I am delighted to have the privilege of introducing today's speaker. Jerry Corrigan was president of the Federal Reserve Bank of New York. Now Jerry you certainly very well known to most people in this community because he was president of the Minneapolis Federal Reserve Bank for four and a half years before his appointment in New York Jerry's career with the FED began in 1968 when he joined the domestic research division of the New York fed. After serving in various capacities, he was named vice president in 1976 and subsequently had responsibility for such diverse areas as the secretary's office planning and domestic open market operations. In August 1979. You left the New York Bank to become Special Assistant to Federal Reserve board chairman Paul volcker. Jerry was named president of the Minneapolis fed in August 1980 and then president of the New York fed in January of 1985. As president of the New York fed. Jerry is a permanent member of the Federal Open Market Committee and was recently named its chairman a position which is traditionally held by the president of the New York fed. Jerry is well recognized as one of the foremost experts around on the structure of this country's Financial Services industry and just a few months ago. He authored a major study titled Financial Market structure a longer View. It is a comprehensive look at the future structure of the financial system and its Associated official supervisory mechanisms, and it's an excellent paper and I commend it to all of you is very very informative. Now when we made arrangements to have Jerry come out here to address the Minnesota meeting several months ago little did we know that at this particular time in the financial markets of the country and of the world would be in a state of turmoil and the Jerry being one of the key people in the central bank would be able to tell us exactly what is happening and what is going to happen. So I think we all very much. Look forward to Jerry's remarks. I would remind you before getting Jerry up here at the podium that he has agreed to have a question and answer period following his comments. There are three by five cards at each of your tables. Please make note of your questions as Jerry is talking and then we will make arrangements to get those questions up to him after the after the comments. So without further Ado, please join me in welcoming Jerry, Corrigan. Thank you very much. Pete. Good afternoon. Ladies and gentlemen, actually Pete's comment about his having invited me to appear here today several months ago is one of one of the occupational hazards that go with my job. As a matter of fact, you may not know it but over the ensuing several months since the invitation your staff or the staff of the Minnesota meetings operation and several occasions called my office to ask what the title of my speech was going to be and I gave them the same answer. I always give remarks because I find it useful to keep my options open in terms of what I will in fact choose to speak about at a given point in time, but be that as it may again Pete. Thank you very much. Let me just say at the outset. What a great personal pleasure. It is for me to be back here in the Twin Cities among so many old and good friends. I think many of you know, that during the four and a half years they lived and worked here. I developed a lasting pain ship for the area and I'm particularly happy to say that from my perspective at least many of the friendships that I developed here in the Twin Cities area and indeed around the entire night Federal Reserve District have been maintained and yes, I do have to get back from time to time for a little of my favorite recreational activity fishing. But the purpose of my visit today is a more serious one. And that I want to discuss with you. The changing role of the United States in the world economy. That's kind of a large agenda. But I find at least that in looking at the world economy today. It is analytically convenient. Although not wholly realistic to think of it in three pieces. United States the other industrialized countries and the developing world with some particular emphasis, of course and the debt-ridden countries in Latin America. Our snapshot of each of these segments of the world economy while subject to obvious limitations is revealing the United States economy is growing at a modest if uneven rate. unemployment is at moderate levels and trending slightly lower as job creation outside of manufacturing remains fairly robust inflation is subdued but certainly by no means Norm that part of the snapshot is reasonably satisfactory particularly, since we are now well into the fifth year of the economic expansion that began in 1982. But as we all know the remainder of the picture is troublesome. Our budget deficit while improving somewhat this year remains large relative to G&P for the specially large relative to our net domestic savings. And our trade and current account deficits of enormous proportions by any standard absolute or relative. reflecting the cumulative weight of those external deficits the United States and well less than a decade has gone from the largest net creditor nation in the world to be its largest net debtor. Indeed. It is now a virtual certainty that by the end of the decade our net external indebtedness as a nation will exceed 1/2 trillion dollars. By now, I believe it is widely accepted that the external dimensions of our current situation are unsustainable. If for no other reason than the inevitability of reaching a point for the rest of the world will not be willing to continue to accumulate dollar-denominated assets at interest rates and exchange rates that would otherwise be compatible with growth and stability here and elsewhere. That of course is simply another way of saying that even the United States as big as rich and as powerful as it is is subject to an external Financial constraint. That constraint may be well down the road, but surely it is there. In a nutshell there for the problem facing the United States is that we have been consuming more than we produce and borrowing more than we save. Common Sense tells us that such a condition is neither healthy nor sustainable. Turning to the second element the other industrialized countries with some particular emphasis on the most important Germany in Japan. The current situation can be briefly described as follows. Growth especially growth in domestic demand is at best sluggish. Unemployment is typically high and absolute or historic terms. Net job creation is slow and hesitant. And especially in Germany and Japan external trade and current account surpluses are very sizable. Finally, once again, especially in Germany and Japan net domestic savings relative to G&P a relative to their own domestic budgetary deficits are much larger than our savings here in the United States. These circumstances Japan in particular is now Far and Away the world's largest net creditor nation and it stays in that regard will continue to grow for the foreseeable future. The point should also be made that for a few of the newly industrialized countries. The external situation is quite similar to that of Japan. Taiwan is the most dramatic example and that it has now accumulated official reserves of more than 50 billion dollars the level which exceeds by a fair margin the official reserves of Saudi Arabia at the Apex of oil prices and the early 1980s. Abstracting from differences in particular countries. However The picture in the industrialized World outside of the u.s. Is there for the mirror image of the situation in the US? Those countries have been producing more than they consume and saving more than a borrower. Completing the cycle United States in turn has been consuming a sizable fraction of those countries excess production and absorbing too much of their excess savings. In the developing World, especially the debt-ridden countries of Latin America still another picture emerges. Growth, even where it has re-emerged as well short of historic norms for those countries and today's per capita income levels are often below levels achieved in the early 1980s. Unemployment and poverty are widespread and sizable fractions of trade surpluses are being absorbed by the servicing burdens of their external debt. And these circumstances political and economic pressures mount. Especially in a setting in which some of these countries are seeking to cope with the debt crisis as they simultaneously try to establish and nurture Democratic political institutions. Now what other situation in these developing countries is difficult indeed. It is simply wrong to suggest that some do that. They have not made me for progress in the so-called adjustment process. Or conditions obviously vary from country to Country the facts of the matter are that these countries have made and are making important strides in reducing or containing current account deficits. Following were realistic interest rate and exchange rate policies. Liberalizing trade and investment policies providing a larger role for private initiative and in reducing budgetary deficits. In fact, some of these countries have been more successful than the United States in coping with their budgetary deficit problems. I want citing the progress that has been made in the developing countries began, especially in Latin America. I am more than sensitive to the formidable tasks that lie ahead more indeed much more remains to be done. But the challenges of the future or the failures of the past should divert our attention from the fact that important progress has been made and it has been made in the most difficult of Economic and political circumstances. It is also true that the debt problems of the developing world still pose risks, not merely to the debtor countries and to their creditor Banks, but also to the world economy and the International Financial system. Thus any effort to forge orderly solutions to the imbalances between the United States and the rest of the world must also take account of how such efforts will complicate or compliment simultaneous efforts to deal with debt and related problems in the developing world. among other things this means as a matter of simple arithmetic that the trade deficit of the United States cannot be materially reduced at the expense of the trade surpluses of the old he sees However, since our trade deficit with Latin America is currently less than ten percent of our overall trade deficit that condition should not pose a major problem in that broader context. I'll taking those admittedly simplistic snapshots of the three segments of the world economy. And superimposing them and each other reveals an overall picture of the highly interdependent World economy. Indeed the nature of the interdependencies are such that no Nation large or small developed or developing can afford to go It Alone. It is also true that none of the current problems here in the US or elsewhere can be solved in the full meaning of that word in a year or two. Thus what is needed now. So all through the trajectories such that we begin to move in directions that are compatible with the longer-term goals of balanced and stable growth in the world economy. Now there are no easy answers obviously as to the precise conditions that can produce those results but there are several necessary conditions which in my judgment must be met if we were to reach that gold keeping in mind, of course. Necessary conditions are not always sufficient conditions. Those necessary conditions include at the very least the following. First the United States domestic savings Gap Must In Time be eliminated. That is we must get rid of the difference between the net demand for savings stemming from the need to finance private investment and the government deficit on the one hand and the net supply of domestic savings on the other. That domestic savings Gap can only be eliminated by virtue of a higher savings rate a lower rate of private investment or a reduction in the budgetary deficit. Since a decisive rise in the savings rate does not seem to be in sight and since private investment is if anything too low already. Eliminating the budget deficit over a period of several years is obviously the only way to go. And winding down that domestic savings Gap is the only vehicle that can provide the financial room within which the external trade and current account deficits can also be face down in an orderly way. as a related matter It should also be stressed that a reduction in u.s. Claims on the world supply of savings, but also be compatible with the goal of free up relatively more of those savings for other purposes including development in the third world. second reverse the pattern of consuming more than it produces. They must in other words except for a period of time a slower rise in our standard of living. As more of what we produce is exported and less of what we consume is produced elsewhere in the world. Here too. There is simply no other way in which are external imbalances can be addressed in an orderly way. To put it in more technical terms. We as a nation must go through a period of several years in which the growth in domestic demand is slower than the growth of our GNP. third The large industrial countries must also adjust and that they in turn will have to consume more than they produce or in other words their relative standard of living must increase at a somewhat more rapid rate. A prospect I might add that should not be altogether unappealing to these countries. Once again, that is the only way that their trade surpluses can shrink in a context in which domestic demand Rises faster than G&P even as overall growth is maintained. In the developing World those countries must have growth rates are in line with the 5% plus rates. They have experienced in the past and they must maintain good sized trade surpluses even as both exports and imports rise. However, quite clearly if the LDC Czar to have growth they must have growing export markets and they must have external financier. They did the development process by its very essence must be accompanied by external Finance. Finally, we and others must avoid a rust to protectionism. protectionism a will produce adjustment But that result will come in a framework of contraction. What we need and what we can achieve is adjustment in a context of growth. That among other things also means that we have to achieve a still higher level of international cooperation and economic policy. Besides these five necessary conditions for sustained and balanced growth. There is another point that needs to be stressed. Namely that as this process unfolds. We must avoid a rekindling of inflation especially here in the United States. Well that can be a formidable task in a setting in which we know import prices must rise as part of the larger adjustment process. But however formidable the task. Maybe there is no doubt in my mind that A Renewed up. First of inflation would soon give rise to increases in nominal if not real interest rates that would compromise prospects on virtually all fronts. Seeking to inflate our problems away will not work. Indeed even today many of the most difficult problems. We Face are in important respects the legacy of our earlier experiences with inflation. Now as I said earlier a full measure of adjustment along the line suggested will take time. The immediate task is to get on the right trajectory. We therefore conclude by making a few comments by way of a scorecard as to where we stand in that effort. this year to start with United States budget deficit will come down by something like forty billion dollars give or take which is almost one percent of GNP. That is impressive indeed. But it good part of the reduction stems from one-time savings some of which might be viewed as gimmicks by the Skeptics. But the current year reductions are in relative terms the easier part of the job and that further important reductions will have to be made for several years running. However, the national consensus that seems to exist that the deficit must come down. I for one believe it can and will. second point on the scoreboard our trade deficit appears to have stabilized and maybe showing some slight Improvement. Although the poor quality of the data make it hard to be sure. We are reasonably sure. However that in real or volume terms the trade deficit has improved. Even though the continued strength of imports together with the so-called j-curve effects of postponed clear signs of gains in nominal terms. Unfortunately in terms of our external financing requirements the normal quantities are what count The other industrialized countries including Japan and Germany growth of domestic demand has been running a bit ahead of the growth of GNP over the past year. That's the good news. The bad news is that the growth in both domestic demand and G&P as at least for the moment slowed and is now running. It rates short of earlier expectations and also short of non-inflationary growth potential. This raises the question as to whether greater stimulus may be needed in that setting. And as a related measure questions also arise about the policy stance in those newly industrialized countries that have very very large external surpluses. The developing world as I said earlier growth has picked up some what although there are very large differences from country to Country. Debt Service ratios while still very high have also improved somewhat in some cases. However growth rates for these countries as a group are well short of what is needed to materially increase living standards and reduce debt and Debt Service burdens to more satisfactory and sustainable levels. Especially when it is remembered that a necessary ingredient to growth itself. Is an orderly flow of external Finance including financing from the world community of commercial Banks? finally insofar as International economic cooperation is concerned. There is also some progress, although as I said earlier the Dark Cloud of protectionism Looms on the horizon. The G5 and the G7 have produced some constructive initiatives and certainly have helped the bill a better framework of mutual understanding of both problems and Prospects. The progress that has been made and that multilateral environment and framework should not be minimized. But by the same token either should the tasks that lie ahead. Summarize relative to those necessary conditions I Source cited earlier. I admittedly over simplified scorecard would suggest that there are signs that events May Be beginning to unfold in the right direction. Even if evidence of decisive momentum is not yet in here. And even if the evidence were entirely convincing the fact remains that the adjustment path will be long and difficult and will require appropriately support of policies along the way. It looking at those tasks that lie ahead. We also must keep our perspective including keeping in mind that there are no quick fixes. Protectionism will not solve the u.s. External imbalances in an orderly way. Nor will they continuously depreciating dollar exchange rate provide a solution? In that regard, I am agnostic as to what might constitute a reasonable exchange rate over the longer haul but I am convinced that in the immediate setting a further fall in the dollar would be counterproductive. It would postpone growth prospects the brought inhibited Capital flows into the US and place still greater pressures and interest rates and the price level in the US. To say nothing of adding more uncertainties to an already uncertain environment. As chairman volcker said recently enough's enough. Well, I cannot be sure as to what pattern of exchange rates would be consistent with that longer-term goal of balanced growth in the world economy. I am quite confident that the essential ingredients to success lie in the areas of initiative. I have mentioned. I am equally sure. That if we in the United States expect others to live up to their responsibilities, we must live up to ours. That is the essence of cooperation. More rapid growth and more open markets in the industrialized World outside of the US are needed. As our continued structural adjustment growth and external Finance in the old EC's. but those efforts even if designed and executed with textbook Precision will not carry the day unless we in the US do our part. That means restraint and discipline that are monetary and financial affairs and our fiscal Affairs as well. And it also means that we must get on with the task of restoring underlying external competitiveness, especially in our manufacturing sector. None of this will be easy for us and for our partners in the world community of Nations. but if nothing else the Alternatives should Spurs on I for one believe that we can and will prevail and with my colleagues at on Marquette Avenue and elsewhere in the Federal Reserve. Look forward to doing our part in helping to ensure that favorable outcome. Thank you very much. Thank you, Jerry. Now we will move into the question and answer period In order to provide the opportunity for a more questions. We're going to try a new format today and what that is going to be is. Dr. Stephen young who is Dean of the Hamline University law school is going to be has a radio microphone in his hands going to be roaming through the audience and it's your beck and call he will relay your question to mr. Corrigan. So Jerry Steve, I'm going to turn the program over to you and see if you can get some questions going. Thank you very much Pete. I see a quick hand over here. What I would like to do to get this rolling with with our very distinguished guest. Mr. Corrigan is to pick on a few individuals of unsuspectingly at first also, Jane Moran check the executive director of the Minnesota meeting will be on the side of the room where I am not and what I like to do, I think we have a table of Bankers over here and who some of whom undoubtedly have written down some questions and after says there was a revolt Here at the reserve table for the bankers who has a question for mr. Kerrigan. Seeing a typical modesty of Bankers. I will move on to a hand over here. Richard I like to ask how you feel about the recent tax reform act affecting our long-term savings rate here in the United States and second question if you would your opinion on going back to a gold standard. Let me take the last question first going back to the gold standard my simple answer as to what I think of it as not much. There is a point of view that has to be kept in mind when we talk about gold standards or commodity standards or any of the many ideas that float around bearing on reform of the international monetary mechanism. I certainly think there are opportunities for reform but there are no as I like to say black boxes. The truth of the matter is that if if we follow sound and sensible economic policies in the underlying sense, we don't need the gold standard or any other standard. But by the same token if we fail to follow sound underlying economic policies the gold standard won't work. It will be abandoned just as it was before so in that most fundamental sense, the gold standard is something of a straw man. There is no monetary mechanism goal or otherwise that can outmuscle bad economic policies as to your first question, which I forgot the impact of the tax reform Act tax reform the tax reform act I find At this juncture frankly hard to make a judgment. It is so complex and I do think that it'll take a little time to see how all the interactions that it generates shake out. There are on the surface any number of aspects of it that strike me is quite sensible indeed, but I I'm not going to pretend that I have that degree of Clairvoyance to have a bottom line Judgment at this point. I don't I think one of the things that we've got to be careful of with they tax reform effort is truly comprehensive. As this one was is that actions produce reactions? For example, one of the key features of the legislative effort laudable feature indeed was that it should be revenue-neutral and indeed. That's how it's been designed with great effort. But even that assumption I'm not sure we can be confident will be realized because the changes themselves induced changes in patterns of behavior. For example, if you as as we have you maintained the federal deductibility of state and local income taxes, but eliminate the deductibility of sales taxes, you obviously create a very large incentives for state and local governments to shift from sales taxes income taxes leaving aside what you may think of that from a political or economic point of view. The incentive is very powerful and to the extent that occurs the Assumption about neutrality is to some extent up for grabs. So whether it's in terms of that kind of question or The specific question you raised. They I'd like to tell you that there was some great Insight that I can bring to bear but I can't think we're going to have to feel our way through that a little bit. Thank you. Have a question here. In view of the huge World supply of dollars, how can the central bank's even if working together succeed in slowing or stopping the falling value of the dollar? I don't think the World supply of dollars as you use the term is at the heart of the problem the supply of dollars today is not dramatically different than it was in early 1985 a 1984 when the dollar Mark weight was 314. The dollar yen rate was 270. So it's pretty hard to accept the hypothesis that that's the core of the problem when a few short relatively short months ago. We had essentially the same condition but a very different exchange rate environment. It is true that the integration and globalization all the rest of it of financial markets including The euro currency in euro dollar markets do present some fresh challenges in so far as the conduct Pursuit and conduct of monetary policy is concerned, but I don't think it's at the heart of the exchange situation at all. Those are two separate issues. We have a question from back here and thank you. My question is firstly a statement and it's held by many that the feds use of open market operations is constrained by Divergent objectives in its domestic and international spheres. How can the US interest rate levels be raised to attract foreign Holdings of us financial instruments without putting undue pressure on foreign debtors Debt Service. That's question. Number one. I think when we take one to a customer today. As I indicated in room my remarks and you just put it in a slightly different context. Hello world of policymaking whether its monetary policy or the policy running your own business. Whatever that is is full of competing or potentially competing objectives that is in the nature of things and I think that the essence of good policy as with the essence of good business is making informed careful judgments as to where the relative priorities many lives. I don't see that there's anything inherently different about that as far as the particular question part of my answer lies in my comment about the exchange rate. I as I said, I think a further fall in the exchange rate at this juncture would be counterproductive. Partly for the reasons. You've you've articulated. It's by no means clear how it what the precise relationship would be either in the short run or the long run between some given level of the exchange rate and a level of interest rates in the US or elsewhere. None of these things are quite that precise. I think it's clear enough where the risks lie and precisely because it's clear enough where the risks lie that I think we should be moving and as I've suggested I think our I don't think we're going to have For the foreseeable future the liberty of a nice neat little world where there aren't potentially competing objectives to be wrestled with. We have question here. I'm your Vantage Point. What do you think is the likelihood of mr. Volker being reappointed? And if you end do you have any other ideas on who else might be under consideration for nomination? I have nothing whatsoever to say. Oh, that's such a dick. either part of it If I'm a ad-lib that we've just had a masterful presentation today of sober and sound and thoughtful analysis. I don't think there's a major piece of the economic puzzle that we have not heard of the last 30 minutes. And I for one am quite impressed question here. Is it possible that a certain amount of protection limit protectionism is a necessary evil in our part in order to evoke a more reasonable response from some of our trading partners. I am so allergic to that word that I will not even answer the question in quite the way it state if the question were stated in terms of should we be making maximum efforts in the direction of encouraging other countries to open their markets to our exports and so on my answer would be yes. I think that is necessary. I think. I didn't quite say this in my remarks, but let me make it explicit. If you look out over again the next couple of years and you kind of say to yourself. Where is the Improvement in the US trade situation going to come from in terms of products in terms of countries in terms of exports or Imports couple things I think are pretty clear to me. Why is as I said in my remarks, it can't come and portent lie with the ldcs. It's got there for to come in a major way with the industrialized countries and some of those newly industrialized countries. It's not going to come at least from what one can see right now in material ways from Rock Commodities whether agriculture otherwise because again, at least as far as I can say, we are looking at a situation on a worldwide basis where the pressures there seem to be on the supply side not the van side that could change of course, but right now that's how I would judge it. And again in terms of imports or exports obviously, I do expect they'll be some adjustment on the Imports Imports into the United States. But arithmetic Ali I think the weight of the adjustment must come from growth and our exports that's where the money lies now, I'm not so sure that we as a nation are really all that anxious. To have a flow of imports in the United States are curtailed in a decisive way. I made a comment Pete you recall earlier this morning every now and then I am struck with a bit of a conflict and that you get the feeling of times that perhaps some of those who speak in terms of protectionism. If you look in there their driveway or their family room, you get the feeling that they're microeconomics and macroeconomics aren't quite as been sync with each other. So so I think again the bottom line is a major part of the Improvement is going to have to come a manufactured goods and have to take the form exports and indeed. It's going to have to take the form of exports. Into the industrialized side of the world all of that to me says that in the trade negotiation side of which I know virtually nothing the emphasis in my view should lie our efforts to try and get more open markets in our major trading partners countries. Thank you. We have a question from back here Bill Jerry some few months ago. You published a white paper dealing with means of trying to strengthen the Banking and Financial system. I wonder if you could make a few comments on on that paper and what the results are likely to be either independently by the fed or through legislation. rather papers I'm tempted to start off by saying there was a blue paper right away paper just because of the cover the color of its cover someone else suggested to me that the cover-ups tracting from the message. There was a title that was on it look like one of those things you used to take your exams in. Not quite sure what they had in mind with that comment, but be that as it may that's a tough one deal with even in a in a couple of minutes. Let me just say two or three things very quickly first. What prompted me to write that piece? wer a couple of things not the least of which is this concern that I have that this kind of pell-mell rushed to reshape the system through loophole exploitation and all the rest of it runs in my my view a clear risk of ending up with a system that nobody really is going to be very happy with and may not be sufficiently sensitive to what I view as legitimate public policy considerations surrounding the operation of the Banking and Financial system. One of the things that was kind of fun for me. During the research for that essay. Is that early on it? There's a quote from Adam Smith In The Wealth of Nations the libertarian economic treaties ever written and in that quote Adam Smith and affects us. We've got a regulated banking system. I guess part of my attitude is if it's good enough for Adam Smith's good enough for me. But I do think that aside from that again some of the things we're talking about here the globalization and internationalization the changing character of our financial markets and institutions seem to me to cry out for underlying structural Progressive reform reform that is aimed at two basic things first trying to better rationalize the competitive realities of both the domestic and international marketplace, but second trying to do what we can to strengthen the system in terms of its capacity to deal with systemic type problems. The particular set of proposals that I've made are very very complex. There's no point in trying to go into them in any great detail, but one of the things that they say is that this is germane to this point about strengthening the system. That of all the freedoms that are contemplated by today's environment. We've got a little leave room for the ultimate Freedom. That's the freedom to fail. And that's where these considerations bearing on the strength of the system become important. So it's a question of trying to strike a balance again between somewhat competing goals. I obviously think that it is a reasonable shot in that direction. I've stressed time and time again that my purpose was to try to stimulate and Elevate the debate rather than to lay out a specific legislative or regulatory roadmap. Although is the second part of your question indicates it obviously has implications in the legislative Arena. I don't know what'll happen there. we have some legislation winding its way through the side that has some useful features, but it does not get at any way any material way the underlying structural fundamental problems. One of the things that it does do is it calls for presidential commission? To take up that those larger issues and report back to the Congress in four months. I was you know, we have a kind of a mixed bag with presidential commission. Some of them have worked very well some of that some of worked exceedingly well such as the Greenspan Commission on Social Security But who knows? Maybe maybe just maybe that'll be the Catalyst the hip the handle the permits this debate to get onto the big picture rather than a little picture. It's again. It's another one of these problems perspective. We seem to have quite an extraordinary capacity. To be looking at things. Through a through a microscope when we ought to be using the telescope. And I think that that point lies in this particular area, but it applies in some others as well. Thank you one one question over here and then we have one here. Should we place less emphasis on the income tax as a source of Revenue and window of attacks or something like that again? I don't want to see my unresponsive, but I don't consider myself to be a great expert on. taxation so I don't have a strong view one way or another just because I don't think I know enough to have a strong view or where the other one question. You know, I think one question over there. Where would you cut federal spending to significantly reduce the federal deficit again? I am going to cop out on that one too. That that judgment is one that rightly has to be made in a political environment. Central Bankers are notoriously apolitical