Fmr. Fed Governor Lindsey: Low Interest Rates Buy Time, But Don’t Force Structural Reform

BARTIRMO: "Some people say, and we were talking about growth of like three percent in China, Larry. I know that they just said they've got a target of 6.5 percent to 7 percent. But I don't know if people believe that."
LINDSEY: "They will officially hit their official target. That's the way how things go in China."
BARTIRMO: "(Laughs) They said they would and they will."
LINDSEY: "Because -- right. Day to day they've got to run a country at least statistically. I think I'm a little bit softer on the economy than Austin. I think it is going to more like a 1.5 percent economy and there's a chance we have a recession. But the odds are maybe only 40 percent or so. And as to how we get out of it, I think Austin and I probably agree, it's a matter of structural reform. And low interest rates buy you time, but they don't force the people to make structural reform. We have excess capacity globally. All zero rates do is allow the excess capacity to linger longer and longer and longer so we are not solving our problems like doing things like this  --" [crosstalk] 
I got to be careful. Larry keeps saying he agrees with me. They are going to come after me. So whatever he says I've got to be against it." (Laughter)
BARTIROMO: "What about the structural reform that you are talking about then, Larry? I mean, what kind of fiscal reform do you both think is required at this moment in time? The Federal Reserve we know has been the only game in town in terms of stimulus going on eight years. So what do you think is going to be important fiscal note that perhaps the next president will oversee?"
LINDSEY: "It is not just fiscal. I think we are going to be focused on quantities too long and we should start focusing on qualities. In my book I point out just how badly the money is being spent. It's very wasteful. We are not getting the bang for the buck we made. Particularly on the regulatory side, we have now regulated banks into a situation where they really can't increase funding. We put up all kinds of rules and restrictions. We even have a higher reserve requirement now for vault cash. What is the risk in the cash sitting in your vault? Why do they need access reserves for it? It's kind of -- we are really in [indecipherable] when it comes to regulation and I think we have to begin to wind that one that back. I think that's going go be a key for moving global economy."