I'd like to introduce our speakers this morning. First up, we'll have David Laidler speaking. He is the Professor Emeritus of Economics at the University of Western Ontario, and of course, one of the foremost scholars of monetarism. He also published two books, among many others, but the demand for money and introduction to microeconomics were published in multiple editions. Following David Laidler, we'll hear from David Glassner, who is an economist at the Federal Trade Commission. He's also an expert on the history of monetary policy. His book is Free Banking and Monetary Reform, and he received his doctorate at the University of California in Los Angeles. And then wrapping up our panel will be Mark Hulabria. He is the Director of Financial Regulatory Studies at the Cato Institute. He was formerly a senior staffer at the Senate Banking Committee, and he got his doctorate right here at GMU. David Laidler, I'd like to welcome you to start us off. So let me thank George and Scott, among others, for inviting me here and coaxing me into writing a paper. That adjective emeritus has actually a Latin word that means not on the payroll anymore. And when you're not on the payroll anymore, you don't write so many papers. So it was an interesting experience over the summer. As you'll discover, David Glassner and I have written heavily overlapping papers without an iota of collaboration. So we've agreed on a division of labor for the presentation, whereby I shall talk more about generalities and only sketch out a little bit of history. And David will talk more about the history. So let me start with my first generality, which is that in this area, semantics matter. And that word, or that phrase, monetary rule, covers a multitude of different items in the monetary policy literature. It can go all the way from legislated quasi-constitutional constraints on the pursuit of policy that sets goals for the policymakers and even sets procedures whereby they are supposed to be able to attain those goals. That's what a completely legislated Taylor rule would be in my understanding. All the way down to informal descriptions of rules of thumb that have been used within central banks to give them some idea about what they think they're doing. The archetype of that was the Bank of England's Palmer rule in the 1830s, which was just a rule of thumb for governing its volume of discounts as a function of its reserves, which apparently was more honored in the breach than in the observance. And there's a whole string of things in the middle. Now, my paper is skeptical of monetary rules, but I want to be very clear about what kind of monetary rules I'm skeptical of. It's the legislated quasi-constitutional kind of monetary rules that I'm worried about. I am not a fan of monetary policy based on the principle of anything that might look good today, we'd better try and see what happens. That's not the point. I think monetary policy should follow principles. I think that those principles should be transparent to the people on whose behalf policy is being made. I just think there should be room for interpreting them flexibly and, if necessary, actually changing them when the evidence piles up that they aren't working as expected. Now, my fundamental reason for taking this position is not very difficult. It has to do with the workings of a thing that I have long labeled the monetary order. That's a kind of pompous phrase that you'll find in Karl Brunner's writings and Bob Mondal's writings going way back to the 60s and 70s. But it's not really a pompous phrase. It's just want to refer to something that is a little bit broader than the monetary system or the monetary policy regime. And I don't think this morning we go too far wrong if we think about the monetary order as being made up of four overlapping items, the goals of monetary policy, the institutional framework through which people responsible for monetary policy carry out monetary policy aiming at those goals, the expectations of the public about how monetary policy is being conducted and what its effects are going to be, and then a whole lot of political items about the way in which those agents who are forming the expectations in another role as voters can hold accountable for the outcome of what they are doing. The policymakers are supposed to be carrying out monetary policy on their behalf. Now, my basic point is, and it's hardly original, and I think you're going to hear it from a number of people today, is that the current state of economic understanding pervades the monetary order at any particular time. Let me just use the phrase economic ideas as a shorthand. How people think the monetary system works affects the way the monetary system works. It affects the choice of goals. It affects expectations about how policy is going to work out, and that in turn affects the way in which policy does work out. And of course, it affects the way in which the electorate respond if they are in a system that helps them, enables them to hold the policymakers accountable. Now, the point about economic ideas from the perspective of a historian of monetary economics is that they evolve over time. But it's not that they just evolve over time. Economic ideas affect the way in which the economy behaves. And when the economy behaves in a manner which is not consistent with current economic ideas, which is usually, those economic ideas get revised one way or another. And we start again. The interaction of economic ideas and the behavior of the economy, it's a self-referential recursive dynamic process. And because what people think affects what they do and what they do affects what they observe, which affects what they think, there can't be any guarantee that you're ever going to converge on something like the true model of the economy. Indeed, I would argue that the notion of the true model of the economy is a very unscientific notion indeed. I think suppose it existed, and suppose you had it. How on earth would you know? The idea of a true economic model really is of no use in economics. It's not at all helpful. Now, obviously, the people who are proposing monetary policy rules understand all this just as well as I do. And there is a very, very intellectually respectable way of analyzing the evolution of economic thought, which can be deployed to support legislated rules. Let me try to outline what it is. I think it's probably the majority of you among economists these days. It is the best analogy for economic science is probably the natural sciences. And the way in which economic science evolves over time is that ideas get proposed. The good ones continue to live and are developed. The bad ones get weeded out so that, at any particular time, what's in the current textbooks contains all that is useful to know that's been inherited from the past. And all the stuff that was also in the past that isn't in the textbooks has been discarded for good reason because it's wrong. And today's economists don't need to worry about it. This is the argument that's been put at many, many department meetings when the motion has been up to remove the history of economic thought from the graduate curriculum. And it's carried weight in an enormous amount of institutions. And I believe very, very unfortunately. But nevertheless, the argument is there. And of course, this is an argument that validates modern ways of proceeding in macroeconomics in which you model the economy, you attribute to the agents an understanding of the true model of the economy. There isn't dissonance at any deep level between what happens and what the agents expect because the agents act as if they have the true model of the economy. And though there are different versions of this around at any moment in time, the purpose of economic research at the moment is to weed this stuff down closer and closer to that true self-referential model of the economy. And once you've got that, you've got a good idea of how monetary policy works. And if you've got a good idea of how monetary policy works, and economic agents have got that understanding as well, well, why not make it clear? Why not spell it out in some rules? And why not to take care of the accountability problem, make those rules binding upon the people who are carrying out monetary policy? And now we live happily ever after in an economic system in which the monetary system sort of functions. Now, I have a quotation here that I think summarizes that point of view. So let me read it. In a free enterprise system, we obviously need highly definite and stable rules of the game, especially as to money. The monetary rules must be compatible with the reasonably smooth working of the system. Once established, however, they should work mechanically with the chips falling where they may. To put our present problem as a paradox, we need to design and establish with the greatest intelligence a monetary system good enough so that, hereafter, we may hold to it on rationally, on faith, as a religion, if you please. Some of you will recognize that quotation. It comes from Henry Simon's 1936 article on rules versus authorities in monetary policy. And it's embarrassing, in a way, right, if you think what's happened between 1936 and now. The late 1930s weren't the greatest. The Bretton Woods system was not exactly a roaring success. We had the great inflation. We had the 1980s decade of central banks saying, trust us till we figure out what to do. Sometime in the 1990s, a few central banks seemed to have figured out what to do, and inflation targeting spread. We had the great moderation, and it looked like it was working. And he, 1990s, sorry, 2007, started to come off the rails in a way that surprised most of us. It certainly surprised me. I'm not going to take a vote on who was surprised. But if you're honest, most of you guys were surprised about what happened after 2007. And yet, somehow, here we are again, back with Henry Simon's in 1936. There's something odd here. Now, once again, I think the proponents of monetary rules are just as well informed as I am about all this. And there is an answer available to them in the literature, which is, cast in terms of this model of economics, as if a natural science, making slow and steady progress, weeding out bad ideas, getting technically more adapt as it progresses, which was interrupted once by a huge anomaly called the Great Depression, coupled with the Keynesian Revolution. And these, according to this view of things, was a huge anomaly in the history of economic thought. It's a period in the history of economic thought which detracted from knowledge. We learned nothing about the way the economy worked from Keynesian as disciples. But thank heaven, or thank Milton Friedman first, and Bob Lucas, and Tom Sargent, and that later, we are now back on track. And in my written paper, I have documented these propositions in the literature. They are there. Well, my last three minutes has got to be devoted to telling you that there is another view of the history of economic thought in which what went on before 1936 is just like what went on after 1936. It's a history of changing ideas, of policymakers getting things wrong, of debate about where to go next, of trial and error coming off the tracks. And in particular, it's a story about the 1920s and 30s getting going, because policymakers in 1919 in a number of countries, not least the UN or the UK rather, were so devoted to a monetary rule that said they had to honor the pre-war parody that they made a colossal mistake when they tried to get the gold standard going again after 1914. Let me just summarize my story of the gold standard and all the rest of it. The story of the gold standard was the story of a series of policy rules that never quite worked out as expected, a system that settled down with the budget principle to some kind of constrained discretion, which was undermined at a very deep level by developments in economic analysis, the development of index numbers, that actually persuaded everybody finally that stabilizing the price of money in terms of gold wasn't the same thing as stabilizing the price level, and a big shift in the theory of value from the labor or cost of production theory of value, which made basing a monetary system on gold something that was natural and not to be questioned and changed it simply into one among a number of alternatives that had to be tested out on its merits. Rhee Keynes and the Bretton Wood system, let me just say that the Bretton Wood system was pretty awful. But boy, the post-World War II era was better than the post-World War I era. And the problem with the Bretton Wood system was that the key currency country refused to obey the rules of the game that it had put in place in the first place, and economic ideas that attributed inflation to cost push instead of to monetary factors had a lot to do with the unraveling of the 1970s and the 1980s. I agree with Orthodox economics, because I was part of the process in a minor way, that the restoration of a little bit of 19th century wisdom to monetary economics from the 1960s onwards went an awful long way, and I was feeling awfully smug. Around about 2006, about how inflation targeting was spreading, and Andy Rose had this paper called Bretton Woods on his head. It looked like there was a new international monetary order just around the corner. Well, bingo, that's all gone. So I time is up, so I will leave you with two thoughts. I would like to propose to you that monetary policy presents problems that are not there to be solved once and for all with rules. They are to be coped with over time, according to principles that evolve in the light of experience. And like every good story, my story has a subtext. You can't talk sense about these things without studying the history of monetary economics, and the sooner it is restored to the graduate curriculum in every PhD-granting university in this country or on this continent, the better. Thank you very much. Our next presenter will be David Glasner. OK, so just by way of introduction, I want to thank the Mercatus Center and Cato Institute for having me here. And two other preliminary remarks. First, I'm an economist at the Federal Trade Commission. However, I'm speaking here in my personal capacity, and anything I say does not reflect or necessarily reflect any of the opinions of the Federal Trade Commission or the commissioners. And the third thing I want to say in introduction is that I'm really almost overwhelmed to be sitting on the same panel here today with David Laidler, one of my all-time favorite economists. So it's a big day for me to be here. As David already said, our papers were conceived totally independently. And there is a great deal of overlap. So I'll just incorporate by reference about 98% of what David has already told you. And so what I want to focus on are some specific episodes in the history of monetary rules. And so just to get started in the discussion, I'll give you my historical conjecture about what was the first monetary rule. May or may not be accepted, but this is sort of my working hypothesis. The first rule was the assignment of value to something worthless by making it transferable into something valuable. So think of a banknote. It's worthless. We're going to give it value by saying it's convertible into a fixed weight of gold. That was the first monetary rule. And it was adopted so unselfconsciously that it was just sort of seemed like natural. So in that sense, it wasn't a self-conscious monetary regime that was instituted. It just happened. But it became self-conscious early in the 19th century when in the course of what is known as the bullionist debates, which transpired as a result of the suspension of convertibility of Bank of England notes into gold in 1797 and the early stages of the Napoleonic Wars between England and its allies in France. And there was as a result of the suspension of convertibility there were huge debates about what the Bank of England was carrying on and what it was doing right, what it was doing wrong. But the upshot of the debates was a consensus or a near consensus in Britain that the way to get things back on track is let's get the pound banknote back to being convertible into a fixed weight of gold. And that's what happened at the end of the war. There was a process of restoring convertibility. But by 1821, that convertibility was restored and it was restored self-consciously. I think there was even an act of parliament at that time that made a legal definition of what the pound was as a fixed weight of gold. So that was like a real monetary rule. So just to give you a little preview, what I want to discuss now is how that worked out and what actually did not work out all that well. But it led to a series of debates subsequently that sort of defined the way the gold standard played out for the rest of the 19th and early 20th century until World War I when the gold standard collapsed. And then there was a reconstruction process after World War I. That did not work out well either. And then the title of my paper is A Rules Versus Discretion Historically Contemplated. And the idea of or the juxtaposition of rules as the opposite of discretion was introduced by none other than Henry Simons, whom David Laidler was just quoting from. His paper was called Rules Versus Authorities in Monetary Policy. But authorities there stood for discretionary action by authorities. So that's sort of where I'm going in that also brings in. So Simons is this figure who represents rules versus authorities. But he harks back to an earlier idea about monetary rules, which I'll just get to in a minute. And then I'll try to see if possible how Milton Friedman sort of carried the torch that Henry Simons tried to pick up. But I may have more topics here than I can cover in the allot of time. So we'll just see how far I get. So to circle back to where I was about a minute ago, the gold standard was restored in England in 1821 and legally restored in England in 1821. And people thought, oh, this is great. We've got the gold standard. It's just going to work out splendidly. Well, it didn't work out so splendidly because in 1825 there was a major financial crisis. There was another major financial crisis in 1836. And that got people really upset about how things were not really working out. The gold standard was not working out the way they wanted to. What was the gold standard? The gold standard at that time was a simple rule specifying what the value of a bank note was in terms of fixed weight of gold. And that's, as I would understand it, it's my understanding of what the rule was and what the gold standard was. So they tried to fix that apparent malfunctioning of the gold standard by something called the Bank Charter Act of 1844, which was often referred to as Peele's Bank Charter Act. Peele was the great prime minister of England in the 1840s. And the enactment of the Bank Charter Act was associated with another huge debate, somewhat similar to the earlier bullionist debates. But this was a debate between the Bank, what was called the Banking School and the Currency School. The Currency School were the advocates of the Bank Charter Act. And the Currency School had a certain model of how the gold standard should work. And that model of how the gold standard should work was not the kind of gold standard which defines the value of something worthless in terms of something valuable, but it was a non-gold standard. It was just gold. So David Hume in the 1750s had a wonderful paper in which he discussed what became known in monetary economics as the price-species flow mechanism. That was supposed to tell you what was going to happen. If all of a sudden 80% of the gold in Great Britain disappeared, how would things work out? And Hume said, oh, things would really work out well because you would just have a redistribution of gold. Prices would adjust. Things would come back automatically. And everything would be fine. But that whole discussion was based on all the money was actually gold. It wasn't bank notes. And so the Currency School said, oh, it's not working out the way David Hume said because we've got all these bank notes here and they're mucking up the system. You've got banks that are just creating bank notes and that's inflationary. But we have a fixed exchange rate between bank notes and gold. So how do we deal with this? Well, we'll just make every bank note represent an actual amount of gold reserves so that the bank notes will in fact be just warehouse receipts. Of course, that was a problem because they already had a huge amount of bank notes circulating that weren't, quote, backed by gold. So they said, OK, well, we can't do anything about that. So we'll just sort of grandfather those bank notes in. But if you create any more bank notes, you can only do that if gold comes into the country. So that will mimic the price-PC flow mechanism that David Hume suggested. And now we'll be back where we should have been in 1821 and life will be good. The banking school, who opposed the currency school, said, no, no, it's not going to work that way. Because the reason people hold bank notes is because bank notes are cheaper. They get value from holding bank notes. And if you force the system to work as if it was just gold, all these services that banks are providing are not going to be provided anymore because all the adjustment will have to take place through the price level, not through supplying the public with the currency that they need. So they said, that's not going to work. Well, guess what? It didn't work. And so in 1847, 1857, 1866, there were, again, severe financial crises. Each of one of those crises required the suspension of the Bank Charter Act. And because the Bank Charter Act only covered bank notes, but not deposits, guess what happened? Banks started creating deposits instead of bank notes. So you still had a fractional reserve currency, except it was primarily a deposit currency instead of a bank note currency, as it had been before 1844. So my basic thesis, and I don't know how much time I have left. Eight minutes. OK, well, I can work with that maybe. So my basic thesis is there are two basic kinds of rules. There are price rules defining the value of a bank note in terms of a fixed weight of currency, or more generally controlling the value of bank notes currency in terms of some broad price level. And there are quantity rules. The Bank Charter Act tried to impose a quantity rule on the gold standard. In fact, it essentially wanted to replace the gold standard in the sense that I indicated at the very beginning of my talk with a quantity rule that said the amount of money in the system can only change in exact on a pound for pound basis with the amount of gold that's in the reserves of the Bank of England. A 100% reserve requirement, or in the case of the Bank Charter Act, a 100% marginal reserve requirement. So you have these two paradigms. You have a price rule, you have a quantity rule. And what seems to me the very interesting thing about the quantity rule that was suggested by the currency school was that it was effectively displacing the gold standard as the fundamental rule. There still was a gold standard. There was still gold convertibility. But in terms of how the system was functioning, that was just like excess baggage. That was a fifth wheel. What was doing the work or what was intended to do the work was controlling the quantity. The gold standard was only useful as a means of controlling the quantity of currency in the system. OK, so the gold standard evolved and the way it evolved. It turned out it was not an international system when Britain adopted in 1821. But it came in an international system over the course of the 19th century. The Bank Charter Act basically became irrelevant at least by 1870, if not earlier. Well, it had to be suspended in 1866. So somewhere between 1866 and 1873 when Walter Badgett basically dismissed it as being irrelevant to the way the system worked in Lombard Street, the system had evolved in a way that made the quantity rule that the currency school through the Bank Charter Act attempted to impose on the system essentially it wasn't operating that way anymore. OK, three minutes. So how do I finish off this story? I'll just go straight to Henry Simons. Henry Simons essentially wanted to recreate the fixed mechanical rule that the Bank Charter Act unsuccessfully tried to impose on the British monetary system with a monetary system which he was one of the originators of called 100% reserve banking. However, in his 1936 paper, he basically gave up. And it tore him apart. He was so disgusted by the fact that the 100%, he was convinced the 100% reserve system would not work because you would have to revolutionize the entire financial system to be able to get it to work. Otherwise what happened to the Bank Charter Act would happen again because you would just create money substitutes near monies, they would replace the 100% reserve currency and you would be back where you started from. So Henry Simons just threw up his hands and discussed and said it's not going to work, I'm throwing in the towel, the best we can do is have a rule to stabilize the price level. Milton Friedman was Henry Simons' disciple, his teacher at Chicago. And he, in his early writings, was a very committed supporter of 100% reserve banking. But somewhere along around 1960, he also gave up on 100% reserve banking. And he said, oh, we don't need 100% reserve banking, all we need to do is control the money stock. And let it grow, but at a fixed rate, where whatever it was, you pick the number k somewhere between greater than 2, less than 5% a year. And that will work and will eliminate discretion and the world will be fine. Well, it wasn't fine. And as David Laidler has explained, it's not going to be fine, because whenever you try to impose some fixed quantitative rule on the behavior of the money supply, it's just going to fall apart. And on that happy note, I think I'll just stop. Thank you, David Glassner. Our next speaker already taking the podium is Mark Calabria. Good morning. Let me say I'm incredibly flattered to be included on this panel. I was so flattered I was tempted to change my name to David to fit in. But I figured it would help with the discussion that since I'm going to be essentially the skeptic of discretion, if you are the proponent of rules, that maybe that will help keep some clarity. Now, one of the evolving tools within economics recently, and certainly since I left grad school, has been the greater use of behavioral economics. And so I'm going to focus my presentation on, is there a behavioral case for monetary rules? To some extent, I think I can characterize maybe the conversation to be that my co-panelists would say, we don't know enough to rely on rules. And I'm going to say, we don't know enough to rely on discretion. And to some extent, to keep consistent with my theme of behavioral, following on George's suggestion that we tweet, I've actually included my Twitter handle. But honestly, for my own behavioral needs, so that when I look out the audience and see you on your phone, I can tell myself that you're live tweeting rather than doing something else. Let me start with telling you what I'm not going to talk about and telling you what I am going to talk about. And so the first thing I'm not going to do is talk about what is the right rule or what is the best rule. I'm not even really going to talk about what a rule is, although I hope we get into this during the discussion because I think that's a very important part of the discussion. And nor am I going to make the argument that rules always outperform discretion. In fact, my argument's going to be that rules can outperform discretion. And then of course, my modest objectives here, first ask the question, are federal reserve policy makers susceptible to cognitive biases? Second, what are some of those biases that they may be susceptible and how would we see them play out with in monetary policy? And lastly, what are some potential de-biasing mechanisms, including rules? So let's talk about, you know, how susceptible is the Fed to bias? Now there's a very large literature in terms of when should we trust experts? I would make the argument that implicit in the case for discretion in monetary policy making is that, you know, hey, these guys are experts, they're economists, after all, they have to know what they're doing. And of course, there's a large area of research that sort of asks, what are the conditions under which we should trust experts and which we should not? And I'm going to summarize that literature by basically saying if there are two conditions that seem to be necessary for us to want to rely on expertise. The first is that those experts operate in a regular predictable environment. You can think for yourself whether monetary policy sounds, the conduct of monetary policy fits that or not. And the second is that there's an opportunity for learning, for repeated practice. And so I'm going to suggest that perhaps the environment for monetary policy doesn't fit that. And then we think about it in some ways such as this, the typical term on the board at the Federal Reserve is about five to six years. Fortunately, we don't have a turning point in the economy that often. In fact, on average, even if you were to serve the full 14 year term on the Federal Reserve Board, you would thankfully live through maybe one recession, serve through one recession. So you quite frankly, in my opinion, are not getting the experience you would need at the board to be able to react and to figure out actually how the economy works over time. We often hear the Federal Reserve invoke the sort of picture of themselves as firefighters. And of course, one of the interesting things in the literature is veteran firefighters actually do seem to have this sixth sense of when is the floor gonna go and when is the roof gonna go. Unsurprisingly, novice beginning firefighters do not. And it takes literally dozens, if not hundreds of actual fires for you to figure this out. Again, fortunately, we don't have these fires this constantly with our macro economy to suggest that this learning environment is there. And that says nothing of those of you who take the two years off so you can keep your tenure and hang out at the board for two years. That's you're almost never gonna be able to learn enough be anything contributing in terms of experience at the board in that sort of environment. Now, one of the other findings that comes out of behavioral economics is many of these biases disappear with experience and market pressures. Do we believe that the Federal Reserve is going to be subject to such market pressures that we can sit here and say that, well, okay, this doesn't work, but this works. I would suggest that the Federal Reserve doesn't have a lot of alternatives, doesn't have a lot of competition in this way. And so some of the normal mechanisms that we see that reduce biases in the marketplace simply aren't there in terms of Federal Reserve policy makers. So moving on, if we accept, and again, let me say some further evidence that's perhaps the Federal Reserve policy makers lack experience and knowledge is their own words. And so this is a quote from December 1978 in terms of the FOMC meeting. I will say, certainly, this was a tough time for the Fed. I think that's fair to say, but the conversation between Boston Fed President, Frank Morrison, Chairman Miller, and I think the things I would highlight, I love these comments, Mr. Chairman, I don't think we understand what's going on in the economy. I'll go along with that. We haven't had enough experience. This is fairly telling. Now, if you reaction is, well, Mark must have just sort of cherry-picked this, but that's gonna be true to some degree, but I think if you read Peru's the Minutes of the Federal Reserve meetings over time, you probably won't find things this brutally honest, but you're gonna find these continuing theme over time of members of the FOMC kind of admitting that, hey, we don't know what's actually going on. And again, my emphasis here is that the experience and knowledge you would need to truly be an expert, like a doctor or a veteran firefighter is lacking. And I hope I can get away with that, saying that as a fellow economist. But again, I think the evidence from the FOMC itself is that this knowledge base simply isn't there. So let's, if we can buy into the case that Federal Reserve policy makers are indeed human, like the rest of us, and suffer cognitive biases and are not in an environment in which those biases are likely to disappear, what are some of those biases likely to be? In no way do I think this is exhaustive. I will emphasize the title of my paper was A, behavioral case, not the behavioral case. So this is not a full catalog, but I've listed about five here, and I wanna talk about two or three that I think are the most likely. So one of the things that I think that probably plagues monetary policy making as well as macroeconomics is availability bias. And that is of course, is that when we are asked to estimate the probability of an event, we are estimate of the probability of an event is influenced by the events that we can remember. I would go as far to say, I mean, there's any macroeconomist who doesn't know about the Great Depression, for instance, or any macroeconomist who doesn't know about the Great Inflation. So again, when you start to think about, well, how frequent are these events, I would argue maybe useful to see how many papers are published about the year 1929 versus any other year, and my guess would be the frequency far outpaces what you would think would be a randomness. And again, I think if you go back and look, and to me, again, this is maybe more that the press as well as not to pick on the line, but the dialogue around every time there seems to be a recession, there's somebody who says there's the Great Depression right around the corner. Of course, it may well be right around the corner, but the point being here is that Federal Reserve policy makers are likely to suffer from this availability bias of thinking about certain events in outer proportion to the actual underlying true frequency of those events. The same would be representative bias. Of course, we've all heard the fewer glasses, you must be smart. Of course, we all know an experience that's not true. But of course, there are other ways to deal with this foremost in monetary policy questions about have recent changes in energy prices, for instance, reflective of broader changes in society in terms of inflation, what's the right measure of money? What's the right measure of inflation? This also matters in terms of lender or of last resort. If you're talking to a small number of banks and they say they were facing liquidity needs, does that tell you that all banks are facing liquidity needs? Or does it happen to be that only the banks that are facing liquidity needs are coming to you and talking about liquidity needs? So again, all sorts of representative problems that are gonna face a decision maker in terms of monetary policy. Last, let me talk about, I'll skip over the status quo bias and over confidence and come back to those later. But I think we also hear embedded in a lot of monetary policy conversations, loss aversion. Certainly conversations about, we've won these hard, fart battles against inflation and we must protect that credibility. Or we've brought down the unemployment rate and we have to protect these job gains. That sounds a lot like loss aversion to me in a very big way. And now again, some of this could say, well, okay, let's say that we're likely, the federal reserve policy makers are likely to serve from cognitive biases. Does it matter? How does that necessarily in and of itself make the case for rules? And what I'm building upon here is Ron Heiner's work in which he talks about decision making as a competence difficulty gap. And not to go through the math, but essentially the confidence difficulty gap is driven by two broad categories of factors. The first of which is the complexity of the decision problem. And the second is the agent's competence in determining the relationship between its behavior and its environment. Won't go through the math, but the bottom line is a larger competence difficulty gap means a lower reliability of decision making. And it means the more likely that rules are outpouring discretion. Largely because you're just as likely to make bad decisions, or you do are to make good decisions when you have a very large gap. I would make an argument, quite simply put it this way, monetary policy is hard and we aren't very good at it. And therefore relying on discretion is likely to lead us astray. And this of course is not to say that rules will be perfect, but with the rule will be much less likely to deviate and distracted by essentially cognitive biases. So let's talk about for a second, accepting that again, the Fed can be subject to these biases and that these biases can lead to bad decisions and that these bad decisions can somehow be overcome by rules. I'll start with a great quote to me from Daniel Kleinman, to maximize predictive accuracy, final decisions to be left to formulas, especially in low validity environments. That sounds a lot like monetary policy to me. And so to some extent, could you set a focal point, whether it's a rule, whether it's a benchmark, whether it is an informal sort of rule of thumb. So for instance, I'll give you what I think is a fairly widely used sort of rule of thumb or rule, which is there seems to be operating at the Fed, a very strong for rule that all else equal, unless there's a strong case otherwise, all changes in the target federal fund rate shall be 25 basis points. In fact, if you go back and look to 1990, since 1990, over two thirds of changes in the federal fund target rate have been 25 basis increments, one way or another. That doesn't strike me as necessarily random. Certainly doesn't strike me as an optimizing agent that is free of biases. So, but again, if you put this in the behavioral context and ask, well, you know, if you put the, maybe the way I think about it is if you're in a dark room, you don't take big leaps, you take small steps. And I think that that's a fair analogy. The only way for me to really try to make sense of why do we see this very, very heavy bias, this rule toward 25 basis points at a time really seems to be to me the behavioral case, rather than believing that this is actually optimizing behavior. So again, some of what I'm trying to argue today that the behavioral economics can give us some greater understanding of how this isn't your main at the Fed and how some of the choices are made. Another potential, which I think the evidence is a little bit more mixed here, is can committees help? Of course we know some monetary authorities are single agents. Ours is of course a committee. Would that be possible to debias by having this argument back and forth? There's some arguments. Blinder and Morgan have specifically looked at some classroom experiments on monetary policy and came to the conclusion that having a committee would reduce biases. There have been other cases. Recently, Coach Lakota has said that in his opinion, the norm of consensus at the Federal Reserve results and status quo bias. So again, you could have a committee, but the rules of that committee and how that committee function could also determine whether you've debiased the committee or not. Lastly, there's a literature largely in the administrative law section that makes the argument that adversarial review, largely by courts, looking at rules, looking at litigants can come up with ways to debias juries and debias rulemaking. I think the way this would most fit in the monetary context would be sort of a GAO audit. But again, something like this where you have this adversarial rules and attempt to debias. So I'm almost out of time. So let me wrap up with starting point. Fed is unlikely to be immune from cognitive biases. These cognitive biases may give some frame of references such as the Great Depression, Great Inflation. Biases reduce competence. Competence reduces the reliability of discretionary decision making. Rules may allow decision making on average to improve. But I think the underlying question, which I have not answered today, but I think the question for further research is, is this quantitatively significant? Is this such a big impact? Do we know how much the deviations in terms of bad decisions that have been made? And let me end with saying, I found a lot of, I really enjoyed the two previous papers reading them. And I found myself in agreement with a lot of them. And I walked away for much of them reading them saying, boy, it sounds like we've made a lot of mistakes in discretionary monetary policy, as well as rule-based monetary policy. So I see some of the historical evidence is largely very supportive of the case that we simply don't know enough to rely on expertise in monetary policy. So I hope I've provided a little bit for discussion. Thank you to all our panelists for your illuminating remarks and for providing really important, I think, historical background. I was struck in reading the papers over how much skepticism there was over the case for monetary policy rules at a conference that's about monetary policy rules. And we've talked a lot this morning about the evolution and the history, but we haven't actually defined what exactly is a rule. David Lader, I'd like to start with you because you started off your presentation by saying that semantics matter. Does the Fed's current framework of a 2% inflation target being data-dependent, does that constitute the type of monetary principles that your advocating central banks should follow or is that too much discretion? I don't like commenting on other people's monetary policy, but a 2% inflation target in principle is the kind of principle I have in mind. Now, if you ask me about the details, I have an aversion to deflaters and I have an aversion to targeting variables that you don't get an accurate reading of until six months or so after they've happened and so on and so forth. So whether the Fed has adopted a principle that I would support, maybe not, but is that the kind of principled behavior that I think can help economic agents out there interact with the Fed in a constructive and convergent way? Yes. David Glass, are there any thoughts as well on how you would define rule or principle or? Well, I think the implicit or possibly explicit criticism I was making in my talk and in the paper has to do more with the notion that you can have a formula a mechanical formula that will displace the exercise of discretion. I think discretion, I didn't get to this point in my talk, but I do discuss it in the paper. I think discretion is a very misleading term. Discretion in the context of monetary policy is to quote our friend Henry Simons is a synonym for arbitrary or dictatorial. I don't think that's what discretion means in the context of judging. Judges exercise discretion. It doesn't mean that they're acting willfully or arbitrarily. I think it's important for monetary policy to have goals and to have standards that they're being judged by. But that doesn't mean that you can just sort of as Milton Friedman like to say, you could just replace the Fed with the computer. I think that was shockingly, with all due respect to Nobel Laureate, shockingly misguided. Mark Calabria, there is legislation that has been considered, proposed legislation has been considered that would require the Federal Reserve to disclose any type of rule that it followed and to sort of say why it deviated from that rule if it did so. How does Capital Hill define rules for the Fed and is that an appropriate framework in your mind? That's a good question. Let me first say, I do think from a research and gender perspective that the definition of rule should be quite broad. And maybe this is my Jim Buchanan voice in the back of my head saying we should think about those rules and institutions. So for instance, I mentioned what seems to be the rule of 25 basis points at a time unless it's a strong case. Otherwise, I think that's a great research topic. Is that actually a good way to conduct monetary policy? What's the theoretical basis for that? But that's a relatively informal rule. So I look at norms and institutions as part of that structure as well from a research and gender perspective. Now let's go to the Capital Hill perspective. So the Capital Hill perspective is a question in terms of are you at least trying to minimize some amount of discretion? Are you trying to explain deviations from that discretion? So for instance, the Form Act, which is passed the House, sets up where the Federal Reserve says this is our essentially model of the economy. This is the rule we're gonna follow. And if we deviate it from it, which we can, we will explain why. And of course, I think that that's largely a positive in that you have that safety valve, if you will. You can deviate from it, but you're creating, again, I think this is actually a strong behavioral argument. Essentially, you're creating a reference point. You will go along with the rule, but you can deviate from it if there's very strong evidence elsewhere. And I would say that the degree of how much flexibility you have, I mean, certainly in one extreme, Congress could legislate a Friedman-style constant money growth rule if they wanted. That would be very, very specific and put a number in there. But again, what we've seen, I think in recent years, is a push for essentially forcing the Fed to say, we know that you in a discretionary environment are essentially operating under a model of the economy and we'd like you to disclose that model of the economy to the rest of us. And I think that brings up a good point, which is, you talked about norms in institutions, the 25 basis point assumed movement. For a long time, inflation targeting was a norm of an institution was implicit rather than explicit. Now the Fed has made it explicit and that's now falling under the framework of this is an acceptable principle that can guide central bank behavior. Question for the other two panelists, for the two Davids is, at an FMC meeting, not every meeting is a jump ball, right?  Shouldn't the Fed just disclose what those are? Wouldn't that be a case for following a rule broadly defined and for making it more public? I'm not gonna speak to the Fed, let me speak quickly to the Bank of Canada, which introduced an agreement where there was an agreement between the minister of finance and the governor. First one introduced in 1991 and it's the next one's coming up for renewal this November. Was a five year agreements with a 2% inflation target with a 1% point margin of error around it and every time the Bank of Canada takes an overnight rate decision which is eight times a year, it issues a press release explaining why it's done what it's done and sometimes it's press release as well. We don't actually expect to get all back on target for about 18 months and these are the reasons. This seems to me like the principled behavior that leaves the policy maker wiggle room that is very helpful but there are two important things to remember about the difference between Canada and the States. The first is that the Bank of Canada has no regulatory authority whatsoever over the financial system that's conducted by other agencies and the second is that the legislation makes the governor solely responsible for the conduct of policy. There is an informal committee that makes decisions but it operates by consensus and unlike the Fed, they won't let any one of them out of the building to make a speech unless it's been vetted to make sure that it is propagating the Bank of Canada's view. So that makes the process of communication and maintaining public confidence while you exercise the wiggle room a lot easier than it is under the Fed's arrangements. Well, I would just comment that I think it's good to expect the monetary authority to explain what it's doing and they should be subject to questions about why they're making certain decisions and I don't think they're responding to a lot of the criticisms that are being made and there should be some kind of more formal process of interrogation about why the Fed is acting in certain ways. Just a quick additional comment might be slightly off the subject but I think it's relevant is that I think a lot of the discussion about inflation targeting or a lot of the criticism of inflation targeting that's come up in passing in this discussion and many other discussions has to do with or would be remedied if we had as a target not an instantaneous rate of inflation but an inflation path and that's sometimes referred to as level targeting and that would on the one hand be more flexible but would also be more predictable over the long term which is the relevant time horizon. Mark Calabria, you argued that rules can help limit the inherent bias in humans and our inherent fallibility but those rules are also devised by humans which are inherently fallible. So how are the two different? So I certainly think that that's an important observation which is if you've got biased individuals that are making the discretionary decisions versus biased individuals making the rules. So let me first say part of my goals to try to ask what the right counterfactual is. I often feel like when I hear people say well we don't know enough to create rules well they don't really explain you're making an argument for discretion by default without actually talking about how discretion would work and so to me the right counterfactual is let's suppose a world in which a single agent is facing the choice of do you pick a set of rules? Do you bind yourself to a set of rules or do you engage in discretion? I think it's fair to say that that agent is gonna have a model of the economy in the agent's head that is unlikely to be correct. So let's start with that. Let's even assume that it's just drastically wrong but that model of the economy is gonna guide the discretion or the setting of the rule. So then we have to think about given that you have an agent with a erroneous model of the economy making discretionary decisions versus rule bound decisions at least the rule bound decisions have the advantage of being predictably wrong and so that other agents in the economy can make offsetting mechanisms whereas if you're erratically wrong it's gonna be much harder I think for other actors in the economy to make those decisions and to some extent it is this question of just like some of the time consistency literature I think there's often some of the behavioral economics is phrased as kind of a time inconsistency between your current self and your future self and your current self might say this is my model of the economy this is how I think the economy behaves and I don't wanna get distracted by other things when I'm actually in the decision making moment and a rule would at least and even if it's a rule in which you can deviate from a little bit like we some of the proposals before Congress you are essentially trying to reduce those deviations and so I do think that even if the model of the economy is wrong or even especially if the economy of the model of the economy is wrong you have a greater predictability with rules based than you will in terms of discretionary regime. Like sure. I think it's important to be explicit about a certain distinction here about what the rules are about. There are rules about objectives for the monetary authority and there are rules about instruments and there's a big difference between having a rule that says that the Fed or the monetary authority should have a rule to pursue a particular price level inflation, target, a dual mandate and a rule that says, well, you have to set your instrument according to a particular mathematical formula. I think there is a huge difference between those two and I don't see why the latter kind of rule which says you must set your instrument in the way I'm telling you has why that is regarded as being somehow more consistent with liberal values than just specifying the objective. I'd like to open it up to some questions from the audience. Does anyone have a question? Raise your hand and someone come around the mics right here in the front, Cameron? Or does someone else have the mic? Oh, please go stand by the mic or you can line up right over there. I think we have that one mic there. From George Mason University. Thank you for a great panel. I have a question for Mark. It occurs to me while listening to your talk that the type of rules that would be necessary would be different depending on the sort of game the central bank is playing. So there would be a difference between whether you're playing a cooperative game versus a more adversarial game. So in the example you gave of the 25 basis point adjustments, you know that's a kind of a shelling point. There's an incentive to converge to that rule so it's kind of self enforcing as opposed to something like you mentioned the time inconsistency game would be more adversarial. There's not a, you can't expect that to be self enforcing. So my first question is, do you think this is a valid distinction? And second, is there a case for, is there a case when it would be desirable to legislatively impose a rule on more of these, these behavioral sorts of problems which strike me as more of a coordination problem than a time inconsistency problem? Thank you. So you, to reiterate where I started my presentation, I purposely avoided the discussion of what a rule should look like and what would be the optimal rule for some of these reasons, because I do think that that's an important distinction. And so I do agree with that. I think the question of to me trying to come up with mechanisms for de-bias. So for instance, representative bias is a good example of to me a rationale for why you might want numerous regional banks that gather information from those districts.  There are other mechanisms to try to de-bias as well like I mentioned committees. There could be different structures. The long terms of the Fed in some sense, which unfortunately don't really get served out in that way anymore, except of course for the occasional chair. These are in my opinion sometimes mechanisms that can help reduce some of the bias and some of the group think. Of course, I think it's also important as you mentioned the 25 basis points. This could be a game theoretic outcome. It could be a behavioral outcome. I think having a little more conversation research in terms of what could be the driver behind that is very helpful. But certainly creating a rule in which you're trying to guide the monetary authority essentially away from behaved cognitive biases. I think it'd be helpful. And now again, when you start to talk about how specific that rule is, well, that's an important conversation that I think it's difficult to do legislatively, but putting some sort of limits on discretion, I think are the direction to go. Next question. Yes, Stephen Keat, former Foreign Service Officer currently with the Fairfax County's Economic Advisory Commission. I noticed you're speaking or a number of you spoke about inflation targets, but we're talking about monetary rules to influence what the inflation rate would be. With our monetary, with our money supply, what about velocity? It seems to me that the Fed has been less effective than it would have liked to have been because it doesn't have control of velocity. And you can be pushing and pushing, expanding the money supply or trying to contract it. And if velocity is going in the opposite direction of what you want, you're ineffective. So I'd appreciate any comments that anyone has on that. Well, let me comment just again. Canadian inflation targeting simply does not rely on control of the money supply. It operates through the overnight rate and it operates according to something that looks very like a tailor rule. If the behavior of the money supply figures in policymaking at all, it's informal and internal and not discussed. My personal opinion is they would do well to set reference values for the behavior of the money supply and take notice if it was giving unfortunate messages. The European Central Bank stopped doing that at exactly the wrong time. And look at the mess that got them into after the financial crisis. But I don't think that issues about velocity and growth rates of monetary aggregates are front of center in monetary policy anywhere for good or ill at the moment. All right, next question. One of the, I'm Perry Merling from Barnard College. One of the takeaways I get from this panel is that this debate about rules or not, okay, is perennial. And I would like to push the panel to a little bit, a little meta thinking. Why is that? You know, why is that? What is that debate actually about? And we see that in the bullionist versus the anti-bullionist, the currency school versus the banking school. And we see it on this panel, right here. So it's perennial. It seems to me that in some sense, the reference to Simons has misled us in this regard because Simon's article sort of suggests that that debate is about markets versus socialism or freedom versus tyranny or something like that. Whereas the older debate, bullionist and then banking school, that wasn't about freedom and tyranny. That was basically about credit, discipline versus elasticity. And I'm wondering if maybe we should get back to debating discipline versus elasticity. And of course, there's no answer about which one is the right one for now. So I say, I'm not in favor of rules. I'm in favor of the debate about rules. Do you have a glass, sir? Well, I think that's a very insightful question. I don't have a full answer, but I think there, I agree that there is a huge ideological component in the rules versus discretion debate. And some of you may know that I have a blog. And one of my posts on that blog, I do is, I sometimes like to talk about Milton Friedman. And I think his objective was to get libertarians and conservatives off the gold standard, and because he didn't like the gold standard and thought it was a bad system, and he came up with all kinds of arguments, some better, some not so good, about why you don't need a gold standard because you can control the money supply. And I think I was sort of alluding to that. Some of you may have sense that I had was making certain allusions to Friedman and the gold standard in discussing the currency school. But I think that was a way for Friedman to frame the discussion in a way that could establish his ideological bona fides against the Austrian gold standard fundamentalists and said, my converted credentials are just as good as your credentials. Yeah, I mean, I agree with Perry that the debate is the thing. And that was really what was implicit in my comment that monetary policy issues raise problems that you cope with. You don't solve them once and for all. Every time someone has won a debate about a monetary rule and got it imposed and thought that that ended the debate, they turned out to be wrong because the state of economic understanding that informed the rule was time and place specific and the world moved on and the world started behaving in ways that the rule led you to expect that it shouldn't and the debate started again. So my plea is not much more than rules, guys. Don't kid yourself. Get up with arguing about what principles the Fed should apply and expect to be surprised if they do. So let me first echo that night. And I think that David's use of the sort of lack of convergence in his paper is a very good description of I think of why we have these conversations. To some extent, I think I read part of David's paper is basically saying nobody ever really wins the intellectual debate. It's just, for one reason or another, political or economic, this camp gets pushed aside. This camp comes in and you kind of have this journey and I think that's part of it is there has been no definitive this settles it. I want to go back to the first part of the question and maybe not the ideology of the politics, but I think that there is an element of rule of law that finds an attractiveness to it. I don't think this is some, I guess I should maybe put this in the context of I spend most of my time thinking about bank regulation. So if you think about conversations about London of last resort or what sort of discretion you should have or when you close down a bank, there are constant conversations about how much discretion should expert regulators have. And I suspect that this is true in areas outside of finance as well. So I think this is a cross cutting conversation about essentially an empirical question about how much face did you put in government experts in general? So I think it is in that context and certainly part of my objective in my paper is to say that we need to have at least some degree of skepticism that the expertise in and of itself is gonna be reliable enough and perhaps if that simply gets us to the point we have a debate and more scrutiny of those expertise decisions, then perhaps that will have us nudge along to the right decision or rather a little better decision because I guess I should emphasize, I don't think there is a right decision. Next question. Chris Hanser Coglou, I'm an investment advisor. With all this conversation about rules, I am curious what the panel's take is on quantitative easing and where we are right now with the QE program. We're in uncharted territory, I believe, and I'm just wondering how rules apply with where we are at this time with QE. I don't have anything useful to say about the current US policy situation, but quantitative easing is just a new word for what used to be called open market operations and if you're as old as I am, there's nothing unconventional about it. It's just a tool of monetary policy that kind of fell into disuse during the great moderation when it turned out that control of a very short-term interest rate was enough to achieve what the policy authorities thought they wanted to do. And if you go back to read the literature of the 20s, you'll find Ralph Hortree, for example, of the UK Treasury arguing that most of the time controlling bank rates all you need, but every now and then, if you've got a real problem, you might have to engage in open market operations. So I think the fuss about the novelty of quantitative easing has been greatly overblown ever since the Japanese first sort of had their little stop-and-go effort at it at the beginning of the decade, all the beginning of the last decade. Well, maybe the easiest part of that question is, where are we? Well, we're still engaging in it. We're still reinvesting the proceeds of it. So it hasn't expanded, but it hasn't ended its existence in terms of quantitative easing. But to me, I think this is partly evidence for the argument I've made about when you have discretionary behavior, you see more erratic behavior. And we have had this sort of post-crisis of, well, we've kind of lost our bearings, our compass isn't working in terms of the direction we're going, so let's try everything. And I agree that I think quantitative easing is less novel than it's often presented, but I also think it presents different problems than sort of normal short-term open market operations. And because partly I look at this at the bank's spec lens, what does this mean for the yield curve? How does that impact net interest margin? How does that impact lending? There are other questions that I don't think you get in the same way. And of course, the elements of quantitative easing doesn't make a difference that we've engaged in such very large-scale purchase of mortgage-backed securities. Is this implicit transfer to Fannie and Freddie in terms of supporting the mortgage-backed security market? So, for instance, I'll note that since Fannie and Freddie were taken over by the government, 60% of their debt issuance have been bought by the Federal Reserve. That's clearly not a free market in mortgage, so how is those distortions added up in that market? I think those are all important questions to ask. And again, part of my objective is to say rather than just taking the sort of Federal Reserve saying we're experts, trust us, and don't question any of this, is we should be questioning all of this. We had time for one last question. Larry White from George Mason University. I was happy to hear the gold standard mentioned, but I was a little unhappy at the way it was dismissed as unsuccessful. I know both David Laidler and David Glasner have publications with the phrase free banking in the title, so I know they're aware that there are alternative ways to run a gold standard. In particular, it isn't necessary to combine it with a central bank monopoly on currency issue, and so I wonder if they would agree that the frailties they're assigning to the gold standard, that is that it didn't quash the business cycle, should instead be laid at the door of the institutional arrangements which gave the Bank of England a monopoly which it didn't use very effectively. Very quick answer to a very complicated question. If in my paper you will see that I express a reasonable amount of content about contentment about the way the gold standard worked after the mid 1890s after the bi-metallic controversy was over and after the Sinai process came on, and I don't think the gold standard would have collapsed if it hadn't been for the First World War, and then the attempt to restore the rule which the restorer set a great amount of importance by of honoring the promises that had been made in 1914 that the pound sterling was worth, God knows how much it was a Troy pound, but it was the 1860 Acts number. So I'm not all down on the gold standard by any means. It was working. In terms of free banking, this is too complicated. I still have worries about the tendencies within free banking towards the centralization of the system's reserves that open up scope for monopoly if you're not awfully careful, and while you're being awfully careful, I wonder if those clearinghouses aren't going to end up looking a little bit like what we call central banks. Any other final thoughts on my panelist? Oh, sorry. Oh, if I can just squeeze in here at the end. I think of the much of what wrong with the gold standard and to this extent, I would agree with Larry also from UCLA, by the way, was the result of attempts to add on additional rules to the way in which the gold standard operated such as the Bank Charter Act. That said, I don't think that I would want to see us try to bring the gold standard back. I think we need to let go and move on. Thank you so much to all three of our panelists this morning.


Erythritol, the too-good-to-be-true non-toxic, low-calorie, tooth-friendly sweetener that may even act as an antioxidant, what's the catch? Well, there are three ways that all non-chloric sweeteners could theoretically be harmful independent of their specific chemistry. Over the years, several large-scale prospective cohort studies found a positive correlation between artificial sweetener use and weight gain, meaning the people that drank the most diet soda, for example, gained the most weight. Another most common explanation for this counter-intuitive finding is what's called reverse causation.  They drink diet soda because they're fat. But there are at least three other, less benign, alternative explanations. The first is called overcompensation for expected caloric reduction. If you covertly switch someone's soda for diet soda without them knowing it, their caloric intake drops. Obviously, they're not drinking all that sugar anymore. But what if you tell them what you did? People who knowingly are consuming artificially artificial sweeteners may actually end up eating more calories. Why? Because they're like, hey, I'm drinking diet soda so I can have two pieces of cake. In this study, they gave people an artificially sweetened cereal for breakfast, but only told half of the group what they did. As you can see, when it came to lunchtime, the aspartame-informed group ate significantly more than the aspartame-naive group that didn't know any different.


Hi, you guys coming to you from the floor of my sewing room because I am working through a new to me, but been around for a minute, pants fitting method. This was brought to me by Jay Stern, Jennifer Stern. She has a YouTube channel here on YouTube. She's a channel here on YouTube. She sells her own patterns and she is a fitting fiend. She does Fit Tip Tuesday and really walks you through all of the kind of things that you need to know about fitting your garments. And just like the rest of us, she was always a little bit like when it came to pants fitting was always a little bit like this feels more complicated than it needs to be. But you know, we're powering through, we're going to do all the methods that we've learned and everything else until she came across the top down center out method. So she has been trained in how to teach this obviously how to do it. And she passed her knowledge down to me. And now I am trying it out for the very first time. The concept of this top down center out is you fit your waistband first.  Then you make just one side of your pants and you add I think I added four inches to the top portion of my pants.  So it's not trying to take a 2D pattern and make all these 2D alterations to it. You're literally using your own body, gravity, three dimensional things, and you are balancing it to yourself. And then once you get all the drag lines removed from the from balancing out the top portion, then you smooth everything out and balance like your side seam and make sure that that is straight. That's the center out portion. Excuse me. That's the center out portion. So in theory, this makes a lot of common sense right using your own body. It's kind of why I have a ditto form, but using your own body to fit pants and not doing any fitting at all until you can see how that pant pattern is going to fit your body. Now, Jen took the whole concept of top down center out a step further and developed like this Velcro system to where you literally like just slap the pants onto these little Velcro portions. So you don't have to worry about pins. You don't have to worry about things coming out. You can literally put them on, walk around, sit down, test, and you can see I'm literally sitting here. There's not a single pin in my waistband or on these pants. It's all Velcro like Velcro. So I'm going to show you my first go at this using Vogue 9032.  This isn't necessarily, I mean, it'll get you close to where you need, but you will still need to do fit adjustment. But for a trouser for like a wide leg pant for something like this, this method is supposed to help you fit your pants in like 10 or 15 minutes. So I'm going to show you exactly how I got to where I am with mine and show you top down center out how everything kind of gets balanced on your body. And then you apply those changes to your pattern pieces. And I'll show I'll walk you through the rest of the process from here. Okay. So you make your waistband. This is what mine looks like. Right. You make the whole thing. This is a curved waistband because it sits one inch below my natural waist. So it has to have a little bit of curve to it. And then I fit this waistband. And when I did that, I actually had to add a little bit more curve to it. You can see that up here, I'm taking out less than I am at the bottom making the top part of this smaller than this part makes total sense common sense to my body finish the top edge. And then along the bottom edge, you're going to add all of your velcro here. And then you add a big strip to the center back and a big strip to the center front. Okay. Then you excuse the boy shorts here, but then you put your waistband on. Okay. Like a belt, bring it around to the front and velcro it where it's comfortable. Now in theory, this would sit at the five eighths mark up here like so. Can you guys see that? But when I do that, it's a little bit too big. So I know I'm going to have to take in the waistband a little bit more, not too much. I still want to be able to sit down.  You just cut out one leg. Just as the pattern is, according to your size, use the fast fit workbook, gray out if you normally do all of that kind of stuff. I ended up making a straight size based on my weight based on my hip because my hip is my largest part of my body. And then I figured I was going to adjust the waist accordingly. So when I did that, you sew your inseam.  You add velcro to the upper part of your front and back centers. And you sew your side seam at a regular stitch up to the crotch line and then from there, leave it open. Okay. Then when you put this on, okay, slip into it like so. And your first rule, the first, we're doing top down first. Okay. So you take your center front and you place that at center front and the velcro is going to hold it on there nicely. You take your center back and you place that at center back. Okay. Get that in place. Now, this is how, this is where the magic happens. Can you see how there's all of these like drag lines? All we do is pick up the pant and adjust it till those go away. So I'm kind of like, center back is staying still. I'm not moving the center back at all right now. And I'm just moving the front half of the pant until all of those drag lines go away. And my hem is parallel to the floor. See if it were like that, that would be no good. So it's got to be parallel to the floor and we're just pulling up and then pushing down all of our velcro. We've got one here and one here. Okay. Then you turn around, you need like a two, not a two way, but like a mirror where you can see your back. Ignore my side seams for now. And you do the same thing.  So everything is nice and flat. There are no drag lines. It feels really comfortable, right? You're moving around. If you get a large like gap between your body and the crotch curve for a drapey pant, that's okay. You want a little bit of space there. But if you have a lot, like if it's hanging way, way down, you just take this, draw a parallel line parallel to the floor perpendicular to the grain line, and you would just pick all of this up until it met your body and you would pull it out horizontally. So when I had my side seams matching, when I did that and they were matching and I had them at the seam allowance for the pant, you can see that my front is good. This is where my front would end, but my back had all of this extra. Okay. And again, that makes perfect sense for my body. So you just literally open this up like a little envelope, smooth this out, bring these two things together and pin all the way down and that becomes your new side seam. You can check it to make sure that it's straight going down. You can see the line that I drew and it's going to look funky on your pattern pieces. But you know on your body on the 3D figure that this is what actually looks straight. It is like crazy how much simpler this makes everything. I don't know. It almost seems like too easy. But let me apply all of these changes to my pattern pieces and then I will sew like a full pant muslin, not just one leg, but a full pant muslin because new things can arrive. Your left and right bodies are different from each other. And then we will analyze that. And then from that point I should be able to cut my fashion fabric and make a pair of trousers with literally like 10 minutes of fitting. All right, you guys. So you can see here I transferred all of my changes to my pattern pieces and where there are diagonal lines, that is all of the pattern that I am going to be removing. So that is the front side seam. Then I went ahead and made all the adjustments to the pocket pieces. Again, all the diagonal lines are everything that's being removed. And then this is the back piece where you can see what has been removed from there. So it was really easy to make these adjustments, just transferring them from the fabric to the actual pattern pieces. All right. And you can see how my excuse my jumping dog, but how my finished muslin turned out. When I pull the center front together, you can see the side seam is perfectly perpendicular to the floor. That's what the back looks like. And the other side seam and then I'll turn around to the front again. Honestly, you guys, this could not have been easier. So head over to the link in my description box. It is for a playlist that Jennifer has put together explaining all about the top down center out method, explaining how to make your waistband and where to put the velcro and all the steps you need to do to prepare your pattern for this process. And then she will walk you through everything that I talked about today, but in a much more slowed down process. She has all the information you need and all that information is that the link in my description box. I cannot wait to try this method on many different types of pants. The next one I'm going to do is a high-waisted straight waistband. So stay tuned for that. But also look out for the pants that I'm about to make from this muslin. I could not be more excited. 10 minutes of fitting and that's the result I got. Simply amazing. That's going to do it for me today though. Thank you all so much for watching. I will see you very soon. Bye.


Patriot Prime Reviews is a channel for adult collectors and may not be suitable for children under 13 years of age. Viewer discretion is advised. Also, I am proud to announce that ToyHacks.com is sponsoring this review. You know me, I absolutely love ToyHacks decals. About 75% of my collection has benefited from their products, all the way from Generation 1 to the new modern figures. ToyHacks provides label sets, upgrade kits and display backdrops for Transformers toys of all types and generations. New for 2020, ToyHacks is introducing the ToyHacks Armory where they'll be offering a variety of weapons for your favorite bots in multiple colors. Also this year, ToyHacks is introducing Robo Points. For every purchase you make, you'll earn Robo Points that you can redeem towards a voucher for future purchases. ToyHacks is a company run by collectors, for collectors, so check out ToyHacks.com and make your collection stand out from the rest. And tell them Patriot Prime sent you. Now, on to the review. Now this video comes with a trigger warning. I'm about to show a Generation 1 figure with non-Generation 1 enhancements. So if you're a G1 purist that can't stand any type of reproductions whatsoever, you might want to turn this video off and watch something else. Now the bottom I'm going to show off in this video is 1986's Generation 1 Metroplex with ToyHacks upgrades. These are enhancement decals that actually replace the original decals he came with. Now my Metroplex is not a 1986 original, but rather a 2008 Takara Encore Metroplex. I got this for a steal, I believe, on Amazon.com back in 2010, I think. Anyway, I love the box art. You got the Japanese writing up here. Pure G1 goodness on the front. On the back of the box you got the G1 artwork. Metroplex being transformed from robot to battle station to city mode. Love the G1 art right here. And Metroplex was front and center in the G1 art in 1986. Now Metroplex did not appear in Marvel Comics whatsoever. Trypticon did, but Metroplex did not. He did appear in some UK storylines, but never here in the States. Metroplex made his cartoon appearance in Season 3, and he was in quite a few different episodes throughout that season. And in every episode he was in, he was either having problems with his transformation cog, he was having his eyes stolen, or some other issue that would always get resolved by the end of the episode where he would normally fight his nemesis Trypticon by throwing him in the ocean. That's how he won every battle. So enough of me talking about Metroplex, let's go ahead and take a look at this awesome city bot. And welcome to Patriot Prime Reviews. Now for this review, I'm going to do something a little different. Every one of my Generation 1 transformer reviews I always go over the figure in alt mode first. But for this one, we're going to do robot modes. I also want to point out that for my Metroplex set here, I have bought a couple of extra accessories.  And the reason why is Toyhacks did such a good job on Six Gun here, I had to get enough pieces to display him as a robot separately because in the original Metroplex, you couldn't form Super Metroplex here without sacrificing Six Gun's robot mode because Six Gun's arms and his legs are actually these black weapons here and the red guns here. Now with that being said, let's take a look at Six Gun first. Now Six Gun here is one of Metroplex's drones, and he gets his name from the fact he's made out of Six Guns. He's got two guns as I mentioned earlier for the legs, two guns for the arms, and he's got a double barrel cannon that makes up his back. The other pieces are tower pieces for city mode.  There was no decals or paint applications on this figure at all. The chest was completely white, the head was red, that was it. Toyhacks killed it with their sticker set and really give this guy a lot of personality now. That's why I had to buy those extra parts so I could display him as well. Taking a look at him up close, Toyhacks gives him chrome horns, blue eyes, chrome there on the double barrel back piece. The chest gets some nice chrome work, lights down here, there's decals for the waist or belt area as I always call it. Down here on his feet has decals and his gun arms, he gets chrome decals that give him, if I can focus in, it looks like there's a fist molded in. So it looks like he's got a fist with a gun attached to his arm. The other side, same thing. Now Six Gun actually comes with a little laser pistol, so I guess you can call him Seven Gun. Now this has a little peg right there that slots into that hole on the side and the Toyhacks decal fits right around that. He also gets Autobot logos right there inside the gun. So let's get that weapon reattached. Now apparently according to the Generation 1 cartoon, Six Shot is the leader of Metroplex's drones, Scamper and Slammer. It's shown in a Generation 1 cartoon that he's also a pretty good investigator that he can sniff out dinosaur static. These three only appeared in one episode of Generation 1, the Season 3 episode of Thief in the Night. Now let's take a look at Metroplex's other two drones, Scamper and Slammer. We'll go ahead and take a look at Scamper first. Now Scamper is a little black Autobot that has also greatly benefited from some Toyhacks decals. Their upgrade set gives him a chrome visor, a red Autobot logo there on the chest, chrome legs and chrome kneecaps. I think the original toy, he was solid black with only the Autobot logo on his chest. Now as far as articulation goes, Scamper's arms can go up and down. That's it.  This is one of the most lost pieces and hardest to find when you're trying to complete a Metroplex. Like Six Gun, it's got a little peg there on the side that pegs into the hole on his fist. Now unlike Six Gun, Scamper can actually transform, but he's kind of a parts former.  Bring this section up. It pegs into place. You're going to take the arms. Now I leave the gun attached because I'm not going to lose that gun. So go ahead and peg the arms right here on top of the vehicle, little holes right on the roof that coincide with the pegs on the arms. And there's Scamper in vehicle mode. And the Toyhacks decals really pop on this. He's got chrome windshield, chrome windows, chrome right here on the back. MSF-1, I'm going to assume that's Metroplex Security Force number one. He also gets chrome rims. And he rolls really good. His wheels are like Hot Wheels wheels. So yeah, I dig that. Now the arms on top, they're kind of awkward. But the way I look at it, he's a Security Force vehicle. Those are cannons. And really the gun on the back. Oh yeah, I forgot to show off the back. The back, he's got tail lights and a vanity plate that says Scamper. Slipping on my showing off decals. And right here on top, a chrome spoiler. So anyway, that is Scamper in vehicle mode. Now taking a look at Slammer, Slammer is a tank. He's got no wheels and he cannot move his turret.  That's about it. Now this piece on the original Metroplex was solid white. So no details whatsoever. But Toyhacks once again killed it with this. He looks like a tank. He's got a chrome there, tip on the barrel, chrome on the bottom. He gets what looks like a barrel right there on front, like an opening where the shells come out. He's got lights there on the front, Autobot logo there on top of the turret along with two chrome hatches. Check the back this time. We've got lights here on the back. Now with the commemorative edition or excuse me the encore edition, this Slammer has this peg on the back. The original did not have that peg and that's going to come to play later in Metroplex's city mode. Now like I said earlier, he's got no wheels. So he's just a plastic piece that you're going to push along the ground and pretend he rolls. So that is pretty much it for Scamper in his tank mode. Now let's break out the big guy. Metroplex is a big beefy bot that definitely looks like he could lay the smackdown on some Decepticons. Bringing him in for a closer look. He's got some great molded details throughout plus these new Toyhacks decals really making pop. Now these decals actually replace all of the originals. You don't use any original Generation 1 decals with this guy and what a difference it makes. Right here he's got vents with the fans in the background. If the light catches that just right you can see fans twirling in the back. He's got diamond plating right here. New vents on each shoulder. These red dots or these maroon dots are new here on the forearms. Right there on the waist. The stripes along the legs. Now on the original those were bright red. They're more maroon now. Decals on the feet and knees. He's got some great looking chrome right there on the thighs. Now articulation for Metroplex. His arms can do a complete 360 and the wrists can rotate but that's because they can pop off. He also has leg articulation. Legs can go up and down and they are on a nice ratchet. Now Metroplex does have some hidden weapons within this mode. Right here there's a little black panel. You flip this down. If I can get my fingernail in. And that reveals a nice chrome missile battery. I love that.  You have to rotate his antenna out of the way to flip this door around. That reveals a double barrel artillery cannon that has some nice chrome accents thanks to toy hacks. Straighten his antenna back up. Now there's another option. On the back of the figure is this piece right here. This is removable. This is a piece for his city mode. A hole right there in a very, very long peg. But I always leave mine attached to the figure and for his battle mode where we've got the missile battery out and the double barrel cannons out. You're supposed to attach six guns double barrel cannon right here on the back. So it'll peg into that hole right there. This cannon. Position that up. So now here you have Metroplex fully armed and ready for battle. With guns on the shoulders, guns in his hand, guns on top of his shoulder, missile batteries, guns, guns, guns. Hell these antennas, they're guns. I love it. He's so cool. Now right here on the back, how I display mine. In city mode you're supposed to hide the double barrel cannon in that tower. I don't fool with it. It stays on six gun. I just flip this tower around and right there, that's how I display my Metroplex. Now let's go ahead and transform Metroplex into his mobile battle platform. And the first thing you want to do is remove his hands. They're just pegged in. They pop right out. So you're going to remove the hands, place those to the side, take the arms and just collapse them. Then you're going to rotate the arms to where these tower pieces, or antennas as they're called, face those forward. I leave the missile battery and cannon out. You're going to move the antenna forward and push down Metroplex's head. It will click into place. Now you're going to take the figure, hold him like so, take the legs and split apart. So now you have this. And now you're just going to rotate Metroplex's upper body forward. Remove the hands from the guns. And now you'll take Metroplex's guns and just attach them on the lower section of the platforms. You take the peg of the gun, matches up to that hole right there. And now you have Metroplex's battle platform. Let's raise the double barrel cannon up. I love that. That thing is awesome. Really impressive. A nice big bulky vehicle and it rolls really well. This version of Metroplex has rubber tires. So he's got one, two, there's four rubber tires on each side, along with these little wheels underneath. So he's got some nice support. He rolls really, really good. Now there's not much interactivity you can do with this vehicle other than to just push it around. I mean, you can move the turrets back and forth on the arms, but that's about it. Now this mode does benefit from some toy hacks decals as well. If you look on the top of the platform, you've got diamond plated stickers right there. So that looks really, really cool. So there you go. There is Metroplex's battle platform. Now let's get him into city mode. For city mode, we're just going to remove everything. Let's take the guns off. Let's take these black guns off there. Let's fold back up the missile battery. I'm going to leave this one out. You're going to remove this right here. That antenna comes off. This antenna on the other side collapses in.  Take the back sections here. Unpeg those just like that. So you have the whole back of Metroplex looking like this. Now you're going to take the top portion and rotate it 180. Now on the original Metroplex, that is like the main area that this figure breaks. So I'm really cautious with this. I'm hoping that this version has fixed that, but I'm not taking my chances. I am still being very careful. Bend that back up. So now you have this going on. And then you're just going to spread Metroplex's legs out. I'll try to see if I can get this all on camera.  Pops right up and you're going to take this section and fold out like so while taking the arm and sliding the arm back and around. Actually I was wrong and assuming you leave that gun out. We're going to fold that back up. Rotate this tower section around like so. That reveals a helipad. Take this tower here or arm, which will form a tower, bring that up and put the head back down. I actually like to take this antenna and fold back up. Now you're going to take slammer, take off the turret. As I said earlier, he's got this little extra peg right here. That's going to go on top of this tower there. You'll take slammer's lower half and underneath reach in and pull out that, which is going to make another tower that attaches right there on top of that one. I am totally losing him in shot. Now that you have slammer in place as the towers, it's time to bring back in six gun.  This separates like so and now what you're going to do, you're going to take his head and plug it into his body just like that. So you form this tower piece, which attaches right there. Now you're going to take this black section right here, pull this down and extend this ramp all the way out. Mine's a little tight. Come on now. It's a lot tight. Now that you've wrestled that ramp into position, you can take one of six gun's arms and attach it here to the side. And there you have Metroplex in city mode and it works. It's a pretty decent city. I love Toy Hacks' new decals with all the windows. They're on the towers, really makes it look more like a city than just the blue windows that the Generation 1 stickers had. The ramp, really cool. You've got nice details there on the helipad up here on the towers. Let me get you to zoom in here. Really good details here in these repair bays. I mean, I love it. I think that looks so much better than how it looked in Generation 1. Now Metroplex was designed to be utilized with the Autobot mini-cars. So you can have like wind charger here. We can put Warpath in that section. Have good old bumblebee over here. The helipad can be used for blades and we can have first aid just hanging out, waiting for any casualties from the latest battle. Metroplex's city mode does have one gimmick. You take Scamper here, put him inside the garage and there's a lever back here. If you hit it just right, it'll shoot him right out. So just pop him in. It's not spring loaded.  Worked a lot better the first time. So there you go guys. There is Metroplex in city mode. Now another cool feature that Metroplex has is he has some extra playability with the five-team combiners such as Defensor, Computron, Superior, Bruticus, Mentosaur, and Abominus. Granted, you pretty much just want to use the Autobots with him. On the side of the figure where these guns go, you pull those out and there is combiner ports. Since I have first aid here, I'll show you how this works. Just flip the head out, just like you're going to attach him to Defensor, and he slots in right there. It doesn't move. This is a static port, so the figure is going to be pointing straight down.  Now there are also ports right there on the legs. Now these are behind these kneecaps. These kneecaps are removable, but mine, I mean, they're ungodly tight. I did this yesterday just checking out how it would look, and I thought I was going to break those kneecaps, so I'm not going to do that for you right now. But here's a picture that I posted on my Facebook page and my YouTube page showing how he would look attached to the aerial bots. Now as far as the combiner team leaders are concerned, they can attach to Metroplex in city mode. I didn't have the space to show that off, but I'm going to put a picture up here in the corner so you get an idea how that looks. Now if you're wanting to add a Generation 1 Metroplex to your collection, keep in mind, this guy comes with a lot of parts, tower pieces, guns, minibots. I mean, you're going to be hunting, so if you want to track one down, highly recommend that you buy one complete. Now for some quick size comparisons, here is 1986's Generation 1 Metroplex with Generation 1 Optimus Prime, his Arch Nemesis, Generation 1 Trypticon, Generations Scamper and War for Cybertron Siege 6 Gun, and Titan Class Metroplex. This one's a little bit bigger. 1986's Generation 1 Metroplex is a fantastic toy. This figure has tons of playability in all three modes. Plus he comes with those three extra little figures. Granted, there's not much you can do with slammer, but it really adds to some of the playability. Metroplex is an iconic character from Transformers Lore and would fit perfectly in any G1-ers collection. So there you go guys, 1986's Generation 1 Metroplex. So does a Generation 1 Metroplex belong in your collection? Absolutely. This should be a staple figure in every G1-ers collection. This is a fantastic toy with tons and tons of playability and he's one of those iconic figures. I mean, they even made a Halloween costume for this guy. Now, keep in mind, if you're wanting to hunt one of these down, I highly, highly recommend to try and buy one complete. As you saw in the video, there are a lot of pieces and parts to this guy. And speaking of pieces and parts, I forgot to show you guys a couple things. With Metroplex's rifles here. Now the one with the decal, that's the commemorative or the Encore version, while this one is a regular G1. The regular G1 version, it has a spring-loaded gimmick, but it was highly nerfed here in the US. So this little spring gimmick, all it does is hold that missile in. I mean, that's it. Yet the Encore version, you hit that trigger, it launches. So I'm sorry I forgot to show you guys that. I've had this guy on display forever with his guns in these hands. I almost think of him as part of the weapon. Also, in the city mode, you can mount these guns on the end of the legs, so city mode has some weapons. Now guys, I want to thank you for stopping by and checking out my video. Don't forget to like, don't forget to subscribe, and don't forget to hit that bell icon to get notified when I upload new videos. Guys, I appreciate each and every one of you. This is Patriot Prime, signing out.