josh: the counter to this is the 80's and paul volcker inflation came down according to the traditionals. we have never understood inflation and the malls were wrong all along or we need to models. a lot of people agree with that and from that perspective, this is what we have a university tenure system for -- for people and kickp with this the tires. if i came appear and said the id needs to raise rates, might face some consequences, but these people alone. there is a lot of interesting analysis and you can see it is starting to pick up. there's a growing following -- growing following in the academic community for this inking. understandgoing to the new normal or the new mediocre? we are still looking for the terms, let alone the modeling. : the reason they are getting more following is that the evidence is backing them up. look at what has happened in the u.s.. you hadn't low interest rates and no inflation. might we need new business models to test these old theories? must be -- this is the super bowl for you tomorrow? definitely a celebration where you think you know what's going t

. >> i want to shift to a different fed chairman, which is paul volcker, who said in a speech before the brenton woods committee last year, "by now i think we can agree that the absence of an official rules-based cooperatively managed monetary system has not been a great success. in fact, international financial crisis seem at least as frequent and more destructive in impeding economic stability and growth." chairman volcker went on to say, "the united states in particular had in the 1970s an unhappy decade of inflation ending and stagflation. the major latin american debt crisis followed in the 1980s. there was a serious banking crisis late in that decade followed by a new mexican crisis and the big and damaging asian crisis. less than a decade later it was capped by the financial crisis of the 2007 through between period and the great recession. not a pretty picture." now, you have said "it would be a grave mistake for the fed to commit to conduct monetary policy according to a mathematical rule. do you agree with chairman volcker's characterization that the "absence of an official

this is paul volcker up here. you go. gh's point, 1, 2, 3, 4, 5, 6 and 1994.nine. the what is calling for that, right? bob: we are starting at zero. it is hard to argue that close to zero is a normal level of rates. the terminal rate may be lower than it has been in the past. but i think the fed needs to get back to some sense of normalcy in the level of rates, and get the financial system functioning more normally. that is what this is about. for me this is not about a tightening. this is starting to reestablish normal functioning of the money markets and the financial system. you need to get interest rates off zero to do that. tom: the bad part of that is commodities. sinkeadline comes across, sink drops the lowest level since 2009. there is a backdrop of commodities as well. and that feeds into the inflation story, which makes you wonder how high the fed will be pushing things. data dependent and gradual at the same time? bob: it is an issue of whether ,e are going to have to tighten because inflation pressures are beginning to build. that would require pol

tom: chris verrone, there is no chart with a commercial force -- with inertial force like paul volcker1950-1951 period. when you were coming out of the war and the long yield was anchored at 2%, even though you have liftoff in 1951, it took a decade to get the long yield from 2.25 to 4.25. i think we are in the early innings here. the 1950's were also characterize as a closed economy and we were the only show in town. tom: and then the dodgers moved to l.a. john: and the game changed. guy: has the fed done enough to change that chart? the long-term story -- you think about the lessening that has been done in the extreme measures that have been applied to the u.s. economy to try to generate a pivot. you have to wonder whether or not we have done enough to get that moving. the: we are asking question, has the ecb done enough? has the bank of japan done enough? youquestion is, how much do want to do in terms of raising inflation over time? tom: so is olivia plan chart correct -- so is overly blanchard correct? -- so is olivier blanchard are correct? john: i would disagree with that. vonni

paul volcker talked about that he year ago. the bank of england has done studies.al crisis, more instability. a stable value. the best thing they can do is allow the markets to operate with the real cost of money -- i.e., let interest rates set their own level -- and start to pay down or run down their bloated balance sheet. when a bond comes do, do not reinvest the money. put it to work in the real economy. contrary i love your in view. but currencies are not like clocks because you can also have currency wars. at the end of the day, it is good for no one, but at least he gives a boost to exports in the shorter term. steve: again, because you can , like ie a currency suppose you could the minutes in an hour, does not make it right. it is very destructive. you look at countries that always try to stimulate exports by devaluation their money, they end up with a weaker economy because they got their domestic economy. look at brazil. they thought having this false commodities boom could put off making structural changes. but you look at other countries, they thought t

. >> i want to shift to a different fed chairman, which is paul volcker. who said in a stage before the bretton woods committee last year, quote, by now i think we can agree that the absence of an official rules-based cooperatively managed monetary system has not been a great success. in fact, international financial crises seem at least as frequent and more destructive in impeding economic stability and growth. chairman volcker went on to say, the united states in particular had in the 1970s an unhappy decade of inflation ending in stagflation. the major latin america debt crisis followed in the 1980s. there was a serious new mexican crisis and the big and damaging asian crisis. less than a decade later, it was capped by the financial crisis of the 2007 through 2009 period, and the great recession. not a pretty picture. now you have said, quote, it would be a grave mistake for the fed to commit to conduct monetary policy according to a mathematical rule. do you agree with chairman volcker's characterization that, quote, the absence of an official rules-ba

. >> i want to shift to a different fed chairman, which is paul volcker. who said in a stage before the bretton woods committee last year, quote, by now i think we can agree that the absence of an official rules-based cooperatively managed monetary system has not been a great success. in fact, international financial crises seem at least as frequent and more destructive in impeding economic stability and growth. chairman volcker went on to say, the united states in particular had in the 1970s an unhappy decade of inflation ending in stagflation. the major latin america debt crisis followed in the 1980s. there was a serious new mexican crisis and the big and damaging asian crisis. less than a decade later, it was capped by the financial crisis of the 2007 through 2009 period, and the great recession. not a pretty picture. now you have said, quote, it would be a grave mistake for the fed to commit to conduct monetary policy according to a mathematical rule. do you agree with chairman volcker's characterization that, quote, the absence of an official rules-ba