00:00The AI revolution is ushering in trillions of dollars in new investments and in technology
00:05that could dramatically change every aspect of our lives. Some economists liken this era to the
00:09early internet boom of the 1990s. But this weekend's essay in the forecast newsletter
00:13asks the question, does that parallel hold up? Bloomberg News senior editor Chris Ancy joins us
00:19now from Boston. Chris, great to have you with us. You have the President's economic team making
00:24this argument, saying it's like the run-up to the dot-com bubble bursting, I suppose. You argue
00:29there are problems with the parallel. Just to quote a bit from your essay. They don't mention the
00:32bubble. They don't mention the bubble, I should say. They just mention the early years. The fervor
00:37and the investment and the excitement and all of that. You're right. The bottom line is that
00:41technological revolutions don't take place in a vacuum. The wider macro context is as important
00:46as the technology itself. Just tick through, if you could, what's different today in that wider
00:51macro context than back in the 1990s? Yes. So people like Scott Bessent and Kevin Hassett,
00:57you know, the Treasury Secretary and National Economic Council director, what they're focusing
01:02on is just one little tidbit here. Specifically, in the mid-1990s, they say, look, there was this
01:11big boom in internet and computing investment. That improved the productivity picture. That allowed
01:20the U.S. to grow at a faster pace without spurring inflation. And Alan Greenspan, the Federal Reserve
01:27chair of the time, picked up on this. He was very prescient. And he realized that the Federal Reserve
01:35could keep interest rates low for longer and allow this productivity boom to unfold. But there were other
01:43things going on, as I point out in the essay. And one was, of course, globalization. That was just the
01:51early years of incorporating China, especially into global supply chain. Yeah. Chris, you start with this
01:57anecdote where you apparently blurted out China at Alan Greenspan in the middle of a speech. Do you want
02:02to go through that for us? Yes, I was. So I was the incoming U.S. economy team leader. And
02:09we had Alan
02:10Greenspan at the bureau. He was a longtime contact of our then bureau chief, Al Hunt. And I guess I
02:20was,
02:20you know, eager to impress my new colleagues that, you know, I knew all about what Greenspan was talking
02:27about. And I kind of blurted out that his most important metric looking back at disinflation over
02:34the past decade was the declining price of Chinese goods imported into the United States. And he kind
02:42of glanced over at me and scowled and said, do you want to continue with the whole presentation?
02:48I said, oh, no, sure. I'm sorry. I'm sorry. Please go ahead. But, you know, as I wrote in the
02:54essay,
02:54it left in my mind, you know, that metric as an important ingredient. And you don't see this from
03:03the Trump team as they talk about, you know, the the 1990s experience.
03:10There is this belief among the president's team that there's going to be this huge boost to
03:15productivity. It's not going to have a dramatically negative effect on the labor market. It's going to
03:20benefit a lot of workers. When you look back at the 1990s, how long did it take, Chris,
03:24for Alan Greenspan, other policymakers, economists to get a fuller sense of how dramatic those changes
03:30that were unleashed with the Internet actually were? Well, the team is correct in saying that
03:36Greenspan was, you know, extraordinarily quick to pick up on this. And in retrospect,
03:45retrospect, he was absolutely right. You guys probably remember back then,
03:51there were those all those ads for Cisco systems, you know, are you ready for the the Internet boom?
03:59No doubt that it had a profound effect on productivity. And it improved a lot of things. We saw,
04:09you know, economic growth pick up to an extraordinary pace compared with the previous decade.
04:16But we also saw, as I said, you know, all of these other dynamics, including, you know, fiscal
04:26contraction, fiscal contraction in borrowing that allowed the private sector to borrow without
04:34paying higher interest rates at the long end. Chris Ancy, thank you very much. Appreciate it.
04:39Thank you very much.
04:39Thank you very much.
04:39Thank you very much.
04:39Thank you very much.
Comments