Richard Clarida

I don't teach freshmen anymore, but... Would you let AI in the class?

Well...

Well, that'll be his decision.

I enjoyed my four years, that's for sure.

But there are a lot of good people at the Fed, and I think that's a decision he'll make.

He's got a very good vice chair right now at Phil Jefferson.

But at some point, there will be a vice chair.

vacancy is that something that the committee when he goes in front of these tough guys in the hill they can demand he have a vice chair of the academic skills well it's not clear that that's what would be on their wish list but possibility I suppose I mean they could request that certainly

Well, you know, this is one of those things where this is very, what they call in DC, very big tent language.

It means different things to different people.

The one accord that we do know about

which is the one that was struck in 1951 between the Treasury and the Fed, was a signal moment in Fed independence because it got the Fed out of the business of essentially capping Treasury yields.

In fact, as I like to teach my students, we all know that World War II ended in 1945, but the Fed didn't get the memo until 1951 because the Truman administration pressured the Fed to keep a cap on rates.

The Fed declared independence in the accord.

I think now if there is a Treasury-Fed accord, it would not be so much focused on that.

It would be focused on, for example, should the Fed hold $2 trillion of mortgage-backed securities?

Should the composition of the Fed's portfolio really be tilted toward T-bills and less from holding 10- and 30-year Treasuries?

So I think there are a lot of conversations to have.

And even during my time on the Fed, there were discussions before the pandemic about rethinking the Fed's portfolio composition.

So I think that's an entirely...