accelerating inflation as Larry Summers has been talking about lately? Well, so overheating would have a number of components, right? The first would be, of course, the massive spending and to some extent the Janet Yellen response to that would be, well, the labor market still has fair amount of slack. There are 10 million people who still haven't come back to the labor rolls and so it has some way to go before we see it sort of pop out. The question, however, is first, are they going to come back to the old jobs or is there a fundamental mismatch which in the post-COVID world, which makes it hard to get them back so they're not really a reserve army holding wages down? The second is that with this confidence built by the spending over time, do other components of demand come in? Investment, for example, and we are seeing some fairly strong investment. So is there resilience and demand beyond the spending which continues for some time and therefore is part of the overheating story? And so I think these are some of the factors that will sort of play out. The third is expectations. How firmly anchored are inflationary expectations? So if you talk to Janet Yellen or Jerome Powell, they look back at the last 10 years and say people have gotten used to a very low rate of inflation. They are going to look through these sort of bursts and basically conclude beyond that that it's going to come back and stay fixed where if on the other hand they don't and all the sort of pro-labor policies that we see emerging, including a $15 minimum wage but also more union support, et cetera, all that combines not only to, in an environment of elevated inflationary expectations make wage demands more sort of more effective. I think you could get the beginnings of stronger inflation. The bottom line, let me add one last bit to this which is that the global competition has been keeping prices down also but the flip side of that is growing sort of oligopolistic firms in some industrial countries. So unchecked by global competition, do the oligopolistic firms sort of find more pricing power and the ability to push some of the cost increases into prices. The bottom line I think is that, both sides have arguments in their favor, the don't worry, be happy side is look at the past 10 years and nothing really has stuck out and the Larry Summers, Martin Wolf and others, this is different because of the size of the spending as well as the views of the policymakers, their sort of tolerance itself makes inflation more likely if they were hawks, you would be less worried. I side with the Larry Summers, Martin Wolf side thinking that it's more danger that it breaks out on the upside, it's not, I wouldn't say it's the overwhelming possibility but it's high enough that we should be somewhat worried in which case I would have preferred far more cautious spending. So a follow up on that Rugu is if you do have major central banks like the Fed lifting interest rates, possibly a bit more forcefully than they did over the past decade, what does that mean for the emerging markets then, particularly if they're still in a lot of economic trouble from the effects of the pandemic, is that something that worries you, that you have something that looks like a rerun of the taper tantrum except at a time when emerging economies are hurting a lot more and possibly with a sharper rise in borrowing costs? Yeah, I mean, the history of emerging markets has been that when the dollar strengthens, when dollar interest rates go up, emerging markets get hit reasonably badly. We already saw a preview of that with the early days of the pandemic when we saw some capital flowing out of emerging markets. We saw stock markets plummet there way before the pandemic had hit those countries, but now many of them are trading at all-time highs stock markets. Now, it's hard to, I think what we have is an undifferentiated sort of financial sector search for yield across the world. And as the central banks tighten interest rates, you will see the consequences. Can these countries prepare now? Well, many of them are trying to prepare the way for tighter monetary policies saying, we simply can't afford to be as lax as we were, given our plummeting exchange rate, et cetera. But I think it's still early days. They haven't had these signals and there are a number of countries which still maintain very accommodative policies. If there's a sense the Fed will turn, I think their policy room will, certainly central bank policy room will shrink considerably, but also I think we will see some impact on asset prices. Do we have a question at the back? Thank you very much. Sam Rogavine from the Lowey Institute. Professor, the first question was about your intellectual development and you emphasize the importance of humility. In that spirit, I wonder if you could look back over the last 18 months and perhaps tell us about what you got wrong. What's the biggest thing you've changed your mind about since the pandemic began? Well, it may be something small, but I think it reflects, yes, this need for humility. Well, as the pandemic hit, I was worried about corporate defaults because I thought with the kind of damage that's being done, we're gonna see far more bankruptcies, we're gonna see small and medium enterprises in huge distress, and therefore it's extremely important to figure out how to deal with them sooner rather than later. We need to figure out alternative bankruptcy mechanisms which will be quick, et cetera, et cetera. The reality is bankruptcy is the dog that didn't bark. I mean, you haven't seen, in fact, if you look at bankruptcy filings, it's actually gone down in many industrial countries. And some of that is the massive, massive amount of support. Some of that is private sector forbearance. Banks aren't pulling the plug sometimes because they have been told not to sometimes because they basically are trying to write this out and then see what happens with the support of their regulators. So that's one thing I got fundamentally wrong. I still think that as we emerge, the need for repair will be significant as the moratoria come to an end, as the debt buildup, as well as the central bank support to that debt buildup comes off, you will start seeing many more bankruptcies than in the past, but it certainly wasn't as dramatic as I feared initially. And it may well be that the real problem is in many emerging markets that haven't been able to support their firms to this extent. Unfortunately, we are out of time. So let me thank you very much for joining us today, but, Chilly, and I really do hope that perhaps in the not too distant future, we'll be able to have you here, actually, in person sometime soon. But thank you very much for sharing your perspectives. Thank you, Roland. Thank you, and bye to everyone. Thank you.