Richard Clarida

History doesn't repeat, but it rhymes, as the saying goes.

And so I'm sure at the Fed, they're looking at past oil shocks, past Middle East shocks.

conflicts, but they'll also have to factor in, Paul, that it's a different U.S.

economy than back in my college years in the 1970s.

In particular, the U.S.

is a net energy exporter.

Important, however, is in the Fed's models, it's still the case that when energy prices go up, the economy slows.

And I think the main reason for that is that it erodes real incomes for a lot of workers.

Also, the fact that the U.S.

imports a lot of goods that have a high energy content.

And so, yes, you better be an exporter than an importer, but the U.S.

is not insulated from this shock.

Well, I'm not sure of that, but certainly the trends, as I mentioned, since 2020 have definitely moved more in that direction.

I would point out, though, that we have had periods not all that long ago, certainly in the last part of Obama and during the first Trump term before the pandemic, you actually had some of those K-shaped trends reversing.

And I can certainly tell you that during my time at the Fed, it was one of my focuses.

That's one reason why the Fed got a lot of criticism for cutting rates in 2019, because the unemployment rate was below 4%.

And some models were saying, oh, you can't operate the economy below 4% unemployment.

And our attitude, well, let's see how the economy operates.

And I think that was a positive development.

And so I think policymakers do need, when they are in a healthy economy, to allow people