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Stanley Fisher studied with Kendall Berger at M.I.T.. This is a few years ago. Mr. Fisher is of course led the IMF at a time of original crisis and this morning the vice chairman on this most interesting August of 2000 15. I'm going to do what we do surveillance which you've heard me say before. Rip up the script. We have just seen Mr. Buffett in a 37 billion dollar transaction and the Greece of that are our low interest rates are the low interest rates that all central banks had. Are they nothing more than an advantage to the haves and an advantage to the capitalists or the plutocracy so that Mr. Buffett can do a transaction while other Americans are harmed. The low interest rates are designed to help the recovery of the economy and in terms of employment which is what really matters. They've done that very very well . Outstanding move it down and down to five. Yeah we went from ten to five and that's what they were. That's what they're intended to do. They also intended to help investment. We would be happier if we saw more physical investment and financial investment probably. But they're doing their job . And the Fed has handled this very well and I can say that because I've only joined lately. Yeah it's good. Everything wasn't your fault. Let's get to this phrase which I ascribed to you totally which is all accommodative. I sat behind you at your Economic Club of New York speech and I saw the physical force that you put into that phrase ultra accommodative. What is ultra accommodative and why do we have this reticence worldwide to raise interest rates. Well ultra accommodative was set at a time when we thought that zero was as low as you could go on interest rates. It couldn't be any more accommodative than the zero. Effectively at. Now we know you can go negative as well but it is extremely extremely accommodative to not have to pay interest. Nominal interest to be sure when you make an investment and that's what this monetary policy is about and it has worked. Why the reticence. Why are we struggling. Governor Carney is struggling. Chair Yellen is struggling to to just raise rates a little bit. Why do fear the the interest the the interesting situation in which we are is that employment has been rising pretty fast relative to previous performance and yet inflation is very low and the concern about the situation is not to move before we see inflation as well as employment returning to more normal levels levels which we specified in advance. When I look at this . Vice Chairman Fischer I look back at the dual mandate of the Fed 1977 that was so complex one year after that you had to publish your textbook to Bush Fisher stars I might point out in the 12th edition. Is this modern Fed trying to do too much within the dual mandate and within the Fed that we saw before that are we asking too much of people like you it's interesting that the problem is not with the dude. The the part that's unusual in the dual mandate namely employment . That's going just fine. It's with the inflation part and if we were just inflation target us we'd be in the same situation we are now. We'd have to be doing even more probably if that were possible. So it's not the dual mandate that's the problem. And besides I don't know a central bank that in its heart of hearts isn't looking at output and employment all the time even as it says we only target inflation. They do both. Well speaking of inflation I saw this week on out on Twitter. Did you follow Twitter at all. I'm afraid not. OK I'm on Twitter. The Taylor rule and the trajectory of that is so distant from where central banks are. Why is that. Well all right. Our calculations suggest that if we put the interest rate right now and where the Taylor rule they're actually quite a few Taylor Rule says it should be you we'd be doing damage to the economy. And you know that was the way the Fed behaved in normal times where I've still haven't returned to normal times. We hope to be doing that. And that's simply too high an interest rate given where we are coming from. I don't want to put you in a difficult position as a public policymaker but how do you respond to the study of many economists including Michael Crowley at JP Morgan . This idea of a new terminal rate of where after the Great Moderation we're coming down to new lower rates including possibly some new inflation hurdle lower rates in general that's a possibility. And there are many possibilities as to where this economy will be moving where it is moving to is not independent of what we and the Fed do and how much employment there will be what the new unemployment rate normal unemployment rate will be. So I think of that as a very interesting possibility. The other possibility we'll have to just wait and see is that we go back to what we were used to before you held court at RMIT When did you first meet Olivier Blanchard . Probably around 1970 four or five certainly in nineteen a few years back. He was very eight years ago February 2010 at the IMF and Professor Blanchard said we need to reflate. And he was beaten to death within the profession for suggesting a 4 percent somewhere in that vicinity hurdle. Are we being too cautious in reflate in the American economy. We are not being cautious. We're being extremely expansionary and we've got zero interest rate. I think the problem with the 4 percent inflation rate is that when we get up there we'll find there are other phenomena that come with it including indexation which complicate the way you run the economy and I think that Olivier the statement we need to reflect the economy is correct . We need a 4 percent inflation rate that's another subject to debate. We'll leave it at that well answered. I had such a great response of questions worldwide from economists who want to speak to you. One of the greats is Lewis Alexander of Nomura who's written very brilliantly on technological progress and how we use computers today. He talks of cumulative progress versus data dependency. This idea of step by step progress getting us to an end result. Where do we stand now. Are we slaves to data dependency. We'd better pay attention to data. My NYSE has to we saw that a Bloomberg headline inflation is low and too expectations of inflation. In a large part of the current inflation is temporary it has to do with the decline in the price of oil it has to do with the decline in the price of raw materials. These are things which will stabilize at some point . So we're not going to be as low as we are now forever. We need to be looking ahead as we go. Having said that the data have to drive us and we have to ask ourselves Where are we. And we're in a situation with very low inflation nearly full employment but very low inflation. Your academic aspect in 1977 where you wrote on price stickiness many would suggest detractors of the Fed that we now have deflation stickiness . Should we fear substantial disinflation and outright deflation this morning we see 10 years Switzerland negative interest rate the 2 year German drives ever lower. Do you fear a global deflation and the knock on effects to the United States. Well we take account of what's happening abroad our capital markets are linked. People invest there. They invest here and we've got to take that into account so yes it's that it's a factor that bothers us. It's not inevitable it's not baked in the economies abroad but it's there right now. I look at your classic what I call the Red Book which was your IMF studies that you put out years ago. You studied with Kendall Berger at M.I.T.. You were on the watch at the IMF. And this idea of the capital account at risk. Are we there again. Where you sitting at the Fed must look at the capital shocks to other nations due to commodities and frankly just due to a new mediocre management guard identifies . We look at that. Our duty here specified in law is to the American economy. But of course what happens abroad affects us. The United States the United States economy. So we have to ask what is happening there and take it into account to some extent. But primarily the U.S. economy depends on itself not only but to a considerable extent. And we take both those factors into account. And if the rest of the world is slower that's not good for the US economy. Where does our theory stand and a final question to you. Vice chairman very quickly this morning are we are we running alone or are we running alone now or is there really a textbook foundation to what you're doing each and every day there's suddenly a textbook Foundation. But we are to an important extent in territory that hasn't been explored before and we have to think about things as as we move ahead. We're not alone. The behavior of the British economy is remarkably similar to that of ours in terms of inflation and unemployment . But there are fewer and fewer that are growing decently. Mr. Vice Chairman thank you so much .