A Fireside Chat with Mohamed A. El-Erian

The institution and the people. Let me just start by thanking everybody for being here and thanking the board for electing me. It's a wonderful opportunity. Thank you for doing this. I'm glad you didn't share with them how you used to torture me on the NewsHour and CNN. We've had this situation before, and that's why I'm a little bit anxious about all the questions. So as you said, I've been passionate about development from a very early age. I think this is a particularly challenging time for low and middle-income countries. I think it's critical to have an institution that does important and impactful work, and to be able to be part of that is not just something that I love. It's incredibly stimulating, but it's a huge honor.

So I think we should welcome something that has the potential, and I stress has the potential, to end a war that has hurt lives and livelihoods not only in the region but around the world. It's far from a done deal. So if you look at the four major challenges, the first one has to do with transforming a memorandum of understanding of 14 points into something that is comprehensive and implementable. That requires a lot of negotiations. The second is the parties involved go beyond the two parties that have signed this agreement. So there's a question: will other parties also abide by commitments that are made on their behalf in the agreement? Third, there's this notion that restoring oil production, shipping of fertilizers, of oil, is like putting on a switch. You turn it on and off. That's not reality. It takes time. And then the final issue is what I call the economic scarring. There are longer-term effects, including some that haven't been felt yet, that's still in the pipeline, and we've got to manage that. So it's wonderful that we have a deal, but I think we should be focused on how do we make this deal something more meaningful to stop a war that has undermined lives and livelihoods. If you look at developing countries and if you look at the last six years, this is the third major shock that they've had to deal with. Lots of minor shocks, but the third major shock. The first one was COVID. The second one was what happened to wheat prices and energy prices following Russia's invasion of Ukraine. And then there's a third one. Then there's a trade issue. And even though developing countries haven't captured the headlines, what typically happens when you have a shock is everybody focuses on what happens in advanced countries and need a crisis of some sort in developing countries to pay attention to developing countries. So the good news is we haven't had a systemic crisis in the developing world. The bad news is we've run down whatever element of resilience was left that has been used up for every one of the shocks. I'm talking about financial resilience. I'm talking about human resilience. So this shock is going to have long-lasting effects at a time when most countries are already squeezed, especially investing in the social sectors, health, education, and most countries have to invest in new technologies so that they don't get left behind. So it's a very serious setback for development, and it's one unfortunately that if we're not careful is going to play out over the next months, quarters, and years.

So it varies. The big issue is do you get more normal flow of goods through the Strait of Hormuz, and with that, do you start reducing some of the pressures that come from lack of energy, lack of fertilizers? I mean, that part of the world accounts for a lot of things. The longer-term issue is going to be country by country. There are some countries that bought time, used reserves, valuable reserves, subsidized energy consumption, and have to restore whatever buffers they had. There are other countries that have been pushed further towards debt problems and now have to come back. And then there's another set of countries that have had to once again cut on investments, on spending on health and education, because that's the easiest thing to cut unfortunately, but it has the worst effects longer term. So it will be country by country as to how they can restore the resilience that they have run down.

I had the honor of having a town hall, and I said that if you think of where we are in the development process, we have three now really big challenges. Whatever issues we had before, whatever headwinds to development we had before, debt, climate, governance, have been made worse by the external effects of the war. So the external spillovers have made existing challenges much worse. Second element, this is happening at a time when aid flows are being cut, when private finance hasn't stepped up yet to the opportunity. There are too many market failures that stop that from happening, and therefore countries are also dealing with lower funding. And then the third element is the world has changed, and the typical development paradigm that people thought was the north star, if you like, it's not clear if that still is applicable, and we haven't got an alternative development paradigm. So this is a really important time for the development process and for CGD that can help the thinking on this, can have an impact on policy. It's a really challenging time that the war has made more challenging.

So I'm surprised how fast oil prices have come down. In the last week, we're down 20%. There's been a massive reaction. So this morning when I came in, WTI was trading around 75, 74. We were at 100 not so long ago, and we were in the 60s before the war. So we've come back quite a bit.

There's no way I'm going to answer that question.

Yeah. And that's the answer. I mean, who knows what will happen? So many different pieces of the puzzle.

I'm like you. It's uncertain, you know, and it's fascinating. The markets have declared mission accomplished, finished, etc. The economists are much more guarded.

So I think if you want to explain the markets, I'll give you an incredible example. Okay, SpaceX was a private company this time last week. SpaceX yesterday was the fifth most valued company in the US. Think about that. More valued than Amazon, almost equal to Microsoft. Okay, that is market hype, enthusiasm, whatever you want to call it. Why? And this then pulls everything else up. I think you've had the following factors play out in the marketplace. One, an enormous love affair with the potential of AI. So people have brought forward the productivity gains that AI promises, and they have monetized it. The second is behavioral. Because of the policy response function, investors have been conditioned over and over again to buy every dip. It doesn't matter why the markets are going down. It's a profitable opportunity, and it has been a profitable opportunity. So whenever there's a bit of a dip, you immediately get more investors in. The third is, as you know, as much as there are things with the US, if you look at private capital, the US is the cleanest dirty shirt. It's not pristine, but it's a lot more attractive than markets elsewhere. So the US also attracts a lot of foreign capital, especially on the back of the AI promise. So that momentum builds such a strong tailwind to the market that the market will overshoot on the way up, just like it's overshot on the way down.

It depends how it unfolds. Okay. So finance normally is the tail, and you think the fundamentals matter. That's what really matters. But we learn every once in a while if the imbalance in the financial sector is so bad that the tail wags the body of the dog. We saw that in 2008 during the global financial crisis. I don't think we're looking at something systemic, but we could well have a correction at some stage. But it's going to take a major setback to change the behavioral elements of the market right now.

Yeah, I mean it's the old problem that whatever happens outside can impact you more than where it happens, right? So yes, it could disrupt normal financing as people become more risk averse. But you know, there's also a bit of a loss of trust. I travel a lot around the world, and there's a lot of questioning of the construct. So the construct is the US is at the core of the system. The US produces a lot of public goods, the reserve currency. The US provides the deepest financial markets. The US has a strong voice, if not a veto voice in some cases, in multilateral institutions. The US is viewed as a natural leader of the G7, the G20, etc. And the implicit contract is the US benefits from every single one of these things. I mean, the reserve currency, you issue pieces of paper and people give you goods and services. That's a great deal. Being the financial center of the world, you get much more capital. Therefore, your borrowing costs are much cheaper than they would be otherwise. You have enormous opportunity to influence, if not impose, outcomes on other countries through the multilateral system. Against that, there was the expectation, the implicit contract, is the system will be run responsibly. And then people look and say, so wait a minute, the 2008 global financial crisis that originated in the US, the first trade war that originated in the US, the US's behavior during COVID in terms of sharing vaccines was not what we expected. Now we have other things coming from the US. So there's a lot of people that question this implicit contract. And that's why you're seeing efforts to build little pipes. No one can replace the US at the center of the system, but you're seeing lots of little pipes being built around the US to try and increase resilience of the system. And that's increasingly the view from the rest of the world is we cannot replace the US, but we have to reduce our sensitivity to the US.

No, it's been going on for a while.

So the greater the challenges, the more the opportunities typically, if you're able to respond to the challenges. And this is what this institution has: the ability to respond to the challenges. Typically, what do you need? You need people, and if you look at the work that's come out of here, you have got the people. You need the platform. CGD is respected in really important decision-making places. And then the third thing is you need sustainability. You need to be able to be around, and CGD has that sustainability. So if you look at who can respond to opportunities in a sector that right now is under tremendous pressure, which is development, and that's development economics, development finance, development policy, you can add whatever word you want after development, it's being challenged. The Center for Global Development is uniquely placed in my opinion.

This is why we have great people. That's their job. But I can tell you, don't focus too much on the US. It's happening elsewhere. Look at what's happened to the aid budget in the UK. It has been radically reduced, not only in terms of a role but because some of it has been diverted to domestic purposes and no longer flows. I mean, it's not just the US. This is becoming a more general process, and it's because fiscal constraints are starting to hit. Growing up, it would have been unthinkable, unthinkable, that the markets, the bond vigilantes, would attack three of the seven G7 countries. Unthinkable. But in the last four years, the UK had a market crisis, Japan and France. So the constraint on fiscal is becoming more and more real around the world, and unfortunately an easy response is to cut your development budget. So it's not just the US. We're seeing it elsewhere. You know, I was at the IMF for 15 years. The easiest thing to cut is spending on social sectors, but that has a really bad immediate and longer-term effect, but governments find it easier than to cut spending on military. So as the budget constraints amplify, it's much broader than the US, and that's why I go back to development is being fundamentally challenged by changes in what we thought were parameters that have become variables.

So one of the most active countries in building alternative pipes is China, and they've gone through the process. The first one was all about establishing links with commodity exporters to secure that, and it was in exchange for either money or 'we're going to come and build infrastructure, etc.' That happened in Africa quite a bit. Then we had the Belt and Road Initiative, which was an attempt to institutionalize. Then that ran into problems. We now have the second version of the Belt and Road Initiative, and China increasingly is representing itself to low and middle-income countries as the responsible party when it comes to multilateralism. So yes, at the same time, China offers a massive challenge to developing countries because we've never seen a country operate at virtually every level of value add in manufacturing. So normally you exit one and you allow other countries to come in. If you think of the conveyor belt up the manufacturing value added, as development happens, you move higher up and new countries can come in and continue. That's the story of Korea. That's the story of Singapore, Hong Kong, etc. China is able to dominate that whole value added curve, and there isn't as much room for countries to come in as there was before. So China is both taking advantage of the situation, but also having to deal with internal problems that stop it from going up the value added curve. You saw the latest retail sales number. You saw the latest investment numbers.

So a bigger question mark than it was before because they are dealing with serious internal domestic issues.

No, that's Jamie Dimon. The cockroaches is him.

So let me answer this question in three parts: the financial side, the economic side, and what it means for low and middle-income countries. The financial side is what I call a rational bubble. Okay. The bubble element of it is at the end of the day, we're going to look back and see a lot of investments prove to be worth very, very little. Why is it rational? Because it's the venture capital approach. The payoff to whoever dominates the AI race is huge. Absolutely huge. It's very hard for people to figure out which of the actors will dominate. So if you want to invest in that world, you have a venture capital approach where you spread your capital across a lot of players on the hope, the typical venture capitalist hope, that if one or two pays off, it will more than compensate for the losses on the others. Now that is usually played at a small scale. The AI requirements are absolutely huge. So the amount of capital being bet that's now going to different platforms is enormous, absolutely enormous. So at the end of the day, unless we have a situation where there are many, many winners, and most people don't think that is the likely outcome, a lot of money invested will be worth very, very little. Add to that that the incentive of the large platforms is exactly what Ronald Reagan did with the Soviet Union, which is engage in a spending war and arms race, and you can see the amount of money that will be pulled into that sector relative to what it's likely to pay off is going to be very, very concentrated. So it's a rational financial bubble. For the economy, that's great. This is why we praise US capital markets, because they're willing to fund all sorts of risk-taking. Go to the UK. They have a massive problem with capital. There isn't enough capital willing to take these sorts of risks. And if you believe, like I do, that AI has an enormous productivity potential, it has risks but it has an enormous positive productivity potential, it's wonderful that you get a marketplace that's willing to allocate so much money for people to innovate. Then comes the developing country aspect. And here I'm going to quote Markus and Hans, if I may. I had a wonderful call, and they are the experts. So I'm going to quote them. It is not like you can simply drop the technology, because the development of the technology will not take into account local conditions. You need the ecosystem to be able to benefit from these technologies. So we can have massive gains on what the World Bank calls small AI: health, farming, education. But big AI that really moves the needle on productivity needs a lot more supportive initiatives. And again, this is where CGD comes in. There's work being done on this, both how do you try to inform the platforms of the importance of looking at different country conditions, and also what are the requirements, the necessary conditions, that you would need for this technology to fulfill what I think is a tremendous promise.

So the sectors right now that are benefiting the most in the advanced countries are finance, tech, and health, and that's because they are ready applications that can be done. It's starting to spread slowly through other sectors, but it's proving much more challenging because turning necessary into sufficient is really hard in the AI world. You know, this notion that you can just bring in someone and they'll do it for you, that's not how it works. You have to fundamentally change your system. One of the hardest questions to ask people is go to a CEO and ask the question: if you grew up native AI, what would your company look like? And most CEOs cannot yet answer that question. And until you know what your north star is, it's going to be really hard. Why do I believe in this promise? And I'm sorry for those of you who have heard this. Let me quote two people that I respect greatly. The CEO of Microsoft says the following: when we first heard about AI, it was about four and a half years ago, and it was about ask a question and it answers.

A year later it became give it a task and it will perform summarize this article for me, write me an email. So it evolved from answering a question to performing a task. Increasingly today, it's your intellectual partner. It's if you know how to prompt it and if you check its work and everything, it becomes literally your intellectual partner 24 hours. That's a massive change in four years. Which leads to the second person I love quoting. James Manika, you may know him. He's done work with the UN on AI. He was on President Obama's global development council. He says we think of AI as a general purpose technology like electricity. Takes time for it to change the world, but it fundamentally changes the world. And you end up doing things completely different when you have electricity, but it takes a long time for you to understand, okay, and get electricity. But it's a general purpose technology. But it's beyond that. AI is developing so fast that it is also the inventor of inventions and that's the whole quest for artificial general intelligence is the invention of inventions. He summarizes imagine you get the industrial revolution and enlightenment happening at the same time. How excited would you be about that? And that's the promise. The major challenge we all have is that our society is totally in love right now with those working on AI. Is Claude better than Gemini? Is ChatGPT going to come back? We are fascinated by those working on AI. We spend too little time on the issue of working with AI and the productivity impact doesn't come from the people working on AI exclusively. It comes from working with AI. And that's why thinking about it from a developing country perspective is so important. If we froze innovation at where it is right now on AI, the productivity promise is huge if we know how to implement it. But it's really hard stuff.

So people should know as soon as I hear IMF I melt. I spent my first 15 years after university at the IMF. I loved it. So the minute you said IMF I just about... we heard what came after that, but if I don't answer your question... Look, a recent World Bank report, and I'm sorry to start with the Bank, had the following. This is the global outlook which was published earlier this week I think or last. It said the following. It said on the present trends, this decade will be a lost decade for most developing countries. I mean, think how consequential this is. And then went on to say in the way you measure development, which is the gap in per capita income, that gap has widened in the last six years in a significant manner. And then it went on to say out of the existing vulnerable countries, most of them are flashing red right now. The way the IMF can help is first in terms of awareness. As I said in the beginning, whenever there's a systemic shock, everybody focuses on the advanced economies and you need the developing countries to end up in urgent care or in intensive care for someone to focus on them. So early analysis, awareness, advocacy is really important. Second, the policy responses is something that needs to be discussed including sharing of best practices. And then finally is the issue that you talked about, the financing. Most of these major shocks have triggered a response in the IFIs or creating significant additional financing. Sometimes you get completely new financing arrangements and there is a need to bridge some of these countries through a period where other sources of financing have dried up.

So let's start with the rough numbers. Net net the world was 10 million barrels a day, a bit more, but there was a lot that was rerouted. Net is 10 million. Demand destruction was 3 million of that 10 million. So the draw down in inventory was 7 million. The biggest demand destruction came from China and it included a 20% drop in oil imports. So the question became when do we hit critical level at 7 million and the view was that we would hit it within the next few weeks and that's in fact one argument why we are where we are on the moment of understanding. The second issue was that inventory wasn't evenly distributed around the world. So the US had absolutely no concern about supply shortages. India had massive concerns about supply shortages. What we found out is that the market is quite very efficient, much more efficient than most people thought when it comes to refined products to redistribute refined products and you see this in the US numbers of the exports of refined products to the rest of the world. So a combination of demand destruction with China playing a major role in this plus a much more efficient market has meant longer runway if you like. The other surprise now is how quickly countries are saying they can resume production. So the biggest surprise was earlier this week Qatar had announced that it would take up to two years to restore LNG production. They said they can restore half now within two months. Today Kuwait said that they can restore oil production much faster than was anticipated and I suspect that is having a huge impact also on oil prices. But it is a puzzle.

I don't think people were deliberately hyping. I think people underestimated the demand destruction that would happen. So there's four stages to a shock like this. The first stage is very concentrated. Energy prices shoot up. That's the first shock. Phase one. Phase two, which we're dealing with, is the energy shock starts becoming a broader price shock. Higher oil prices means higher diesel prices. Higher diesel prices mean higher cost of transportation for food means food prices go up. So you start seeing the energy shock proliferate through the price shock. The third element that some countries entered, not the US, is demand destruction that prices start destroying demand or physical shortages start destroying demand. And then the fourth shock that we didn't get to is when that turns into a financial problem because countries fall into recession, credit risk goes up, the markets become much more hesitant to provide financing. So you get a tightening of liquidity conditions. So those are the four. The speed with which you go down is a balance between your buffers and their use. And I think people underestimated first how much use would come down especially in China and then underestimated how the buffers available would be distributed in the system.

So thank you for bringing up this element. If you were to simplify the impact of AI on the labor market, there is the labor displacement and labor enhancing and the productivity gains come from the labor enhancing. But that's also the thing that requires most work. But if you really want the productivity gains, the focus should be on labor enhancing. The shortcut is labor displacement, cost minimization, and that is a balance that is impacted by adoption policy. And that's why you'll hear me stress over and over again the need to have clear guidelines on adoption policy that can be then adjusted to your individual needs. And that's at the corporate level, at the government level on that. So there is a risk. The promise is huge. It's an 80/20 proposition. If you look at the 20, one of the major risks in addition to cyber and everything else is the labor displacement side. Now what I find really interesting is if you think of most innovations they have an 80/20 element of them. They have huge potential and they have huge risks. When the car came in, great for transportation, pretty awful for people who got hit and injured and everything else. So you've got to manage the 20. And this is where good governance comes in, the ability to balance the two things. A typical US-based approach is to fall in love with the 80, underestimate the 20 until the 20 hits us. And if you look at the Facebook examples, we fall in love with the 80 and then we realize there's a 20 that has to be managed better. We're doing this with social media today as to what it does to our kids. The typical European reaction is to focus on the 20 and forget about the 80 and you regulate the 20 away. And the right approach is to embrace both. The 80 you unleash, the 20 you risk mitigate. And that is particularly important, Isaac, when it comes to the labor impact.

You're going to be very unhappy with my answer and I apologize. If I tried to answer your question, I would cross the line between courage and stupidity. Because I don't know enough to answer your question. But I can tell you that given the call I had with two of your colleagues, Hans and Marcus, that's the sort of thing they're working on and it's the sort of thing that you need to absolutely. So you framed the perfect question. I'm just going to redirect you to other people to answer it. And Marcus has written down notes, I can see that.

That's a great question Nancy. Let me start with what Judy referred to which is the data from this week. Just this week as you know retail sales are down in China, investment is down. So the demand side is down, the production side is up 6%. So whatever imbalance they had is getting worse. How did they reconcile this? 12 month exports are back, the trade surplus is back to a trillion dollars. Last year despite a 25% decline in exports to the US, the trade surplus was $1.2 trillion because they've been able to reorient their exports and produce more for the external world. That has a limit to it. The ability to absorb and I'm surprised, for example, there hasn't been more push back from Europe. I was in Germany recently and I saw more Chinese cars in Germany than I've seen in my whole life. And there's a major growth in Chinese cars at a time when the German auto industry is having problems. So the question you asked is a really good one. I feel that unless the constraint comes from outside, they're able to achieve their growth targets despite not addressing the main imbalance that you talked about. And it is getting worse. I mean it's ironic that it's getting worse.

You're absolutely right. If you think back how easy life was, Carol and I were at the IMF at the same time. There were two givens that people were buying into the globalization program. That the closer integration of countries, goods, services, and labor would result in people being better off. And then the second one was the Washington consensus domestic side that if you want to prosper, you prosper through fiscal responsibility, the respect of central bank independence and other institutional independence. You deregulate, you liberalize. And that consensus was so strong that we didn't pay attention to the distributional aspects, the climate aspects, all sorts of aspects that ultimately undermine the dominant narratives. So if you ask today what are the one or two things that most people agree on the global economy, you'll find it very hard to come to something. Globalization is no longer seen as the model because it alienated too many people. And when you alienate people, people get angry. And when people get angry, they become single-issue voters. And when they become single-issue voters, it's very tempting to dismantle something even if you don't have something to replace it. Perfect example, Brexit. I mean, think of Brexit. The attraction of telling someone, I'm going to allow you to regain control. How powerful is this? I'm going to regain control by dismantling my biggest trading relationship and not having something to replace it. But when people are angry because they feel that somehow they've been undermined by some external influence, by globalization, they will vote for that alternative. So we've dismantled globalization and the best we can hope for right now is what Gordon Brown calls managed globalization light and that has two elements to it. It's managed, it's more managed and it's light. It's not the uber globalization. And if we don't get agreement on managed globalization light, we're going to get fragmentation which is much more costly. The internal side of it, there was no agreement on the Washington consensus anymore because Washington itself no longer believes in the Washington consensus. We're running a fiscal deficit of 6% of GDP. There's concern about the independence of the central bank. We're not liberalizing. We're imposing tariffs and we're having more of an industrial policy starting to emerge. So we've lost both the external anchor and the internal anchor in terms of narratives. So yes, I should have mentioned that and I apologize for not mentioning it and thank you for bringing it up.

I'm just going to say not just in terms of major conflicts. I'm going to widen it a bit because I don't think you can address major conflicts without addressing longstanding problems. I was part of the IMF who would go around the world and say merit-based appointments in the civil service are critical. We still have institutions where nationalities matters as to which positions you can hold. Almost impossible to defend. I would go around the world saying governance matters, representation matters, voice matters. We have a voice and representation set up in these international institutions that's more reflective of a world of yesterday than a world of today, let alone a world of tomorrow. These issues are so longstanding and reform has been so slow that it fundamentally undermines the credibility of those institutions and we really need the IMF and the World Bank. We couldn't create them today. We would never get agreement to create them today. And it's incredibly powerful to have 189 members, to have these articles of agreement. And not addressing these longstanding issues undermines daily the credibility of this institution, therefore the impact. The role of these institutions is to inform and influence outcomes. And if you want to inform and influence, you've got to be credible and you've got to be perceived as being neutral, what I call a trusted advisor. So I think there's a more general issue that we need to advance the reform and to be fair every single IMF managing director and World Bank president has been keen to do so but the reality is the governance system doesn't allow them to do so. And this is a question that comes down to Europe and the US and particularly Europe which is way overrepresented in these institutions. So unless you address these fundamental issues, the buy-in for a system of multilateralism is going to be complicated. As you can tell, a few people in my life have had a huge influence on me. And Mike Spence, the Nobel Prize winner, is one of them. And he always says, 'What sort of game are we playing?' And I said, 'What do you mean?' He said, 'Game theory. Force yourself to think of game theory.' Because game theory specifies who are the players, what are their objectives, and how is the game being played? Multilateralism can only be played cooperatively. It cannot be played uncooperatively. And if increasingly people lose trust in these institutions, they will not play it cooperatively. So I go back always to these long-standing reforms that unless you address them, it's like something that eats away at the foundation of multilateralism every single day. And we can address them if countries are politically willing to accept some reduction in their influence and that's Europe in particular that happens but it's in their interest because multilateralism serves them as much as it can serve the rest of the world. So I think that's a really important issue. Work has been done here, work has been done elsewhere as to what this can look like and it just needs political leadership coming from the capitals.

So my expectations is what he pointed out yesterday, and I find it fascinating that people are trying to apply an old playbook to a completely different Fed. This is a different Fed. Kevin Walsh is very different from what we've had before. And he said in his first press conference, 'Here are the five areas of reform.' I probably I'm going to forget some. Communication, sources and uses of data, the inflation framework, the balance sheet, and what's the fifth one? I can look it up. But he fundamentally said here are the five areas that I think we need reform which is something that's really important to say because all those five areas need reform. And then he said something else that the Fed is really uncomfortable about doing but other central banks are not. We're going to use the best expertise including external expertise to help us think about this. This doesn't come naturally to the Fed at all. It comes naturally to the Bank of England, but it doesn't come naturally. So this is a reoriented Fed under Kevin Walsh and I think it's really important because as much as we have focus on the critical importance of defending the independence of the Fed and I am 100% behind that, we must not forget that this is a Fed that has not met its inflation target for 63 consecutive months. So more than five years of not meeting its inflation target. This is a Fed in which five officials have had to resign because of allegations not proven of financial irregularity. So there's a compliance issue, there's a culture issue. This is a Fed whose models have consistently been wrong in the same direction. This is a Fed whose communication instead of being forward guidance has been shown to be either confused or confusing. So if you look at how the Fed has operated, the Fed does need reform. I'm part of the G30. The G30 is the establishment of policy makers. We've just issued a second report under the leadership of Bill Dudley who used to be the president of the New York Fed. And the message from that is how the Fed operates is as important to maintaining its political independence as the pressure from outside because ultimately you need to be accountable. If someone gives you independence, it doesn't mean you're not accountable. You have to be accountable for how you perform. So I view this as a huge breath of fresh air into an institution that needs to be reformed in order to be more effective and in order to protect its political independence. The market is not where I am at all. So the market views it through the power lens. The power lens is every official puts in what's called a dot. There's 19 officials and they submit the dot plot. The dot plot shows the expectation of policy actions. We had 18 out of 19 officials submitted. The one who didn't submit is Kevin Walsh because he said, 'I don't believe in this. I think this is more confusing than anything else.' And what the market saw is that nine of the 18 expected at least one rate hike, if not more this year. That's what the market focused on and that's why we got a reaction that's being reversed this morning of stock market selling off, bond yields going up. And it's a problem that the market will need, I suspect, one or two more policy meetings, FOMC meetings, to realize this is a fundamentally different Fed. You're looking at me like...

Thank you.