Watching here, losses to end the week, stoxx 600 down 1. 25 . Of the major european indexes, the ftse is the biggest loser right now, down 2 . Thats because some of the heaviest stocks affected are british trading in london. Hsbc, london shares of royal dutch shell, British American tobacco, bp, all big losers, and they are very heavy, so they weigh on the ftse. It has been a banner week for equities. If you were long this week, you did quite well because we were up the past four trading. Essions it is not taking away the gains you made for the week. You can see the pound rising. This also amplifies losses on the foot. There tends to be inverse correlation between the pound and the ftse 100. And then rollsroyce. This is not the carmaker. That brand owned by bmw. ,ut the jet engine maker already troubled. It was cutting 9000 jobs it announced earlier this week, but now s p has cut rollsroyces longterm Credit Outlook two junk, and the outlook is negative, so rough for rollsroyce. Vonnie lets get to our resident fed expert, Michael Mckee. We are awaiting remarks from the fed chair jay powell, and conversation with princetons alan blinder. We will be bringing you those comments. Michael mckee is with us, and michael spoke with Loretta Mester earlier on. I would like to talk to you about about that conversation before we hear from the fed chair. It is going to be a really interesting interlook you should come alan blinder. What did you learn from Loretta Mester about what we might see from the fed and the fomc . Michael that is the question. June 10 is the next decision day for the fed. If jay powell wants to send a message, he will have to do it today. The message from Loretta Mesters we are going to do another round of Monetary Policy stimulus, but it is probably too early right now. The other thing wall street wants to know beside timing is what tools we are going to use. She suggested they will use asset purchases over guidance, which everybody has said. So then the question becomes what kind of asset purchases, and in that case, yield curve control comes up. Matt so what do you expect to hear in terms of yield curve control . Loretta mr. What Loretta Mester told us, no decision has been made. Can listen to what she had to say. Yield curve is very flat at the short end, so maybe before guidance we have given already, it is not necessary to do something to emphasize that forward guide. But i dont want to take it off the table as something that is a potential for me to think about as a possible tool. I just dont see that we needed in this space, nor do i see that we would necessarily need to use it. But if we were to use it, i would view it as a reinforcement for forward guide the short end. Vonnie so they are definitely floating the idea of at least front end curve control. Much of atext, how departure is this for one mike John Williams the new york fed for one like John Williams of the new york fed . Michael it isnt all that much different from quantitative easing in the situation we are talking about. What we are trying to do now is hold the yield curve down. The fed was using quantitative easing to pull the longterm down and push people into more risky investments. Now that they are trying to push more people into risky investments, from what lamere, mr. Said from what Loretta Mester said, they are looking more the short end. The thing is he promised to buy as many securities is necessary to push it down. If youve got credibility, you probably dont have to buy very many securities because they wont start pushing the writeup. So it could be cheaper in the long run for the fed. Matt youve spoken to Loretta Mester today, John Williams yesterday. I remember you talking to Robert Kaplan a few days ago. You spoke to rosengren a couple weeks ago. Are you just on a hot streak as an economics editor for bloomberg tv, or is the fed trying to communicate a message to the markets . Michael obviously both, matt. [laughter] im on a hot streak because im obviously the best reporter out there. No, seriously, i think the fed has embraced the idea. When i went to them, and we have interviewed just about everybody now, i suggested this is the time when people are going to want to hear from the policymakers. They are going to want some direction because this is all new to everyone. I think they have embraced that idea, not necessarily because i raised it, but the idea that you get out there and talk to your consistent wants talk to your constituents. The fed was criticized for bailing out the banks and leaving the ordinary people alone. It is hard to understand a lot of these Lending Programs. For the fed to get out there proactively and explain what they are doing is probably a good strategy for them going forward, and i think that is what they are trying to do now. Vonnie theres that, but then there is also the markets. Markets are little bit more savvy. You could say there are those that are fed watchers, that are very nuanced about what the fed says, and they want to keep an eye on what Market Participants do with regard to pricing, right . They dont want to be front run by the markets when growth begins to maybe pick up slowly. Michael thats one of the problems with Forward Guidance. If you do get a runaway train, they are a where of that. But i think the markets have a pretty good idea of where the fed is now. When we talked to the right a muster today and get the information that we are going to do another round, and it is probable not going to be in tune, i dont think anybody on the trading desk doesnt understand that. It is good to have it specifically said, but people have a goodi have a good idea of where the fed is now. It is a very good example of the secondary Market Securities program, where they were going to buy etfs. You look at where spreads were and how much they have come down to basically where we were before the crisis, and all of the companies that have been able to go to market and sell debt, and yet the fed has only bought about 3 billion of etfs. It was the announcement that the fed is there, and the market knows the fed is there, that has really driven this. Obviously in europe, we have been a negative rates land for a long time. Japan as well. Bailey england, andy recently said he is not going to rule it out. Bubbly a good move. Central banks like to keep their optionality. Does the fed actually have any optionality in this sense, or are negative Interest Rates a sickly ruled out for america . Michael they are basically ruled out. They put it in terms a little andrew baileythan did. They say we are not considering it, but we wouldnt rule it out forever. But it would take an awful lot for them to go in that direction because it hurts the banks, and we know that from europes experience. It takes profit ability away from the banks, but also hurts the financial markets. It disrupts the monetary transmission, especially in the United States because some any companies rely on the money markets, and the Money Market Funds that will loan money for overnight transactions, that if you went to negative rates and Money Market Funds were losing money on those transactions, they would stop doing them. So they are very aware of that. That is not a problem you have in europe because most financing there is not done in the capital markets, but among banks, which is one reason the banks there have complained so loudly and they had to put in the tearing system to take some of the systeme the tiering to take pressure of a banks. Theink he will be doing same of what jon ferro and i were doing. Whats next . How are you going to do it . He will probably give jay powell a chance to explain some of the Lending Programs and maybe talk about when they are going to get the main street are grim up and how that is going to work because that is a very different animal than anything the fed has done before. I think he is using the opportunity to talk philosophy. We may have a little more nerdy conversation than we sometimes do because blinder is obviously a former vice chairman of the fed. Matt and a professor. I dont want to harp on negative rates, but theres so much interest here, and a lot of european viewers are tuned in because we are getting ready for the close. Someone wrote in a question, and although you are an economist, not a lawyer, i will throw it to you. Is it legal to have negative rates in the u. S. . Im sure people have thrown it around a little bit, but have you ever heard a detailed discussion on the legality of negative rates . Michael there have been discussions, and there are two the about whether it is legal in the u. S. Are questions about whether it is legal in the u. S. , given legal activism in the United States, if the fed ever went in that direction, they would probably be challenged and there would be some sort of determination eventually made. That is another reason the fed doesnt want to do it, because they dont want to step into that thicket. They would be happy if congress thought they should do negative rates, if they wrote in an actual permission to do that in the Federal Reserve act, which they dont have. It is kind of an open question. When you have market rates go negative, that is not the problem. But that could be an issue. Vonnie what kind of central banking willie have in five years . We passed through a major crisis that entails the fed getting creative. Ben bernanke was really the beginning of it, and then janet yellen with communication and so on. What does the central bank become after this, particularly now that we have in ministry should waiting and more than ever . We have the administration weighing in more than ever . That is really the question. It will depend on a lot of things. If the ball, progress on the virus and how deeply the fed has to go further into Monetary Policy. Congress and the president and the fed think their role should be. They are working hand in glove with the treasury to part. We havent seen anything quite like that since the accord of the early 1950s. The fed stopped liking that and got out of it, and now they are sort of back in it. At some point, they are definitely going to want to get back out of that again, but then congress, it will be up to them to decide if they want a completely independent central bank. Would they prefer a central bank that works with the government . Whereey set up a system the fed isnt subject to political influence if they do that . A lot of questions. I think the only thing we know for sure is that we will have a very big Balance Sheet in five years, but how they go about Monetary Policy and how the fed fits into the u. S. Financial system, an open question. Before. ve been here huge Balance Sheet, lots of stimulus, and real concerns about inflation. Vonnie matt, i am going to jump in actually because i think we are going to get to the event itself. Here is professor alan blinder with fed chair jerome powell. I want to start with a few general questions about the fed and then get more down to some of the specific things you have been dealing with. At the general level, strange as it may seem to those in the financial world, not every american spends every minute of every day thinking about the Federal Reserve. So could you maybe start us off by talking a little bit about where and how we see the fed fitting in in the more general scheme of American Government . And while you are doing that, maybe you could reveal the secret handshake. [laughter] chair powell i would be glad to. The fed is an institution, a Great American institution, founded about 107 years ago. It is an interesting institution from the standpoint of it is sort of federated in nature. Theres a board and washington, d. C. The members are nominated by the president , confirmed by the senate, and serve long terms of 14 years, although your term as chair or vice chair, as you know, is only four years. Oft is meant to keep you out the political cycle, so they are not synced up with the political cycle, so we are supposed to operate in a very nonpolitical way. We also have 12 reserve banks around the country, and the president of those reserve banks also serve on the federal open Market Committee, which is where we set Interest Rates. Those are appointed by their private sector boards, with the accent of the board with the consent of the board. It is a way of making sure we dont have the kind of groupthink that could result from having everyone in one building in one part of the country. We instead have institutionalized for city of perspectives from all around the country. The fed is present in every community in one way or another all around the country. So we do a few things. We look after the overall stability of the Financial System, and we have tools to do that. In an Interest Rates effort to support Economic Activity when it needs support, and we supervise and regulate banks. We operate large parts of the payment system. We have a lot of different roles. All of them are meant to be undertaken in a strictly nonpolitical way that serves all americans. The last thing i will say is that we do have this precious grant of independence, as all Central Banks in Major Economies do, but with that comes the obligation of transparency and accountability, so we are directly accountable in our system of government to the oversight committees that we report to in congress, and we work very hard to keep their trust, to understand whats on their minds, to expand what we are doing, as a way for us to maintain our democratic legitimacy in a system where most of the authority is, as it should be, in elected people. As a somewhat specific followup to that, do you worry either generically, or especially these days when so much is going on, that the public markets, the congress, the white house hold exaggerated beliefs about what the federal actuallyan accomplish . Ission creep is one thing what do you thing about that . Chair powell i think we do have this precious grant of independence, and that means that we really need to stay in our lane and just do those things that congress assigns us to do. If we are going to rome all over the landscape, then we shouldnt be independent. We should be part of the elected branch of government. That means we stick to our knitting, i would say. We do have tools that can be used in the Financial System only in emergency situations, such as the Global Financial crisis of a decade ago, such as the pandemic. Nowe tools can only be used with the approval of the secretary of the treasury under statute passed by congress, under doddfrank. So we do use those tools, and they are very powerful, but they have quite a limited use, only to be used in unusual and extant circumstances, with the permission of the treasury secretary, who of course is part of the administration. So i think we need to stress, and we try to stress all the time, that we have tools that we can use, but they are not for general times. Particularly now, what i would say is the tools we are using our lending tools, not spending tools. We dont have the ability to make rants of money to particular groups of people, no matter how directly they are affected by the pandemic. That is a job for elected officials who control spending and taxation. It is not a job for appointed officials like us. So there is a need to underscore the limits of our powers, although our authorities are very strong, and at a time like this, you are seeing how strong they can be. Chair powell alan one of the ways alan one of the ways you draw a line between lending and only loans to make that be paid back. You might say, with 100 certainty, if there was such a thing in the world. That has generally been the dictum of the fed. You have been directed during the pandemic not you personally, the fed has been directed to make loans in places where the fed has not gone before. Not 100 they are guaranteed to pay back. I was talking a minute ago about Mission Creep or Mission Impossible does that kind of thing where you . Chair powell this is an emergency of a nature we havent really seen before. At the beginning of this, my colleagues and i really saw that we needed to be using our tools to their fullest extent, that it would be very hard to explain to the public why we would hold back from doing that at a time when we saw the 50 year low in unemployment turn into a 90 year high in unemployment in the space of 60 days. We saw economies around the world shutting down, and i think we felt called to do what we could. So we crossed a lot of redlines that had not been crossed before, and i am very comfortable that this is the situation in which you do that, and then you figure it out afterward. So that is how i would look at that. Alan thank you. In line with that, the fed has stood up in a very short time a veritable alphabet soup of special lending facilities, some of which look like what happened in the financial crisis, but many of which look very different from that. Can you give us a sense institutionally of how that was passed . To not sleeping much in march. I can sympathize with that. But can you give us a sense of how different and difficult it was for the institution . Anir powell i think it is extra ordinary institution. We are lucky to have a large number of highly dedicated, highly capable people, many of whom were here and lived through the Global Financial crisis and were critical players in implementing the facilities that were put in place then to prevent the collapse of the global Financial System. A very different set of problems. So i think we benefit from that experience, and all of us, as you have, have studied the lessons of the financial crisis a great people. So i think we knew a lot. I would break it into a series of phases. First, what happened was as the pandemic became clearer a week or so before february, that the pandemic was going to be a global phenomenon, any hope that would be contained in a meaningful way in a province of china was gone, and markets began to struggle with processing that. Really. Knowable what will be the effect on global economists . Markets began to struggle, investors fled from any kind of risk, and really, markets stopped functioning in a broad sense, so companies and households couldnt borrow, couldnt rollover debt, and markets kind of closed. What we did was we came in in the first instance and tried to restore market function through a variety of ways. We purchased a lot of treasury securities to get that market working again. The shortterm money markets, which were systemically important to many private corporations, they stopped working. Turned to the provision andredit, to corporations, to municipalities and states. That is some thing we really had not done in modern history at all, but this is not the Global Financial crisis. That was about week is in the Financial System. This time, the Financial System is in good shape. Its got much better risk management, high levels of liquidity. This was the problem in the real economy, and the private sector, of companies not being able to finance themselves. So we announced the setup of a facility to backstop that market, and as we backstop these markets, even before we begin actually lending, they start to work again. There is a confidence factor we have seen in real force here. So it was a remarkable time. It is a great honor to serve in these jobs. Sometimes they are not easy, but we never forget how important it is, and really what an honor it is to be able to be in a job at this time when you are really needed. Pursue onee particular aspect of that which i guess is still incipient, which is the socalled main Street Lending programs. I remember when main street was first announced, thinking that this was an assignment that pushed the fed into a place where no fed had ever been, even more so than the ones you were just speaking about. Can you comment a bit about the special difficulties the fed has encountered in standing up these socalled main Street Lending programs . Chair powell the main street facility is for small and mediumsized companies, companies that arent large way dont haveme the ability to get access to the capital markets, so they dont issue public ons or public equity, meaning that the way they get their financing in their operations is really through the Banking System and for nonbank. So we have a facility that deals with companies that have access to the bond market, and congress has done a lot for Smaller Companies under 500 employees, with the paycheck protection program. This is for the companies in the middle. It is very challenging because it is an extra nearly diverse space. The credit needs of different kinds of companies in Different Industries are extraordinarily diverse some of them borrow against assets, some against cash flow. Some are much more volatile than others. It is quite diverse, and trying to figure out the right credit products for that market is challenging area in addition, the world of credit is a world every agreement between a borrower and a bank is negotiated, so each Credit Agreement is a little bit different. It doesnt have the degree of standardization that the bond market has, where there are forms of indentures and perspectives. It is much more routine than it is, so it is challenging to get in there, but nonetheless, get in there we will. We are days away from making our first loans in main street. We have three facilities that are part of it, meant to reach out to different parts of that broad space. In the meantime, many of those companies are finding that they can borrow from banks. Others are waiting for us to get our facility up and running area it is far and away the biggest challenge of any of the 11 facilities we have set up, the 3 main st elegies the 3 main st facilities. As we have shown, we are very willing to learn from experience. We put out a proposed term sheet. We got a couple thousand letters from people on the first nine street term sheet. We have consulted actively with all different kinds of companies and experts, and we have now released the documents and do expect to start making loans on main street in a few days. Alan well, congratulations. Are you envisioning these loans million, half a million . What size loans are we talking about . Chair powell the current structure is that the smallest loans would be about 500,000, and the largest could be over 100 million, and that is for the larger companies. We are working with companies that have as many as 15,000 employees and 5 billion in revenue, and there is no limit on the bottom end. I could imagine us expanding on either end. The whole nature of this exercise that congress has given us is go find companies that have employees. Really, it is about creating a context in which employees will have the best chance to either keep their job or go back to their old job, or find a new job. That is the point of this ago and have kept them there. The fed, even before you were chair, has made it quite clear it does not have any intention of doing that. , is thisxplain why some aspect of american exceptionalism that is not so obvious . Chair powell maybe i will give context. We set a policy rate which is the federal funds rate. We lower it when the economy is weak. We raise it when the economy is stronger. Inflation was more often a problem and we would often raise it. It has not been a problem in a while. We raised it to prevent the economy from overheating. In the 90s, the mid to late 90s, just after you were at the fed, japan hit the effective lower bound, it hit zero. The question came to the fore, what you do now. Since then, it is more than 20 years, central bankers and economists have been working on the problem of what can Central Banks to when they hit zero . Are they out of ammunition . The answer is no. During the Global Financial crisis the fed got to zero. We effectively promised to hold our policy Interest Rate at zero for a long time. That affects short, medium, and longterm Interest Rates. That supports Economic Activity. Borrowers borrow across the curve. We also bought longerterm treasury securities and other fully guaranteed securities in order to lower longterm yields. Those are the principal tools we use during the financial crisis. We feel we understand them. We no longer think of them as nonstandard tools. We think of them as in the toolbox. We are in an area of much lower Interest Rates. We expect part of the time to be at the effective lower bound of zero. Some banks decided in addition to that to use negative rates. We do not think that is an appropriate tool in the United States. I would say the evidence on whether it actually works is mixed. There are currently negative side effects. There sometimes are with these things. It is not clear to my colleagues and me on the open Market Committee this is a tool that would be appropriate to deploy in the United States. If i can push you on that. What is different in the United States compared to the euro zone . Chair powell a couple of things. One, i do not see that the evidence this is not a difference. This is a difference in understanding. There are many central bankers who feel this way. The evidence on whether it actually helps is pretty ambiguous. One thing it does is interferes with the process of credit intermediation. Banks taken deposits and lend it out to the extent the policy rate is negative. You are crushing down on bank margins and that makes them lend less. There are other possible negative effects. The evidence is mixed. It is not clear either way. We also have institutional arrangements that would not work with negative rates. I would not say those are decisive. Things like the Money Market Fund industry, which a lot of companies of various kinds used to fund themselves in which individuals look upon as a place to put their money. Alan thank you very much. Let me turn to questions that have come in from people listening. Squinting. I am reading this off of my screen with my i will not even mention my age. From frankestion wilson thanking you for your extraordinary job. The question is how sensitive is the fed to the difficult time that the lower end of the economic spectrum is experiencing these days compared to the extraordinary strength in the equity market that wall street has seen. Does that affect policy at all or is it just a necessary side effect, that even if you are not rooting for it just happens . Chair powell let me say hello thatank and say we know everyone is affected by the pandemic in a negative way to one degree or another. The burdens are falling very strongly on those who can least afford to bear them. Come largely from ,arts of the Service Economy which involve dealing with large groups of people that are tightly together. That is restaurants, it is bars, it is travel, it is hotels, it is a lot of places. Many of the jobs that have been are, at least temporarily, relatively low paid Service Industry jobs. You can see those are the people who are being laid off who have the least financial resources. Survey,ple, in our shed survey of households economic decisionmaking, which we released a week ago. If you are someone who made 40,000 or less annually, the chances of you being laid off in the last month or so approach 40 . Almost 40 of those people have lost their job. Falling, secondly falling on women to an extraordinary degree. There is tremendous inequality in the way the pandemic is affecting our population. You asked, does that affect our policy. It does. Essentially, part of our mandate is maximum employment. Maximum employment and stable prices. We are very focused on the full range of employment and doing whatever we can to try to get those people back to work or in a new job. Some of those jobs may take a while to come back. It is important those people be protected from this event. This is not something that was anybodys fault. This was a natural disaster. It is important they receive support, and they have received a high degree of support so far. Alan thank you. Is from question several people, but first from gilchrest burke. The question is what if there is another big wave of covid19 in the late fall in the fed is asked to react again . How big of a Balance Sheet can you manage before it gets to be , and one of the problems he asks in the question is inflation maybe you see other problems. Is there any limit to how big you can make the Balance Sheet . Chair powell let me start by saying we are not experts on epidemiology, the spread of pandemics or anything like that. We talk to experts in the main answer they give you his things are highly uncertain. We do not know anything the general public does not know if you are listening to the expert about how this will go. There is clearly a risk of a second outbreak or second wave. That would be challenging. We will continue to react. We are not closed any limits we might have. We would continue to have some authority to react. I would worry more that a second outbreak would undermine confidence. A full return a full recovery of the economy will depend on people being confident it is safe to go out, safe to engage in a broad range of economic activities. That is how the economy will recover. You see people testing the limits, every day all of us are doing things we might not have done two months ago and you are seeing how that works. We are watching the data nationally. That is what is going on. A second wave would undermine Public Confidence and might make for a longer a significantly longer recovery and a weaker recovery. ,n terms of the Balance Sheet now aren concerns for to the downside. The risks are to the downside, not the upside. We see prices moving down because in a lot of parts of the economy people are cutting prices. You see week inflation data for a a while. Dealing with disinflationary forces for a long time. Sinceing that is happened 1975 is inflation was the date economic issue since another volcker, whatpaul he did at the fed and his colleagues did, inflation has been under control. The upside risk to inflation is not great. I would say our Balance Sheet cannot go to infinity. Comfortablei am with where we are now and the path we are on and do not see risks based on what we are doing to inflation or to financial stability. Alan thank you. A couple of variance on this question. I will read the one that came from roseann hartford. It reads once the fed is done purchasing fixed Income Securities anticipating going down the road you are talking about what is the plan for managing the portfolio . Sayingthe question as there might be more than fixed Income Securities. Withwell we tend the things that wind up on our Balance Sheet during the financial crisis, we help them to maturity. These are relatively shortterm loans of four years. That is what we have been doing. The plan would be not to sell them but to hold them to maturity. I would say we got we do not desire to have an active role in managing the portfolio. We are not the right ones once the facilities have done the lending they are going to do , the decisions about what to do , about defaults and things like that will not be something we will want to be involved in on a daytoday basis. Those are arrangements that will work out. We have a Financial Advisor on each of these facilities. In some way or other, that will be managed in a commercially reasonable way, but not by fed policymakers. Alan thank you. That is very useful. A generic question from judy goesabout how the fed about communicating with the public on these emergency rules, and in particularly an effort to avoid some of the misunderstandings that took root after the emergency measures of the financial crisis about a decade ago. That proved not to be too popular with the public, even though it was tremendously successful. Chair powell the first thing is we are disclosing a lot of information, much more than the law actually requires us to disclose. We are disclosing, for all of the facilities under the cares act, we will be disclosing the name of the borrower, the amount, will be updating those on a regular basis. I like to think disclosure will help. I read things in the paper that are supposedly happening, and i know they are not happening. One reason they are not happening is we have not made very many loans. I read we are extending tons of credit to this industry. We have not made a lot of loans in the Corporate Credit facilities. We have not started the municipal facility. I think transparency is important. I also think this is something weve been focused on. You are at the beginning of the transparency revolution and one of its principal authors. The old theory was tell them nothing, there should be a lot of mystery around central banking. Alan and a bunch of other researchers flip that around, now the view has been that transparency is your friend, that markets will do the work for you if they understand what you are doing. We work very hard to explain ourselves to the general Public Comment particularly focused on the general publics elected representatives in congress. We work hard to stay in communication with them, the ones on the committee, the ones on the leadership, the ones not on the committee, and also we try to communicate publicly through a lot of outreach so we explain what we are doing and try to avoid misunderstandings, and also listen to feedback. We have listened. We did this round of event over last year called the fed listens , which was such a successful program, where we listen to people from all different walks of American Life talk about how they think about the fed and Monetary Policy. I tell you it informs the work we have been doing in reviewing the way we do what we do. That, i a footnote to you draw they time distinction between lending and spending. On the a whole book crisis, as you know. The public left that with no distinction, thinking the Federal Reserve had spent all this money and the treasury had spent all this money, even though virtually every penny was lending, not spending. Dont thinkng i have a magic solution to how to explain this to the average tax,can, but it is a use and in the case of the financial crisis than ever got the distinction. Good luck with that. Chair powell i would just say, most people have Better Things to do in their life than to understand the details of central banking. Working at the fed you get that from day one. Our obligation is to be as transparent as possible and clearly explain ourselves to the public that we serve. We work really hard at that. That is part of the job. It is part of how we retain our democratic legitimacy. Alan thank you. Time for a few more questions. I am squinting at the screen to try to read them. Michelle asks this is a bit related to previous question are the latest fed policies likely to lead to more income inequality in the United States . Chair powell absolutely not. I will tell you why. As i mentioned, the pandemic is falling on those least able to bear its burdens. It is a great increaser of inequality. If you look at the labor Market Reports that the bureau of labor statistics puts out, you will in it is lowpaid workers the Service Industries bearing the brunt of this. It is also women, as i mentioned. Everything we do, everything we do is focused on creating an environment in which those people will have the best chance to keep their job or get a new job or maybe go back to their old job if they have been furloughed. That is at work. I will not give a name, but just as an example, a company that was investmentgrade on march 22 but has been downgraded to junk. The noninvestment Grade Company that has tens of thousands of employees. Why would we include that company in one of our programs . These are Large Companies and there are many of them that fit that description. I am not thinking of anyone. The reason is this. A company that does not have Market Access and cannot roll over its debt and cannot have cash on hand to deal with its obligations, what they will do is lay people off. They will cut costs. They will not have any choice. That is the choice they will make. By announcing our facility and including those companies, the ones who actually need the credit, or needed the credit in march, those companies have now been able to go out and finance themselves and have lots of cash on their Balance Sheet. These are companies that are not so directly affected as some of the Service Industry companies are that deal directly with the public in large numbers. They have been able to avoid layoffs. That is the point of all of this. I think we have to keep our focus tightly on that goal of the labor market in supporting the labor market, and not get distracted by other goals. Alan thank you. This will be the last question. It takes us outside the boundaries of the United States. As the bedbugs of the Global Economic situation, as the fed looks at the Global Economic situation, what are you thinking about about the pandemic and the economics about the poor countries in asia . She lists india, pakistan, and indonesia as examples. Chair powell this is a challenging time for those countries. They do not have the kind of medical infrastructure we have. They do not have the policy space. They do not have the ability to provide support to their economy , even through fiscal policy or Monetary Policy. It is a very difficult, challenging time for many of those poorer countries. International Monetary Fund and the world bank are doing everything they can to get more and try to help those countries. There is no question for all of the suffering going on in the countries like the United States, western europe, you are outcomes inworse many of the poorer countries. It is something those International Organizations will legal will need a lot of support from nations like the United States and have been getting it to deal with. From ane final question extremely important person, very important person. Powell asks do you have a favorite child, and should that favorite child be congratulated on anything . Chair powell i love all of my children equally, but i certainly think susan powell deserves a special graduations special congratulations for graduating in the class of 2020. Alan all of us here join that congratulations, susan. The class of 2020 will long remember the end of its senior year, and it will get two graduations. Soon and one happening another physical one in a year. , on behalf ofl the griswold center, if i may take the liberty, although i am not a member, on behalf of the class of 1975, on behalf of of the entire Princeton University community, and indeed the citizenry of the United States, i want to thank you for your service, i want to thank you for spending the time with us this morning. , ande deeply in your debt glad you are the chairman of the Federal Reserve. Chair powell thank you. Glad you are the chairman of the Federal Reserve. I am just is her microphone on . I think her microphone might be off. I will pick up while you fix that. I want to get to Michael Mckee and asked one pressing question that i think a lot of viewers will be left with after that. Alan blinder asked chairman powell is the fed responsible for increased income inequality and he said absolutely not. Theoryertainly a popular quantitatives easing has supercharged a lot of rich values held by the and therefore increased income inequality. There are couple of other ways i could think of. What do you think . Michael after 2008, the fed Lending Program did contribute income inequality because they were specifically designed to boost assets. At this point, we have supercharged the markets but we are still below where we were when the crisis began. It is hard to say weve contributed a lot of extra income to people. For the wealthy and the class that buys equities, they have lost less than they otherwise would. Jay Powells Point is that so many people were without jobs in the economy is in danger of coming to a halt. As thet hits hardest people that live paychecktopaycheck, by putting a floor under it, they are trying to Keep Companies alive, this so the vet and the fiscal authorities are doing their best to limit income inequality. Matt this is another question that dawned on me while watching this. Chairman powell says they are still days away from giving out the first main Street Program loans. I am not sure exactly when your lockdown started. Weve been locked down for overdose chrome ons. A lot of the companies that wouldve 42 months. For two months. A lot of the companies that wouldve needed loans have already gone bust. They have not been allowed to take in any revenue. Why was the fed so late to the game with this . Michael that is a question ive asked a number of fed officials, whether it is too late. They all say it is not, but obviously some Companies May not have made it to the finish line. The problem with the fed is they do not land for companies on a regular basis. They land to banks and primary dealers that lend to other people. These direct loans is a different thing. As jay powell explained today, when you are trying to make a loan you need to know in terms of pricing the loan, in terms of whether you will make the loan, whether the other party is a good credit risk. There is no way for the fed to easily know that. Their point was banks have relationships with these companies, and they know, particular he they are private companies are not publicly rated, they know whether or not there good credits are trustworthy. The fed does not have that information so they need to set up a system to do that and set up a system to channel the money and get it out there, supervise it, and in theory get it back. They were not prepared to do that. They have been criticized for moving too slowly and we can look back in hindsight and see if that is the case. That is the reason they cite for taking so long. Vonnie indeed, the fed chair said this at the beginning. It was more a case of ask and ask forgiveness later. Crossed a lot of redlines that have not been crossed before. Does that mean we are through the pale, there is no going back for the central bank . Michael the fed would like to go back. They do not want to be in this business. As we saw jay powell say today, the idea Forward Guidance and qe went from being extreme unusual measures to now being a regular part of little kid. These things part of the tool kit. These will probably be regular parts of the tool kit. Lets hope we do not need them. Vonnie no market reaction. Almost everything the fed has done has been bacon already. Michael mckee, thank you for joining us during the fed chairs chairs conversation with princeton professor alan blinder. Todayortant conversation with new jersey governor phil murphy. We heard earlier from the new york city mayor that the city may start reopening in two weeks. Berlin, andller in myself, vonnie quinn in new york closehis is european on bloomberg markets. David from new york to our tv and radio audiences worldwide, this balance of power where the world of politics meet the world of business. Market struggle to keep momentum going because of issues with china. We have kailey leinz to explain it to us. Kailey a mixed picture for the equity markets. We are awaiting that suppose a News Conference from President Trump on the china issues. Investors do not seem eager to put risk on the table ahead of that unknown factor. We have seen the s p 500 and the doubt lower. And the dow lower. The nasdaq has flipped into positive territory, but only marginally. Investors have to consider the dismal consumer data we got earlier this morning. 13. 6 percent drop in Consumer Spending in april. The consumer the engine of the u. S. Economy. That weakness is weighing on sentiment as well. We are seeing broadbased clients in the s p 500