Robert Rubin: Profiled People in Economics and Banking
Executive Summary
- Robert Rubin was one of the most prominent and influential policymakers and heavily promoted the repeal of Glass Steagall restrictions that he later benefited from when he went back to Citibank from the Clinton Administration.
Introduction
Rubin was the head of the Treasury under Bill Clinton and Citibank. He was a major proponent of eliminating Glass Steagall under Clinton in 1999. The following explains what Rubin thinks about how savings functions. It is an exchange between Robert Rubin and Warren Mosler.
“Ten years ago, around the year 2000 just before it all fell apart, I found myself in a private client meeting at Citibank with Robert Rubin, former U.S. Treasury Secretary under President Clinton, and about 20 Citibank clients. Mr. Rubin gave his take on the economy and indicated that the low savings rate might turn out to be a problem. With just a few minutes left, I told him I agreed about the low savings rate being an issue and added, “Bob, does anyone in Washington realize that the budget surplus takes away savings from the non-government sectors?” He replied, “No, the surplus adds to savings. When the government runs a surplus, it buys Treasury securities in the market, and that adds to savings and investment.” To that I responded, “No, when we run a surplus, we have to sell our securities to the Fed (cash in our savings accounts at the Fed) to get the money to pay our taxes, and our net financial assets and savings go down by the amount of the surplus.” Rubin stated, “No, I think you’re wrong.” I let it go and the meeting was over. My question was answered. If he didn’t understand surpluses removed savings, then no one in the Clinton administration did. And the economy crashed soon afterwards.”
Source: Mosler Economics