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CNBC Excerpts: CNBC Exclusive: Goldman Sachs Chairman & CEO Lloyd Blankfein Speaks with CNBC's "Squawk Box" Today

WHEN: Today, Wednesday, January 7th

WHERE: CNBC's "Squawk Box"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Goldman Sachs Chairman & CEO Lloyd Blankfein on CNBC's "Squawk Box" today. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000344499, http://video.cnbc.com/gallery/?video=3000344500, and http://video.cnbc.com/gallery/?video=3000344501.

All references must be sourced to CNBC.

BLANKFEIN ON GROWTH ENVIRONMENT:

LOOKING AT THE BIGGER PICTURE, WE ARE STILL IN THE SITUATION WHERE THE MACRO CONTEXT HAS THE UNITED STATES IN PARTICULAR AT ABOVE TREND GROWTH AND ESSENTIALLY ZER0 INTEREST RATES, AND THE EXPECTATION THAT INTEREST RATES WILL STAY LOW FOR A VERY, VERY LONG TIME EVEN AS GROWTH CONTINUES TO CYCLE HIGHER, THAT'S A VERY GOOD ENVIRONMENT FOR ASSET PRICES AND FOR STOCKS.

BLANKFEIN ON OIL:

NOW THAT WE HAVE $50 OIL, HOW CAN IT BE SUCH A BAD THING? THERE'S A MILLION REASONS WHY IT WOULD AFFECT THE MARKET IN THE SHORT TERM, BUT WHEN YOU SEE BONDS REACTING AND EQUITIES REACTING YOU HAVE TO SAY THAT DOES NOT MAKE SENSE ANY REAL SENSE BECAUSE EVERYBODY KNOWS IT'S A TAX CUT, IT'S THIS, IT'S A BOOST, IT'S A SUBSIDY, ALL THOSE POSITIVE THINGS IN THE ECONOMY. SO WHAT'S GOING ON? IS IT REALLY NOT JUST THE SUPPLY SIDE AND A BLESSING? IS IT REALLY SUGGESTING THAT THERE ARE SOME DEFLATIONARY PRESSURES.

BLANKFEIN ON THE FEDERAL RESERVE:

WHAT I DO IF I WERE THEM I WOULD TAKE A LOT OF RISKS ON THE INFLATION SIDE, AND THERE'S REALLY NOT MUCH INFLATION, THERE'S NO INFLATION THAT'S EVIDENT ANY WAY, BUT I'D TAKE THAT RISK TO AVOID A LOW, BUT VERY ADVERSE CONSEQUENCE OF IT BACKSLIDING. IF IT BACK SLID, WHAT WOULD WE DO? WHAT ARE THE REMEDIES? IS THERE GOING TO BE A STIMULUS PACKAGE, ARE WE GOING TO HAVE LEGISLATION PASSED, FISCAL, THE ONLY GAME IN TOWN HAS BEEN THE MONETARY, AND WE FIRED A LOT OF THE BULLETS. I'D KEEP FIRING BECAUSE SUSTAINING IT IS A LOT MORE SURE THAN LOSING IT AND TRYING TO RECAPTURE THE FORWARD MOMENTUM.

BLANKFEIN ON TECH FEAR:

WE'RE ALL FAMILIAR WITHTHE GOOD LEVERAGE OF TECHNOLOGY, HOW ABOUT THE BAD LEVERAGE OF TECHNOLOGY? PEOPLE TALKING ABOUT CYBER TERRORISM AND BAD BEHAVIOR, WHAT ABOUT MISTAKES? YOU KNOW, SOMEBODY MAKES A MISTAKE, BAD SOFTWARE, WRONG BUTTON, WE CONNECT TO SOMETHING LIKE 60 EXCHANGES. WHAT IF THERE'S AN ERROR? IN THE OLDEN DAYS, YOU HAD, YOU KNOW, YOU HAD A FAT FINGER, AND IT WOULD COST YOU A HUNDRED THOUSAND DOLLARS MISTAKE. COULD YOU HAVE A HUNDRED MILLION DOLLAR MISTAKE, A BILLION DOLLAR MISTAKE BECAUSE OF LEVERAGE? SURE.

BLANKFEIN ON INTEREST RATES:

YOU THINK THERE'S A LITTLE BIT OF AN EMBEDDED ASSUMPTION THAT INTEREST RATES CAN GO UP SHARPLY TO A VERY HIGH LEVEL OVER A VERY SHORT PERIOD OF TIME? AND AS FAR AS THE DISORDERLY NATURE, YOU KNOW, AT SOME POINT, IT DOESN'T BECOME THE FED'S DECISION, IT BECOMES THE MARKET'S DECISION. ONCE THE FED STARTS TO MOVE, THEY MAY WANT TO GO IN A MEASURED, SLOW PACE. BUT IF I'M SITTING THERE IN THE MARKET AND I KNOW THEY'RE GOING AT A MEASURED, SLOW, BUT INEVITABLE PACE, I'M GOING TO GET THERE IN FIVE SECONDS. THE MARKET MAY GET THERE WAY AHEAD OF THE FED.

BLANKFEIN ON COST OF SYNERGIES:

WHAT'S THE VALUE OF SIZE AND COMPLEXITY? WELL, SYNERGIES. BUT NOW, THERE'S A COST TO SIZE AND COMPLEXITY. EXTRA CAPITAL THAT YOU NEED TO HAVE. THAT CAPITAL HAS A PRICE. YOU CAN LOOK AT THE VALUE OF THE SYNERGIES VERSUS THE ADDITIONAL CAPITAL AND SAY, YOU KNOW SOMETHING, THE SYNERGIES ARE NO LONGER WORTH IT.

BLANKFEIN ON RULE REDUNDANCIES:

THERE'S A NUMBER OF REDUNDANCIES IN THE STRUCTURE OF THE REGULATION. SO FOR EXAMPLE, THERE'S C CARD, THERE'S THE CAPITAL RULES, THERE'S LIQUIDITY RULES. ALL OF WHICH AMP UP THE AMOUNT OF CAPITAL. I WOULD SAY THEY ARE ALL DESIGNED AS IF EACH ONE WAS UNIQUELY CARRYING THE WEIGHT OF GETTING THE RIGHT LEVEL OF CAPITAL, AND COLLECTIVELY, MAYBE WE HAVE TO HAVE TOO MUCH CAPITAL.

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