Good afternoon, everyone and welcome to this conversation with John Cochrane. I am delighted to welcome John to record this session, which we also will release as a video and at ESAIP's Global Economy

podcast. I've followed John's work for a long time and always been impressed by his

clarity of thought and ability to find approaches to and develop models to key finance

and economic issues without overbilling the reader with astonishingly complex

algebra, which unfortunately has become the standard in much academic work.

John is one of the world's leading economists in his field.

He's been researching financial economics and macroeconomics for 40 years,

and is now the Rosemary and Jack Anderson Senior Fellow at Stanford's

Uber Institution. He was previously a professor at the University of Chicago and its

School of Business. He's the author of several books and numerous papers on finance,

including the leading textbook on asset pricing. He blogs as the Grumpy Economist, and in the past years, he has become a podcast star

as one of the three Goodfellows on the Hoover Podcast with the same name,

a podcast that alongside John also includes historian Neil Ferguson and former National Security Advisor,

General H.R. McMaster. John, it's great to have you with us.

It's a pleasure to be here. Thank you very much.

So I want us to start talking about inflation and deflation,

and especially about a book that you published in early 2020,

titled The Fiscal Theory of the Price Level.

This is, in my view, a very profound book, and you develop in it a new type of approach for

understanding the price level. But before we go into the book and what you are proposing there,

why was it necessary to develop a new understanding of what drives

changes in the price level? Basically, what is wrong with the old theories and models?

...