what we do at al serra is tried to balance his story and he's the people who allow us into their lives, dignity and humanity. ah, hello, i'm darrin jordan and joe hall with a quick reminder other top stories here on al jazeera, a diplomatic pass out of the crisis, and ukraine appears to remain open despite an increase in fighting in the east and further reports of russian troop movements along the border president joe biden, and let him have 2 to have accepted in principle to hold a summit over ukraine. the format will be prepared by the foreign minister on thursday. shabba thompson reports now from washington d. c. we have reasonably, the russian forces are planning to attend to attack ukraine on friday. joe biden

stump, many of the u. s. as allies like categorically stating that love him a fusion, had made up his mind to invade ukraine in the coming days. and on sunday, the president convened a meeting of his national security council to discuss the situation ahead of that meeting. the us secretary of state reaffirmed that despite the president's announcement diplomacy was still an option until it settled until we know that the, the tanks are rolling plains are flying and the aggression has, has fully begun. we're going to do everything we kind of prevented, but we're prepared either way and we're prepared with a responsive, we'll have massive consequences for russia if it actually carries the through. lincoln said he hoped, a forthcoming meeting this week with his russian counterpart would address both preventing war and addressing mutual security concerns for the us, europe and russia in dollars. the russian and ukrainian i'm back to this to the u. s. were also on the sunday talk to circuit. i'm totally, anton, of denied any invasion of ukraine was planned. he said moscow's priority was the

implementation of the minster agreements, which was designed permanently to stop the war and ukraine east. by among other things, given the region some autonomy, united states, easy to stop such crisis. you have to dissuade a key to who you need agreement that phone ukraine ambassador said whether russia invaded or not. the country was already at war, but still held out the possibility of diplomatic solution. we call in, not only on the grass, which is russia, but also, and all of our friends and allies to get together and use every opportunity to still deter russia from invasion over the discussion as always, the u. s. as passed declarations in the run up to war. how confident are you given what's happened in the past with afghanistan with iraq? are you absolutely confident in the intelligence you're seeing now? we have high confidence and in, in the things that we're looking at, of course, you know, in terms of being able to predict exactly what's going to happen going for

jay, you know, you never came a friend to say that the summit agreed to in principle by the us and russia won't just be about ukraine, but about security and strategic stability in europe as a whole. the white house, as it was always committed to diplomacy as long as there. busy was no invasion but added as far as it was concerned, it was still seeing preparations for a russian assault very soon, but it's not specific. when the president was on friday, she advertised the al jazeera washington mino, bella ruth, says rushes extending its military deployment. there the decision is due to growing tension near the ukrainian border. around 30000 russian soldiers have been carrying out exercises in bella. ruth. australia is putting its borders up nearly 2 years to fully vaccinated tourists. visitors who are not double. john will need a travel exemption to enter and will have to contain the government close the

country off to the rest of the world. and march 2020 britons queen elizabeth tested positive for covered 19 buckingham palace, and the 95 year old monarch is experiencing most symptoms and will continue duties . talk survive. iran, nuclear de la, reportedly nearing a final agreement in vienna. but in tehran, 250 m p 's of demanded 6 conditions be met before any deal is signed. that include a guarantee from the us and european signatories. they will not pull out of any new deal. and the dominican republic has started building a new wall that will cover nearly half its border with haiti. resident lewis urbanatto hopes the construction will stop illegal migration, as well as drugs, weapons smuggling, about half a 1000000 people from haiti, or in the dominican republic. so those are the headlines and as continues here on out to 0 after the bottom line statement, that's watching bye for now. i

am steve clements and i have some questions. how did americans just get sucker punched with the highest rate of inflation in 40 years? when no one was looking, and if your cup of coffee now cost double what it used to, what are the consequences for joe biden? let's get to the bottom line. the, just about everyone in america can feel the pinch, the cost of everything is rising. whether it's essentially like food or gas and rent, or other things like travel and services in one year alone, the consumer price index attract inflation has gone up by $7.00 and a half percent. that's the biggest hike in 40 years. while president joe biden has caused the rising cost of living in america, he sure going to get blamed for it last year. his administration called at transitory but it turns out, inflation has some legs and it's gonna be around with us for

a while. there is no way around the fact that inflation got punches the quality of life for many americans and it breeds discontent. so what should he be doing? what are the forces behind the surgeon prices, and what can be done about things getting more expensive all the time, or is this just a new normal? today we're talking with jason firm and who was the top economic advisor to the white house under president brock. obama serving as the chairman of the council can amik advisors. he now teachers economic policy at harvard university, jason firm, and it's great to be with you today. i know that you understand inflation and it's writers better than anyone. but you know, let me just kind of put up some numbers here that we've just gotten from the u. s. department of labor boot up 7 and a half percent peanut butter is actually something joe mansion put out on his sweeter a 15 and a half percent. gas, 40 percent electricity, 10.7 percent cars, 40 percent. so we have a surge in a lot of these numbers in basic staples that, that people are interacting with. now, wealthy people can get by, but a lot of other people are going to be, you know, in, you know, struggling with all of this. can you give our readers and understanding of what

happened between last year and this year that has sent this, this, these prices surging levels that we're seeing? yes, steve, we're, we're really seeing inflation. at 1st. people thought it was a few specific things. oh, this is what's happening in cars. you know, this is what's happening with the price of something else. but as 2021 went on, those price increases broadened out and started as you just showed in that chart affecting everything. i'm an economist, so for me, everything is supply and demand. it's not supply or demand. in this case, the supply can't fully react. in part because of coven, we can't make as much as we'd like. and demand is sky high because we gave households a lot of money and kept interest rates very low. and the collision of those 2 has meant this once in a generation price increase. what with president trump before the bide ministration came in. we already had a lot of injection of money. we also had

a tax bill in 2017, that basically put a lot of money out there. so the, because the, the, you know that there's been a lot of money switching around the u. s. economy, have we overstimulated the economy and put ourselves in a bad position? no, i think we did too much. i'm glad we did a lot that. so don't get that wrong. the u. s. economy has recovered further and faster than most other major economies in the world. we've recovered much faster than we have in previous crises. the unemployment rate is relatively low right now . so big picture, i'm happy, fine tune that big picture. go back in time. you know, give people somewhat smaller checks, make the size of the whole thing a bit smaller probably would have done, you know, even better than we did. have we done that? you know, president biden gets a little irritable when somebody talks about inflation around him. he did this with a fox news reporter peter do see he also did with an end b, c journalist, very famous lester hole, where he basically go lesser such a wise guy on this. but isn't not in the purview of the president to make policy

choices that could affect the drivers of inflation. or is this just sort of out of his, you know, ability to operate because, you know, we, it's hard not to pay attention to present biden's mood going sour on this. yeah, i mean, 1st of all, i do think this is a legitimate concern that the american people have. i don't think this problem was invented by the media. i think if anything, the media are reflecting something that families across the country thing, it's tricky for the president because it actually, he doesn't have a lot of tools to bring down inflation. the agency that is the primary agency for dealing with inflation is the federal reserve. the president has been exactly right on them. he's treated them as independent and he's appointed excellent people, nominated excellent people to the fed. they need to be confirmed by the senate. so the main thing he should be doing on inflation is putting people on the fed and getting out of the way. and for the most part,

that's what he's done. but of course, when you're president and something goes wrong, you're always going to get more blame than you deserve. now, some years ago i interviewed former federal reserve chairman paul volcker, i think you were actually there in the same conference. and at this meeting, i asked former chairman bulk or what it was like to try and team inflation, where the prime rate went up to $21.00 and a half percent. and you had this period of time afterward that led to a big recession in 1980 to 82. and we got 10 percent unemployment. is that a pathway that we're going to see coming out of this? that rates has to go up, that you're going to have to have a wall on took to bring demand down, because supply is so limited. i mean, it is that one of the policy responses that you think is serious on the table because that would also be a shocker for a lot of people in this economy. yeah, the goal of the fed is and should be to avoid exactly that problem. and that's part of why you want the fed to do more up front, so they don't have to do

a huge amount later on. i mean, some of this is phrased as the hawks want this and the doves want that i think that's the wrong way to think about it. any one like myself who was calling on the fed to move earlier and to raise rates earlier, was basically saying if you don't do this, you might be in that same position is volker. when he had to tackle the inflation it had been building up for 15 years. now it's more like 9 months. so i, i think this is something we can still deal with it. it won't be anything like milker. but, you know, if you take that attitude news as an excuse to do nothing, that's when it'll become like the volker situation. you know, here in washington, we're already seeing people trying to scramble to come up with short term fixes. and so one of the items in the news right now is to reduce or get rid of, you know, for some holiday of a gas tax. i've seen you comment on this a bit. you know,

i've seen others like senator joe mansion say we're, you know, we're already gonna mess up the trust funds in the highway trust one, why mess them up more? is there a danger of running to quick fixes that end up undermining and hurting us in ways of over responding to inflation right now? yeah, i mean, gas prices are just the worst issue economically and politically because people hate it when gas prices go up. they blame the president and of all the prices in the economy. the one the president probably has the least influence over is gas prices. they're set in a global market. this is not much you can do. i'm, you always are trying to do things, release oil from the strategic petroleum reserve, for example, you know, gas tax holidays, another one of those. maybe it would lower prices by $0.12, maybe a month later, prices would have made up for all of that. and i'll be up even more so i think it's something that sounds good when you propose it. you actually did, it probably wouldn't be received that well. i hope they don't do it. but,

but i get that they're under tremendous political pressure through no fault to their own for the global oil price. you know, i know that these are problems are very complex and i read you and i know that i'm and ask a simple minded question though in this because it's something that's been lurking in that, you know, this may be a naive one on my part. but after watching a lot of the hostility towards immigration in the last administration and seeing, you know, the american population growth at its lowest level, you know, in a, you know, very, you know, in a number of generations. you know, you kind of wonder on one hand is, are a combination of, of folks not coming into america through immigration, however, they may come into the nation. and also looking at some of the trade brinkmann ship that we've had were america's come out of the, you know, trans pacific partnership deal that we have had to bring some ship with china. so may be some of those goods that were coming in that were perhaps undervalued or, or of a lease valued more cheaply than you can make an american academy is the combination

of those factors having in any impact on the cost we're seeing in the, in the surgeon, prices and inflation in the united states. yeah, steve, i think both immigration and trade are 2 things that we should be more open about. i would have thought that regardless of what the inflation rate was, i think that addressing both of them would help to some degree with the inflation as well. i look at the president and he's done a wide range of policies on the supply side related to ports and micro chips and all sorts of things. pretty much though, to lever is he hasn't pulled that. i think he could are trade in immigration. i don't think they'd make a huge quantitative difference on inflation, but they'd help and they're worth doing along with everything else is doing it. trade is one of the areas why haven't heard much that by administration. just as you said in just this week, the president just released a new strategy for the indo pacific and trade, as mentioned in there a few times. but when you kind of look at that and compare it to what the obama

administration was doing of the trans pacific partnership, and you ask yourself, okay, how is america going to lead more or benefit more than it did during that highly complex negotiated deal? is there something missing in the biden economic plan in terms of global economic engagement that we need to see if he's really going to begin addressing? now, not only the economic health of this country, but also to lead in the rest of the world. yes, if i'm always for more free trade not less. the truth is it's not a huge difference for the u. s. economy right now, t p p would have been a very good thing. i was for it. i'm at what did that a lot more for growth at the united states, joined it for vietnam and malaysia than it would for the united states. be a small positive for us, but only a small one because we're. busy already pretty open to trade. so i think at this stage when you look at something like t p p, i know i, i'd, i'd ask

a bunch of geopolitical questions that you're far better equipped to answer than i would, you know, what does it do for the united states because of a china for other countries, these of each i and i think there probably is a strong geopolitical argument for it and as a decent economic argument, but not so huge that you know, i find myself pulling my hair out of no one listened to me about it. what do you think about the other side of this? because when president biden has been asked about inflation, his natural, a deflection is to semiconductors. and so we've heard about an intel plant to put in a $20000000000.00 production facility into ohio. that's going to take a long time and you know, you can't, you know, invent that overnight. but he's talked about semiconductors as being a driver of, of the price of cars. but it just seems simple to me. can you tell us where the president is right without explanation and what the limits of explanation are yet semiconductors. just as phenomenal shortage that's emerged,

it spreads itself throughout the economy, especially in cars. cars are disproportionately contributed to inflation, so the presence absolutely right about that. the main solution to it though is the law of supply and demand that micro ships go up in price. more businesses come in to make them, and i don't know, maybe the policy response is helping speed that a little bit. but i can't imagine it's helping speed at that much. so you know, sort of yet another case where, yes, that's the problem. not every problem has a solution in the case of semiconductors. the solution is mostly patience and letting the market work its magic. when you know, one of the things about the market i've been trying to, i was thinking about this show and like, you know, if i were to, you know, wanna go out and buy a car, you know, and you kind of looking at, should i buy it now should i buy it in the future? you know, used car prices are surging like crazy. the value of my used car is high, but you raise the question, you have jason firm and was going to go out and buy a car now for 30000 dollars this year. but you might go up to 40. and if you made

a rational economic choice and say okay, want to buy it sooner because inflation is going to drive those numbers higher than aren't you exacerbating the problem? how do you get out of this escal acore cycle of more and more demand? because people fear if they don't get it now, then then the, the absolute cost will go up. and the value of everything diminishes just an instant how you get out of that cycle. yeah. is not a, you know, there's not a clear cut answer to that question. i'm inflation expectations matter a lot. they fact, you know, are you going to buy something now or wait 6 months? that depends on your inflation expectations. what ways are you going to negotiate depends on your inflation expectations? does a business raise its prices or not? it depends on its inflation expectations. on the problem is this thing is really important, inflation expectations, but we don't know very well how it's set, how it changes or how to influence it. i'd like to think that the fed by talking more seriously about the problems with inflation. it's commitment to tackling

inflation. the steps it's taking to deal with inflation will also bring down inflation expectations and change some of that consumer behavior around gaming the timing of inflation and the like. but, you know, we just don't know exactly once these expectations start to rise, how you get that genie back in the bottle, and the hope is that you can get it back there without causing recession. like paul volcker, did you know i talked to a couple of senators recently, i won't name them, they both voted on in favor of the re nomination of j jerome powell, as chairman of the federal reserve board. but at the time they talk to him a lot about the feds role in the economy of buying bonds and you know, the need to begin tapering that and bring it down. and i just saw them the other evening and they were very upset that in their view, and i don't know if it's accurate. the fed has not been tapering off, has not been coming coming out of the economy. so it raises this question. do i

like to ask you is what blind spot and what mistakes this is the fed and making right now in this, in your view? or is it managing the portfolio of u. s. economy as, as, as well as it can, are, you know, how would jason fermon council the fed to begin dealing with some of these questions where people begin to feel like this is a rigged economy and not one where they, the market is working as well as it could, yes, it's steve last year, the fed was way behind the curve. it was constantly saying the inflation is about to go away. it's not a problem. you know, implying that it didn't need to do very much. it's changed dramatically in the last several months. the expectations the market has for what the fed is going to do, has changed dramatically. they're identifying inflation, is the number one problem that they're dealing with. they're talking about using their tools, and we're going to start to see them using their tools. it's trickier to know how much they should use that if you go too far, you can cause

a counter reaction. they've already tilted pretty far. busy i think they can tilt still further, but it's okay also to let the pressure build up. the expectations travel along with them. you don't want to wake up one day and make a really, really dramatic move. so they're. busy in a better place now, and if you're going to still need to keep pushing themselves into that place of higher interest rates and letting the portfolio wind down possibly, and selling some of you know, another area that is come under scrutiny. in part because of cove it but because of economic bait behaviorism, we've all had to learn a little bit about the global supply chain. you know, we can't get certain components. we need or lights, or, you know, address certain things because of the global supply chain breakdown we've seen. i'd be interested in your thoughts on that and whether that's at a property at an effective way to begin thinking about supply chain issues in the future, or whether that's folly,

because it's very hard to get the circumstances you know, to work in a market economy like ours, down closer to the folly view that quest. you know, i think global supply chains in the year after coven hit held up pretty well. there are issues with p. p. e. there were issues with ventilators. but for the vast, vast majority of the products we all use, just the worst possible thing could imagine to the global economy. and yet, ever this, you know, the shelves are basically stopped. you could die most almost everything that you wanted to buy this year. it's been a little bit choppy or but even this year for most durable goods, there are more of them being introduced than ever before. there are more of them being consumed than ever before. and so for most of them, the problem isn't that there's been some supply chain that froze up. it's that we wanted to spend on making this up 20 percent more and we can only buy 10 percent more. now cars are a big and very notable exception to all of that car production is lower on car

number of cars purchased is down, but outside of that important exception, a lot of what we're seeing is actually supply does not increase much as we wanted at you let me ask you a question about this because i can give you got an interview, folks in your outside to just around america. they see prices surging, they don't know who to blame, they may blame the white house. they may blame, blame companies. i know a friend who's a regular every day buyer at starbucks and, and this friend is furious because he's a book, you know, basically a year ago at cost like 5 bucks for a muffin and a coffee. and now it's gone up to $8.25. so that's a, that's a pretty big surge. and is this a function of companies in your view that are meeting the price that people will pay as a corporate greed? are there things that companies are doing could be doing to not raise prices as quickly how, how i mean, i don't get a price fixing, but have a price restraint,

self restraint. right, so 1st i want to be clear. there is a 2 little competition in the u. s. economy. we need more vigorous and active anti trust. i don't think that problem is closely related to the inflation problem we've been talking about. but there are a number of markets where it is a problem. in general though, you know whether your companies are always trying to maximize their profits, they were trying to do that in 2019 they're trying to do that. now you give people more money and companies are going to both res quantities and raise prices. they're going to do that, whether they're monopolies, or, you know, in gauge and heavy competition. well, you know how to be a smart economic advisor in a political system. and i know that you do not have to send your thoughts into president biden and get, you know, you know, counted for them one way or another, but it does raise the interesting question of, what does the president do in this situation?

you're facing an election a midterm election this november. it was already going to be tough for the democrats. you have a lot of discontent. i mean, inflation has become one of the top issues of concern for americans today. mark more than russia, ukraine, more than a lot of the other things going on. this is a big deal. what are the choices that he has in his political season of responding in a way that would be compelling in your view? i don't know the exact answer to that. i'm part of it is message i'm doing what i can you know, it's good. you know, it might be bad before it gets better. no, i understand it's a legitimate problem for you. so not being out of touch, part of it is getting the policy right, which is mostly about pointing good people to the fed. that's nominating good people for the fed. that's what he's done already. part of it is making sure he doesn't get distracted. the not just spend all you can't wake up every day and fight inflation is not a day's worth of activities every day for the president to do on that. he needs to spend his time on other things like getting on child tax credits for american

families, dealing with climate change and all the other things that he was elected to deal with. now, i only get a that is fully solves the discontent. i think the only thing that solves the discontent is inflation being lower. and the only thing that's going to make inflation lower is a combination of time and the federal reserve. you wrote a piece, jason about why so many mainstream economists did not see inflation coming. has there been any kind of revision in, in, in the profession by many of your colleagues on, on how to kind of tool up but the next time. so there's better anticipatory of predictions when it comes to something like this. yeah. you know, and the issue here was, our models were basically telling us this was going to happen. but they were saying such crazy things that people didn't want to believe them. so they almost turned the models off and said, you know, we don't know if this we're going to add a fudge factor in. so the biggest lesson to me isn't that economics went wrong.

it's to take your economic seriously and to never devalue that when you have powerful tools and use them like fiscal stimulus and monetary stimulus, they actually can make a very big difference. there's a broader lesson which goes beyond economics, which is it's never a great idea to silence dissenting voices, shout them down and accuse them of being idiots. you know, maybe they're right. take them seriously. let's not have an echo chamber where everyone thinks the same thing. let's be uncertain, debate. ready and have a proliferation of voices, you're always going to get a better answer if you do that than the alternative. so when do you think i'm going to be less frustrated with the price of just peanut butter, which is surging. i happen to be, you know, a great fan of just peanut butter which is searching good, crazy level. well 1st of all, if i could suggest that you switch over to ice cream, those prices have actually been falling on lately. i think it's the only thing that

price where prices are falling on. that doesn't work for you. i don't know. maybe wait a year. well, we'll leave it there. jason firm and former top economic adviser of the white house and now professor of the practice of economic policy at harvard university. thanks so much as great conversation on inflation everything you needed or wanted to know . thanks jason. thank you. so what's the bottom line? the good news is that there are some jobs out there and some even pay well, but guess what? inflation will eat your higher wages. quick fixes are just hard to find. the wealthy won't have a problem, but the vast majority of americans are going to have to scramble harder than ever to pay their bills. feel their cars with gas, pay their rent by their medicine and just pay more to survive and keep their heads above water. when the american standard of living takes a big hit, folks become really unhappy and unhappy voters punish the party in power, which is the democrats. they should be bracing for a very tough election battle this year, especially if things go from bad to worse,

which i think they probably will. and that's the bottom line ah, from international politics to the global pandemic, and everything in between. it did not respect poor people and your our planet promised to ensure the safety of women, what path dr. pulled back that people actually have more feel. why is the u. k, so hostile to transfer? the make 3 to all of us. join me if i take on the live, dismantled misconceptions and meet the contradiction. time to get up front on al jazeera, who some, a rowboat is a mechanical odd or even that self driving train at the airport. that androids today can be easily humanoid. robots, like, me, will be everywhere. al jazeera documentaries. next the lead on the weird and wonderful world of robots that learn. think for you and even trust. i feel like i'm

alive, but i know i am a machine. origins of the species on al jazeera lou . hello, i'm darren jordan unto all the top stories here on al jazeera. the white house says president biden has accepted in principle, a proposal for french broken summit with russian president vladimir putin. if russia does not invade ukraine earlier, the ukrainian president appealed for cease 5 east following days of sustained chilling on the front lines, jabber towns. he has more now from washington, dc for them, but it's an agreement in principle to a stomach bug floated to someone about ukraine. the elisa paula says this is a summit to discuss, discuss secured.