Surveillance: Evergrande 'Manageable,' Dalio Says

a moment. This is really really timely for Global Wall Street. We will come all of you on Bloomberg Television and I'm Bloomberg Radio. John Farrell mentions ever Grand there is Bridgewater up to their eyeballs and ever Grand paper. No, we don't have you don't have any other I gotta make some news here, help me out. Ray Ray has the bravest bio I've ever seen. Let me go here, and I have a nodding familiarity with us. In his high school years, Daio was a media ocre student. What happened?

How did you go from a mediocre student to the success you've seen over so many years? Um? Then, I like markets, I was a kid that I mean school that when they cram stuff down your throat and it just didn't interested in markets. Interested the markets interested you in the mathematics of the markets and the girls. Okay, of course we knew that, but Long Island. But the dynamics of it, the dynamics of the markets. When did that click in for you? Did it wait for when

you were talking? Well, like I caddied, and this was the sixties, and it was you know, that was the hottest time in the markets. Like every time you get a haircutters shoe shot, and somebody would talk to you about the markets. So I caddied, and I took my caddying money and I put it in the markets. And um,

I didn't know what I was doing. The first stock I bought was my whole criteria was it was the only company that I ever heard of that was selling for a lot less than five dollars a year, Northeast Airlines. They did well, and and and and you know, like my investment criteria was I could buy more shares, so if it went up, I'd make more money. That was my crow. Did it work out? Well? What happened is it has come to and he was about to go bankrupt and somebody acquired and it tripled, and I thought

this game is easy. It was to start right, Yeah, But of course the game isn't easy. The game has not been easy for Bridgewater. Let's get this on the way. Our Catherine Burton has done wonderful reporting on the struggles of the entire industry. The difference is, you know, seven oh eight you had challenging years and you bounced back with a vengeance. Can you bounce back now? With markets

at the zero bound um? Seven oh eight week was a great year because we caught the we anticipated the financial crisis and we did great, and then we had seven and so on. Recently we got we missed the COVID coming and then we got hit by the COVID coming um and so then we bounced back from from that. But I think we um we didn't take as much risk as we could because we added we added value, but not as much as we should have added. I want you to speak to Bridgewater clients now and those

with billions lined up considering giving you money. What are the new procedures at Bridgewater to be more supple in the market, given where credit markets are again at the zero back Well, I don't think there's new procedures. It is the amount of risk that one wants to take at certain times. So if you take our all Weather Fund, for example, I think it's up ten plus something this year, it could have been um more aggressive. The question is in this risk environment, how much do you want to

be aggressive? You know? So, um, you know, we're always looking at things that we can do better. That pandemic is something that we've examined and we learn a little bit more, but by and large it's you know, uh, it's the same, just more of it. Stephen Roacheville University had claimed at Morgan Stanley says it's the single biggest miss he's ever missed. Was how we came out of the pandemic. How do you feel the nation and our fiscal status will come out of the huge debt build

up we have. How do you believe America will d debt? Well, this is all happened over and over again. Um, that's what quote my attention. When you hit a zero interest rate and you have too much debt and everybody needs money, the way it works is the government sends out the checks, but the government can't print money, so it has to borrow money. From the Federal Reserve and borrow money from others, and they don't have enough money, so that they print

the money. And so the value of cash and the value of bonds as negative real returns, significantly negative real returns, and so money goes somewhere else. It goes into traditionally equities, it goes into gold, it goes into property, it goes Yeah, the house over there way just went up three thousand dollars when you sat down on the chair. Continue the But the same thing happened in um V one August

nineteen seventy one. Same thing happened in March nineteen thirty three, and that was when they produced a lot more money. And that monetization which moves its way through the system mechanistically. The way it works, a bond confedera reserve comes in and buys a bond, it gives it to an investor. That investor then in turns puts it into other investments, and then it gives it to the public through the government.

So this is um that's the way the mechanics. Regelio with this at the Granite Economic Forum on Bloomberg Radio and Bloomberg Television this morning. Let's go to China now, it's so much in the news. I wanted to wait, but I think we've just got to get to China right now. This is a new Beijing. Is it a return to an old Beijing that you and I knew when you were buying Northeast air or is you do

you envision a Beijing that's moving to a new territory. Well, you have daughter in southern law in Shanghai, and you and and so we get to living at real time. We're living in real time. And the more you have contact, I think the more you understand it. I don't think it's well understood for a long time. The the question is how can communism and capitalism coexists? That's the riddle you have to answer. And he had to answer it

a while ago. And what do these people want at the top and what they The answer to that riddle was told also by Deng shell Ping. When he was asked, he said, it's glorious to be rich. And then they asked about capitalism, and he says, it doesn't matter if it's a black cat or a white cat, just as long as it catches mice. And so the idea is producing wealth and so capitalism, capitalism, yes, but the redistribution. Okay. So we have four things that are really going on

in China. If if you understand their intend um, common prosperity is the word now, okay, and there's been the objective to raise money and then to broaden the base of that. Okay, that's common prosperity. So if you look at their tax rates, they're lower than the United States. If you look at the measures of almost capitalism, they have as much capitalism or more capitalism, much more so than Europe for example. And then and now they're in

a prospect to broaden that. So I think there's a tendency and an understandable tendency to think, because they are maoist and capital and communists, that they're going to go back to that kind of a thing. Then they're not. And den Cha Ping excuse me, Um, Shishi Ping. Just Um, for example, introduced the newest stock market in Beijing. He made a point of being the one who introduced the market in Beijing to the small and medium sized enterprises. They know that it catches mice. And so the issue

is that the capitalist is not in control. The issue is that there's a system for the whole system. And then what they want to do is make sure that um, it's not a capitalist driven system. So and then there's data control and then and then you have to understand there's micromanagement. It's like the kids. There's a top down versus bottom up. Whether you like it or not, it's what happen our listeners and our viewers prosper from their

micro management of the real estate debt collapse. We're beginning to see in China, what is the opportunity if we see their dominant investor position domestically go down in price. How do you play that? Well, the mechanics are the same as UM. The United States went through and everybody else went through, so it would be very similar to our two thousand eight mechanical. So what we do it's tappened over and over again is UM the central Bank makes a decision of moral hazard. You know, they never

used to have more? Do you believe they're there right now after this week that we've seen in the market, So they knew that this was happening, and there's the preparation for this, and they know that there's more and and that's a good thing, not a bad thing. Because in the past it used to be contro that they would guarantee it the banks, five major banks would loan state owned enterprises and local governments with implied government guarantees, and it was bad. So the process is the same.

Expect the exact same type of processes we would go through, which is to say that there will be more, There will be stung, investors will be stung. That's how it works, and that the system will be protected because it's denominated in their own courtcul I want to get this on the record or Redelio, because every Wall Street firm is saying this morning, this is not a Lehman moment. What

we witnessed yesterday and the lesson in price. Explain why this is not a Lehman moment to Redelio, Well, because a Lehman moment produced pervasive structural damage through the system method that wasn't rectified until the Treasury came across in terms of it's borrowing, and then the bed came across with quantitative easy. But this is not that kind of a shake up type of thing. This is three billion

is what they owe, and this is all manageable. The basic economics is for all countries in all time is that if you're that is in your own currency, you can deal with it. You could work you could work it out. We've seen it all happen over and over again, and it's a good thing that lenders get stung or that the borrowers get stung. That's how the system works. Okay, I want to go to my number one question to

Ray Dalio. I'm fascinated by this. You and I have said at the Mbar at the Mandarin and Hong Kong and looked at that spectacular experiment. I had the honor of Lord Patton with us the day of the Hong Kong collapse, a change essentially and polity there. How should our western banks, the people you know, James Diamond Staley of Barclays, Moye Han of a reinvigorated Bank of America, how should the Western banks adapt an adjust in Hong

Kong to new China realities? Well, I think very simply, you have to decide whether the rules and the place is a place that you're comfortable with. They will set the rules and you go in there and you decide if you're going to be part of that as a as a good citizen, or you're not and then but you don't jump in and out you're in. Other words, China's a strategic play. You're not going to jump in and out, so and and the amount that you're in

should be that which you're comfortable with. It's the same as an investor. It's not smart to sell on the break or buy it's it's it's a strategic play. Most investors are very overweight in the United States or other places. Diversification. There's a competition, a big competition, a war of sorts

going on between in technology and so on. The diversification put the amount that and the exposure that you want to have there because you have to have places on some money on two chips because they are at risks in the United States do when we look at technology and it's something you address courageously. In Principles, the book did so well. Whence the movie come out fourth of July one Hanks is playing Dalio. Okay, so Principles was a huge success. If President she said, read Principles, what

would chapter would you wanted to read? What does he need to know about Dalio? Principles? Well, um, I think like everybody, Um, the key is um you know what you don't know, that what you don't know, and how to deal with what does he not know about the United States of America, the resiliency of this nation from the Pacific Rim, from Australia and MacArthur all the way up to Tokyo. Well, there's a different there's a totally different approach. It's UM, whether you like it or not. UM.

We are a bottom up individualists. It's bill about individualists and build I think, and the individuals and bring immigrants to the United States, and and and that the power of the individual. In China, it is UM the top down and it is an an extended family. One of the leaders said to me, for example, it's like you know, a strict parent and that. And so when we deal with things like video games, do you want your kids to watch video games? In the United States, we would

say that's a parental decision. Generally speaking, it wouldn't be the state to make that. They would say, it's terrible what's going on, and the state is going to mandate it. So that there are two those two approaches. And I would say that the understanding, the relative merits and understanding really how we can get along because there's a risk of war. You know, there's a risk of conflict here,

and so understand how we can get along. I wish that yes, Chinese understood Americans better in Americans understood bring it back to not so much to Bridgewater at the alternative investment business again at the zero boundary. You've written about this, You've been very eloquent. Bridgewater Folks has a great series on YouTube with Bob Prince really walking through the realities of being at the lower bound. Is the

game over? Is the volatility so taken out almost like a sum Nolan Japanese bond market, that we can't provide value anymore above long only institutional money. Yeah, the the value of interest rates um the impact of interest rates has been largely taken out in terms of the magnitudes. You're not going to have that kind of volatility, and if things go down, you're not gonna have the same kind of protections from the bonds as as you do.

It's changed because then you get quantitative easing. It gets transmitted so that when you need an easy you get the printing of money and then you have the reflation type of dynamic. So that's the way, that's what the volatility is transmitted. We've had plenty of volatility in the markets, but not in the on market. Right. Look at how the markets obeyed since um in last April. They printed the money and sent out the checks. That's the way

the dynamic works. Well, what will the consultancy business be? I mean, we've all been wrong that the actual assumption is single digit six or seven percent, and everybody and people that caught the right have been looking at double digit actual returns. Are you and Bridgewater stealed for a

single digit future or can you be more optimistic? I think that if if I think we're going to get another round every another round of que quei huie dale you know now sorry, there's gonna be called queie dale. You're predicting another round of queueie not immediately. I think that what happens is you get a taper. I think like every tightening of interest rates has been less than the one before it, since two thousands, since at gy peak, and every trough in interest rates has been lower than

the one before it. And then when we had zero, then we did quei and every que has been larger than the one before before it because we've accumulated so much that and that we're now printing. I think that you'll have probably one pull back and I'll call that a mock charge, and then you set the markets down because the duration of the bond market and the duration of assets is longer. That means interest rate sensitivity is greater. You have that particular correction, and then you'll have another

round of that. And so I think it's that's the nature of the beast that we're in with the QUI understand, and that means negative real returns. The things that must happen is that cash is going to have a lower interest rates than bonds. That negative UM let me answer, Let me get my thought through, and then it'll come through. Continue.

So what you'll get is um a significantly negative real cash rate, a negative and probably more significant real bond ary, and that you're going to continue to have to have interest rates significantly below nominal GDP. Growth in other words, inflation pressure real growth. The average thing is going to increase this tecnominal nominal g d P. That's production of

inflation and growth. You put those two things combined, you would rather own a piece of that, which is a piece of economy, than you would want to own interest rates. That's the environment. We've got to wrap it up here in a bit um. People are listening to this worldwide. My colleague Matthew Miller is in Berlin listening, and he's in my ear with Bloomberg Technology saying can you just

ask him about bitcoin? Paulson of the hedge fund game, not Henry Paulson, the other Paulson, the great benefactor of Central Park. John Paulson is saying bitcoin is a fraud. And I speak with my own words there, But what do you think about bitcoin? Is it a durable thing for banks or for institutions? UM? I always going to ask a big I'm not an expert on bitcop but I'll tell you what I think. I'll tell you what

I think anyway. Anyways, take it it's not worth much, but um bitcoin um has an imputed value, not and uh not a intrinsic value. And and so it depends what it's perceived as it's a tremendous accomplishment to have done that programming, not have it hacked, and to have its advancement at the same time, and so it will have the perceived value that it is given by the marketplace. Uh. Now, at the time. Right now, if you take the value of bitcoin, you to take the price, what should the

price be? And you since the quantity doesn't change, you know what, it's a function of demand. Right now, bitcoin is worth a little less than a trillion dollars. Gold or gold in existence is worth if you take central banks and jewelry out of it, about five trillion. So it's about of that market that represents, you know, the hedge market and so on. I think that there. I think if you if it's successful, really successful, um it, it's not going to be a lot more than that.

And if it's um and also if it's successful, there's a risk of government will outlaw it. So that's what I think. Seconds. I believe there's a new book coming out. Give us twenty seconds on your new book coming up. Well, it's a study I did to understand what's going on now. I did the last five years to understand the rises in declines of reserve currencies and empires. And it's called the Changing World Order, and it um it describes the changing world order we're in. But putting it for an

historical perspect we'll go for another hour here. I'm kidding Dalio with us, thank you so much, with Bridgewater today, the huge impact of principles a few years ago in the changing world order, look for that year, in the coming weeks, h in months. Just so much to talk about here over the next number of hours of the

Greenwich World Economic Form. We start strong in the sell hear with Mr Dahlio, with us later with Noil Rebini crisis economics of eleven years ago, but far more than Nora Rebini, who got way out front of that crisis of of oh five, seeing things come along in oh seven, oh eight, oh nine. And I want to give you a little window right now before we get to the present moment of what Noil and I have lived. There

was you and I in Davos at a hotel. It was a late night and we sat there and we penciled out the reversion of the mean of the housing market, and you said it's got to end. And it did a year later, maybe eighteen months later. Bring us forward, now that we are so debt encumbered, do we have the degrees of freedom that we had when you and I said at that quiet bar in Davos. Well, my concern is that compared to a decade ago, that levels, both private and public are much higher than before twenty

years ago. That to GDP ratial globally was about GDP. Right now is three and sixty and rising in advanced economies is four percent of GDP and rising in Chinese tre GDP and rising. So my concern is that we

are in a that trap. It's not just physical dominance, but when central bank is gonna want to essentially phase out unconventional monetary policy, given that that ratios, there is a risk of a crash in the bond market and the credit market, the stock marketing economy, and therefore they will be in that that trap and unable to normalize policy rates. That's why I see inflation. I had drubin.

I am so honored that you're here. I am pleased to announce folks that Berry I Can Green's new book and Debt is my book of the year, and this is the guy that talked to about it. I can Green space and some golden feathers over this new debt crisis. Now, how do you interpret the outcome of this build up in debt, which is life at zero bound. Well, we're in a situation in which, in normal times we're not reducing debts and deficits, while whenever there is a crisis

then we have to back stop the financial system. There is more built up of public debt, there is more built up of private debt because with zero policy rates or negative policy rates or quantity division and credits is cheap. So we are in that supercycle where both in good times and in bad times that racis arising, and therefore

eventually central banks are in a trap. People said they're going to normalize policy rates, but with these levels of private and public that if they were trying to do that, that they market crash and economic rush, and therefore I think the path of list resistance given that that race is going to be to wipe out the real value

of nominal datatics, interest rates, we've higher inflation. That's one of the reasons why I see loose monetary policy, loose fiscal policy, loose create policy, and eventually inflation being the source of the wiping up critical story. I went through the New European Paintings gallery at this weekend. Noraal speaks of the old world you symbolize. Are we going to do the same thing they did in Venice in the city state of the fifteenth century, which has inflated our

way out of our present challenges. Well, we have a huge amount of debt and deficity. What are the options. Are we gonna cut government spending politically, the pressure everywhere in the world is to do more spending to essentially

deal with income and wealth inequality. Are we gonna raise taxes on the wealth in the reach It's gonna be constraints on that, So they'll be constraints are going to imply the deficits remain high, and therefore the path of list resistance is going to be to monetize them and try to wipe up with higher inflation. The real value of nominal fixed interest rate that of course, over time that is going to reprice short term debt is going to be higher interest rates with high in volatile inflation,

inflation ris primare gonna go higher. So that's going to be a solutional in the short term and eventually high that ratios with real rates rising over time is gonna imply that defaults because it be unsustainable that situation, both in the private sector and in the public sector in a number of countries. So I see both inflation and that crisis. I had yes John Hay could catch up with you again, but have you won with this on

the show? Walk me through what that means for trained growth through the next couple of years, then through the next ten years for that matter. Even everything you've just described, Well, we have on one side that ratios that are unsustainable. And as I pointed out, the current amount stafulation where growth is lower and inflation is higher, is not just driven by short term supply bottlenecks, both in goods market the labor market. I pointed out that I see over

the medium term nine negative supply shocks. They're going to reduce potential growth and increased cost of production over time.

Very briefly, what's gonna happen is neglobalization and protectionism, where I have volcanization of global supply chains, aging of population in advance, colom and emerging markets, restrictions to migration from South to north, decoupling between US and China, and trade technology data information will have Global climate change is gonna increase the cost of energy and the cost of food prices, where pandemic is gonna disrupt again global supply chains. We

have also cyber warfare. There's going to be a source of disruptional production. And finally, the rising income and while inequality implies that will be monitoring fiscal policy, trying to help workers labor unions, and that's gonna put upper pressure on wages. So I say, a situation which over the medium term we loose monitor and physical and credit policy and these negative supply shocks, you could end up over the medium term in a situation of stagflation like in

the nineteen seventies. That's the situation I worry about. And no, really, this is far more nuanced than I think many people realize. A lot of people are making this call for higher inflation based on loose fiscal policy, monitory policy staying easy. You're focused almost overwhelmingly on these structural issues that you think you're just gonna stick beyond the fiscal the fiscal

push that we've seen over the last year fading. How under appreciated is that view when you go to events like this and have that conversation on the sidelines of economic forums like the one you ran, well, I think it's unappreciated because even those who worry about the rising inflation make an argument at once the short term bottomnecks

are gonna go away. The source of inflation is going to be essentially overheating of the economic coming from the fact that moneitoring, physical and credit policy still to loose. I agree on that side that aggre demand is going to be in overheating, but also worry about the medium term aggregate supply of the economy. And I see these global trends that are just the reversal of the forces

that for the last thirty years kept inflation low. All of them are reversing in the direction where potential growth is going to be lower, cost of production is gonna be higher, and since monitoring physical policy and credit policy are gonna be loose, eventually we end up with inflation and slower growth. That's stagflation. Dr Rubini. In a final question, I want you to address for our audience and radio and TV the optimism you have of the American economic experiment.

I have fought for a decade plus of calling you, Dr. Do I don't buy it for a minute. You've got a lot of worries out there, but state the optimism you have on the American experiment. Well. On the American experiment, I would say the most positive thing about it is that there is going to be a huge amount of technological innovation, whether it's AI, machine learning, robotic, automation, all the essentially application coming of it gonna over time increase

productivity growth significantly. However, I worried that AI automation, robotic is going to also have negative spelobe. It's going to increase income and wealthy inequality is going to lead to massive technological unemployment. Central bank responsibility and the central bank is is the social guide of last resort. Do social policy within the central bank history? Well, I worried at

the central banks now are on a mission creep. They started by worrying about inflation, than growth, than financial stability, than income inequality, than global climate change, and a list of other factors. And that mission creep implies that they are becoming highly unconventional and that's going to lead us to higher inflation over time. You have to limit what you have to do, and what you can do is

only growth, inflation and maybe financial stability. So that initial criep is part of what's going to lead to higher inflation by unconventional mount of policy being around for much longer than otherwise. Noria, thank you, sir as always got to catch up. I thought No Real liked to two. So I know no Real likes that one's smiling. Take you got too much of respect. He has old world doctor realist. This is John John. This is really important.

He represents an old world economic It's worried about the solidity of balance sheets and financial statements versus an American modern income statement dynamics. That's a difference. He's not Dr Doom, He's Dr Istanbul. He's been a good friend of this program over the yes and we appreciate it. Nown Rebani Dad, the CEO of Rabini Macro Associates and co CEO of Veeping Bust dot com right now and this is a

great joy. She gave us so much perspective on Afghanistan and looking west to her around Shiny Bachelovs joins us right now from Rock Creek. She will have an important conversation to a sprightly Alan Greenspan tomorrow here at the Greenwich Economic Forum. That will be a timely conversation. Dr Beschelov,

thank you so much for joining us. There's a nostalgia right now of moving from the chaos of the poll fed making it up as we go back to the cadence of the FED of Arthur Burns, of Alan Greenspan. Can we go back and if not, how do we move forward out of this crisis? I think, tom what has been really interesting is I don't think it has been so chaotic. In fact, the BED has been giving us a pretty good indication of where it has been

and where it's going. Obviously, the times have been you know, the kind of the pandemic which killed more than it killed even in was something that no federal reserved with Alan Greenspan or the Burns or J. Powell could threat to very easily. But no question, I think the meeting this week today tomorrow is going to be very critical and people will be listening very quick, very very carefully, like the way they used to listen to the way Alan talk, not just what he said but loud. His

voice was No, I think you're absolutely right. I want to speak to you about the fame Greenspan granularity, the way the gentleman from n YU would look at each in every rail car, each and every data that granularity works in goods producing economies. Do you have a confidence that we can shift to a service sector prosperity and do that with this technology overlay we're all talking about.

So the interesting thing in talking to Alan is that he does these daily forecast Remember he was a forecaster before he was a um VET chair and he has continued doing that. Interestingly with the huge problems we have

with the supply chain right now. The kind of work he was doing on railways and counting the rails, rail wasted trucks and UM and cars and UH and looking at UH, the sort of the minution on the supply side has become incredibly, incredibly valuable because the tech sector, as you said, may not get UH well measured in some of his UM some of his estimate, But supply chain problems that we're facing is very traditional economics one

oh one. Obviously a lot of the supply chain issues have led to higher inflation, and we actually had the o E c D releasing its interim forecast earlier today expecting higher inflation in the US and the UK and in the deuro Zone, but also saying that supportive fiscal and monetary policy needs to stay in place. Is that going to mean inflation runs too hot for too long? I actually believe in the drug quick we are looking at inflation being more office short to medium term issue.

There's no question that if you throw in so much liquidity that will not start slowly being taken out of the economy if you have the kind of disruptions we have. Even as we're speaking, there are ports uh re ports that are getting closed down because of sick people with COVID, so that while that is going on, there's no question we're going to have disruptions and that will be pushing

up inflation. I think as we get to two thowy three, if the assumption is you know, COVID is endemic and it sort of stays on in a smaller way, that would be a different scenario. Obviously, if that continues, I think that's a whole other issue, bigger problems than inflation. Well, you mentioned port closures there. Obviously we had one in China for quite some time at one of the world's biggest ports. And also going on in China, you had

broader restrictions due to the delta variant. You have a crackdown on steel production because of a decarbonization effort, and you have the situation with the property sector being trying trying to be rained in by every regulators. And obviously ever grant is front end center. How worried about China are you when you think about a global economy right now? So everground obviously is a big topic today, but it has been really the problems that ever ground have been

known in the marketplace for some time. The bigger topic I think in China is that we're so used for growth rates in China having been that people don't like that kind of growth rate is not going to stay forever. So if you assume a more normalized growth rate in China which moves down too closer to four or five six percent regarding you know, that's a very big range I'm giving you. I think we will be in a

very different situation in China. Obviously, they have major problems with an aging population, and um those are sort of the aging population and the fact that you will have a slower growth rate, I think are the bigger issues that are getting forgotten as we get concentrated on ever ground day and on ever ground d I think the government will not bail out, most likely, but they will manage it in the way and they will sort of let it go out and uh and down slowly in

a managed way. Probably there's a lot of faith that'll be able to do that after Now we've gotta leave it there. It's a really important final part as well as lost there the Rock Creek CEO. It is a granwage economic forum and it is about well your image of Connecticut, of the boats that stand around me here my grand Banks fifty four over there more looks little small in Greenwich Harbor, but it is a Connecticut that mirrors this nation. The income disparities in this state are

absolutely extraordinary. Ned Laban, as governor, is steering the state forward. We have a conversation now on the inequalities of the state. You are the courage as a fancy guy growing up with the Lamont family. You went down to Bridgepoort and taught what were the lessons you learned in Bridgeport away from entrepreneurship about the economic disparities of your state? Givarney tom Um, Welcome to Connecticut. I taught up at Harding

High School. That was probably twenty years ago. I taught a class on entrepreneurship, how to start up a business. Here's here's what I learned. I said, find an entrepreneur and write a story about somebody you know it started up a business and they didn't know. They didn't have role models there. So I brought in entrepreneur who had created businesses, trying to inspire these kids that you can do it too. What do you need from the Biden

administration taxes or front center. We'll get to the salt thing in a moment, But on a holistic basis of all the people of Connecticut, the North up towards western Massachusetts and over to the eastern Rhode Island, what do you need holistically from the Biden administration on a new text policy. I want to see this infrastructure bill pass. You know, I could take tennes all go into Metro North. A lot of Metro North helps too. I mean, we

have a lot of people move in the state. Fifty thousand folks have moved in the state in the last eight months. And uh, I want to do everything I can to speed up rail service from Stamford down to a Grand Central. That infrastructure bill helps. There a lot on taxes. You gotta pay your bills, so just do it cautiously. You took the Metro North, I believe, or at least the symbolism of it down to mets Yankees. With a new governor of New York state to us,

we're nationwide and we're world wide. The emotion you felt on this important rememberance at nine eleven anniversary of nine eleven. I was in the city that day, Remember like yesterday, Remember going out in the street. The cell phones weren't working. You said, man, this is something the likes of which we've never been through before. And there I was whether Eric Adams and gat the Uncle the new leaders of New or you can get it done. I was very

impressed with both them. Look, Connecticut, we live and die by how successful in New York is. We've got to work very collaboratively. It doesn't work for me to um speed up metro north of the Westchester border, and then

it's up to them. We got to do it together. Obviously, We've also never dealt with a situation like this when talking about the pandemic, Governor, and this is something that is front and center am in this current surgeon and as the school season is still underway, with many students not able or eligible to be vaccinated, why is it that those who are eligible don't need to be in the state of Connecticut. Why is it those who are not eligible? What I can tell you is our schools

are open. Our schools are open. Last September, that made a big difference. In New York City took a little bit longer. I think a lot of families started moving to Connecticut because they wanted their kids in school, were able to do that safely. This year, our schools have been opened a very few quarantines, almost none, mainly because teachers are vaccinated and kids are wearing a mask. We're gonna do that a little bit longer so our kids can stay in school and their parents can get back

to work. So that means the September mask mandate is going to be extended for how long? I think it's going to be extended a little bit longer. I gotta work with my friends in the legislature on that. I see um the virus coming up obviously less in Florida and Georgia, now more North and South Carolina, Tennessee. So is it heads up here during the flu season? I want to be careful. Is there a polarized tax out there and it's assault tax? I hear you stop conversations

when you talk about this tax. It's on property and my ability to deduct my Greenwich taxes, my Connecticut state taxes over a certain level. That lament on how we affect a real estate tax deduction fairly well. Obviously, when they you know, latterly ended the salt deduction, it hit states like ours a lot. And you can argue about the intellectual merits of the salt deduction. I can just tell you that Connecticut is one of the few donor states.

We send a lot more money to Washington than we get back, just critically, you send a lot more money to Mitch McConnell's Kentucky. Absolutely. Oh yeah, So I'm fighting for Connecticut. So that's why I think anything that reduces taxes for people at all income brackets here at the federal level makes sense. That includes getting back the salt deduction. Thank you so much for joining us at the Greenwich Economic Forum right now. And this is a great joy.

She gave us so much perspective on Afghanistan and looking west to her around. Shanni bachelovs joins us right now from Rock Creek. She will have an important conversation to a sprightly Alan Greenspan tomorrow here at the Greenwich Economic Forum. That will be a timely conversation. Dr Bachelov, Thank you so much for joining us. There's a nostalgia right now of moving from the chaos of the Powell Fed making it up as we go back to the cadence of

the FED of Arthur Burns, of Alan Greenspan. Can we go back and if not, how do we move forward out of this crisis? I think tom what has been really interesting is I don't think it has been so chaotic. In fact, the BED has been giving us a pretty good indication of where it has been and where it's going. Obviously, the times have been you know, the kind of the pandemic which killed more than it killed even was something that no FED reserved with Alan Greenspan or Arthur Burns

or J. Powell could threat to very easily. But no question, I think the meeting this week, today tomorrow is going to be very critical and people will be listening very quick, very very carefully, like the way they used to listen to the way Alan taught not just what he said, but loud his voice was No, I think you're absolutely right. I want to speak to you about the famed Greenspan granularity, the way the gentleman from n YU would look at each in every rail car, each and every data that

granularity works in goods producing economies. Do you have a confidence that we can shift to a service sector prosperity and do that with this technology overlay we're all talking about. So the interesting thing in talking to Alan is that he does these daily forecast Remember he was a forecaster before he was a um VET chair, and he has can genue doing that. Interestingly with the huge problems we

have with the supply chain right now. The kind of work he was doing on railways and counting the rails, rail wasted trucks and UM and cars and UH and looking at UH, the sort of the minution on the supply side has become incredibly, incredibly valuable. But because the tech sector, as you said, may not get UH well measured in some of his UM some of his estimates. But supply chain problems that we're facing is very traditional

economics one oh one. Obviously a lot of the supply chain issues have led to higher inflation, and we actually had the o e c D releasing its interim forecast earlier today expecting higher inflation in the US and the UK and in the deuro Zone, but also saying that supportive fiscal and monetary policy needs to stay in place. Is that going to mean inflation runs too hot for too long? I actually believe in the drug quick we are looking at inflation being more office short to medium

term issue. There's no question that if you throw in so much liquidity that will not start slowly being taken out of the economy if you have the kind of disruptions we have. Even as we're speaking, there are ports uh reports that are getting closed down because of sick people with COVID, so that while that is going on, there's no question we're going to have disruptions and that

will be pushing up inflation. I think as we get into two thousand three, if the assumption is you know, COVID is endemic and it sort of stays on in a smaller way, that would be a different scenario. Obviously, if that continues, I think that's a whole other issue, bigger problems than inflation. Well, you mentioned port closures there. Obviously we had one in China for quite some time at one of the world's biggest ports. And also going on in China, you had broader restrictions due to the

delta variant. You have a crackdown on steel production because of a decarbonization effort, and you have the situation with the property sector being trying trying to be ranged in by every regulators, and obviously ever grant is front end center. How worried about China are you when you think about a global economy right now? So Everground obviously is a big topic today, but it has been really the problems that ever ground have been known in the marketplace for

some time. The bigger topic I think in China is that we're so used for growth rates in China having been that people don't realize that kind of growth rate is not going to stay forever. So if you assume a more normalized growth rate in China, which moves down to closer to four or five six percent regards, you know, that's a very big rand I'm giving you. I think we will be in a very different situation in China.

Obviously they have major problems with an aging population, and um, those are sort of the aging population and the fact that you will have a slower growth rate I think are the bigger issues that are getting forgotten as we get concentrated on ever grand Day and on ever Ground. I think, um, the government will not bail out most likely, but they will manage it in the way and they will sort of let it go out and uh and down slowly in a managed way. Probably. There's a lot

of faith they'll be able to do that. After we've gotta leave it there. It's a really important final point as well as I've actually lost there the Rock Creek CEO. This is the Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays from seven to ten am Eastern on Bloomberg Radio and on Bloomberg Television each day from six to nine am for insight from the best in economics, finance, investment,

and international relations. And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com, and of course on the terminal. I'm Tom keene In. This is bloomberg S