Live from noon to 3 00 p. M. Eastern. Yesterday the Treasury Department discussed Economic Growth and Currency Exchange rates at a form hosted by the Jack Kemp Foundation. He is introduced by foundation president. The son of former congressman. This is an hour and 15 minutes. Joining us today. My name is jim kemp. We had been around for about nine years and we have a very International Audience today. Many people in the United States remember him mostly for being an nfl quarterback for 13 years for the Buffalo Bills and most of that time in the 1960s after he have a sufficient number of concussions he decided it was appropriate to run for the United States congress. In 1970 my dad was elected for Congress Just outside of buffalo new york. And serve in congress for 18 years. Until he ran for president in 1998. Unsuccessfully losing to George Hw Bush in the primary. They served for four years. And then he went into what he called the political wilderness. In the early 90s. And he was very surprised to receive a call from an old foe a friendly foe but bob dole asked my father to be his Vice President ial nominee in 1986. It was a surprise i happen to be playing football in the Canadian Football League at the time. A buddy of mine told me. I said i think you might want to come check this out. My parents they didnt need to consult me. They have gone on and said yes and not only did it surprise the u. S. Media but as family members did not know either. My dad have empowered america. When he passed away in 2009 i was really fortunate and privileged to start a foundation in his name which exist today. Today we have that kemp forum the kemp forum on global Economic Growth. Its a debate and discussion series that provides a platform for the competition of ideas. I hope you and steve can please be civil today. Isnt that what our country needs. Many people talking about ideas and thinking about the way that reality works. In today talking about global Economic Growth and thinking about the way that business is transacted instantaneously and what the parameters for that business are. How do they set their financial policies so that people can become all that god created them to be. The Jack Kemp Foundation is to advance the american idea and we Cover Economic policy and Foreign Policy and equality of opportunity. Inspired by him. Today if you are interested in what we are talking about and want to have that social media conversation that apparently is pretty that is pervasive you can use the hashtag kemp forum. And one thing that i do want to know about my dad a lot of people knew him for his football career but supply side economics was what he was known for in his political career. He was not a great politician because he knew how to work washington. He was a great politician because he believed in the american idea and believed in the substance that became supplyside economics. Known as the combination of getting tax rates right. To maximize incentives and having tighter Monetary Policy than was have at the time. Which is what helped and the stagflation of the 80s. It really launch dads political career and helped people to take a physical education major from Occidental College seriously in the economic realm. In a quote from him on this topic my father in 1982 said that what is too little recognize is recognizes the fact that the pressure for protectionism more often than not originates in a failure of the Monetary System. A calming and increasingly market requires the medium of exchange. They manifest themselves as disruptions of trade. Not bad for a quarterback. Who had have some concussions. In the 80s to focus attention on a more stable Monetary System he realized there was a lot of people that had written a great step on it. He also realized that lyrically to get anything done you have to be able to engage with folks on the other side. They went to a democratic senator from new jersey. And they convened conferences talking about Monetary Policy and international Monetary Policy that laid the groundwork for the plaza accord 1989. It focused on stabilizing the system. Those accords made important contributions in today given and the financial instability that we have seen in recent years we think it may be time for such consideration of a new Exchange Rate accord. So last year at the Jack Kemp Foundation. We started the project on Exchange Rates in the dollar. It was directed by sean. He seen it in the back. Thank you for being the inspiration behind this and taking the inspiration that you got from mundell and kemp and doing this. Into honor dr. Mundell i would like to read a quote from him as well. At our first event last year he sent us a letter and said the following. There is no valid economic argument in favor global monetary disarray. The major currency shifts. They serve to is that exacerbates. It is just turbulence and waste. To contribute to rising political stresses. I fear continued longterm trade imbalances. They remove barriers while at the same time maintaining a stable account. Debt as i mentioned. He looked for people that were great thinkers on the issues that he believed were central to the Human Flourishing in america should represent. Some years ago i assume it was in the 80s my dad met david and they became friends and dad asked david it rang often. And i think he learned that he needed to respond quickly. There thrilled with the appointment. Grateful for the family. The right man at the right time. Im glad that you are all have the opportunity. And meet him as well. You are really happy to have dr. Steves with us here. When you think and i know everybody thinks about this when they wake up in the morning. When you think of hyperinflation where instability is rising and measuring the hyperinflation. And shake it to its core its a problem that a lot of people arent thinking about. And he is advising nations that want to end or prevent that hyperinflation. Steve is a professor of applied economics and the codirector of the institute for applied economics. It is also a senior fellow. And the troubles currency project. The International Monetary research in beijing. Contributing editor at the central banking in london. He is been a key ally to us at this project and steve is going to be very involved in todays program. Steve please come up and share some remarks with us. I will be rather brief in my presentation. I will introduce is probably not further than your dad and david go back. In any case it is a pleasure to be here i would like to make three powerpoint presentations the first one as supplyside economics. In supplyside economics they still wonder what that is. From the fundamental things. Its minding your peace more than your queues. That is prices rather than quantities. If you go back to the start of the crisis that we began actually in 2007 thats where i want to begin. That crisis started bubbling up in august of 2007 in the United States. With the subprime mortgage fiasco. It also more pointedly blossomed in the uk when Northern Iraq with the savings and loan institutions and went under. The first bank run that they had had in a century Northern Iraq fooled in 2007 march of 2007 he was taken over by j. P. Morgan and aig. And then the big one came. And that is september 152008. You have the rampup of all of these problems coming. The supplyside economics side of the story. I will go if i can run this properly. The u. S. Dollar against the euro in three short months it appreciated by over 20 , a fantastic price move in the most important pricing in the world. That important prize by the way was not on the dashboard of anyone at the fed in the higher ranks, meaning the chairman. It was not on the chairman enzi dashboard. But its on the supply side dashboard. So we had the collapse of the euro. We had a sharp appreciation in the dollar, collapse and the price of gold. Thats another price. The price of oil you can see we had a tremendous decline, almost 60 , and almost instantly the Consumer Price index it was 5. 6 in july, and it went down to 1. 1 of 4. 5 percentage point drop, huge collapse. By the time we got into the summer of 2009, 2009, actuallye economy was registering negative on the cpi index. We were actually deflating. The point here is in the supply side view of things focusing on prices is what . The Monetary Policy in the United States at the time these problems were developing, and lehman was getting boxed into a corner was way too tight. We had a huge appreciation of the u. S. Dollar. The dollar was soaring at this time, suggesting Monetary Policy was too tight. So if we go to the second slide, how do we fix this . Well, we fix it, the second slide i like to call my because bob mondale as a group of friends and associates visit him every summer outside of siena and the group usual suspects including former central bankers such as paul volcker is a steadfast member of the group. Talking about stability. Stability might not be everything that everything is nothing without stability. In general, ticket with regard to Exchange Rates. So here you go up at the top, you can see that he quit up there when the dollar was very weak and then we had the summer of 2008 where the thing appreciates massively and comes down. That was a big move on the first slide that i had. Its out of this range of 120140. When its above 140 its very weak and when it is below it is extremely strong and the euro is weak. Our proposal at mundell is that we should have some arrangement between the United States and the europeans to stabilize the Exchange Rate, the most important prize in the world, the dollareuro Exchange Rate. If that was stable all the other satellites would stabilize around it because they are very much focused on that important price. So when the dollar is weak, when its above 140 on that chart, how does it get stabilized . The ecb would buy the dollar and if youre buying the dollar that means they are increasing their Monetary Base so they would loosen up their Monetary Policy, and on the other side if the dollar, the euro is very weak and the dollar is very strong, if you were down below 1. 20 on this, the fed, actually would defend the euro, purchasing euros and, of course, increasing the Monetary Base in the United States as a result loosening up. And the relative values and monetary stands would be stable in europe and the United States which were talking about a big chunk of the World Economy, if, in fact, they found some sort of rule or had some kind of agreement along those lines. In this regard it is interesting, our featured speaker of the day, if you look back to scholarly work, including an article in the 2005 issue of the cato journal had this to say here clearly, a stable currency, not a strong or weak, is appropriate during most of the countries economic life. So im going to introduce david in a minute. We are very much on the same page. And as you can see this idea of stability in general is recognized by people in the supplyside camp, in the economic sphere. Now, the last slide is why does anyone care about stable money, or do Companies Care about stable money . I had two of my Research Assistant spend the better part of an semester reading every annual report of the top 100 companies in the United States. And they wanted to see, one, did they say anything about Exchange Rates or Exchange Rate risk, Exchange Rate exposure . And as you can see every Single Company in these three groups that i have, yes, they noted exposure to Foreign Exchange risk and it was a concern to them. The second item down here, did the company hedge its risk . As you can see 77 77 companies are in column one, so that means 77 in that Group Representing that group did hedge, and also in the third row down there you can see that group was hedging, too. There were 20 companies in there. You had 97 of all top 100 companies actually were not only concerned but also hedging their risk. Now, the last item, did they quantify the foreignexchange losses . The first group you at 77. They did quantify. They gave you a number. The second group also quantified, and they did not hedge. There were only three companies out of the top 100 that did not hedge but the did report their losses. In the third group they were concerned, they hedged, and they did not report their losses. So what kind of losses are we talking about . In 2016 you have microsoft, effects loss, 3. 3 billion. Alphabet lost a billion in foreignexchange. Proctor and gamble 880 million. You are talking about real money, so concerned action in most cases hedging, still losses and the losses are quite large. And with that, i will terminate my slide presentation and get to a more pleasurable thing, and that is introducing my good friend, undersecretary David Malpass to you. David is and around and is not only been around, hes very respected on wall street where he was at bear stearns as a chief economist, and also had his own independent consultancy, very well respected on wall street. Hes been in washington on various tours of duty. George bush number one, u. S. Secretary, u. S. Treasury department, assistant secretary. Prior to that ronald reagan. That was my First Encounter with david in the political sphere, u. S. Treasury. Also the chief of staff on the republican step for the joint economic committee. So hes been on the hill. Hes been u. S. Treasury two times around. Hes been on wall street and a number of positions, and i think the main thing about david that i like is the fact that he thinks and he writes. So if you go back and look at the wall street journal, you will find many articles that david and. I quoted one out of the cato journal, so hes a thinker and hes a writer. He likes ideas and likes the action, both on wall street and in washington. So with that, david, the floor is yours. [applause] thank you very much, professor. And im very happy to be here at the Jack Kemp Foundation. I want to thank jim kemp and sean rustin for putting this together. Also steve hankey for the very kind introduction, and warm regards to joann. I watched lyndsay bahn run the downhill yesterday and i thought of joann and jack bombing down the ski slopes where they were excellent skiers. So i want to answer the question of when done at first meet jack. Those in 1984. It was a houseSenate Budget conference, and he was persistent, tenacious in fighting for ideas. I went to mount vernon on monday for president , during president s day, took my family there, and we can all remember and here we are in a Historic Building here. Those were Historic Buildings they are. On how powerful our Country Foundation is inviting for ideas. I want to talk today about peace through strength. Thats one of our strongest ideas, how do we create peace having a Strong Economy and the Trump Administration high priority is on growth, both here and abroad, as a way to make a stronger and to create a Good Environment for people, for higher Median Income spirit we need a Strong Economy that provides sufficient resources for the national security. Thats been a priority in the new budget. So we are sparking the growth side of that equation through a tax reform law that will approve the structure of the economy. Along with regulatory reform, image reform and trade reform. The policies are aimed at allowing new businesses to form and Small Businesses to grow. This sounds a little like jack kemp. The goal is to achieve higher Median Income. That means more pay for workers comp for more workers, and to reverse the policies of weakness and decline that prevailed over the last decade. The council of economic advisers will be releasing a great new report today on these growth policies. Its coming out i think this afternoon. Its chockfull of chapters about how do you grow an economy, 700 pages worth, and i commend it to you. Tax reform is one of the Critical Reforms discussed in the report so i want to go into that a little bit.