Welcome back to the second session of this conference. It's my pleasure to introduce to you Yeming Ma from the Columbia Business School. She will be presenting her paper, which will be discussed by my dear colleague on my right-hand side. And you have 30 minutes. Hi, good afternoon, everyone. Thank you so much for being here. It's a great pleasure to be sharing this work with you. This is the Reserve Supply Channel of unconventional Monetary Policy. Its joint works was Will Diamond from Wharton and Jiang, Jiang at Kellogg. So we started out with observing that there's been a very large and continued expansion of central bank reserves around the world. And in the U.S., for example, reserves outstanding before the crisis was very low at just 50 billion in 2006. And they have jumped up once during the financial crisis to 2.8 trillion in 2015, and then another time following the COVID interventions to 4.1 trillion in 2021. Now the U.S. is not alone. Also for the ECB, the balance sheet size has grown substantially, reaching above 8 trillion in 2021. So in this rise in reserves, one of the key contributors is quantitative easing or the APP program here for the ECB. And what this involves is the purchase of securities, such as government bonds, et cetera, et cetera. And importantly, though, this purchase is financed by reserves that are safe and liquid assets that can only be held by the banking sector. Now this is important to notice because the banking sector after the crisis has also been constrained by increasing amounts of regulation. For example, leverage ratios and supplementary leverage ratios essentially impose a cost on how large bank's balance sheet size can get. So in this backdrop, we wanted to really understand what is the effect of this increase in reserve supply that is now concentrated in the banking sector? In particular, how does it affect the functioning of the core activities that we know that banks do, including lending to the real economy? In particular, could there be any side effects of having such a large supply? And we think that this question is important for thinking about how we should design central bank policy going forward and in particular how large the optimal size of central bank balance sheet should be. And so just to take a step back, so banking theory has given different potential results for this question. There's been very seminal theories that say how banks are in the business of maturity transformation. So their assets are of a longer maturity than their liabilities. And so having some more liquid assets such as reserves could actually help to reduce some of the risk of these maturity mismatch and help banks lend more by having a liquid asset buffer. For this first set of theories, having a larger supply of this potentially scarce liquid asset could actually improve lending to the real economy. Now more recently, however, there's been a second set of theories pointing to balance sheet costs that constrain banks' size in total. So if you have more of one particular asset such as reserves, you could be crowding out the existence of other types of assets such as loans to the real economy. So ex ante, you know, we're not really sure which ones of these channels would dominate, which is why we want to look at the data. Now, one very simple way to look at the data would be just to look at this over time. So here in red, I have the amount of reserves held by US depository institutions. And you can see very clearly an almost flat line leading up into the financial crisis that then, you know, distinctively jumps up for the financial crisis. And again, start the doing COVID in blue. I am plotting the ratio of illiquid assets on bank balance sheets where illiquid assets are all the assets, excluding cash, reserves, fed funds, repose, treasuries and agency securities. So think of the blue line as representing essentially lending that the banking sector is extending through your economy. And what you see is almost like a mirror image. Whereas when the red line jumps up, there's almost a simultaneous drop in what the blue line shows. So the simple interpretation of this would be as reserves go up, the banking sector is lending less as a proportion of its asset size. But as we all know here in this room, quantitative easing and APP, it was not a random policy. It was implemented because there was a recession. So perhaps what we see in the contraction of lending is not so much the result of a policy, but the result of the overall recession in general. Because as we know, loan demand tends to drop in times of recessions. And so although this is preliminary evidence that there may be a crowding out effect of reserves on bank lending, it is definitely not conclusive because of the endogeneity with the business cycle. So instead of looking at the time series, we want to have a framework that we estimate using variation that does not come from QE, that comes from something not related to underlying business cycle fluctuations and demand shocks. By estimating a framework with demand and supply, we can then run a counterfactual, right, where we only move reserve supply in the system so that we can then observe how much bank lending, deposit taking and mortgage lending changes. So that's going to be the goal of this paper. And what we find as the reserve supply channel of unconventional monetary policy is that actually additional reserves or else equal crowd out bank lending. And over the period from 2008 to 2017, on average, each dollar of reserves injected crowded out 19 cents of corporate bank lending. Relatively, deposit and mortgage quantities are less affected. And that is because these markets are relatively less elastic than the corporate loan market. The underlying mechanism that we think is at play is that you have reserves that can only be held by banks that cannot be freely reallocated to non-bank intermediaries. And you have banks that are subject to regulation, which makes their balance sheet space costly and hence can lead to the crowding out of other assets if there is an additional input of reserves. Okay, I want to stress that this result is not the only effect of QE. Many of you have probably looked at many of the other channels. For example, the effect of asset purchases, which definitely are important and should be thought of as existing in parallel to what we are looking at here. But what we wanted to highlight a little bit is that when looking at QE, it's not only important to look at what the effect of asset purchases are. The flip side of the coin is the reserves injected and it's the same amount as the assets being purchased. And so we really wanted to contribute to the literature by taking a closer look at the reserves that have been created, which so far has received much less attention. So the results we have, the one of crowding out, should be thought of as complementary results to everything we know so far about the effect on asset markets through the purchase of different securities. Now, in quantifying that effect, we also put some numbers on seminal theories in banking that have looked at how different components of banks' activities relate to each other. Theories that have said how deposit taking and lending can provide positive synergies. Theories that said how liquid assets can facilitate the holding of illiquid assets while reducing run risk, et cetera, et cetera. And the setting we use is going to be a structural model. Again, because we think that relying on the time series alone is not going to be an effective way at understanding causation. So with that, let me give you a one slide overview of the model. I promise this is by far the densest slide and after that it's going to get a lot easier. Okay, so we have a bank M facing a residual demand curve. So it knows that it's going to set its own rate RL, but that it's also going to be affected by the other rates that its competing banks are setting. Okay, the bank would then like to maximize its profits, which comprise of the revenue it's earning from lending and to corporations and mortgages. It's going to then pay its deposit costs. But importantly, and here you see there is that large C at the end of the profit function, the bank has to pay a cost. And this cost exceeds just the deposit interest rate that it has to pay its depositors. This cost, think of it as everything else that the banks would like to, would have to incur. You know, we talked about overhead costs earlier, but this could also for a bank's case involves regulatory cost, potential expected bankruptcy costs, et cetera, et cetera. And importantly, this cost, we allow it to be a function of different bank balance sheet components, including the quantity of loans, deposits, mortgages and securities. So we will allow, for example, this cost to vary as the amount of reserves, the amount of securities, liquid assets in the economy is changing. Okay, so with that cost function, very standard banks are setting their marginal return equal to the marginal costs for loans, mortgages and deposits and for liquid securities because it's a competitive market. The marginal cost is just equal to the price. Okay, so in a figure, this is going to look a lot better. We have very standard in blue, the marginal revenue from lending banks are going to set the margin revenue equal to their marginal cost. So that's the intersection of the blue and red line. Okay, and so that is an equilibrium. And now we want to understand, suppose we had more reserves in the system. If suppose we did more APPs, suppose we did more QE, what's going to happen to the marginal cost of providing loans? And suppose the estimate, and again, we're going to ask the data that, but just for example, suppose that's going to increase the marginal cost of lending. This you can see is the upward shift of the red curve to the red dotted line. All right, in that case, it would been increased in the interest rate on loans and tracing that down the demand curve in green, we would observe a contraction in the quantity of loans. And so this graphical illustration is what we want to take to the data and estimate in real quantities. Okay, so demand supply, very standard. Let me start with the demand system. So we use micro data for deposits, mortgages and loans, thinking of deposit and mortgages as a county time level market and for loans as a state level market. We have this issue that when we want to estimate the loan demand curve, deposit demand curve, we need to use supply shocks to trace out the demand curve. And here we want to use again a shock that is very unrelated to QE. We use the reallocation of bank funding after natural disasters. So natural disasters happen, think of hurricanes, you know, think of flooding. There's an increase in local loan demand and this has been shown in the reduced form literature. Now this increase in loan demand at a given branch is going to translate into a loan supply shock at other branches of the same bank, assuming that internal capital markets are efficient. And that the bank is really allocating funding. Okay, as long as the loan demand at branches that are unaffected by disasters are not correlated with loan demand at the affected branches, this should comprise a valid supply shock to trace out the demand for deposits, mortgages and loans. So this is precisely how we estimate this instrument. So we calculate how much in total is a given bank's branches exposed to natural disaster losses.  Okay, so in a loan demand system, we think of how differences in the rate of providing deposits, the observable characteristics and the unobservable characteristics can explain differences in the log market shares. Okay, as standard two-stage least squares with the instrument we just mentioned gives us the following results. It shows that for a given bank, if one bank unilaterally changes its deposit rate for example, by 10 basis points, its deposit volume is going to increase by about 4.6%. Now, if you look at columns two and three, you see that the coefficients are about 10 times larger. It shows that the price elasticity in loan and mortgage markets are a lot larger. So the same rate change is going to have a much larger volume to respond. And that's perhaps not surprising if you think of firms and borrowers as being much more sensitive relative to your sleepy depositors. Now, this again is about how one bank changes its rate. What if every bank in a given economy changes its deposit or loan rates, right? That should not only help them to steal business from each other, that also changes the size of the entire market. So to understand how the outside option size or the size of the market is changing, we then consolidate our instrument to the market level. So basically asking how much do branches of banks in a given market in a given county, how much are they exposed to natural disaster losses? We use that as an instrument to understand the aggregate effect of a demand shock. And we find that if all banks in a given market change their rates by 10 basis points, then for deposits, that's going to be a 1.3% change in total volumes. Mortgages have a 4.0% change and loans have by far the largest change again at 16.1%. For the same rate pass-through, loans and mortgages are more responsive, once more. So we know how much quantities would change given a rate pass-through, and now we need to understand what is that rate pass-through. So once again, we have observations of marginal revenue from our demand estimation that in equilibrium it's going to be equal to realizations of marginal costs, but now we want to understand how this marginal cost is going to change if the central bank is injecting more reserves, if we have more QE. Now, it's a complex function, the one in the first line, that is the functional form of the cost function we allow, and importantly, we want to have these interactions between different balance sheet quantities. So we want to allow how, when there's different amount of reserves, how the cost of bank lending, how the cost of taking out mortgages is changing, for example. And so this interaction effect in the cost function makes our supply system a bit more difficult to estimate than the standard demand and supply system in which if you have a demand shock for the deposits, for example, you're only changing the deposits costs. So what we would then have though is that if there's a deposit demand shock, it's not just the deposit quantities and costs that are changing, it's also the loans, the mortgages that are going to adjust at the same time because of this interrelated cost function that we set up in the first place. So instead of having just one dimensional supply system, we will have a multi-dimensional one, and for that we would need multiple instruments to really pin down all these cost function parameters. And again, we want to find some shocks that are completely unrelated to QE to get rid of the endogeneity problem. The first one is we essentially reuse these natural disasters, but instead of looking at how a bank transfers the initial demand shock, we just use the initial demand shock to begin this because now we need a demand shock to trace out the supply curve. The second one is a very standard bardic instrument where we look at how the deposit growth of different counties change over time and we think of banks as being exposed to that deposit growth and that not coming something from the bank supply side. So with these instruments, we can run the bank's marginal costs as well as their quantities of loans, deposit and mortgages against each of these instruments. And we show that using these regression coefficients, we can jointly pin down the coefficients of the cost function. Remember, that's the big function I showed you over here, all the case with different parameters here that can help us understand how does bank's marginal cost relate to their balance sheet composition. So what we find is the following. Here we are running in the panel A, the different costs and volumes on the natural disaster shock and you can see that the volumes are all going up, but for the costs, the mortgage and loan costs are higher. So when you have more demand, it's going to be more costly to give out lending and deposits are more valuable so their costs are relatively lower. As seen by the negative sign, the first column. In the second panel, this is a bardic deposit shock. So you're exposed to a lot of deposit growth and here you see that the mortgages and loans, they're cheaper to lend out. So this seems all to be consistent with what we would think of these shocks as doing. And then the second step again is to use these coefficients to pin down the cost function. And here is what we have and probably the most interesting result of the paper is in this matrix. This matrix shows you for a given change in the quantity of deposits, mortgages, loans and securities. There I'm going row by row. How much does the marginal cost of deposits, mortgages, loans and securities change and there I'm going column by column. If you look at the diagonal of this matrix, you see that the coefficients are positive. This means that if you have more deposits, then the additional unit of deposit is going to be more costly and similarly for mortgages and loans as we would expect. Now what's really interesting is if you zoom in onto the last row, again that is how the effect of a unit of securities changes the marginal cost of different banking activities. And the middle two columns shows a positive coefficient. So you see 0.317 and 0.264. That shows that having more reserves, having more liquid securities on bank balance sheets is increasing rather than decreasing the marginal cost of lending to firms and the marginal cost of giving out mortgages. That shows that it's not the case, at least in the sample period we have, that having more reserves is making lending cheaper. In contrast, it's actually making it more expensive. And so it seems that relative to the two sets of theories, it is the set of balance sheet cost theories that is dominating the overall results. Now, quantitatively what these coefficients mean is that if you have 100 million increase in reserves for the average bank branch, the marginal cost of mortgages increases by 31.7 basis points and the marginal cost of loans increases by 26.4 basis points. Now, you may think these are basis points, so probably not something we want to worry about. But I would argue that it depends first on how many of those millions of reserves we are injecting. It would also depend on how the change in marginal costs is translating into changes in interest rates and how eventually that change in interest rates is translating into changes in quantities. Now, for that second part, remember that's what we did in the demand system where we estimated how a given change in interest rates translated into quantity changes depending on the elasticity of demand. So in the last section, what we do is to put everything we have so far together. We have a demand system that tells us how quantities change given interest rate changes and we have a cost function, a supply side, that tells us how when reserve quantities change how the marginal costs of lending, of taking out mortgages, of issuing deposits, how that changes. So we run a counterfactual analysis in which we inject the amount of reserves into our system as we observe in practice from quantitative easing over the years of 2008 to 2017. We inject the reserves, we observe, we let the system equilibrate what is the increase in marginal cost of everything. We see what's the increase in markup given bank's market power and then we see how the eventual changes in interest rates translate into quantity changes. So in the new equilibrium, what we find first is that if you have more reserves, you need to reward the holding of reserves more in a closed system. So relative to the market-wide risk-free rate, the interest on excess reserves or the reserve spread increases by an average of 16 basis points. So if you compare that to something like the interest on excess reserves minus the Fed funds rate spread, which in the data over this time period is 11.6 basis points, then I would say it's not exactly the same, but it's quite surprising that it's in the same ballpark because we have not used any related data in that sort. The correlation of these two data series is also very high over time. So we really seem to observe that as you have more reserves, you're forced to reward the holding of these reserves more and that in the market because the Fed is setting this interest on excess reserves, it's the Fed funds rate that is changing to change the spread. Now this initial change in the spread on reserves is passing through to different markets that banks operate in for deposits. The deposit spread increases by 12.7 basis points and for mortgages and loans, it's at 18.8 and 15.6 basis points respectively. So in terms of just the quantity, the price response, excuse me, we don't see such a big difference. So approximately deposits is the lowest and then mortgages is the highest, but approximately we're in the 12 to 18 basis point range. Now what is really different, however, is how much these rate changes pass through to the quantities. And here we find that it's really bank loans that are seeing the largest effect. Okay, for a dollar injected, we find a 19 cent drop in the amount of loans extended to firms, versus that for mortgages and deposits, those quantities are much less affected. And here the reason again goes back to the demand systems. We estimated we've found that loan demand is much more elastic than deposit and mortgage demand so that the similar amounts of rate pass throughs are going to have a much larger effect in the loan market. And once again, I stress that this is not the only channel of quantitative easing or of APP. Again, this is result of injecting reserves, right? In total, we would also expect some effects from the assets being purchased, expect effects from changes in the long-term interest rate and in the yield curve, and those are all important. But here we highlight one channel that was probably not really paid attention to before, which is that the addition of reserves, which have to happen if you, the central bank is purchasing anything, and if reserves are confined within the banking sector, that that has the side effect of not helping bank lending, but crowding out bank lending. And the effect is at 19 cents per dollar, and over time you see in blue and red we compare our projections and the data they align so that it really seems that over time we are seeing evidence of increases in reserves leading to declines in loan amounts. Okay, so again, this is the reserve supply channel of unconventional monetary policy. We think it's an additional factor that really should be considered. Then we think about how much QE should we be doing, what should the optimal size of bank balance sheet be, because bank regulation is in place and that's unlikely something we can change. We came to this conclusion not by looking at QE because we were worried about the endogeneity. We set up a demand and supply system that we estimated using exogenous variation, and we ran a counterfactual that showed us a dollar in reserves crowds at 19 cents of loans from bank balance sheets. I think implications of this real doubt going forward could be that the amount of reserves, if you have larger reserves, one of the costs is potential crowding out, but if you want to alleviate some of the negative effects, one thing that in the U.S. has been done during COVID is, for example, to exempt reserves from the supplementary leverage ratio regulation, and that is something one might want to think about. You want to keep having large central bank balance sheet sites going forward. The other possibility is to no longer restrict the access to reserves to the banking system. All of the problems that arise here are because you have a lot of reserves that cannot leave the banking system, and the banking system has a lot of costs in holding these reserves. Suppose you were able to have other type of intermediaries, say money market funds, have access to central bank reserves. Then the injection of reserves no longer have to be fully absorbed by bank balance sheets, and at least you can allow the market to tell who is in a better position to absorb these reserves and perhaps banks can then have a greater capacity of extending lending through your economy. With that, thank you very much. I really look forward to the discussion and all of your comments. Thank you. Thank you, Yeming. Your paper will be discussed by my colleague Anjesa Deonalo. Good afternoon, everybody. It's a great pleasure having the chance to discuss this super interesting paper. I think you got it already that from for this audience, for this place, this is really a topical paper, something that everybody should read in this audience. So this paper is about QE, or APP, any asset purchase program by central bank and zoom in on a specific characteristic of asset purchase, so the creation of reserves and the accumulation of central bank reserves on banks balance sheet. Banks balance sheet only because, as Yeming mentioned at the very end, these reserves, no matter who is the final counterpart in the asset purchases by the central bank, have to stay and have to be held on banks balance sheet. And under some circumstances, this means that QE translates to an expansion of the balance sheet of banks. So the question that Yeming and I called or asked in this paper is whether this increase in the supply of reserve is actually having an effect on other banks' decision, in particular about the decision of banks of providing loans, mortgages, and raising deposit. And they have a very top-provoking funding that actually increased in the reserve supply during the 2008-2007 period, crowded out bank lending. So what they show is that for every dollar of reserve that was injected, there was a 90-19 cent reduction in bank loans. And they call this the reserve supply channel, as Yeming mentioned several times. This is not capturing the overall effect of QE, likely for us, but it's rather showing an effect or a force that is counterweighting the stimulative impact of QE. And if you think about the overall amount of reserves that were injected, this is not a small number, but it has a very sizable effect. So what's the idea? What's the mechanism behind the emergence of this reserve supply channel? So the idea is that the injection of reserves and the expansion of balance sheet that comes with it is actually changing the cost of providing other banking services, loans, mortgages, and also deposit. And in principle, this effect will go either way. Reserves are a very safe and liquid asset, so banks with more reserves are banks that are better prepared to face, for example, liquidity shock, and so this should give them the ability to lend more, the ability and willingness to lend more. But the effect that Yeming and Erko Auto show is that it goes the other way round. So you have more reserves, and somehow this increased the cost of providing other services, so in particularly loans. And so the overall effect is the one that I mentioned at the beginning, is that they're crowding out of bank loans due to the increase in reserves. So I know that this doesn't really do justice to the paper and the authors and the great work that they put into their estimation, and I think Yeming did a great job summarizing the estimation strategy of what they do. So they build a structural model of the amount and supply of loans and other banking services, and they estimate this model through instrumental variables. And it's really a challenging task, and I think they tackle very, very well with a very sophisticated estimation strategy, which she went through in her presentation. So, and as I said already at the beginning, this is a very interesting and policy-relevant paper. So, and potentially present a controversial result, because as I said, this is something that I think no one in the central bank was expecting or paid too much attention to, and there's some fed colleague who actually in a very different setting prove a sort of opposite result so that actually this accumulation of reserve led to an increase in bank loans. So what I will try to do in my discussion is not to go through the estimation strategy, but rather try to focus on the mechanism behind the result and try to understand better why an increase in reserve on banks balance sheet is leading to a reduction in bank loans. So try to understand under which circumstances we should be worried about this reserve supply channel of QE, and one is that we can dream and sleep better. So let me sort of do a sort of list of basic ingredient that you need to get this reserve supply channel to emerge. So first of all, you need that the banks are not the ultimate seller of asset that are purchased by the central bank. So this is, for example, it's very different across the US and Europe where, for example, for treasury sovereign bonds, those in Europe were mostly held on banks balance sheet and they were the ultimate seller. And because if banks are the ultimate seller, essentially there's only a swap between treasuries and reserves which are very similar assets so there's no expansion in banks balance sheet. And this is an ingredient that is absolutely needed to have this reserve channel at play. And the second ingredient that you need is that there's some sort of constraint, as Heming pointed out, that the bank are facing and this constraint must be a constraint that really binds for a bank and also you need the reserves and loans enters into this constraint as a substitute. So if you increase the amount of reserves, you make the banks to be closer to the point in which the constraint binds or is no longer satisfied and then you have to reduce something else on the balance sheet or changing something else on the balance sheet for the constraint to be satisfied again. So this is what captured this substitution between reserves and loans and the existence of this constraint is what actually is the driving force behind the fact that holding more reserves actually lending more costly. So what this constraint could be? So Heming mentioned at the very beginning of our presentation a leverage constraint and in the paper they also mentioned they have a policy implications section at the very end of the paper in which they discuss what could be the source of this cost. And so let's think together about what the constraint that banks might be facing. So hardly this is a risk weighted or a liquidity constraint because reserves and loans do not enter as a substitute in this constraint. Reserves carry no risk weight and reserves are actually there to improve your liquidity position so they are not treated the same way as loans in those constraints. So as Heming mentioned, what a potential candidate or a suspect could be the leverage requirement or the supplementary leverage requirement, which as she mentioned was reserved at a different rhythm during COVID both in the US and in Europe and the Bank of England already in 2016 excluded reserves from the computation of the supplementary leverage requirement. So my point about this constraint is that it's there but entering to force in the US only in 2018 as a requirement. Of course banks knew already about this constraint. It was a rule already in 2014 and they probably are most likely front loaded. So this constraint might be a candidate. And what I think is that the sample period that they have that goes from 2001 to 2017 is really an exciting time for someone that is interested in bank regulation because this is the time in which we had the crisis, then we had basal tree regulation and then the proposal and then the implementation and entering to force of the bargeous requirement. So they have a very long sample time. And then I was wondering whether it would be possible to sort of zoom in or separate or zoom in on some shorter time period where regulation entering to force or also to try to understand which one of these regulatory constraints might be the one that is actually driving the result. Also because if you think of banks before the crisis and right after the crisis and nowadays or so closer to the end of your sample period the ability of banks to satisfy constraint were very different. So if I was checking for with European data so now the average European bank has an SRS LR of 5.2%. The requirement is only three. So they are way above the constraint which means that this is no longer binding. And I wonder when this happened so I think zooming in in shorter time period could give a better idea of which one of these constraints if it's really a regulatory constraint that is binding or is something else. I think this is the other point that I wanted to make is that it's about a balance sheet expansion. So in the asset purchases described in the US banks were not the ultimate counter party in the purchase of assets. They were acting as intermediaries with non-banks and I think you have very convincing data on this and you mentioned this at the very beginning of the paper and also in the policy discussion. So what happens essentially if we look at the bank's balance sheet was on the asset side we saw an increase of reserves and we saw something else also moving on the liability side of the bank's balance sheet which was an increase in deposit. And I didn't put the wonderful Essian metrics that you have but deposit and reserves actually have not changed the marginal cost of lending in an opposite direction. So if you have one euro more of deposit you actually reduce the marginal cost of lending. If you have one euro more of reserves you actually increase the marginal cost of lending. Of course the magnitude of the two effect is not the same but it's quite close. So I was wondering whether the exercise in the counterfactual which simulates an injection of reserves only but without thinking much about how this injection or expansion of reserve on the asset side is funded on the liability side whether it is saying anything to us in terms of the magnitude of the effect. I don't think it will change the direction but you might say something about the magnitude. And also the other point that I wanted to make is that looking at the liability side I know this is my bias, personal bias of always looking at the liability side but there are very different type of deposit and the one that banks were, they were backing up the increase in reserves were mostly wholesale funding. So something that is extremely roundable, unstable which is not really something that goes in the direction of pushing up your incentive to lend. So this might also be a force that is at play that is a consequence of the increase in reserves and of all the points that you are making about banks not being intermediary to these QE asset purchases and that could be an interesting angle to explore. Let me skip the smaller comments because I think we can discuss separately among the two of us so let me just summarize. I really enjoyed reading this paper and I think I was in the office reading it in the last few days and I think all my comments were, oh my god, really? Oh really, I really want to know more. So and you start really from the abstract where you want to, you think that is super, something that is super interesting and I don't think it's just because I'm in a policy institution who did QE but it's really because it's a very well written paper very interesting, very careful analysis and I think there are some avenues in which maybe not even for this paper but for some future work in which one can deepen the discussion about the underlying mechanism behind the result and for example explore this interaction in more details between QE, so monetary policy, and regulation. I think that will be really interesting to do and will also give the possibility to derive more to strengthen the policy implication of the paper altogether. So with this I stop here. Thank you. Thank you, Agnes. So for those of you who are listening online submit your questions via Slido and before I return back to Ye-Ming those of you who are on site here just raise your hand if you want to ask a question. So Ye-Ming, do you want to first reply to Agnes? Yes, thank you so much. I think that's the most important thing for such a thoughtful and kind discussion. I just want to quickly touch base on two things. I think we need to discuss much more on some of the deeper comments. Maybe let me start from the end and think a bit about the accounting. So I think as you correctly point out at least at the very beginning when there is an injection in reserves through the purge of securities and if these securities are originally held in the non-bank sector, the expansion on the bank's asset side in terms of reserves, the commercial bank's asset side in terms of reserves is automatically matched by an expansion in its liabilities, most likely deposits. It has to be just for things to be balanced that something's got a balance on the liability side and that should be one-to-one in its immediate mechanical effect. However, that does not mean that that amount of expanded deposits is there to stay. After the fact has occurred, the bank should equilibrate. It's going to look at, okay, this is how large my balance sheet now is, this is how much I want it to be or how much I can afford it to be. How do I adjust both on my asset and liability side to, let's say, a new equilibrium in which I no longer am obliged to hold on to all the deposits that initially expanded and I think what we want to understand is the world that has equilibrated rather than the very initial world right after the injection where I fully agree that it's like a one-to-one expansion in deposits. Now, as that said, it should still be that in the equilibrium-adjusted world, that could be a simultaneous expansion in deposits and that's something we definitely could think about running where we basically run the counterfactual with a simultaneous increase in reserves and an increase in deposits. And I fully agree that the liability side matters and actually, I think you pointed it out, but Viral and Raghu, actually, they agreed with your point so they wrote a very recent paper. You should all take a look at it if you haven't, but they basically look at the liability side. Potential side effects on the liability side where they argue that larger reserves could actually increase, let's say, instability through exacerbating the possibility front. So definitely, in the liability side, side effects may also be very important and so far we focused mostly on the asset side. Yes, also in terms of regulation, I agree, I think if you're a little bound by how many parameters we can estimate, but we can definitely try to have, let's say, time-specific coefficients that then can better understand over what time period, what regulations were at play and how large were these constraints at affecting lending. But we will need to try a bit to see how much flexibility the data gives us and how much power we have is the estimation. But once again, thank you so much. Is there's one question here in the back, Morten? Yeah, I was wondering about them. So the result you find that the elasticity is much higher for the loans. One interpretation of that would be that this is very costly because then the corporate sector, they can invest less. But I guess the other one is that large firms, they have very close substitutes to issue equity or corporate bonds and so on. So therefore the cost actually may be very small. So it will seem to be important to figure out what happens on the corporate side. That's very much true. So I think what we can say is that there is less, fewer loans that the banks are able to finance. But it would also be important to understand is that really a drop in the total amount of borrowing or is it substituting a way to cap to markets? Perhaps one way to understand the current results is to say that there could be some substitution and especially for the largest firms, I think probably the substitution will be very good.  If you're more credit constrained, that means you're going to be especially affected if banks are constrained from injection reserves. But I fully agree. Ideally, we have a bigger model that also has a capital market involved. Next question here in the middle. On your left. Great paper. So I don't know if you can look at this in the data, but you can possibly argue that reserve requirements force banks to drop the riskier loans, which are actually bad. They shouldn't have been made in the first place, but banks were risked doing risk-taking behavior, at least I guess during the financial crisis you can maybe argue for that. And that was the loans that dropped and that was actually the purpose of QE. So of course I'm playing the devil here. So is there any way for you to look at something about the quality or risk of the loans that were dropped? That's a very good point as well. I guess there's a deeper philosophical point as in do we want a very safe banking sector, which would be probably like a narrow bank, or do we care about like liquidity transformation and lending that the banking sector performs? I guess there's a sweet spot in between that banks should take let's say positive MPV projects and rather than finance a lot of zombies. The counterfactual currently cannot do this because we would have to model quality inside the supply side, but we should be able to look at the data around that time and just to see corresponding to the same time period because we do have granular loan-level data. What types of firms are likely to lose their financing and probably that can get to that. Thank you. Next question, Peter here in the middle. Left. So yeah, I liked a lot. So the paper, one question is, have you clarified what kind of assumptions you need to go from kind of analysis coming from local shocks to kind of general equilibrium effects that you kind of get to. So these elasticity's potentially are different. Yes, absolutely. So the assumption would be that the regions of the demand curves we have estimated and the regions of the cost functions we have estimated in response to local disaster shocks and in response to deposit growth from a bar tick shock are representative of the ones with a large injection in reserves. And of course that is not exactly true. Like we have a much larger magnitude, let's say for response that we have in the counterfactual than we have for an average deposit or loan market with the average shock that we experience. But with these shocks, we do have quite some variation. There are some very small shocks. Like you have a lot of rainfall locally and you do have a very small loss. But it is true that this data said it also has things like Hurricane Katrina, like very large scale events that led to very large losses in the local economy. And there for those types of shocks, we do see a much larger region of the parameter space being used to estimate the coefficients. But it is the assumption that yes, the response to the shocks that we use are able to predict, are able to represent what we would observe following a system-wide reserve injection. Next question on the way in the back. You mean, thanks for the great presentation. I was wondering about how you interpret the securities market in the context of your model. The reason is that it seems to me there is a marginal cost for banks of intermediating basically between the non-banks and the central bank in terms of balance sheet cost. But the bank seems to pass through this balance sheet cost to borrow us instead of the non-banks. So you could think of a market where because the banks have the power basically to do QE, they pass through the balance sheet cost to the non-banks instead of the borrow us as in your setting. That's a very interesting way to think about it. I think perhaps by review preference, the fact that we observe what we observe meant that they were unable to pass through everything to the non-banks. From some other work, my personal take is that they do have quite considerable amounts of market power over non-banks, but perhaps it's present but incomplete. Next question. Let me look at the slide. So there's one question on the way you separate out the amount in supply. How do you use the natural disasters to capture local demand? So also for sort of a European audience, could you elaborate a little bit more to what extent banking in the US is truly local? Because here we think of often you have these large banks that are basically active in different markets. That's a great question. I think it's not purely local for sure. I think what probably is more local if a disaster hits a region, it's the housing, it's the infrastructure in that place, it's the residential homes, all those things that need to be rebuilt. So I think that definitely is very local. Now, the assumption would have to be that it's those borrowers and those depositors that they go primarily to local banks in that county for which we would have the disproportionate effect. If they do also go to other banks in other counties, that is something we would have to net out. So I think what we use here, you can think of this as the relative increase in exposure of the local bank branch due to local disasters. And this is going to be a larger effect. The more locally oriented the banking sector is. So I guess if you're taking another economy or banks are even more local, probably this kind of shock is going to be even a better instrument at generating the variation. It would not be useful in a world in which there are no local markets at all and that everyone, no matter where they are, can go to any bank branch and has a similar propensity to go to any bank branch equally. Thank you. Next question is, so you abstract from loan maturity in your setup. So a very long contract is the same maturity. And so one question would be if one were to model some sort of term premium, at least in this house we've been saying one of the effects through which QE reaches different parts of the economy is also by extracting duration and it should in principle compress this term spread. So if we think of your model you would have two different loans with different maturity. Would that be another channel that would be worth looking at? It would probably go in the opposite direction. Right, I think it's an interesting heterogeneity because I guess there should be two differences depending on the maturity of the loan. One exactly is the one you said. If QE's goal is to flatten the yield curve then longer maturity loans may be benefiting more on the asset side let's say. But it should also be the case I guess longer maturity loans, they have a different duration risk, they have different considerations from the bank supply side and that also could affect how the cost function differs. The cost function parameters differs for these two types of loans. So there will likely be very interesting interactions there. We can try to separate those out. So we'll observe the maturities at issuance at least that were extended for these loans. Thank you for the suggestion. Okay, my last question is stealing from Agnes' discussion. If I sort of push the rationality provided in terms of comparing the US and Europe so to the extent that these banks are also sellers of securities Agnes was stipulating if I could be smaller so is that something you would agree with that if you were to run this type of estimates for Europe would you expect because of this to find smaller facts? I think literally or let's say first the mechanical effect, yes, right? So if you think x anti or else equal there are some banks who hold more of the securities that the central bank is buying relative to a banking sector that holds less. Yes, there's definitely the second one would respond by more given the channel I'm proposing but I think I guess it's important also to ask why a certain banking system is holding more of a certain security in the first place and if there's any anticipation effect that perhaps these are the things that the central bank going forward is more likely to buy that contributed to a larger holding of certain type of securities then I would just argue maybe that's just the intermediate step of the channel we're proposing remember the intermediate step has to be that the banks I guess are first buying it from their clients as a managers and then they're offloading it to the central bank so there's exist a very short period in time at least in the US most often the banks are holding these things on balance sheets and then perhaps that is a different time frame a different type of equilibrium that we see in Europe but I think yes and no depending on what the x anti expectations and incentives were for holding securities in the first place good well when I hear yes and no I'm thinking I think more research is needed so well thank you so much and of course for making this an interesting session thank you so much


James Swannock here. Welcome to the Alcohol Free Lifestyle podcast and today our top coach Victoria English is interviewing her father, Bob English, who is an 83-year-old man who's been alcohol free now for 42 years. And Bob is a business owner, a former Ironman. He's a husband, dad and grandfather. And he says that he nearly surrendered to the grips of alcohol many years ago, but he's turned his life around and he's 42 years alcohol free, which is incredibly inspiring. I'm running into so many people these days who are choosing alcohol free. I'm recording this right now from Bali, Indonesia and I just met someone yesterday who has been alcohol free for two years and a lot of my new acquaintances or friends here are either alcohol free and have been for a good year or two or they have a drink on occasion. So I'm not sure whether this area of the world attracts that type of person, but I am just noticing so many more people who are attempting this, doing this and choosing to live an alcohol free lifestyle. I'm having a look on CNN.com at the moment. I'll go on to FoxNews.com as well, just so I've got the left and the right. So no one's going to accuse me of bias. But it's interesting, all these things in the world. CNN's headline is this invisible gas could seal our fate on climate change and they're talking about, there was a big report coming out about climate change. New Zealand is slowly reopened to the world from early 2022. Tom Hanks' son is ranting against vaccines despite parents COVID battles. There's a story about sex in the city being back. There's a story about cryptocurrency, $600 million of crypto being gone. Let's flip over to Fox News now. Fox News is saying cops feel under attack as Democratic Mayor Defends Court of Rush send off a slain officer. I don't even know what that means. Andrew Coymo or Cuomo, the New York governor just resigned yesterday as I'm recording this. President Biden refusing to release visitor logs from Delaware despite his frequent trip. I mean all this stuff that's going on. I'm telling you, where is all the stories? Where are all the stories about alcohol, about the damaging effects of alcohol? And I know that you will feel inspired by this upcoming interview with Bob English, Coach Victoria's father, because he made the choice 42 years ago to give up alcohol and completely transformed his life. And his daughter, Victoria, who's now working in my organization as the top coach of Project 90, got to benefit from that. And her daughter's got to get to benefit from their grandfather, Victoria's father. But I'm looking at CNN and Fox News.com. I'm not seeing anything here around all the damaging effects of alcohol. I'm not seeing things here about people trying to encourage people to reduce or quit alcohol. It's all political fighting and infighting. You know, not that these stories aren't important, that they're publishing. They are, but surely talking about the damaging effects of alcohol and the inspiring effects of alcohol if you stop drinking it should be more prominent in our media today. But anyway, that's my little somewhat of a rant over. If you would like to get my daily email, you can go to alcoholfreelifestyle.com forward slash guide, and I will send you my alcohol freedom formula. It's the same process that I've been walking through our clients through in Project 90. That's a free guide. If you go to alcoholfreelifestyle.com forward slash guide, I will send you that free guide and you will end up getting my daily email. If you don't like daily emails from me, don't do it. So just a warning, having said that my daily emails are pretty awesome. I think lots of knowledge bombs talking about health and wellness and all kinds of things. Likewise, if you would like to speak with Coach Victoria, who you're going to hear on this podcast and potentially join us in Project 90, then you can do that by going to alcoholfreelifestyle.com forward slash schedule where you can book a call. And if you want some more details about Project 90 in general, you can go to alcoholfreelifestyle.com forward slash project 90. Okay, enough for me. Let's get into today's episode with Victoria English, the inspiring Victoria English, I should say, interviewing her inspiring father, Bob English. Hi, everyone. This is Victoria English, top coach with Project 90. I am once again taking over James's podcast and I have a very special guest today, very special to me. And I think by the end of this episode, he will be special to you as well. I am interviewing my father, Robert English. He goes by Bob. I've known him well all my life. And he has an incredible story, which some of our current Project 90 members know a little bit about. And he just the little bit that they know has inspired all of us so much that I was asked to interview him. So please welcome Bob English, my dad. Hi, Daddy. Hi, sweetheart. Hello to everybody. Yeah, thanks for being here. So I live out in Denver. My dad lives in Lakeland, Florida, a little town between Tampa and Orlando. That's where I grew up from age, I think four to 17. And yeah, we're just going to talk a little bit about your life, your story and how giving up alcohol changed just about everything for you. So let's start with just a little bit about your background. Where did you grow up? What was your childhood like, things like that? Okay, well, I was born in 1938, 83 years old. I was born in the Coler regions of Pennsylvania, Frackfield, PA. And I had three brothers growing up and four sisters.  My father died when I was 10 years old. But he actually left for the TB Sanatorium when I was eight. So I knew him up until I was eight years old. He was a strong disciplinarian. But I remember him being that, but I have some warm memories of him going out picking huckleberries and him watching me pitching ball games and so forth. But I didn't have him to help me grow up, but I did have my brothers and they looked out for me. And all in all, we were a very happy family. My mother did a good job of raising us. We had a strong ties to each other. I know family was always very important to you. And as your daughter growing up, I could see the pain of growing up without your dad. And I'm sure that was incredibly difficult. When you graduated from high school, I know you went into the service. Tell us a little bit about that. Yes, I joined the Coast Guard in 1956. And for most of that service time, I spent it on an icebreaker of the USCG West Wind. And I made three trips to the North Pole, the Arctic Circle, and one long trip to the Antarctic. And in the service, I learned one thing in the service I thought was important, that we had 175 crewmen on that ship. And we were black and white, Latinos, Filipinos. And everybody got along. Everybody liked each other. We were a good crew. And it just gives me hope for the world that if people get together, most people are good hearted and want to get along. And that was proven to me on that ship. So that was a good lesson I learned in the service. And looking back, it was some of the most enjoyable. It was one of the most enjoyable periods of my life. I bet.  I was that in the Antarctic. It was 40 below. I was using a blow torch to heat up nails so I could pound them into the wood without them breaking. They got so brittle. And the thought crossed my mind. When I get out, I'm going to go someplace for them. And you did. And you did. So, you know, I don't know what the culture was around alcohol when you were growing up and came of age and when you were in the service and everything. But I would imagine there was a lot of drinking going on with you and the guys. Well, I started actually, I had my first beer in high school and that was driving around in the backseat behind a quarter beer and going to the drive in and things like that. But it wasn't anything serious. It didn't affect me at all. And then when I got into the service, that that was a drinking atmosphere. Fortunately for me, being on an icebreaker, I was gone for the Indian Arctic almost seven months. And it was a three month trip up to the North Pole. So I spent a lot of time on board ship and didn't have the opportunity to drink. But when we got unsure, that was part of our lifestyle was drinking. And I was young and healthy and strong. And I could drink till early morning and wake up six o'clock and do full day's work and just let it go. I thought I'm okay. Yeah, I think that happens to a lot of us in our 20s. We think, well, you know, no consequences other than maybe a hangover, a headache and a little queasy, but you can get through it. So then after the service, you put yourself through college, you got married to my mom. Tell us about that. And what kind of role alcohol was playing in your life at that point? Well, when I got out of the service, I actually got a job as a salesperson. I've always worked more or less by myself all during my life. And I sold vacuum cleaners and sewing machines and door to door and made a lot of money doing it actually. Saved enough money to go to school and use the GI bill. Then when I got out of college, I went to work for a manufacturing company for a while. And then decided to be a manufacturers rep myself. And that eventually led me into found in my own company, Valium Products Inc. And I did that with Little Capital. And that's when drinking first appeared to be a problem. I would get stressed out and so forth and I would come home and drink. I wasn't a person that went to the bars that often. I mostly drank at home. But then as children got older, then I did start going to the bars. I didn't want to drink at home in front of them. But I struggled with drinking and I knew I had a problem. And it was just I didn't get drunk every day. I wasn't a drinker every day, but I would go on vinges.  And I just thank God to this day that I never hit anybody. But I was giving up hope. I thought what's going to happen to me, I'll always be able to make some money. But I'm probably going to end up living in some cheap hotel room all by myself. And I'll probably die of cirrhosis on the liver. And then I had a DUI. And I remember the judge, I was found guilty of the DUI. I went to court thinking I was going to beat it, which was just my ego getting in the way.  And you better think that to it. And she sent me to this psychiatrist. And he interviewed me on my drinking. And every question he asked, and you know, the normal questions that you deal with your life is just do that. I lied in every case. I don't know, not me. And I was driving back from that interview with the psychiatrist. And I said, you know, that judge is right.  The definition being that I believe my own lies. And so that was a lesson learned, but I didn't quite learn my lesson and continued to drink. And one time I came home, had a tussle with my son, not anything serious, but I knew I knew that was that was inexcusable. I went to bed. My wife, your mother woke me up and said, you're either going to get better or we're leaving with the kids. I'm leaving with the kids. So that day I called AA. And that was the start of it. I never had a drink since then. That was 42 years ago. But I really was determined I was going to quit this because I had a full life ahead of me and a world full of opportunities. And it wouldn't be fair to my children and myself or my family to continue what I was doing. So that was my incentive to get better. And I did. And it was, I still to this day say, other than other than having my children the most important day of my life is the day that I quit drinking alcohol. And it opened up a whole new world for me. Yeah. I, well, I've told you, I remember that day very, very clearly, because I was I was still young. But it was I was old enough that I understood what was happening. I knew that if mom put put tinfoil over your plate and put it in the fridge that you weren't coming home. I knew that, you know, our my brother was going to, you know, try to defend us and that it was going to be messy. And I just remember that heaviness in the house. And I didn't understand it because I was I was still young. And I just thought, well, why is it like this? Why is why is daddy one person when he comes home and a different person the next day? And there was just this darkness. And I remember that day when mom took us to the to the room and said that to you.  And it didn't.  And I've told my dad for our listeners, I don't know if you remember this dad, but do you remember the letter I wrote to you? And I wrote a letter to my dad later in my life, I don't know how old I was, but I said to him, I said, I said, Daddy, my dad said a lot of things for me.  I've never wanted for anything. But I wrote him a letter. And I said, the the greatest gift that you ever gave me was to stop drinking. And I believe that to this day, because my dad's 83 years old. Last week, he went to Philadelphia with me.  And here he is 83 years old, wearing a rocky Balboa wig. And he's running up the rocky steps with with me and my 13 year old daughter, his granddaughter, Aubrey. Those are the gifts that this is my next question. And we'll talk about this.  But the the intangibles are so numerous that you can't even begin to dream of them when you stop drinking.  And my dad had arranged for my mom, my brother and I to have, you know, enough money that we would be okay. But he felt so hopeless that he had just sort of made that arrangement and almost resigned himself to that fate. So listening, just, you know, if you're in the grips of it, we get it, we understand. And I hope you'll enjoy my dad's story because it doesn't have to be that way. No, no, it doesn't.  I didn't feel like that afterwards. I said, there is hope. I can make it. And I just had that faith and it just renewed my life. I could remember I had my own business and I was afraid to make appointments with people. They'd say, well, meet me at one o'clock after lunch, so and so, and I'd say to myself, boy, I don't know if I'm going to be sober that day. Just better tell them I'll call them when I'm in the area or something like that.  They am running a business with employees and having to meet a payroll. And I'm doing things like that.  Right. And so all that changed, of course. Yes, thankfully, and energized and it paid off. It sure did.  You know, I remember I remember not making things like dentist appointments on Mondays, because I was afraid I would smell like wine. You know, like, everything was just sort of in a in a in a way just sort of tied to that habit. And the freedom that you find when you give it up is is amazing. But you know, what I what I coach about is things like that drive us further into shame. And shame do it makes us want to drink more, because that's a painful thing to sit with. But you know, we're talking about alcohol, which is one of the most highly addictive substances that you can ingest. And so it net it is going to change your your behavior, it's going to be it's going to change how you view the world and how you interact with everything and everybody. So when you see that, for what it is, and you can say, Okay, it's not that I'm a bad person. It's not that I don't love my family. It's not that I don't value my health or my career. It's that you ingested enough of this highly addictive thing that this is the outcome. So when you can release that, then you can get on with the business of getting better. And when you stop drinking, I would imagine that a was about the only option. That was the only option at the time. Yes. But I enjoyed it. I mean, I met I met people from every social economic level. And it I think one of the things you have to be if you're going to be successful is you have to practice humility. And you have to get rid of your ego.  And no matter whether you make $100,000 a year or $20,000 a year, you have that in common. But I met several professionals in AA, and we formed a friendship outside of the AA meetings. Unfortunately, they're all gone now. But they were a big help. We mentored each other and held each other accountable. So that was a good thing too. Yeah. Yeah, that's nice that you did that. And yeah, you can you can make those kinds of friends. And it does help to have that that that thing in common that you know, the drinking thing because you can talk freely and you understand each other. You understand what it's like to go to an event where there's going to be alcohol and you're not drinking. You understand what it's like when people question you like so did you give it up like for real for real? Or is this just a phase? Yeah, and that's, you know, as you know, I've told you about what we do here at Project 90 and how we coach around all of those things because you don't have to do it alone.  And I'm glad today in 2021 that there are options. You can do Project 90. You can do AA, find something that fits, but find something. Right. And take it serious. Yeah. Yeah.  Like what do you do with that vacuum that forms? You know, suddenly you have more time. You have more energy. You have more money because you're not spending it on alcohol. And you lose pounds right away.  You're feeling good. And then sometimes people are sitting there kind of twiddling their thumbs like, well, what do I do now? So when that happened to you, what did you do? Well, I started exercising and running. And that became a passion of mine. And we'd go to the races together and I'd be the designated driver because they always serve beer after the races. And I was the designated driver and I would just chuck myself driving that car. But that's what I did. I did running and exercise and so forth. And just to do a competitiveness of it and met a lot of new friends there too. So it was a big thing for me. But I could have never done that if I was drinking. Oh yeah. Yeah, for sure. I remember when you'd mow the lawn, you'd be exhausted. Yeah, that's right. I would. Yeah.  He's coming home and things are getting better. And then he takes up this running habit. And you know, this is again for our listeners, this is just an example of how putting down that one thing impacts not just your life, but your family's life. I, you know, I was inspired by my dad. And so I got into fitness. Then I went to college. I was so inspired by his healthy eating that I studied dietetics and exercise physiology. I went on to have, I've had a career and wellness for 30 years. So again, you know, when you think about the impact you're having on your own life, you never can anticipate the ripple effect and the life you're going to change by giving up that one thing that I understand how big it feels. It feels like a big thing. But like my dad said, it when you let it go, it feels like a boulder has been lifted off of you. Yes, it has. Yes, it has. And my dad is being modest when he says, Oh, I took up running. Tell us a little bit.  Tell us about your marathons triathlons, your rankings right now. Go ahead. Well, I mentioned that humility is one of the characters prior to practice. Go ahead. You can flex a little dad. When I was eight years old, I was ranked number two in the whole world for for Ironman triathlons. When you were 80. When I was 80, when I was 75, I was ranked number one in the world. Wow. For triathlons. And so that's my two biggest achievements. But last year, I was ranked number one in the state of Florida for my age group. And it's just something I love to do and it keeps me in shape. And it gives me a sense of accomplishment.  Yeah, of course. And I was a politician too, for eight years. You weren't here when I was a politician. You were down in Miami, but that was kind of a odd thing.  I use $300 bottles of wine and everything. Oh gosh. And I say no, no, I don't want any. And they couldn't they couldn't believe that I would turn think something like that down. I just smirk and say no, I don't need it. Yeah. Right. Yeah.  Yes. Yes, it is.  The ones taking your breath. Yeah. Yeah.  Yeah. Like why would you race go for a run race, you know, doing something for your health and then ingest an addictive carcinogen? That makes no sense. No, it doesn't. But it's a brainwashed. We're brainwashed. We are absolutely brainwashed for sure. And you so your company Valiant, which I have to brag a little, the V for Victoria, that's where you got the name. Yeah, that's. But how many people do you employ and how many years has it been around? Well, I found that the company in my garage. In 1978, I worked out of there for three years. And then in 1981, I bought a little building 1600 square feet and hired a welder and bought some equipment, so forth. And so since 1978, I've been in business, that's over 40, 40 years. And I have about 90 employees right now and we do millions of dollars with the business. Our motto is let's clean China's clock. We tried, actually, away from China and we're pretty successful at it. That's right. Yeah.  If you had continued your path with drinking, I wouldn't have you today. Oh, no, no. Aubrey didn't have you. Lauren, Kelly, and Daniel wouldn't have you. You know, so that, I mean, that's the, that's just the reality of it. Alcohol is, if it has you in its grips, it doesn't want to let go. And like I say to clients, you know, however you're drinking today, in a year, you will drink differently than you do today. You're either not drink or you're going to drink more because it doesn't, it's not a static thing that stays the same. And you know that and I know that. But when you look at that, you know, you've got 90 employees, those are 90 families that thanks to you have employment and the kids have food on the table. What does that feel like when you look back on these 40 years of not drinking? What does it feel like? It's got to feel profound. Well, it is the source of pride. I mean, we run a, we run a good company. We're very kind to our employees. And actually I thanked them for our success. I mean, we couldn't have done it without, without the employees. And all the employees know of my background. They know what I struggled with. And for example, I won't allow a hat being worn in, in the shop with a, with a beer hat on the top of it. They know that they're not going to wear a hat for work with a beer advertisement on it. And so everybody is very, very aware of, I try to make them aware of alcohol. And if I find somebody or hear somebody in our employee, one of the employees who has a drinking problem, we may get a point to intercede and do what we can to help them. And for the most part, we've been pretty successful. And the people have stayed with us. They sobered up. They understand the importance of being sober and what it means to their future. So I'm preaching the gospel when I can. Oh, I know you are. Because I value it so much. Yes. It's a valuable thing. And it's great that you have that atmosphere in your company. You know, we don't have alcohol at the company parties. We're not going to advertise alcohol on our baseball caps. You see it for what it is and you're not shy about sharing it. No, no. Yeah. No, no. That's good. That's good. You know, it's it was it was it was amazing to me when I began to struggle with alcohol. And for our listeners, I thought I knew what a drinking problem looked like. It looked like what I saw when I was young with my dad. And I just figured that anyone who had a drinking problem had always had a drinking problem from the time they took their first drink or something. And imagine my surprise because I went through college and everything and drank and had a good time and never had any consequences. Didn't really drink during my early mid 20s. Once I graduated and started having children, alcohol wasn't part of my life. So I really thought I had dodged that bullet. I thought, well, that's something that runs on the male side of the family and I'm fine. And, you know, when I started self medicating with alcohol for anxiety, I was having anxiety. I didn't know what it was. This was the year 2000 or so.  So, you know, you have my dad who was, you know, in the service and drinking with his buddies. And then it developed into a problem. He was a business owner. And then you have me. It didn't develop until later. And I thought I was holding it all together and I had three children, then I had four children. It's a very insidious problem, addiction. And for anyone listening, if you're questioning, well, is my drinking a problem? I encourage you to not compare your drinking to other people because that was my mistake. And it wasn't, it was just because I didn't know better. But I compared my drinking to what I saw in my father. And the real question is, does this align with my values? Does this drinking habit make me a better version of myself? Do I feel okay about my drinking habits? And if I had had that knowledge that we impart to you all on this podcast and in our coaching program, I probably could have saved myself a lot of suffering. So, you know, if it doesn't feel right to you and your bones and your skin, then it's not right. It doesn't matter how other people are drinking. It matters how you feel about your drinking. Would you agree with that, dad? I certainly would. That's well said, daughter. I even did some good serving as a bad example. Well, like I say sometimes I say, well, I'm either an inspiration or a cautionary tale. Depends on which part of the journey you saw me on. But, you know, when I did realize I had an issue, it was great to know that I struggled with the shame of it going to my dad about it. Because I thought, oh my gosh, my dad had a problem and then look at him, he overcame it and he's this superstar athlete and this county commissioner and business owner and he's got it all together. And I felt a sense of shame, like, oh gosh, I'm going to disappoint him. But just like he said with his employees, when you've been through this, you have that compassion. You know what it's like to be in that struggle. So, when I went to my dad, I remember telling you, I was in the car at carpool for one of my kids and I told you and you were a little surprised and then you were very supportive. Yeah, thank you. I appreciate that. Yeah, I knew you had it in you. Yeah, good girl. Thank you, daddy. So, for people out there who are listening and they keep waking up in the morning with that shame, with that regret, with those broken promises, again, what would you say to them? What would I say to them? I said, you're getting a message and it's up to you to listen to it. And the life that you have before you without alcohol, it's so beneficial.  I could, there's so many good things out there to do and to live for and you're just free to do it all. And there's a wonderful life out there. You just have to get rid of that baggage and take advantage of it. Yeah.  No sensible reason. You just have to get up and do something about it, period. Yeah, that's right. What could I say? Yeah, no, you hit the nail on the head.  So, if you drink it as we're expected to in society, we're expected to drink, drink responsibly, they say, but it's an addictive substance. So, when you get to a point where you find that you're having problems, it's only a natural progression. That's what happens when you use an addictive substance enough times. So, it may not be your fault if you were, like my dad said, brainwashed and took up this habit, which has now become more than a habit, but it is your responsibility to do something about it. And you can't do half measures either. I think I told you the story, if I have the time to tell it again, about how I decided I was going to give up this beer drinking and whiskey drinking, and I was going to be a civilized drinker. So, when I bought these little tiny wine glasses, and I bought this bottle of Champlain or Chavu or whatever kind of wine, $23 a bottle, and I came home and sat it on the table and filled these little glasses and drank it slowly. Oh, I'm so good. I'm such a nice social drinker. This is the way you have to enjoy alcohol. Well, fast forward about two weeks later, I'm buying gala wine for $5 a gallon and drink it out of a fruit jar. That's craziness.  I did the same thing.  Exactly. Yeah, yeah, yeah. So, I mean, that's the craziness of it. So, I mean, just I hope listening to my dad inspires you. This is a man who, again, was about to give up, was almost resigned to it. Yeah, ready to give it up. Yep. But instead, he said, well, let me give this thing a shot.  They have a daughter. He has been such an inspiration and role model for me and my brother, for my kids, for all of his grandchildren, and all those employees, those 90 employees, and they are taking that home to their families. And it affects how those kids are growing up. So, again, this work is an inside job, but the way that it then goes out into the world is immeasurable. So, anyway, to our listeners, if you are interested in Project 90, please, please, please reach out to us. You can reach me, Victoria, at alcoholfreelifestyle.com. You can click on alcohol-free lifestyle forward slash project 90 to find out more. You'll be with like-minded people, lots of business owners like my dad, CEOs, just amazing people, an amazing community. As you can hear on this podcast, no topic is off limits. We are here to really dig in, do the work, and help you get rid of this.  Get on with this of having fun and enjoying life again. So, anyway, I hope you'll reach out. Thank you, daddy, for being here. I just have one final word of advice, if I may. Yes, sir. This is to the people who are in a program. They're making progress. They're very pleased with themselves. They could see the light at the end of the tunnel, but just remember this. Alcohol is evil. And you cannot take one drink because you are just one drink away from being a drunk. So, no matter how successful you are, 42 years ago, I still am wary about alcohol. I fear it. So, always have that fear of alcohol, and that will help you go a long ways. Thank you. Thank you, daddy. All right, guys. Well, again, Bob English, my dad. Thanks for being here, daddy. Thank you for listening to me. Thank you so much for listening to today's episode.  If you look in the show description, there's a link there to get my guide, which is the Alcohol Freedom Formula Guide. And in that guide, I will walk you through the process and system for successfully reducing or quitting alcohol. It's the same system and process that I give to my clients inside of Project 90. And if you would like to get your hands on that guide, you can click the link in the description part of this episode, or you can go to alcoholfreelifestyle.com forward slash guide. Likewise, if you would like to be considered for Project 90 to join our community and get some accountability, some coaching and have fun, achieve some goals over at least 90 days with our help and support, then you're invited to schedule a complimentary coaching call with one of my coaches. You can do that by clicking the link in the show description or going to alcoholfreelifestyle.com forward slash schedule. Now, Project 90 is for over 30s only. And it's really for people who are ready to get long-term power over alcohol. You don't have to quit forever, but you will have to quit for at least 90 days with our support. Just a reminder, 95% of my content is free and plastered all over the internet. If you just Google James Swannick and the word alcohol, you'll find that. For those of you who want additional support, if you want coaching, fun, accountability, if you realize that you can't do this on your own or you just plain don't want to, then I invite you to schedule that call and we can talk about if Project 90 is for you. If you would like to take some of my supplements, swanvitality.com is the website. I'll put a link in the show notes as well. I have a liver support product called Loving Liver, which I designed and specially formulated to help remove toxins from your liver after years of alcohol consumption. Again, there's a link in the show description. We've also got a green powder there, which turns into a green juice filled with amazing ingredients to support you and give you energy throughout the day. And there's also a magnesium product, which I take every night to help me prepare for sleep and to sleep through the night. So there's a few options there. Lastly, if this episode or the show in general has helped you or supported you in any way, I would so appreciate it if you would write a review. It really does help the show climb the rankings and expose the show to people who don't yet know about us. So if this show has benefited you in any way and you feel compelled to pay it forward, just writing a short little review, hopefully a nice one will be so appreciated. And I will thank you immensely. Lastly, if you'd like to talk to me about anything at all, feel free to send me an email at James at alcoholfreel lifestyle.com. I do read and respond to every email. And you can also follow me on Instagram at at James Swannick, send me a message there. And I look forward to connecting with you soon. Catch you on the next one.


Remember that Anna Kendrick's song from the first pitch, Perfect When I'm Gone?  Sorry, I don't know the cup part. What is up, everybody? This is Chris from the Rewired Soul, where we talk about the problem, but focus on the solution. If you're new to my channel, my channel's all about mental health and what I like to do is pull different topics from the YouTube community to try to teach you how to improve your mental and emotional well-being. So if you're into that stuff, make sure you subscribe and ring that notification bell because I'm not going anywhere. Y'all are used to clickbait by now. You're on YouTube. You know how we gotta do it to get you to watch a video. But yeah, anyways, quick video. I am getting ready to hop in my car and leave for California for the week. I'm leaving my beautiful girlfriend Tristan and our two cats behind as I head off to California. So what am I doing in California? Those of you who follow me on social media, you know what's going on, kinda. So first, I am heading to Central California to see my mom, my dad, maybe my friends if they got time. I'm gonna be there Monday and Tuesday. And then I'm heading off to the beautiful city of angels, Los Angeles.  So what you're gonna need to do, what you're gonna need to do is follow me over on my social media, Twitter and Instagram at the Rewired Soul because I'll be taking pictures while I'm there. I'll be doing Instagram stories. I'll be tweeting. And you'll get to see who I'm collaborating with. I've been talking about how it's really funny, how a lot of you are guessing who I'm collaborating with and 98% of you are wrong. Like there's people I talk to that you don't even know who I talk to and stuff. So some of you got it right. But anyways, yeah, follow me on social media if you want a little hint as to who the collaborations are with. And I'm even meeting up with a Rewired Soldier. Yes, I'm meeting up with one of my longest subscribers and I'm gonna meet up with them and we're gonna do a collaboration as well.  So listen, now it's the serious part of the video. While I'm gone, I have collaborations every single day lined up that will be posted on this channel. Okay. I have various YouTubers, some bigger, some smaller who are going to be doing guest videos on my channel and do me a favor. Do me a favor. Watch every single one of them because listen, something I'm trying to do with my channel is even if this aspect of mental health does not affect you, please watch it and educate yourself. I have somebody talking about ADHD. I have somebody talking about autism spectrum disorder. I have somebody talking about OCD. I have somebody talking about parenting stresses. I have somebody who's talking about healing yourself after having a broken relationship with a parent. So please watch these videos so you can understand what other people are going through. One thing that is my mission here is just so you have some empathy and some understanding like I tell you all the time that we are selfish and self-centered by nature. We're like, oh, well, that doesn't affect me. Oh, I don't have ADHD. Oh, I don't have OCD. Oh, I don't have autism spectrum disorder. I don't need to watch this. No, we need to so we can better help each other. And as you watch these videos, share them with other people. Let's increase some awareness of what's going on and what other people are struggling with so other people can better help each other. All right. This isn't a me thing. This is a we thing. That was a great quote. Use it somewhere. All right. But the other thing I want you to do, please go subscribe to these people that I have collaborating with me. I'm not going to tell you who they are, but you'll see. You'll see who they are. But go subscribe to their channels. Show them some love. Check out their other videos. And yeah, my lovely editor, Zach, he's going to be helping me out while I'm gone. And I might. No guarantees. I might upload some content while I'm gone. I'm bringing my camera obviously to film some collabs and things like that. I'll be staying in a hotel. It's a hotel I stayed in before and the Internet is like decent. So I might record some stuff and send it over to Zach because I know like the new Shane Dawson's coming out while I'm gone and all that stuff. So stay tuned. I might upload some videos myself. But anyways, a reminder, follow me over on social media, Twitter and Instagram at the Rewire Soul. Make sure you don't miss anything. And while I'm driving, I have been known to do a little carpool karaoke on my Instagram story. So make sure you follow me. All right. But anyways, like you guys, I just want to say I love you all for all the support and I'm so excited that I get to do these collaborations. But I really appreciate every single one of you. We just hit 95,000 subscribers last night. So we're 5,000 away from 100,000. And my whole mission with growing this channel is just so I can reach a larger audience and try to help as many people with their mental health as possible. I'm really grateful for this next kind of phase we're going into where I get to collaborate with more people who are sharing their stories and we get to talk and discuss like different aspects of mental health, mental illness and all of that. And part of what I'm doing with these collaborations is I'm going to be doing some self reflection, self growth as I continue to grow. And I really hope that you guys enjoy the collapse when they come out and you can take something from them. All right. But anyways, anyways, enough of that sappy stuff. I'm going to hit the road. I got a pack still, but if you like this video, please give it a thumbs up. If you're new, make sure you subscribe and ring that notification bell. And don't forget to follow me on Instagram and Twitter at the rewired. So a huge thank you to everybody supporting the channel over on Patreon. And I just updated all of the names on this beautiful scrolling thing, wherever it is that you would like to become a patron, get your name up here. Click or tap on that page on that account right there. All right. Thanks so much for watching. I'll see y'all soon.