YouSaid · the spoken record

Paul McCulley

lines on the record: 157
first: 2015-08-28
most recent: 2015-08-28
sittings or episodes: 1
sources: podcast

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“etc etc etc in fact most of us have preached this to our children at some juncture you know the you know the the virtues of thrift you know god and all this sort of thing the virtues of thrift however it is a fact that one man spending is another man's income So therefore, if we all decide to spend less and save more at the same time, we collectively kill our collective income, which is the fountain from which savings flow. Another example.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The paradox of thrift is the textbook one that you would explain. It's that it's quite okay for you to rationally say, I need to spend less and save more. In fact, let's.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, I have a three-hour lecture on this one. The key difference between micro and macro is what is rational for the individual If all individuals do so at the same time is irrational for the community”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I thought they were done. Maybe they are. I haven't actually been on the pit in a long, long time, but I think a lot of people think in terms of macro is simply the summing up of micro.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, they don't. But I've spent a lot of time trying to figure out Keynes is still a four letter word in a lot of circles. When Keynesian policies have been precisely what ultimately have been employed to get us out of the liquidity trap and are still being employed, I have a thesis on this, Barry, is that I think a lot of people, unfortunately a lot of people in our business don't understand the difference between microeconomics and macroeconomics. I think a lot of people in our business look at macroeconomics as simply the summing up of microeconomics, microeconomics being old-fashioned supply demand. What takes place on a transaction by transaction basis, the commodity pits in Chicago, the ultimate microeconomics.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our sense of resentment, if you will, that this institution that is ostensibly apolitical was the only game in town and therefore had to play the role it did. Now I actually think that the Fed did a wonderful job of playing the role that was foisted up on them. So those who were forecasting the opposite were wrong. But I think the issue of where does monetary policy fit in the mosaic of overall government policies is a legitimate source of discussion. I really do.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sheet of her To what these guys are. Investment Actually, I think they will be perpetually wrong in their forecast of nefarious consequences. But I do think there's something that's important in this public discussion, if you will, which is the role of monetary policy in the mosaic of government and the The role of monetary policy relative to fiscal policy and macroeconomic fine-tuning. So I think there's a lot of substance There. In fact, two of the very long 80 plus page scholarly papers I wrote during my retirement years while I was at the GIC were on particularly this issue of the monetary fiscal policy mix and the liquidity trap. So I think I do understand”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That they look at that chart as the moral equivalent of a fat man in Speedos. It's just wrong It's just wrong. I can't tell you why it's wrong, but it's just wrong.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So actually, I could feel the hate mail coming and we're not even live on the air. So economically, I've never been able to understand that camp”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The Fed's struggling to get up to its 2% target. So as an economist, I've always been befuddled, quite frankly, at those at the extreme, and I call them the extreme. I guess it's probably grounded in monetarism. You print money, there's going to be inflation without understanding the context in which you are printing money. So it's really befuddled me as an economist that other side of the divide as a money manager. It was delightful because she just knew the guy was categorically wrong.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Lots of economic reasons that they're wrong, notably that monetary expansion, as well as zero interest rates are not going to have a huge stimulative effect on the economy and the liquidity trap. So I can give you all that.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Payroll, which is very similar to what happened back in the 1930s. So rather than having a run on the conventional banking system, we had a run on the shadow banking system, and the Fed had to stop it or else it would have continued to sell fetus into a depression.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it had elements, if you will, of what happened during the Great Depression in the money market sector. Because remember, one of the programs that the Federal Reserve did was the commercial paper funding facility. The commercial paper market, which is where big companies and small companies, and a great deal of the shadow banking system as well, was funding itself literally. Down, and GE is one of the biggest issuers of commercial paper at that juncture in existence. So when you shut down the commercial paper market, you're talking about shutting down access to working capital, which is”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it was truly a nefarious downward spiral that the private sector simply did not have the ability to deal with itself.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. And remember, the Fed went to zero and started QE four months, five months before the stock market finally found a bottom. In March 2009, so normally you think in terms of Wall Street responds pretty quickly to warm and fuzzies from the central bank. But if it takes that long for Wall Street to recognize they've been given a gift, it tells you something is seriously wrong with the underlying economy.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Again, the counterfactual is really difficult. Unemployment would have been dramatically higher. 15, 20%. Really? No problem with that whole notion because when we were”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know if it would be similar to the 30s. That's why I said modern day because the dominant thing back during the 30s is we didn't have deposit insurance and we had a total collapse of the banking system. But it would have been a modern day depression that would have been self-feeding and would have had elements of what's been going on in the last five to seven years in southern Europe.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“They were the only game in town and they didn't want to be. But if you're the only game in town and you have a congressional mandate to avoid another depression, you do what you can do. It doesn't mean that you like it. I don't think Ben Bernanke liked doing some of the things that he had to do. But effectively, it was the only thing that he could do consistent with his mandate.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It is simply not. I look at getting off zero as declaring victory and getting out of the liquidity trap or put differently a valedictory of graduating with the Fed being at the top of the class, getting out off of zero. And actually, I think the Fed should get extraordinary applause for getting us out of a liquidity trap because the textbook that I studied and you studied said in a liquidity trap, when the private sector is delevering, you should use fiscal policy to stimulate aggregate demand.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know what the FOMC is going to do in September. The case for getting off of zero is not because we have an incipient inflationary problem.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. But the fact that we had that experience underscores the notion that the power for me anyway of QE was as a commitment device. As long as we're doing QE, there is zero discussion of getting all for zero. So the moment they said we're going to taper QE, people said, well, now we need to start contemplating when they're going to get off at zero. And the Fed had to massage the market psychic on the whole thing. So I think zero is right. I think QE was right. I think the regulatory things they did were right working in tandem with Treasury on TARP was right.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That the Fed use. Because the bond market is nothing more than a forward curve on expected Fed policy plus a risk premium. So therefore, forward guidance is reinforced by quantitative easing. And if there was ever any question about that, it was last year with the whole taper issue. And the Fed said, well, we're thinking about tapering and the market went crazy and said the next thing that's going to happen is the Fed is going to hike short-term interest rates. And the Fed had to do a great deal of communications work to say, no, we're still at zero. Taper me.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“All of that nonsense. And that's the only thing I can say politely about it that we heard six years ago was nonsense. And those who were spouting it owe the world an apology and they owe Ben Bernanke personally an apology. When you're in a liquidity trap, you go to zero for interest rates, nothing much happens in the private sector because the private sector is delevering. So you do what's next, which is quantitative easing, which has an impact in directly pulling down long-term interest rates. But the bigger impact of quantitative easing is a commitment device for forward guidance. Goes forward guidance is a new tool that the Fed's been using. We're zero, and we're going to stay at zero for an extended period of time or until we do this.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“They're buying duration out of the marketplace, which was the notion that somehow they're going to bloom their balance sheet and we're going to have hyperinflation.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, exactly. We now have an FSOC, so therefore we have this collection of regulatory agencies, and the Fed's part of that. But from pure monetary policy, I think they have been spectacular. And I want to speak to quantitative easing. And quantitative easing has two impacts, one, which is what the market tends to focus on, is the sheer supply-demand effect that the balance.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I'm a big believer that they did a mosaic of good things. And remember, the regulatory side of things is not just the Federal Reserve. Don't Frank.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the fat has done a huge amount of things that are right ever since the financial crisis I can argue with some of the technical details of this, that or the other, but the broad thrust of monetary policy ever since the financial crisis has been spot on.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Had a private sector borrowing boom. We all know about it in the housing sector here, but also the Club Med countries in Europe had a massive private sector boom and borrowing. So you were driving growth with increased private leverage. Ever since then, the private sector has been delevering either outright or slowing its pace of debt accumulation. So you've had a negative from the private sector because of delevering. Now, logic, good old-fashioned Keynesian logic from where I live and breathe would suggest if the private sector is enforced delevering, the government sector should go the other direction in order to maintain adequate aggregate demand.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not looking for a return to robust global growth for a long, long time. And there are several reasons for that. First and foremost is my diagnosis of the breaking growth going back to 2008. In the years prior to the financial crisis, you had a financial sector boom.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“About it. Yeah, I mean, in wonk terms and the short run, the demand for oil is a whole lot more income elastic than it is price elastic.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It certainly is relative to where we were going to increase supply. And global demand has been exceedingly weak because global economic activity, global aggregate demand has been weak ever since the financial crisis of 2008. And I think demand for oil really is more a function of growth than it is the price. And right now, the demand side is impacted.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We did a huge, huge. We did. And supply outstripped demand. OPEC sucked it up. Saudi Arabia sucked it up and kept the price up there. But ultimately the sheer force of increased supply meant that if Saudi Arabia continued the game and tried to defend it at 100, they would not be in the oil production business anymore. So that was the underlying economics, microeconomics of that is that 100 didn't work. And I don't know if 40 works, but clearly 40 is more likely to work than 100.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I think I agree with your causes. I would put the dollar at the low end of my list at the highest end is the fact that at $100 plus for oil and technology you had an incredible economic incentive to increase supply.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Perfect example. Suppose you got a 3% raise last year and this year you got a 1% raise. You experience disinflation. You went from a 3% raise to a 1% raise. If your boss cut your pay by 3%, you experience deflation.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Disinflation is a slowdown in the rate of inflation. So prices are still rising, but rising at a slower rate where deflation is actually a fall in prices. And we're experiencing deflation in a lot of commodities with everyone knowing about oil. That's deflation, whereas disinflation would be just a very, very slow and slower rate of increase.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so therefore there was a clear articulation of whose job was whose job and the three men who ran the place from the beginning did an extraordinary job of doing their jobs and cooperating. So I think part of it is the genius of the organizational structure and the three men who were the founders. I think that's hugely important because I look at a lot of other competitors and they've never really quite grasped that it is a three-part business and that you can be really good at one part but maybe not the other two. So I think that is a key factor. Another factor in here I simply have to take my hat off to Bill Gross. He's brilliant. He is a macro thinker. And also he is a very good marketer.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there are a lot of factors first and foremost is the pure genius of the founders. And there were three founders, not just Bill Gross, but Jim Muzzy and Bill Podleck. Bill Podlick was an amazing businessman. Jim Muzzy, they're all three alive. Jim Muzzy is an amazing client man and marketing man and Bill Gross is an amazing investor. So from the beginning of the firm, they had a division of labor is you run the business, you run the clients, and I run the money.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It really, really was. Muhammad came back from Harvard, and that was right before we went into the Minsky moment. We were prepared. We had our risk management in order. And for the following number of years, it was truly Camelot.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I know both men exceedingly well, and both men are close personal friends of mine. They're exceedingly different. And I think that's why their marriage, and that's what it was, lasted for as long as it did very effectively. Yeah, by any means.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I've known Bill for twenty five years and I've known him well for 25 years so it's kind of hard to give you just a snapshot of Bill because my life experience with Bill is From an unemployed kid in 1990 to literally last year when I suited up one more time at his personal request as a personal friend for four months last year. So it's a very long movie with me, a wonderful movie. He is a fascinating person, incredibly smart, sometimes incredibly... Stubborn”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was two years there between 90 and 92, and then I got the job as chief economist for UBS. And I did that for seven years. And then back to 1999. And Bill Gross called me up and said, you're coming home.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I had travelled during my EF Hutton days to California, but my move to California the first time was in 1987. I spent three years working with Columbia in the Drexel Hub. And then Bill Gross gave me a job when I was unemployed in 1990, a quarter century ago.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“To go work for Columbia Savings and Lo And Beverly Hills, California for Tom Spigle back during the Milken Day. And worked there for three years, not in junk bonds, but in running interest rate risk for the S&L. And then junk bonds blew it up. And then I went to Pimco in 1990.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And when he left E.F. Hutton, there was an economist in corporate finance there with a PhD from Hopkins named Bob Barbera. So they put him into action as the chief economist, and he was looking for a number two who understood finance because he was an energy economist. So Bob and I worked together for four years, great relationship between 1983 and 1987. And then I left for three years.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a little skimpy. A little skimpy. Actually, the story of 1983 when I went to EF Hutton, Eddie Ardini had been the chief economist. Oh, sure, of course. of EF Hutton. In fact, I had studied under Eddie when he was an adjunct professor at Columbia. And it turned out he had left and went to Prue. There had been a big sort of move”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So that was the first thing I did actually as a ghost writer for the executives doing op-eds and speeches and that sort of thing. And I got my first job on Wall Street in 1983 at EF Hutton.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“From Morgan Stanley or Goldman Sachs or any of the major players. So I took a job for my first two years out of Columbia working for Conoco, a division of at that time DuPont. And my first two years were as a speech writer for the executives of Conico.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Columbia is known as a stockhouse when you think in terms of the famous graduates. I'm a macroeconomist. Who also loves finance and try to merge the two, which ultimately was the reason I became such a Minskyite, if you will, of macro and finance. And I learned all the appropriate equity models, which was a good thing while I was at Columbia. But actually, I did not get a job immediately on Wall Street in 1981. Remember, 1981 was not a really great time for Wall Street. I was a 24-year-old kid with a deep southern accent, and I interviewed with all the major players, because I did well there and didn't get a job with.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really enjoyed my two years at Columbia because it gave me a chance to more from economics. And that's really what I was about as an undergrad. Into finance and markets. So I think my two years at Columbia really gave me the melding of economics and finance, which set me up nicely for what turned out to be the rest of my career.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think in my class at Columbia, 10% of us were the kids who went straight from college. So I got out of Columbia at 24.”
2015-08-28 · Masters in Business · An Interview With Paul McCulley: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source