On the sculpt theyre interested theres a good book called firefighting which is a summary of the crisis in First Responders which digs deeply into these programs. I recommend everyone have a look at it over the next couple of weeks. Been among other things has been distinguished economic historian being wellsuited to put this horrible event we are experiencing now in context as well it gives a sense today about what will determine how deep this recession will be perhaps how long it will last, how effective the fiscal and monetary response has been, and perhaps will likely come and whether or not the covid19 recession will leave longlasting scars on the u. S. In the Global Economy so turn this over to ben for his remarks after which david wessel will pose some questions and after that therell be some instructions on how the audience members can ask their own questions. So bent over to you and thank you for doing this. So thank you and thank you for joining us this afternoon it feels like a long time ago but in january or february we had a good economy with three and half unemployment rate. Where helpful lease the strength of that economy will provide a little bit of momentum and financial reserve to get through this. First what had happened as the world has been hit by the covidien 19 virus, the virus itself is doing great damage. But from an Economic Perspective the fact that nonessential businesses are being shut down globally its having an enormous effect on Economic Activity. People are out not shopping theyre not working kids are not going to school. We are going to see the effects of that very soon. You need to keep the data in perspective. If gdp in the Second Quarter is say 10 lower than in the first quarter, we will record on an annual basis and multiply by four its very possible seed gdp numbers over a magnitude of minus 30 or greater. Likewise unemployment is hard to measure in the short term. People who are furloughed from a company are they unemployed will they be coming back . In the near term will see dramatic numbers but we wont know for a while how serious and how deep this phenomenon is going to be. People have made comparisons to the Great Depression, its not a good comparison the depression was 12 years long, came fight a chance from financial crisis a manmade, human made errors and decisions. This is more like a natural disaster. The response is more like emergency relief that it is a typical stimulus or anti recessionary response. Now having said that, the critical factor in terms of how bad this is going to be, how much imprint it will leave on the u. S. Economy, is its duration. How long will it last . The longer at last, the more businesses will fail financially. Theyll close their doors. Longer it lasts the more people lose their jobs and lose their association with the former employers. The longer it lasts the more disruption there will be in the harder it will be to come back. To the duration will be critical. The most determinate is the Public Health response. We currently arent shut down because we are trying to bend the curve. That means they want to get that number of new cases low enough that people feel confident the system can handle the cases. We want to add palliatives, methods and treatments you want to test and tracy ultimately want to be able to feel people can go back to work safely and that is going to depend more than anything else on the Public Health response. I think that is still a great deal of question on how thats gonna go. One scenario is the partially open up the economy over the summer, and perhaps in the fall theres more infection and we shuts down part of the economy again. Could be a very bad year for the u. S. Economy the Public Health response and our ability to make sure hospitals have the equipment they need the scientific establishments putting all of its resources into addressing this disease. That will be the most important determinant of how long and how deep this downturn is. Having said all of that there are other components to the response we talk about briefly the fiscal response and spent most of my time on how the Federal Reserve is responding to this crisis. We are not really talking here about a stimulus package because people cant really go out and shop. What were talking about us emergency relief. What we need to do primarily in the fiscal package is make sure people can survive this. Without very low income, businesses that lose revenue can pay their bills, pay the rent, so when the all clear is sounded or partially clear is sounded they can open up again and we can restore Economic Activity. Thats a big part. Besides the Fiscal Program that addresses health needs the biggest part of the karis acted twopoint to trillion dollars is trying just to provide life support to an economy that will be shut down for a while until we have a better grip on the disease. The money is going into direct payments to individuals to help them get through this. I think the main issues there are logistical. Are weakening money to the people fast enough . Is that enough . Will probably be more coming later. It is the right idea to help people get to this. The other part is to help businesses survive this. And that involves grants, large amounts of money for the Airline Industry also credit to help firms pay their bills and so they remain solvent and can open up again when the Health Situation is better. I think overall, the fiscal policy response to think of as a emergency relief package or Disaster Relief has been pretty good. There are some logistical issues and getting the money out. But it has the right shape. I do suspect therell be more coming later as we help the economy of active full employment. I would also add this as bribery be debt finance which in the circumstances is appropriate. Happy have the capacity to borrow and deal with these types of crises. Now let me talk with the remaining few minutes about Federal Reserve which has been extraordinarily active. I want to commend for being very proactive in addressing concerns in the economy. The fed has done basically three types of things. Each of which has Important Role with our system and economy. The first is supporting market functioning and liquidity. This is what Central Banks were created for. This is what the fed looks out for is your listing the fed has been dealing with liquidity issues when the repo markets were destabilized the fed was putting liquidity in the system since then the pressures on the Financial Markets coming from the insurgency, associated with this crisis, theres been a lot of destabilization, the fed has responded in a big way. It has been for example buying large amounts of treasury and securities to have good functioning in those critical markets. It continues to put cash into the system to try to make the repo markets and the money markets work better. Open up the discount window so banks can borrow one fourth of 1 . The interest, as they need liquidity to make loans, very importantly, the fed has also getting liquidity in the International Systems are back in 2008 in the financial crisis, one of the problems around the world with so many Financial Transactions take place in dollars of course the only source of dollars as the Federal Reserve. So in order to stabilize the money markets around the world the. Engine fed conducted swap operations with 14 other banks meetings we found ways to provide them with dollars they could you in their economy to stabilize their Financial Systems and that in turn affected u. S. Financial markets. In this instance the fed also set up swap agreements for the same 14 bank so once again the federal be acting as a lender last resort and dollars not to u. S. Banks and Financial Institutions but essential to the rest of the world. Its also a facility where other countries besides the 14 can pledge the treasuries they hold, get dollars get cash and provide liquidity within their own economies. The fed is acting very aggressively to make sure its enough cash and liquidity in the system. That is the first line. Secondly, the fed has been aggressive on Monetary Policy they lowered Interest Rates as you know over the summer they cut rates three times as insurance and that seemed to be what the doctor ordered so to speak. That Recession Risk at the time fell and it looked like the fed had achieved a soft landing now we have a much different situation. The fed is cut rates down to the minimal zero basis points we saw in years after. [inaudible] it has guidance single keep it at zero until the economy is clearly back on track and inflations back at 2 bright suspect it will be quite a while. The asset producers is doing it 500 billion in treasury and 200 billion the securities have been undertaken. That will transit modify into keeping rates low after the Health Crisis has big guns to go away this is twostage process at the moment, easier financial conditions are helping the system making it easier for corporations to borrow so they can continue to survive is not really time yet to stimulate spending and get people to go out and buy cars and houses that will have to wait until the Health Situation is better and at that point Monetary Policy will perform its normal function. Finally and most innovatively, the fed has been intervening substantially in credit markets. Credit markets have been very disruptive by the fact people are so uncertain about how long it will last, with the cashel implications would be. As the crisis began, many, many credit markets were disrupted. The. Fed as glenn said, borrowed from the feds claim book from 2008 and added quite a few innovations of its own. Borrowing from the 2008 playbook, it has done three things first to create a commercial basis facility that gives lending to corporations to finance their inventories and their materials, their working capital. That something we did in 2008. That is on the shelf thats already running. Secondly, there is a money Market Liquidity Fund we also had 2008 they brought up to allow money markets to show their securities and reduced pressure from the money markets. Weve seen run phenomena on mutual funds of this is been helping there as well its something we did in 2008 the third facility we had also planning to reintroduce but not yet its Lending Facility is used to buy packages of credit, consumer credit, credit cards Student Loans other types of credit to help make those markets more effective. So these announcements together with the treasury insecurities have already improved credit market functioning considerably. Going be on that, the fed is going to use the Emergency Powers which we use in 2008 for the First Time Since the depression, the fed in general has limited ability to buy assets and make loans. Under emergency conditions is called unusual conditions with permission of the treasury secretary defend kit fed can lend to anybody thats a 133 power and based on that, they are adding a whole number of lending facilities, trying to ensure businesses can borrow cheaply and effectively in order to maintain their survival in this. Whats coming out, there are two corporate facilities one thats going to land directly to corporations, essentially making loans or buying bonds for corporations again to survive the period. Theres a secondary facility that will buy existing bonds, trying to improve functioning of the credit markets in the Corporate Bond markets. And then thirdly, this is important one. Its departing quite substantially from past experience that is also going to be introducing a socalled main Street Lending business program. Main street is a little bit of a mess out no more be because its 500 to 10000 employees with the federal be doing we dont other details yet presumably theyll be making banks to make loans to these midsize firms and the fed will have cheap liquidity and perhaps providing protection against risk so it will be incentivized to make loans on good terms to these midsize firms. The smallest institution, the smallest businesses are eligible for loans from the Small Business administration that began this week. The logistics are so important to their some snafus in terms of getting the money i hope that get straightened out that is supposed to provide the s pas program is supposed to provide cash to smaller businesses on favorable terms and facts those loans are partially forgivable if the Small Companies maintain their payroll. The fed is helping there as well at announced today or yesterday it will buy sba loans from banks, provide a secondary market for those loans and making them more liquid and banks more willing to make those loans. I think the thing to emphasize here is that the fed, what the fed can do is reinforce the private credit markets. The private credit markets are dysfunctional because of the insurgency. The fed can come in and replace those markets to some extent or strength and to try to bring private vendors back into those markets. The fed does not give away money, if the 133 requirements do require the fed pay collateral they intend to be repaid. Order to get the sense of protection, big chunk of the money in the Fiscal Program, 165 million provides equity for the lending programs so if they do lose money it will be covered by the treasury funds. Again, there has been progress all day loosing credit markets improve. Think the critical issue will be how quickly the Public Health situation improves and that in turn will depend on logistics of distributing equipment and gear. Ventilators, scientific effort we really need to get control of this. Finally let me check talk about the United States its a global situation. Almost every country in the world is suffering from this pandemic. At almost all have chosen to significantly reduce Economic Activity so this will be a global recession. The situation is being worsened by a strong dollar, by commodity prices, outflows from those countries. We address very well may see crises in global recession as well as United States. We have a hard road ahead. I am pretty pleased overall with the fiscal monetary responses we have seen. We need more. At least those authorities have dealt what they can to help our economy stay functional until the Public Health situation gets better. So ill stop there david and be happy to answer any questions. Host thank you very much for that been, people listening and we have a number of questions already but feel free to email us or on twitter hashtag covid19 economy. As you mentioned the fed has aggressively decreased its Balance Sheet at 6 trillion will be twice the size it was would you left the fed in 2014. Is there a limit to how much money the fed can creator the reserves can create to purchase u. S. Treasuries and lend through all of these facilities. Is there some limit to how much the treasury can borrow to finance this . So technically speaking theres no limit to where the budget can get at 6 trillion its about 30 or less of u. S. Gdp in japan adored the exact number but its 80 or 90 of gdp that the size of japans Balance Sheet. It could be bigger. Much of the increase is temporary, for example a lot estate commercial paper for example those are shortterm loans and presumably as things normalize those will be paid back in the fed Balance Sheet will accordingly shrink. I think the fed does have capacity to increase its Balance Sheet and it appears to be willing to do so significantly. I think that is appropriate. I dont think there is any real danger from that. I dont think inflation will be a risk. If anything this inflation, low inflation will be more of a concert in the next year than too high of inflation. As far as a borrowing is concerned, the federal government is borrowing a lot. I mentioned this is when that Borrowing Capacity is so valuable wouldnt have a national emergency. Which of course this is. Paying for this with taxes would be counterproductive just because it would depress buying power at a time when the economy needs buying power. The question of sustainability of u. S. Debt is a tough one party think the long run issues clearly as the population ages as costs of medical care goes up, we see projections of the federal debt that are very disturbing over the next decade or two. We need to think hard about how we are going to get control of that trajectory. I think in the near term, dealing with a crisis of this magnitude i think this is an appropriate approach. I would note, finally, that Interest Rates being almost zero means the interest burden associated with this borrowing is going to be quite low even though the number of dollars borrowed is high. Host i want to back up to inflation point. Some people look at whats going out the huge increase in federal deficit, low interest rate, the fed created reserves. They think surely this will create inflation, maybe more than we want. You dont seem to think thats the case, how come . Guest if you look at the supply and demand elements