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Former Dallas Fed Chief Economist Michael Cox reacts to Ben Bernanke's speech on the economy and how to spark job growth.
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Moving now to our first -- of the show other guest says that when it comes to helping the economy the Fed is out of bullets Michael Cox as a former chief economist.
And senior vice president of the Federal Reserve Bank.
-- Dallas are you there Michael.
I'm here I CEO all right thank you very much for being with us today you heard what -- fed chair Ben Bernanke.
Had to say nothing new Peter burns said it was a -- form of the I Jackson Hole speech what do you think about it.
Well if you read the Jackson Hole speech you do get more what you found courses that the Fed is at least down to some very small caliber bullets 22000.
Most maybe even -- -- level.
Because they've really tried everything they can't and interest rates are down about as far as they can go that pump 2.2 five billion trillion -- with a base money into the economy.
And so it at best what the Fed is gonna do not now would be very miniscule.
But let me reiterate there's a couple things that that Bernanke said there that trouble me and one -- with this focus on keynesian policy demand stimulus as a way to get the economy going.
The economy doesn't really supper right now from the lack of potential demand -- what it suffers from the lack of incentives and clarity.
People don't have that you know with all these -- taxes -- the -- this government chaos people don't have the incentive do the things to -- GDP.
GDP is a collection of economic activities were people -- -- they get a job they work hard to try to become productive they saved their money.
They invest people in vet people innovate they didn't they engage in productive risk taking.
That businesses hire people those lines come when economic actors have an incentive to do that.
Michael let me let me ask you what.
Much more in terms of clarity can best -- provide they've already sent that they're keeping rates low until.
2013.
-- they continued to give us updates on what's happening GDP and inflation which doesn't seem.
To be moving much from there targets that they had given.
Most recently so what addition all clarity and transparency measures do we need.
We need something from on the financial regulators this out of the financial nature namely not just lower interest rates we've -- all of our financial bullets what we need to do now.
Is to get for the Fed they really want to stimulate the economy moved to the real side.
Where the difficult work it's so difficult up there 243 new rules and regulations coming up Dodd-Frank.
-- 67 studies they're 22 periodic reports that financial institutions gonna have to file.
The Fed needs to get together with the SEC the FTSE and all the other good government regulators and and put a big hold all this this this thicket.
That the putting up in front of them out people who loaned money and borrow.
Michael has -- as a -- on the real about the need to operate -- let's shift gears a little bit from the from Ben Bernanke.
To the president's speech tonight you've already said it pinned the -- way isn't the way to go.
What will be in the correct formal that the president's and understand -- three jobs in his country.
-- funny thing you can do to create jobs the first one would be don't get rid of obamacare them and number one things holding businesses back now.
-- people is the uncertainty of how much their employers are gonna cost them.
So that would be the first and the second thing would be to lower the corporate income tax rate America has now the corporate it highest corporate income tax rate the world.
We're creating jobs we're just great and overseas where they don't pay the corporate income taxes.
-- have to keep going down the list we could ignore -- immigration policy.
-- let businesses come in here.
People would people what businesses people with investment people with financial resources could come into this country right now the opposite is happening businesses are moving out.
Two more business friendly environment.
Let me -- on hold for a second Michael we have Peter -- standing by you heard what mr.
Cox soccer in the way of suggestions Peter but none -- those seen.
Likely in terms of what the president is going to offer later on this evening.
-- lord -- -- still ruling the roost over at the White House that pays for now because that we have learned what the president is gonna propose at least some of what he's gonna propose -- in Charles.
-- our colleague Ed Henry confirming -- the package will be about 400 billion dollars and let's click through some of the elements here extend the current payroll tax cuts for workers.
Through -- I keeping a hundred billion dollars and and taxpayers' pockets offer tax breaks -- targeted to small businesses that create.
New jobs -- a new round -- infrastructure spending.
By the with with a big focus on renovating and rebuilding public schools get those free trade agreements through congress for South Korea Panama Colombia and one other one that we've been reporting on extend.
Unemployment benefits with job training the president will propose to pay for this they say it's gonna be paid for but the -- wanna do -- In the Washington convention -- over the next ten years and they want to do it all through closing corporate tax loopholes.
For business.
And limiting deductions for families that earn more than 250000 dollars a year we've heard those effort we've heard the president's push those before and he's gonna renew that fight tonight.
All right thank you very very much Peter we appreciate it wanna sit back you -- Michael Cox former Dallas fed to have reserves she had she had chief economist.
Let's talk about this issue of the man because Ben Bernanke has talked about this virtuous cycle and it sounds wonderful.
You know money -- -- in the economy but to your point trillions absolutely trillions of dollars have imported to this -- have imported to this effort.
How do you sparked this how to how to so what actually -- how we get this going in this country that -- virtuous cycle how -- Did gone.
I'm telling you again it comes from incentives I need to have an incentive to go out and hire somebody and not have be thwarted in that incentive.
But haven't reached that maybe have not government's slap my hand goes up broke some rule or -- -- gonna tax me.
And people need to -- senators as well that's -- economic activity comes from it comes from the supply side.
You -- be much more in favor of policies which -- the -- encourage people to loan invest save.
And so on than once -- just get the government and give them the opportunity to spend more money.
That big keynesian monetary policies fiscal policy has never worked in this country it didn't work in the Great Depression.
We ran up what would be the equivalent today of trillions dollars where the the debt -- debt but the unemployment rate in this country did not rise above 12% until government I -- all these.
Safety nets and is keynesian fiscal policy platforms then it rose to 25% -- actually backfires on you because it takes money out of the hands of people.
Where it's best left to be spent on the things that they -- and the economy and they need the most.
You gave some great ideas in resuscitating this economy Michael -- and Michael Cox a former Dallas fed reserve chief economist.
The number one thing you say -- get a lot to it was worrying about Dodd-Frank I think.
You and businesses out there share a lot of -- -- concerns we will see whether the president addresses what's really hitting.
The nerve of American households and American business says when we hear from him later on this evening thank you very much for joining us today.
And now -- -- the.
