Manhattan Reborn 1978

new York.

night~

Manhattan, 49nd Street.

Waldorf Astoria Hotel.

As one of the most luxurious and famous five-star hotels in New York and even the United States, it has witnessed many important events in the history of the United States and the world.

After the end of World War II in 1946, representatives of the four victorious countries, the United States, Britain, France and Great Britain, signed the "World Peace Agreement" in a suite in its tower.

Allied representatives also signed post-war agreements at the hotel.

Eisenhower, the commander of the Allied Forces during World War II and later the president of the United States, also frequented the hotel. After his death, his wife chose to live here permanently.

In addition, Hoover, the 31st President of the United States, also established a permanent residence in the hotel.

In the spacious banquet hall on the second floor of the hotel.

Today, we welcome another group of economic elites and government officials from all over the world.

The hostess of the Waldorf Astoria Hotel, Brooke Astor, the most famous "philanthropy queen" of the New York real estate tycoon Astor family, prepared an extremely sumptuous reception dinner for all the guests tonight, and made everyone very satisfied. of high-end suites.

Caverin Simon, the administrator of the Astor Family Foundation, in a neat suit and polite manner, has been accompanying the 77-year-old Mrs. Brooke Astor, euphemistically expressing the host's hospitality to the guests.

. . .

A corner of the banquet hall.

David sat in a chair with a small plate in his hand, tilted his head and looked at Pine, who had been busy all day and had no time to eat, and smiled at Giles.

"Should you be more concerned about his health?"

"Pine has lost at least 15 pounds recently!"

"Is there any?" Giles looked at the smiling Pine carefully and put an apple into his hand.

"Here, here you go~eat more!"

"Hahaha~" Blumer couldn't help laughing and "smacked" his friend, complaining.

“There’s obviously such delicious food next to it...”

"Do you only have apples on your mind?"

"Uh..." Giles rubbed his head with his hands and asked Pine awkwardly.

"What do you want to eat? I'll get it for you!"

"Hahaha~ No, thank you."

Pine smiled and rejected Giles's kindness, and explained to David: "I happened to be losing weight recently, and you can see that my belly is gone~"

"Oh..." David looked at Pine's abdomen carefully and nodded with slight admiration.

"You don't smoke or drink. You love your job and you know how to protect a healthy body."

"If I were a woman, I would never let you go!"

"Hahaha~" Pine happily accepted David's compliment and joked with a shrug.

"If you want to become a woman now...it's not too late!"

"No, no, no!"

"I still think it's good to be a man!"

"Hahaha~" Pine, Giles and Bloomer were all amused by him.

After the joke~

Pine picked up the apple and took a bite. He looked around and asked the three of them.

"Did you gain anything from attending the meeting today?"

"That's... too much~"

"David, let's talk first." Blumer said with a "cheesy" smile on his lips, and he was the first to jump out and divert the "firepower."

This made Giles, who was about to speak, helplessly shut his mouth. .

David saw the different performances of the two people and said with a smile: "I gained a lot today!"

“I can now get to know people who I could only see and hear about in books and media reports.”

"Including Herman Kahn, director of the Hersend Institute, famous economists Israel Kirzner, James Buchanan, Angus Deaton, Murray Rothbard, etc. Etc., Avinash Dixit, Amartya Sen, Jagdish Bhagwati..."

"Oh, right!"

“I also met several outstanding representatives of the new generation of economics~”

“Robert Mondell, Claudia Goldin, Annette Yerlen, etc. . . ”

"Robert Mondell? Is he the one who works at Columbia University...?" Pine picked a familiar name with great interest and asked.

"Yes, that's him." David turned around and looked around, quickly found the waiter, made a writing gesture to him, and said.

"Professor Robert Mondell is a graduate of the University of Chicago."

"He taught at Stanford University and the Bologna (Italy) Center of the School of Advanced International Studies at Johns Hopkins University before taking up a position at the International Monetary Fund (IMF) in 1961."

"In 1966, he returned to teach at the University of Chicago and served as editor of the Journal of Political Economy."

“Concurrently, he is a summer professor of international economics at the Graduate School of International Studies in Geneva, Switzerland.”

"In 1974, he came to New York to teach at Columbia University, and in 77 he co-authored the book "The New International Monetary System" with his friend Professor J.J. Polak."

"But in my opinion, his greatest contribution so far is the article "Capital Flows and Stabilization Policies under Fixed and Floating Exchange Rates" published in the Canadian Economic Journal in 1963."

"In this landmark paper, he analyzed the short-term effects of monetary policy and fiscal policy in an open economy."

“His basic conclusion is that the effect of macro stabilization policies will change with the extent of international capital flows~”

"Because under different exchange rate regimes, the effects of macroeconomic policies are completely different."

“Under a floating exchange rate system, monetary policy is effective but fiscal policy is ineffective; under a fixed exchange rate system, fiscal policy is effective but monetary policy is ineffective.”

"One of Mundell's colleagues at the International Monetary Fund (IMF), Fleming, also conducted similar research on stabilization policies in open economies, explaining whether capital flows freely and the impact of different exchange rate systems on a country's macroeconomics. Influence."

“So, the economics community now calls their research ideas: Mundell-Flemming Model.”

"The Mundell-Fleming model (referred to as the M-F model) is the form of the "IS-LM model" in an open economy. It is a short-term analysis that assumes a fixed price level~"

"It is also a demand analysis, which assumes that the total supply of an economy can quickly adjust with changes in aggregate demand, so that the total output in the economy is completely determined by the demand side."

After David said this, he nodded and thanked the waiter who came with a paper and pen, took out 20 meters from his pocket and gave it to him, and continued to talk to the three of Pine.

"The purpose of the M-F model is to prove that the "Mead conflict" under a fixed exchange rate system can be resolved."

(Meade Conflict, first proposed by British economist James Meade in his famous book "The Balance of Payments" in 1951, refers to the use of expenditure adjustment policies or expenditure transformation policies alone in many cases while simultaneously pursuing The realization of the two goals of internal and external balance will lead to conflicts between a country's internal balance and external balance.)

David picked up the pen and drew the IS-LM model on the paper, smiled at the three of them and said.

"In a later article, "Capital Flows and the Relative Size of Countries," Mundell extended the mathematical model to the entire world economy~"

"It first proves that the effect of monetary policy is not completely lost under a fixed exchange rate. On the contrary, the effect of monetary policy is transmitted abroad."

“Secondly, it proves that under floating exchange rates (and with full capital mobility) the effects of fiscal policy are not lost but are instead passed on to the rest of the world.”

"The three countries with the best application of the M-F model are currently the three largest economies in the world: the United States, island countries and Germany!"

“It’s no accident that they both have strong currencies!”

"Because the three countries are not only the three largest economies in the world, but also the three richest economies and have the most developed capital markets."

"The conditions under which they implement fiscal expansion are able to maintain monetary tightening."

"Well...at least for now~" David said, opening his arms to the side, causing the three of them to laugh.

After listening to David's "popularization of economics professional knowledge", Pine asked with interest.

"After you met Mondale, did you talk to him about this?"

"Of course not~" David picked up the pen and drew another equilateral triangle on the paper, pointed at it and smiled.

"Professor Mundell and I discussed the shortcomings of the M-F model and the Mundell triangle theory he proposed."

"And I used this equilateral triangle to clearly demonstrate my personal understanding of the underlying principles of Mundell's triangle."

As David spoke, he marked each corner of the equilateral triangle: free flow of capital, fixed exchange rate, and monetary policy independence.

He pointed at the picture and said with a smile: "The meaning of this picture is that regardless of any country's policy choices under an open economy, the independence of its own monetary policy, the stability of its exchange rate, and the complete mobility of capital cannot be achieved at the same time!"

"The most they can do is satisfy two goals at the same time, without having to give up the other."

"Otherwise, the country's currency and economic development will accumulate and become a hunting target for international hot money!"

"For example: the two largest countries in South America, Brazil and Argentina!"

"..." Pine frowned and stared at David for more than ten seconds, then said with a weird smile.

"Elder went to Houston a few days ago. Did you tell him this?"

"I said it, but I didn't say it either." David looked directly into Pine's eyes and whispered.

"When I was telling him about the El Niño climate phenomenon, I mentioned something about Brazil and Argentina, which have entered a fragile bottleneck period and a period of high risk in developing their economies with high leverage and debt!"

"Because in the past ten years, the two countries have to pay billions, or even tens of billions, of debt interest every year to ensure the rapid development of the domestic economy~"

"The economic growth rate of these two countries last year was already weaker than the debt increase rate."

"Later, I learned from my mentor, Professor Bartley, that Elder's main job at Morgan Bank was to be responsible for investments in South American countries."

David smiled at Pine and spread his hands and said, "So I think if he can act more decisively, he will definitely be able to recover a lot of losses for Morgan Bank before the debt crisis between the two countries breaks out."

"Haha~" Pine laughed dryly with an even weirder expression. He stood up and quickly found Old Morgan's eldest son Panaris and Elder from the crowd in the distance.

"I'll go find them. Just wait!"

"Okay~" David waved his hand to Pine, indicating that he could help himself.

Giles frowned and glanced at Pine's retreating back, then turned to look at David and fell silent.

Blumer looked at the triangle drawn by David with great curiosity, pointed at its three sides and asked.

"What if: I want all three options...what will happen?"

"Haha~"

David smiled and shook his head, picked up a pen and wrote on the three sides pointed by Blumer: non-independent monetary policy, floating exchange rate and capital circulation control.

Then, with Blumer's thoughtful expression on his face, he explained.

“In the Bretton Woods system from 1944 to 1973, the independence of each country’s monetary policy and the stability of its exchange rate were achieved, but international capital mobility was strictly restricted by each country.”

"After 1973, monetary policy independence and free capital flow were achieved, but the fixed exchange rate system that could maintain exchange rate stability was changed to a floating exchange rate system."

"Among the countries that are still insisting on implementing the three choices that I don't want, Xiong Daguo is obviously a very typical special existence~"

"It belongs to: implementing non-independence of monetary policy, official control of the free flow of capital, and also implementing two sets of exchange rate systems, namely the formal exchange rate and the non-trade exchange rate (ie, preferential exchange rate)."

"So based on this triangle, ordinary people can very intuitively see at a glance the different forms of economic systems in various countries around the world!"

"..." Bloomer took the pen from David's hand, frowned and tried to write down his thoughts beside him, and then quickly "overturned" it, sighing with a wry smile.

"What else is hiding in your head?"

"Hahaha~" David shook his head and joked.

"Knowledge and wealth, of course!"

“In some ways, knowledge = wealth!”

"..." Blumer was speechless.

Giles stood nearby and stared at the triangle on the picture. Many thoughts flashed through his mind. Suddenly, his eyes lit up and he said.

"Can your triangle selection problem be applied to many fields or industries?"

"That's right!" David continued with a cowardly expression.

"The triangular choice dilemma when people are looking for a job is income, requirements and development space."

“The triangular choice dilemma in personal asset allocation is profitability, safety and liquidity.”

“The choice triangle when it comes to enterprise product design is cost, performance and reliability.”

"The triangular choice dilemma in enterprise project management is scope, time and cost."

“The triangular choice dilemma in national economic development is national unity, economic efficiency and balanced regional development!”

“These are all objective factors that people should consider when facing choices or making major decisions!”

"Of course~"

"In this world, there are also some very special circumstances."

"For example, when we choose a university after graduating from high school, we have to make very difficult choices in terms of city, school and major."

"The city determines whether you can use your family's local or foreign connections to help you in your studies at university or in your job after graduation~"

"School determines whether you can get better employment opportunities and alumni resource help after graduation by relying on the aura of graduating from a prestigious school."

"Professional determines whether you can apply what you have learned and avoid the embarrassing situation of using what you have learned."

"But~"

"If you are a super genius, your family has extremely rich network resources, and you are a super rich second generation, with hundreds of millions of family assets waiting for you to inherit..."

"Then you can ignore what I just said and forget about it!"

"...You are such a bastard!" Blumer, with a tigerish face and bared teeth, made an internationally recognized gesture to David and counterattacked weakly.

"Hahaha~" David smiled nonchalantly, crossed his arms across his chest, looked at Bloomer with provocative eyes, and continued "Gonghuo".

"The most unpleasant thing in the world is the truth that makes people feel extremely uncomfortable!"

"Did it prick your fragile little heart?"

"Do you want me to call an ambulance for you?"

"...fxxxyou!" Bloomer raised two middle fingers to David and growled through gritted teeth.

"Hahaha~" David felt that he had finally avenged the hatred he had been bullied by the two of them yesterday, so he shook his head and smiled happily.

"You can only talk?"

"Don't accept it? Let's challenge him!"

"I..!!"

Blumer was completely speechless for this shameless and "talking" bastard with a certain "force value".

Giles didn't seem to hear the "intimate interaction" between the two at all. He stared at the triangle on the picture and murmured.

"Why didn't I think of...?"

"Tsk tsk~"

David turned his head and ignored Bloomer's ugly look of jumping up and "exploding", and smiled at Giles.

"Professor Mundell said that he originally proposed the M-F model to study the internal and external equilibrium adjustment theory of small open countries."

“But as I deepen my research on the M-F model, I feel that there are also two important flaws in the internal and external equilibrium adjustment policy combination~”

"First, the M-F model misses the discussion about stock equilibrium in international capital markets."

“Because in the model, Mundell believes that international capital flows are the only function of interest rate differentials, so as long as interest rate differentials exist, capital will flow consistently to make up for any level of current account imbalance.”

"In reality, interest rate differences between countries are common~"

"The second problem is that Mundell places great emphasis on the capital account in terms of external equilibrium standards, and international capital flows are the only function of interest rate differences."

"Therefore, if a country has an international balance of payments deficit, it can only attract capital inflows by raising domestic interest rates, so as to recover and control the total amount of money flowing out of the country."

“But this is a policy that both crowds out private investment and relies on high external debt to achieve external balance.”

“Therefore, both the monetarist external equilibrium standard measured by reserves – the balance of payments – and the capital account external equilibrium standard emphasized by Mundell have certain flaws.”

"They, all..."

"Cough, cough!"

Just when David was about to make some more "macroscopic remarks", Pine coughed from behind.

He slowly turned back and saw Pine standing behind Old Morgan, Julie, and Professor Bartley, throwing a few looks at him.

David stood up immediately, smiled at the three of them and said, "We were chatting just now, and we wanted to eat something to fill our stomachs."

"Oh~" Old Morgan nodded with a smile, looked at his son Giles who was deep in thought, and said nothing.

"Uncle Mediterranean," Julie said with a naughty smile on her lips and half of her body.

"Look, I'll just say it~"

"We must not let this kid feel no pressure."

"Having pressure will make him more motivated!"

"Haha~" Old Morgan's eldest son Panaris and Elder looked at David, smiled and nodded.

Professor Bartlett stood nearby and saw the smile on the corner of David's mouth "frozen". He took half a step forward and took the initiative to change the topic, and smiled to save the situation.

"On December 1975, 12, President Ford signed the Energy Policy and Conservation Act, announcing the establishment of a 22 billion barrel Strategic Petroleum Reserve."

“In July 77, approximately 7 barrels of light crude oil produced in Saudi Arabia were put into storage as the first batch of strategic reserve crude oil.”

“Thus, the United States’ oil reserve strategy was officially established.”

"But currently, judging from the data disclosed by the Ministry of Energy, the weight of the strategic oil reserve is less than 100 million barrels."

“Even though President White has repeatedly raised the importance of expanding the weight of strategic reserves in Congress in the past two years, he was unable to gain immediate support from the majority of members of Congress.”

"David, do you know why?"

"Um... I don't know." David shook his head honestly and gave up his seat to the instructor, wanting to hear his answer.

Professor Bartley sat down unceremoniously and continued speaking as if no one was watching.

"The reasons given by those congressmen all sound ridiculous."

"No money!"

"It is because the country has been running fiscal deficits for years, the treasury has no money, and they have many proposals that require money, that they choose to oppose it."

"Uh..." David was speechless.

This reason may sound right at first glance~

Because these congressmen are seeking the benefits they deserve from the voters in their respective constituencies, they ask for money from the government. .

But if we look at it from another perspective, when they oppose increasing strategic oil reserves, do they still have reasons that are not convenient for them to disclose?

Is it even necessary to think about it?

There must be!

Seeing that David didn't show any surprise, Professor Bartlett leaned back in his chair with a smile and said again.

"The triangle choice problem you just talked about...did you come up with it yourself?"

"Yes."

"Okay then, tell us about it now."

"Um... Okay." David looked at the people sitting around him, picked up the paper and pen he had just used, drew a larger and clearer equilateral triangle on the back of the paper, and said.

"I drew this triangle based on the research theory proposed by Professor Mundell..."

"I call it The Eternal Triangle."

"The triangle choice problem that arises from it, I call it The Impossible Trinity, or the trilemma."

"The meaning of the trilemma is..."

When David was whispering his theory to everyone, he did not notice that the hostess of the dinner, Brooke Astor, had quietly walked up behind him.

Caverin Simon, who was following Mrs. Astor, listened carefully to David's theory and couldn't help raising his eyebrows and whispering.

"He's the David Coleman."

"Um.."

Mrs. Astor, whose face still retained the charm of the past, looked at David's back curiously and nodded slowly.

She had heard people mention this "lucky" young man more than once in recent months.

But she didn't think that a person could be valued by old Morgan, Julie and Professor Bartley just by being "lucky".

As a young man who could make all three of them "mistake", Mrs. Astor felt that even if she was deceived by him, she would not be embarrassed. .

But if this young man really has it. .

Emm. .

Mrs. Astor thought of this and whispered a few words to Mr. Simon beside her.

Mr. Simon was slightly surprised and just about to ask, when he suddenly heard David's voice coming into his ears again, he immediately understood what Mrs. Astor was thinking.

But while he was looking at David, he also felt keenly that someone was looking towards him.

The person looking at him was Pine sitting next to Giles.

Although the two of them have very few opportunities to come into contact with each other, they have known each other through various channels and connections.

Pine nodded with a smile, expressing his kindness.

Mr. Simon also smiled and nodded in response, having some new thoughts in his mind about what Mrs. Astor said just now.

Maybe. .

You can try!

ps: Some information on the U.S. strategic crude oil reserve will appear later.

Bryan Mound is located in Brazoria County, 3 miles southwest of Freeport, Texas. It was put into use in 1986 and has 19 underground salt caverns with a storage capacity of 2.471 million barrels.

Big Hill is located in Jefferson County, 26 miles southwest of Beaumont, Texas. It was put into use in 1991 and has 14 underground salt caverns with a storage capacity of 1.7 million barrels.

West Hackberry, located in Cameron Parish, 25 miles southwest of Lake Charles, Louisiana, was put into use in 1988 and has 21 underground salt caverns with a storage capacity of 2.204 million barrels.

Bayou Choktaw is located in Iberville Parish, 12 miles southwest of Baton Rouge, Louisiana. It was put into use in 1987 and has six underground salt caverns with a storage capacity of 6 million barrels.