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>> hi everyone my great pleasure to introduce scott the founder and ceo chief investment officer of t-square group global and investment firm prior to served as chief investment officer it found that management held a number of roles the 1990s into thousands among them overseeing investments in europe. also the world of financeater bc philanthropist including his home state of south carolina. please join me in welcoming scott. scott even respected voice in financial markets for decades you've only recently started weighing in publicly on larger questions u.s. public at six the 2024 election what motivated you to start speaking out about the direction of american economic policy?

>> first, thanks to you, the manhattan institute for having me. when they invited me, just so you know we have heather mcdonnell we have christmas at okay you had mythos too. i don't need anymore. but it is a good question. i've always been politically interested in macro investing. you're always a politically adjacent because geopolitics, people ask me what is macro investing? i said we live at the edge of geopolitics, economics and gravity. eventually gravity wins. for a long time i have been analyzing political situations, economic situations i decided 2023, 2024 it was important for me too 2 come out from behind my desk. we are at a very unique moment

here. i would list three reaso■ns or three things i am focused on. one, just in the u.s. i am alarmed by the size of these deficits and spending. we do not have a tax problem we have a spending problem. i have never really seen anything quite -- we have never seen anything quite like this i am an economic historian for anyone who wants for better or r clinton johnson 57 this is really alarming in terms of six or 7% deficit during peace time peacetimeduring a non- recessio. i think the biden administration

is what they are doing. they are two very different choices for america. their central planning top down mindset it's the 60s and the 70s show revisited. i wast yale when james tobin was there, janet yeln advisor. i thought we had put all this on the scrap heap of history, but it is back. it is not working any better this time. i would argue probably worse. i think we are confronted with that choice.y view if you want to call biden, sometimes is called biden -itis. it's almost like an acute disease there. you do not know when it's going

to flare up. i made a particularly bad mood. [laughter] i think on the other side we see from trump won .0 it is not a strict adherence to reagan's principles.pr it's a 21st century adaptation and it really worked for everybody. i will bring that back to number three. igniting the private sector and the balance across all income distribution and capitol and labor growth that we had i thought washenomenal. that is number one. number two is an economic historian and someone who has been in markets for 40 years i

think i'm starting to look like it now. [laughter] we are also at a unique moment geopolitically i could see in the next few years we are going to have to have some kind of a global economic reordering. something on the equivalent or if you want to go back to the steel agreement there is a very good chance we are going to have that over the next four years. and i would like to be a part of it.t. i have studied this. it is a unique skill set. and three both of your most recent panelist said the

republican coalition is a new coalition. i am very dedicated and focused to make sure that keeps expanding and to make sure this new group who joins the party the policies are good for them. we retain those groups continue growing- , turn into majorities. two weeks ago here in d.c. the gentleman and i had a date with one or 50 or 200 block 200 blackentrepreneurs and it ws fascinating. many have always been republicans some have just switched. some art trump curious them to spend the day with these folks was solk enlightening. they feel as though they are not getting adequate representation in the republican party.

they are insulted by the donald trump went to jail that is white black people are voting for him. thesey people at this event are entrepreneurs. they are first generation and they are rich. they are franchise owners, they are car f dealers they are not y league graduates or senior vice president of fortune 500 companies this is main street. that's the natural progression y third reason for coming out to make sure that constituency gets bigger. >> fascinating. you've painted a pretty bleak picture abides economic agenda that he would say it look, my agenda has been a historicrerk success. inflation reduction act and the chips after spurring in the present acknowledges inflation challenge he would argue the worst is behind us.

let's drill in a bit about where you think a second biden term will take the country economically? because again with the president is saying is this is delivering -- mike is ultimately going toel be delivering wage growth. keeping with china and what have you. when you are looking ahead to another four years of president biden where you see the u.s. economy the end of d that? >> was set on one of the earlier panels is ease given weight so much money wire the program so unpopular? of the movie called the king maker she's on the bus three cap dollar bills she is super popular as a president of the philippines now. money can buy votes and love.■■ the thought happened this time. and to give my overview we have got this top down view and just

turning machine or anything you can turn the dial kinda back to jfk economic the economyig and too complex. on to a linear program we have gotten the linear result. global result is unemployment is low. investment is high. everyone is unhappy. the output is fine the non- linearity in the system means all the components are really not working that well. i've been quoted before sync i could make zimbabwe great again if i had a 7% deficit. one of the former panels we are

gettinout but more talk about the fed and putting on the brakes and the biden administration hitting the accelerator and grand prix racing is called two footeddriv. you hit the gas company hit the brakes and go around the corner. i think that is what is happening here. they're not going to forgive you for perfect youhink the inflation is transitory? they could come back roaring back it's always there it would re- accelerate. wit decline that i think has americans seething. my firm is not regular we do not try to predict particular

get the direction of travel. we get employment number y beat the heat has come up the jobs market but it's come off the jobs market in a bad way through unfettered immigration. that should not be a tool in the toolkit for getting down inflation. back to the question of why everyone is unhappy is could yof wage earners would have been depending on the number you want tor use 10, 15, 20 million new arrivals. but look at theseat policies wht i believe is a flawed macro machine they keep trying to make micro adjustments. they called the great inflation.

housing market takes off. then mortgage rates take off. and young people or old people are locked out of the housing■z market. we are going to announce 10,000h subsidy. all these irregularities and contortions in the system that are so s unhealthy. all the doing is pushing the housing market up more. the real problem in the housing market is going to come 12, 18 or 24 months because of new arrivals typically take 24 months tort forming households. so guess what there's going to be more competition for housing. i probably two and half million.

with the top down view you're getting slice after slice of the problems that all the micro levels. >> more housing insecurity and mayb even more homelessness in the streets of some american cities. then you could try to say, we will build more public housing but that's not a great track record. building on that many americans are itching for returns to lower interest rates that prevailed for most of the past 20 years. others believe ultra low rates of overstimulated the economy and badly distorted the market for risky assets. riwith the bank of canada europn central bank cutting the key policy rates just this week what do you expect from the fed over the coming months? what should the fed do question right now grabbing jay powell by the lapel and sake cut the policy right now is thein right step?

>> i think bank of canada can cut because the canadians and europeans exercise some level of fisc prudence. they are not two footed driving. er cycle. jay powell has been easy for whatever reason he felt compelled to ease the financial conditions last fall. after the meetings in november and december the statements or anti- dime and he walked out. in the press conference gave very guidance of rate cuts are coming. that a massive ease in financial conditions by doing that what happened? he pushed up the stock market which benefits the top 20%.

and then we are back to the bottom 50% who don't own assets, they have debt so rates have had to stay higher for longer. i h actually think he has hurt biden's chances byc growth, n preexilic economic growth when it could've been slowing and it could've been cuttingnk rates. but they are not. i would also it will not be a slow down and inflation that causes the race to get cuts it will be an economic wubble. sue said economic wubble, you mean this going to be maybe a quarter of negative growth or something like that? >> some kind of a slow down in the economy. thine an economic slowdown.

but the administration's log lovefor sleeves between now and november 5. november 6, november 7 everything is up for grabs for a policy one or 50 billion comere out from that covid employee retention checks those checks are going to conveniently starkly mailed out next month. fascinating producing student loan forgiveness and a in avariety of other measures designed to help the economy. >> back to the younger voters ha on president biden. een some of the numbers. under 35 cohort had been very, very attached to the democratic party and that is starting to move it. a big portion of that is housing. the other thing too is if you look at now philadelphia has been measuring credit card delinquency since 2012. we are at the highest rate of

delinquencies since they have been measuring. that is a primarily that lower 25% income group but the other group is very high at credit credit carddelinquency is 35 an. they don't have >> there is a stark difference to tax policy being proposed by former president donald trump and incumbent president joe biden. let's art biden. among other things the president's call for steep tax increases on corporate income and investment income. they insist this will leave lower middle income housing untouched. you talk about your concerns about deficit and debt. ready stand on biden's approach? and in particular tax increases these must focus on? >> come back to your initial wht from behind myy desk now? i viewed 2024 as a last chance to grow our way out of this problem. for more years of layering on this amount of debt

a permanent and maybe have to go to a higher taxation regime just all things in placen opportunity to grow our way out of this. i think biden's alerting on of debt i'm deeply cynical about this. it is spend, spend, spend. many assets maybe aren't productive. clearly they've gotten rid of scoring. you are replacing things that worked with things that work less well these could be stranded assets. now they are going to say we have done all this spending we've got to pay the piper i had a piece that came out yesterday it's part of the series they ask about 10 or 12 people in the international economy magazine

how do we restart americanyr productivity? my number when you do it through tax you keep high after-tax returns on capitol. raising capitol gains taxes or raising the taxes or the corporate taxes is just the wrong thing. it is the slight of hand when biden says he is not going to raise taxes on anyone making lef you're going to move capitol gains up to■psae that's going to apply to everybody. so i think this is just worse and worse. >> in the incidence of corporate taxes as well i presume that will have an impact on■ wages indirectly and directly. >> yes we saw an investment boom

in 18 , and the other thing to as the 2017 trump tax-cut a lot of because the investment expensess were inin those years of these e biden deficits are actually worse because it was a one 100% on day one. i just think this is a dynamism killer. some of these other ideas taxing unrealized capitol gains you tone it tax relays tax openings if you want to drive the venture capital industry offshore i could not come up with the a betterway to do that. i am on a foundation board. every three years to make us feel not very smart they take us up to silicon valley. on the last trip so we don't meet the fund managers we want to meet the entrepreneurs.

what was fascinating, six of eight entrepreneurs were not nativeborn americans. that is high and high class those people could all be in singapore. they could all be in israel. they could all be in abu dhabi we will drive that whole class offshore. >> you noted earlier on he saw the trump presidency as a shrewd adaptation of the reagan playbook for the 20th century. could you elaborate on that? you think about the ways in which he made selective departures the ways in which he did reaffirm ideas from the reagan playbook. talk to usla about the parallel. >> let's go back to where we were in 1980. reagan came in with high inflation the great malaise. and the soviet union. trump came in wasn't malaise

growth was kind of punk there was recovery posted gfci had not been strong. immediately for tax cuts. they both focused on the biggest external threat that reagan spent the soviet union into oblivion. i thinkio trump had a different idea for how to deal with china and makeup for bad trade the historical trade agreements. kind of push things forward. and i think that once aice and a great again it was a reaganesque

saying. it is an optimistic vision of america instead of managed decline which i would think biden 2.0 would be. but, i will say it's of the other panels were at this whoever wins has aandate. if joe mandate for central planning and things on the periphery and novel economic ideas or social poci economics. donald trump will have eight mandate for deregulation, closing the border and energy independence and projecting strength. both candidates will have a a mandate. >> going back to tax policy for a moment donald trump is calling for making the tax cuts and jobs asked permanent he's also

calling for a big across-the-boardnce in tariffs a policy critic c is self-defeating. is there a role for tariffs and a conservative economic policy agenda? >> let's go back to alexander hamilton. alexander hamilton release and n terrorts reasons. when you setting up the treasury there was no real revenue. tariffs up into world war i tariffs were the main source of revenue. he believed in tariffs to generate revenue and to protect u.s. industry. i would add a third reason for tariffs it is negotiating.iven n credibility and what he's done in the p past on tariffs we may not have to get to tariffs. but the threat of tariffs will change the quality and the

fairness of a lot of historically portrayed deals. president trump, are very focused on the trade deficit. they talk about a function of bad trade agreements. i think the tariffs are one way to remedy that. but i think anyone with an economics and background will also tell you the trade deficit comes from the budget deficit. and from that level of the currency. this interaction and the calculus betweenac the three. so i believe in a conservative agenda tariffs and to have a place. but i think it is part of the calculus of all of the tools in the toolkit.ne who might be

among the world's leading experts on currency fluctuations and how to think about them. so if you go back to the reaganr era you have the applause that you have a number of different projects theza and then it was up and down. >> talk to us a little bit about that. talk to us whether uc some kindy intervention as an important tool for the next presidential ministration pickwick settle think there has to be a large-scale currency intervention. what i think we have to have is to go back to the 80s and even the '90s there is a large-scale coordination between currency, between fiscal, between a monetary with the chinese. with these systems these excess rese accumulated.

the level of the excess reserves tells you that probably there is initial trade agreement is not right with the level of the currency is being suppressed. there is hidden subsidies. there is something wrong with these excess reserves. is there something else that could be done? could you say you are accumulating these excess reserves, you are moving out of treasury maybe we don't think that'sht a good idea. >> essentially the strength of the dollar right now is a product of interventions other states are undertaking including some adversaries are undertaking and we need to be more proactive? >> i think we are not thinking about it the way we used to. and again, it is back into this calculus. the other thing is when you are ruing these massive deficits

to generate the high inflationary level the biggest currency in the world. currency therel pickup in yield■ver the japanese yen of three or three and half percent. that is not sustainable or optimal i over the long-term. t we keep after coming back to china. howo think about the chinese currency? our research at my firm shows we think the chinese currency on any academic model is now undervalued.in they've done a big internal devaluation they cut labor, written down real estate very similar to what happened to the

europeans in 2011 and 2012. the currency is in three different equilibria. stat cheap. 99% of your citizens that they could take their money out they would.d. and then you have the 20% chance of foreign investors who would probably believe if i'm holding are and be 20% chance in three years i'm not getting my money back. i think the rn be something we have to investigate the relationship between that and the dollar. charles kindleberger is with a great currency thinkers of the 20th century. keynes gets a lot of credit branch and woods. i think kindleberger was a big part of that. at the time a between the

u.s. and sterling he called it the important pair. i think we've got to rethink the important the c and h. when you go to reserve currency status in the history of the world 76 reserve currencies. tell him that all the former reserve currencies have in common? a portable, spain, holland, france, uk. they were also security zones. ho lose reserve currency status? especially spain? they got highly leveraged and could no longer support their military. so when you tell me people in the biden administration's of course you want to keep reserve currency status. but their 10 year budget projection calls for fence. in a world that seemed if

anything defense spending needs to rise you cannot keep your reserve currency status if you lose the defense umbrella >> you are an admirer of the late chinese prime minister face of the stagnant economy and persistent deflation his agenda for economic revival consisted of three arrows. aggressive monetary policy, fiscal stimulus and structural reform. if you were advising let's say donald trump were he elected president what would you suggest as the three arrows for a successful presidency? >> i might even advise him to campaign on three arrows. 3% real economic growth, how do you get that? through deregulation, more u.s.

energy production, sling inflation and forward guidance on confidence people to make investments of the private sector can take over from the bloated government spending. two, i would urge him to make public his and desired the deficit down to 3% by the end of this term. he didn't get us to six or 7% deficit the average for under him. so get that down to three. and then 3 million more oil barrels equivalent i'd say frome u.s. energy production. that would be my three, three, three. that would substantially decrease the oilhe price which would bring inflation that's that someof the number-one drivf inflation expectations. then back to the fed they could

go into a proper cycle. >> us tky about deficit. you started off your remarks by just describing that's been a in the fray and getting into■e e public policy debate nationally with the federal deficit will lend somewhere between six 7% of gdp the primary deficit that is staggeringly high relative to your it is quite an outlier when you're looking other advanced market democracies. so, your time but getting the ■ deficit down to 3% overall. not just in the primary deficit down there. talk to us about a path that you consider politically realistic and credible? donald trump is a pragmatist he's not someone who wants to tank the economy but i don't think it would be closed to the ideas and fiscal consolidation might be appropriate. so when you are thinking about path of their what is that

look like? some kind of fiscal consolidation that is not something that's going to cause an enormous amount of economic pain. except as expert earlier point i think we are at the last chance for growing our way out of this. it has got to include that we reinstate 2017 tax cuts and job act i think we could tame the green new trillion over 10 yearn that i think there's probably something to do on medicaid in terms of empowering states to know cuts i think on discretionary spending we probably need to do a freeze except for defense.

i think the market will respond to that. i have been very outspoken. i knows with great pleasure in the past 48 hours that senator kennedy from louisiana senator hagerty from tennessee secretary yellen to task for shortening the u.s. debt maturity which has eased financial conditions people talk about politicizing the fedury has taken over the fed. as a former fed chair, she knew how to do it.[: i think there is a chance you could get into a good reflexive cyclee on debt cost. i think it has been imprudent to finance at the front end. every emerging market blow up i've ever seen starts the same way you end up with an asset bubble, sound familiar? that is driven by height deficit

in the highest deficit in an election year gets finance at the short and you called the threey problem. you are not supposed to see this in the u.s. to see it in turkey, you see it in argentina, you sit in so this year interest on the debt will be 1.1 trillion. >> more than the defense budget. i've an article coming out in the next few weeks. i was wri with congressman mike gallagher. he's going to the private sectorriv. i'm a big fan of the congressman. in it i said these high deficit. these high deficits are going to create a national defense problem. cicero had some quo le

limited finances holds or. the u.s. ability to leverage up during a conflict the treasury was able to expand the deficit. steven was talking about it earlier in terms of whether it's a covid crisis or war. u.s. treasury was able to save the country during the civil war by expanding the deficit. they were able to save the economic well-being of the country during the great depression by spending. they were able to save the world during world war ii. we have to get this down or we have no room to maneuver. having said all that it goes to 1.5 trillion mechanically if there are no interest rate

decreases this year. but, i think president trump with the right policy could a se on the downside. these entitlements are massive. i think the next four years is not the time to deal with them.e discretionary portion of the budget and get that under control. i always say crawl, walk, run. they've got to crawl, maybe a walk our way to get the current deficit under control. then the next step i administration to have the confidence to do with the entitlements. >> you spoke earlier on about the historical role of tariffs in protecting american industries and this notion of

tariffs being used for negotiating leverage. there is of course another way tariffs have been used in american history that's a source of revenue. and i wonder when the former president talks about the idea ofhe across-the-board tariffs, particularly in large tariffs on china and of course president biden has announced his own tariffs on chinese electric vehicles among other goods. do you see a role for tariffs as a revenue source? some folks are saying essentially this amountso a consumption tax on american houses if there is also geopolitical benefit to it, do you see that ass a credible or reasonable straty help achieve fiscal consolidation? >> yes. let's say there a 1 tariff, a long time some portion of that will normally it is two thirds of that.

now you are collecting 10% lift is six or 7% of it. rbut you are also using it as a geopolitical tool. i was jared bernstein was talking about biden policy. he is saying they do not like as it market failure. everything is a market failure. in the q&a a woman for a european think tank said you said the word seven times. you never tell us what it means to be a friend. in terms of tariffs, i think in terms of currencies, i think in

terms of bilateral trade agreements, i think in terms of security agreements, i think in terms of values, i think we should make it very clear there is a green, yellow, red bucket but we let everyone know where they are. >> here's what we ask of you. you can choose which bucket you want to be in. and here's what you get for being in the bucket. >> i believe we have time for a few questions from the audience. >> marketwatch. there's definitely aha view in e first trump presidency the tax cuts in spending are good for the financial health what makes you think calls himself the king

of debt. why do you think things will go better in the second presidency on that front? >> the view would be incorrect. it's fantastic for the country. working wages went up the tax collection level never went down. then we got covid things were going very, very well. did it work for that country absent debt to gdp would be going down from 22 onward. i think the jobs act ra home

run. across everything. it was fueled by private sector expansion. it was not fueled by the government spending. and, wait for, non- inflationary because the demand shock from the private sector was met with the deregulation as opposed to being met with construction through >> any other questions? >> i'm sorry. and then you will bect next. >> thank you. charlie from the daily mail. the back treatment several of these fundrai about possible trump victory are they

optimistic or pessimistic? and could you also give me an idea who they want to see is vice president? >> i have no particular expertise. i will work backwards of no particular expertise but i can tell you i think they would be happy with the list that leaked out yesterday. i think the wall street group would be very happy with that. the wall street group was always going toomack. what i find more interesting is the new venture capital cohort who is supporting president trump. as they say in las vegas, a new shooter. this is a completely new group. it's being socialized now and sn silicon valley it is okay to be

a republican. it's okay to support donald trump. i have found the comments on why he's coming unfavored, donald trump. a lot of it was anti- biden sentiment. whether it is the pervasive anti-semitism that a lot of these policies. there are two candidates now. there is a clear choice. >> i jumped the line there i guess. you mentioned you think to get real gdp according to most more than the previous not much administration.

where do you think 1.8 to three, is a pretty big jump. were you see the big difference coming from?>> i think the globs picking up. i think if you look got struck between trund biden if you look at the economic data for biden the big jump is in structures. which is the manufacturing. the mining, which is the energy industry is practically nil. i think we can do that. i think you can get sumer sentiment back. i think it can be exports. i think it could be very broad broad-based and i think a lot of

it driven i think just in the energy industry there could be a regulatory certainty that would happen. some of my clients are some of +■z the biggest private families who aree manufacturers in the u.s. i always ask them for at 1.0 what was more important the tax cut or deregulation? the tax cuts were nice but the regulatory certainty is what enabled us to do thehow up at tf the obama epa on friday. more ir you, the tax cuts or the deregulation? the tax cuts were nice but the regulatory certainty is what enabled us to do the massive

capx. we'd show up at the obama e.p.a. and ask, seeking some window guidance on our chemical facility, can we do this, what and they would be on site at the facility on monday. so i think it can be across the board. and look, i think once we can get inflation down, interest rates think we can have a proper housing boom. >> i hope you'll indulge me, a bit of a trial and also civil trial a lot of people come told that if you're a person that holds political conviction it's no longer very wise if you if particular someone who might reside in a deep blue, my broad orientation, that's a thought. i wonder how you think about that and when you speak to other

like-minded folks who are successful entrepreneurs, investors, people who want to enter the public life, are you getting that sense as well people have to migrate given the politicalen climate? >> i think the recent verdict is when the idea of being enemy of the state, state is in a state government has made it come thid previously it was tax rates, regulation, doing business, regulatory within state government, this migration from the blue states to the red states is, one of the largest migrations, kind of other than, the post civil war migration

thist. migration back to red states. i think there is a risk premium that's being created but does the risk premium get created on tax uncertainty? i will tell you, i have one investment in massachusetts and massachusetts put in a tax and level. tax above a certain massachusetts was my biggest tax bill last year and i have oneve. so im think this idea of econo; freedom, i really think it's make freedom. i don't think we degenerated to this idea that enemy of the state i hope we won't that i'm part of the republican party i'm

part of the republican party that is saying the best revenge isis just win on november 5th, let's -- let's that way. but it is alarming. it's alarming on both sides to see the breakdown and the federal systems whether it was during trump with sanctuary cities, we are not going to enforce the law and state of te have to enforce their own border, you know- join me in

thanking -- [applause] [inaudible conversations]

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>> and now with discussion strategic and international studies on the us south korea alliance with experts on managing relations between the two nations, they also discuss north korea's nuclear program and countering china, from washington, d.c. this is just under 2 hours. >> good afternoon,