Single Best Idea with Tom Keene: Rich Clarida & Lael Brainard

Tom Keene breaks down the Single Best Idea from the latest edition of Bloomberg Surveillance Radio.

In this episode, we feature conversations with Rich Clarida & Lael Brainard.

Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF

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Episode Transcript

Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.

Speaker 2 (00:14):
The single best idea and going back over two decades,
today was one of the most extraordinary shows we've ever done.
I really want to say we try to do a
different conversation on technology. We are able to execute that today.
Mark lehmannan from San Francisco definitive with Citizens JMP decades

(00:35):
of work in the society of San Francisco in Silicon
Valley and what they're doing. Perfect. To have him in
today with Facebook Meta and with Microsoft as well. Then
to have our Ana Agarana and men Deep Singh with
this was just brilliant. Aul Trump by two vice chairman
with US today. Lal Brainer will get to in a

(00:57):
moment at Harvard, but here with Columbia Universe in PIMCO
is a former vice chairman of the FED. Richard Clarita
on when you cut rates, do you establish a trend
or can you do a one off?

Speaker 1 (01:12):
If you go back to when Tom, you and I
start our careers in the eighties with Vulgar, Vulgar would
never give you an indication of where rates were going
to be in years. It was one meeting at a
time and for the first half of Green span. It
was one meeting then at a time. This is really important, folks. Well,
two things happened. The academic literature to which I contributed

(01:32):
said there can be benefits to providing guidance on their
rate path, and so I think policymakers fall in love
with that idea. They doubled down on it when we
hit the zero lower bound, and it made sense to
do that. But one of the points I make in
the paper that you nicely plugged, Tom, is that monetary
policy is not immune from the laws of economics. There

(01:55):
are benefits and costs to decisions, and there are benefits
in cost and diminishing. And I think you raise a
very good point. We could be in a different world
if basically the FED and other central banks said, you know,
there's a lot of uncertain we're gonna do one meeting
at a time.

Speaker 2 (02:11):
Bottle it. I can't say enough about that answer on this.
I feel very strongly about this, folks. They are completely
awetted to the belief. And in physics, if you will,
an inertial force of starting a trend, either rates higher
or rates lower doesn't matter, And maybe the efficacy of
a one off right now would be an interesting idea

(02:34):
for people like Lyle Brainerd and Richard Claire to the
others to study at least or ponder as well Richard
Clare to their PIMCO. The paper he mentioned is just
out from the National Bureau of Economic Research NBER. I'll
try to get that this weekend out on Twitter and
linked in. Low Brainerd with the same exquisite economics as Clarida,

(02:58):
but different She's at Harvard out of Wesleyan. She had
an honorary degree from Wesleyan at their commencement in May.
Lyle Brainerd and here on Trump vessent economics.

Speaker 3 (03:11):
I would say what is clear to me, because I
have been listening carefully to the Treasury Secretary and the President,
is that they see tariffs as a way of raising revenues,
and they have a very aggressive revenue target for tariffs.
They want to raise hundreds of billions three hundred billion
dollars a year in tariff revenues, which is an order

(03:34):
of magnitude larger than what we have seen recently. And
that means that tariff rates have to be at those
high smooth Hawley levels with the attendant potential effects on
the labor market. And we've already seen substantial slowing in
the second quarter in terms of underlying private domestic final demand.

(03:58):
Consumers look like they are feeling a little bit cautious.
We can see that even in today's personal consumption expenditures data,
which really was very modest growth. So yes, I do
believe there's some risk that by trying to achieve those
very aggressive tariff revenue goals, they really are putting a

(04:20):
big dampener on what could be a very dynamic and
exciting period in American growth.

Speaker 2 (04:25):
The dynamic and exciting period is maybe the path to
Jackson Hall, Lisa Branwinson. I will be out there for
the festivities. Low brainerd is it? Harvard? I can't emphasize
enough the work that's being done right now on tariffs.
Whatever your politics, whatever the pro Trump anti prompt is
that the other thing, this is an absolutely unique time

(04:50):
for any of us living today. On our podcast on
Apple Music, on Spotify, on YouTube podcasts, this is a
single best idea

Speaker 3 (05:00):
Sen