YouSaid · the spoken record

Barry Eichengreen

lines on the record: 66
first: 2023-12-04
most recent: 2023-12-04
sittings or episodes: 1
sources: podcast

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“Could uptake and reorganization and productivity pay off, all be faster this time? We don't know history points in the direction that we're going to have to be patient. Who knows maybe a little bit less patient.”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“So as an economic historian, I'm tempted to compare AI and its impact on productivity and growth with earlier general purpose technologies like electricity, the internal combustion engine. If you do those comparisons mechanically, you're led to the conclusion that it's going to take five, ten, 15 years before AI shows up in the productivity statistics. When we first began to get personal computers. Robert Solo, the MIT economist Nobel laureate, famously observed, we see the computer everywhere but in the productivity statistics and that remained the case for about 15 years, after which productivity accelerated. But as an economic historian, I also want to be cautious about not using the history mechanically.”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“That's accurate. So it's not only the capital controls on cross-border flows, but also the domestic financial regulations and limits like regulation Q that both worked in the same direction. We argue in that book in defense of public debt. I promise not to keep plugging it. that economic growth was also unusually rapid in the third quarter of the 20th century. So what mattered was not only the low interest rate, but the high growth rate of the economy compared to the interest rate and that interest rate growth rate differential that favored debt consolidation, which a lot of countries, including the United States, but around the world pursued successfully.”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“cat is out of the bag. We have liberalized financial markets and there are powerful political interests that will push back against the reimposition of those kind of regulations. And finally, a lot of countries were able to bottle savings up at home through capital account restrictions, restrictions on cross-border financial flows. China is famously a country that continues to do that to limit capital outflows. Imagine a US government trying to limit the ability of the big banks to shift funds abroad in the current political environment, in our lifetimes it ain't going to happen.”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“No, so there were financial restrictions domestically and internationally. So the period through the 1960s was famously the period of Regulation Q in the United States, which put a ceiling on the interest rate that banks could offer depositors. So people with savings moved their funds into treasury bills and bonds, which kept the interest rate on those instruments relatively low. There are economists like Carmen Reinhardt at Harvard who point to the possibility that governments around the world will again resort to similar measures of financial repression. In the Jackson Hole paper, my co-author and I argue that the”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“The debt is hard to inflate away because investors will demand a greater return. The shorter of the yield curve, mostly central banks control that rate, but longer term, investors will sell bonds vigorously as they have over the past two years and interest costs will rise. Why was it possible that this was a viable solution, as they believe it was after the World War II, you know, in the 1945 and that decade afterwards, what was it about the global capital structure? I've got a book that I absolutely love called Globalizing Capital History of the International Monetary System. And 1945 to 1960, capital was not very global, was it?”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“They tend to wake up to that strategy sooner rather than later and demand more compensation, higher interest rates in order to hold public debt. So a burst of inflation like we had in 21-22 can bring the debt ratio down for a time. But then interest rates go up and that strategy is no longer viable. Finally, there are governments around the world that have reneged, have defaulted on their debts. Argentina famously multiple times in its history, but that's how to put it politely not good for the sovereign's reputation, and you can see those problems playing out. Again, everybody's favorite example in Argentina today.”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“Back to those golden years and the economy was growing not robustly but reasonably. Well, now people are worried about headwinds to growth and experts on such matters like the International Monetary Fund are marking down their growth forecasts for the US and more generally and everybody listening to this podcast will know how interest rates on the debt have gone up. fortunate set of circumstances is no longer with us. The other thing governments can try to do is inflate away the debt, grow the denominator of the debt-to-GDP ratio through inflation rather than actual real economic growth, but investors cotton onto that strategy and in the paper Jackson Hole paper we show”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“Well the debt to GDP ratio can be lowered, or governments can continue to run large budget deficits and not see their burden increase significantly if they're lucky and by being lucky what I mean is if the growth rate of the economy is higher than the interest rate on the debt, in effect they can grow the denominator of the debt-to-GDP ratio faster than interest rates begin to balloon the numerator of that ratio if the economy is growing faster than Level of interest on the debt, and we had a period like that in the twenty tens, when interest rates were near zero.”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“political interests that share a desire to consolidate the debt and bring debt ratios down over a sustained period, the more polarized the polity, the less people agree, the harder it is to build that kind of coalition and sustain it over time. So there are a few interesting counter examples in recent history. Jamaica actually was a country with a heavy debt load well in excess of 100% of GDP that has seen some success in political coalition building over the last 10 to 15 years and has brought that debt ratio down quite successfully, but it's an exception to the rule greater political polarization, not less has been the rule in the US, Europe. Other places.”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“That's right. So Jack used the word unsustainable before. If you're going to bring down a very heavy debt burden, you need a sustained effort over a period of years. And you can hold that together in the face of electoral uncertainty and so forth. Only if you can build a broad-based coalition.”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“They restore their capacity to borrow and they can do the same in the future if another emergency arises. The difference recently, of course, have been that governments have not brought those high levels of public debt back down after the emergency passed in most cases. So we didn't do that in the United States after the global financial crisis of 2008-2009. And we haven't made much progress on that problem after the COVID-19. So part of the paper was to ask what has changed and what are the prospects and in two words what has changed is political polarization.”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“I had written co authored a book in twenty twenty one called In Defense of Public Debt and the argument there was that there are good reasons for governments in emergencies to rely on their capacity to issue public debt, to borrow, to live beyond their means when they're fighting wars or dealing with financial crises or dealing with a global pandemic that puts millions of lives at risk. So those are circumstances where historically we have seen public debt shoot up. But then prudent governments, once the emergency is passed, begin to bring those higher debt levels back down so that they have”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“this point of view or whether or after which it translates into significantly slower economic growth, the level of debt-to-GDP that is problematic depends on the particular circumstances of the economy. Maybe it would be helpful if you let me explain where that Jackson Hole paper came from.”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“I would put it slightly differently. High levels of debt relative to GDP are problematic. They create headwinds for the economy for a variety of different reasons. The increased payments on the debt prevent governments from engaging in more productive investments, in infrastructure and research and development and so forth. They prevent governments from meeting important social needs in terms of early childhood education or healthcare for the elderly, whatever your priority may be, they can screen the national defense investment in defense and security as well. There is no magic number. I don't think there's a magic number where debt becomes a problem from”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT
“To be with you, Jack, when you invited me, I envisaged someone, an elder statesman in his 50s. You look a little younger than that.”
2023-12-04 · Forward Guidance · Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies · IDENTIFIED FROM THE TRANSCRIPT