At the Bloomberg Washington Summit, Part 4

Economics

CFO of UPS talked about two scenarios for rises in interest rates: good: improvement in productivity, bad: stagflation. Senator Ben Cardin said “We know that if interest rates go up it would make it very difficult for the Federal Government to participate in creating growth.” (As if the government can create growth without getting out of the way.)

Cardin also Congress has schizophrenia about the Fed.  He asked if we would rather have Congress run monetary policy.  I would say someone has to be responsible to the electorate over monetary policy.  Central Bank independence is nice in concept, but what if you get a bunch of deluded idealists who believe in an untested policy, like we have today?  As voters, we need to have the ability to replace them, or better, limit the abilities of the central bank so that it doesn’t matter so much what they do.  Then Congress will have to take hard actions, knowing they can be replaced in a few years.

“Yellen has right of first refusal at Fed, as the next Chairman,” Laurence Meyer said.  Another commented that the Vice-Chair has never succeeded the Chairman before.  Personally, I think she would be worse than Greenspan and Bernanke.  More dovish than both.  Maybe bring on Warsh, Lacker, Prosser, etc.

 

US Postal Service

Cardin commented “I don’t think outsourcing saves money for government.”  I would agree, but it means returning to a government with more bodies, paid less, and limiting the influence of lobbyists.  It also means reducing complexity in laws and regulations.

He also commented “I believe that the role of the Post Office is universal service and overnight delivery is part of that.”

One twitter commenter wrote: USPS Corbett is asked if we even need the postal service. Quick answer: Yes. Audience quietly whispers: “Dinosaur.”

USPS CFO thought there was a long-term solution. He wants regulatory changes, allowing delivery of alcohol, and other things prohibited now. He wants more independence from current regulations.

Lunch

I had delicious food and good conversation at lunch. I sat with Tom Keene & my former professor Steve Hanke of Johns Hopkins & the Cato Institute.  The two of them talked about their mutual experiences at the same school in Colorado for undergraduate study.  Keene asked what he should ask Krueger on unemployment.  The table volunteered a number of good ideas, mine was to ask whether the higher unemployment wasn’t structural because of global competition.

China

Here are a few tweets, none written by me:

“Hot money goes out of QE economies to emerging economies… they are fighting too much credit.” Steve Hanke/John Hopkins

“Whatever the standard is the Chinese will meet it and compete” Steve Hanke/John Hopkins #bbwash

At #bbwash intl economist Dambisa Mayo says #China a monopsonist for #iron and #copper

Once again, I got the final question:

China has enough credit problems to slow their economy dramatically.  They have overinvested in industries that are in oversupply.  Why should we be concerned about China, when they are in the same position as Japan in 1989?

Mayo attempted to answer, but she really didn’t get the question, and stuck to her own script.

More in part 5 (final)