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This is a Bloomberg business flash from Bloomberg World Handquarters.

I'm Charlie Pelt.

A mixed picture for stocks.

Little changed in US equities right now.

The Dow is down five, a drop there of less than point one percent.

SMP up to a game of point one percent.

Nestack up five, also a game of point one percent.

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Stocks are fluctuating.

We've got the tenure up six thirty seconds, the yield one point six eight percent, Gold down four seventy ounce to twelve sixty seven, a drop of four tenths of one percent, and crude oil down one dollar nine cents now to seventy nine.

West Texas Intermediate at declining two point two.

I'm Charlie Pellock.

That's a Bloombird business flash.

Bloomberg jaging stock to the Fed in focus.

Interest rates start too row for where the economy is going.

The question is how much higher should they be.

Feds increased to fast yes, and in doing so, it has increased its liability.

Keeping interest rates at zero for a long time is not going to cause inflation to go up.

It's very controversial.

I think what we need to do is find a way for the FED to integrate its policy and think more about its impact on the world.

The Fed in focus on Bloomberg Radio, the Fed in focus day to affect your Janet Allen's testimony to the Congress, this time the House of Representatives the Financial Services Committee, pretty much a repeat of yesterday's testimony.

But when you step back and look at the two days with Jane Allens seems to be saying is that she no longer is certain the Federals the economy, excuse me, is on an upswing that will continue and warrant more rate hikes.

She is concerned even about long term slowdown with Larry Summers from a Treasure Secretary called secular stagnation, and that could put the FED on hold for a long time.

Joining us now is Leo Hanian, senior fellow at the Hoover Institution at Stanford University.

Lee welcome, Hi, thanks for having me so on that particular point, do you think Janet Yellen's acknowledgement of Larry Summer's argument, which a lot of people have not been on his bandwagon, is justified.

You're certainly an expert on long term trends on on US growth.

What do you see?

Yeah, I mean, in terms of the data we've been seeing, there's really no sign that the economy has recovered back to its pre two thousand and eight trend um productivity growth, which is is about point nine percent per year since two thousand and nine, its historical averages two and a half percent per year.

So this is the most disturbing trend that I'm seeing in the economy right now.

Uh, And I don't see any sign that productivity growth is going to increase.

Professor h hanean um And I just want to note that you're not only a professor of economics at the University of California u c l A, but also advised many federal Reserve banks.

Also to note that you are at the Hoover Institution and the head of the enter Family Program at u c l A.

In that context, of your research.

You did some research about the New Deal and Franklin Delano Roosevelt, if you were to do that same kind of research on what the Federal Reserve has been doing in the last five to ten years in the United States, give us an idea of how that would play out.

Well.

In the nineteen thirties, we had a slow recovery where jobs didn't come back.

The big difference is that productivity growth was very, very rapid after after three And what happened is that once we free the economy up by removing some gum rate interventions that were depressing job creation, depressing new business formation, the economy really started to take off about in nineteen thirty nine.

Today we don't have the benefit of having a strong underlying economy with with strong productivity growth.

And the set is is put themselves really into a corner.

And then they've really pinned themselves into a corner in the sense that they've kept the interest rates obviously close to zero um, they've embarked on a number of quantitative easing programs, and when you look at the data, you don't see the employment population ratio coming back anywhere close to we were before we see very weak productivity growth.

And there's not really any evidence I'm aware of it indicates that the if the FED continues to do this, the it will enhance economic growth in any way.

Uh, FED policy is not really the medicine for the disease we have right now.

Well, what is the medicine then?

Yeah, the biggest you know, the biggest issue we have right now, and this is this is a unique situation with the US economy.

We're the only country in the world has had two plus years of systematic, persistent economic growth on average year and year out.

No other country has ever done that over a two century period.

And the reason we've been able to do that is because we replace big businesses that ultimately decline with new transformational businesses that take off.

So back in the twenties, it was General Electric and General Motors in US, Deal and DuPont and Kodak, and they helped us grow through the nineteen fifties and sixties.

And then after that it was Apple and Microsoft and Oracle and FedEx and Walmart and Costco, and they've been the reason we've been able to grow for the last three five years.

What we know what we're not seeing now is who will be the new Apple, the new Microsoft, the new fed X, the new Walmart.

And we have about a thirty drop in new business formation.

We've never seen anything like that.

What new business owners tell us is that they see high tax rates, particularly a tax code that really impacts them much differently than the tax code impacts very large businesses.

They talk about a difficulty finding skilled workers who are well matched for jobs.

They talk about difficulties in finding capital, and so some of those issues I think we can sort out, such as UM reforming dot frank, which has really impacted community banks, which were the banks that really made it possible for new businesses, a small businesses to grow, and they're just having a really hard time getting loans because it's become so expensive to make a small business loan.

I think that is that kind of pass a lot.

I don't even know where.

I gotta say that's a very uh coach and description of what's going on.

Very interesting.

Lee Orhanian is a senior Fellow at the Hoover Institution at Stanford University and also professor of Economics at u C l A.

Didn't that thank you very much for joining us, Sir um Kathleen.

Very interesting descriptions.

I think so too.

Honestly, Lee is summing up so many issues, and I think the kind of the point he was getting out and maybe you're gonna get two PM.

Can the federally fixes by keeping race solo?

I thought, that's the big questions description of this is not the right medicine for this particular ailment.

Very telling.

You're listening to taking Stock on Bloomberg Radio, Hoover, taking Stock is a brunt to you by um being coming up next, we're going to continue the FED in focus