YouSaid · the spoken record

Scott Sumner

lines on the record: 76
first: 2025-01-08
most recent: 2025-01-08
sittings or episodes: 1
sources: podcast

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“I really feel like my life is 95% over or 98% over because even if I have another 20% of my life left in front of me. Time goes by so much faster when you get older that in a subjective sense that twenty percent of my life is only a few percentage points. Because when you're young, time goes so slowly. So it makes you kind of look at things a different way than when you're middle aged or young. I hope I'm not depressing your listeners, but don't tell yourself, oh, I'll wait till I'm retired and then do all these fun things because you may find you don't have the energy at that point”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“So I'll tell you, I think that in my mid thirties, I just quickly transitioned from young to middle age. And I think in my mid-60s, I just transitioned from middle age to old. And after that transition, it's no longer about what I'm going to do. It's like, okay, I basically done what I'm going to do. I'm not going to write any more books. I'm going to try to just sort of enjoy life. Think enjoying life does involve being productive in some sense. So I rebooted my blog a few months ago trying to make it better and more enjoyable. So I'll pursue that as kind of a half job, half hobby type of activity. So I'll keep busy. But other than that, I'll just do things like travel and movies and read novels and so on, things I enjoy. I don't have any major career objectives not to sound too morbid but for the”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“And so I had a very odd career that didn't fit the normal mold. I didn't pursue topics that were trendy. I just pursued things I was interested in. Even my dissertation, Lucas was my chair at Chicago, and I did currency hoarding. Well, that's an odd thing for someone to do studying under Lucas who's known for rational expectations theory and so on. So I just pursued what interested me. And for decades, I pursued work on the Great Depression. I think my book on the Great Depression is the one book I'm proud of. I think there's some useful academic contributions in that book. The other books I wrote are more just popularizing my blog posts, but that book I did a lot of real research on. So it's been... I guess kind of an unusual career in that sense, not following the conventional path.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Even stay at Bentley. And then I did my dissertation very quickly right before they were going to fire me. I went in ABD. And then a few years later, I actually got turned down for 10 years. For lack of publications and then quickly got a few publications, including the JPE article I mentioned. And so I got tenure by reapplying under different circumstances. So I was treated actually very well. Like many schools, I wouldn't have even survived at. And then unlike a lot of faculty, I did most of my research after getting tenure, almost none before.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“My parents probably should have held me back one year even to go to kindergarten. So I was, you know, I wasn't a particularly good student or as an uneven student all along the way. I wasn't particularly ambitious. I'm not sure why. And yeah, it's kind of weird. I mean, I got into blogging 15 years ago. And it put me into a different world where I was interacting with a lot of people, mainly, you know, electronically interacting. But I'd been much more of a loner for most of my life. When I look back on that earlier period of life, it almost feels like a different person now. But analyze exactly why it was a late boomer, but it was clearly an aspect of my personality. It wasn't like I was held back by something artificial. I just wasn't applying myself as aggressively or forcefully as I could have. But when I would get under the gun, I would at the last minute somehow get things done that I need. Like I almost did.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Know gender problems in higher education, how a lot of women don't like the kind of style that was used in Chicago seminars, very argumentative and aggressive. I just accepted that as normal when I was young, but that was, I suppose, a distinctive feature. Definitely the Chicago students tended to be really good at intuition. So the view at that time was like the MIT students were really good at the technical side of economics and the Chicago students were good at the intuition because we were constantly being trained on sort of real world story problems where you'd apply Chicago price theory. So that education was helpful to me later on when I got into blogging. I think it gave me intuition to think about certain issues in a way that I wouldn't have had maybe if I'd gone through a more technical program somewhere else.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Or how did that all? My personality was kind of shy. So the biggest problem I had is I didn't interact much with faculty, but I did have some students that I studied with. In those days, grad school is very different. So first of all, it was very non-technical. You didn't have to know a lot of math or statistics. In addition, they would admit about sixty students a year and they would basically flunk out half of the class within a few years. They had pretty strict core exams and prelims. So there were big classes. It wasn't like small seminars like imagine you get in a lot of places. Now, except the upper level classes were smaller. It was very kind of contentious and it didn't bother me at all, but many years later, I began to read about”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“There was a lot of interesting stuff being done there. A lot of people that were getting Nobel Prizes or would get them in the next few decades for their work done about that time.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“So I grew up in Madison. I went to the University of Wisconsin as an undergraduate. I actually was accepted at Chicago, but for financial reasons I went to Madison for my undergraduate years. And then for graduate school, I only applied to Wisconsin and Chicago. That was it. So, I should say that at that time I was very ignorant about how the world worked and I wasn't very career oriented, very ambitious, very sort of linked into what was going on. And so I'm not recommending my career path to anyone else. But I applied to those two schools. And Madison was my fallback school, in case I didn't get into Chicago. But I was interested in free market economics at that time. And so that's what drew me to the University of Chicago. And actually, again, this may be nostalgia on my part, but I feel like it was almost at its peak in the 1970s.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, also would be a classic example. And to be honest, many of the films I like today, I would have been bored by when I was young. So when I was young, I would have liked Christopher Nolan much more than Oz And it's sort of like cultivated a little more patience. And I've learned that with patience comes the ability to absorb certain types of art that you're not able to absorb if you don't make the effort.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Car chases and explosions. And I feel sort of overwhelmed. And I think to myself, well, that's probably not for me, even though the actual film might be much less intense than the preview.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think I sort of thought so, like if you look at the Batman films, the one where the actor who passed away, unfortunately I forgot his name, who played the Joker, that one kind of caught my attention because of that performance. But generally speaking, those sort of big budget modern action films don't interest me all that much. But his films are certainly more interesting than typical inception, interseller, and so on are intriguing to watch visually dazzling. But as I get older, I guess I tend to migrate more towards sort of like quiet films. So when I go to the theater now, I'm often seeing something that's a fairly quiet film, but the previews that appear before the movie are just nonstop.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“They're very skillfully made, but Stylistically, I see them as fairly conventional. So did he do the Batman film with the Joker?”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think so. And you asked what might hold up. I don't know if there'll be classics like it's a wonderful life in that sort of classic, but I think films by like Wes Anderson may hold up well because his style is so distinctive. Visual style, especially.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“As compared to how I view Kubrick. So I saw the Kubrick films when they first came out, but he's been very much imitated. So maybe younger viewers would be less impressed by some of his films because they would think, well, I've seen that before. But of course, what they saw before was actually after. He created that innovative style. But we've just had so much material flooding our senses that it may be more difficult. Could you imagine? Someone coming along like Bach or Beethoven in classical music in the next decade and having that impact? Wouldn't you agree?”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I can't get the quote right exactly, but Susan Sontag said something defect of like, are artistic masterpieces still possible? And then she said, or are we not receptive to the possibility of future masterpieces? Is the problem there not being produced or that we're no longer receptive to them? And I think it is somewhat of an open question. You can consume so much of any art form or multiple art forms that you become a bit jaded. I don't know, it'd be interesting to think about what younger viewers that are very talented at the arts think of directors like, say, Kubrick.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think, you know, it's like it's an unusual novel. Like it seems to me to be kind of a depressing novel. But on the other hand, I consider myself a middle brow reader, not a highbrow reader. And when I say it's depressing, that may be just superficial and maybe at a deeper level it's inspiring in some way. But I found it kind of mesmerizing in similar way to my struggle by Nausgard in that sometimes you finish a novel and it's you, okay. on to the next one. That was a nice novel. And then there's some novels where you feel like a whole world has been sort of opened up in front of you. And I think my struggle was like that. And I think solenoid was like that. And earlier ones like In Search of Lost Time and some of the classics, but it's more than just a novel. It's a whole world in a sense.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I think that's my view. There's in any art form there's like a golden era, or there's multiple in some cases. Like if you take the art of painting, there was an enormous number of masterpieces produced between sixteen hundred and say sixteen seventy five. The next seventy five years, I don't think it's anywhere close to being comparable. That previous 75 years when Rembrandt Velasquez, Vermeer, Rubens, all those were so spectacular. And I think the painting didn't get a lot of momentum again until the 19th century when there was new innovations which opened up new possibilities. So, yeah, I think that in film, certain styles get played out, and then eventually somebody develops something new. I'm actually surprised by how vibrant the novel is as an art form, because that's been done fantastically.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“But then ask this question What happened to Coppola after the 70s? So he has those four masterpieces. Why can't he continue? Like he was presumably just as talented, but maybe he had just run out of ideas. And my view is that cinemas evolved in a way where the more interesting directors today are ones that have sort of a more weird or edgy style, more unusual style because the conventional masterpieces like the Godfather have already been done. So you have more quirky filmmakers like Wes Anderson, David Lynch, and so on that are pushing the envelope in kind of a mannerist direction.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“But even, I'm going to sound like an old film snob here, but like if I go back to the 70s and 60s and 70s when you had those Kubrick and Coppola masterpieces one after another, I don't feel like I'm seeing that now. But it's possible that they're out there that I'm just missing them. Or it may be that like the directors may be just as talented, but the fact that they're coming later makes them not seem that way. They seem more derivative. Like you can look at the Cohn Brothers, clearly extremely talented directors. If they had been on the scene 40 years earlier, would they be viewed more highly because they would have been more innovative at that time?”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Like I just looked at a list of Mat Iglesias' favorite films, and three of them that I had seen, Dune, and Nora and Challenger, I mean, they seemed like good films, but they just, I felt like I was too old for them. I didn't really connect with them. And it may be a generational thing.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know. I kind of feel like I've already gone through sort of the peak period for my life. Like everybody has eras that resonate with them. For me, East Asian films from places like Taiwan in the 90s were maybe what the French new wave was to a generation And I don't know if I'll ever really recreate that feeling. And that's not a knock on the movie industry. I think the directors coming along now are perhaps as talented as ever or more talented. But it's my receptivity to what's being done is maybe not as high as when I was younger. So there's a certain period when you're at your peak ability to receive a certain type of film.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's hard to say There's so many great ones and some of them are probably less known to people. Some of the black and white ones that younger people don't tend to watch as much strangers on a train notorious.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, my favorite is Vertigo. That's not necessarily better in a... Artistic sense than, say, rear window or some of his other classics. But I think Vertigo as Hitchcock's maybe most personal film. Where Jimmy Stewart is sort of a stand in for Hitchcock, in a sense, right? So as I recall the plot, Jimmy Stewart is at some point trying to sort of mold or reshape this woman into. This dream woman he had met earlier. And Hitchcock is a director is also sort of trying to do that same thing and maybe failing in the end. So it seems like Vertigo is in some sense a critique of Certain aspect of a masculine personality. It just seems to be more of a serious, deep film than a lot of Hitchcock films, which are brilliant films, but are made to be kind of light entertainment in many cases. Does that make sense?”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Combines all these things in a way that some other art forms by comparison seem a little more one-dimensional. Like I'm a big fan of all the visual arts, including painting, but I think painting as an art form was kind of played out by the early 20th century. At least the visual ideas were exhausted and then goes into conceptual art and so on. But film, because it has all these different aspects combined together, was a very dynamic art form throughout much of the 20th century. And I think that's what especially drew me to film.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's what I look for in a film is something that is visually interesting that expresses artistic ideas in a visually compelling way. But I find it difficult to put into words exactly what that quality is because it's just sort of intangible. You know it when you see it. Like there's certain directors that in the first 30 seconds of the film, you just see their signature visual style, right? A Wes Anderson film has a very distinctive visual style, David Lynch and so on. But it isn't just visuals, it's the way visuals are combined with music and editing and dialogue that has made film such a rich art form during the 20th century especially.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“So, just the way my brain is wired, I'm much better at visual things than at verbal things. Probably listeners can already suspect that. So when I look at film, I'm focusing mostly on the visual aspect of the film. And that's sort of hard to put into words. I think that Lot of people tend to look at film from the perspective of a screenplay. It's sometimes said that cinema is about cinematography and TV is about screenplays. So people that are really interested in film tend to like movies a lot better than TV shows because the visual aspect comes to the fore.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Or the Fisher effect, or the income effect, and so on. So I actually have been thinking about this since the late 1980s, but I didn't really come up with that phrase until more recently. Once I started thinking in those terms, I started to see this mistake appearing in all sorts of contexts and probably even myself, I've reasoned from a price change at various times. And I've seen prominent economists make statements that to me seemed to be an example of this fallacy.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Driving the price level. So it isn't just don't reason from an individual price change. It's don't reason from a price level change. Like don't ever talk about whether inflation is popular or unpopular without thinking about whether it's supply or demand side inflation or whether it's inflation trying to get out of deflation. Don't reason from an interest rate change. Never say the interest rate went up. Therefore, this will happen or the exchange rate depreciated, therefore this will happen because the impact of those price changes always depends on what's driving the change. Is the interest rate changing because of the liquidity effect?”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't remember when I first used that, but I'll tell you a story on this. I think I started mentioning this phrase 10 or 15 years ago, either to my class when I was teaching at Bentley College or in my blog. But when I thought back on my early career in academia and my research, I realized that I'd actually been thinking about this all along. So I did a paper in 1989 with Steve Silver on real wages. It's in the JPE. And it's basically a paper that looks at the question of real wage cyclicality and criticizes the previous literature as reasoning from a price change. So there was this debate about whether real wages were pro-cyclical or counter-cyclical. And we ended up with a view that real wages are counter-cyclical when there's demand shocks and pro-cyclical when there's supply shocks.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“And in that upside down world where it's hard to really understand the meaning of policy indicators. It's easy to make mistakes. You know, as you know, there's currently a debate now between Keynesians and what are called neofisarians about whether low interest rates are easy money or tight money. You'd think a basic question like that would have been settled decades ago in the field of economics. And if it's that confusing to even high-level theorists, why should we expect policymakers at central banks to always get these decisions right?”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“I know that the mistake theory is unpopular among intellectuals. You know, a certain policy is in effect because policymakers just don't understand things. It's much more fashionable to view dysfunctional policies like tariffs as reflecting, say, special interest politics of one sort or another. But I think monetary policy is different. I think monetary policy is one area where mistakes actually do occur fairly often and you get outcomes that governments actually don't want because they're not thinking about the situation in the correct way. And even the policymakers themselves have often failed to really understand the nature of the problem. It's sort of an Allison Wonderland world where things look one way but are very different, like high interest rates look like tight money and low interest rates look like easy money, but often low interest rates are actually reflective of a previous tight money policy that's created deflation.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think that that's a piece of evidence in favor of the view that these problems that look structural actually have a deeper cause, and that is a failure of monetary policy to achieve the desired objective. And a lot of times”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, good question. So I think you could have made a similar argument about Japan, say, 12 years ago, right before Abe took office. And Japan had suffered a long period of deflation. There was problems in the banking system and so on. So it was easy to view the Japanese situation in some senses structural and to blame it on whatever demographics or whatever you want to point to. So Abe ran for office on a platform of inflation. He promised higher inflation. And by the way, that's worth thinking about because of all the recent discussion about how unpopular inflation is. Roosevelt in 1930s also ran on higher inflation and was very popular on that platform. So Abe runs for office in 2012 on a platform of high inflation or sorry, not high, but say up to 3% a year. And things do improve in Japan. Under his changes in monetary policy.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Know enough about the Chinese situation, but if you're asking me, does China have the ability to get out of deflation with a weaker currency? Yes, they do. They have that ability. I don't think there's even any question one economist, Lars Fenson, called currency depreciation a foolproof way of escaping a liquidity trap. You can always weaken a currency and create inflation under a fiat money system if you're determined to do so if you haven't done so there is some sort of political barrier to taking the steps that would be required or there's simply a sort of a cognitive error like you're not thinking about the problem in the right way which has also been an enormous problem in monetary economics because of confusion about what low interest rates mean and other things about monetary policy that confuse even policy makers often into thinking their policy stance is different from what it actually is.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“I still feel like maybe part of the reason is fear of the way the US would respond with protectionist measures if there was a sharp fall in the yuan. Now, I'm not certain that's the case, and I'm not certain that China is making the right decision. On balance, I think they'd be better off allowing a little more weakness in their currency. I'm not exactly certain all of the reasons why it could reflect different interest groups within China, some which benefit from a strong currency, some from a weak currency.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll give you an example, and I hope I get the facts right on this. In the early 2000s, there was a lot of criticism from American economists like, why don't the Japanese just value the yen if they want to create inflation? They can get out of the liquidity trap. At the very time the economists were making this a suggestion to the Japanese, treasury officials were putting a lot of pressure on Japan not to depreciate the Japanese yen with the implied threat of protectionist response if they did. So, you can argue that essentially, to the extent that the US is able to influence Japanese policymakers, we may have pressured Japan into a long period of deflation by discouraging them from devaluing the yen in a way that would have been required to get Japan out of deflation in the 90s and early 2000s.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“And Japan, despite large depreciation in the Japanese yen, has still only suffered very mild inflation. In China where the currency is much stronger than in Japan, you get outright deflation. So it's a question of prioritizing exchange rate over macroeconomic stability that leads to these kind of unfavorable outcomes in terms of inflation. Anytime you prioritize any variable above your core goal of either inflation targeting or nominal GDP targeting, you will end up with negative outcomes.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Inevitably going to let go of your ability to control macroeconomic aggregates like nominal GDP and inflation. The most extreme example of that is Hong Kong, which has pegged their currency of the dollar for 40 years. And so essentially the Hong Kong business cycle and the periods of deflation in Hong Kong are completely correlated with the strength of the US dollar. So if we go back to the late 1990s, most countries in East Asia devalued sharply. There was a severe crisis. China did not The consequence of China's decision not to devalue when all its competitor countries were devaluing was deflation. That was a political decision they made. More recently, China has allowed a little bit of weakening of the Yuan, but not nearly the extent that you see in places like Japan.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, good question. So, first of all, the deflation they're going through, I would argue, is very similar to the deflation they went through in the late 90s and early 2000s. It's due to the Chinese government being reluctant to weaken the currency sufficiently in the foreign exchange market. To maintain positive inflation. And that reluctance seems to be partly due to political reasons. But as you know, governments around the world have traditionally viewed the exchange rate as a very important variable. And so if you focus on a certain set of goals for your exchange rate,”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“It's off course, aggregate demand falls sharply, and that is the factor that actually worsens the financial crisis as you get deeper into the process”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“And so I think that again and again, when you look at these cases where there's some sort of monetary policy mistake, America nineteen twenty nine, Argentina in the late nineteen nineties, you see the monetary policy mistake occurring first in an otherwise healthy economy, then you see the financial crisis developing as nominal GDP is falling sharply. But there are other occasions like two thousand eight where the financial distress occurs first, and this is why I believe it gets misdiagnosed, because the financial distress occurs first, people think that everything that happened afterwards was an implication of just a worsening financial crisis. Whereas what actually happened is the financial crisis causes changes in the equilibrium interest rate that the Fed misjudges. Policy gets off course.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“The financial problems ended up being more severe in Europe than the United States, and they were more severe because the path of nominal GDP was much more unfavorable in Europe compared to the United States, even though the United States did not do particularly well.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“And that was what was expected in early two thousand eight, the recession was going to be much worse than the US than in Europe. But here's one difference. Monetary policy in Europe was clearly tighter throughout two thousand eight than the US. The ECB was much more hawkish than the Bernanke Fed. That led to the recession being more severe in Europe. In addition, two years later, in 2011, The Europeans got spooked by rising commodity prices. And pickup in inflation, which was a little bit misleading because nominal growth was very weak still. They tightened monetary policy twice in early 2011. They had a double dip recession.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think the financial market problems are mostly a symptom. Here's another example I could give you. At the beginning of the two thousand eight recession, the view in Europe was that America was paying a price for our kind of reckless cowboy capitalism, deregulation of banking, less stable financial system than in Europe. And there was almost a little bit of gloating in some quarters in Europe at that time. Now we now know that the Great Recession ended up being much worse in Europe than the United States. So let's say the standard view is correct that the Great Recession was caused by the American housing bubble combined with the banking crisis. The recession should have been much worse than the United States were the ones that had the big subprime crisis.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“But there's an awful lot of circumstantial evidence to support my claim because we observe, for instance, in the United States that when nominal GDP is more volatile, so is real GDP. That's one thing we know. We also know that some of the volatility of nominal GDP comes from very clear monetary policy mistakes that have been made at various periods of time that can be clearly identified. And so when we see this show up in similar movements in real output, there's just a strong presumption that there's a causal relationship there. Financial markets also seem to treat it like there's a causal relationship. Financial market responses to Federal Reserve policy shocks. Seemed to reflect a view in the financial markets that these things are important for the real economy.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“It's because our instincts have recognized the fact that in fact most of the US business cycle is due to nominal shocks interacting with sticky wages. And if that hypothesis is true, that model of the business cycle is true for the United States, but not for Zimbabwe. Then, what is telling us is that if we can control nominal GDP growth, probably the path of real GDP will also be more stable. Now, it's possible that we do succeed in stabilizing nominal GDP growth and we find out it doesn't help.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“I see what you're saying, but I think that in a way, your instincts that it's almost tautological reflects the fact that you sort of buy into what I'm saying about the interrelationship between real and nominal shocks. I mean, we both know that they're not necessarily at all closely correlated, right? In 2008 and nine Zimbabwe had a recession and hyperinflation at the same time. So their nominal and real economies are going in dramatically different directions. And we also know that real and nominal variables are radically different variables. So when our instincts tell us that there's something tautological about the correlation between real and nominal GDP in the United States.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“You see, that's what I don't accept. See, I believe that the fall in real GDP was mostly due to the fall in nominal GDP. So in a counterfactual, we know that the trend rate of growth in nominal GDP had been 5% a year going into the slump, and it fell to negative 3%. So it's like an eight-point decline in the growth rate. Now in a counterfactual where they keep nominal GDP growing at 5% a year, let's say. Most of the difference shows up in stronger real growth, and only a small part of the difference shows up in higher inflation. So the inflation rate in 2009 was actually around zero. It might have been no more than two or three percent if nominal growth had been that much higher, and real growth might have been five percent higher.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source
“An analogy I sometimes use is like a cold that turns into pneumonia, right? It starts as one illness. It might seem to a person like it's just a bad cold, but actually the nature of the illness has changed. And this is what often happens in these periods of financial crisis combined with falling nominal GDP. It starts with one type of problem, financial distress, and it turns into a very different type of crisis when nominal GDP falls sharply because of all these nominal debt contracts.”
2025-01-08 · Conversations with Tyler · Scott Sumner on Monetary Rules, Blooming Late, and the Death of Cinema · IDENTIFIED FROM THE TRANSCRIPT · source