So Larry we got those CPI numbers out they came in just about as bad as ever it expected they would. Let me ask you what you
think. Do you think we're peaking in inflation now. Because some people think this is about the peak. I think we're probably
peaking for the next several months. There was a huge component from gasoline this month that I don't think will be repeated in
the next several because of the base year effects. I think the number is going to come down whether we're peaking indefinitely.
I'm not at all. I'm not certain that that's going to happen. It'll depend on lock. And it will also depend on the decisions
that the Federal Reserve makes. And when the questions are sticky it's going to be there's this trimmed mean way of getting
inflation which is now up at 6 percent. It's the longest in history since 1980.
For what do you make of that. Look there's been an effort as there always is when you have inflation to dismiss it as due to
specific or temporary factors. That is much more wrong than right.
You can see it when you take out all the extreme observations in both directions. Is that calculation does.
You can see it as I've emphasized by looking at the wage wages which are the ultimate source of costs in the economy. We've got
a pretty fundamental inflation problem in our country. You know David I saw something recently that brought this home to me.
People think of us as having had 13 14 percent inflation in the 1970s but that's only because of the way it was calculated then.
If you use the same way we calculate inflation now it got just above 10 percent in the 1970s. So getting to eight and a half
we're actually closer to being back there than I think most people realize. So given that and that's a really interesting
fact I must say I did not know that. Given that what should the Fed's realistic goal be right now. I mean they cannot get it
back to 2 percent by next month. Goodness knows. No. Look I think we need to go back to the old idea of price stability as
being when people are thinking about inflation as part of regular economic calculations. And we need to move away from the
detailed fixation with numerical targets which it seems to me has led us to unhealthy places. So I'd go back to a general
definition of price stability. But we are nowhere close to that right now. And I would worry
about the clamor of voices that are saying that you know 4 percent inflation could be okay or even that inflation above 3
could be okay. I think we need to be very determined to come way down from
where we are right now. Larry there was a Bank of America survey of fund managers out this week and the big headline was concerns
about stagflation. It's higher than it's been since certainly 2008 or so.
How concerned should we be about stagflation. I think it's the most likely place we're going to be if stagflation means rising
unemployment and still high inflation. I think that's the preponderant probability as to where we're
going to get over the last couple of years. As I've said over the next couple of years as I've said before on your show David
the painful fact that needs to inform our view is that we've never had a moment when unemployment was below 4. Inflation was
above 4. And we avoided recession for the next two subsequent two years. And right now unemployment's well below 4 and
inflation is well above 4. Lots of people say look the job market is so strong why would
anyone think we're going to have a recession. What the data show is that the lower unemployment is the more
likely it is that that's going to turn down in subsequent months.
So that was last week. Next week of course we had those meetings in Washington the IMF and the World Bank. In anticipation of
that it appears the secretary of Treasury Janet Yellen had a speech before the Atlantic Council this week in which she really
said we've got to decide which side we're on apparently pointing her fingers sort of at China saying you need to decide where
you're going to come out because of the conflict with Russia over Ukraine.
What about the use of International Economic and Monetary Forum to really address things like national security. Look there's
plenty we need to work out with respect to China. But let's start with the fact that the United States has now
committed no funds to international Covid. Relief efforts. Let's start with the fact that the United States is a massive laggard
with respect to climate change commitments because we haven't been able to pass anything through Congress. Let's start with
the fact that Russia is earning more export revenue than it was before the war and the ruble was stronger than it was because
our European allies are continuing to import oil on a substantial scale. I think we need to start in those places
before we go after China. I think Secretary Yellen has been enormously successful in her leadership on global tax issues
including bringing China into that regime. But the U.S. Congress isn't there. And I think that's a hugely important thing. I
think that we do need to address the Chinese in a strong way but we need to make a
decision as to whether the US strategy is to use international financial institutions as a strategy and a route to cooperating
with China in those spheres where cooperation remains possible or we need to conceptualise those institutions entirely as means
of containing disciplining and limiting China. We haven't really given entirely clear signals on that. I
think we should still be trying to take the former approach of using them as tools for engaging China. Finally I hope that
we're going to see in the next months a U.S. strategy that's clear and explicit towards the World Bank. It seems to me that
as climate change has loomed larger and larger as a problem as there has been a major pandemic
issue as the need for relief around the world has stepped up the bank has really not stepped up as a major player. And given that
the US is the largest shareholder and appoints the president. The U.S. has a responsibility at this point to energize the
bank. Okay. Let's have a two issue really rapid round here if we could. Number one Iran must. Now he said he wants to do a
hostile takeover. He announced it this week toward the end of the week of Twitter. What you make of that Twitter may be
practicing what it preaches in terms of being a source of news volatility and drama. This is going to be quite a story. Quite a
story indeed. And finally one issue in the news this week was you. And it's something that even us because there was this
piece by John CASSIDY in The New Yorker which really takes you on with your inflation predictions some which were made on this
program. In fact it quotes Wall Street week specifically. And one of the things it takes you to task is on this program back
in March of 2021. You said there's a one third one third one third chance one third of runaway inflation. One third wouldn't
happen because the Fed really clamped down hard and one third will muddle through. They think you were too vague. I'm not
sure. We thought you were vague at the time. But what's your response. I don't know for someone who is vague. I sure made a
lot of people in the administration mad with the force of my view. It's kind of remarkable that they're saying that I in that
piece that I had the numbers wrong given that they're the people who are forecasting 2 percent inflation and they're the people
who have the budget that said this year that the Treasury yields are not going to rise above 1 percent. Hey in the meantime think
of the administration anonymously is quoted actually taking a test saying you had overestimated the output. Look I think all
we need to do is look at is look at the numbers on inflation. And I sure hope that they're more optimistic
forecasts will turn out to be right. And look you'll all have a huge stake in their
success.