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Richard Sylla

lines on the record: 83
first: 2018-08-16
most recent: 2018-08-16
sittings or episodes: 1
sources: podcast

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“Exactly. That's a point that Hamilton had to teach Jefferson. Jefferson thought because France had lent us money, they were really nice people. And since the Brits had fought against us, they were bad people. And Hamilton had to persuade him, no, France didn't lend us money because they're nice people It was in their interest to do it because Britain was their great rival.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, leave it on. So those notes that were left behind. But in some cases, they sold bonds to people. So the great majority of the debt was Americans were financing it themselves. But about 12 million dollars, which was about maybe a fifth of the debt, was borrowed from people overseas, the French government, the King of France basically Latin American slot. We should remember. And some of those loans were absolutely crucial to getting supplies that our armies needed to win our independence.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“that the government didn't really have the revenue while the war was going on to pay for what it needed. And so it would take things actually, confiscate goods, but give people a receipt saying, you know, when... Congress gets around to it, you'll be paid this. So some of the debt was not exactly arm's length transaction. It was the... The situation of the American Army was so desperate that they just sometimes just had to confiscate goods from Americans”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“The largest part of the debt was financed by Americans. The bonds were sold to lots of merchants bought the debt. In some cases, the debt was... Issued as IOUs to soldiers and suppliers.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. And the states basically said we have our own problems. We can't really contribute very much to the federal government. So in the seventeen eighties after the revolution is over and Britain has recognized America's independence, the national government did not have the money it needed to pay the interest on its debt much less the principal. Basically the United States was like a country in default on its debts. It borrowed a lot of money and could not pay the interest”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Hamilton faced many of the issues we face today, a large national debt that has to be managed. In his case, it was the debt that was left over from the American Revolution. And it'll seem strange to Americans today, but after the American Revolution, the national government, which was just Congress, did not have its own revenues. It had to ask the states for revenues, sort of like a united fund approach to financing governments.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Apply the tools of economics to understand history better. So he's the one that made me move into economic and financial history.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“And he knew 20 different languages. And so people got to, you know, said to anybody with that talent, we need him to come to Washington in the war and help us translate documents. So he went to Washington and in Washington he met Harvard professors who said this guy's really smart and a good economic historian. So pretty soon by the late 1940s, he comes to Harvard as the professor of economic history. And I had him, I sat in on his graduate class as an undergrad, but then I had to take the class as a graduate student because every Harvard PhD had to study economic history in those days. Unfortunately, that's not true anymore. But he was such a interesting lecturer and had this wealth of knowledge. And what he persuaded me is that you can study all the economics you want. You can be a money and banking economist. You can be a public finance economist. Those were the fields I was thinking of. But you can apply them to history. And I decided that that was really interesting too.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“A particular influential mentor comes in. Harvard at that time had an economic historian named Alexander Gershenkron. Who was born in Russia, but he was like the first half of the 20th century. His father was a capitalist, so he had to leave Russia when he was a teenager in 1917. And they went to Austria. And so his formative years were in Austria. But then Hitler came to power. So he had to leave Europe and came to America. People knew that he was a great scholar, so he got a job teaching at night at Berkeley. In the daytime, he worked in the shipyards building liberty ships. Wow.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Not so much. I think how did I go from being an economist to becoming an economic and financial historian? Yes. That's where...”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“And so any young person in the late 50s, early 60s thinking about a career, academia would look pretty good because of all this interest of the government in beefing up our intellectual talents. So as I mentioned, I wanted to major in economics before I got to Harvard. And my interest in economics was kindled even more at Harvard after taking this year off or even before I went out to India, I thought I want to come back and get a PhD. The only question was where. And Harvard let me in and, you know, there's always a family thing too. My wife wanted to study one year after me in college, but she wanted to go to grad school in the history of science in Harvard was really good in that.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think I was kind of, you remember the late 50s and early 60s were a great time to be in an American university because we were worried about the Russians and Sputnik. And so the government was putting a lot of money into financing higher education.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I studied economics and finance, and these people were a statistical institute, so I got some econometric training there. I don't remember the details of what I studied, but I do remember meeting a famous British scientist named JBS Haldane who had kind of gotten fed up with Britain and moved to India and wore Indian clothes, you know, Adi and all that. And, you know, he was one of the great scientists of the first half of the 20th century. So I got to know him and that was kind of a lot of fun to get his perspectives on the world.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and Calcutta, of course, had millions of people, but basically India is a country that's like one-third the size of the United States, but has about four times as many people. So Put those two together, and you've got a country that's about 12 times the density of population. That we have in the United States.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“They would say that a hundred thousand people just slept on the pavement every night, and that was the poor man's air conditioning, because India can be kind of hot, the pavement is kind of cool. And so people would get away from the heat by just getting down and bedding down on the concrete because it was a little cooler than the air around them.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I was lucky enough to get a traveling fellowship or scholarship after I graduated from Harvard where I could go any place in the world and study for a year. It was financing for a year. And what I did was that chose India because it was halfway around the world and I had a class from Reinhold Niebuhr, the famous theologian, taught a class like an emerging markets. I was a senior in Harvard, and I took the class from Reverend Reinhold Nieber, and he got me interested in India. So the combination of being awarded this fellowship and having learned something about India made me choose India to spend my year away.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“I studied economics, I was one of two people in Harvard's class in nineteen sixty two who in nineteen fifty eight they wanted to say they were going to major in economics. Two out of 1,100. By the time we graduated, something like a quarter to a third of the class majored in economics. So I knew before I got to Harvard that I wanted to study economics. But that wasn't taught so much in high school in the 1950s. And so, you know, I and one other person of the Harvard's 1100 class said, we want to major in economics. And four years later, about a quarter of the class majored in economics.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Get to normal, and I think normal is four to five percent on a government bond long term and maybe two to four percent on short-term side.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“And after the war, the Fed maintained that pegging for a while because the Secretary of the Treasury wanted to minimize the interest cost of the national debt. But then the Fed said, if we keep doing this, we're going to cause inflation. So in 1951, the Fed was given its freedom to normalize, basically. And over the course of the 1950s, those very low rates that came along with World War II gradually rose. And by the end of the 50s, they were up where you got like four and a quarter, four and a half percent on a government bond, maybe the late 50s, early 60s. And I would say from a long-term perspective, that something like that, you know, between 4% and 5% on a long-term government bond and maybe 4% on shorter-term stuff, that's sort of normal rates. Well, so that's what I'm thinking the Fed is doing now. Maybe something like the 1950s, where they'll gradually increase rates till we...”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think that's what they're trying to do from my historian's perspective. I would sort of say that people would say, well, what is a normal rate? How far do we have to go to get to a normal rate? And when I was just a kid in the 1950s, the Fed was normalizing interest rates. The interest rates had become very low in World War II, partly because the Fed was enlisted in the war effort and given the job of pegging government bonds. It was 2.5% on a long-term bond and three-eighths of one.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, Ben Bernanke, I think, thought that there was a glut of savings in the world. And that was one of the reasons, you know, this is before the financial crisis. Rate so low. Actually, when the Fed was raising starting in 2004, you know, from 2004, middle of 2004 up to 2006, the Federal Reserve raised its policy rate 25 basis points at every meeting. And so we were up from 1% where we started up to between 5% and 6% a couple years later. And they were hoping that longer-term interest rates would respond to they were surprised when they raised the short-term rates, but the long rates didn't really go up very much. And that's when Bernanke coined this glut of savings in the world, that there was just such a demand for safe government bonds, despite the Fed raising short-term interest rates, the long-term rates didn't move much at all. Greenspan called it the conundrum.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“And I was updating the book a year later and I said, well, you know, rates have come up and now the Fed is raising. So maybe that May of 2003 is a low. Well, today we laugh when we say the 10-year bond at 3.33%. We haven't seen that for quite a while. It's about 2.8% right now, and that's up from less than 2%. So I think then I thought that, well, we turned the corner. What I couldn't foresee in 2004 and 2005, and I don't think anybody else foresaw it either, was that we were going to have this financial crisis starting in 2007 and 2008. Maybe I should have paid more attention to what was going on in the mortgage market, but I didn't foresee the crisis.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know, Barry, I wrote the last edition of the History of Interest Rates updating it in 2004 and 2005, I think it was published in 2005, and I was working on it in 2004. And at that time, I thought that maybe we had reached the low of the interest rate market. And you mentioned the recession of 2001, greenspan's Fed responded to that by driving their policy rate down to as low as 1%, I think in 2002 and 2003 we had a Federal Reserve policy rate of about 1%. And then the Fed began raising in 2004, the middle of 2004, and I thought, well, maybe 2003, I can even give you a month the tenure bond got to 3.33% in May of 2003.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“that basically drove interest rates to very low levels, and the central banks did that because they wanted to bring us back from the depths of the crisis, and they succeeded, but they only succeeded after keeping interest rates at very low levels for a long time, the lowest levels in human history.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it is an unprecedented era. I would say the main reason rates have been as low as they've been in recent years is the financial crisis of 2007-9, I call it. It started in 2007 and kind of peaked out after the Lehman failure And continued into 2009 when unemployment, we had a great recession and 10% unemployment. And it was the response of the monetary authorities to that, basically to buy up a lot of financial assets and balance sheets of central banks doubled, tripled, quadrupled. And I think it was that these massive purchases of securities, some call it quantitative easing.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Closer to 3,000 year lows. Wow. That is, in all of recorded history, Rates never got to be quite as low as they have been in recent years.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that's where the history comes in. I think if you realize that markets tend to trend for 10 or 15 years in a certain direction, and you can kind of tell where you are. I mean, I could tell in 2009 and 10 that the markets were at one of their low points of all of U.S. history for 200 years of market history. And so what I would say when the markets bounced up a little bit, well, that was an encouraging sign. I know I give some talks to groups around 2010 and 11, and I was pretty optimistic about the market, and people were shaking their heads and say, you know, you seem to be much too optimistic. We're still pessimistic. So I think it's that long-term view that, you know, it's not day trading. It's not even trading little jumps and ups and downs of the market. It's really taking the long-term view and saying if you buy stocks at where they were in 2009, 10, 11, 10 years later, you're likely to be pretty happy.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it requires a certain amount of discipline, and I think that's what an investor really has to have discipline. Don't be swept up by the latest manias or depressions. People go from being euphoric to being depressed. And usually when they're euphoric, that's a time to sell. When they're depressed, it's a good time to buy. In some sense, it's a contrarian strategy. But I think anyone who studies long-term market cycles would say it's the right strategy to have.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“At the same time, then when everyone else is depressed like they were in 2009 and 2010, that's when Wall Street's having a sale. That's a good time to buy. I think this is what history shows you. Some people call this market timing, but I view it as, you know, in some sense it is in a long-term sense market timing, but I think market timers usually think in much shorter terms. Like, you know, I'm going to ride this current wave.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Precisely. So I would say that both in terms of interest rates and in terms of stock market returns, there are kind of longer cycles. And nobody can predict exactly what's going to happen. They aren't exactly a decade. But in my view, you could tell that stocks were a bargain around 2009-1011, just as you could tell they were not a bargain around 19, 98, 99, 2000. So what you want to do, since you can never predict when markets will turn, when you think stocks are not a bargain, you probably ought to raise some cash and be ready for have some cash when the markets fall. When Wall Street has a sale, I like that.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Usually, the next decade was a bad decade. And I wrote that in 2001, and I made a forecast just by assuming returns would be real returns would be zero, that what would happen to returns. And it turned out, you know, I actually drew a picture of it. And it turned out that what actually happened from 2000 to 2009 sort of mimicked pretty much what I did. Then in 2009, or actually probably a year later, 2010 or 11, for the same reason, after you have this big decline of a decade or so, market history told me that the next decade after that is usually better. So I made a prediction that we would have a pretty good decade from 2010 to 2020. And that's pretty much come to pass too.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“I, a couple times in my career, have made my own investment decisions, and they turned out to have been right. Around 2000, at the height of the dot-com bubble, I and other people like Bob Schiller thought the markets were tremendously overpriced. And I wrote an article. I think I first gave it as a talk at the end of 1999, wrote it up in 2000. It was published in 2001. And I said there that... Whenever the markets went up as much as they did peaking around 1999.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“I think one of the main reasons for studying market history is that things that happen in the past tend to repeat themselves, things like financial crises. We had one recently. It was kind of unexpected because we hadn't had one for a long time. But then just studying the way the markets behaved in the past, there are ups and downs. You can learn a bit about market cycles. I think an investor needs to know where we are sort of in a market cycle because that's valuable information.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source