WHEN: Today, Thursday, April 20th
WHERE: CNBC's "Squawk on the Street"
Following are excerpts from the unofficial transcript CNBC interviews with former Federal Reserve Chairman Alan Greenspan and IMF Managing Diretor Christine Lagarde on CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET) today, Thursday, April 20th.
All references must be sourced to CNBC.
Alan Greenspan, former Federal Reserve Chairman
GREENSPAN ON FEAR
BECAUSE OF A FUNDAMENTAL OF HUMAN NATURE, FEAR DOMINATES EUPHORIA. AND THAT MEANS THERE IS AN EQUITY PREMIUM IN STOCKS OVER BONDS OR ANY OTHER CREDIT INSTRUMENTS, WHICH IS THE RESULT OF HUMAN NATURE. AND PEOPLE ARE WILLING TO PAY THE DIFFERENCE BETWEEN THE RATE OF RETURN ON EQUITIES AND THE RATE OF RETURN ON BONDS, MERELY BECAUSE OF AN IRRATIONAL FEAR. IN MY VIEW, IF YOU CAN LIVE THROUGH THE UPS AND DOWNS OF STOCKS, THE BEST THING YOU'LL DO IS YOU BUY STOCKS AND FORGET THAT YOU OWN THEM.
GREENSPAN ON THE DEFICIT
ALAN GREENSPAN: THE DEFICIT IS BEGINNING TO MOVE RATHER QUICKLY.
SARA EISEN: THAT'S A PROBLEM?
GREENSPAN: AND THAT'S THE PROBLEM. AT THE MOMENT, WE CAN'T AFFORD IT. IF YOU GO OUT AND BUILD A BRIDGE FOR EXAMPLE, YOU DON'T GET ANY REVENUES FROM THAT BRIDGE UNTIL IT'S COMPLETE. SO THERE'S A BIG COST UPFRONT DOING THAT. AND MOST OF THE INFRASTRUCTURE TYPE OF SPENDING IS OF DELAYED IMPACT.
GREENSPAN ON ENTITLEMENTS
GREENSPAN: THE SIMPLEST WAY TO GET TAX CUTS IS TO CUT SPENDING AND THE MAJOR AREA WHERE WE HAVE TO CUT IT, OR AT LEAST SLOW IT DOWN DRAMATICALLY, IS ENTITLEMENTS. THERE IS NO OTHER PROGRAM WHICH MAKES –
EISEN: AND NOBODY IS TALKING ABOUT THAT.
GREENSPAN: BECAUSE CUTTING SOCIAL BENEFITS OR CUTTING ENTITLEMENTS IS THE THIRD RAIL OF AMERICAN POLITICS. AND I THINK THE THIRD RAIL OF EUROPEAN POLITICS, EVERYBODY ELSE'S POLITICS. IF WE DON'T COME TO GRIPS WITH THAT, WE'RE NOT GOING TO SOLVE THIS PROBLEM.
GREENSPAN ON THE DOLLAR
EISEN:WHAT DID YOU THINK WHEN YOU HEARD PRESIDENT TRUMP WARN ABOUT THE DOLLAR, SAYING THAT IT'S TOO STRONG AND IT'S HURTING AMERICA?
GREENSPAN: I TURNED OFF MY HEARING AID.
EISEN: YOU DON'T THINK THAT'S HEALTHY TO HEAR?
GREENSPAN: NO, I THINK IT'S HEALTHY TO HEAR EVERYTHING.
EISEN: DO YOU THINK HE CAN ACHIEVE THAT? TALKING DOWN THE DOLLAR?
GREENSPAN: LET'S PUT IT THIS WAY. THE DOLLAR IS THE INTERNATIONAL CURRENCY IN WHICH ALL THE FORCES OF GLOBAL FINANCE CONVERGE AND SET THE PRICE. NOBODY'S GOING TO TALK IT UP OR DOWN. WHETHER IT'S THE PRESIDENT OF THE UNITED STATES OR ANY PERSON YOU WANT TO CHOOSE.
Christine Lagarde, IMF Managing Director
LAGARDE ON DEREGULATION
THE REGULATION PHASE HAS BEEN QUITE EFFICIENT IN ORDER TO REDUCE THE RISKS, WHICH CLEARLY WE SAW BIG WAY IN 2008. DOES THAT MEAN THAT THE REGULATION SPHERE AS WE HAVE IT AT THE MOMENT IS PERFECT? NO. AND IT NEEDS TO BE IMPROVED AND IT NEEDS TO BE CONSOLIDATED SO THAT PEOPLE UNDERSTAND WHAT THE RULES OF THE GAME ARE.
LAGARDE ON GROWTH
WE ARE SEEING POSITIVE DEVELOPMENTS. EITHER AS A RESULT OF MANUFACTURING AND TRADE CYCLE THAT IS UP. OR BECAUSE OF GOOD POLICIES THAT HAVE BEEN IMPLEMENTED IN MANY ECONOMIES. SO FROM 3.1 LAST YEAR, WE'RE MOVING TO 3.5 THIS YEAR. WHICH IS CLEARLY A GOOD IMPROVEMENT.
LAGARDE ON RATE HIKES
THAT'S FOR THE BOARD OF THE FED TO DECIDE. BUT TWO THINGS ON THAT POINT. ONE IS IF RATES INCREASE, IT'S A CLEAR SIGNAL THAT THE U.S. ECONOMY IS DOING BETTER. INFLATION IS UP, UNEMPLOYMENT DOWN. THIS IS ENCOURAGING AND IT'S ENCOURAGING FOR THE REST OF THE WORLD. IF IT MOVES TOO FAST, THAT'S WHERE WE MIGHT HAVE RISKS BECAUSE CAPITAL FLOWS WILL MOVE BACK FROM THESE EMERGING MARKETS OR LOW INCOME COUNTRIES WHERE THEY ARE AT THE MOMENT INTO THE U.S. MARKET AND THAT CAN PRECIPITATE SOME DISORDERLY ADJUSTMENTS IN THOSE OTHER COUNTRIES.
LAGARDE ON IMPROVEMENTS
WE CLEARLY ASSESSED AS PART OF OUR FORECAST SOME OF THE CHANGES THAT ARE LIKELY TO TAKE PLACE, IN PARTICULAR A DEGREE OF TAX REFORM. SO THAT IMPROVEMENT OF THE U.S. ECONOMY WAS ALREADY FACTORED INTO OUR NUMBERS IN JANUARY AND THERE WAS NO NEED TO CHANGE THEM AGAIN THIS TIME AROUND. BUT GOING FROM 1.6 TO 2.2 FOR THE U.S. ECONOMY ALONE, IS A MAJOR DRIVER FOR THE GLOBAL ECONOMY.
LAGARDE ON CURRENCY
THE ISSUE OF CURRENCY HAS TO BE LOOKED AT WITH GREAT CAUTION. AND WE WERE CERTAINLY PLEASED TO SEE THAT THERE WAS NOT A MAJOR CHANGE IN THE FOREX REPORT THAT WAS PUBLISHED BY THE TREASURY DEPARTMENT AND WE KNOW THAT THIS IS CONDUCTED VERY THOROUGHLY, VERY CAREFULLY WITH WEIGHING OF ALL THE CRITERIAS. AND THIS IS VERY ENCOURAGING.
LAGARDE ON U.S.-CHINA RELATIONS
WE CERTAINLY HOPE THAT THERE IS CONSTRUCTIVE AND SUSTAINABLE, SOLID RELATIONSHIP BETWEEN CHINA AND THE UNITED STATES. THOSE ARE THE TWO MAJOR ECONOMIC POWERS OF THE WORLD. AND IF THESE TWO HAVE A GOOD RELATIONSHIP, THAT IS PRODUCTIVE FOR BOTH, IT'S GOING TO BE GOOD FOR THE REST OF THE WORLD.
LAGARDE ON THE FRENCH ELECTIONS
LAGARDE: IT WOULD CERTAINLY ENTAIL MAJOR DISORDER AND THE RISK OF DISLOCATION
EISEN: DO YOU SEE THE ELECTION BEING FRAMED THAT WAY AS A REFERENDUM ON THE EU AND THE EUROZONE?
LAGARDE: LET'S SEE WHAT HAPPENS ON SUNDAY.
LAGARDE ON U.S. TREASURY SECRETARY STEVEN MNUCHIN
I HAVE EXCELLENT CONTACTS WITH THE NEW ADMINISTRATION AND I HAVE HAD EXCELLENT DISCUSSIONS AND VERY GOOD MEETINGS WITH SECRETARY MNUCHIN SO I'M DELIGHTED THAT WE HAVE A PARTNER TO WORK WITH.
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