ray dalia founded the world's biggest hedge fund, bridgewater associates, investing nearly $170 billion. the self-made money manager predicted the lasting impact of the financial crisis. and his fund has outperformed for decades. we sat down with dalio for conversation on his investment strategy. his view on monetary policy. >> i don't believe they can raise rates faster than is discounted in the curve. >> analyzing the global economy. >> i think china is going to be just fine. just to be clear.

it will be weaker. >> and what his future holds. >> i can't stop. i love the game. >> on this special edition of bloomberg surveillance. ♪ good evening. we are here for one of our most anticipated events in the history of bloomberg "surveillance." let's set up where we are. this is 114 acres north of new york city. it is a benchmark. we have steve back there with our audience, we say thank you. we need to get started. michael: if you sold in may and went away, it is time to come back. >> why don't we get started on the economic machine.

>> that is what you have based your entire career on. your study of the economy, not just investing. tell us about your concept of the machine and how you got to that. dalio: the same thing happens over and over again. these things happen economically. let me just describe the machine. it is the same for an individual. in a country is no more than the collection of the people. there are three main factors. productivity. which produces income. you can spend at the end of the day what you earn. what you earn is a function of your productivity. for a country it is the same as individuals. you work hard and are well educated. you can be more productive if you work harder or you can be more productive if you are more creative.

over a short amount of time you can spend the amount of money which is different from what you earn. that's because we have debt. >> they're also called children. [laughter] dalio: ok, thank you. we have debt cycles and there are two. there is a short-term, the business cycle. recession, that eases. as a result, money goes into a system and what it does is it ends up with prices. when we are getting the first asset prices, then we make items that are cheaper because interest rates go down so we have that business cycle. when that cycle gets past a certain midpoint, there is a monetary policy as you get to

the later part of the cycle. and you start to have inflation, it becomes too tight end the cycle goes down and that is the business cycle. when we look at every country and see where it is, we are in the middle part of that cycle and we are having the conversation we are having about the federal reserve. there is a long-term debt cycle because these debt cycles add up. a long-term, just imagine you start off with no debt. low debt to gdp ratios. you start out with no debt. earning $100,000 per year and you have no debt. you can borrow 10,000 dollars per year as you have no debt. you could spend 110,000 dollars. your spending somebody else's income. they are earning more so they can spend more and become self reinforcing until you get to the

point where debt rises too much relative to income like a balance sheet. you can leverage to a certain point. all central banks are in the business of helping that cycle go along so that lower interest rates. as they lower those and hit zero, we then come to a dilemma. we have the end of monetary policy as we traditionally have it. as a result you cannot keep that cycle going. then when you have big spreads, you put liquidity in the system, money, there is debt and money. the difference between debt and money as money, you have to pay back. excuse me debt you have to pay , back. you go into a store, buy a suit, you pay with a credit card, money settles the transaction. what the central bank does is it can't create credit because there's too much debt. they put money in the system.

the put money in the system by buying financial assets. when they buy bonds, the seller of that bond takes the cash and buys something else. as a result, it causes the spread to narrow. it causes prices to rise. that appreciation in the asset prices the experience then creates a normal term structure of interest rates. there are three equilibrium's we have longer-term. the first is debt cannot rise faster than income. second equilibrium is the operating rate in the economy cannot be too loose or too tight. the third equilibrium is that we have term structure of a capital market structure. in other words, that cash is going to have a lower return than bonds which is going down to have a lower turnover than equity. there is an equilibrium that keeps working its way through that system. monitoring fiscal policy.

tom: we did that out of world war ii. we worked up and it collapsed, many people in this room lived that. we have come down with a great moderation, enjoyed the last seven years. where are we now in that continuum when we observe things mathematically? i would say we need math on the radio, a lot of curves like indonesia, brazil. other challenges. where are we right now? dalio: the united states is in the midpoint of its short-term debt cycle. utilization, gdp gap. as a result we are talking about whether the fed should tighten. that is what central banks do. we are near the end of a long-term debt cycle. because that cycle of being able to raise -- you have interest rates going to zero. you have spreads that have come

down. those spreads that have come down means that asset prices have gone up. now the expected return of asset glances are all very low. -- asset classes are now very low. cash, we know bonds are two and a quarter percent. you know it will get for the next 10 years. 2.25%. premiums look like three or 4% on that. all the assets are now aligned in normal risk premiums. that's why if interest rates rise faster than is discounted in the markets, those are discounted. tom: for those of you worldwide, they are an exceptionally competent group of bloomberg users. in the alternative investment funds.

with that said within the , framework of your machine, do you presume a jump condition as central banks come out of this, or can they manage it with smooth vectors and smooth flight paths? dalio: i don't believe they can raise rates faster than is discounted in the curve. that interest rate curve, the rate at which it is discounted to rise which is built into the curve, is built into all asset prices. if you raise them much more than is discounted in the curve, i think that will cause asset prices to go down because all things being equal, all assets are on the present value of discounted cash flow and we look at that. all of them are subject to the same discount. they have that in their structure. if you raise rates faster than is discounted in the curve, all things being equal, that produces a downward pressure.

that is a dangerous situation because the capacity of the central banks easement is not -- has not been less in our lifetime. we have a very limited capacity of central banks to be effective in easing monetary policy. the federal reserve has a responsibility both as the u.s. central bank and the world central bank. we have a situation where if we go around the world, you should have an easier monetary policy in europe. if we look at it in the same framework, europe is in a depression. rather than gdp gap, we have a depression with a low point. with a lot of political extremism beginning to emerge because of the pressure. they need an easier monetary policy. japan needs an easier monetary policy. china needs an easier monetary policy. ♪ >> do you think qe works anymore? dalio: it will work a lot less

than a did last time. ♪

tom: your work which you most recently published with bridgewater and the most fascinating thing i see within your economic machine is a currency and how it plays into it. would you predict a stronger dollar like the pre-plaza accord or the rubin dollar of the 1990's? how does currency fit into how you see a lack of productivity and growing debt? ray: the picture we are in is very similar to the picture that was painted from 1982 to 1987.

and that, we have a lot of countries, particularly commodity producers, who have a lot of dollar-denominated debt. as we had that environment, as they are in a debt problem, it is a self reinforcing situation because their debt is denominated in dollars and revenues go down. they are short of dollars. a debt is a short position and you have to cover it. that bids up the price of the dollar. what we need now, we have these commodity countries. very similar, emerging countries, very similar. dollar-denominated debt. it is a self reinforcing cycle, and back then until 1985. then we have the plaza accord as you refer to. and we have the need to ease monetary policy. but we were able to do which was a good.

-- period, we were able to ease our monetary policy as the economy grew. it is tough to do that where we are right now. brendan: this primetime edition of bloomberg surveillance on radio and television worldwide with ray dalio, founder of bridgewater associates. what do we do? what is a central bank do when it is at that. when you're at the end of that long-term credit cycle. ray: the thing that you do is you realize that the risks are asymmetrical. you can tighten monetary policy. there is enough debt, enough sensitivity. you wait more to see, because the risks are asymmetrical. that's the main thing. the risks on the downside are different than the risks on the upside.

brendan: do you think qe works anymore? ray: it will work less than it does last time just like each time it worked a lot less. i am saying we cannot have a big rate rise. the term structure on assets, because of the amount of debt, what it has with the dollar with deflationary pressures. we will have a downturn. the downturn should be worrisome because we do not have the spreads. qe, you're asking if it will work. it is the purchase of those assets to get those premiums up. when you keep pushing, buying more bonds. if there is not an attractive investment relative to bonds, the spread is what will drive that. if there is not much spread in something else, you get less effective monetary policy. brendan: are we there?

ray: no, not yet but we are closer to being there and some countries like europe, they are there. what happens is, what are you going to buy in the way of the bombs? -- bonds? we are very close to there. that is why you need more currency depreciation. the effectiveness in japan is there. the effectiveness of monetary policy that comes through the currency. when the person who is receiving that cash for selling their bonds has to do something, and they are in different between cash and that other asset. there is a pressure to move it out of the country. we have very high rates. in comparison to those in europe and japan. it comes through the currency. you have to have currency moves. that is the environment we are in.

tom: this is absolutely critical. we have a presidential debate, we don't need to get into republican and democrat. this station, too many people, is flat on its back. they want productivity. the smartest thing in your work is the mystery of going from non-efficiency or inefficiency to efficiency. what is your prescription for the next president to assist in productivity? ray: we have done a study going back 60 years. we took the various factors and correlated them with the next 10 years growth rate. we did this across 20 countries. studies on economic principles.org so you can read this. economies like a human body, it basically works that way. it is the same thing as an individual. when you ask yourself is that

individual going to be productive and grow, you will ask what is the education and the most important single factor is what is the cost of an educated person? someone is more educated, that is a good thing. if you have to adjust it by the number of hours worked and what that cost is, because let's say in europe. southern european countries like france, italy, and spain, after adjusting to the average powers -- hours worked in a week, they cost twice as much as an american. you can have the education. that is good, but if you are expensive it is not good enough. does the income pay? if you have a situation where you have an educated population, the single most important factor is what does it cost to have an educated person? the second biggest factor is

indebted to us. you have these -- indebtedness. you have the later parts of these debt cycles, they have less capacity to increase their boundaries and expand. it goes toward other things. we have surveys of work attitudes. different cultures have different work attitudes. some places live to work and some places work to live. there is a cultural, i'm not saying one is better than the other, but you can take surveys. tom: what is your prescription in the upper of politics, whether it is mr. corbin or mr. cameron. australia? we didn't even know this was coming. the prime minister of australia is out. what is ray dalio for a better america?

ray: and for a better world. there are these various factors. there is not one factor. they are clear and in the study. those factors, at the end of the day, are the same. are you going to be well educated or economically well educated? inefficient? there is a 58% correlation between corruption and economic growth over the ten-year timeframe. as we go into that, productivity will be the single biggest factor. how do you make people productive? self-sufficiency. the single biggest factor for a number of countries is do people feel the consequences of their earning or not working? in countries where there is self-sufficiency, they feel those consequences rather than a

greater social net with higher levels of productivity. at the end of the day, it is when you look at your neighbors and say if they can get an income and they are not going to be penalized, they will be less motivated. what i am trying to direct the attention to is what those specific factors are so that it is like a health index. i like to draw people to productivity in this study. you can see what those correlations are because, for all nations, same formula. it is like a health report. if you can look at your cholesterol level, do you smoke, do you exercise? tom does not want to find out. ray: you can know your ten-year prognosis and if you look at that with that benchmark, you can see what productivity is. it is a series of things and i

don't want to over -- over itplify ♪ ray: i don't have a balanced portfolio, i learn to be scared. ♪

mike: howdy you apply investing -- how do you apply that when you are looking at investments you want to make? what does it tell us about where america is and where american companies are going? ray: i am most interested in who is going to buy and sell and why. the way i look at the price is it is the aggregate of purchases divided by the quantity of goods sold. that may be a pond or equities.

, orhat may be a bond equities. i look down there and factor by factor. when i am trading, anything that will give me an edge, whether it is insider buying or whatever it is, what we do is we take those rules and have written them down. it came in 1982 or 1983, every time i put on a trade, i would write down and look at those rules. what i discovered by doing that is those rules would be programmed into a computer. when they were programmed into a computer. tom: did you just say bloomberg terminal? mike: shameless plug. ray: i give you the endorsement. so they are all different ways. we trade 140 different markets, all liquid.

tom: do you have an informational advantage now that you had in 1986? we will get to it but seriously, do have been doing this for 10-20-30 years. is it tougher today given the flow of information or is there so much information across the bloomberg terminal to your advantage? ray: the technology continues to empower me. i think there is no getting around the deep thought. the technology, if you put a lot of data in and are not spending the time with the deep thought, thinking about how you are going to be wrong and you have the fundamental cause-affect linkages, that has ways been the case. artificial intelligence is not a new thing. 1953 is when it started. there were narrow nets and

different ways of doing it. almost every manager blew up used it. there's no escaping the fact that when you think about relationships, they have to be connected cause effect relationships. the same things happen over and over again through history. tom: gluten-free. get some water and let me preset you for the audience. we welcome all of you worldwide. bloomberg television on bloomberg radio. ray dalio of bridgewater, with no need for introduction, former caddie, yes he is in the news, we will get to that. very importantly economic , principals.org is where so many of these concepts and structures are. mike: if you are having a bad month, there are openings for caddies here.

this is where i want to get to risk. a, but not about the current situation but how you develop the theory. where is the moment where you decided to take a bet on the disparity? ray: in the early 90's, i earned enough money that i was putting together trusts for my family. i realized making money and the market is zero some and the allocation is the important thing. i realized how markets work. the problem with those markets is you can't achieve balance. if you have a stock-bond mix, and you want to diversify, and you buy stocks, 50-50 of your money, you are dominated by

equities because it has twice the volatility. i need more volatility in order to create a balance because i want to that equally on two things. in the traditional way, you have to buy more bonds and as you buy more, you are buying a lower return of assets. as we turn out the assets, you dilute your turn and you're not getting much. in order to have an equal amount return and you are not getting much. in order to have an equal amount on each one of those things, you have to have an equal amount of risk. because those that have riskier assets are volatile assets, they tend to have a higher return and higher risk. and that is structural because they have a longer duration and because assets are leveraged themselves.

the average s&p 500 company has a debt ratio of 1-1. it has embedded leverage. the idea of taking a bond is going to produce a return stream that gives me about the same amount of risk in those two assets. it also raised the return because the return of cash is lower than the return of bonds in that time. that meant that i could create diversification because the most important thing is how do you create diversification without lowering your return? i do not know in any 10 year period or any period what is going to be good and what is not good. tom: what does the asset model say when your leveraged bond porfolio and you stock portfolio correlates? what is the analysis you see?

ray: it would be equal to if you own stocks. 100% correlation between these two assets, now i have made more leverage so it has the same volatility and they are 100% correlated, than the mathematical answer is it will equal the volatility stocks. the fact is, if it is not 100% correlated, we can get into what drives correlation. what it means is that you are going to have as result, you are going to have diversification without lowering your returns. if i apply that to different asset classes, then i can have -- the most important thing is that you have a well-diversified portfolio. i look today and i would be terrified to own any other portfolio. the reason is am i going to own stocks? am i going to be concentrated in

bonds? i do not want to be concentrated in stocks, i do not want to be concentrated in bonds. tom: how do you respond if you are almost too diversified? how do you respond to the criticism? ray: diversification of assets, you do not know which would be the better return, similar expected risks, it does not lower your return. tom: do you test that it is operational within the great distortion we are living in now? ray: i have almost my entire net worth in it. meaning my trusts. the reason i have is because i need a balanced portfolio. if i don't i am scared. i learned to be scared over the years.

i tested it through the most severe -- the great depression, 1923 in germany. tom: did you test it through the giants game this weekend? [laughter] tom: no? this is serious. it is nice to make jokes as we saw with the "wall street journal." ray: i want to be clear. no thing is a sure thing. if you have a well diversified portfolio and it underperforms cash, the only times in that situation that it did badly were depressions. and what that means is, as the federal reserve is tightening monetary policy, if they cause asset prices as a whole to go down, that is -- the only times

it really did badly in the great depression and in 2008, in both of thos years, 20% to 25%, those are very tolerable contractions because the traditional portfolio fell, like, 60% in those periods of time. when i look at that, i am saying, we have central banks on your side and otherwise, you will be concentrated in some asset. michael: are we in a depression now? ♪

allweather, your risk at onefunding, lost 5% time. overall, allweather lost 20%. is it a failure of risk parity? ray: on a month-to-month basis, the stock market was down, the assets were down. i think it is almost a good -- that was a lousy month for us. up until then, the longer term returns are what they are. that was a month. all i am saying, you could lose 5% in a year. like, i could look back, it is down 6% this year. i am comfortable being in that position. you look at the whole history, the stock market in 2008 was down 38%, right? warren buffett, greatest investor, his bad year was down 48%, 47%. when you have those kinds of -- to me, i feel like i'm fine.

though.did not caddy, right. i want to defend the hedge fund industry. there are three people in here on the racket. the coverage in august, do we remember that we went to 50 intraday? it was wild. john paulson down. ray: let me be clear. we have our allweather fund. that is down about 6% for the year now for those reasons. i am comfortable it will be balanced. we have funds that are up materially. tom: we've got to make some news here. how much are they up?

ray: it depends which fund you are in, somewhere around 6%. michael: where are you getting the alpha? ray: we can go long and short in a couple of different markets. michael: you are applying how the machine works to this time period. you have said we are in secular stagnation. i will go back to the question from earlier which is where is american business right now, even global business? what is the ability of businesses to turn a profit so that you can make money? ray: american businesses, number one thing, are flush with cash. as a result, the biggest force in the stock market is the buybacks and mergers and acquisitions. something like 70% of the stock market is along those lines. of course, i think you know the changing complexion of the businesses.

the productivity numbers are severely distorted because you cannot account for productivity. tom: you are more optimistic? ray: it means photos have collapsed in terms of productivity. what is the value of a photo? tom: are you on instagram? ray: no, i am not. tom: i am not, either. seriously, i promised i would not bring up probability. with all of the work you have done, are these derivative strategies around bonds and equities able to withstand the shock of the next black swan? ray: there are all sorts of embedded risks.

i would say we are better able to withstand them than we have been before. there is less liquidity in the markets. there is a fair amount of essentially dynamic hedging. dynamic hedging is a way -- like insurance companies when they take their protection. i would say we are better able to withstand them in terms of, not the short-term volatility, you are going to lose liquidity, but in terms of the bigger moves.

provided that we don't have that big event we are talking about, which is the tightening of monetary policy, you get the doubt. what worries me is what the next downturn in the economy looks like with asset prices where they are and lesser ability of central banks to ease monetary policy. michael: some central bankers would say, if we raise rates now, we will have some ammunition. you sound like you disagree. ray: again, it is a restrictive policy. i do not care if they raise 25 basis point. i do not see the reason for it, frankly. 2007, i was watching this incredible bubble happened. it was an obvious bubble. and the fed just paid attention to the gdp gap and they missed the whole bubble. now we have a situation where we are in the mid-part of the cycle and they are trying to identify where the inflation and and we have a lot of liquidity. little glimmers here and there, always little glimmers of something, but basically i think they worry too much about the short-term debt cycle and not enough about the long-term cycle.

i do not get it. and that's -- look at the world. we are in a world economy. tell me countries who should be tightening monetary policy. michael: this is a prime time bloomberg "surveillance" special worldwide. we are with ray dalio of bridgewater. in the time we have left, i want to talk about you and bridgewater. you have been around for a while, as tom noted, and you have suggested to people that you are starting to step back. a lot of people are saying, this man with his ability should stay in the game. what are your plans? ray: by the way, it has been 40 years. michael: i was just trying to be nice. ray: what i am talking about is stepping back in management, not stepping back investments. i am an addict, i started at 12. i can't stop, i love the game.

right? there is some confusion as to what the stepping back is. i will always be playing the game. michael: do you have a succession plan in place? ray: bob prince, who has worked with me for 27 years, i think he is 55. greg jensen has worked with me for 17 years, and he just turned 40. and this team, i have a lot of people who have been there a long time and we have all played the game. we are used to doing it. i could step down and it wouldn't matter, really. tom: alan mullally has an historic meeting. everybody runs a company differently. everybody has a style. when you have a meeting at

bridgewater, with the incredibly trained individuals you choose to hire, how do you inject humility into the meeting? ray: oh, the business we are in teaches us that. tom: i'll say. ray: we have a very unusual culture. tom: we do not have that at bloomberg. ray: well, nothing is like this. it is a total meritocracy. what we do is tape everything so everyone can listen to everything. there is nothing hidden. it is a very straightforward way. that is why a lot of people come there. because everyone has the right to make sense of anything. there is no traditional hierarchy.

so you can ask any questions and that keeps you on your toes. the best way to do it -- it is like, what do they call that in parliament? tom: question time? ray: you stand up in front and you have everybody shoot at you and you get the stress test, and that is the best way to test your thinking. that is fantastic. meaningful work and meaningful relationships. ♪ tom: are you having a greater debate at bridgewater about china? when you have meetings about china, is it heated? ♪

tom: are you having a greater debate at bridgewater about china? when you have meetings about china, is it heated? are they collegial? is everybody on the same page? ray: it is not heated because the culture is analytical. keep it calm and say anything you want to say. china -- if we have this template, you just drop the numbers in this template.

michael: china is one of the few times people have seen you actually come out with a mea culpa and say, we missed something. ray: what is your question? michael: how did you miss it with the template? ray: what i was saying is -- by the way, we miss things. that is the humility. what happened was when they went to the bubble bursting, you have two problems in china. you have a debt problem and you have to restructure. local governments have to restructure. but that is a manageable problem because it is in their local currency. and, by the way, the people -- i've gotten to know many of the decision makers -- they are very intelligent and capable and prudent people. restructuring your debts in your local currency is a manageable exercise.

we have done it three times. the snl crisis. that is a manageable process. if you have your balance sheet, you can manage that. the second issue they have is they have to restructure what they are spending money on. they have to rebuild a new economy to replace the old economy. that is like a heart transplant, a serious operation, and it tends to weaken them. but like most heart transplants nowadays, you will get through it ok if you have good surgeons. they have a bubble. the third thing is they went from an equity market. you get the speculator and they get hyped up, they get leverage on margin, and then you have the bubble. that bubble was a negative at the same time.

all i am saying is you went from a bull market and you are having a negative force coming in at the same time. those three negative forces. if you look at other economies, that is a negative for economic activity. ok, so, what comes next? we know the certain things that come next. my statement was when we had that bubble burst, we shifted from one set of circumstances, two minuses and a plus, i think we exaggerate over the short-term a lot of the importances. we look at everything up close. and so when you look at china, i think china is going to be just fine, just to be clear. it is going to be weaker. their weak growth is going to be more than twice our normal growth. tom: i love how you come back -- you have historical charts -- on currency depreciation.

many people -- i promised you i would not ask you for currency quotes in this wonderful session we are having with you. at the end of the day, is the solution always going to be currency depreciation? ray: it is always going to be the number one choice. if you are facing a domestic contraction, and you have a choice, do you want to depreciate your currency? because everybody judges their net worth based on their own local currency. that was the lesson i learned in 1971.

i was clerking on the floor of the new york stock exchange. i walk on the floor of the stock exchange. richard nixon on sunday night announces that he is going off the gold standard. i thought, wow, we don't have money. i walked on the floor of the exchange and i learned that every time, it stimulates and makes everything cheaper. in other words, when you have zero interest rates, what are you going to do? tom: i am going to rip up the script here. you live in connecticut and you have done better than good. how important to your state is it to have generous electorate in connecticut? how important -- what is the symbolism of that?

ray: we have an issue, of course, in terms of the tax rates and competitiveness. and how -- that is why austin, texas, is getting silicon valley people. it is the nature of that particular competition. i think it is up to the governor and the legislature to try to balance that in the best practical way. i do not really care to comment on that. i mean, i think it is -- i understand the dilemma. there is also a big wealth gap. when you are taking the big wealth gap, you have to deal with the wealth gap. i am not the one to say how that is best handled. michael: let me ask you this to bring it all together. you have an economic model. the fed probably has to do more qe. central banks have to ease. the u.s. in secular stagnation. you are optimistic about china. ray: i do not think the secular stagnation -- i am sorry, i shouldn't even interrupt the question. michael: fold that into the question. what kind of returns in the next 10 years can investors expect? i am not talking about your particular funds, but is it going to be different? ray: yes, and you know it. you will have returns that average somewhere between 3% and 4%. this is a major pension fund problem. the way assets work is when there is quantitative easing or purchases and prices go up, that is really just producing a present value effect. so it is like a bond. as your bond price goes up, you invest in -- let me say -- i am sorry, i am not saying it clearly. if you invest in a 10-year bond and it is 2.25%, no matter what, you will get 2.25%. if the bond price goes up, you

can be jubilant, but when you collect the profit, sell it, invest at a lower interest rate, the lower interest rate means you will still get that 2.25%. you carry that all the way through. that has permeated all asset classes. that has permeated venture capital. all asset classes going forward are going to have a very low return. that means you need a whole lot more money in order to immunize something. supposing you have $100,000 a year expenditure, how much money do you have to have in order to immunize a $100,000 a year expenditure? we need that to keep the economy going. we have a situation where we know it is certain that we have low returns.

tom: we have one minute. one minute or one more hour? we went with one more minute. everybody wants to go find your next uber out of silicon valley. what do you say to a 26-year-old smart kid? how do you sell them in 2016? ray: it is easy. when you can go long or short, anything in the world or everything in the world, that means you do not have any cycles. that means you get to even think about the whole world and how it is connected, and there is nothing more exciting. and there is no excuses. because if you go into any other business, you will have a cycle. there will be a tech cycle, everything. i think -- if you take financial engineering, every investment that you will go into -- tom: i think we should do that.

thank you. we have run out of time, thank you so much. [applause] what are we doing tomorrow? michael: tomorrow is fed day. ♪

betty: welcome to the bloomberg tv special -- china behind the wall. in a rare glimpse, i travel to beijing to visit china's historic statehouse. there, i spoke with one of the country's highest ranging officials, a former ambassador to the united states, a leader in the powerful state council, and china's negotiator on foreign policy. we talked about the most pressing issues between the two countries from cyber spying to