Surveillance: Fed's Framework With Kaplan

Good morning, Rob. Thank you very much for joining us today on Bloomberg Radio and television worldwide. Um, and thank you for not wearing a tie and not making Tom look bad here. UM. I hate to do this, but let me start by playing the cynics advocate. There are those who are saying this morning, the Framework Review change is all well and good. What makes you think you can even get to two inflation, let alone over it

since you've gone a decade without getting there. Uh yeah, it's possible that it will take a while to get to two. Technology technology enabled disruption UH in particular, are limiting the pricing power of businesses and uh AN inflation has been muted for close to ten years, and so part of this policy articulation is really a reaffirmation of the of the situation we've been operating in our decision function for the last few years. It's not a radical shift.

It's an affirmation that we're we've been in a more muted inflation period. We need to be alert that that could change. But uh, but I don't. I don't view this policy articulation is as a is a radical change. It's a reaffirmation of the way we've been operating. So the new policy is that quote, appropriate monetary policy will likely aim to achieve inflation moderately above two for some time. How do you define moderately above and how do you

define some time? Yeah, and we've left it deliberately undefined. To me, price stability is still our dual mandate. It's full employment and price stability. Two percent is our our best indicator of that. And so for for me, what it means is if we're running, if we get into situation I hope we do in the next couple of years, we're running closer to full employment. I'm willing to take

a little bit more risk and have a greater tolerance. Uh, in my monetary policy judgments that inflation could run a little bit above two percent, And for me, a little bit means a little bit. Uh in that I've I've said publicly, you know, to and a quarter maybe a little bit more than that. I still think price stability

is the overriding goal. And and this framework doesn't change that. Well, why isn't this a return to nineteen sixties style FED policy trading off inflation for lower unemployment, Because of course that didn't end well. Yeah, and that's a danger. That that's a danger. And so it's not that I'm gonna lose a concern that we could have a spike in inflation. And I'm not going to lose a concern. And in fact, this this framework articulates a concern about financial stability. I

think those concerns haven't gone away. Uh, it just says on the margin, this is my interpretation and the way I'll be operating. On the margin. I'm willing to take a little bit more risk in service of getting underrepresented groups into the labor force, a little bit more risk on inflation. But I am, not, for one, going to be willing to take risk that we'll lose price stability allah the sixties and seventies. I'm gonna be on guard

against that. Well, there's also a concern out there that an overrepresent a group people on Wall Street are going to be the real beneficiaries here. That you may not be able to stimulate a lot of economic activity or inflation,

but you sure can pump up the stock market. I think that's also something we have to be cognizant of, and in particular, not just on the FED funds rate, but also on our purchases of treasuries and mortgage backed securities and the thirteen three programs that we've implemented this year. I think it's very important that we articulate that those programs will lapse. Uh. And I do think, uh, we we need to be conscious of financial stability and excesses

that could build as a result of our policies. And and I will view that as an important consideration as I make judgments going forward. Well, if you were still at Goldben Sacks looking at your Bloomberg terminal, would you think that maybe we see some bubbles forming now? I would. I would be concerned that, uh, when the Fed takes the type of actions we've needed to take this year. Uh, you have, you have excesses and risk assets, not just prices.

But what I'm particularly concerned about is debt build up. And there hasn't been as much discussion. Maybe there is, there should have been. But part of the issue we faced in March with the with the pandemic and the and the closures that we had to do to fight it is we had a lot of excesses in financial markets and it required the FED to step in and do quite a bit to stabilize financial markets. So those

excesses can build up. They're hard to see, and yeah, i'd be I am worried about those in the seat I'm sitting in, and I'd be conscious of those. Uh if I were in the private sector. Well, you do know Wall Street given your background, and you know as well as I do that all the traders are sitting there this morning going yeah, great about this framework review. But what have you done for me lately? Are you anticipating any kind of change in the statement, something more

to adjust forward guidance? Ah. I would prefer and I'm one one view around the table. I would prefer to wait. I would prefer to get more clarity on the path of the virus. I think we've already given quite a bit off forward guidance in that through our summary of economic projections, which will do another one in September. I've already said that rates are going to stay low for the rest of this year and all of next year. UH, and I would prefer to show some restraint here. We

I think we've done quite a bit. We last spoke with you at the beginning of the month when COVID cases were spiking in Texas and the six hundred dollars in extra unemployment benefits was just running out. What's the economy like now? A month on from there, so we had a we had a pretty robust rebound through mid June. We saw some stalling after June, and I would say in the last two or three weeks, all our high frequency indicators mobility engagement indusseries are improved, are are firming,

and so we're rebounding. Uh. We were not rebounding as much as we would have if we had the virus under better control, but we're still rebounding. We think third quarter I think third quarter GDP is going to be plus annualized, and so we are. We are growing we're rebounding. The issue is, as long as we've got relatively high levels of virus present, it limits consumers willingness to engage in a number of industries and activities, and that is

having a muting effect on the rebound. But we're still but we're still rebounding. Well. A week from today we get the August payrolls report, what is the labor market like? What should we expect when we get those numbers? Uh, we think that between now and the end of the year, we're at ten point two percent unemployment right now. Uh. The bigger indicator I look at you six, which is unemployed plus discouraged workers plus people working part time who

would like to work full time. Is those are both going to improve to where the unemployment rate is going to end the year. We think closer today at this point, and the U six figure will come down also proportionately. So I can't tell you the exact timing month to month, but you're you're going to see gradual improvement till the end of the year unless we have a greater resurgence

than the virus. The virus is still the key. Going back to the framework bringing that into this, you decline to put a numerical target on unemployment because the inflation inflection point changes over time. According to the Fed, Uh, we got down to three and a half percent unemployment in February with no inflation. Can we get back there again under your framework? Uh, We're to give it every We're going to give the economy every opportunity to do that.

The dynamics of inflation may well change, uh, and I'm a tuned to that because of supply shortages, They're going to be further changes in technology and technology enabled disruption. There may be changes in the dollar. We'll have to see if there's severe dollar weakness that could have an

impact on inflation. And so UM, I think I think my own approach is going to be I want to give the labor market every opportunity to get back to that point and not pre empt improvement because I anticipate inflation. I'm willing to take a little bit more risk in having inflation run moderately above two percent in order to get to fuller employment and bring in a number of these underrepresented groups that I think will really help the

country and help the labor market be stronger. Speaking of inflation expectations, as a Wall Street guy who really gets this stuff. What are ake Even's telling us? Now, there's a theory out there that while they have been rising, it's really because there's a lack of liquidity in the tips market, and if you take that liquidity premium out, you don't see any inflation embedded in the expectations markets. Uh. There's a lot of factors that affect trading markets. As

you said, liquidity is one of them. I would say the concern about dollar weakness is reflected in a number of commodities, and I think is having some effect on the tips market. So there there are certain groups, I would guess in the private sector that are positioning themselves to be prepared for higher inflation than we've had the last ten years. That may or may not happen, but I think you're seeing a little bit of that concern in the tips market. Well, last quick question, I'm turning

you over to Tom. Tom wants to know will the US economy collapse if there's no football in Texas this ball? Uh? I think the the the the Texas economy, and the the US has shown to be very resilient even if you take away things that that we hold sacred. We'll adapt to it and well will continue to will continue to power ahead. Robert Kaplan, the president of the Dallas, thank you very much for joining us. Did you see Oh, yes, her dad he hasn't that like a press conference is

like he was practicing to be polist press conference. Michael McKee, congratulations on a bullard and cup and conversation wrapped around Chairman Paul speech as well. In days of old of Bloomberg on the economy, this would be a one hour conversation. We'll compress that in now with William Dudley. For years at Golden Sacks and given great credit for inventing modern Goldben Sacks economics, and then at the New York Fed. Bill Dudley out of Berkeley has been one of our

greatest students of our theory of monetary policy. Bill Dudley, what did the chairman wrought yesterday? We knew this was coming, but the scathing notes I have read from selected economists have startled me. What did he do yesterday? But what he did yesterday was he basically changed the inflation objective of the FED reserve. Before the Fed failed what's called bygones police. Every year they tried to hit two percent, they missed for five years, ten years, a hundred years,

a thousand years, next year. It was always to try to hit two percent. Problem with doing that is if you keep missing on one side, inflation expectations become an anchored, and that was troubling the FED. The FED hasn't had troubled hitting two percent objective on inflation for many years. So basically the FED has shifted and said, now, no, we don't want to hit two percent every year. We

want to hit two percent on average. So if we underperform inflation for a bunch of years, then we need to have inflation above two percent for a while in order to keep inflation expectations around two percent. That's really what that's this whole shifted designed to keep inflation expectations

well anchored at two percent well explained. If we combine Angus medicine on demographics and population with Alan Meltzer on the history of your institution, A simple question has to be asked, if we assume a lesser nominal GDP, if we assume a more dampened economy, why don't we just lower the two percent target to one point nine or

one point eight percent. Why not do that. The reason why the Fed wants to have a inflation target of two percent, not lower, is they want to have enough room when you end uh an economic expansion to have the nominal interest rate high enough so there's enough room to cut rates to stimulate the economy and get the econmy out of recession. Let's say the inflation target was zero, then the you know, the peak short term funds rate would at the end of the cycle might be two

or three percent. There wouldn't be much room to cut rates, and therefore there wouldn't be much way way to actually stimulate economic activity. J Powell essentially way writing the obituary for the Phillips curve this relationship that previously was believed that if you get unemployment lower, that will lead to a rise in inflation. I wouldn't say it's quite the obituary, but he's basically saying that we are now going to focus on inflation to god when we tighten entrey policy,

not the level of the unemployer rate. So they change the language with respect to their employment goals rather than deviations around their employment goals, it's now shortfalls. So they're basically saying that we'll push the unemployer rate to whatever level we can. As long as inflation is low, we're gonna keep going. Before in this last cycle, we actually saw the Feds start to rage rates even before we

got to a full employment. So we are getting inflation in certain areas, and we were talking about this earlier in the show. Certainly asset prices have gotten incredibly inflated and continued to do so on the promise that the Federal keep rates low. How concerning is this? At what point does this have to take to make the take stock and raise rates. Well, I think that they are a little bit uncomfortable with the fact that asset prices are are so buoyant. But remember that was it's also

partly by design. I mean, the Fed basically did what they did in March April May to try to make the Monterrey policy easy and financial conditions a conditive, and they succeeded. Now, as the stock market keeps going up and up and up and up, that will cause some anxiety about the Fed. But remember the stock markets go up, stock markets go down. The consequences for financial stability historically

have been actually been pretty modest. We had the stock market crash in lots of economists anticipated there be a recession. There was no recession. I think that, you know, buoyancy in the stock market is probably less risky to the economy because it's not all people that hold, you know,

use a lot of leverage to own own stocks. Bill Dudley Robert Samuelson in The Washington Post wrote a fabulous book a decade ago on the sixties inflation, really centering on the theology of Walter Heller and well meaning people who were trying to tame budgets in the Vietnam we're budgets and and such. Stephen Stanley of Amir's Pier Punt wrote a wonderful essay over the weekend, and he hearkens back to the volatility that could be assumed here through

what are called stop go policies. The idea of a FED that has to adapt suddenly we move away from the green span uh careful set a sequential policy back towards the Walter Heller stop go policies of the sixties and seventies. Is that a risk. I wouldn't put it quite letting that way in terms of stop go. But what what the FED is basically saying is we're gonna wait until inflation actually gets before we tighten. What that means is when they start to tighten, they'll probably try

have to tighten quite a lot. And so you know, the markets right now are saying, oh, this is great. The Fed's gonna be on hold for a very long time. But it also raises the risk that when inflation actually gets above to two percent of the Fed's objective, the FED will actually have to slam on the brakes a little bit harder, and so it does increase the risk of an economic downturn. On the other side, is the

is the Greenspan era ending? I mean, if if Alan Greenspan was of a gradual approach of sixteenths and eighths of a percentage point, are we going back with the stop going as you just mentioned larger increases did the Greenspan era and yesterday? You know, I'm not sure that Alan greens would necessarily disagree with what the FED is proposing here, but it certainly we're now in a new regime where you don't tighten preemptively just because you think

the commun is getting to the full employment. You actually wait to see whether the low unemployer rate actually translates into rising inflation before you actually play mont So it is a it is a meaningful ship. Now that said, I think the FED is actually already acting that way today.

The fact that when the FED stopped raising rates and reverse course, you know, a year and a half ago, uh, you know, that was partly due to an idea that we want to get inflation above two percent, that was already So we already have seen a shift in policy. Does the FED have any control at this point given where rates are in actually boosting the inflation rate that they want to boost. Well, that's where autocomments has some skepticism.

It's it's nice to say that you want to get inflation above two but you haven't been able to accomplish that over the last ten years, and so what are the tools you're going to use to actually accomplish that outcome. So there's quite a bit of skepticism about whether the FED will actually be successful in pushing inflation above two percent.

And the Japanese experience is a cautionary tale in that regard. Well, they said, I mean J F R. J. Powell said, we are prepared to use all the tools in our toolbox and they didn't go on to say what those tools were, and we're all sort of left in the dark. What do you see as the most plausible tools that the FED will engage next should there be another like of a downturn. Well, I think that they'll do more of the same, They'll do more asset purchases, They'll keep

their their credit to liquidit programs in place. But I think the reality is we have to acknowledge the fact that the power of Monterrey policy right now to stimulate the economy it's pretty low. I mean, interest rates are already very low, the stock market is already very high, credit markets are very open and accessible. So the the the idea that the FED can do more. Yes, they can do more, but how much effect will it actually have in the economy. That's why the FED keeps talking

about fiscal policy right now. The FED understands that that the power from Montreal policies to support the economy today is pretty darned modest, and what the economy really needs at this point is for their fiscal support. Bill Dudley, I want to go back to the heritage of Berkeley

economics and folks, it's just a fabulous heritage. We know, I can green and de long of now, but the heritage back to the time of Bill Dudley is absolutely extraordinary, from Anchor Loft and uh Sayas and and others, Bill Dudley, when you look at the heritage of Berkeley economics, can you say that the speech yesterday will have a global impact that other central bankers, including Andrew Bailey speaking here in and hour or so at Jackson Hall, that they

will have to adjust as well. I think people generally are are understanding more and more that the importance of keeping inflation expectations well anchored, and so I think that's a broadly share view around around the world. So I don't really think that the FED is sort of in the vanguard here. I think what they're doing is responding to a problem that's been very evident for a number

of years. Bill. What's the statistic above two percent where this policy in place, where the sweat goes up among fancy guys like you. Is it two point one percent? Or is it the number substantially higher the tape is really I think it depends on two things. One, how long have you been below two percent? And by how much?

And numbers and how that is then affected inslation expectations at the end of the day is they made it very clear in their policy statement what they care about at the end of the day is keeping inflation expectations anchored at two percent. So the inflation outcomes necessary to do that are what going to drive their decision beating. It turned out that inflation rising to two and a quarter percent was sufficient to keep inflation expectations anchored at

two percent, and they stopped there. It turned out that they needed inflation to rise to two and a half or three percent to get inflation expectations will anchor and maybe more patient. This is fascinating, Bill Dudley, thank you so much, a very generous interview or the former president of the New York Fed. Right now, the gentleman from Michigan and Chicago joins us Smart Casel. He is with

PIMCO or CIO for Global Credit. Mark your world changed yesterday and what way did Pimco's world change because of the new framework of Chairman Pouel. Well, Tom, I think this is a big deal. Powell. I agree, and this is it may not be a paradigm ship, but I think this is a significant evolution of how the FED thinks.

And I think Powell is a really good leader. If you if you look at the inflation, the core PC inflation, we haven't gotten to the FEDS inflation target mandate since two thousand five to two thousand and six, so we have had fifteen years of undershooting in our country. And by the way, the same thing has happened in Europe and Japan. So I think, you know, Paul has realized this and they are willing to run the economy hot, and I think he's going to go all in. Uh

in Sport. I hate to say, is Lisa, but it's a victory lab for Kis. We gotta do it this morning. Marquis your shop full disclosure, folks, I visited Newport, I've been to Cappy's Cafe with Mohammed, you guys, with the leadership of Bill and Mohammed, and then following on after that train wreck with your leadership, Marquisel. PIMCO has been

dead on about a low rate regime. Do you maintain that low rate regime or can you see out two years, five years, ten years where we get back to the normalcy The chairman Paul desires, uh, Tom, you know we we think we're probably closer to the lows now and rates and that's simply because we are going to get um We think a big fiscal push it could it could happen after the election, but monetary policy is going all in the said has been unbelievably supportive for markets.

Uh and and we think ultimately with the mobility data will improve, the economy will start growing again. If we get fiscal infrastructure spending with the Democrats, we could see a much deeper curve and you could over time see higher rates. So I think we're closer to the lows now, even though yes, we did think rates would come down, but now now I think we're we're suggesting that with the economic recovery and all the fiscal and monetary policy support,

that rates over time could could go higher. Mark. This is a huge call, the idea that we could be near the lows after thirty forty years of yields going down. What does that mean about investment grade credit? Given the fact that duration, a measure of the sensitivity to interest rates, has risen to the highest levels on record, is investment

grade credit riskier than high yield at this point? Well, I think what you're gonna see And if you go back to March, what was fascinating about this, Lisa, is the opportunity actually back then was an investment grade. The said, did this corporate bond purchasing program. By the way, they announced the secondary market facility at two and fifty billion, they've only used thirteen billions, so they've used five percent

of it. And yet the investment grade corporate bond market is priced one point for trillion this year of investment grade supply. That's a hundred multiplier on the government's money. One of the most effective programs in the history of central banking. So the fact is is that you're right, the opportunity was an investment grade. But now what people are realizing is that, hey, if this economy broadens, you're gonna have to own some equities. You're gonna have to

own some high yield. So we are seeing a transition in the market. And I think as people feel more comfortable flying and getting getting on planes and the mobility dat improves, you'll start to see investors continue to take more risk. Okay, mark investors, people broadening out? What about you? Are you seeing the opportunity for you to take PIMCO money or funds managed by the firm and move it more into that equity like risk away from investment grade.

Has there been any shift in allocation on the heels of this, So we've we've added nine million jobs, but we've still got thirteen million more to add back. The unemployment rates still ten percent. We we still think it will take two years to get to two percent inflation. What where we've been kind of modifying our strategy? Is it back in March and April? You know, we came out with this ring the bell moment on March twentieth.

We said that investment grade credit was the cheapest I had seen it in my career other than once before. So we were buying a lot of investment grade credit in March, April, May. And now what we've done. And back then, by the way, we were buying healthcare, telecom, cable, a lot of the non cyclical, a lot of the defensive credits like technology. Now we actually think the recovery trade, if it goes through, you could see the travel and

tourism sector pick up airlines, lodging, et cetera. Mark to get Matthew on you we can do that with a guy from Chicago. You're calling for the end of the great moderation, I believe, And then do you follow on that there is a small or a great agitation that follows on? Well, Tom, I think what some people may be underestimating is these large cap companies have built up

a massive war chest of liquidity. Even if you look at the deeply affected COVID hit sectors like airlines, hotels, gaming companies, these companies, Tom have twenty to thirty six months of liquidity. So any vaccine that comes out over the next six to twelve months, as businesses consumers start to travel again, I think you could see a rebound and I think that's that's the next wave of the rally. The first wave of the rally was clearly housing and technology.

But if we get an economic recovery, if this mobile of the data takes off, you're gonna see the airlines take off. You're going to see people start to travel over the next six twelve, eighteen months, and that's I think the potential next wave of the rally. So Mark just quickly, here, is this a bet that you're willing to make now that we are going to get that gain in airline airline bonds, airline credit as well as the rest of the travel sector. We do have an

overweight to that sector. We've done it in what we consider to be a prudent way, and how we've done it is we've basically lent to airlines through through secured uh bonds, which are basically collateralized by very new planes. We've also lent to some of the strongest lodging companies out there. I'm talking about companies that are the leaders in their field, also gaming companies and so yes, we do think that that sector, which has been beaten down

significantly can bounce back. It's not going to be a straight line. There's clearly risks. There's risk with the virus, there's risk with the fiscal So we're doing this eyes wide open. But assuming we get the mobility data and travel to eventually come back. Remember we're the t s A data. We're where we were last year. I'm willing to say that by next year will be at fifty. So the whole point is to get an improvement. Given the liquidity these companies have, I think you'll see a

rebound there. Mark case. This has been wonderful, Thank you so much. With PIMCO this morning, joining us down David Rubinstein, co founder, co executive chairman of the Carlisle Group, an author of a new book, How to Lead, which is a really piercing testament to the quality of his interviews. I can't say enough about interview to interview the way that Mr Rubinstein has approached this for Bloomberg. This book

is a triumph of cutting to the chase. There's a lack of media bladder and an immense amount of direct questioning of people successful. Mr Rubinstein, I must start with my favorite interview you've ever done, with the always mysterious Jeff Bezos. What did you learn from Mr Bezos? Well, Jeff, of course, saw is an unusual person. He's built one of the most valuable companies in the world in a

relatively short period of time. But some of the secrets he gave were He makes no decisions before ten am. He doesn't like to make any decisions too late in the afternoon. He likes to get eight hours of sleep. He thinks that he has less than eight hours of sleep, he can't really focus well. He also thinks they has to listen to people. He wants to make certainty. Here's ideas from other people, doesn't think all of his ideas

are necessarily the best ones. And I would say relatively speaking compared to compared to what he's accomplished, is his demeanor is quite modest, and he has an incredible sense of humor. David, this is so important, and I say this with immense respect for your philanthropy to America, particularly with our historical documents. There has been criticism, including Mark Bennioff on Bloomberg the other day, over the philanthropy of

these tech giants. Right now, Bezos is a pinata over fifteen dollars an hour, twenty dollars an hour, thirty dollars an hour. Do you advise some of these voices in your book to get more like David Rubinstein and be more philanthropic? And that's not what I tried to do the interviews. The interviews are done on peer to peer on Bloomberg and UH, they're basically an effort to get people to say what made them successful. And in the book, I try to talk about the the qualities that make

people successful and how they become leaders. And that's what I'm trying to do. I'm not really trying to give them advice. Privately, I might ask them if they're interested in certain things, or they might ask me certain things about philanthropy. Jeff Bezos has given away a fair amount of money. It's just that compared to his net worth, it might seem small, but it's staggering amounts of money so far. David, good morning to you. And you've interviewed

doing Pizza Peg. You've interviewed people from such different backgrounds, such different fields. Is it possible to find a common thread, to find something that makes all of these people good leaders regardless of the fielding which they operate. Yes, there are a couple of qualities I talk about in the book. One is they have focused early on their career. They're focused focused on doing whatever they want to do, approving

an idea or a concept. They have failed at some point in their life because they recognize that failure probably helps, and so failure has helped them. They also have persistence. They're very persistent. They also learned how to persuade other people. The key to life and getting people do what you want is persuading them either by writing or orally, or by leading by example. Most of them are actually fairly humble. Um,

you know, every leader isn't humble. We know of some leaders that are not humble, but generally these are people that are quite humble. They also keep learning, They re read, read, read, keep learning more and more. They have a fair amount of integrity. I would say that's very important to them. And they also, I think, are people who share the credit. They don't think that they're the only ones who are responsible for their success. In the end, most of them

will say they had a lot of luck. Yeah, that's really interesting too, isn't it. The elements of luck. I mean, they were all humble. They will humble on TV, David, I wonder what they say to you behind the scenes. But you lead a business of course yourself, and so what what have you identified about your own leadership journey by doing this series of interviews. Well, I think in my own case, I got lucky. I I really wasn't supposed to be a business person. I thought I was

a lawyer. I changed, I got lucky. I failed many times. I learned from that. I do think that sharing the credit it's very important. And I also think one thing I didn't mention just mone Ago is rising to the occasion. Leaders have to rise to the occasion. It's okay to run a company on the normal times when something bad happens, like a pandemic. If you can rise to the occasion, you're more likely than not to be a really great leader. David Rubinstein, I need to go back to your public

service to the nation. You served with President Carter long ago in far away their echoes this morning of the sixties and seventies, stated by economists, is our central bank recalibrates how they will try to reflate the economy to provide for economic growth. You lived with the Carter administration very high inflation. Do we risk echoes or shadows of that time? If we could get inflation to two or three or four percent, it wouldn't be the worst thing

in the world. We had double digit inflation. And the difference was then the U. S economy was relatively um separate. We didn't have enormous amounts of low income products coming in from China. It was an economy where the workforce was unionized. Well, that's not a bad thing. I would just say that today you've got less than ten percent unionized, and so the pressure from wages isn't as great as

it used to be. And then you've got the outside world producing products and services at much lower prices than we can in the United States, so that's kept inflation down a great deal. I don't think the situation is replicable then if we see an atomization of the labor force witness Senator Paul of Kentucky last night accosted on the streets of Washington with echoes of nineteen to eight, etcetera, etcetera. How would you suggest, Mr Rubenstein, that the elites provide

the labor economy that this nation screams for. What's the best path? Well? I do think that UH companies that have employed lots of workers should be sensitive to their needs and we should pay them a a respectable wage, plus side benefits. Healthcare benefits are extremely important for people, and not all employers provide them. But I think we should recognize the dignity of basic workers, and in some

cases that is over overlooked. But in the whole, I don't see the situation where we're gonna get let massive inflation. Inflation would actually probably help us a bit and paying down some of our enormous debt, but I don't see that happening. If the FED could get two percent or three percent inflation. I think they'd be quite happy with that. Useful to have you on the program, David having written a book all about leadership, on the day that we find out that Japan is looking for a new leader.

I don't know if you ever mention Zo Abe or the pleasure of spending much time with him, but he certainly managed to last a long time for a Japanese prime minister. Certainly the ones who came before him. There was sort of a revolving door in terms of the politicians that you have met and have talked to and that has stayed the course. Do they have something special that you note? Yes, Um, I have met Prime Minister Abbey.

He served quite well for eight years. I spent some time one time in his office talking about the value of private equity to the Japanese economy. I'm not sure that that persuaded him of the value of private equity, but I have spent some time, and I think he did a very good job. It's unfortunately needs to step down now. UM. I think politicians are different than business leaders.

They obviously have different considerations. I did have an interview in the book of President Bush and President Clinton together President Bush forty uh forty three and President Clinton and it's quite humorous and how they get along and have a pretty pretty good relationship. Politicians don't have much different considerations and business people. It's much harder to be a political leader and survived than to be a business leader

and survive. In my view, what's been your favorite inner view? Well, I think it's like asking which of my children I like the best. But my favorite person to be interviewed by is Tom you. Um. But aside from that, the persons I've interviewed, I think the Jeff Bezos interview was extraordinary. He had quite a sense of humor. We had two thousand people there. He was he was really great. Oprah was terrific. I mean she really doesn't need an interviewer

to dring her out. She I mean, she gave a masterclass and how to be interviewed and uh and she said the key to her success has been listening to people when she does interviews. Warren Buffet and Bill Gates were also quick good. Um. So I don't think there was anybody didn't like. A Yo yo mob was great uh um. Ruth Bader Ginsburgh had an incredible crowd of people cheering for her, A real rock star. David, what's your I got one final question before you you turn

me off? What's your first question to President Trump? And appear to peer interview with Donald Trump? I have interviewed him before before he was president, and I told me he was going to run for president. I I was surprised. I didn't think he was really gonna do it, but he did. If I interviewed them today, I would say in the end, what surprised you about the presidency? Did you anticipate it would be as hard as it was or do you think it's easier than you thought it was?

And why do you really want to do this for another four years? Because it can really tax you and you can do so many other things. What is it that you want to do in the next four years that you haven't done in the first four years? David Rubinstein, thank you so much and congratulations on But for Bloomberg. We stumbled into this with Mr Rubinstein, and this has been a massive success, a massive win for uh Bloomberg.

The peer to peer conversations of Mr Rubinstein How to Lead is a new effort here in these books and again, as David Rubinstein said their folks. If you got to pick one interview of the Jeff Bezos interview is just magical. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane before the podcast. You can always catch us worldwide. I'm Boomberg Radio