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It says here the federal reserve's roughly $1 trillion doll pile of paper losses stemming from its underwater
Securities Holdings have begun to turn into more than hundred billion dollar in actual losses tweeted America is going
bankrupt by the way and he he retweeted somebody else saying interest payments on US national debt will shatter $1.1
trillion do this year you don't have to go to Elon Musk even go to these technocrats with sharp pencils on the
budget and they say this is not sustainable we we we can't keep doing
this by the way well Trump is oh we're gonna we're gonna we're gonna copy third world th this is a third world agenda
you're just giving me a laundry list of third world rubbish we're speaking of the 26th
of July the pce data just came out today this morning it's the preferred measure
of inflation by the Federal Reserve core PC came in at 2.5% down from 2.6% the
month before uh stocks are rebounding uh from their sell off earlier this week so
what is going on what is the market interpreting when it comes to inflation we're speaking now with an expert on
inflation and monetary policy Steve hanky he is the professor of Applied economics at Johns Hopkins University
Professor hanky always good to have you welcome back good to be with you David good to be with you as always pce day
let's talk let's start with that 2.5% still roughly in line with your expectations for um remind us again I
U.S.inflation
believe it's one two two to 3% was where you
John Greenwood and I have as a result of the fact that the money supply let's
start at the beginning the money supply the stock of money measured by him too
is actually lower today than it was in July of 2022 so we've had a contraction in the
money supply very that's very unusual by the way and and with a
contraction you get with a lag lower and lower inflation
so inflation is being drugged down because of what happened you know a year
and a half two years ago with the money supply starting starting to go south so
the this this lower pce number of 2.5% is not surprising to me and also
John Greenwood and I have the CPI the Consumer Price Index that headline
number we have it coming In by the end of the year between two and a half and
3% right now it's at 3% the CPI but but they're coming down these inflation
numbers are coming down and and the main reason for that is again a year and a
half ago two years ago the money supply started coming down by the way the money
supply has been ticking up the uh year-over-year uh change in M2 is now
slightly positive I think it's still below your 6% golden rate correct why is
that significant yeah yeah yeah so the the year-over-year rate of growth in the
money supply is about 61 of a percent about you know roughly half half a
percent and to hit an inflation Target at 2% you
should be operating at hanky's Golden growth rate for growth rate in the money
supply of about five or six% so it's still it's not only it's not
only contracted and and the stock of money is less than it was in July
2022 but but this little uptick we've had for the last couple months on a
year-over-year basis is is peanuts compared to where it should be to be
consistent with hitting the 2% inflation Target you know it's it's way below I mean it's less less than a percent the
year-over-year growth rate should be five or six okay so bottom line you
still think there's going to be disinflation in the order of around 2% until the end of the year into next year
Professor well to this the CPI not not the
pce the C the CPI Greenwood and I have it coming in
around two and a half to 3% that's that's the range and it's it's already
at 3% and fall so we're we're clearly going to hit the bullseye again again using the quantity
theory of money money is the fuel and the economy and and the changes in the
money supply are what make nominal GDP go up and go down depending on how fast
the money supply is going up and or going down and what is the nominal GDP
it has two components inflation and a real component uh very good I I want to
come back to uh Global inflation if there is such a thing we can comment on that the IMF just came out with their uh
latest uh economic Outlook report but first this article here from market watch quite interesting here it
Fed's actual loss
highlights the income income statement from the Federal Reserve and it's highlighting a hundred billion doll loss
right in 2023 and it says here the federal reserve's roughly $1 trillion doll pile of paper losses stemming from
its underwater Securities Holdings have begun to turn into more than hundred billion dollar in actual losses then
goes on to say that this could continue well into the next decade according to an analyst from uh this firm called
monach chill uh Capital Partners so my my question is Professor let's let's assume they're still underwater in
actual losses will this have any impact on the money supply broadly speaking no but but the
big effect of this is that the if the if the Federal Reserve makes a profit money
is actually transferred to the government account it's transferred to the government so it's it's a source of
funding for government expenditures and If the Fed is making losses that
transfer doesn't take place there's there's no money to to send to the the
treasury and and and the government's general account so so what's that mean
that that simply means that if nothing else changes the deficit would be larger
than it would be if the FED would be sending profits and
funds to the government's general account so it's it's it's it's more of a
fiscal effect than than a monetary is the Federal Reserve in trouble as uh
some people have commented that they're quote unquote going bankrupt I mean if this were an actual bank I mean hundred
billion dollars in losses a year would mean bankruptcy but I guess that doesn't apply to the fed well yeah the the f a
central bank it isn't there right I was going to say it's not one of those other kinds of banks that can go that
can central banks do and occasionally become insolvent by
the way how does that make sense what what does that mean well I mean you know
they can print their way out of the problem right
okay you know so it it can happen but you know the the printing press is
always available are you concerned they will turn on the printing press because of this loss probably not because of the
loss per se what what concerns me is that the FED is doesn't look at the
quantity theory of money they they have another model and and the model is a
post Kian macroeconomic type type model they have several but but they those
models don't don't include the money supply the quantity theory of money of course does include the money
supply it's M Supply Plus V the velocity
equals P the price level times plus y the real rate of growth in the economy
so that's the equation of exchange that goes along with the quantity theory of money and and M is one of the one of the
variables the the money supply changes in the money supply what are the what's the percentage change in the money
supply if you add that to the percentage change in the velocity it's it's by
definition equal to percentage change in the price level plus percentage change
in the real rate of growth in the economy uh well I don't know if the IMF
Global inflation
uses the quantity theory of money when making their inflation assessment but let's just take a look at
they don't and and and and and you you mentioned the the world inflation
inflation is not a global or World thing it's a local thing it every country has
its own Central Bank well some countries are lumped together for example the Euro zone now the the European Central Bank
functions as a central bank for those who are members of the of the euro
but countries that have central banks produce their own money and that grows
at different rates and the inflation rates are different in the different countries so uh we we've John Greenwood
and I have just looked at 27 countries around around the globe that comprise
about 75% of the world GDP and and we find that you kind of we we call a
roller coaster an inflation roller coaster from 2020 through this year
2024 first you get in some countries the the ride has been wild because you had a
big increase in the money supply and of course the infl followed by on average about 24 months you get
inflation peaking out so money supply Peaks out 24 months later you've had
inflation peing out now that I can give you the countries where that happened
and and and those countries are as follows
us UK Euro Zone Denmark Sweden Canada
you're Europe in Canada Canada in there Australia New Zealand Argentina Brazil
Egypt Ghana Israel Mexico Nigeria Peru
Philippines Sri Lanka turkey Thailand th those had a wild ride
infl the money supply went up rapidly grew rapidly and peaked out and then on
average 24 months later the inflation peaked out so that's the wild roller
coaster the ones where you get didn't get much of a wild ride were China Japan
Switzerland Malaysia India Indonesia and South Africa because
they they didn't Goose the money supply as much and as a result the inflation
did Peak out about 24 months after the peak but it didn't it it didn't amount
to much for example the peak in China to give you an idea the the the peak rate
of inflation that followed the peak rate ative growth in the money supply was
what 2.1% in China I mean right right now
China almost has no inflation by the way so so when when the IM this this this
this IMF thing they they add everything up they aggregate it into some big
aggregate number that that's kind basically meaningless because the individual
components of that depend on the individual rates of growth in the money supply in the countries and of course
the individual inflation rates which which vary all over the place just to add some context for the audience we're
referring to a recent World economic Outlook update published uh earlier this month in July and it says here the
momentum on global disinflation which you just addressed Professor is slowing signaling bumps along the path this
reflects different sectoral Dynamics the Persistence of higher than average inflation in services prices tempered to
some extent by stronger disinflation in the prices of goods what's your response
to breaking up inflation by goods and services for some purposes it's it's fine because for example
Commodities are very sensitive and they they react much more rapidly than other
components in the in in the price index whatever the broad price index CPI or PC
or whatever whatever the index or there million broad indexes that include a lot
of things but the commodity part of it moves around and it's quite volatile and
and it will it will react more quickly to changes in the money supply than
other parts of the index the one that comes last is Services services are the
last thing to adjust so all these things in the index some of them come early and
some Lag Way behind Services Lag Way behind but the overall
index is is what is important that is the overall price level and that is
determined by what's been going on about a year and a half two years maybe two
and a half years before in the in the money supply um what this is also what they
said St IMF staff projections are based on upward revisions to commodity prices including a rise in non-fuel prices by
5% in 2024 energy commodity prices are expected to fall by about
4.6% uh so what's your outlook on Commodities
see the point you this raise is key because they're they're looking at changes in relative prices okay and
commodities like oil is a commodity that a big one by the way sure most probably
most important one and and o oil price go it goes up and it and it goes
down and but but the price level itself
is kind of a separate thing I mean the the oil prices are part of the index but only part and
and oil prices can be going up for example and everything else in the index going
down so the relative price is oil relative or Commodities relative to
everything else and and that's not the way to look at aggregate price indices
like the CPI what's the CPI well the CPI you know it has over 300 items in it it's it's
it's a big basket with a lot of stuff in it and some some some things are going up in the basket and some things are
going down or they're going up and going down at at very different rates but the
basket itself is when we talk about inflation we we don't talk about
specific things like commodity inflation you can talk about it but the the
average person when they think about inflation and we talk about inflation as a generic thing it's the big basket the
big basket going up and going down I mean where is where's the big basket now in the US it's about 20% higher than it
was at the start of 2020 at the start of covid and of course that that's why
voters are so mad about and complaining about inflation the rate of inflation the rate
of increase in that aggregate is slowing down that's that's what you and I just
were talking about earlier it it's slowing down to maybe at the end of the year two and a half to 3% according to
Greenwood myself but the but the but the big complaint everybody has is that the
basket itself is about 20% higher than it was four years ago and and of course
that's that's the gripe about Biden uh what what about people keep saying people keep saying well you you you know
you whipped inflation it's coming down but everybody going to the stores is realized it's a sticker shock because
four years hasn't that long ago and and if something overall if what you're buying is 20%
higher you're you're you're basically hitting sticker shock every time you turn around this is this came in from
Twitter I like you to respond to this tweet please Professor so Elon Musk tweeted America is going bankrupt by the
America is going bankrupt
way and he he retweeted somebody else saying interest payments on US national debt will shatter 1.1 trillion this year
it says here it's going to eat 76% of all income taxes collected now I I run the the number my I ran the numbers
myself the Federal Reserve the federal government tax receipts is around $3 trillion so it's really around 33% not
76 I don't know where they're getting that from but regardless it's a huge number uh my my my general question is
do you agree with this assessment America is going bankrupt it's Sensational but what's your reaction to
that um it is Sensational but the general point is the general point is
correct and that is the the debt to GDP ratio is is increasing it's over
100% And and even non if you go to the nonpartisan Congressional budget office
you don't have to go to Elon Musk even go to these technocrats with sharp
pencils on the budget and they say this is not sustainable we we we can't keep doing
this and and I agree we can't keep doing this so if something is not sustainable
you know my famous L herbstein who was the chairman of Nixon's Council of
economic advisors said once and of course people love to put if something
can't go on it will stop and so the question is well the
question is well how will this stop and and there are only three ways to stop it
one re in government spending that's
possible two in increase direct taxes three increase the inflation tax
or some combination of those three things so that's one thing we can
anticipate that some something in that threo mix that three-legged stool will
occur to to stop the unsustainable which
which that's that's really what what Elon Musk is talking about he when when he says bankrupt he means some
something something has to change and something will change e either direct taxes will go up or inflation taxes will
go up or we will cut and reign in government spending my own preference by
the way is to re in government spending that that because government spending is
a real is a real drag on the economy and productivity in the economy and the
Dynamics of the economy and and and how do you do that I
I think the best way to do that is to have a constitutional convention and
change the US Constitution as as they did in Switzerland and we put in
something like a Swiss debt break where government spending could not go up any more rapidly than real growth in the
economy point point number one and point number two in the Swiss debt break would
be that the budget over the intermediate term would have to be balanced so it's
kind of a combination of constraining government spending to the rate of
growth in the economy and balancing the
budget suppose we don't have this constitutional change what is the most
likely outcome well then you'll have some hodg podge of mix of those three
things inflation tax direct taxes going up and and government spending not not
being as rained in as as as as a Swiss debt Break by the way this is what
Donald Trump said on the campaign Trail he said I will end the devastating inflation crisis immediately bring down
interest rates and lower the cost of energy there's been people online pointing out the fact that you can't
Trump's economic agenda
have it both ways if you end infl if you lower interest rates you're going to risk raising inflation now I'm going to
just throw this at you that has the causality wrong if you
go back through the centuries and this gets back into the quantity theory of money too they're
just not paying attention to the fundamentals when what happens is in
interest rates and yields on bonds they they follow inflation they they don't lead
it CH interest rates don't come in other words if you increase interest rates you
you don't increase inflation or or you don't you don't necessarily decrease it
either changes in the money supply will affect changes in
inflation and changes in inflation are followed by changes in the interest
rates that's that how it works lower interest rates and lower inflation which
is what Trump said well yeah but you that that means you'd have to have first
you have to have the growth rate in the money supply at at some reason
reasonable level that that allowed you to reduce inflation so you've got to
start with the money supply and if if you if you control a money supply you
can control inflation and if you control inflation you're going to have bond
yields that that follow whatever that controlled number is okay he also said
he wants let's go let's go through a hypothetical let's go through a hypothetical okay the hypothetical is
that I I I I'm I'm going to change the inflation Target in the United States
from 2% to zero so we're going to have no inflation and and to get that how do
how do we do that go back to what I gave you the 2 plus 2 plus two thing it would
be 2+ 0 plus two so the golden growth rate for the money supply be four in
percent per year instead of 6% per year and then you hit the zero you don't have
any inflation and as a result of that interest rates are going to be lower
than they are right now that's for sure okay and by the way I I I think
long-term interest rates in the United States since they do follow inflation
will be coming down because I I told you the inflation according to the fort cast
that Greenwood and I have two and a half to 3% by the end of this year probably
probably in 2025 below 2% well that's that's those are lower
numbers than we have right now right now the headline is 3% and that means the
long-term interest rates will come down from where they are right now what's that what's that mean that that means
that's probably a pretty safe investment because if the if the yield on the 10e
falls from 4.2% let's say down to 3.7% that means that the price of the 10
years is going up there's an inverse relationship between the yield on bonds
and the price so so you not only are going to be getting a a pretty good
yield on on that Bond but but you'll get a a capital
gain because the price of the bond will go up so it's a it's a pretty good
trade uh on energy now Trump said he wants to lower the cost of energy just generally speaking is that something The
Government Can Do Well the the yes uh but but but the how big the
impact is is is another issue but the the answer is yes and especially now you
realize that the US is actually exporting a little oil right
now and other energy so if if you have policies that are very favorable to the
oil industry and and the and and the oil production goes up and the US is a big
supplier I just said they're actually the the biggest one
now and we're exporting Oil we're the biggest producer we're exporting oil
that that means what well the supply curve look at a demand a supply and
demand diagram and and if the supply curve shifts out to the right what happens to the price it goes
down if demand remains constant in a in a in a stable position and the supply
curve shifts out to the right in a supply and demand diagram the the price
the equilibrium price is lower at the at the new intersection of the new supply
curve with the old demand curve so so the answer is is is yes government
policy can affect where the supply curve for oil and gas in the United States is
going and and if if government policy is favorable the supply curve will will
shift out to the right the price will go down some people are saying that um Trump's
policies are inflationary and this is this is why his running M JY Vance wants to lower or weaken the dollar uh for
variety of reasons one of which is what he one of it which is that he wants to make American exports cheaper their
JD Vance wants weaker dollar
strategy is to bring more manufacturing back home domestically if we're
producing more Goods the rationale is you need to weaken the dollar in order to strengthen your Sports what's your
reaction to this I think it's a stupid idea
okay why why is that I would I would get him he gets an F for
that wait a minute now uh on which part the weakening of the dollar part with the the the domestic production why why
why would the White House want to be in there fooling around of the value of the dollar
because they want to make exports talking about especially in the context of of
of this is this is a beggar Thy Neighbor kind of thing you know where let's
weaken the dollar so we can increase exports it's a it's it's it's gonna it's
going to lead to problems first of all we'll talk about these problems first of all how would so
hypothetically how would the White House not the Federal Reserve but how would the White House go around or go about
lowering or weakening the dollar if it really wants to do so well they they they they could TR talk it down or or or
they could have a they could they could have an international you know they could have a international meeting
remember the plaza Accord so so so they they they could
they could by having an international meeting getting it everyone to agree that they're going to they're going to
try to change the configuration of the exchange rate somehow so that that that would be one possibility the other
possibility is that the the the FED is not really the one that's responsible
for the the dollar they in a way they are indirectly but the the the the legal
mandate is with the US Treasury so so the US Treasury
could intervene in some way this is I mean there there are number there number of indirect things that
could happen but but I think I think talking about it is is a losers game
this is this is what okay this just came in today actually on the 26th of July uh ACC Reuters breaking news Donald Trump
says he wants to reverse the strong dollar policy which has underpinned the US economic framework since the early
1990s he says we have a big currency problem in an interview with Bloomberg
his choice for vice president JD Vance goes on even further like I said he said the senator from Ohio wants to get rid
of the Dollar's role as a def facto Global Currency as well he said quote the strong dollar is sort of the Sacred
cowl of the Washington consensus but when I survey the American economy and I
see our Mass consumption of mostly useless Imports on the one hand and our
and our hollowed out industrial base on the other hand I wonder if the reserve currency status also has some down sides
can you well no no no no it doesn't at all it's it's why we it's why we can run
trade deficits every year since 1975 it's a privilege we get of being
able to finance those deficits at low interest rates so it's it's a huge
benefit being the international currency is a huge benefit to the us we consume a
lot more than we produce and we can easily do that and finance it cheaply
because the US dollar is the international currency so it it's nonsense he Vance is being guided and
and this is all talking points from the from the cryptocurrency crowd he he's
he's filled his heads full of sugar plums the these
guys have no idea what they're talking about they're talking their own book
They're talking crypto book that that's he's repeating that but he doesn't even know what he's
repeating I'm telling you what what he's repeating but he doesn't know what he's repeating he's listening this is all
crypto talk the cryptos would like to destroy the US
dollar I'm a strong do I I I I'm I'm I'm a I'm a I'm a remember I was on the
President Reagan's Council of economic advisors strong dollar supply side
economics and ronom is strong dollar this the strong dollar is where
we want to go what what's the strongest currency in the world for a long you know over a hundred years the Swiss
frank and and the Swiss are big
exporters the strong the strong dollar helps them because it it it it it it
actually makes the Swiss economy and businesses more productive because
they're not looking to the government to somehow weaken the Swiss frank and the
currency to basically bail them out they they realize that they to be competitive
they've got to be highly productive and efficient and they are highly efficient and productive and and by the way they
they run a current account Surplus not a deficit and but the Swiss frank just for context
since World War I that that's the only currency that's appreciated in real
inflation adjusted terms since World War I it's stronger than the US dollar it's
not the global international currency because Switzerland of course is a isn't
a isn't a giant economy like the us but but
nevertheless uh I think the history of the strong Swiss frank is where you want
to go if if you want a weak currency by the way that's that's that's a great
idea go to South America if if if fance knew what he was talking about he'd look
at Argentina and see what a pickle are in he'd look at all these countries
where where their their their currencies have lost virtually all our value in matter of three or four years they have
huge inflation problems and and the they are countries in which the dollar is
King everyone wants to get out of these junk currencies like the Argentine peso
and and put greenbacks under their bed the supply of Greenback notes US dollar
notes is in Argentina the second largest Supply or Horde of dollars in the world
of course the first horde is in the United States itself so so Vance is just talking Vance
is talking utter utter nonsense uh well this is going back to my earlier question as to how the White House could
control the dollar this is further down this article it says here Trump has been thinking about imposing Capital controls
to stem demand from overseas investors for American assets and the dollars needed to buy them I don't I don't
number one I I don't know where this report's coming from this is all highly speculative but but let's go let's say
it's a hypothetical okay who who's reporting this where you
I'm reading this on Reuters it's um you know they're talking about yeah anyway but let's let's make it a hypothetical
yeah we we don't know what the Reuters Spin and what Reuters is trying to do
here whether they're trying to smear trump it it sounds like a hatchet job on
on Trump actually if you that's my interpretation Capital
controls we want Capital controls that's what they have in Argentina I mean this
is this is complete Madness so so okay so you're opposed to
that okay uh you you what what should the appropriate policy I'm I'm opposed
to Capital controls on steroids I'm not just opposed I'm opposed on steroids
we're we're you want to make us a third world country and post Capital controls
on the US dollar this is a complete nuts has this is there a
president we're getting out we're getting out in la la land here David
yeah well is there any presidents of this happening in the past oh oh yeah
go yeah go go back to the Great Depression the smooth Holly
Terror and you know that that that's the that's the model is the Great
Depression okay well I I will note that what I just read which is more or less what JD Vance was quoting is kind of a
contradiction to what um the 2024 Republican Party platform the GOP
platform make America great against again there's a bullet list of bullet points of the things they want one of them is keep the US dollar as the
world's Reserve currency so there does seem contradiction there yeah that's the I I I think the starting point should be
the the rep that platform statement not not some Reuters uh thing yeah remember
my 95 remember David my 95% rule Hank's
95% rule is 95% of what you read in the Press is either wrong or irrelevant okay
you know what else has been circulating in the Press I want to get I know what you're GNA say but I want to get your response anyway Donald Trump is going to
very soon announce some sort of us Bitcoin strategic Reserve How likely is
Trump wants Bitcoin strategic reserve
this going to happen even if he said he wants to do it I I I I the answer is I I I don't I
don't know but the the the the cry the crypto crowd has been I I do I do know
that the crypto crowd is been lean trying to lean on the candidates as much
as they possibly can and fill their heads with
nonsense yeah he's um that that that by the way that that's that that's exactly
what bu the president of Al Salvador did by the way well Trump is oh we're
gonna we're gonna we're gonna copy third world th this is a third world agenda
you you're just giving me a laundry list of third world World rubbish but this is
what he has been doing uh the Donald Trump on the campaign Trail has been trying to appeal to crypto investors by
raising money in cryptos for his campaign he's raised more than $4 million so far from a mix of digital
tokens a campaign Aid told CNBC uh contributors have donated Bitcoin
ethereum list of other things right so um I don't know if he's going to make this an official state policy but
that that's that's why I I I did indicate early on when you brought up
the JD Vance thing I I I said I said he is echoing talking points from the
crypto crowd that that's what he's e i I do know that that's what he's echoing with
what what you what you stated getting getting rid of the dollar as as the
international currency remember they're they're they're all off on this D dollarization kick they they they they
their narrative is that the forget Vance and Trump and the elections or anything
like White House all that stuff they they they basically are making an argument that the US dollar is doomed
anyway and and and you you better be jumping into crypto as fast as you
possibly can to save yourself that that's that's their sales pitch communicate your message as to why
we may or may not need a so-called Bitcoin strategic Reserve which by the way is what El Salvador did in the US
what would that message be oh well bit Bitcoin is a highly speculative asset
that so do do do you want as your reserve a highly speculative asset with
zero fundamental value yes yes or no it's a it's a
rhetorical question I'm not really sure why to answer that I know you want me to
say no so I'm gonna say no let me interview you yeah I don't I
don't know what am I passing this exam here I don't know um I I I you you
haven't answered yet so I can't grade you this is my this is my rhetor to your
rhetorical question some people might say that dollar has no fundamental value either right I mean at least Bitcoin has
a has a cap of how many you can in theory mint there's no there's no cap on
the dollar you could print this there's no cap on the dollar but at least at least you can buy things with the dollar
and it is the international currency that everything is invoiced and priced in and and it's also the current the
currency that's on the the other half of over 90% of all the all the foreign
exchange transactions in the world so so it it has a it has a use
value it it might not have as they say a fundamental value because it's a fiat
currency you can't redeem it into gold it's not it's not a gold based or
commodity based currency like like most like all the all the international
currencies we had before 1971 by the way when the when the gold
window was closed all all of those had in principle a Redemption value you you
could redeem the currency for either in most cases either silver or gold so so
so they're all they're all Fiat in that sense but you have to be thinking in
terms of what about the use value what what's the use value of of Bitcoin well
it's not very useable I mean the criminals use the thing they're they're
about the only ones to use it all right well great talk I want to end on this uh uh this article here U maybe I'll just
Banks' operational risks
get a quick comment here uh Bloomberg article a key us regulator has privately found out half of major banks at
overseas have an inadequate grasp of a broad swath of potential risks from cyber attacks to employee blunders
according to people familiar with the matter in the confidential assessments the office of the controller of the currency said 11 of the 22 large banks
that supervises have quote unquote insufficient or weak management of
socaled operational risk I I it doesn't really go into too much more detail than
that that that Rings true to me okay let me tell let me tell you what
the Bas is for that it's a small sample I haven't I haven't done an audit like
this what you're quoting from as a controller I guess the controller supposedly has done on audit or
evaluation and so forth but I as you know as a professor of course I I I
profess and I train quite a few students who go to Wall Street top investment
Banks and so forth and I spoke to one of my former students who's who's been on
Wall Street now for five or six years top top firm top student top top young
man and and he he literally told me that about half the
Analyst at the top firm where he was are are
clueless don't know what they're doing so so just just based on kind of
getting a sense of what's going on and the intelligence I get from my students
who actually know what they're doing by the way they know what they're doing they've been properly trained and they
they all do quite well the feedback I get is pretty consistent with what I
just told you that the a lot of a lot of the young people really just just don't
have their suspenders on they they really don't know what they're doing so
so if that's the case would you think that risk management at the banks is under control I mean that that does that
does raise a question as to whether or not there needs to be either more oversight from The Regulators or perhaps
tighter Capital controls I don't I don't you know do you have any thoughts as to well I it is it isn't the controls we
have all the controls and monitoring and and everything you you have to have good
people running these things we we're talking about risk
management you know that that's a fairly complicated subject and uh and
and by the way I I know about this is because one
one of my former students for many many moons ago is a as a top risk management
man at at at a huge International Bank and he does know what he's doing but
he's had lots of experiences a Trader and everything else so so that
bank which I won't name is probably in pretty good shape I don't think it's one of the ones where they have a problem
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