Also greatly affects our economy. So even from the perspective of narrow selfinterest, it is important for us to be mindful of those spillovers and spillbacks of our policies and take them into account. Policy coordination is difficult. Possiblenot sure it is given our separate legislative mandates. Contact in anlose attempt to promote understanding. And in crisis situations, when it is necessary to mount defenses because we are worried, for example about an incipient financial crisis, that network resulted in very close and effective coordination and cooperation. It has been important in recent years. Students are often told inflation is always and everywhere a monetary phenomenon. Yet you listed three reasons for inflation, none of which were too much money. What is the role of money in inflation . Chair yellen i guess i would is too muchn there demand for a limited supply of goods and services that is a situation that creates inflation. It ties in with the framework i articulated with economic slack. I would say for example just now after all these years of growth in theer economy and trying to diminish theployment, probably now labor market is in a normal state. Would foster inflationary pressures if demand rose at a sufficiently rapid pace and on a long run basis such that we pushed against dwindling labor resources. That is one reason why i believe it is important for us to normalize or move Monetary Policy towards a more neutral level. Accommodative Monetary Policy when it is not occurring in the context of an economy that is close to full employment, that is not inflationary. When first at the end of 2008, the fed lowered its overnight Interest Rate to zero. Then we started buying up longerterm assets which swelled the quantity of reserves in the banking system. And people who reasoned money causes inflation but thought that is somehow independent of the state of the economy worried our purchase of those assets meant that inflation was around the corner. Theresponse was to say Unemployment Rate is very high. It is 10 , 9 , 8 . Very high. Maybe when the Unemployment Rate has declined to low levels that is a legitimate concern. But it is not in the context of an economy with this much slack. I think history proved the view i just explained to be right. So, money does not cause inflation independent of the state of the economy. This question comes to us from twitter. Has the effect of quantitative easing been underestimated . Quantitative as the i will interpret feds purchase of large quantities of longerterm treasury and mortgagebacked securities. Our objective in purchasing these securities was to drive down longerterm Interest Rates on treasury and mortgagebacked securities, that would also filtered through to private securities and the market in general. There is a lot of research now. But it is difficult to unambiguously know just how large the impact was of those purchases. Read is finding our purchases did succeed in driving down our longerterm Interest Rates by a meaningful amount. And as a consequence, our policies had the favorable effect of holding inflation up a little closer to our target, stopping it from falling quite so much and lowering unemployment. And the job growth was stronger. There are other countries also, japan, the bank of england, the e. C. B. , that are engaged in similar programs. So now we have International Experience to add to that in the United States. I read all of that experience as saying that these programs are successful. But does it have a larger impact than we think . I suppose there is some research at the larger and and some on the more skeptical and. My assessment would be it had a favorable impact. I dont want to exaggerate exactly how large it was. But i think it was certainly favorable. With Labor Force Participation rate relatively low compared to recent history, do we change how we think about what constitutes full employment and how that dictates Monetary Policy decisions . Chair yellen did you say Labor Force Participation rate . Right. Chair yellen the labor force purchase of Participation Rate has been declining for some time in general in the United States. Because weing trend, have an aging population, is for it to fall further. But what has been hard to know following a very severe financial crisis with very high unemployment is how much of the decline, what portion of the decline we saw Labor Force Participation might reflect not just voluntary retirement but discouragement of people searching for a long time and dropping out of the labor force because they were unable to find jobs. Some of the decline in Labor Force Participation might reflect a weak economy and be a kind of hidden unemployment. We saw declining Labor Force Participation not only among those in the retirement years but also among prime age working people. Thato, the fed recognized we were uncertain about just how much additional slack there might be that was taking the form of depressed Labor Force Participation. We have monitored that very recognize the we Unemployment Rate itself might be misleading a misleading indicator of the extent of slack in the labor market. Now, i think there was something correct about the reasoning that Labor Force Participation was a form of hidden slack. Essentially the last couple of years, the Labor Force Participation rate has been flat. And even though the demographic trend should have been pushing it down. That suggests as the economy has recovered, we have seen the Unemployment Rate fall, but it has not fallen nearly as much as you might have expected. In part, we have created a lot of jobs. And yet, the Unemployment Rate has not fallen very much. Part of the reason is i think we have drawn people in to the labor market who have been discouraged. This is something we have watched very closely. I think what we found over the last couple of years is our economy because of that had more room to run then we were certain it had. And it has been a Good Development to see Labor Force Participation improved to some extent, especially among primates working people prime age working people. Unfortunately, this is the last question we have time for. You mentioned in your conversations the role the fed plays in managing expectations. To that point, it seems like more than anyone in the world, you have to be careful about what you say. How has this affected your life . [laughter] right. Ellen you are [laughter] guess i have had a fair amount of experience and training for this job having chair as a governor, vice in San Francisco. It is an Important Role i have two talk about Monetary Policy and to communicate it clearly as i can what the committees strategy is and how we see the economy unfolding. It is very important in managing on the one hand, i want to be careful not to Say Something that will needlessly roil expectations i do not mean. It on the other hand, i do want to talk about Monetary Policy because my job is to promote understanding of Monetary Policy. Although that is a difficult task, i try to do it to the best of my ability. I knowre we wrap up, that there are so many students here, many of whom are really committed to making a difference in Public Service which is something you have dedicated your career for. I wonder if you have any words of wisdom for the young people. Chair yellen it is wonderful to see so many young people who are and many to education of you to Public Policy. The core offor me, having a satisfying career first and foremost was finding something to do that i really love and am really interested in. I was lucky as an undergraduate to discover economics, which is a field i regard as implicitly fascinating. It is pretty true to say almost every day of my life i get up with a sense of enthusiasm about wanting to work on economic issues. And so, the first piece of advice for everybody is obviously not economic. You can me it can be many different fields that make capture your intellectual interest. But finding something you love, that youre really interested, want to focus your career around it, that is the starting point of having a good career. I would say second, people say to me, dont you feel your career was a success because you got to be chairman of the fed . And i would say, no, that is not the right way to look at it because ones career is about everything you do along the way and precisely where it into ends up. Even if i had not ended up in this role, ive would have felt i had a great career i have enjoyed great i think it is important to choose things you do at every stage of your career that you find interesting and engaging and rewarding. Say atic service, i will the Federal Reserve i have found, and i think this is important, and i found this and people if i knew can brainstorm with, problem solve with, three respect whom you respect, whom you like spending a time with. I think that is an important aspect of any job that makes it satisfying. I have certainly found it in government. People devoted to the Public Interest and using Public Policy to advance the Public Interest. And finally i would say being affiliated with an organization that you feel proud of, that you think makes a contribution to society. And that is certainly true of being at a university. No hesitation about feeling good about what universities do. I certainly have felt the same way about the Federal Reserve. I know we are an organization that really is devoted to the Public Interest and enables me to feel good about how i spend what we and we will are engaged in. As we wrap up, let me thank our audience for coming, for all of your questions. I am sorry we did not have time to get to more of them. Also, a very special thank you to chair yellen for sharing hers perspective and also for her Public Service through so many decades. Thank you so much. We really appreciate it. [applause] joe dallas fed chair janet yellen speaking from the University Michigan school of Public Policy. I want to talk a little bit about some of the key ideas she had. She said the u. S. Economy is growing at a moderate pace right now, operating a slightly more robust and healthy weight way. She says the intention is to gradually raise funds rates to neutral. As the economy is performing as expected. Once again reiterating the point that fed policy is not on a preset course. She was asked about inflation. She insisted the inflation target is symmetric at 2 . A lot of criticism of the fed on that point. People say 2 is a ceiling and not a floor. I want to open it up to our coast. What struck you . One thing that stood out to me is chair yellen saying global coordination is difficult. She also said the Global Economy is operating in a more robust manner, basically saying the path is clear for the fed to tighten. What also stands out, this new tool we have been hearing about recently, the unwind of the bounty, no talk of that. This is probably not the venue to bring that up. Questions from the student audience for interesting but did not give enough scope to ask something is caucacus that. They did ask the effect of qe in general. It was interesting she did not want to overstate the impact of qe, but she did think it had a beneficial effect on the economy. For bloombergl technology. Misswhat you time for bloomberg technology. That is the immediate one that people connect with and the easiest. , comparednk about it the number sold. When you look behind the numbers, about 350 of content of chips in a car compared to about 50 in a phone. Potentially this has the potential to have a big impact. Caroline more value. Fundamental drivers, the internet of things. We are talking about how at t. Uses ishrase everybody internet of things. What does that mean . Our research and when we speak industrial people automation is where the volume is at this point. Even ethernet connections for factories is something they are just about to get. In terms of connections, remote management, bringing the data of the machines to manage them to be more efficient, right at the beginning stages. But the potential is supposedly huge. Caroline what about the runaway successes when you dig into the chipmakers . Nvidia comes to mind. Is it still the standout . Sentiment has turned against it. There have been downgrades that have brought it back close to being in line with where everybody else was. Nvidia was ai, selfdriving cars, we will be the heart of it. To be fair to them, they posted some numbers. They are not particularly huge. They are better than anybody elses. They have shown progress. Ultimately, that will attract competition from Companies Like intel. That are bigger with more resources. That is where some of the sobering sentiment has come from recently. Caroline is there a divergence as to who the key players are to watch in semiconductors . Potentially this year if you listen to analysts and investors, they are due for one trade memory is old school. Why does anybody care about that . It is just computers. A lot of the data has to be stored somewhere. Traditionally, that was stored on spinning disks. There are only three or four the news that make thing. Increasing demand limited to supply. Prices go up and everybody does better. Beoline ian king, we will driving you dragging you back on when it is safe that. Chinas farmers are looking to the sky. How the Chinese Government is planning to replace manual labor. That is next. This is bloomberg. Caroline the future of farming is heading to the sky. Island,hern chinese agricultural drones are being used to spray pesticides over crops. The government is accusing encouraging farmers to move from manual labor to automated farming. We have this story from china. The farm is about 44 acres. This year, it is trying out new technology. He has hired a team of joan operators to s decide to spray pesticides over his crops. [speaking another language] the team of six arrives at dawn and got to work. Agricultural drones are taking off in china. In recent years, the government has encouraged farmers to move away from manual labor to automated farming. Right now, drones are only used on about 2 of chinese farms. The market could be worth 4 billion u. S. A year. The worlds top drugmaker is betting more farmers will start automating. The company has introduced two drones for pesticide spraying. They use radar to maintain the right distance from crops. It follows a planned route the system is doing a lot of the work automatically. We can ensure more precise spraying. Drone has a small payload. The operators have to refill the canister every five minutes and change the battery every 10 minutes. It can only be used on smaller farms about 50 acres. It is tedious but cheaper and faster and hiring a labor. He paid about 22 u. S. Per acre. Cheaper perst 7 acre than hiring men with that taxpayers. Backpack sprayers. Caroline fascinating. Coming up, we speak with former apple c. E. O. John sculley. His futures on the thoughts of Artificial Intelligence. That is next. If you like bloomberg news, check us out on radio. You can listen on the Bloomberg Radio app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. [ engine revs ] [ screams ] [ shouting ] brace yourself this is crazy [ tires screeching ] whoo boom baby rated pg13. [ screams ] tually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Mark i am mark crumpton. You are watching bloomberg technology. Lets begin with a check of your first word news. Two adults including a teacher are dead following an apparent murder suicide at an Elementary School in san bernardino, california. Two students were wounded. Police say their conditions are not known. The shooting happened inside a classroom. The School District spokeswoman said officials believe the teacher knew the shooter. Judge neil gorsuch was sworn in today as the 113th justice of the Supreme Court after a Senate Battle exposed a bitter partisan divide that resulted in republicans changing the rules so only a simple majority of yes votes was required for confirmation. In sweden, people are questioning their countrys open immigration policy in the wake of the truck rampage that left four people dead. The suspect is an Asylum Seeker from uzbekistan whose request for a residence permit was turned down. A second person has been arrested. In france, the president ial election is a fourway race. The communistbacked candidate has caught Francois Fillon for third place. And nationalnt front