[{"_1":2,"_3":-5,"_4":-5},"loaderData",{"_5":6,"_7":8},"actionData","errors","root",{"_138":-5,"_139":-5,"_140":141,"_142":143,"_144":145},"routes/clips.$id.$slug",{"_9":10,"_11":12},"clip",{"_13":14,"_15":16,"_17":18,"_19":20,"_21":-5,"_22":23,"_24":25,"_26":27,"_28":29,"_30":31,"_32":33,"_34":35,"_36":37,"_38":39,"_40":41,"_42":-5,"_43":-5,"_44":-5,"_45":46,"_47":-5,"_48":49,"_50":51,"_52":-5},"canonicalUrl","https://howleaderslead.com/clips/2584/when-you-know-something-say-something","id",2584,"title","When you know something, say something","subtitle","Kevin talks about his open criticism of the Fed","transcript","WEBVTT\n\n1\n00:00:00.000 --> 00:00:05.750\nIt's incumbent upon those of us who have experience and judgment around these\n\n2\n00:00:05.750 --> 00:00:07.720\nthings to share our views.\n\n3\n00:00:07.720 --> 00:00:11.400\nI will say, I've tried to do it with the utmost respect.\n\n4\n00:00:11.400 --> 00:00:15.860\nHere I'm opining from the cheap seats, these folks at the Federal Reserve and\n\n5\n00:00:15.860 --> 00:00:17.000\nother central banks.\n\n6\n00:00:17.000 --> 00:00:20.400\nThey're the ones who are in the lion's den.\n\n7\n00:00:20.400 --> 00:00:24.400\nThey're the ones who have to make hard decisions amid uncertainty.\n\n8\n00:00:24.400 --> 00:00:29.580\nBut decisions they make matter very importantly to the lives of everyday\n\n9\n00:00:29.580 --> 00:00:30.400\nAmericans.\n\n10\n00:00:30.400 --> 00:00:36.050\nAnd if people that have some experience can offer a perspective and it helps\n\n11\n00:00:36.050 --> 00:00:38.800\nchange how a policymaker might think,\n\n12\n00:00:38.800 --> 00:00:42.590\nI think it's incumbent upon us that we're once in the arena to offer our two\n\n13\n00:00:42.590 --> 00:00:43.000\ncents.\n\n14\n00:00:43.000 --> 00:00:46.200\nIf the people in the arena now disagree, that's okay.\n\n15\n00:00:46.200 --> 00:00:52.090\nBut doing it with respect, doing it with civility and offering a different\n\n16\n00:00:52.090 --> 00:00:55.800\nperspective when in cases like I believe we're in today,\n\n17\n00:00:55.800 --> 00:01:01.030\nthe broad conduct of monetary policy is off track, has been off track for a\n\n18\n00:01:01.030 --> 00:01:02.000\nlong time.\n\n19\n00:01:02.000 --> 00:01:07.100\nI really do believe that a couple of years ago they made the biggest economic\n\n20\n00:01:07.100 --> 00:01:09.400\npolicy error in 45 years.\n\n21\n00:01:09.400 --> 00:01:15.940\nIt was less than a year ago, David, that they still had interest rates at zero,\n\n22\n00:01:15.940 --> 00:01:19.800\nthat they were still buying treasuries and mortgage-backed securities\n\n23\n00:01:19.800 --> 00:01:24.290\nas if we were in emergency times when the economy was booming and inflation was\n\n24\n00:01:24.290 --> 00:01:27.400\nthe highest level we'd seen since the 1970s.\n\n25\n00:01:27.400 --> 00:01:31.530\nIf that's not an opportunity for those of us who have a judgment off our\n\n26\n00:01:31.530 --> 00:01:32.400\nperspective,\n\n27\n00:01:32.400 --> 00:01:37.400\nthen I think our entire society has gotten way too soft and sensitive.\n\n28\n00:01:37.400 --> 00:01:41.400\nIf we can offer our two cents and it makes a difference, the lives of Americans\n\n29\n00:01:41.400 --> 00:01:42.400\n, I think it's something we ought to do.\n\n30\n00:01:42.400 --> 00:01:44.400\nThis whole perspective.\n","pretty_transcript","start_time",1712099,"end_time",1814859,"keywords","experience, respect, Federal Reserve, monetary, policy, economic policy, treasuries, mortgage-backed securities, zero interest, policymaker, civility, perspective","slug","when-you-know-something-say-something","origin","cms","mux_playback_id","JvmWOcVp65TE9m3wdyfoQOrYT6pUPJXu1Sc32rs02XJo","mux_asset_id","ARdRXpyLI3HivSjjHkj4KJwuULhHbiWLwQyiMjHZBQI","leader_id",1,"episode_id",148,"updated_at","2025-02-26T20:12:48.000000Z","meta_title","meta_description","og_image_media_id","web_url","https://www.howleaderslead.com/clips/2584/when-you-know-something-say-something","og_image_url","leader",{"_13":37,"_102":103,"_104":105,"_106":107,"_26":108,"_109":110,"_63":111,"_60":111,"_112":113,"_70":114,"_40":115,"_116":-5,"_42":-5,"_43":-5,"_44":-5,"_117":118,"_90":119,"_45":120,"_121":122,"_123":124,"_47":-5,"_125":126,"_127":128,"_94":129,"_52":-5},"episode",{"_13":39,"_15":53,"_28":54,"_17":55,"_56":57,"_19":58,"_21":59,"_60":61,"_62":-5,"_63":61,"_64":-5,"_65":66,"_67":68,"_69":-5,"_70":-5,"_71":72,"_73":74,"_75":-5,"_36":37,"_40":76,"_42":-5,"_43":-5,"_44":-5,"_77":78,"_79":80,"_81":82,"_83":84,"_85":-5,"_86":-5,"_87":88,"_89":-5,"_90":-5,"_47":-5,"_91":92,"_93":-5,"_94":-5,"_52":-5},"og_image_media","Study the leaders around you","study-the-leaders-around-you","Learn how to elevate your leadership by studying the leaders around you. Plus, deepen your understanding of economic policy so you can strengthen and protect your organization in any economic climate.","summary","

Today’s guest is Kevin Warsh, a brilliant economist who served on the Federal Reserve board of governors during the 2008 financial crisis.

In this episode, you’ll get his powerful insights into our current economic climate. These are trends every business leader needs to be aware of right now.

But there’s an even bigger insight for you here, too.

When you ask Kevin about his success, he is quick to give credit to the other leaders he’s worked for. That’s how he’s grown his own leadership skills.

That’s a must-have mindset for any leader. We’ve got to actively pay attention to the leaders around us and learn from them.

Whether you’ve got a boss who’s fantastic … or whether you don’t … you’ve still got a huge opportunity either to adopt or avoid the strategies you see other leaders using.

And this episode will help you do just that!

You’ll also learn:

How to deal with doubters – especially if you’re younger than those you lead
What we can learn from the 2008 economic crisis (and why it matters right now)
The strength of a team that (respectfully) disagrees with each other
A powerful framework to analyze big trends in order to make sound decisions
What it’s like to walk into the Oval Office and interview to be Fed Chair

Take your learning further. Get proven leadership advice from these (free!) resources:

The How Leaders Lead App: A vast library of 90-second leadership lessons to stay sharp on the go

Daily Insight Emails: One small (but powerful!) leadership principle to focus on each day

Whichever you choose, you can be sure you’ll get the trusted leadership advice you need to advance your career, develop your team, and grow your business.

","WEBVTT\n\n1\n00:00:00.000 --> 00:00:07.770\nWelcome to How Leaders Lead, where every week you get to listen in while I\n\n2\n00:00:07.770 --> 00:00:08.520\ninterview some\n\n3\n00:00:08.520 --> 00:00:10.640\nof the very best leaders in the world.\n\n4\n00:00:10.640 --> 00:00:14.030\nI break down the key learning so that by the end of the episode, you'll have\n\n5\n00:00:14.030 --> 00:00:14.640\nsomething\n\n6\n00:00:14.640 --> 00:00:18.520\nsimple you can apply as you develop into a better leader.\n\n7\n00:00:18.520 --> 00:00:21.200\nThat's what this podcast is all about.\n\n8\n00:00:21.200 --> 00:00:25.510\nMy guest today is Kevin Walsh, a brilliant economist who served on the Federal\n\n9\n00:00:25.510 --> 00:00:26.040\nReserve\n\n10\n00:00:26.040 --> 00:00:29.560\nBoard during the 2008 financial crisis.\n\n11\n00:00:29.560 --> 00:00:33.780\nAnd boy, you're here in for a real treat today because he's got a lot of\n\n12\n00:00:33.780 --> 00:00:34.840\ninsights into our\n\n13\n00:00:34.840 --> 00:00:37.080\ncurrent economic climate.\n\n14\n00:00:37.080 --> 00:00:41.760\nThese are trends every business leader needs to be aware of right now.\n\n15\n00:00:41.760 --> 00:00:45.400\nBut there's an even bigger insight for you here too.\n\n16\n00:00:45.400 --> 00:00:49.630\nBecause when you ask Kevin about his success, he is quick to give credit to the\n\n17\n00:00:49.630 --> 00:00:50.520\nother leaders\n\n18\n00:00:50.520 --> 00:00:52.040\nhe's worked for.\n\n19\n00:00:52.040 --> 00:00:55.480\nThat's how he's grown his own leadership skills.\n\n20\n00:00:55.480 --> 00:01:00.540\nNow this is not going to come as a surprise to you, but I absolutely love that\n\n21\n00:01:00.540 --> 00:01:01.440\nmindset.\n\n22\n00:01:01.440 --> 00:01:05.790\nWe've got to actively pay attention to the leaders around us and learn from\n\n23\n00:01:05.790 --> 00:01:06.120\nthem.\n\n24\n00:01:06.120 --> 00:01:12.600\nLook, I hope you're a fantastic boss, better yet a fantastic coach.\n\n25\n00:01:12.600 --> 00:01:17.920\nBut even if you aren't, you've still got an opportunity to learn and grow.\n\n26\n00:01:17.920 --> 00:01:22.040\nWhen you study the leaders around you, you can easily spot the strategies and\n\n27\n00:01:22.040 --> 00:01:22.760\nhabits you\n\n28\n00:01:22.760 --> 00:01:27.040\nwant to adopt for yourself and those you want to avoid.\n\n29\n00:01:27.040 --> 00:01:30.120\nAnd this episode will help you do just that.\n\n30\n00:01:30.120 --> 00:01:41.320\nSo here's my conversation with my good friend and soon to be yours, Kevin Walsh\n\n31\n00:01:41.320 --> 00:01:41.480\n.\n\n32\n00:01:41.480 --> 00:01:43.520\nKevin, it's great to have you on the show.\n\n33\n00:01:43.520 --> 00:01:46.080\nHey, David, thank you so much for including me.\n\n34\n00:01:46.080 --> 00:01:50.620\nAll I can say is you must be pretty deep on your depth chart to have me on this\n\n35\n00:01:50.620 --> 00:01:51.200\nshow.\n\n36\n00:01:51.200 --> 00:01:53.160\nI've been a longtime listener.\n\n37\n00:01:53.160 --> 00:01:55.160\nYou've been a dear friend.\n\n38\n00:01:55.160 --> 00:02:00.560\nI thought I was signing up for a show called How Soldiers Follow.\n\n39\n00:02:00.560 --> 00:02:02.760\nBecause that's the only show I'm really qualified for.\n\n40\n00:02:02.760 --> 00:02:05.760\nWe'll see what you do with the next run in front of us.\n\n41\n00:02:05.760 --> 00:02:08.640\nYou're already showing your humility.\n\n42\n00:02:08.640 --> 00:02:10.920\nBut here you are now.\n\n43\n00:02:10.920 --> 00:02:16.190\nThis Stanford fellow, but I understand you had a guidance counselor in high\n\n44\n00:02:16.190 --> 00:02:17.080\nschool that\n\n45\n00:02:17.080 --> 00:02:20.760\ndidn't think Stanford was a good enough school for you to go to.\n\n46\n00:02:20.760 --> 00:02:22.440\nCan you tell us that story?\n\n47\n00:02:22.440 --> 00:02:24.520\nI grew up in a small town upstate New York.\n\n48\n00:02:24.520 --> 00:02:26.200\nIt was a fabulous place to grow up.\n\n49\n00:02:26.200 --> 00:02:30.120\nI had a great, great parents, great brother and sister, great community.\n\n50\n00:02:30.120 --> 00:02:34.920\nAnd I went to public school and I had a wonderful guidance counselor to protect\n\n51\n00:02:34.920 --> 00:02:35.480\nthe innocent.\n\n52\n00:02:35.480 --> 00:02:37.080\nI will not say his name.\n\n53\n00:02:37.080 --> 00:02:41.150\nHe was also, among other things, one of the gym teachers at school and he was\n\n54\n00:02:41.150 --> 00:02:42.360\nfabulous.\n\n55\n00:02:42.360 --> 00:02:46.610\nAnd this gentleman in this public school, I think we had 600 people in my\n\n56\n00:02:46.610 --> 00:02:48.440\ngraduating class.\n\n57\n00:02:48.440 --> 00:02:52.900\nHe was responsible for filling out the forms that one had to fill out for the\n\n58\n00:02:52.900 --> 00:02:53.240\nNew York\n\n59\n00:02:53.240 --> 00:02:57.950\nState Regents, the Department of Education statewide, about what his advice was\n\n60\n00:02:57.950 --> 00:02:58.360\ngoing\n\n61\n00:02:58.360 --> 00:03:02.120\nto be for the students graduating from public school.\n\n62\n00:03:02.120 --> 00:03:05.640\nAnd having been, I'd say, a reasonable participant in gym class.\n\n63\n00:03:05.640 --> 00:03:08.280\nI knew him reasonably well, I thought.\n\n64\n00:03:08.280 --> 00:03:11.940\nAnd he asked me whether I was planning to go to a two-year college, four-year\n\n65\n00:03:11.940 --> 00:03:12.520\ncollege\n\n66\n00:03:12.520 --> 00:03:14.240\nor join the workforce.\n\n67\n00:03:14.240 --> 00:03:17.280\nI think in my high school, about a third of the kids did each of those.\n\n68\n00:03:17.280 --> 00:03:20.120\nAnd it was a great group of fellow students.\n\n69\n00:03:20.120 --> 00:03:23.200\nAnd I told him that I would like to go to a four-year college.\n\n70\n00:03:23.200 --> 00:03:28.520\nHe checked the box on the New York State form and he said to me, \"What four-\n\n71\n00:03:28.520 --> 00:03:29.360\nyear college\n\n72\n00:03:29.360 --> 00:03:31.720\nwould you like to attend?\"\n\n73\n00:03:31.720 --> 00:03:35.160\nAnd I said, \"Well, I know it's a bit of a long shot, but I think I'd like to go\n\n74\n00:03:35.160 --> 00:03:35.280\nto\n\n75\n00:03:35.280 --> 00:03:37.720\nStanford in California.\"\n\n76\n00:03:37.720 --> 00:03:44.360\nAnd he said, \"Well, with some hesitation, do you know it's in Connecticut?\"\n\n77\n00:03:44.360 --> 00:03:47.990\nAnd I said, \"Well, sir, I think I have the brochure in front of me and I'm\n\n78\n00:03:47.990 --> 00:03:48.320\npretty sure\n\n79\n00:03:48.320 --> 00:03:49.320\nit's in California.\"\n\n80\n00:03:49.320 --> 00:03:51.880\nAnd he said, \"No, it's in Connecticut.\"\n\n81\n00:03:51.880 --> 00:03:55.400\nAnd it turns out he was talking about Stanford, Connecticut with an AMA.\n\n82\n00:03:55.400 --> 00:03:58.960\nSo through good fortune, I ended up out west.\n\n83\n00:03:58.960 --> 00:04:01.280\nThat's funny.\n\n84\n00:04:01.280 --> 00:04:03.400\nAnd now I want to get into how you leave it.\n\n85\n00:04:03.400 --> 00:04:05.760\nFirst, I want to take you back.\n\n86\n00:04:05.760 --> 00:04:09.430\nWhat's the story from your childhood that shaped the kind of leader you are\n\n87\n00:04:09.430 --> 00:04:09.960\ntoday?\n\n88\n00:04:09.960 --> 00:04:12.280\nWell, again, I'm going to take slight issue.\n\n89\n00:04:12.280 --> 00:04:15.010\nYou're going to keep using this word \"leader\" and I'm going to fight you for\n\n90\n00:04:15.010 --> 00:04:15.520\nthe period\n\n91\n00:04:15.520 --> 00:04:17.440\nwe have in front of us.\n\n92\n00:04:17.440 --> 00:04:19.240\nBut I would say I showed up.\n\n93\n00:04:19.240 --> 00:04:22.490\nIt's probably not from my childhood, although when I showed up in college, I\n\n94\n00:04:22.490 --> 00:04:23.000\nwas still a\n\n95\n00:04:23.000 --> 00:04:25.320\nchild whether I knew it or not.\n\n96\n00:04:25.320 --> 00:04:27.960\nI traveled 3,000 miles away.\n\n97\n00:04:27.960 --> 00:04:33.190\nI remember my mom packing up two big navy duffel bags with sheets and pillow\n\n98\n00:04:33.190 --> 00:04:33.800\ncases and\n\n99\n00:04:33.800 --> 00:04:35.000\nthe rest.\n\n100\n00:04:35.000 --> 00:04:38.920\nThis was the opposite of today's tiger moms or helicopter parents.\n\n101\n00:04:38.920 --> 00:04:42.600\nThey brought me to the airport and sent me on my way with my own bedding.\n\n102\n00:04:42.600 --> 00:04:44.440\nI landed in San Francisco.\n\n103\n00:04:44.440 --> 00:04:50.130\nI took a blue super shuttle van down onto campus, which I had not visited\n\n104\n00:04:50.130 --> 00:04:51.080\nbefore.\n\n105\n00:04:51.080 --> 00:04:55.390\nNot long after I arrived at the place, I needed a job and there was an\n\n106\n00:04:55.390 --> 00:04:56.960\nadvertisement in the\n\n107\n00:04:56.960 --> 00:05:00.880\nStanford Daily, the school newspaper at the time.\n\n108\n00:05:00.880 --> 00:05:05.520\nAnd it was for a research assistant to help a couple of professors.\n\n109\n00:05:05.520 --> 00:05:09.760\nAnd they were paying $13 an hour for this research assistant.\n\n110\n00:05:09.760 --> 00:05:13.330\nAnd it turns out that job was working for some of the finest economists in the\n\n111\n00:05:13.330 --> 00:05:13.800\nworld.\n\n112\n00:05:13.800 --> 00:05:17.890\nAnd I was lucky to be working for great people like George Schultz and Milton\n\n113\n00:05:17.890 --> 00:05:18.640\nFriedman and\n\n114\n00:05:18.640 --> 00:05:23.600\nJohn Kogan and a whole lot of people who really changed my life in terms of my\n\n115\n00:05:23.600 --> 00:05:24.600\nknowledge,\n\n116\n00:05:24.600 --> 00:05:29.430\nchanged my life in terms of what I would end up growing up to do and made my\n\n117\n00:05:29.430 --> 00:05:30.120\ncollege\n\n118\n00:05:30.120 --> 00:05:32.960\nexperience never mind my life experience that much better.\n\n119\n00:05:32.960 --> 00:05:38.140\nKevin, I understand that one of your first jobs or maybe even your first job\n\n120\n00:05:38.140 --> 00:05:39.040\nwas selling\n\n121\n00:05:39.040 --> 00:05:42.040\npencils at the Saratoga racetrack.\n\n122\n00:05:42.040 --> 00:05:44.280\nTell us about it and what did you learn from that experience?\n\n123\n00:05:44.280 --> 00:05:47.680\nI started working there when I was probably 14 or 15 years old.\n\n124\n00:05:47.680 --> 00:05:52.040\nI worked there for about six weeks every summer until I was 19 or 20.\n\n125\n00:05:52.040 --> 00:05:56.590\nAnd after a couple of promotions, when I was first a bar back, really setting\n\n126\n00:05:56.590 --> 00:05:57.280\nup kegs\n\n127\n00:05:57.280 --> 00:06:00.880\nand delivering ice to the bars all over the racetrack, I was finally promoted.\n\n128\n00:06:00.880 --> 00:06:05.120\nI had my big opportunity and that was to sell pencils and programs to people as\n\n129\n00:06:05.120 --> 00:06:05.760\nthey entered\n\n130\n00:06:05.760 --> 00:06:06.760\nthe track.\n\n131\n00:06:06.760 --> 00:06:08.640\nI learned a lot about hard work.\n\n132\n00:06:08.640 --> 00:06:12.820\nI learned a lot about trying to keep track of your pencils because there was\n\n133\n00:06:12.820 --> 00:06:13.640\ngood margin\n\n134\n00:06:13.640 --> 00:06:14.640\nin pencils.\n\n135\n00:06:14.640 --> 00:06:18.990\nWe build them as lucky Saratoga pencils that would go with a program and you\n\n136\n00:06:18.990 --> 00:06:19.840\nsell the lucky\n\n137\n00:06:19.840 --> 00:06:21.520\npencils in the feature race.\n\n138\n00:06:21.520 --> 00:06:26.080\nA lot of guys say, \"Okay, who do you like in the big eighth race today?\"\n\n139\n00:06:26.080 --> 00:06:29.790\nAnd if the raid horse is going, you'd give eight different answers to the lucky\n\n140\n00:06:29.790 --> 00:06:30.360\npencil.\n\n141\n00:06:30.360 --> 00:06:34.140\nAnd at the end of the day, if the number six horse won, that would be the guy\n\n142\n00:06:34.140 --> 00:06:34.800\nwho'd come\n\n143\n00:06:34.800 --> 00:06:36.640\nback and he'd give you a tip.\n\n144\n00:06:36.640 --> 00:06:39.930\nAnd the tips you gave to on everyone else when you gave lucky pencils, they\n\n145\n00:06:39.930 --> 00:06:40.480\nwouldn't\n\n146\n00:06:40.480 --> 00:06:42.720\nbe really expected the victory.\n\n147\n00:06:42.720 --> 00:06:45.920\nSo it was a nice way to get a little bonus at the end of a big Saturday at\n\n148\n00:06:45.920 --> 00:06:46.600\nracing.\n\n149\n00:06:46.600 --> 00:06:50.200\nAnd I also met a lot of people that, frankly, I never would have met otherwise.\n\n150\n00:06:50.200 --> 00:06:54.680\nSo it was great exposure to people that would come to know many decades later.\n\n151\n00:06:54.680 --> 00:06:56.280\nWell, here you are now.\n\n152\n00:06:56.280 --> 00:06:58.440\nYou're coming full circle these days.\n\n153\n00:06:58.440 --> 00:07:03.760\nI understand you're actually in the horse business and considering really going\n\n154\n00:07:03.760 --> 00:07:04.240\nafter\n\n155\n00:07:04.240 --> 00:07:06.280\nit in a big time way.\n\n156\n00:07:06.280 --> 00:07:08.120\nWhat do you think of the horse business?\n\n157\n00:07:08.120 --> 00:07:09.120\nAnd why now?\n\n158\n00:07:09.120 --> 00:07:12.600\nTell us, as an economist, tell us about the horse business.\n\n159\n00:07:12.600 --> 00:07:16.120\nAny good economist would never be in the horse business.\n\n160\n00:07:16.120 --> 00:07:21.570\nThe horse business is if it's a business that has some potential for a positive\n\n161\n00:07:21.570 --> 00:07:22.520\nreturn,\n\n162\n00:07:22.520 --> 00:07:23.520\nDavid.\n\n163\n00:07:23.520 --> 00:07:24.920\nThat is not the horse business.\n\n164\n00:07:24.920 --> 00:07:26.960\nI think of it more as a hobby.\n\n165\n00:07:26.960 --> 00:07:33.220\nIt's a great opportunity to be with dear friends around animals we love and\n\n166\n00:07:33.220 --> 00:07:35.840\ngreat camaraderie.\n\n167\n00:07:35.840 --> 00:07:39.740\nMy experience in the horse business, I think, is indicative of most an\n\n168\n00:07:39.740 --> 00:07:40.840\nincredible amount\n\n169\n00:07:40.840 --> 00:07:44.920\nof fun, but catastrophic losses every year.\n\n170\n00:07:44.920 --> 00:07:48.410\nSo you show up in the horse business with the money that you're prepared to\n\n171\n00:07:48.410 --> 00:07:48.960\nlose.\n\n172\n00:07:48.960 --> 00:07:53.200\nBut on the other side of things, as you well know, the friendships that you\n\n173\n00:07:53.200 --> 00:07:54.000\nmake in that\n\n174\n00:07:54.000 --> 00:07:55.680\nbusiness are incredible.\n\n175\n00:07:55.680 --> 00:08:00.580\nAnd just to tie this question back to an earlier story, among the people who I\n\n176\n00:08:00.580 --> 00:08:01.480\nfirst met when\n\n177\n00:08:01.480 --> 00:08:06.360\nI was selling pencils was a guy by the name of Denny Fips who you knew, some\n\n178\n00:08:06.360 --> 00:08:07.400\nyears ago,\n\n179\n00:08:07.400 --> 00:08:11.400\nyou and I are friends with his incredible wife and his family.\n\n180\n00:08:11.400 --> 00:08:15.950\nI met Denny because he would buy his lucky program and lucky pencil from me as\n\n181\n00:08:15.950 --> 00:08:16.520\nhe entered\n\n182\n00:08:16.520 --> 00:08:17.960\nthe clubhouse.\n\n183\n00:08:17.960 --> 00:08:20.160\nAnd back in the day, Denny Fips was the great name.\n\n184\n00:08:20.160 --> 00:08:22.600\nHe was the king of Saratoga.\n\n185\n00:08:22.600 --> 00:08:23.600\nHe was royalty.\n\n186\n00:08:23.600 --> 00:08:28.600\nHe was always very nice to me and frankly left me a pretty good tip each day.\n\n187\n00:08:28.600 --> 00:08:32.790\nAnd so many years later, when I was just out of government, he called me up one\n\n188\n00:08:32.790 --> 00:08:33.360\nday and\n\n189\n00:08:33.360 --> 00:08:39.000\nhe surprised me by asking me if I would speak at the Jockey Club dinner.\n\n190\n00:08:39.000 --> 00:08:41.920\nHe was the chairman of the Jockey Club David.\n\n191\n00:08:41.920 --> 00:08:46.400\nAnd I remember hesitating, but I couldn't turn this kind invitation down.\n\n192\n00:08:46.400 --> 00:08:52.100\nSo I accepted and I went up to the Jockey Club dinner wearing a black tie and\n\n193\n00:08:52.100 --> 00:08:52.360\ntrying\n\n194\n00:08:52.360 --> 00:08:55.080\nto give a fair presentation.\n\n195\n00:08:55.080 --> 00:08:56.920\nHe said speak about anything you'd like.\n\n196\n00:08:56.920 --> 00:09:01.920\nSo I tried to opine just a bit on the economy and what was going on.\n\n197\n00:09:01.920 --> 00:09:04.840\nBut as I stood up there, I felt quite humbled.\n\n198\n00:09:04.840 --> 00:09:09.500\nI told the assembled group some of the most interesting and important people in\n\n199\n00:09:09.500 --> 00:09:10.160\nthe horse\n\n200\n00:09:10.160 --> 00:09:14.300\nracing business, I told them that I had grown up not far from where this Jockey\n\n201\n00:09:14.300 --> 00:09:14.800\nClub dinner\n\n202\n00:09:14.800 --> 00:09:18.480\nwas being held in a tent in Saratoga.\n\n203\n00:09:18.480 --> 00:09:21.840\nAnd I said, but to be candid in my wildest dreams.\n\n204\n00:09:21.840 --> 00:09:26.480\nI did think there was some possibility that I could be here someday.\n\n205\n00:09:26.480 --> 00:09:31.260\nBut in my wildest dreams, I would be here in black tie, but I'd lean over and I\n\n206\n00:09:31.260 --> 00:09:31.640\nwould\n\n207\n00:09:31.640 --> 00:09:35.480\nsay Mr. Phipps, would you like the surf or the turf?\n\n208\n00:09:35.480 --> 00:09:41.420\nSo speaking to that group was humbling and it shows something special about the\n\n209\n00:09:41.420 --> 00:09:42.080\nkinship\n\n210\n00:09:42.080 --> 00:09:46.520\nand camaraderie in the horse racing business.\n\n211\n00:09:46.520 --> 00:09:49.690\nBecause you're listening to this, I can tell you're the kind of person who\n\n212\n00:09:49.690 --> 00:09:50.400\nwants to learn\n\n213\n00:09:50.400 --> 00:09:52.240\nhow to lead well.\n\n214\n00:09:52.240 --> 00:09:56.140\nBut there's a lot of companies out there who want to take that desire and\n\n215\n00:09:56.140 --> 00:09:57.440\ncharge you $500\n\n216\n00:09:57.440 --> 00:10:03.320\nor $1,000 or heck, even $20,000 to try and show you how to lead.\n\n217\n00:10:03.320 --> 00:10:05.320\nThat's just not right.\n\n218\n00:10:05.320 --> 00:10:08.450\nIf you want to be a better leader, I believe you deserve to have access to\n\n219\n00:10:08.450 --> 00:10:09.280\nsomething that\n\n220\n00:10:09.280 --> 00:10:13.080\nwill truly help you and it shouldn't cost a fortune.\n\n221\n00:10:13.080 --> 00:10:17.560\nSo I want you to go to howleaderslead.com and start my leadership class.\n\n222\n00:10:17.560 --> 00:10:22.260\nIt's really and truly free and after you take this class, you're going to feel\n\n223\n00:10:22.260 --> 00:10:23.280\nmore confident\n\n224\n00:10:23.280 --> 00:10:27.300\nin your role and you'll be on your way to getting big things done with your\n\n225\n00:10:27.300 --> 00:10:27.880\nteam.\n\n226\n00:10:27.880 --> 00:10:33.320\nGo check it out at howleaderslead.com.\n\n227\n00:10:33.320 --> 00:10:42.160\nNow, I want to talk about how you came up in your career because you had some\n\n228\n00:10:42.160 --> 00:10:43.520\nhuge jobs\n\n229\n00:10:43.520 --> 00:10:46.120\nat very young ages.\n\n230\n00:10:46.120 --> 00:10:50.280\nAfter graduating from Harvard Law School, you go to Morgan Stanley and you\n\n231\n00:10:50.280 --> 00:10:51.160\nquickly climb\n\n232\n00:10:51.160 --> 00:10:54.440\nthe ranks, eventually running M&A there.\n\n233\n00:10:54.440 --> 00:10:58.200\nWhat's a key leadership lesson you glean from those years?\n\n234\n00:10:58.200 --> 00:11:02.690\nDuring my career, there's nothing but borrowed valor from bosses that I had up\n\n235\n00:11:02.690 --> 00:11:03.240\nand down the\n\n236\n00:11:03.240 --> 00:11:05.240\nranks.\n\n237\n00:11:05.240 --> 00:11:13.080\nI've been most lucky, mostly serendipity to be exposed to great leaders.\n\n238\n00:11:13.080 --> 00:11:19.060\nMy experience is you see leaders around you and they have qualities that are\n\n239\n00:11:19.060 --> 00:11:19.960\nqualities\n\n240\n00:11:19.960 --> 00:11:22.080\nyou admire.\n\n241\n00:11:22.080 --> 00:11:23.200\nYou steal from them.\n\n242\n00:11:23.200 --> 00:11:24.920\nYou borrow.\n\n243\n00:11:24.920 --> 00:11:28.280\nThis is all an apprenticeship business that we're leading, whether it be in\n\n244\n00:11:28.280 --> 00:11:29.000\nbanking or\n\n245\n00:11:29.000 --> 00:11:31.400\nin government or anything else.\n\n246\n00:11:31.400 --> 00:11:35.440\nAnd see, when you see qualities, you try to imitate them, make them your own,\n\n247\n00:11:35.440 --> 00:11:35.880\ntry to\n\n248\n00:11:35.880 --> 00:11:37.320\nfollow good behaviors.\n\n249\n00:11:37.320 --> 00:11:40.860\nAnd when you see qualities you don't like because they don't treat you well\n\n250\n00:11:40.860 --> 00:11:41.360\nwhen you're\n\n251\n00:11:41.360 --> 00:11:45.930\ntheir associate or you see how they treat others, there might be a little bit\n\n252\n00:11:45.930 --> 00:11:46.480\nof that\n\n253\n00:11:46.480 --> 00:11:50.150\nin you too, where you're rushing around and not treating people like you should\n\n254\n00:11:50.150 --> 00:11:50.440\n.\n\n255\n00:11:50.440 --> 00:11:52.320\nYou see it and you don't like it.\n\n256\n00:11:52.320 --> 00:11:58.260\nSo I would say from my early career in investment banking and mergers where I\n\n257\n00:11:58.260 --> 00:11:59.960\nhad some incredibly\n\n258\n00:11:59.960 --> 00:12:04.760\ntalented bosses and I had some bosses that were more difficult.\n\n259\n00:12:04.760 --> 00:12:08.890\nI started to pick up skills that I thought were successful and that I wanted to\n\n260\n00:12:08.890 --> 00:12:09.680\nincorporate\n\n261\n00:12:09.680 --> 00:12:11.760\nand reject others.\n\n262\n00:12:11.760 --> 00:12:16.240\nI worked in mergers for about five and a half years at Morgan Stanley.\n\n263\n00:12:16.240 --> 00:12:20.170\nI loved every bit of it and I learned a lot about financial markets during that\n\n264\n00:12:20.170 --> 00:12:20.680\ntime.\n\n265\n00:12:20.680 --> 00:12:26.470\nIn some ways, the career is one where I was exposed to markets both in good\n\n266\n00:12:26.470 --> 00:12:27.320\ntimes and\n\n267\n00:12:27.320 --> 00:12:30.480\nin bad and learned a lot.\n\n268\n00:12:30.480 --> 00:12:35.660\nIt was rarely in either financial markets or in the government or back now in\n\n269\n00:12:35.660 --> 00:12:36.560\nthe private\n\n270\n00:12:36.560 --> 00:12:41.560\nsector where we don't seem to be in some form of boom or bust.\n\n271\n00:12:41.560 --> 00:12:43.880\nAnd those are incredible learning experiences.\n\n272\n00:12:43.880 --> 00:12:48.720\nThe learning experiences in more placid times are probably ones where you pick\n\n273\n00:12:48.720 --> 00:12:49.480\nup a little\n\n274\n00:12:49.480 --> 00:12:50.480\nless.\n\n275\n00:12:50.480 --> 00:12:54.820\nBut I learned a lot especially about financial markets during my time at Morgan\n\n276\n00:12:54.820 --> 00:12:55.560\nStanley.\n\n277\n00:12:55.560 --> 00:13:01.360\nWhen you were running the mergers and acquisitions group, you're young.\n\n278\n00:13:01.360 --> 00:13:06.520\nYou had to have a lot of people who were older than you working for you.\n\n279\n00:13:06.520 --> 00:13:11.160\nWhat advice can you give to people who have older people working for you?\n\n280\n00:13:11.160 --> 00:13:15.200\nI remember that was really challenging for me early on.\n\n281\n00:13:15.200 --> 00:13:16.760\nHow do you deal with it?\n\n282\n00:13:16.760 --> 00:13:21.690\nI'd say at Morgan Stanley back then, I had plenty of bosses in banking and\n\n283\n00:13:21.690 --> 00:13:22.520\nacross the\n\n284\n00:13:22.520 --> 00:13:25.600\nsecurities firm and in mergers who were older.\n\n285\n00:13:25.600 --> 00:13:29.640\nBut I would say the firm then was quite meritocratic.\n\n286\n00:13:29.640 --> 00:13:34.680\nWe might be in an era now where we use words like merit and meritocracy and\n\n287\n00:13:34.680 --> 00:13:35.600\npeople roll\n\n288\n00:13:35.600 --> 00:13:37.720\ntheir eyes at that.\n\n289\n00:13:37.720 --> 00:13:42.000\nBut at least in those days, merit really carried the day.\n\n290\n00:13:42.000 --> 00:13:46.120\nAnd so long as you show up in your job in government or in the private sector\n\n291\n00:13:46.120 --> 00:13:47.960\nwith skills,\n\n292\n00:13:47.960 --> 00:13:53.760\nwith knowledge, with insight and also huge amounts of humility, age and rank\n\n293\n00:13:53.760 --> 00:13:54.480\nseem to\n\n294\n00:13:54.480 --> 00:13:55.880\nmatter a lot less.\n\n295\n00:13:55.880 --> 00:14:02.120\nIn almost every place where I've been, title was the least important thing,\n\n296\n00:14:02.120 --> 00:14:03.080\nability to\n\n297\n00:14:03.080 --> 00:14:07.800\ncontribute to the team to execute were much more appropriate.\n\n298\n00:14:07.800 --> 00:14:12.970\nIn some sense, I'm not that old of a guy today, but it strikes me meritocracy\n\n299\n00:14:12.970 --> 00:14:14.040\nas underrated\n\n300\n00:14:14.040 --> 00:14:16.280\nin its relative importance.\n\n301\n00:14:16.280 --> 00:14:21.400\nAnd so long as you're in a position where you can demonstrate the right mix of\n\n302\n00:14:21.400 --> 00:14:22.000\nassets\n\n303\n00:14:22.000 --> 00:14:27.520\nand liabilities, skills and areas of progress, age rank and serial number\n\n304\n00:14:27.520 --> 00:14:29.520\nmatter a bit less.\n\n305\n00:14:29.520 --> 00:14:34.350\nAnd I agree and you then you go from Morgan Stanley and you go on to work as a\n\n306\n00:14:34.350 --> 00:14:35.040\nspecial\n\n307\n00:14:35.040 --> 00:14:38.000\nassistant to the president for economic policy.\n\n308\n00:14:38.000 --> 00:14:43.250\nWhat was the most challenging part for you as you made that transition from\n\n309\n00:14:43.250 --> 00:14:44.080\nworking in\n\n310\n00:14:44.080 --> 00:14:47.080\na public company and going to the government?\n\n311\n00:14:47.080 --> 00:14:50.440\nWell, a lot of people find that transition difficult.\n\n312\n00:14:50.440 --> 00:14:52.640\nI probably expected to find it difficult.\n\n313\n00:14:52.640 --> 00:14:54.440\nI didn't find it so difficult.\n\n314\n00:14:54.440 --> 00:14:59.810\nYou know, in the high pressure stakes and the deadlines of the White House, the\n\n315\n00:14:59.810 --> 00:15:00.320\nWest Wing\n\n316\n00:15:00.320 --> 00:15:03.600\nof the White House, it felt very meritocratic to me.\n\n317\n00:15:03.600 --> 00:15:10.600\nI started out with a scarcity of responsibilities, a pretty small remit.\n\n318\n00:15:10.600 --> 00:15:14.380\nAnd over time, as you work harder and execute and do your job and work well\n\n319\n00:15:14.380 --> 00:15:15.120\nsort of up and\n\n320\n00:15:15.120 --> 00:15:19.600\ndown the chain, it didn't feel so different to me than the private sector.\n\n321\n00:15:19.600 --> 00:15:26.480\nIt was intense, demanded, disciplined, loyalty, analytic rigor.\n\n322\n00:15:26.480 --> 00:15:30.590\nAnd I found it to be a great experience and the transition was a lot less than\n\n323\n00:15:30.590 --> 00:15:32.160\nI had feared.\n\n324\n00:15:32.160 --> 00:15:33.160\nWow.\n\n325\n00:15:33.160 --> 00:15:37.060\nYou know, and then Kevin, at age 35, you became the youngest person to ever\n\n326\n00:15:37.060 --> 00:15:38.120\nserve on the Federal\n\n327\n00:15:38.120 --> 00:15:39.120\nReserve Board.\n\n328\n00:15:39.120 --> 00:15:42.360\nTell me a story about the confirmation process.\n\n329\n00:15:42.360 --> 00:15:46.890\nThe confirmation hearings went quickly, but the senior Democrat on the Senate\n\n330\n00:15:46.890 --> 00:15:47.440\nBanking\n\n331\n00:15:47.440 --> 00:15:51.710\nCommittee was a lovely man who passed away a Democrat named Paul Sarbanes, a\n\n332\n00:15:51.710 --> 00:15:52.360\nDemocrat\n\n333\n00:15:52.360 --> 00:15:54.000\nfrom Maryland.\n\n334\n00:15:54.000 --> 00:15:57.220\nAnd I went to do a courtesy interview with him and any members of the Senate\n\n335\n00:15:57.220 --> 00:15:57.680\nwho'd be\n\n336\n00:15:57.680 --> 00:16:00.280\ninterested in taking that interview.\n\n337\n00:16:00.280 --> 00:16:03.950\nAnd the meeting went well, but he said to me, \"You're young and I see your\n\n338\n00:16:03.950 --> 00:16:04.680\nbackground\n\n339\n00:16:04.680 --> 00:16:08.680\nhere isn't what I've come to grow accustomed to going to the Federal Reserve.\n\n340\n00:16:08.680 --> 00:16:12.400\nI'm going to call Paul Volcker's office.\"\n\n341\n00:16:12.400 --> 00:16:15.780\nAnd I want to hear what Paul has to say about you before I decide whether I'll\n\n342\n00:16:15.780 --> 00:16:16.400\nbe voting\n\n343\n00:16:16.400 --> 00:16:18.520\nfor your confirmation.\n\n344\n00:16:18.520 --> 00:16:20.400\nAnd so I said, \"Well, that sounds great.\n\n345\n00:16:20.400 --> 00:16:24.270\nHis office worked with the White House office and set up a meeting with me to\n\n346\n00:16:24.270 --> 00:16:24.800\ncome up to\n\n347\n00:16:24.800 --> 00:16:26.720\nNew York and see Paul Volcker.\n\n348\n00:16:26.720 --> 00:16:31.330\nNow, I should admit to you what I wouldn't have admitted when I was 35, I was\n\n349\n00:16:31.330 --> 00:16:32.040\nso excited\n\n350\n00:16:32.040 --> 00:16:33.040\nby the meeting.\n\n351\n00:16:33.040 --> 00:16:35.920\nThis is like getting to meet one of my heroes.\n\n352\n00:16:35.920 --> 00:16:39.210\nFor most of your listeners, this is like, you know, getting to meet Tom Brady\n\n353\n00:16:39.210 --> 00:16:39.580\nor Steph\n\n354\n00:16:39.580 --> 00:16:41.960\nCurry or Peyton Manning.\n\n355\n00:16:41.960 --> 00:16:46.320\nI wanted to bring my autograph book, but that probably would have made me seem\n\n356\n00:16:46.320 --> 00:16:47.000\neven younger\n\n357\n00:16:47.000 --> 00:16:49.760\nthan I had intended.\"\n\n358\n00:16:49.760 --> 00:16:54.230\nSo I went to see Chairman Volcker and he greeted me and he was a serious and\n\n359\n00:16:54.230 --> 00:16:55.480\nstern fellow also\n\n360\n00:16:55.480 --> 00:16:57.560\npassed away a few years ago.\n\n361\n00:16:57.560 --> 00:17:01.480\nBut he was strong up to the end and I introduced myself.\n\n362\n00:17:01.480 --> 00:17:05.020\nAnd he said, \"Paul Sarbanes says that I should meet you and pass along a\n\n363\n00:17:05.020 --> 00:17:06.120\nrecommendation.\"\n\n364\n00:17:06.120 --> 00:17:09.480\nI said, \"Well, it's an honor to meet you, Mr. Chairman.\n\n365\n00:17:09.480 --> 00:17:10.480\nAsk your questions.\"\n\n366\n00:17:10.480 --> 00:17:12.440\n\"You start with questions for me.\"\n\n367\n00:17:12.440 --> 00:17:17.190\nSo actually I have quite a few and I was asking these arcane questions about\n\n368\n00:17:17.190 --> 00:17:18.040\nmoney printing\n\n369\n00:17:18.040 --> 00:17:22.960\nand bank reserves and the Federal Reserve's balance sheet.\n\n370\n00:17:22.960 --> 00:17:26.290\nAnd he answered a couple of them and he said, \"Kevin, there's something I need\n\n371\n00:17:26.290 --> 00:17:27.960\nto tell you.\n\n372\n00:17:27.960 --> 00:17:31.880\nThis job you're signing up for really is quite simple.\n\n373\n00:17:31.880 --> 00:17:34.880\nIt really, really requires two things.\"\n\n374\n00:17:34.880 --> 00:17:38.020\nAnd so I probably took out my pen in my book and I was going to write down\n\n375\n00:17:38.020 --> 00:17:38.880\nthese two great\n\n376\n00:17:38.880 --> 00:17:43.790\ninsights from a great Fed Chairman who dealt with the great inflation of the\n\n377\n00:17:43.790 --> 00:17:45.160\n1970s.\n\n378\n00:17:45.160 --> 00:17:49.800\nAnd he said, \"The first thing is you have to get interest rates about right.\"\n\n379\n00:17:49.800 --> 00:17:52.950\nAnd he put the emphasis on about because he said, \"We don't really ever know\n\n380\n00:17:52.950 --> 00:17:53.320\nexactly\n\n381\n00:17:53.320 --> 00:17:54.440\nwhere interest rates should be.\n\n382\n00:17:54.440 --> 00:17:57.040\nThey should just be in the right neighborhood.\"\n\n383\n00:17:57.040 --> 00:17:58.520\nAnd so I wrote that down.\n\n384\n00:17:58.520 --> 00:18:02.800\nAnd he said, \"The second thing is probably more important than the first.\n\n385\n00:18:02.800 --> 00:18:06.500\nWhen you're a governor at the Federal Reserve, probably the most important\n\n386\n00:18:06.500 --> 00:18:07.360\nthing is to make\n\n387\n00:18:07.360 --> 00:18:12.000\nsure you look like you know what you're doing.\"\n\n388\n00:18:12.000 --> 00:18:17.830\nAnd so what I think he meant by that is the conduct of policy is about doing\n\n389\n00:18:17.830 --> 00:18:18.440\nthe right\n\n390\n00:18:18.440 --> 00:18:22.640\nthing on interest rates, but there's a certain theater to it.\n\n391\n00:18:22.640 --> 00:18:27.400\nThere's a certain displaying of conviction to it.\n\n392\n00:18:27.400 --> 00:18:32.200\nMonetary policy, what the Fed does, people react to it.\n\n393\n00:18:32.200 --> 00:18:35.200\nDoes the person look like they know what they're doing?\n\n394\n00:18:35.200 --> 00:18:40.240\nDoes the person look like they have conviction about what the future is?\n\n395\n00:18:40.240 --> 00:18:44.960\nAre they conveying a seriousness of purpose to beat inflation down?\n\n396\n00:18:44.960 --> 00:18:46.720\nAnd so that always stood with me.\n\n397\n00:18:46.720 --> 00:18:53.030\nAnd in the '08 financial crisis, I reminded our colleagues in Ben's kitchen\n\n398\n00:18:53.030 --> 00:18:54.000\ncabinet, we\n\n399\n00:18:54.000 --> 00:18:56.600\nhave to do the right thing as best we can.\n\n400\n00:18:56.600 --> 00:19:01.160\nWe also have to convey a sense of confidence that we can get through this.\n\n401\n00:19:01.160 --> 00:19:02.840\nAnd it was a story that stuck with me.\n\n402\n00:19:02.840 --> 00:19:07.490\nAs I think about the conduct of policy in the 10 or 11 years since I've left, I\n\n403\n00:19:07.490 --> 00:19:08.200\nthink both\n\n404\n00:19:08.200 --> 00:19:12.840\nthose factors are as relevant today as they were when Paul gave them to me in\n\n405\n00:19:12.840 --> 00:19:14.040\n2006.\n\n406\n00:19:14.040 --> 00:19:19.930\nAnd you helped lead our country alongside Bernanke out of the Great Recession\n\n407\n00:19:19.930 --> 00:19:21.560\nin 2008.\n\n408\n00:19:21.560 --> 00:19:24.560\nWhat did you find the most challenging and what were you the most proud of\n\n409\n00:19:24.560 --> 00:19:25.120\nduring that\n\n410\n00:19:25.120 --> 00:19:26.320\nperiod?\n\n411\n00:19:26.320 --> 00:19:30.800\nWhat I'm most proud of is being part of an incredible team.\n\n412\n00:19:30.800 --> 00:19:36.950\nMy thought was most remarkable and probably unheralded at the time about Ben\n\n413\n00:19:36.950 --> 00:19:38.560\nBernanke is\n\n414\n00:19:38.560 --> 00:19:43.410\nit would have been easy for him at an academic by background, not someone who\n\n415\n00:19:43.410 --> 00:19:44.120\nwas deep in\n\n416\n00:19:44.120 --> 00:19:49.520\nmarkets or frankly that well known to have surrounded himself in his own\n\n417\n00:19:49.520 --> 00:19:50.800\nkitchen cabinet\n\n418\n00:19:50.800 --> 00:19:56.720\nwith peers, with other academics that had backgrounds just like his.\n\n419\n00:19:56.720 --> 00:20:01.860\nPeople who would almost inevitably agree with his important judgments during\n\n420\n00:20:01.860 --> 00:20:02.920\nthe crisis.\n\n421\n00:20:02.920 --> 00:20:08.650\nBut what he did is he chose a team of rivals, not in any historical sense, but\n\n422\n00:20:08.650 --> 00:20:09.680\nyou know,\n\n423\n00:20:09.680 --> 00:20:14.540\nthere was a set of concentric circles of people he would consult on big matters\n\n424\n00:20:14.540 --> 00:20:14.840\n.\n\n425\n00:20:14.840 --> 00:20:20.320\nI was proud and lucky enough to be, I think, in the smallest circle.\n\n426\n00:20:20.320 --> 00:20:25.820\nAnd so in that circle was a career Federal Reserve veteran, a guy named Don C\n\n427\n00:20:25.820 --> 00:20:27.120\none who became vice\n\n428\n00:20:27.120 --> 00:20:28.320\nchairman.\n\n429\n00:20:28.320 --> 00:20:32.130\nAt that time he'd probably already been at the Fed for 35 years and he knew the\n\n430\n00:20:32.130 --> 00:20:32.680\nplumbing\n\n431\n00:20:32.680 --> 00:20:33.960\nof the institution.\n\n432\n00:20:33.960 --> 00:20:36.920\nHe knew the backgrounds of everyone we would turn to.\n\n433\n00:20:36.920 --> 00:20:39.640\nAnd he was the institutional memory.\n\n434\n00:20:39.640 --> 00:20:45.880\nHe turned to Tim Geithner, whose background really was at the Treasury\n\n435\n00:20:45.880 --> 00:20:47.560\nDepartment first,\n\n436\n00:20:47.560 --> 00:20:51.860\nand worked under Bob Rubin and Larry Summers, had risen obviously in some later\n\n437\n00:20:51.860 --> 00:20:52.440\nyears to\n\n438\n00:20:52.440 --> 00:20:55.600\nbe Treasury Secretary, New York Fed President.\n\n439\n00:20:55.600 --> 00:20:58.600\nBut Ben leaned on him because his experience was different than Ben's,\n\n440\n00:20:58.600 --> 00:21:00.280\ndifferent than Don's.\n\n441\n00:21:00.280 --> 00:21:04.800\nAnd I suspect he leaned on me because I knew something about financial markets.\n\n442\n00:21:04.800 --> 00:21:09.060\nI knew something about the individual players that were involved in what would\n\n443\n00:21:09.060 --> 00:21:09.840\nbe the global\n\n444\n00:21:09.840 --> 00:21:11.840\nfinancial crisis.\n\n445\n00:21:11.840 --> 00:21:17.760\nAnd I had instincts for what was likely to be going wrong that he found useful.\n\n446\n00:21:17.760 --> 00:21:20.890\nThe other thing he might have thought, and I don't want to put words in his\n\n447\n00:21:20.890 --> 00:21:21.480\nmouth, is\n\n448\n00:21:21.480 --> 00:21:23.520\nthat I knew how to execute.\n\n449\n00:21:23.520 --> 00:21:26.950\nSo if we were going to put in a program for better or worse to provide\n\n450\n00:21:26.950 --> 00:21:27.800\nliquidity to a\n\n451\n00:21:27.800 --> 00:21:32.180\nnew group of people that were struggling to try to get out of this crisis, then\n\n452\n00:21:32.180 --> 00:21:32.720\nI could\n\n453\n00:21:32.720 --> 00:21:36.860\nmarshal a team of the most talented people we had at the Fed and the Treasury\n\n454\n00:21:36.860 --> 00:21:37.360\nand the\n\n455\n00:21:37.360 --> 00:21:42.480\nWhite House and across the government and race up to Capitol Hill and tell our\n\n456\n00:21:42.480 --> 00:21:42.720\nstory\n\n457\n00:21:42.720 --> 00:21:47.310\nand execute in ways such that he could do what he does best, which is think\n\n458\n00:21:47.310 --> 00:21:47.920\nhard and\n\n459\n00:21:47.920 --> 00:21:50.640\nlong about the decisions we were making.\n\n460\n00:21:50.640 --> 00:21:52.960\nSo if you said to me, what am I most proud of?\n\n461\n00:21:52.960 --> 00:21:57.510\nI would say to be part of a team of people who frankly disagreed on almost\n\n462\n00:21:57.510 --> 00:21:58.400\neverything\n\n463\n00:21:58.400 --> 00:22:03.280\nthen, but we figured out that we would have our family fights.\n\n464\n00:22:03.280 --> 00:22:07.040\nIn Ben Bernanke's office, Ben was the decider.\n\n465\n00:22:07.040 --> 00:22:08.520\nIt was his name on the door.\n\n466\n00:22:08.520 --> 00:22:11.720\nIt was called the Bernanke Fed for a reason.\n\n467\n00:22:11.720 --> 00:22:15.740\nAnd the rest of us would sit there and salute and support the proposition that\n\n468\n00:22:15.740 --> 00:22:16.280\nwould put\n\n469\n00:22:16.280 --> 00:22:20.760\nforward, even if we had a lot of internal disagreements.\n\n470\n00:22:20.760 --> 00:22:26.500\nBut in the darkest days of the crisis, under his leadership, this team came\n\n471\n00:22:26.500 --> 00:22:27.520\ntogether and\n\n472\n00:22:27.520 --> 00:22:32.210\nI wouldn't say we did everything perfectly, but we were better off fighting out\n\n473\n00:22:32.210 --> 00:22:32.880\neach other's\n\n474\n00:22:32.880 --> 00:22:39.040\nviews in private so that in the darkest, most fragile days of the US economy,\n\n475\n00:22:39.040 --> 00:22:39.700\nthen probably\n\n476\n00:22:39.700 --> 00:22:45.180\nsince the Great Depression, we spoke with one single voice and one team to try\n\n477\n00:22:45.180 --> 00:22:45.640\nto get\n\n478\n00:22:45.640 --> 00:22:47.920\nthrough the dark night.\n\n479\n00:22:47.920 --> 00:22:50.790\nLooking back, Kevin, is there anything you would have done differently during\n\n480\n00:22:50.790 --> 00:22:52.320\nthat time?\n\n481\n00:22:52.320 --> 00:22:57.680\nIt would take more therapy than I'd be willing to indulge to do that.\n\n482\n00:22:57.680 --> 00:23:01.540\nBut yeah, I'd say with the benefit of hindsight, David, in all candor, there\n\n483\n00:23:01.540 --> 00:23:02.560\nare a lot of things\n\n484\n00:23:02.560 --> 00:23:05.880\nthat we could have collectively done differently.\n\n485\n00:23:05.880 --> 00:23:08.400\nI'll just give you one example.\n\n486\n00:23:08.400 --> 00:23:12.760\nAnd the benefit of hindsight here is incredibly revealing.\n\n487\n00:23:12.760 --> 00:23:19.830\nBut in the 2008 financial crisis, there were signs of illiquidity, signs of\n\n488\n00:23:19.830 --> 00:23:21.880\nmarket dysfunction,\n\n489\n00:23:21.880 --> 00:23:24.640\neven in the end of 2007.\n\n490\n00:23:24.640 --> 00:23:30.850\nAt a time we got to the spring of 2008, Bear Stearns, a relatively small\n\n491\n00:23:30.850 --> 00:23:32.400\ninvestment bank,\n\n492\n00:23:32.400 --> 00:23:37.280\nwas in harm's way, was apparently insolvent.\n\n493\n00:23:37.280 --> 00:23:42.920\nAnd we had a heck of an internal family fight on a simple question.\n\n494\n00:23:42.920 --> 00:23:45.040\nIs Bear Stearns unique?\n\n495\n00:23:45.040 --> 00:23:49.090\nThat is, their problems are Bear Stearns problems and the rest of the banking\n\n496\n00:23:49.090 --> 00:23:49.760\nsystem in the\n\n497\n00:23:49.760 --> 00:23:54.760\nUS and around the world are perfectly well capitalized in solvent?\n\n498\n00:23:54.760 --> 00:23:57.720\nOr is Bear Stearns the canary in the coal line?\n\n499\n00:23:57.720 --> 00:24:03.000\nIs this revealing something about what would turn out to be an insolvent\n\n500\n00:24:03.000 --> 00:24:04.440\nbanking system,\n\n501\n00:24:04.440 --> 00:24:07.200\nnot just in the United States, but around the world?\n\n502\n00:24:07.200 --> 00:24:13.320\nI would say no one had perfect information in real time in March of 2008.\n\n503\n00:24:13.320 --> 00:24:19.760\nBut had we debated and come to the view then that Bear Stearns was indicative,\n\n504\n00:24:19.760 --> 00:24:20.080\nI think\n\n505\n00:24:20.080 --> 00:24:27.470\nwe would have had a six or seven or eight month head start on trying to prevent\n\n506\n00:24:27.470 --> 00:24:28.760\na cascading\n\n507\n00:24:28.760 --> 00:24:35.760\nset of losses, harms to the real economy, damage to the financial system.\n\n508\n00:24:35.760 --> 00:24:42.860\nAnd I dare say, damage to the United States relative to other great powers like\n\n509\n00:24:42.860 --> 00:24:43.720\nChina,\n\n510\n00:24:43.720 --> 00:24:47.610\nwho prior to that moment thought, well, those Americans, we might disagree with\n\n511\n00:24:47.610 --> 00:24:48.200\nthem, but\n\n512\n00:24:48.200 --> 00:24:50.520\nsurely they know how to run a banking system.\n\n513\n00:24:50.520 --> 00:24:53.560\nSurely they know how to run a market economy.\n\n514\n00:24:53.560 --> 00:24:56.320\nThat hurt our reputation around the world.\n\n515\n00:24:56.320 --> 00:24:59.950\nSo if I could go back to a moment, I would go back to Chairman Bernanke's\n\n516\n00:24:59.950 --> 00:25:00.680\noffice into\n\n517\n00:25:00.680 --> 00:25:05.840\nthe fights we have, and we would shed more light than heat on that moment.\n\n518\n00:25:05.840 --> 00:25:09.670\nAnd I think from March till October, November of that year, we probably would\n\n519\n00:25:09.670 --> 00:25:10.280\nhave done a\n\n520\n00:25:10.280 --> 00:25:15.080\nlot of things differently.\n\n521\n00:25:15.080 --> 00:25:19.040\nWe'll be back with the rest of my conversation with Kevin Worschen, just a\n\n522\n00:25:19.040 --> 00:25:19.520\nmoment.\n\n523\n00:25:19.520 --> 00:25:24.280\nNow if you really want a good one, two punch of financial content this week,\n\n524\n00:25:24.280 --> 00:25:25.560\nyou've absolutely\n\n525\n00:25:25.560 --> 00:25:30.930\ngot to go back and listen to my conversation with legendary investor Stanley\n\n526\n00:25:30.930 --> 00:25:32.280\nDruckenner.\n\n527\n00:25:32.280 --> 00:25:35.960\nStands a one of a kind thinker who sees the future differently.\n\n528\n00:25:35.960 --> 00:25:38.800\nAnd as leaders, that's our job too.\n\n529\n00:25:38.800 --> 00:25:43.280\nIf you envision the future and you're wrong, it's not very fun.\n\n530\n00:25:43.280 --> 00:25:45.960\nIt's like shank and wedge that really matters.\n\n531\n00:25:45.960 --> 00:25:51.440\nBut if you envision the future particularly in a way that others have not, and\n\n532\n00:25:51.440 --> 00:25:52.000\nyou bet\n\n533\n00:25:52.000 --> 00:25:55.480\nit big and it all comes to fruition, it's not so much that you're not going to\n\n534\n00:25:55.480 --> 00:25:55.520\ndo it\n\n535\n00:25:55.520 --> 00:25:59.320\nand you make a lot of money, it's that you figure out a problem and you've won\n\n536\n00:25:59.320 --> 00:25:59.640\nand there's\n\n537\n00:25:59.640 --> 00:26:02.120\na self satisfaction of it.\n\n538\n00:26:02.120 --> 00:26:06.310\nSo constantly looking at the world as a collection of puzzles and trying to\n\n539\n00:26:06.310 --> 00:26:07.160\nfigure out those\n\n540\n00:26:07.160 --> 00:26:10.600\npuzzles, when you get them right, it's wonderful.\n\n541\n00:26:10.600 --> 00:26:14.160\nWhen you get them wrong, it's not so wonderful, but you move on.\n\n542\n00:26:14.160 --> 00:26:18.510\nMy conversation with Stan was one of our most talked about episodes of last\n\n543\n00:26:18.510 --> 00:26:18.800\nyear.\n\n544\n00:26:18.800 --> 00:26:21.440\nSo go see what all the fuss was all about.\n\n545\n00:26:21.440 --> 00:26:31.600\nThis episode 103 here on How Leaders Lead.\n\n546\n00:26:31.600 --> 00:26:37.480\nYou use your instincts, you do all this hard work, you get a basic policy that\n\n547\n00:26:37.480 --> 00:26:38.240\n's set in\n\n548\n00:26:38.240 --> 00:26:40.920\nyour mind.\n\n549\n00:26:40.920 --> 00:26:43.720\nWhen have you really shifted from your policy?\n\n550\n00:26:43.720 --> 00:26:44.720\nOr do you?\n\n551\n00:26:44.720 --> 00:26:50.820\nYour policy is so set in terms of what you think that you stayed absolutely\n\n552\n00:26:50.820 --> 00:26:51.760\nconvicted\n\n553\n00:26:51.760 --> 00:26:53.280\nto it.\n\n554\n00:26:53.280 --> 00:26:54.960\nWhat's it take for you to move off of it?\n\n555\n00:26:54.960 --> 00:26:57.480\nAnd can you give an example of when you shifted?\n\n556\n00:26:57.480 --> 00:27:00.440\nIn economics, it needs to happen all the time.\n\n557\n00:27:00.440 --> 00:27:03.120\nNone of us really know where our philosophies come from.\n\n558\n00:27:03.120 --> 00:27:04.800\nWere we born with them?\n\n559\n00:27:04.800 --> 00:27:06.760\nDid we learn it from great mentors?\n\n560\n00:27:06.760 --> 00:27:09.520\nWe are around, but we all have instincts.\n\n561\n00:27:09.520 --> 00:27:13.240\nIn a different science, there's something called the Polani Paradox.\n\n562\n00:27:13.240 --> 00:27:18.600\nAnd the Polani Paradox, broadly speaking, says we know more than we think we do\n\n563\n00:27:18.600 --> 00:27:18.920\n.\n\n564\n00:27:18.920 --> 00:27:21.120\nAnd I think that's true.\n\n565\n00:27:21.120 --> 00:27:24.640\nWe say that we have instincts about things, but they're not random.\n\n566\n00:27:24.640 --> 00:27:28.950\nThey probably come from things that our brains are processing from our\n\n567\n00:27:28.950 --> 00:27:30.160\nexperience, from what\n\n568\n00:27:30.160 --> 00:27:32.280\nwe've read and learned.\n\n569\n00:27:32.280 --> 00:27:37.640\nAnd so instincts are important, but I'll add a corollary to the Polani Paradox.\n\n570\n00:27:37.640 --> 00:27:39.040\nI don't know what to call it.\n\n571\n00:27:39.040 --> 00:27:41.800\nWe also know less than we think we do.\n\n572\n00:27:41.800 --> 00:27:47.760\nAs we demonstrate too much conviction and good economists, good thinkers about\n\n573\n00:27:47.760 --> 00:27:49.160\nthe economy,\n\n574\n00:27:49.160 --> 00:27:51.000\nevery day they're very open-minded.\n\n575\n00:27:51.000 --> 00:27:55.200\nNew data comes in and they have to go back to the judgment they made and ask\n\n576\n00:27:55.200 --> 00:27:55.920\nthemselves\n\n577\n00:27:55.920 --> 00:27:57.080\nwithout bias.\n\n578\n00:27:57.080 --> 00:27:58.440\nWas I right or wrong?\n\n579\n00:27:58.440 --> 00:28:01.840\nStan Druckenmiller does that in financial markets every morning when we sit\n\n580\n00:28:01.840 --> 00:28:02.440\ndown early\n\n581\n00:28:02.440 --> 00:28:05.970\nto look at the book of business and wonder, why are we long and short\n\n582\n00:28:05.970 --> 00:28:07.520\nsecurities in economics?\n\n583\n00:28:07.520 --> 00:28:09.560\nWe have to do the same thing.\n\n584\n00:28:09.560 --> 00:28:14.090\nYou've been very public disagreeing with the Fed and the way they've handled\n\n585\n00:28:14.090 --> 00:28:14.480\ninterest\n\n586\n00:28:14.480 --> 00:28:15.480\nrates.\n\n587\n00:28:15.480 --> 00:28:16.480\nTell us why.\n\n588\n00:28:16.480 --> 00:28:17.480\n- Sure.\n\n589\n00:28:17.480 --> 00:28:20.880\nSo I'm waiting for the softball questions, by the way, Novak.\n\n590\n00:28:20.880 --> 00:28:24.510\nI mean, at some point here, you're going to ask me what's my favorite tree or\n\n591\n00:28:24.510 --> 00:28:25.360\ncolor or\n\n592\n00:28:25.360 --> 00:28:26.360\nsomething?\n\n593\n00:28:26.360 --> 00:28:27.360\n- It's coming.\n\n594\n00:28:27.360 --> 00:28:28.800\n- All right, you're in your heart.\n\n595\n00:28:28.800 --> 00:28:32.400\nThis is serious stuff.\n\n596\n00:28:32.400 --> 00:28:37.630\nIt's incumbent upon those of us who have experience and judgment around these\n\n597\n00:28:37.630 --> 00:28:38.600\nthings to share\n\n598\n00:28:38.600 --> 00:28:39.600\nour views.\n\n599\n00:28:39.600 --> 00:28:44.120\nAnd I will say I've tried to do it with the utmost respect.\n\n600\n00:28:44.120 --> 00:28:46.160\nHere I'm opining from the cheap seats.\n\n601\n00:28:46.160 --> 00:28:50.690\nThese folks at the Federal Reserve and other central banks, they're the ones\n\n602\n00:28:50.690 --> 00:28:51.280\nwho are in\n\n603\n00:28:51.280 --> 00:28:52.280\nthe lion's den.\n\n604\n00:28:52.280 --> 00:28:56.320\nThey're the ones who have to make hard decisions amid uncertainty.\n\n605\n00:28:56.320 --> 00:29:01.610\nBut decisions they make matter very importantly to the lives of everyday\n\n606\n00:29:01.610 --> 00:29:02.720\nAmericans.\n\n607\n00:29:02.720 --> 00:29:07.920\nAnd if people that have some experience can offer a perspective and it helps\n\n608\n00:29:07.920 --> 00:29:08.680\nchange how\n\n609\n00:29:08.680 --> 00:29:12.780\na policy maker might think, I think it's incumbent upon us that we're once in\n\n610\n00:29:12.780 --> 00:29:13.360\nthe arena\n\n611\n00:29:13.360 --> 00:29:14.800\nto offer our two cents.\n\n612\n00:29:14.800 --> 00:29:18.720\nAnd if the people in the arena now disagree, that's okay.\n\n613\n00:29:18.720 --> 00:29:23.380\nBut doing it with respect, doing it with civility, offering a different\n\n614\n00:29:23.380 --> 00:29:26.000\nperspective when in cases\n\n615\n00:29:26.000 --> 00:29:31.530\nlike I believe we're in today, a broad conduct of monetary policy is off track,\n\n616\n00:29:31.530 --> 00:29:31.960\nhas been\n\n617\n00:29:31.960 --> 00:29:34.400\noff track for a long time.\n\n618\n00:29:34.400 --> 00:29:38.080\nYou know, I really do believe that a couple of years ago they made the biggest\n\n619\n00:29:38.080 --> 00:29:38.600\neconomic\n\n620\n00:29:38.600 --> 00:29:41.600\npolicy error in 45 years.\n\n621\n00:29:41.600 --> 00:29:47.440\nIt was less than a year ago, David, that they still had interest rates at zero,\n\n622\n00:29:47.440 --> 00:29:47.960\nthat\n\n623\n00:29:47.960 --> 00:29:52.000\nthey were still buying treasuries and mortgage-backed securities as if we were\n\n624\n00:29:52.000 --> 00:29:53.880\nin emergency times.\n\n625\n00:29:53.880 --> 00:29:57.350\nWhen the economy was booming and inflation was the highest level we'd seen\n\n626\n00:29:57.350 --> 00:29:57.880\nsince the\n\n627\n00:29:57.880 --> 00:29:58.880\n1970s.\n\n628\n00:29:58.880 --> 00:30:03.640\nThat's not an opportunity for those of us who have a judgment off our\n\n629\n00:30:03.640 --> 00:30:05.120\nperspective, then\n\n630\n00:30:05.120 --> 00:30:09.560\nI think our entire society has gotten way too soft and sensitive.\n\n631\n00:30:09.560 --> 00:30:12.650\nIf we can offer our two cents and it makes a difference, the lives of Americans\n\n632\n00:30:12.650 --> 00:30:13.200\n, I think\n\n633\n00:30:13.200 --> 00:30:15.320\nit's something we ought to do.\n\n634\n00:30:15.320 --> 00:30:18.240\nThis whole perspective has just been great.\n\n635\n00:30:18.240 --> 00:30:20.910\nBut now I do want to have a little bit of fun with you with a lightning round\n\n636\n00:30:20.910 --> 00:30:21.640\nof questions.\n\n637\n00:30:21.640 --> 00:30:22.840\nSo are you ready for this?\n\n638\n00:30:22.840 --> 00:30:24.240\nI'm ready.\n\n639\n00:30:24.240 --> 00:30:27.120\nWhat's one word others would use to describe you?\n\n640\n00:30:27.120 --> 00:30:29.120\nWell, probably have to go with two words.\n\n641\n00:30:29.120 --> 00:30:32.360\nI hope they would say true friend.\n\n642\n00:30:32.360 --> 00:30:35.520\nWhat would you say is the one word that best describes you?\n\n643\n00:30:35.520 --> 00:30:37.480\nDiscipline.\n\n644\n00:30:37.480 --> 00:30:41.720\nIf you could be one person for a day beside yourself, who would it be and why?\n\n645\n00:30:41.720 --> 00:30:45.120\nI'd be Stan Druckenmiller for a day.\n\n646\n00:30:45.120 --> 00:30:46.120\nWhy?\n\n647\n00:30:46.120 --> 00:30:48.080\nBecause he's certainly been on your podcast.\n\n648\n00:30:48.080 --> 00:30:52.400\nHe's both my boss and all of our friends.\n\n649\n00:30:52.400 --> 00:30:58.280\nI showed up working for him 11 years ago when he started his family office and\n\n650\n00:30:58.280 --> 00:30:59.040\nI admired\n\n651\n00:30:59.040 --> 00:31:02.920\nhim from afar and I knew what a great investor he was.\n\n652\n00:31:02.920 --> 00:31:06.060\nAnd by the way, 11 years, I thought I really knew something about investing and\n\n653\n00:31:06.060 --> 00:31:06.600\nthe economy\n\n654\n00:31:06.600 --> 00:31:08.640\nand markets and I knew something.\n\n655\n00:31:08.640 --> 00:31:11.160\nI had reasonable experience.\n\n656\n00:31:11.160 --> 00:31:15.320\nHe has this skill that me humans don't have.\n\n657\n00:31:15.320 --> 00:31:19.400\nHe has taught me an inordinate amount, including frankly at 4.30 this morning\n\n658\n00:31:19.400 --> 00:31:20.240\nwhen we started\n\n659\n00:31:20.240 --> 00:31:22.200\nto work.\n\n660\n00:31:22.200 --> 00:31:27.360\nBut there's got to be a reason why Steph Curry is just better than every other\n\n661\n00:31:27.360 --> 00:31:28.280\nbasketball\n\n662\n00:31:28.280 --> 00:31:29.280\nplayer.\n\n663\n00:31:29.280 --> 00:31:31.760\nWhy Tom Brady is just better.\n\n664\n00:31:31.760 --> 00:31:33.360\nIt's certainly not teachable.\n\n665\n00:31:33.360 --> 00:31:37.680\nI've learned everything I can from him and I'm still learning.\n\n666\n00:31:37.680 --> 00:31:45.610\nBut he has this innate skill, this gift to use a probably politically incorrect\n\n667\n00:31:45.610 --> 00:31:46.080\nword.\n\n668\n00:31:46.080 --> 00:31:51.330\nAnd I just loved to have that gift for 24 hours to know what that gift feels\n\n669\n00:31:51.330 --> 00:31:52.240\nlike to hear\n\n670\n00:31:52.240 --> 00:31:57.060\ndata to look at a computer screen and see the future in ways that other\n\n671\n00:31:57.060 --> 00:31:58.400\ninvestors simply\n\n672\n00:31:58.400 --> 00:31:59.400\ndon't.\n\n673\n00:31:59.400 --> 00:32:02.360\nIt's a remarkable skill and regrettably for me.\n\n674\n00:32:02.360 --> 00:32:06.600\nI've been trying to learn it from him sitting at his door for 11 years.\n\n675\n00:32:06.600 --> 00:32:10.500\nBut I'm afraid gifts are just that they're gifts and they're not easily passed\n\n676\n00:32:10.500 --> 00:32:11.080\nalong.\n\n677\n00:32:11.080 --> 00:32:17.360\nThe name of your Derby horses do you think is going to be in the hunt?\n\n678\n00:32:17.360 --> 00:32:22.070\nI am going to the Kentucky Derby when my three great partners and I have a\n\n679\n00:32:22.070 --> 00:32:22.960\nDerby horse.\n\n680\n00:32:22.960 --> 00:32:26.520\nI don't want to jinx those that are in the stable now.\n\n681\n00:32:26.520 --> 00:32:31.670\nBut we pray every day to be able to show up the first Saturday in May and have\n\n682\n00:32:31.670 --> 00:32:32.160\na good\n\n683\n00:32:32.160 --> 00:32:33.160\nrun.\n\n684\n00:32:33.160 --> 00:32:37.200\nWe've had some really great horses in our seven or eight years in this horse\n\n685\n00:32:37.200 --> 00:32:38.160\npartnership.\n\n686\n00:32:38.160 --> 00:32:41.800\nWe had a wonderful horse who ran in the Belmont stakes.\n\n687\n00:32:41.800 --> 00:32:44.880\nAlmost did it but just didn't quite get to the finish line first.\n\n688\n00:32:44.880 --> 00:32:49.730\nI named Governor Malibu and I hope somewhere in our feeble stable there's a\n\n689\n00:32:49.730 --> 00:32:50.560\nKentucky Derby\n\n690\n00:32:50.560 --> 00:32:53.200\nwinner because that's what keeps us all motivated.\n\n691\n00:32:53.200 --> 00:32:56.040\nYour favorite name of a Derby winner?\n\n692\n00:32:56.040 --> 00:32:58.040\nAffirmed, 1978.\n\n693\n00:32:58.040 --> 00:33:00.720\nI didn't go to the Derby.\n\n694\n00:33:00.720 --> 00:33:03.960\nI still haven't been to the Derby because we don't have a horse in the Derby.\n\n695\n00:33:03.960 --> 00:33:08.300\nBut in Saratoga, affirmed against Alladar in the Traverse Steaks, something\n\n696\n00:33:08.300 --> 00:33:08.880\nclose to\n\n697\n00:33:08.880 --> 00:33:10.280\na match race.\n\n698\n00:33:10.280 --> 00:33:14.290\nThese two great horses fought against each other their entire three-year-old\n\n699\n00:33:14.290 --> 00:33:14.840\nseason.\n\n700\n00:33:14.840 --> 00:33:18.450\nRemember sitting in the grandstands with my mom as a firm who I'd bet two\n\n701\n00:33:18.450 --> 00:33:19.160\ndollars on\n\n702\n00:33:19.160 --> 00:33:23.200\ncame home to win that race and it was a precious moment.\n\n703\n00:33:23.200 --> 00:33:27.840\nI remember being with my mom that day and that was the excitement up and down\n\n704\n00:33:27.840 --> 00:33:28.480\nmy spine\n\n705\n00:33:28.480 --> 00:33:31.600\nas a firm came in and passed the finish line.\n\n706\n00:33:31.600 --> 00:33:33.360\nYour biggest pet peeve?\n\n707\n00:33:33.360 --> 00:33:34.920\nI'm a grudge holder.\n\n708\n00:33:34.920 --> 00:33:40.280\nI can hold grudges far longer than I should.\n\n709\n00:33:40.280 --> 00:33:44.460\nWhen I see grudge holders and others, I shake my head but it's probably only\n\n710\n00:33:44.460 --> 00:33:45.400\nbecause I know\n\n711\n00:33:45.400 --> 00:33:48.440\nthat's among my great failings.\n\n712\n00:33:48.440 --> 00:33:51.360\nIf I turned on the radio in your car, what would I hear?\n\n713\n00:33:51.360 --> 00:33:55.540\nYou know, I'm embarrassed to say you'd probably hear serious satellite radio\n\n714\n00:33:55.540 --> 00:33:56.360\nand you hear the\n\n715\n00:33:56.360 --> 00:33:57.360\ntop hits.\n\n716\n00:33:57.360 --> 00:34:03.240\nNow the typical audience for the top hits I'm afraid is some 17-year-old but I\n\n717\n00:34:03.240 --> 00:34:03.800\nhave to\n\n718\n00:34:03.800 --> 00:34:07.960\nadmit it's a serious channel too, top hits.\n\n719\n00:34:07.960 --> 00:34:10.800\nWhat's something about you a few people would know?\n\n720\n00:34:10.800 --> 00:34:15.310\nI think what they probably wouldn't know is that at Corum an introvert, my\n\n721\n00:34:15.310 --> 00:34:16.560\nperfect weekend\n\n722\n00:34:16.560 --> 00:34:20.320\nhas me sitting at home lying on one chair.\n\n723\n00:34:20.320 --> 00:34:25.070\nMy wife and another are puppy in between us and I have a stack of papers that I\n\n724\n00:34:25.070 --> 00:34:25.800\n'm trying\n\n725\n00:34:25.800 --> 00:34:31.330\nto read and I can spend the entire weekend reading and thinking and not being\n\n726\n00:34:31.330 --> 00:34:31.880\nin the\n\n727\n00:34:31.880 --> 00:34:33.400\ncompany of others.\n\n728\n00:34:33.400 --> 00:34:38.720\nSo at Corum really an introvert and I can fake it but I suppose to the uniniti\n\n729\n00:34:38.720 --> 00:34:39.680\nated they\n\n730\n00:34:39.680 --> 00:34:44.000\nwould think I was extroverted when the truth is this is all theater.\n\n731\n00:34:44.000 --> 00:34:45.000\nAll right.\n\n732\n00:34:45.000 --> 00:34:48.000\nI get a few more questions and I'll let you go.\n\n733\n00:34:48.000 --> 00:34:51.780\nYou've mentioned George Schultz is a great American, someone that you admire\n\n734\n00:34:51.780 --> 00:34:52.440\ngreatly.\n\n735\n00:34:52.440 --> 00:34:55.160\nWhen did you first get that really special relationship with it?\n\n736\n00:34:55.160 --> 00:34:59.060\nHow did the door get open to where all of a sudden this guy you have the chance\n\n737\n00:34:59.060 --> 00:34:59.560\nto have\n\n738\n00:34:59.560 --> 00:35:00.960\nhis ear?\n\n739\n00:35:00.960 --> 00:35:05.580\nTo go full circle when I was looking for a little paid work on the side of my\n\n740\n00:35:05.580 --> 00:35:06.400\nschooling,\n\n741\n00:35:06.400 --> 00:35:11.670\na couple of Stanford professors were looking for a research assistant to do a\n\n742\n00:35:11.670 --> 00:35:12.560\nproject and\n\n743\n00:35:12.560 --> 00:35:17.640\nto me they were just professors at Stanford they seemed like older guys and it\n\n744\n00:35:17.640 --> 00:35:18.280\nturns out\n\n745\n00:35:18.280 --> 00:35:21.440\nthat was a project which George Schultz was the patron saint of.\n\n746\n00:35:21.440 --> 00:35:25.960\nI worked with John Kogan, a now a colleague and others working a set of\n\n747\n00:35:25.960 --> 00:35:27.320\neconomic projects\n\n748\n00:35:27.320 --> 00:35:30.360\nthat George was advising.\n\n749\n00:35:30.360 --> 00:35:34.800\nI will say once I figured out come to recognize who George Schultz really was\n\n750\n00:35:34.800 --> 00:35:35.600\nin America as\n\n751\n00:35:35.600 --> 00:35:40.700\nopposed to just another professor who Milton Friedman really was in thinking\n\n752\n00:35:40.700 --> 00:35:41.680\nand rethinking\n\n753\n00:35:41.680 --> 00:35:46.880\neconomics who Condi Rice really was I was just blown away by that experience\n\n754\n00:35:46.880 --> 00:35:47.520\nand that\n\n755\n00:35:47.520 --> 00:35:49.800\nwas nothing but serendipity.\n\n756\n00:35:49.800 --> 00:35:54.850\nAnd so in some sense to be honest my admiration for them and what they did grew\n\n757\n00:35:54.850 --> 00:35:55.600\nover time\n\n758\n00:35:55.600 --> 00:36:00.210\nas they came to understand all that they had accomplished both inside\n\n759\n00:36:00.210 --> 00:36:01.360\ngovernment then\n\n760\n00:36:01.360 --> 00:36:03.880\ngoing to the private sector.\n\n761\n00:36:03.880 --> 00:36:07.940\nAnd as George said to me as I was sort of going back and forth or contemplating\n\n762\n00:36:07.940 --> 00:36:08.320\ngoing\n\n763\n00:36:08.320 --> 00:36:14.660\nback and forth to government, George said when you leave government you need to\n\n764\n00:36:14.660 --> 00:36:15.200\nleave\n\n765\n00:36:15.200 --> 00:36:16.760\nand learn something.\n\n766\n00:36:16.760 --> 00:36:20.550\nSo if you ever get that phone call to come back and you go back you're better,\n\n767\n00:36:20.550 --> 00:36:21.040\nyou're\n\n768\n00:36:21.040 --> 00:36:25.000\nmaterially better, more experienced, more knowledgeable than the day you left.\n\n769\n00:36:25.000 --> 00:36:28.930\nAnd he went on to say the problem with too many people in government is they go\n\n770\n00:36:28.930 --> 00:36:29.280\ninto\n\n771\n00:36:29.280 --> 00:36:33.330\ngovernment, their party and power leaves and they just sort of sit on the shelf\n\n772\n00:36:33.330 --> 00:36:33.480\nand they\n\n773\n00:36:33.480 --> 00:36:37.200\nwait for the red team or the blue team to win next in which case they're not as\n\n774\n00:36:37.200 --> 00:36:37.640\ngood when\n\n775\n00:36:37.640 --> 00:36:38.640\nthey go back.\n\n776\n00:36:38.640 --> 00:36:43.690\nAnd so I've at his behest and you know with Stan as my partner, just make the\n\n777\n00:36:43.690 --> 00:36:44.720\nlast 10 or\n\n778\n00:36:44.720 --> 00:36:46.600\n11 years trying to be better.\n\n779\n00:36:46.600 --> 00:36:48.760\nAnd to learn more and think more.\n\n780\n00:36:48.760 --> 00:36:53.030\nSo if that phone call wherever to come again like it did for George, you know\n\n781\n00:36:53.030 --> 00:36:53.280\nyou'd be\n\n782\n00:36:53.280 --> 00:36:54.280\nready.\n\n783\n00:36:54.280 --> 00:36:59.080\nHe'd been cabinet secretary four times, secretary of labor, secretary of\n\n784\n00:36:59.080 --> 00:37:00.360\ntreasury, secretary\n\n785\n00:37:00.360 --> 00:37:06.850\nof state, director of the OMB and the president of CO4, Fortune 500 companies\n\n786\n00:37:06.850 --> 00:37:08.000\nall pretty good\n\n787\n00:37:08.000 --> 00:37:10.520\nby the time he was 70 years old.\n\n788\n00:37:10.520 --> 00:37:15.540\nSo he became really the ultimate role model for what he did but also how he\n\n789\n00:37:15.540 --> 00:37:16.360\nconducted\n\n790\n00:37:16.360 --> 00:37:18.920\nhimself, a total gentleman.\n\n791\n00:37:18.920 --> 00:37:21.820\nI could quote him all day but you know he's been gone a couple of years and for\n\n792\n00:37:21.820 --> 00:37:22.160\nthose\n\n793\n00:37:22.160 --> 00:37:28.310\nof us in the Hoover family, those of us I would say in the conservative family,\n\n794\n00:37:28.310 --> 00:37:28.360\nyou\n\n795\n00:37:28.360 --> 00:37:32.770\nknow his passing at the age of a hundred, it's a reminder to us that this\n\n796\n00:37:32.770 --> 00:37:33.440\ncountry's done\n\n797\n00:37:33.440 --> 00:37:36.660\na lot for us and if and when we have the opportunity to give back we better\n\n798\n00:37:36.660 --> 00:37:38.160\nwell do so.\n\n799\n00:37:38.160 --> 00:37:41.960\nYou're one of the very few people that I know that actually interviewed for a\n\n800\n00:37:41.960 --> 00:37:42.120\njob with the\n\n801\n00:37:42.120 --> 00:37:43.920\npresident of the United States.\n\n802\n00:37:43.920 --> 00:37:47.400\nCan you share a little bit of that story, a little backdrop of that or a little\n\n803\n00:37:47.400 --> 00:37:47.800\ninside\n\n804\n00:37:47.800 --> 00:37:49.960\nscoop on that interview?\n\n805\n00:37:49.960 --> 00:37:52.720\nSo I can share a little but only a little.\n\n806\n00:37:52.720 --> 00:37:57.190\nSo I interviewed with President Trump to be chairman of the Federal Reserve as\n\n807\n00:37:57.190 --> 00:37:57.880\ngood fortune\n\n808\n00:37:57.880 --> 00:37:59.480\nwould have it.\n\n809\n00:37:59.480 --> 00:38:03.440\nPresident was about a year, year and a half into his job.\n\n810\n00:38:03.440 --> 00:38:06.320\nJanet Yellen's tenure was ending.\n\n811\n00:38:06.320 --> 00:38:12.100\nIt began with what I was told at the time were 16 of us interviewing for the\n\n812\n00:38:12.100 --> 00:38:12.720\njob.\n\n813\n00:38:12.720 --> 00:38:16.870\nAccording to published reports as they say it came down to Jay Powell and to me\n\n814\n00:38:16.870 --> 00:38:17.120\n.\n\n815\n00:38:17.120 --> 00:38:21.800\nSo I say that in the interest of full disclosure my criticism of Powell\n\n816\n00:38:21.800 --> 00:38:23.440\neconomic policy could\n\n817\n00:38:23.440 --> 00:38:25.720\nbe nothing but sour grapes.\n\n818\n00:38:25.720 --> 00:38:28.520\nYour listeners should take that for what it is.\n\n819\n00:38:28.520 --> 00:38:31.750\nJay interviewed with the president on a Wednesday, this is after a series of\n\n820\n00:38:31.750 --> 00:38:33.000\ninterviews with\n\n821\n00:38:33.000 --> 00:38:35.520\nhis advisors in the months that preceded.\n\n822\n00:38:35.520 --> 00:38:38.120\nI interviewed with the president on Thursday.\n\n823\n00:38:38.120 --> 00:38:42.180\nI had been led to believe that Secretary Mnuchin, the Treasury Secretary for\n\n824\n00:38:42.180 --> 00:38:42.680\nreasons\n\n825\n00:38:42.680 --> 00:38:48.320\nthat I'm sure are perfectly fair strongly favored Jay Powell for the job.\n\n826\n00:38:48.320 --> 00:38:54.660\nI knew that I was not well positioned because he was driving the secretary of\n\n827\n00:38:54.660 --> 00:38:55.880\nthe Treasury.\n\n828\n00:38:55.880 --> 00:38:57.680\nI wake up that morning in Washington.\n\n829\n00:38:57.680 --> 00:38:59.920\nI go for a run on the Potomac River.\n\n830\n00:38:59.920 --> 00:39:03.360\nIt's sort of think of like a Jack Ryan scene.\n\n831\n00:39:03.360 --> 00:39:05.240\nThe monuments are passing me on the right.\n\n832\n00:39:05.240 --> 00:39:07.960\nIt's a beautiful spring day.\n\n833\n00:39:07.960 --> 00:39:11.610\nAnd I go for a run and I think to myself life comes down to a few important\n\n834\n00:39:11.610 --> 00:39:12.360\nmoments.\n\n835\n00:39:12.360 --> 00:39:13.440\nAnd this is one of them.\n\n836\n00:39:13.440 --> 00:39:17.680\nI go back to my closet at my old place in Washington.\n\n837\n00:39:17.680 --> 00:39:21.680\nI put on not my best suit, but you know an okay suit.\n\n838\n00:39:21.680 --> 00:39:25.720\nAnd I go to interview with the president of the United States in the Oval\n\n839\n00:39:25.720 --> 00:39:26.360\nOffice.\n\n840\n00:39:26.360 --> 00:39:29.520\nI hadn't been there since I'd been a junior staffer.\n\n841\n00:39:29.520 --> 00:39:30.520\nYou know what was that?\n\n842\n00:39:30.520 --> 00:39:32.840\nA decade prior.\n\n843\n00:39:32.840 --> 00:39:35.920\nIn the Oval Office, the Oval Office, no matter how many times you've been there\n\n844\n00:39:35.920 --> 00:39:36.000\n.\n\n845\n00:39:36.000 --> 00:39:40.200\nAnd I'd certainly never been there interviewing to be chairman of the Fed.\n\n846\n00:39:40.200 --> 00:39:43.610\nAs I'm walking in, I think to myself, you know, what's he going to ask me about\n\n847\n00:39:43.610 --> 00:39:44.160\ninterest\n\n848\n00:39:44.160 --> 00:39:48.830\nrates and how I would think about the growing rivalry with China, the state of\n\n849\n00:39:48.830 --> 00:39:49.280\nour fiscal\n\n850\n00:39:49.280 --> 00:39:53.550\npolicy, social security, perhaps, you know, subjects that I'd spent a lifetime\n\n851\n00:39:53.550 --> 00:39:54.080\nthinking\n\n852\n00:39:54.080 --> 00:39:55.400\nabout.\n\n853\n00:39:55.400 --> 00:39:58.920\nI cross the step getting into the Oval Office.\n\n854\n00:39:58.920 --> 00:40:02.440\nThe president comes from behind the USS Resolute Desk.\n\n855\n00:40:02.440 --> 00:40:07.490\nThe most important piece of American furniture, famous for President Kennedy\n\n856\n00:40:07.490 --> 00:40:08.440\nand young JFK,\n\n857\n00:40:08.440 --> 00:40:09.440\nlooking behind it.\n\n858\n00:40:09.440 --> 00:40:14.930\nWhen the president comes up to me very closely and he shakes my hand and brings\n\n859\n00:40:14.930 --> 00:40:15.560\nme close\n\n860\n00:40:15.560 --> 00:40:20.200\nto him, he puts his hand on my shoulder.\n\n861\n00:40:20.200 --> 00:40:24.270\nAnd he looks at me and is as close to me as to be candid any 72-year-old man\n\n862\n00:40:24.270 --> 00:40:24.840\nhad ever\n\n863\n00:40:24.840 --> 00:40:25.840\nbeen to me.\n\n864\n00:40:25.840 --> 00:40:30.880\nAnd he looks at me and he says, \"You're a very good looking man.\"\n\n865\n00:40:30.880 --> 00:40:36.800\nAnd I didn't know quite how to respond to that, maybe, that what I was\n\n866\n00:40:36.800 --> 00:40:38.160\nexpecting.\n\n867\n00:40:38.160 --> 00:40:42.150\nI don't know, I understand that's not the first time he had used that\n\n868\n00:40:42.150 --> 00:40:43.240\nappreciation.\n\n869\n00:40:43.240 --> 00:40:47.520\nI came to understand that the appropriate answer was, \"No, no, no, sir.\n\n870\n00:40:47.520 --> 00:40:49.520\nYou're a very good one.\"\n\n871\n00:40:49.520 --> 00:40:53.830\nBut I did not give that answer, as George Schultz would say, \"It is not my\n\n872\n00:40:53.830 --> 00:40:55.120\nplace to divulge\n\n873\n00:40:55.120 --> 00:40:59.880\nan Oval Office conversation certainly at this moment.\"\n\n874\n00:40:59.880 --> 00:41:03.090\nBut I will say, the president knew what he was doing and he buttered me up with\n\n875\n00:41:03.090 --> 00:41:03.680\nall kinds\n\n876\n00:41:03.680 --> 00:41:06.990\nof stuff like that, but he must have interviewed thousands of people in his\n\n877\n00:41:06.990 --> 00:41:07.440\nlife.\n\n878\n00:41:07.440 --> 00:41:08.520\nIt was a tough interview.\n\n879\n00:41:08.520 --> 00:41:11.320\nHe knew exactly what he was looking for.\n\n880\n00:41:11.320 --> 00:41:15.720\nAnd as I left that interview after an hour and a half and I walked out to an\n\n881\n00:41:15.720 --> 00:41:16.320\nUber, I\n\n882\n00:41:16.320 --> 00:41:18.200\ndidn't think I was going to get the job.\n\n883\n00:41:18.200 --> 00:41:21.120\nSecretary Mnuchin had his favorite there.\n\n884\n00:41:21.120 --> 00:41:27.600\nBut I was proud of myself, Dave, in a way that I probably had never been before\n\n885\n00:41:27.600 --> 00:41:27.600\n.\n\n886\n00:41:27.600 --> 00:41:31.120\nI didn't let my ambitions get ahead of my principles.\n\n887\n00:41:31.120 --> 00:41:32.800\nI knew what to say.\n\n888\n00:41:32.800 --> 00:41:38.550\nAnd I decided to call it straight, give my best view, and win or lose the job\n\n889\n00:41:38.550 --> 00:41:41.400\non its merits.\n\n890\n00:41:41.400 --> 00:41:42.800\nAnd the president made his decision.\n\n891\n00:41:42.800 --> 00:41:44.840\nI respect the decision.\n\n892\n00:41:44.840 --> 00:41:50.360\nAs we sit here today, I'm rooting for Jay Powell and I'm rooting for the Powell\n\n893\n00:41:50.360 --> 00:41:51.080\nFed.\n\n894\n00:41:51.080 --> 00:41:53.560\nThey have a lot of wood to chop in front of them.\n\n895\n00:41:53.560 --> 00:41:56.880\nThey have important and hard decisions to make.\n\n896\n00:41:56.880 --> 00:42:01.900\nAnd from that decision to the next, if the phone call wherever to come again, I\n\n897\n00:42:01.900 --> 00:42:02.200\nwouldn't\n\n898\n00:42:02.200 --> 00:42:06.000\nhesitate to raise my hand and try to serve.\n\n899\n00:42:06.000 --> 00:42:09.790\nOne thing I have to ask here, our listeners will probably kill me, is, compare\n\n900\n00:42:09.790 --> 00:42:10.680\n2008 to\n\n901\n00:42:10.680 --> 00:42:13.080\nwhat we experienced the past couple of years.\n\n902\n00:42:13.080 --> 00:42:19.090\nAnd what do you see ahead for our country in the next few years, the state of\n\n903\n00:42:19.090 --> 00:42:20.240\nour U.S.\n\n904\n00:42:20.240 --> 00:42:21.240\neconomy?\n\n905\n00:42:21.240 --> 00:42:24.800\nI'm an optimist, so I'll begin by saying that.\n\n906\n00:42:24.800 --> 00:42:29.520\nI think if we make the right decisions, the U.S. economy can boom.\n\n907\n00:42:29.520 --> 00:42:34.040\nIt can be the beacon to the world and the century can be ours.\n\n908\n00:42:34.040 --> 00:42:37.640\nBut I don't think we have room to make a lot of mistakes.\n\n909\n00:42:37.640 --> 00:42:44.710\nI think we have made some serious errors in the conduct of economic policy in\n\n910\n00:42:44.710 --> 00:42:45.400\nrecent\n\n911\n00:42:45.400 --> 00:42:46.400\nyears.\n\n912\n00:42:46.400 --> 00:42:52.160\nThey're not fatal, they're not determinative of the next decade or two.\n\n913\n00:42:52.160 --> 00:42:53.800\nBut this is a hinge point in history.\n\n914\n00:42:53.800 --> 00:42:59.840\nI do think history will look back on this moment and say they did the following\n\n915\n00:42:59.840 --> 00:43:00.400\nthree\n\n916\n00:43:00.400 --> 00:43:06.070\nthings right, and that's what caused a new economic boom, where they did the\n\n917\n00:43:06.070 --> 00:43:07.120\nthree things\n\n918\n00:43:07.120 --> 00:43:11.200\nwrong and the errors of the past were compounded.\n\n919\n00:43:11.200 --> 00:43:15.830\nI guess it's common to say that the next elections are the most important\n\n920\n00:43:15.830 --> 00:43:16.760\nelections of\n\n921\n00:43:16.760 --> 00:43:18.320\nour lifetime.\n\n922\n00:43:18.320 --> 00:43:19.680\nI actually believe it.\n\n923\n00:43:19.680 --> 00:43:23.200\nAnd this isn't a call for Republicans or Democrats.\n\n924\n00:43:23.200 --> 00:43:27.820\nThis is a call for good economic common sense, not losing faith of what has\n\n925\n00:43:27.820 --> 00:43:28.800\nworked for the\n\n926\n00:43:28.800 --> 00:43:30.080\ncountry.\n\n927\n00:43:30.080 --> 00:43:36.150\nI think left to its own devices right now, the U.S. economy is more fragile\n\n928\n00:43:36.150 --> 00:43:37.080\nthan most\n\n929\n00:43:37.080 --> 00:43:38.480\npeople believe.\n\n930\n00:43:38.480 --> 00:43:45.330\nThere is still a mountain of liquidity that is covering up sins of economic\n\n931\n00:43:45.330 --> 00:43:46.840\npolicy errors,\n\n932\n00:43:46.840 --> 00:43:49.920\nboth by companies and by governments.\n\n933\n00:43:49.920 --> 00:43:55.340\nThat liquidity is slowly draining out of the economy, and we're going to see\n\n934\n00:43:55.340 --> 00:43:55.800\nwhat's\n\n935\n00:43:55.800 --> 00:43:57.880\nbeneath the surface.\n\n936\n00:43:57.880 --> 00:44:02.240\nAnd we can either try to cover it up and say, oh, no, everything's just fine.\n\n937\n00:44:02.240 --> 00:44:06.840\nAnd we're on the right track or say, no, this is a period where the country\n\n938\n00:44:06.840 --> 00:44:07.800\nneeds to\n\n939\n00:44:07.800 --> 00:44:09.520\nthink differently.\n\n940\n00:44:09.520 --> 00:44:15.700\nAnd the second piece that I would say is whether you and I like it or not, the\n\n941\n00:44:15.700 --> 00:44:16.200\ntruth\n\n942\n00:44:16.200 --> 00:44:22.460\nis the rivalry between the United States and China will be the defining rivalry\n\n943\n00:44:22.460 --> 00:44:22.800\nof the\n\n944\n00:44:22.800 --> 00:44:24.720\nnext 40 years.\n\n945\n00:44:24.720 --> 00:44:31.290\nHow it's handled, how it's managed, requires experience, knowledge, deafness,\n\n946\n00:44:31.290 --> 00:44:32.240\ntoughness,\n\n947\n00:44:32.240 --> 00:44:37.360\nand a willingness to think anew about priors one might have had about these two\n\n948\n00:44:37.360 --> 00:44:38.280\neconomies.\n\n949\n00:44:38.280 --> 00:44:42.510\nAnd I think to somehow suggest that we can work this out through dialogue or\n\n950\n00:44:42.510 --> 00:44:43.320\ntake a script\n\n951\n00:44:43.320 --> 00:44:48.700\nfrom the '80s or '90s or 2000s, and we're pleased that I think is wishful\n\n952\n00:44:48.700 --> 00:44:49.600\nthinking.\n\n953\n00:44:49.600 --> 00:44:55.600\nSo I take this period in front of us with a lot of sobriety and seriousness.\n\n954\n00:44:55.600 --> 00:45:01.630\nAnd I'm hopeful that business leaders like you has been government bureaucrats\n\n955\n00:45:01.630 --> 00:45:03.160\nlike me,\n\n956\n00:45:03.160 --> 00:45:06.680\nregardless of parting backgrounds, say that there is still this thing called\n\n957\n00:45:06.680 --> 00:45:07.360\nthe national\n\n958\n00:45:07.360 --> 00:45:08.920\ninterest.\n\n959\n00:45:08.920 --> 00:45:13.000\nAnd left and right might disagree on how best to achieve that.\n\n960\n00:45:13.000 --> 00:45:16.840\nBut we actually have one common goal, and we need to agree on it.\n\n961\n00:45:16.840 --> 00:45:21.970\nThe mistake would be to try to educate our children and say that we should be\n\n962\n00:45:21.970 --> 00:45:22.640\nashamed\n\n963\n00:45:22.640 --> 00:45:28.880\nof our country, that we are an empire whose best days are behind it.\n\n964\n00:45:28.880 --> 00:45:35.040\nNo in fact, like all countries, we've made enormous mistakes in our past.\n\n965\n00:45:35.040 --> 00:45:39.980\nThis is a country with sin, but at the same time, there's a country that has\n\n966\n00:45:39.980 --> 00:45:40.520\ncreated more\n\n967\n00:45:40.520 --> 00:45:44.650\nwealth and prosperity and opportunity than any country in the history of the\n\n968\n00:45:44.650 --> 00:45:45.240\nworld.\n\n969\n00:45:45.240 --> 00:45:47.200\nAnd we should be proud of that.\n\n970\n00:45:47.200 --> 00:45:52.880\nAnd so it's probably just as important for us to get economic policy right as\n\n971\n00:45:52.880 --> 00:45:53.720\nto converge\n\n972\n00:45:53.720 --> 00:45:59.800\naround something called the national interest, put our pettiness and partisans\n\n973\n00:45:59.800 --> 00:46:00.760\nhip aside,\n\n974\n00:46:00.760 --> 00:46:05.640\nand teach to the up and coming students that sat where you and I were when we\n\n975\n00:46:05.640 --> 00:46:06.680\nwere 18 years\n\n976\n00:46:06.680 --> 00:46:12.190\nold and convinced them and persuade them of all the bounties that are America's\n\n977\n00:46:12.190 --> 00:46:12.960\nbounties\n\n978\n00:46:12.960 --> 00:46:14.840\nand the strengths that we've had.\n\n979\n00:46:14.840 --> 00:46:18.690\nWe don't have to paper over things that we didn't do so well, but this is not a\n\n980\n00:46:18.690 --> 00:46:19.040\ncountry\n\n981\n00:46:19.040 --> 00:46:22.120\nwe should be ashamed or embarrassed by.\n\n982\n00:46:22.120 --> 00:46:27.850\nAnd if we do those things right, some in the world will admire us and follow us\n\n983\n00:46:27.850 --> 00:46:28.120\n.\n\n984\n00:46:28.120 --> 00:46:33.370\nOthers might be scared by us or intimidated, but we need to lead because I\n\n985\n00:46:33.370 --> 00:46:35.000\nstill have this\n\n986\n00:46:35.000 --> 00:46:40.320\nold-fashioned parochial idea, Dave, that if the United States isn't leading,\n\n987\n00:46:40.320 --> 00:46:41.240\nthe economy\n\n988\n00:46:41.240 --> 00:46:46.500\nisn't leading the world, the world will be a more dangerous place and America\n\n989\n00:46:46.500 --> 00:46:47.560\nand Americans\n\n990\n00:46:47.560 --> 00:46:50.160\nwill be less well off.\n\n991\n00:46:50.160 --> 00:46:51.160\nLast question.\n\n992\n00:46:51.160 --> 00:46:55.200\nWhat advice would you give to someone who wants to be a better leader?\n\n993\n00:46:55.200 --> 00:47:00.440\nThe key to being a better leader is to go find better leaders and learn from\n\n994\n00:47:00.440 --> 00:47:01.120\nthem.\n\n995\n00:47:01.120 --> 00:47:02.760\nWe only come to know who we are.\n\n996\n00:47:02.760 --> 00:47:07.680\nWe only come to reveal ourselves by interacting with other people.\n\n997\n00:47:07.680 --> 00:47:13.710\nAnd because I'm really an introvert, from the time I was in elementary school,\n\n998\n00:47:13.710 --> 00:47:14.360\nI always\n\n999\n00:47:14.360 --> 00:47:16.880\nsort of had to force myself out there a little bit.\n\n1000\n00:47:16.880 --> 00:47:21.300\nAnd through those interactions, I think you pick up skills, soft skills and\n\n1001\n00:47:21.300 --> 00:47:22.400\nhard skills,\n\n1002\n00:47:22.400 --> 00:47:24.880\nknowledge and intangibles.\n\n1003\n00:47:24.880 --> 00:47:30.470\nI guess there are people that are probably born great leaders, but for most of\n\n1004\n00:47:30.470 --> 00:47:31.080\nus, we\n\n1005\n00:47:31.080 --> 00:47:35.470\nend up being around really good leaders and really bad leaders, and it's\n\n1006\n00:47:35.470 --> 00:47:36.440\nincumbent upon\n\n1007\n00:47:36.440 --> 00:47:39.680\nus to try to pick up those good skills and to avoid the bad skills.\n\n1008\n00:47:39.680 --> 00:47:44.500\nI've never been one who thinks that you can go to the Barnes & Noble section of\n\n1009\n00:47:44.500 --> 00:47:45.040\nthe book\n\n1010\n00:47:45.040 --> 00:47:48.560\nstore on leadership and read a few books and have it figured out.\n\n1011\n00:47:48.560 --> 00:47:51.980\nThat's just not my experience either from my own experience or from the people\n\n1012\n00:47:51.980 --> 00:47:52.360\nthat I've\n\n1013\n00:47:52.360 --> 00:47:54.360\nbeen around.\n\n1014\n00:47:54.360 --> 00:47:57.720\nThey have learned from the best and frankly learned from the worst.\n\n1015\n00:47:57.720 --> 00:48:04.130\nKevin, I want to thank you so much for fighting your introvert tendency and\n\n1016\n00:48:04.130 --> 00:48:05.440\ncoming on this\n\n1017\n00:48:05.440 --> 00:48:09.480\npodcast and doing something you might not have wanted to do.\n\n1018\n00:48:09.480 --> 00:48:15.620\nI found this conversation to be enormously fascinating and I genuinely hope you\n\n1019\n00:48:15.620 --> 00:48:16.080\nget that\n\n1020\n00:48:16.080 --> 00:48:17.080\ncall.\n\n1021\n00:48:17.080 --> 00:48:20.790\nI'd love to see you run the Federal Reserve Board or be Secretary of Treasury\n\n1022\n00:48:20.790 --> 00:48:21.440\nor whatever\n\n1023\n00:48:21.440 --> 00:48:24.760\nyour dream job is in terms of making our country better.\n\n1024\n00:48:24.760 --> 00:48:25.760\nI hope you get it.\n\n1025\n00:48:25.760 --> 00:48:26.760\nThank you, David.\n\n1026\n00:48:26.760 --> 00:48:28.000\nIt's been a real pleasure being with you.\n\n1027\n00:48:28.000 --> 00:48:39.160\nWell, no doubt about it.\n\n1028\n00:48:39.160 --> 00:48:42.040\nKevin is an incredible economist and thinker.\n\n1029\n00:48:42.040 --> 00:48:45.870\nI hope you enjoyed that deeper dive into our economic policy because it's\n\n1030\n00:48:45.870 --> 00:48:46.600\ncertainly a\n\n1031\n00:48:46.600 --> 00:48:51.440\nbig factor in how you and I go about making decisions for organizations.\n\n1032\n00:48:51.440 --> 00:48:55.900\nBut Kevin also has some keen insights into leadership, even if he doesn't want\n\n1033\n00:48:55.900 --> 00:48:56.520\nto admit\n\n1034\n00:48:56.520 --> 00:48:57.520\nit.\n\n1035\n00:48:57.520 --> 00:49:01.080\nHe understands one of the most fundamental things about leadership.\n\n1036\n00:49:01.080 --> 00:49:04.320\nIt develops as you interact with people.\n\n1037\n00:49:04.320 --> 00:49:09.400\nAnd I just love how Kevin studies the leaders around him in order to grow.\n\n1038\n00:49:09.400 --> 00:49:12.200\nThat's a big takeaway for you today.\n\n1039\n00:49:12.200 --> 00:49:16.400\nIn your life, in your career, you're going to have great leaders.\n\n1040\n00:49:16.400 --> 00:49:17.960\nYou're going to have okay leaders.\n\n1041\n00:49:17.960 --> 00:49:21.600\nAnd let's be honest, you're going to have some bad ones too.\n\n1042\n00:49:21.600 --> 00:49:26.280\nIt's important to pay attention to all the leaders in your life.\n\n1043\n00:49:26.280 --> 00:49:30.470\nIt's how you uncover great strategies that strengthen your own style and it's\n\n1044\n00:49:30.470 --> 00:49:30.920\nhow you\n\n1045\n00:49:30.920 --> 00:49:36.240\npinpoint those red flag behaviors you simply want to avoid.\n\n1046\n00:49:36.240 --> 00:49:38.440\nThat's what I want you to do this week.\n\n1047\n00:49:38.440 --> 00:49:40.720\nThink about a great leader you work with.\n\n1048\n00:49:40.720 --> 00:49:45.560\nWhat's one strategy or habit that they use that you can incorporate in your own\n\n1049\n00:49:45.560 --> 00:49:46.360\nleadership\n\n1050\n00:49:46.360 --> 00:49:47.360\nstyle?\n\n1051\n00:49:47.360 --> 00:49:50.000\nHere's a little secret for you.\n\n1052\n00:49:50.000 --> 00:49:54.080\nDeveloping this mindset is a huge shortcut for your own leadership growth.\n\n1053\n00:49:54.080 --> 00:49:57.930\nAnd by the way, it's what you're doing every week when you're listening to this\n\n1054\n00:49:57.930 --> 00:49:58.200\npodcast.\n\n1055\n00:49:58.200 --> 00:50:02.730\nJust make sure you're also taking notes on all the leaders in your own life,\n\n1056\n00:50:02.730 --> 00:50:03.240\nboth good\n\n1057\n00:50:03.240 --> 00:50:04.960\nand bad.\n\n1058\n00:50:04.960 --> 00:50:07.040\nSo do you want to know how leaders lead?\n\n1059\n00:50:07.040 --> 00:50:11.720\nWhat we learned today is the great leaders study the leaders around them.\n\n1060\n00:50:11.720 --> 00:50:15.180\nThanks again for tuning in to another episode of how leaders lead where every\n\n1061\n00:50:15.180 --> 00:50:15.960\nThursday you\n\n1062\n00:50:15.960 --> 00:50:20.480\nget to listen in while I interview some of the very best leaders in the world.\n\n1063\n00:50:20.480 --> 00:50:24.470\nI may get a point to give you something simple on each episode that you can\n\n1064\n00:50:24.470 --> 00:50:25.280\napply to your\n\n1065\n00:50:25.280 --> 00:50:28.880\nbusiness so that you will become the best leader you can be.\n\n1066\n00:50:28.880 --> 00:50:29.880\nThank you.\n\n1067\n00:50:29.880 --> 00:50:36.940\n[BLANK_AUDIO]\n\n1068\n00:50:36.940 --> 00:50:46.940\n[BLANK_AUDIO]","

David Novak 0:04

Welcome to How leaders lead where every week you get to listen in while I interview some of the very best leaders in the world, I break down the key learning so that by the end of the episode, you'll have something simple you can apply as you develop into a better leader. That's what this podcast is all about. My guest today is Kevin Warsh, a brilliant economist who served on the Federal Reserve Board during the 2008 financial crisis. And boy, here, you're in for a real treat today, because he's got a lot of insights into our current economic climate. These are trends every business leader needs to be aware of right now. But there's an even bigger insight for you here too. Because when you ask Kevin about his success, he is quick to give credit to the other leaders he's worked for. That's how he's grown his own leadership skills. Now, this is not going to come as a surprise to you. But I absolutely love that mindset. We got to actively pay attention to the leaders around us and learn from look, I hope you're a fantastic boss, better yet a fantastic coach. But even if you aren't, you've still got an opportunity to learn and grow. When you study the leaders around you. You can easily spot the strategies and habits you want to adopt for yourself, and those you want to avoid. And this episode will help you do just that. So here's my conversation with my good friend, and soon to be yours, Kevin Warsh.

Kevin, it's great to have you on the show.

Kevin Warsh 1:43

A David, thank you so much for including me, all I can say is you must be pretty deep on your depth chart. To have me on this show. I've been a longtime listener, you've been a dear friend. You know, I thought I was signing up for a show called how soldiers follow. Because that's the only show I'm really qualified for. We'll see what you do with it with the next run in front of us.

David Novak 2:05

So you're already showed your humility. But here you are now, this Stanford fellow. But I understand you had a guidance counselor in high school that didn't think Stanford was a good enough school for you to go to. Can you tell us that story.

Kevin Warsh 2:22

I grew up in a small town in upstate New York was a fabulous place to grow up. I had a great great parents, great brother and sister, great community. And I went to public school, and I had a wonderful guidance counselor to protect the innocent, I will not say his name. He was also among other things, one of the gym teachers at school and he was fabulous. And this gentleman in this public school where I think we had 600 People in my graduating class, he was responsible for filling out the forms that one had to fill out for the New York State Regents, the Department of Education statewide about what his advice was going to be for the students graduating from public school. And having been, I'd say, a reasonable participant in gym class, I knew him reasonably well, I thought. And he asked me whether I was planning to go to a two year college four year college or join the workforce. I think in my high school, about a third of the kids did each of those. And it was a great group of fellow students. And I told him that I would like to go to a four year college and he checked the box on the New York State form. And he said to me, what four year college would you like to attend? And I said, Well, I know it's a bit of a long shot. But I think I'd like to go to Stanford in California. And he said, well, with some hesitation, do you know it's in Connecticut? And I said, Well, sir, I think I have the brochure in front of me, and I'm pretty sure it's in California. And he said, No, it's in Connecticut. And turns out he was talking about Stamford, Connecticut with an AMA so through good fortune, I ended I ended up out west.

David Novak 3:59

That's funny. And now I want to get into how you leave. But first, you know, I want to take you back. What's a story from your childhood that shaped the kind of leader you are today? Well, again, I'm

Kevin Warsh 4:10

gonna take slight issue you're gonna keep using this word leader, and I'm gonna fight you for the period we have in front of us. But I would say I showed up it's probably not from my childhood, although when I showed up in college, I was still a child, whether I knew it or not, you know, traveled 3000 miles away. I remember my my mom packing up to big Navy duffel bags with sheets and pillowcases and the rest. This was the opposite of today's sort of tiger moms or helicopter parents. They brought me to the airport and sent me on my way with my own bedding. I landed in San Francisco I took a blue super shuttle van down on the campus, which I had not visited before. Not long after I arrived at the place. I needed a job and I there was an advertisement in the Stanford Daily the school newspaper at the time. And it was for a research assistant to help a couple of professors. And they were paying $13 an hour for this research assistants. And it turns out that job was working for some of the finest economists in the world. And I was lucky to be working for great people like George Shultz and Milton Friedman and John Cogan, and people who, who really changed my life in terms of my knowledge changed my life in terms of what I would end up growing up to do, and made my college experience nevermind my life experience that much better.

David Novak 5:33

Kevin, I understand that one of your first jobs or maybe even your first job was was selling pencils at the Saratoga racetrack. Tell us about it. And what do you learn from that experience,

Kevin Warsh 5:44

I started working there when I was probably 14 or 15 years old, I worked there for about six weeks, every summer till I was 19 or 20. And after a couple of promotions, when I was first a barback, really setting up kegs and delivering ice to the bars all over the racetrack, I was finally promoted, I had my big opportunity. And that was to sell pencils and programs to people as they entered the track. I learned a lot about hard work, I learned a lot about trying to keep track of your pencils, because there was good margin and pencils, we build them as lucky Saratoga pencils that would go with the program. When you sell the lucky pencils in the feature race. A lot of guys say Okay, who do you like in the big eighth race today. And if there were eight horses going, you'd give eight different answers the lucky pencil. And at the end of the day, if the number six horse one, that would be the guy who'd come back and give you a tip, and the tips you gave to on everyone else, when you get lucky pencils, they wouldn't they wouldn't be really expected the victory. So it's a nice way to get a little bonus at the end of a big Saturday racing. And I also met a lot of people that frankly, I never would have met otherwise. So it was great exposure to to people that would come to know many decades later.

David Novak 6:54

Well, here you are. Now you're coming full circle these days. And I understand you're actually in the horse business and considering really going after it in a big time way. What do you think of the horse business? And why now tell us you know, as an economist, tell us about the horse business.

Kevin Warsh 7:12

Any good economist would never be in the horse business. Words horse business is if it's a business that has some potential for a positive return, David, that is not the horse business. I think of it more as a hobby, it's, it's a great opportunity to be with dear friends, around animals we love and great camaraderie. My experience in the horse business I think is indicative of most an incredible amount of fun, but catastrophic losses every year. So you show up in the horse business with the money that you're prepared to lose. But on the other side of things, as you well know, the friendships that you make in that business are incredible. You know, just to tie this question back to an earlier story among the people who I first met when I was selling pencils was a guy by the name of Danny Phipps, who you knew passed away. Some years ago, you and I are friends with his incredible wife and his family. I met Danny because he would buy his lucky program and lucky pencil for me as he entered the clubhouse. And back in the day, Danny Phipps was the great name. He was the king of Saratoga, he was royalty. And he was always very nice to me, and frankly, left me a pretty good tip each day. And so many years later, when I was just out of government. He called me up one day and he surprised me by asking me if I would speak at the Jockey Club dinner. He was the chairman of the Jockey Club, David. And I remember hesitating, but I couldn't turn this kind invitation down. So I accepted and I went up to the Jockey Club dinner wearing a black tie and trying to give a fair presentation. He said speak about anything you'd like. So I tried to opine just a bit on the economy and what was going on. But as I stood up there, I felt quite humbled. I told the assembled group, some of the most interesting and important people in the horse racing business. I told them that I had grown up not far from where this Jockey Club dinner was being held in a tent in Saratoga. And I said, But you know, to be candid, in my wildest dreams, I did think there was some possibility that I could be here someday. But in my wildest dreams, I would be here in black tie, but I'd lean over and I would say, Mr. Phipps, would you like to surf or the turf? I'd be speaking to that group was humbling, and it shows it shows something special about the kinship and camaraderie and the horse racing business.

David Novak 9:46

Because you're listening to this, I can tell you're the kind of person who wants to learn how to lead well. But there's a lot of companies out there who want to take that desire and charge you $500 or $1,000, or heck, even two $20,000 to try and show you how to lead. That's just not right. If you want to be a better leader, I believe you deserve to have access to something that will truly help you. And it shouldn't cost a fortune. So I want you to go to how leaders lead.com and start my leadership class. It's really and truly free. And after you take this class, you're going to feel more confident in your role. And you'll be on your way to get the big things done with your team. Go check it out at how leaders lead.com.

Now I want to talk about how you came up in your career because you had some huge jobs at very young ages. And after graduating from Harvard Law School, you go to Morgan Stanley, and you quickly climb the ranks, eventually running m&a there. What's the key leadership lesson you glean from those years?

Kevin Warsh 10:57

You know, during my career, there's nothing but borrowed valor, from bosses that I had up and down the ranks, you know, I I've been most lucky, mostly serendipity to be exposed to great leaders. And, you know, my, my experience is you see leaders around you. And they have qualities that that are qualities you admire, you steal from them, you borrow, you know, this is all an apprenticeship business that that we're leading, whether it be in banking, or in government, or anything else. And see, when you see qualities, you try to imitate them, make them your own, try to follow good behaviors. And when you see qualities you don't like, because they don't treat you well, when you're their associate, or you see how they treat others. You know, there might be a little bit of that in YouTube, where you're rushing around and not treating people like you should you see it, you don't like it. So I would say from my from my early career in investment banking, and mergers, where I had some incredibly talented bosses. And I had some bosses that were more difficult. And I started to pick up skills that I thought were successful, and that I want to incorporate and reject others, you know, I worked in in mergers for about five and a half years at Morgan Stanley. I loved every bit of it. And I learned a lot about financial markets during that time. In some ways. The career is one where I was exposed to markets both in good times and in bad and learned a lot. It was rarely in either financial markets or in the government, or back now in the private sector, where we don't seem to be in some form of boom or bust. And those are incredible learning experiences. The learning experiences more placid times are probably ones where you pick up a little less. But I learned a lot especially about financial markets during during my time at Morgan Stanley. When you

David Novak 12:55

were running the mergers and acquisitions group. You're young, you had to have a lot of people who are older than you working for you. Okay. What advice can you give to people who who have older people working for you? You know, I remember that was really challenging for me early on. How do you deal with it?

Kevin Warsh 13:16

Let's say, Morgan Stanley, back then, you know, I plenty of bosses in banking and across the securities firm and in mergers, who are older. But I would say the firm then was quite meritocratic. You know, we might be in an era now, where we use words like merit and meritocracy. And people roll their eyes at that. But at least in those days, Merit really carried the day. And so long as you show up in your job, in government or in the private sector, with skills, with knowledge, with insight, and also huge amounts of humility. You know, age and rank seem to matter a lot less in almost every place where I've been, you know, title was the least important thing, ability to contribute to the team to execute were much more appropriate. You know, in some sense, I'm not that old of a guy today, but it strikes me meritocracy is underrated, and its relative importance. And so long as you're in a position where you can demonstrate the right mix of assets and liabilities, skills and areas of progress. You know, age, age, rank and serial number matter a bit less.

David Novak 14:28

Ira, and you then you go from Morgan Stanley, and you go on to work as a special assistant to the president for economic policy. What was the most challenging part for you, as you made that transition from working in a public company and going to the government?

Kevin Warsh 14:46

Well, a lot of people find that transition difficult. I probably expected to find it difficult. I didn't find it so difficult, you know, in the high pressure, stakes and the deadlines of the White House though swinging the White House. It felt very meritocratic to me. I started out with a scarcity of responsibilities of pretty small remit. And over time, as you work harder and execute and do your job and work well sort of up and down the chain. It didn't feel so different to me than the private sector. It was intense, demanded, you know, discipline, loyalty, analytic rigor. And you know, I found it to be a great experience, and the transition was a lot less than I had feared. Wow.

David Novak 15:32

You know, and then Kevin, at age 35, you became the youngest person to ever serve on the Federal Reserve Board. Tell me a story about the confirmation process.

Kevin Warsh 15:41

The confirmation hearings went quickly. But the senior Democrat on the Senate Banking Committee, he was a lovely man who passed away, a Democrat named Paul Sarbanes, a Democrat from Maryland. And I went to do a courtesy interview with him and any members of the Senate who'd be interested in taking that interview. And the meeting went well, but he said to me, you're young, and I see your background here isn't what I've come to grow accustomed to going to the Federal Reserve. I'm going to call Paul Volcker's office. And I want to hear what Paul has to say about you before I decide whether I'll be voting for your confirmation. And so I saw that sounds great. His office, worked with the White House office and set up a meeting with me to come up to New York and see Paul Volcker. Now, I should admit to you what I wouldn't have admitted when I was 35. I was so excited by the meeting. This is like getting to meet one of my heroes. For most of your listeners. This is like, you know, getting to meet Tom Brady or Steph Curry or Peyton Manning. I wanted to bring my autograph book, but that probably would have made me seem even younger than I than I had intended. So I went to see Chairman Volcker and he greeted me and he was a serious and stern fellow also passed away a few years ago. But he was he was strung up to the end. And I introduced myself. And he said, Paul Sarbanes says that I should meet you and pass along a recommendation, as well. It's an honor to meet you, Mr. Chairman, ask your questions. He said, Why don't you start with questions for me? So actually, I have quite a few. And I was asking him these arcane questions about money printing and bank reserves and the Federal Reserve's balance sheet. And he answered a couple of them. And he said, Kevin, there's something I need to tell you. This job you're signing up for, really is quite simple. It really only requires two things. And so I probably took out my pen and my book, and I was going to write down these two great insights from a great Fed chairman who dealt with the great inflation of the 1970s. And he said, the first thing is, you have to get interest rates about right. And he put the emphasis on about because he said, we don't really ever know exactly where interest rates should be, they should just be in the right neighborhood. And so I wrote that down. And he said, the second thing is probably more important than the first, when you're a governor at the Federal Reserve, probably the most important thing is to make sure you look like you know what you're doing. And so what I think he meant by that is the conduct of policy is about doing the right thing on interest rates. But there's a certain theater to it, there's a certain displaying of conviction to it. Monetary policy, what the Fed does people react to it? Does the person look like they know what they're doing? Does the person look like they have conviction about what the future is? Are they conveying a seriousness of purpose to beat inflation down? And so that always stood with me, and then the Oh, eight financial crisis? You know, I reminded our colleagues in the in Ben's kitchen cabinet, we have to do the right thing as best we can. We also have to convey a sense of confidence that we can get through this. And it was a story that stuck with me. And as I think about the conduct of policy in the 10 or 11 years since I've left, I think both those factors are as relevant today as they were when Paul gave them to me in 2006.

David Novak 19:13

And you helped lead our country alongside Bernanke, out of the Great Recession in 2008. What do you find the most challenging and what were you the most proud of during that period?

Kevin Warsh 19:26

What I'm most proud of is being part of an incredible team. What I thought was most most remarkable and probably unheralded at the time about Ben Bernanke is it would have been easy for him at an academic by background, not someone who was deep in markets, or frankly, that well known to have surrounded himself in his own kitchen cabinet, with peers, with other academics that had backgrounds just like his people who would almost inevitably agree with him. Important judgments during the crisis. But what he did is he chose a Team of Rivals, not in any historical sense. But you know, there was a set of concentric circles of people, he would consult on big matters, I was proud and lucky enough to be, I think, in the, in the smallest circle. And so in that circle was a career Federal Reserve veteran, a guy named Don Cohn, who became vice chairman. At that time, he'd probably already been at the Fed for 35 years. And he knew the plumbing of the institution, he knew the backgrounds of everyone we would turn to. And he was the institutional memory. He turned to Tim Geithner, whose background really was at the Treasury Department first, and worked under Bob Rubin and Larry Summers had risen, obviously, in some later years to be Treasury Secretary, New York Fed President. But Ben leaned on him because his experience was different than Ben is different than Don's and I suspect, he leaned on me because I knew something about financial markets. I knew something about the individual players that were involved in what would be the global financial crisis. And I had instincts for what was likely to be going wrong, that he found useful. The other thing he might have thought and I, you know, I don't want to put words in his mouth is that I knew how to execute. So if we were going to put in a program for better or worse to provide liquidity to a new group of people that were struggling to try to get out of this crisis, that I could Marshal, a team of the most talented people we had at the Fed and the Treasury in the White House, and across the government and race up to Capitol Hill and tell our story, and execute in ways such that he could do what he does best, which is think hard and long about the decisions we were making. So if you said to me, what am I most proud of, I would say to be part of a team of people who frankly disagreed on almost everything then. But we figured out that we would have our family fights in Ben Bernanke is Office. Ben was the decider was his name on the door, it was called the Bernanke fed for a reason. And the rest of us would sit there and salute and support the proposition that would put forward even if we had a lot of internal disagreements, but in the darkest days of the crisis, under his leadership, this team came together. And I wouldn't say we did everything perfectly, but we were better off fighting out each other's views in private, so that in the darkest, most fragile days of the US economy, then probably since the Great Depression, we spoke with one single voice and one team to try to get through the dark night.

David Novak 22:46

Looking back, Kevin, is there anything you would have done differently during that time? It would take

Kevin Warsh 22:52

more therapy than I'd be willing to willing to indulge to do that. But yeah, I'd say with the benefit of hindsight, David, in all candor, there are a lot of things that we could have collectively done differently. I'll just give you one example. And the benefit of hindsight here is incredibly revealing. But, you know, in the 2008 financial crisis, there were signs of illiquidity signs of market dysfunction, even in the end of 2007. By the time we got to the spring of 2008, Bear Stearns, a relatively small investment bank, was in harm's way was apparently insolvent. And we had a heck of an internal family fight. On a simple question, is Bear Stearns unique, that is their problems are Bear Stearns problems and the rest of the banking system in the US and around the world, are perfectly well capitalized insolvent? Or is Bear Stearns, the canary in the coal mine? Is this revealing something about what would turn out to be an insolvent banking system, not just in the United States, but around the world? I would say no one had perfect information in real time in March of 2008. But had we debated and come to the view, then, that Bear Stearns was indicative? I think we would have had a six or seven or eight month head start on trying to prevent a cascading set of losses harms the real economy damage to the financial system. And I daresay damage to the United States, relative to other great powers like China, who prior to that moment thought, well, those Americans who might disagree with them, but surely they know how to run a banking system. Surely they know how to run a market economy that hurt our reputation around the world. So if I could go back to a moment, I would go back to Chairman Bernanke. The Office into the fights we have. And we would shed more light than heat on that moment. And I think from March till October, November of that year, we probably would have done a lot of things differently.

David Novak 25:14

We'll be back with the rest of my conversation with Kevin Warsh in just a moment. Now, if you really want a good one, two punch of financial content this week, you've absolutely got to go back and listen to my conversation with legendary investor Stanley Druckenmiller. Stan's a one of a kind thinker who sees the future differently. And as leaders, that's our job to

Stan Druckenmiller 25:38

if you envision the future, and you're wrong, it's not very fun. It's like shanking, a wedge that really matters. But if you envision the future, particularly in a way that others have not, and you bet it big, and it all comes to fruition, it's not so much that you make a lot of money. It's that you figured out a problem, and you won, and there's the self satisfaction of it. So constantly looking at the world is a collection of puzzles and trying to figure out those puzzles. When you get them right. It's wonderful. When you get them wrong, it's not so wonderful, but you move on.

David Novak 26:13

My conversation with Stan was one of our most talked about episodes of last year. So go see what all the fuss was all about. It's episode 103 here on how leaders lead.

You use your instincts, you do all this hard work, you get a basic policy, that's, you know, set in your mind. You know, when have you really shifted from your policy? Or do you I mean, is your policy so set in terms of what you think that you stay absolutely convicted to it? What's it take for you to move off of it? And can you give an example of when you shifted, and economics

Kevin Warsh 26:57

that needs to happen all the time? None of us really know where our philosophies come from. Are we born with them? Did we learn it from great mentors were around but we all have instincts in a different science. There's something called the Fulani paradox. And the Fulani paradox, broadly speaking, says we know more than we think we do. I think that's true. You know, we say that we have instincts about things, but they're not random. They probably come from things that our brains are processing, from our experience from what we've read and learned. And so instincts are important. But I'll add a corollary to the plenty paradox, I don't know what to call it. We also know less than we think we do. Sometimes we demonstrate too much conviction, and good economists, good thinkers about the economy every day, they're very open minded new data comes in and they have to go back to the judgment they made and ask themselves without bias. Was I right or wrong? Stan Druckenmiller does that in financial markets every morning, when we sit down early to look at the book of business and wonder why are we long and short securities and economics? We have to do the same thing. You've been

David Novak 28:09

very public disagreeing with the Fed and the way they've handled interest rates? You tell us why. Sure. So

Kevin Warsh 28:17

I'm waiting for the softball questions. By the way, Novak, I mean, one year, you're gonna ask me, What's my favorite tree or color? So it's coming? Hard this is this is like, this is serious stuff. It's incumbent upon those of us who have experience and judgment around these things to share our views. And I will say I've tried to do it with the utmost respect. You know, here I'm opining from the cheap seats, these folks at the Federal Reserve and other central banks. They're the ones who are in the lion's den. They're the ones who have to make hard decisions amid uncertainty. But the decisions they make matter, very importantly to the lives of everyday Americans. And if people that have some experience can offer a perspective, and it helps change how a policymaker might think, think it's incumbent upon us that were once in the arena to offer our two cents. And the people in the arena now disagree, that's okay. But doing it with respect, doing it with civility, and offering a different perspective, when in cases like I believe we're in today, the broad conduct of monetary policy is off track has been off track for a long time. You know, I really do believe that a couple of years ago, they made the biggest economic policy error in 45 years. It was less than a year ago, David that they still had interest rates at zero, that they were still buying treasuries and mortgage backed securities as if we were in emergency times when the economy was booming and inflation was the highest level we'd seen since the 1970s. If that's not have an opportunity for those of us who have a judgment offer perspective, then I think our entire society has gotten way too soft in and sensitive. If we can offer our two cents and it makes a difference the lives of Americans, I think it's something we ought to do.

David Novak 30:15

This whole perspective has just been great. But now I do want to have a little bit of fun with you with a lightning round of questions. So are you ready for this? I'm ready. What's one word others would use to describe you will probably

Kevin Warsh 30:27

have to go with two words. I hope they would say true friend.

David Novak 30:32

What would you say is the one word that best describes you?

Kevin Warsh 30:35

disciplined?

David Novak 30:37

If you could be one person for a day besides yourself? Who would it be and why?

Kevin Warsh 30:41

I'd be Stan Druckenmiller for a day. Why? Because he's certainly been on your podcast. He's both my boss and and all of our friends. I showed up working for him 11 years ago when he started his family office. And I admired him from afar. And I knew what a great investor he was. And by the way, 11 years I thought I really knew something about investing and the economy and markets and I, you know, knew something I had reasonable experience. He has this skill that we humans don't have. He has taught me an inordinate amount, including, frankly, at 430 This morning when we started to work. But there's gotta be a reason why Steph Curry is just better than every other basketball player, like Tom Brady is just better. It's certainly not teachable. I've learned everything I can from him, and I'm still learning. But he has this innate skill, this gift to use a probably politically incorrect word. And I just loved to have that gift for 24 hours to know what that gift feels like to hear data to look at a computer screen and see the future in ways that other investors simply don't. It's a remarkable skill. And regrettably, for me, I've been trying to learn it from him sitting at his door for 11 years. But I'm afraid gifts are just that their gifts and they're not easily passed along

David Novak 32:10

the name of your derby horses do you think's going to be in the hunt.

Kevin Warsh 32:17

I am going to the Kentucky Derby when my three great partners and I have a derby horse. I don't want to jinx those that are in the stable now but but we pray every day to be able to show up the first Saturday in May and have a good run. We've had some really great horses and our seven or eight years in this horse partnership. We had a wonderful horse who ran in the Belmont Stakes. almost did it but just didn't quite get to the finish line first. And then Governor Malibu and and I hope somewhere in our feeble stable. There's a Kentucky Derby winner because that's what keeps us all motivated.

David Novak 32:52

Your favorite name of a Derby winner

Kevin Warsh 32:55

affirmed 1978 I didn't go to the derby. I still haven't been to the derby because we don't have a horse in the derby. But in Saratoga affirmed against Aladar in the traverse stakes something close to a match race. These two great horses fought against each other their entire three year old season. I remember sitting in the grandstands with my mom as affirmed who I'd bet $2 on came home to to win that race. And it was a precious moment. I remember being with my mom that day. And that was the excitement up and down my spine as a firm came and passed the finish line,

David Novak 33:31

your biggest pet peeve

Kevin Warsh 33:33

on a grudge holder, I can hold grudges for far longer than I should. And when I see grudge holders and others I shake my head but it's probably only because I know that's that's among my great failings.

David Novak 33:47

If I turned on the radio in your car, what would I hear?

Kevin Warsh 33:51

You know, I'm embarrassed to say you'd probably hear Sirius Satellite Radio and you hear the top hits. And the typical audience for the top hits I'm afraid is some is some 17 year old but I have to admit it's a serious channel to top hits.

David Novak 34:06

What's something about you a few people would know? I think what

Kevin Warsh 34:11

they probably wouldn't know is that a quorum an introvert. My perfect weekend has me sitting at home lying on one chair, my wife on another or puppy in between us. And I have a stack of papers that I'm trying to read. And I could spend the entire weekend reading and thinking and not being in the company of others. So I had core I'm really an introvert and I can I can fake it, but I suppose to the uninitiated they would think I was extroverted when the truth is this is this is all theater.

David Novak 34:45

I got a few more questions and I'll let you go. You've mentioned George Schultz is a great American someone that you admire greatly. When did you first get that really special relationship with how did the door get opened to where all of a sudden this guy you have the chance to have his ear

Kevin Warsh 35:00

or to go full circle when I was looking for a little paid work on the side of my schooling. A couple of Stanford professors were looking for a research assistant to do a project. And to me they were just, you know, professors at Stanford, they seem like older guys. And it turns out that was a project which George Shultz was the patron saint of I worked with John Cogan, I now have colleague and others working on a set of economic projects that the George was, was advising. I will say once I figured out come to recognize who George Shultz really was in America, as opposed to just another professor, who Milton Friedman really was in, in thinking and rethinking economics, who Condi Rice really was, I was just blown away by that experience. And that was nothing but serendipity. And so in some sense, to be honest, my admiration for them. And what they did grew over time, as they came to understand all that they had accomplished, both inside government, then going to the private sector. And as George said, to me, as I was sort of going back and forth, or contemplating going back and forth to government, George said, when you leave government, you need to leave and learn something. So if you ever get that phone call to come back, when you go back, you're better, you're materially better, more experienced, more knowledgeable than they you left. And he went on to say the problem with too many people in government is they go into government, their party and power leaves, and they just sort of sit on the shelf, and they wait for the red team or the blue team to win next, in which case, they're not as good when they go back. And so I've at his behest, and you know, with with Stan as my partner, spent the last 10 or 11 years trying to be better, trying to learn more and think more. So if that phone call wherever to come again, like it did for George, you'd be ready, he had been Cabinet Secretary four times, Secretary of Labor Secretary of Treasury Secretary of State Director of the OMB and the president or CEO for Fortune 500 companies all pretty good by the time he was 70 years old. So he became really the ultimate role model for what he did, but also how he conducted himself a total gentleman. I could quote them all day, but he's been gone a couple of years. And for those of us in the Hoover family, those of us I would say in the conservative family, you know, his passing at the age of 100. It's a reminder to us that this country has done a lot for us. And if and when we have the opportunity to give back, we better well do. So.

David Novak 37:37

You're one of the very few people I know that actually interviewed for a job with the President of the United States. Can you share a little bit of that story, a little backdrop of that, or a little inside scoop on that interview?

Kevin Warsh 37:49

So I can share a little but only a little. So I interviewed with President Trump to be chairman on the Federal Reserve, as good fortune would have it. President was about a year year and a half into his job. But Janet Yellen tenure was ending. It began with what I was told at the time were 16 of us interviewing for the job. According to published reports, as they say it came down to Jay Powell and to me. So I say that in the interest of full disclosure, my criticism of Powell economic policy could be nothing but sour grapes. Your listeners should take that for what it is. Jay interviewed with the President on a Wednesday this is after a series of interviews with his with his advisors in the months that preceded I interviewed with the President on Thursday, I had been led to believe that Secretary Minuchin the treasury secretary for reasons that are that I'm sure perfectly fair, strongly favored Jay Powell for the job. I knew that I was not well positioned because he was driving the process secretary, the Secretary of the Treasury, I wake up that morning in Washington, I go for a run on the Potomac River, it's sort of think of like a Jack Ryan seen the monuments are passing me on the right. It's a beautiful spring day. And I go for a run. And I think to myself, life comes down to a few important moments. And this is one of them. I go back to my closet at my old place in Washington. I put on not my best suit, but you know, an okay suit. And I go to interview with the President United States in the Oval Office. I hadn't been there since I'd been a junior staffer. You know, what was that a decade prior? And the Oval Office is the Oval Office, no matter how many times you've been there, and I'd certainly never been there interviewing to be chairman of the Fed. As I'm walking in, I think to myself, you know, what's he going to ask you about interest rates and how I would think about growing rivalry with China. The state of our fiscal policy, Social Security, perhaps, subjects that I'd spent a lifetime thinking about. I crossed the step getting into the Oval Office. The president comes from B Behind the USS resolute desk, the most important piece of American Furniture famous for President Kennedy and young JFK looking behind it. When the President comes up to me very closely, and he shakes my hand and brings me close to him, he puts his hand on my shoulder. And he looks at me and is as close to me as to be candid any 72 year old man had ever been to me. And he looks at me, and he says, You're a very good looking man. I didn't know quite how to respond to that. I was expecting. I don't know, I understand. That's not the first time he had used that that appreciation. I came to understand that that the appropriate answer was no, no, no, sir. You're very good. But I did not give that answer is George Shultz would say it is not my place to divulge an Oval Office conversation certainly at this at this moment. But I will say the President knew what he was doing. And he buttered me up with all kinds of stuff like that. But he must have interviewed 1000s of people in his life, it was a tough interview, he knew exactly what he was looking for. And as I left that interview, after an hour and a half, and I walked out to an Uber, I didn't think I was gonna get the job, Secretary Minuchin had his favorite there. But I was proud of myself, Dave in a way that I probably had never been before. You know, I didn't let my ambitions get ahead of my principals, I knew what to say. And I decided to call it straight, give my best view and win or lose the job on its merits. And, and the President made his decision, I respect the decision. And as we sit here today, I'm rooting for Jay Powell. And I'm rooting for the Powell fed, they have a lot of wood to chop in front of them, they have important and hard decisions to make. And from that decision to the next, you know, if the phone call wherever to come again, I wouldn't hesitate to raise my hand and try to serve.

David Novak 42:05

You know, one thing I have to ask you, our listeners will probably kill me, as you know, compare 2008 to what we experienced the past couple of years. And what do you see ahead for our country, you know, in the next few years, you know, the state of our US economy, and

Kevin Warsh 42:21

I'm an optimist. So I'll begin by saying that, I think if we make the right decisions, the US economy can boom, it can be the beacon to the world and the century can be ours. But I don't think we have room to make a lot of mistakes. I think we have made some serious errors in the conduct of economic policy in recent years. They're not fatal. They're not determinative of the next decade or two. But this is a hinge point in history. I do think history will look back on this moment. And say, they did the following three things, right. And that's what caused a new economic boom, or they did the three things wrong. And the errors of the past were compounded. I guess it's it's common to say that the next elections are the most important elections of our lifetime. I actually believe it. And this isn't a call for Republicans or Democrats. This is a call for good economic common sense not losing faith of what has worked for the country, I think, left to its own devices. Right now, the US economy is more fragile than most people believe there is still a mountain of liquidity that is covering up sins of economic policy errors, both by companies and by governments. That liquidity is slowly draining out of the economy. And we're going to see what's beneath the surface. And we can either try to cover it up and say, Oh, no, everything's just fine. And we're on the right track, or say, No, this is a period where the country needs to think differently. And the second piece that I would say, is whether you and I like it or not. The truth is the rivalry between the United States and China will be the defining rivalry of the next 40 years, how it's handled, how it's managed, requires experience knowledge, deafness, toughness, and a willingness to think a new about priors one might have had about these two economies. And I think to somehow suggest that we can work this out through dialogue or take a script from the 80s or 90s or 2000s and reprise that, I think is wishful thinking. So I take this period in front of us with a lot of sobriety and seriousness, and I'm hopeful that business leaders like you has government bureaucrats like me, regardless of party and background say that there is still this thing called the national interest. And left and right might disagree on how best to achieve that. But we actually have one common goal. And we need to agree on it. The mistake would be to try to educate our children and say that we shouldn't be ashamed of our country, that we are an empire whose best days are behind it. No, in fact, like all countries, we've made enormous mistakes in our past. This is a country with sin. But at the same time, there's a country that has created more wealth and prosperity and opportunity than any country in the history of the world. And we should be proud of that. And so it's probably just as important for us to get economic policy right, as to converge around something called the national interest, put our pettiness and partisanship aside, and teach to the up and coming students that sat where you and I were when we were 18 years old, and convince them and persuade them of all the bounties that are America's boundaries in the strengths that we've had. We don't have to paper over things that we didn't do so well. But this is not a country we should be ashamed or embarrassed by. And if we do those things, right, some in the world will admire us and follow us. Others might be scared by us are intimidated. But we need to lead because I still have this old fashioned parochial idea, Dave, that if the United States isn't leading the economy isn't leading the world, the world will be a more dangerous place, and America and Americans will be less well off.

David Novak 46:49

Last question, what advice would you give to someone who wants to be a better leader?

Kevin Warsh 46:54

The key to being a better leader is to go find better leaders and learn from them. We only come to know who we are, we only come to reveal ourselves by interacting with other people. And because I'm really an introvert, that's, you know, from the time I was in elementary school, I always sort of had to force myself out there a little bit. And through those interactions, I think you pick up skills, soft skills, and hard skills, knowledge and intangibles. You know, I guess there are people that are probably born great leaders. But for most of us, we end up being around really good leaders and really bad leaders. And it's incumbent upon us to try to pick up those good skills and to avoid the bad skills. I've never been one who thinks that you can go into the Barnes and Noble section of the bookstore on leadership and read a few books and have it figured out. That's just not my experience, either from my own experience, or from the people that I've been around. They have they have learned from the best and frankly, learn from the worst.

David Novak 47:58

Kevin, I want to thank you so much for fighting your introvert tendency and coming on this podcast and doing stuff that you might not have wanted to do. I found this conversation to be enormously fascinating. And and I genuinely hope you get that call. You know, I'd love to see you run the Federal Reserve Board or be secretary treasurer, whatever your dream job is, in terms of making our country better. I hope you get it.

Kevin Warsh 48:26

Thank you, Dave. It's been a real pleasure being with you.

David Novak 48:37

Well, no doubt about it. Kevin is an incredible economist and thinker. I hope you enjoyed that deeper dive into our economic policy, because it's certainly a big factor in how you and I go about making decisions for organizations. But Kevin also has some keen insights into leadership, even if he doesn't want to admit it. He understands one of the most fundamental things about leadership. It develops as you interact with people. And I just love how Kevin studies the leaders around him in order to grow. That's a big takeaway for you today, in your life, in your career, you're going to have great leaders, you're going to have Okay, leaders, and let's be honest, you're going to have some bad ones too. It's important to pay attention to all the leaders in your life. It's how you uncover great strategies that strengthen your own style, and is how you pinpoint those red flag behaviors you simply want to avoid. That's what I want you to do this week. Think about a great leader you work with what's one strategy or habit that they use that you can incorporate in your own leadership style. Here's a little secret for you. Developing this mindset is a huge shortcut for your own leadership growth. And by the way, it's what you're doing every week when you're listening to this podcast. Just make sure you're also taking notes on all the leaders in your own life both good and bad. So do you want to know how leaders lead? Well, we learned today is the great leaders study the leaders around them. Thanks again for tuning in to another episode of how leaders lead where every Thursday you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you will become the best leader you can be

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