washington journal continues. host: back with chris condon, federal reserve reporter to talk about jero we are back with chris condon . talking about jerome powell , the testimony yesterday. today he will be before the banking committee at 10 am eastern time. we will have coverage on c- span.org or you can listen with the radio at. but it the chairman tell the house lawmakers yesterday? >> it was straightforward. a message about the economy pick it is in good shape. unemployment is very low and

one of the lowest points in the last 20 years. inflation is under control. that is a good place to be and for the economy to be. they feel the current policy and where they projected the fund rate to is a good path. he added a line in the prepared testimony that he delivered yesterday. he said that seems to be the right path for now. it is a little bit of a no -- debate over what they are trying to signal with that pick the one hand there is folks saying this is the same old boilerplate caveat the fed will add. we are not on autopilot. if conditions change, we might speed up the pace of the rate

hikes because the tax hikes have stimulative effect. on the other hand, the trade situation will cause the economy to slow down and that will make them slow down the pace. on the other side, there is an issue of how far can the fed continue raising rates? this may be his way of acknowledging there is a debate going on about how far they should bring the fed rate down before they stop and look around. it has to do with the neutral rate. it is what the interest rate. neither hitting the gas or the brake. they are getting closer to that and try to figure out where it is and what they should do when they get there. this may be jerome powell's way of saying we are thinking about

when we should stop.>> the neutral rate.>> does that mean the fed just stops? >> for a long time? >> it depends on what they decide to do. the first a problem with the neutral rate is no one knows where it is. it is a theoretical, well- founded, theory in economics. you cannot look it up. some of the estimates range from a little bit below to -- where is it? there is a question that they agree where it is. do they stop when they get to that point? some on the open market committee say we should stop at that point and take a look at

how the economy is responding. something because unemployment is so low, they think that they should inch higher than that. tapped the brakes a little bit. that will help them with the generation of any and wanted -- i wanted inflation.>> today he is before the house financial services committee. at 10 am eastern time c-span 3 or c-span.org covered yesterday's hearing before the senate banking lawmakers. if you missed that,, go to our website at c-span.org. why is the economy doing well? where and for what does the fed give credit to? >> first of all, we should put this into context. historically it is doing okay i would say.

in the longer run, look at the pick your. -- picture. productivity growth has been pretty low pick if we look in the last 10 years, it is getting better and better. the deepest recession since the great depression. the economy has very slowly pulled out of that hole. i think the fed deserves a lot of credit for being patient and not raising interest rates to fast. people forget that they have been under pressure to raise interest rates sooner and faster . they said we will be patient. they allowed unemployment to quiet low now and it has not generated the inflation that some people thought it would. of course these many years of

very low interest rates have poured a lot of money into the economy and along with the bond purchasing program the fed undertook. that has kept -- they kept the barring rate very low for households or businesses. it makes them have an easier time and generate momentum. >> we want to hear from the viewers. we encourage you to join. what is the economy like where you live and do you feel like the economy is doing well or not? says the fed chris condon, the fed says that the economy is doing okay. is it heating up and could we

face another recession? we are 10 years out from the last one. >> i would say there is little overheating in the economy. pretty amazing if you look at that. we have unemployment that picked up a little bit in june. astoundingly low. i say astoundingly because it is not generating more inflation wages. it is very subdued. overall inflation and the measure that the fed looks like kicked up in what they call the core measure which takes out the volatile components and the feds target is not a lot of alarm over the inflation issue. the people that are worried

about inflation point to the fact that when unemployment drops the slope, historically it generates excess inflation. you have to get ahead of that because you change the rate and that does not really work its way into the economy for another six or 18 months or longer. you can't afford to wait to see the sign. the fence they look for don't single -- signal any flags. it is remarkable.>> randy in west virginia is a democrat. you are up first.>> i wanted to ask you. isn't there people that are saying we should not have a federal reserve? >> there is still corners of the political spectrum.

we think of rand paul from kentucky. there is a federal reserve. this is a very, very small minority view. central banks have been around developed economies for hundreds of years. not so long in the u.s. the fed is over 100 years and quite young compared to some european banks. it is widely recognized from absolutely crucial functions in the economy. first of all, it helps regulate the flow of credit. if there is not that regulation, the economy, during good times can overheat as we were talking about. sometimes the flow of credit is too little and very difficult for the economy to climb out of without someone adjusting the

knob. they serve as a financial regulator. a job it did not do very well. they have worked pretty hard to better keep an eye on these big banks. the fed is what we call the lender of last resort. before there was a federal reserve we had a history of banking crisis in the united states and it was more frequent. banks in these periods get into trouble. not because they are sitting on bad debt but they lose deposits and liquidity. even though they are in a good situation they don't have the money because, if you have seen it is a wonderful life, as a deposit in businesses and they

cannot get it back. they can step in to provide the liquidity and make these crises much less frequent and severe.>> the president tweeted this this morning. jobs created since the election and greater than i anticipated and only doing better as trade deals come to for wishon. does he deserve credit? >> i think he has not messed it up. there has been a long recovery. the unemployment rate has been falling. it hit 10 % during the crisis were during the recession. it has been coming down ever since then. unemployment is not a new phenomenon. since president trump took office, he passed tax changes which are contributing to the

activity. it certainly has boosted sentiment among businesspeople. it is helping to encourage them to invest. unemployment has continued to drop. you can't point a finger and say he has messed it up. there is some serious worried about trade. just on the tax cuts. it is not really clear how persistently this is going to benefit the economy. the fed's opinion is this is going to boost demand in the economy for at least two years. what happens after that? some people like to refer to this as a sugar high that will then fall off and we will be left with a little bit of demand drop taken away from growth in

the economy and that will complicate things if that happens and managing where they want to put the rate. the jury is still out. it could be that these changes help encourage longer-term investment. there is specific portions of the changes that encourage companies to make longer-term investments. if that happens, that could be a more persistent benefit to the economy but the jury is out. on the trade front, this is more serious. let's face it, as jerome powell said yesterday before the senate banking committee, historically, countries that lower trade barriers do better economically. if the u.s. is going to or have a sustained period to impose

higher tariffs limiting trade will be bad for the economy. that is a clear risk. that is showing up in some of the reports that the fed gabbard and in the information that we and other reporters gather from companies out there and people who run businesses that change the decisions they are making because they are worried about this trade dispute turning into a trade or.>> let's listen to the we grow it in south carolina and ship it. peaches, soybeans and solar panels and the lists goes on and on. what is happened in the past when we have raised tariffs? >> i have to say that i am

firmly committed to staying in arlene and it is the economy. trait is the business of congress and congress delegated that but it has effects on the economy. we should talk about it and talk in principle. in general, countries that remained open to trade that have not erected barriers have grown faster and countries that have had done worse going in different directions.>> that was the chair yester day on capitol hill. back on capitol hill today. 10 am and you can look for coverage on c-span3 , c- span.org . the app. let's hear from alex. what is the economy like where you live? >> i wanted to comment on host: ?

caller: yes. -- >> gold standard? is that what you said? >> yes. constant -- constitution says we should have it expect this is another outdated way of looking at monetary -- monetary problems. is it that the supply of money that is tied to the production of gold. inflation is dependent on how much gold we can take out of the ground. ay that modern centrl bank make mistakes. they certainly

it is not to say that the central banks don't make mistakes, they certainly do but the gold standard is widely considered not the best. >> in new jersey, you are on the air with chris condon.>> i went -- wanted to describe what the fed is doing. they were having a lot of bad debt from banks and i am wondering how much success they are having and reselling them or do you know how much how much it takes up of the portfolio at the present time? >> good question. we have to separate. there is two things that need

to be separated work quantitative using required -- response to the financial crisis. the fed went out and purchased trillions of dollars and securities. and i will forget exactly what the level is right now. summer around 3 1/2 trillion dollars and very sizable. they have become -- begun letting that go off. they don't reinvested as they mature the total amount on the balance sheet is flawed. why do they do it? they hit zero with the interest- rate and that was not enough work this severe recession we

were in. they wanted to push down longer interest rates. go out as a purchased her -- and by low interest bonds. it makes it cheaper for households and businesses to borrow quite controversial at the time. it worked and stabilizing the credit market. there is a lot of free church -- research showing it was effective to reduce rates. how long did that work and there is debate about that? it is pretty positive. . not to bring it down to the level it was before. i have a much more lower level.

they are letting that blowoff. the caller mentioned the bed that. that is a separate issue in bailing out some banks. the fed did take as collateral a thought of lousy debts. some of the banks and including aig, the big insurer. as far as i know, much of that is still held by the fed. the balance sheet is not on the hook. that gets in to a technical area that it is not something that threatens the balance sheet . ot of my

questions. i have been listening to your comments to the other callers. you mentioned the unemployment rate. we know the unemployment rate is low, you mentioned the unemployment rate. we know the unemployment rate is low. as the republicans used to say, when george bush was in office, those people are not just looking anymore. is it actual? is that we were trying to say? that the jobs are taken, or not are the people that are not looking anymore, or are these minimum wages we are talking about. i live in the seventh pores to stay in the nation, next to the

first poor state -- poorest stay in the nation. i don't see a lot going on here. everything seems to be climbing. but the wages are not going up. walmart with a higher these people. they hire these going up. they hire these people at walmart at part-time and they do not give the many benefits. most everybody who is ever hired at walmart is part-time. they rarely hire a full-time person. >> there is a limit to that. and employment rate is essentially the number of people

who are looking for a job actively, divided by that number again plus all the people who are working. it leaves out all of the folks who are not looking for a job at all. what we call the participation rate which is the total number of working age people who are looking actively is quite low compared to where it was 30 years ago. yes, act -- absolutely trigger point, this is a concern. especially for people who are outside of the workforce. with that said, a lot of people have been pulled back into the workforce who are entirely outside. discouraged workers, or those who are not looking at all. maybe caring for parents or children -- a lot of those

people have been pulled back in the last five years or so. there are still tremendous numbers out there who are not looking. they do not get recorded when we talk about the low unemployment rate. the wages is -- wages is a big issue. a lot of the jobs being created do not come with great pay. part of the reason we see wages not moving up is because a lot of the people moving out of the workforce, those retiring -- baby boomers, who are at the end of their career making a bit more many at the higher end of the income spectrum are moving out. they are being replaced by kids out of school or people who have been out of the workforce for a long time. people getting lower skilled, lower paying jobs. that transfers hire people --

higher paid people going out and lower paid people coming in, that shows up in the aggregate wage figures. we can talk all we want about how great it is that unemployment is low, but there are other issues in that. in addition, another thing that i encounter is the idea of insecurity. people who have jobs do not feel great about how secure the jobs are, how secure the benefits are. what happens to their health insurance if they lose their job? it weighs on a lot of people, even if they are employed. >> what is more important as far is you arkansas and, -- concerns, monetary policy or fiscal policy? they often seem to be at loggerheads with each other. what takes precedence?

they often put it back on the congressman. what is your thought on that point? >> i am not sure i can tell you which is more important. the short answer is they work best when they work together. as you say, that does not always happen. after we had some fiscal stimulus to get it -- help us get out of the early stages of the crisis recession, congress did not do a whole lot to help with fiscal policy during the obama years to help lift up the economy. that -- now there is a separate medical debate about that. these things often work at loggerheads. at the moment, at what could be the higher point in the business cycle, we are finally getting fiscal stimulus. i am not sure it is the best timing for that.

the former fed chair said that is just about the worst timing. as for the question -- he referred if you watched yesterday's testimony, he did frequently say, i am sorry senator, "this is not really our job. to be fair to him, the fed has a very specific set of tasks set out by congress that was created by congress. it is accountable to congress. congress can change the rules, telling the fed which -- what it should and should not do. so when they come to j powell and say, what about education and skills training, or quality in -- any quality in wages? there is only so much the fed can do with interest rates and financial regulation to address

these things. they are legitimately in congresses ballpark to deal with. i do not want to just repeat his answers. and strike out we might hear those answers again when he is before the house financial services committee. he will be getting questions by house lawmakers today. that is at 10 am eastern time. i am going to squeeze in bob in indiana. you are the last call. >> hello. i have two simple questions. how has the dollar declined and what is currently backing up the federal reserve note? >> i am not sure i understood the first. for the second, what backs a

current federal reserve note, that is to say the dollar, it is merely backed by the confidence of every day people and the idea that when they take that dollar to the store they will be able to exchange it for goods and services. nothing more. there is no precious metal behind it. you cannot take it to the fed and get silver or gold for it. those days are gone. modern currencies exist on the confidence in every day people that when you bring it somewhere you will be able to exchange it either for another currency or for another good or service. that is it. >> that guttural reserve -- chris condon, federal reserve reporter with bloomberg news. thank you. >> international expected on

state and collaborate -- federal collaboration, the importance of arts and history education, and preparing the future workforce. watch the final gathering being held at 12 -- 12:15 pm eastern tomorrow. mike pompeo will be on capitol hill wednesday to sit before the senate foreign relations committee on the north korea policy. he will also answer questions on trump's recent meeting with vladimir putin. the coverage wednesday starts it to:30 eastern here on c- span3. also available on c-span.org . this weekend on american history tv, saturday at 6 pm easter, on the civil war, the author of the book lincolns mercenary explains the economic factors that drove many poor northerners to volunteer. san diego state university professor pierre on the vietnam

war from the u.s. military escalation in 1965 to the fall of saigon 10 years later. sunday at 11 am, a military historian talks about his book. at 4:30 pm eastern on real and on -- on reel america, films about alaska, the 1936 film , a 1949 film, escape -- eskimo hunters in northwest alaska, a 1967 film alaska centennial, and the 1944 film. watch american history tv this weekend on c-span3. join us this weekend for alaska weekend with featured programming on c-span, but to be, and american history tv.

saturday morning on c-span, a washington journal reporter will talk about the effect of climate change in alaska. sunday morning, the executive director of the national congress of american indians discusses native americans and native alaskan issues. on the communicators saturday at 6:30 pm eastern, a cable provider will talk about how the company makes broadband possible for small villages across the tundra, glaciers, and mountains. the incoming president of telemedicine and telehealth, will talk about providing healthcare three telemedicine. on the tv on saturday at noon eastern, the c-span cities tour explores the alaska literature -- literary scene with the author of amazing pipeline stories.

on sunday at 9 pm eastern, on afterwards, officer -- author mark adams talks about his book, tip of the iceberg. his experience retracing in 1899 expedition as scientists, conservationists, and others on the alaskan coast. on sunday at 2 pm, that c-span cities tour visits the alaska state capitol in the alaska native heritage center. they also will look at preparing seafood for market. at 4:30 pm on reel america, watch four documentaries on alaska. a 1936 film, a 1949 film, a 1967 film and a 1944 film.