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Growing up as a Xennial, I had zero interest 
in the economy. After graduating in journalism,  

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I landed a job as a stock market reporter, 
and that's one of the best things that ever  

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happened to me. In the early noughties, the 
city of London was a very exciting place to  

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be. Financial services were thriving, until, it 
all came crashing down, one morning of September,  

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2008, when one of the world's largest banks, 
Lehman Brothers collapsed. I'm Charlotte Kan,  

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an inquisitive Xennial, and in this 
episode I thought I would invite a man  

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I used to interview regularly when working 
as a business reporter. It's Gilles Moec,  

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who's AXA Group Chief Economist and head 
of research at AXA IM. Welcome to Xennials.

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Gilles Moec, thank you so much for joining us.

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It's a pleasure, Charlotte.

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So, Gilles, as an economist, had you ever heard 
of Xennials, and what do you make of analyzing  

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a generational cohort and trying to understand 
its traits and characteristics through the lens  

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of economics and through fiscal and monetary 
policies in particular? We know that Boomers,  

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for instance, were very much influenced by 
the post World War II reconstruction efforts,  

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and as a result, they tend to be described 
as a hardworking, as fairly optimistic,  

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and also very career driven. So tell us, Xennials?

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Okay, so I'm a very sad person, so it's not 
going to surprise you that I didn't know the  

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word actually before you talked to me about it. 
But yeah, I think generations make sense from  

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an economic perspective. Economists usually love 
to talk about cycles, right cycles of between 5,  

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10, 15 years. So basically, depending on 
when you started working, for instance,  

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during a particular cycle, a very favorable one 
or mediocre one, very often it is going to have  

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a very lasting impact on the professional life. 
And there are tons of literature on the fact that,  

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for instance, if you were unlucky enough to start 
a career during bad economic times, you're going  

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to suffer from it in your job opportunities, 
in your pay level for 15, 20 years. So yeah,  

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I mean there's certainly space for generational 
analysis in mainstream economics, yeah.

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The 1990s are often described as the 'Good 
Decade', an era of strong economic growth. But  

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that's almost a tale of two halves, isn't it? 
With what's happening in the US and in Europe  

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they're quite different, and obviously we all are 
focusing on the west here and not other countries.

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Yes. Yeah, it's definitely the beginning, the 
emergence of many areas outside the west. And in  

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the west, I would certainly agree that it's quite 
different actually, across the Atlantic in Europe,  

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the problem we had was that the decade started 
with reunification in Germany and that triggered  

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a massive shock. Actually, the Bundesbank at 
the time was as usual, super worried about the  

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inflation shock that the unification would 
create. Hiked interest rates massively. And  

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given the way our European assistant worked at 
the time, all the initial central banks had to  

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follow suit. And I was working at Banque De 
France in the nineties, and basically you  

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could describe monetary policy in France at the 
time as Bundesbank plus five minutes. Basically,  

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you would wait to see what the Bundesbank would 
do and then you would follow suit. So we had  

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pretty tough financial conditions. Germany had 
to work actually quite painfully through the  

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shock of unification and the ramifications 
for the rest of Europe were quite grim.

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So actually the peak in unemployment in a lot 
of countries on the continent was roughly 94,  

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95. It's only after 95 that things 
really started to improve in Europe,  

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at least on the continent. The UK, it's a 
different story. In the UK, things went pretty  

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well fairly quickly after the 1992 crash out 
of the European rate mechanism. But same thing,  

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the beginning of the decade was not so great, even 
in the uk, people may have forgotten about it,  

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but actually 92, 93 was not a good year. 
In the US, you didn't have that shock  

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from the Germany reunification obviously. So 
Clinton won the elections on the famous Motto:  

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'It's the economies stupid' because the late 1980s 
were not great. And then there was the recession  

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triggered the very short recession triggered by 
the first Gulf war, but very quickly after 92  

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things improved very nicely in the US. So given 
the sort of cultural dominance of the us, yes,  

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the general memory of it maybe, yeah, was a super 
great year economically. It's not that obvious.

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What you've just mentioned is the perfect 
segue for my next question. You've talked  

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about Clinton. Often we credit the maverick 
politicians of the nineties with this period  

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of economic growth that maybe happened later 
on during the decade, but nevertheless,  

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they were the fruit of harsh policies that 
were implemented in the eighties. And often  

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they are credited with the success of their own 
policies, but really there's a lot more to it.

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Yes, definitely. For me, the best example of that 
is the UK. The UK went through a very complicated  

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decade of 1980s. Obviously under Margaret 
Thatcher you had this massive supply side reforms,  

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fiscal policy turn to austerity. Public spending 
fell and your entire segments of the industry just  

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disappeared. Unemployment was actually massive in 
the UK in the 1980s, and when Tony Blair won the  

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elections in 97, basically, I'm not going to say 
it was easy, but yes, it was kind of easy because  

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a lot of the dirty job had already been done. 
He inherited a very low level of public debt,  

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low levels of deficits, low levels of taxation, 
and it was able actually to make the UK converge  

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to what had become the sort of normal social 
democratic welfare state that you had in the  

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rest of Europe. It was a catch up, but he had 
the financial needs of the catch up and it could  

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benefit from the surge in what is called potential 
growth, which was a legacy of the 1980s. So very,  

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very tough period, but giving way to 
fundamental improvement in the nineties.

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Could you describe the 1990s from your 
perspective as an economist and tell us more  

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about the monetary and economic policy context. 
I mean, it's often described as an era of great  

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volatility across financial markets. We've got 
the emerging market crises of 97 and 99, that  

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lasted for quite some time and started in 
Southeast Asia of course, and then that was  

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followed by Russia and a lot of Latin America. 
So what about all those crises? I haven't  

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mentioned greater flexibility in exchange rates 
as well, and a reduction in inflation worldwide.

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Gilles Moec (08:34):
Well, inflation was basically  

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killed in the 1980s. That's not a legacy from the 
1980s. The dirty job had been done, the pain had  

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been inflicted in the 1980s in the form of a surge 
in employment, so that by the 1990s, inflation was  

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more or less under control, but we still had to 
deal with a number of shocks and it felt as if  

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the minute you had started dealing with a crisis, 
there was another one just cropping up. So today  

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it's fashionable to talk about poly crisis, but 
actually the nineties there was quite a bit of  

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poly crisis as well. It's just they did not feel 
existential. And in many cases, those crises were  

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the product of proper fundamental improvement. 
If you think about the Asian crisis of the 1990s,  

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to some extent it was the product of the fact 
that Asia was actually emerging, was doing well.

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And as is the case with many countries at the 
beginning of their economic emergence, well,  

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they don't necessarily have the right monetary 
plumbing, they don't necessarily have the right  

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banking regulation and so forth. You have to 
create all this, and very often it takes a  

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crisis to create. It takes a crisis to force 
basically policy policymakers to deal with  

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those plumbing issues. So yeah, we had crisis, 
but at the same time there was a sense that,  

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yeah, we are actually making progress or it's the 
reflection of progress. Same thing in Europe. We  

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had those exchange rate crisis at the beginning 
of the 1990s, which I described with central  

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banks forced to get into super tough monetary 
policies. But why were we doing it? We were doing  

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it because we wanted to create the single currency 
in Europe. My view is that it was worth it, right?

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But I remember at the time, again, I was a 
super young junior economist at the Banque  

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de France at the time. You had dinner table 
conversations with your family and stuff,  

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and you were accused of basically triggering 
recessions and stuff. And the point we were  

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constantly making at the time was, Hey, 
we have an objective. The objective is  

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to create single currency. It's a cool 
project. People did not believe in it at  

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the very beginning. It very nearly got killed 
by the 92 referendum. It was no small feat,  

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it was done. And so there was a sense of yes, 
it's complicated. There's a crisis. We need to  

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deal with those moments of volatility. But 
down the road it's a good thing. Down the  

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road we're going to get to something which 
is much more solid than what we had before.

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And Gilles, since you mentioned the growth 
pains that Asia went through during the 1990s,  

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what about the rise of China during the 
decade? I mean China literally started  

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to explode at the end of the 1990s. 
How did that come about, remind us!

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Well, it was nearly how, just say a conscious 
decision, a collective conscious decision in  

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the West really. There was this idea that now that 
the big rivalry with the USSR was over, cold war  

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was over quite naturally. We would also converge 
to what remain if you want, as the alternative  

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block. And China was the other country, the other 
model, but there was this very optimistic view at  

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the time. Clinton was very much on that view, for 
instance, that by welcoming China in the world  

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economy, by gradually creating the conditions 
that they could, for instance, join the World  

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Trade Organization, we would gradually create 
a friendlier China. So the development of China  

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was also seen as a way to anchor China into the 
new nice, harmonious, and obviously down the road  

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democratic world order that we thought we would be 
creating at the time. It was a time of optimism in  

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the sense as well, if you remember the famous book 
at the time, the End of History, this idea that  

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the old liberal views from the early 18th century 
would actually come true. Now it's actually not  

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Anglo-Saxon, it's French, it's Montesquieu was the 
first, actually you said that if we engage in free  

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trade gradually, we will come to more harmonious, 
more civilized international relationships. And  

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this belief was extraordinarily strong in 
the 1990s, did not really come to fruition.

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That's for sure. I was going to mention it 
actually, Francis Fukoyama and the end of  

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history and this idea that somehow we had reached 
the pinnacle of all political and economic systems  

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with neoliberalism. There's one man who really 
left his mark on monetary and fiscal policies  

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during the 1990s and beyond it's Alan Greenspan 
- quite a complex and interesting character. He  

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helmed the US Fed from 1997 to 2006. What 
do you make of the man and his policies?

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He is a very interesting man, but I guess today we 
would not choose someone like him to head the Fed.  

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He made his career, he made a fortune actually 
by creating a fairly small consultancy at the  

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beginning, which was really good at extracting 
signals for the markets from the day-to-Day data  

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flow. He could translate basically the change in 
signal conditions into signals for the markets.  

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So it was a guy who was obviously very well 
attuned to what was going on in the economy,  

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who knew how to read the economy. But apart from 
very strong principles, he was a libertarian. It  

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was a discipline of Ayn Rand. Apart from this 
sort of generic libertarian worldview. He was  

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a guy who was extraordinarily suspicious of big 
macroeconomic models. So it was a big case of I  

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can fine tune the economy by reading what's going 
on, by reacting to data on industrial productions  

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and employment, et cetera. I don't need a big 
theoretical framework. Very different from people  

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like Bernanke or Draghi who for me were the two 
latest big giants of military monetary policy,  

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people with very strong grounding in 
macroeconomic models. Greenspan was,  

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I would call this a fine tuner, 
but if you so markets loved him.

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And my reaction at the time, again, I was at the 
French Central Bank, maybe were a bit jealous of  

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the status, the star status of Greenspan at the 
time. But our view at the time was certainly my  

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view was that actually a central banker should not 
be loved. Actually, it's probably dangerous if the  

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market loves the head of the biggest central 
bank of the world. And it was the case. He  

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was seen as the complete maverick, the guy who 
could drive the economy and avoid any sort of  

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accident. And he actually gave way to accidents 
and he was probably creating the conditions first  

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for the dotcom bubble of 2001, and probably also 
played a big role in building of the conditions  

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for the great financial crisis of Wade. But at 
the time, the market was in love with the guy.

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Thank you Gilles. And I promise this audience 
that one day I will spend more time explaining  

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the principles of libertarianism and Ayn Rand, 
let's move on. Europe. A lot happened during  

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the 1990s. You've alluded to it, the adoption 
of the Euro or the preparation that led up to  

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it. What were the key milestones and remind 
us how people felt about it in the 1990s.

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Gilles Moec (16:35):
It was not obvious actually, because now  

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it feels as sort of natural state of affairs, but 
it all hinged on the French referendum in 1992,  

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which was a near miss. I can't remember the score. 
It was 51 49, something like this. So actually  

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clearly the population was in two minds about 
monetary union. It was not a walk in the box,  

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it was not obvious to anyone. And then there 
was also this feeling that we were losing some  

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sovereignty because we were losing the capacity to 
decide monetary policy at the national level. And  

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it was not entirely obvious to the public at large 
what would be the benefit. And it was in a way,  

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a bit theoretical because basically what you 
had to explain to people it was hard was okay,  

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actually we believe, you believe that we 
have national monetary policies. Actually,  

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it's not true because we are 
so integrated and in reality,  

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national central banks at the moment 
continuously follow the Bundesbank.

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So actually we'll be better off deciding 
collectively rather than just following what the  

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Bundesbank is doing. But it's very hard to convey 
as a message and the benefits in terms of, okay,  

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now we have a single market. It's obvious that 
we need to have a single currency complementing  

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if you want this single market, the benefits 
were not easy to convey. And down the road,  

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what I think it boiled down too, to get the 
project across the line was basically to  

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appeal to sort of generic pro-European feeling, 
which was still very true at the time. You could  

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still tap into this sort of generic belief 
that more union is probably good that did not  

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necessarily hold that well later on, but in the 
nineties you could still really tap into that.

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Did we reach peak globalization 
during the late nineties?

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Ideologically? Yes. Statistically 
no. Statistically no. Because peak  

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globalization in terms of the share 
of import and exports in global GDP,  

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it's actually not so long ago, it's just before 
Covid, but in the general mindset of policymakers,  

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yes, it's probably the late 1990s, early, early 
naughties, the preparation of China joining WTO,  

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the creation of, because in Europe we had the 
single market in the US they had nafta. So you  

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could see regional free trade zones becoming 
more and more frequent. And generally speaking,  

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I remember a few guys at the time started saying, 
that might not be such a great thing. I remember  

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Robert Reich who was a labor secretary, I think 
under Clinton writing a book in the late nineties.  

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I remember reading that I'm thinking might be 
something saying, we are creating a world which  

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is great for what he called symbol manipulators. 
Guys who, people who can work in abstract terms,  

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but full blue collars, it's less obvious. Denny 
Roderick, the Economist, which was the first start  

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saying maybe we're going too far, but those 
were pretty isolated voices in general. This  

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was this general feeling that, hey, what we're 
doing is good. And by the way, I still think  

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it's good. I think I believe in very, very few 
absolute truth in economics, but that free trade,  

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generally speaking is a positive. That is one 
of my beliefs, but it was peak at the time.

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And are we going through 
reverse globalization today?

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00:19:35,440 --> 00:19:42,200
It's complicated. To some extent, yes. I prefer 
to call this cloudification. So yeah, I want to  

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copyright on that word because like Xennials, like 
Xennials, I call this cloudification because it's  

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not as if regions or countries are retracting on 
their own resources, it's just that they tend to  

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trade and to finance themselves among friends if 
you want, among geopolitical friends. You can see  

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that in North America in June of this year. It's 
the first time in 20 years that Mexico sold more  

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manufactured products to the US than China. 
You can see that also in financial flows. The  

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share of China in holding US debt has been 
falling for the last 10 years. Europeans,  

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Japanese South Koreans are actually raising their 
share of US debt. So yeah, we're creating clubs.  

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So it doesn't mean that world trade falls, it's 
still very much alive. But yeah, it's not just  

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about price and comparative advantage, it's all 
this plus am I actually trading with a friend.

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To conclude with, what era are we in 
today in terms of fiscal and monetary  

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policy and how do you think it 
will shape today's generation?

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Okay. I think on monetary policy, it's, it's 
a pretty painful normalization. And we've had,  

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thanks to globalization in part, actually we've 
had 20 years of extremely low inflation to the  

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point that it kind of disappeared from the common 
psyche. We didn't really have to think about that.  

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And when we had this surge in inflation, when 
at the end of the pandemic for a few months,  

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the economic profession believed that it was 
transitory. I certainly believed it was transitory  

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and it proved to be much, much persistent. 
So I don't think military policy will ever  

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come back to the sort of zero rates situation we 
had before covid. So monetary policy on trend is  

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probably going to be more restrictive on fiscal 
policy. We've spent a lot of money over the last  

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few years through the pandemic also in Europe to 
deal with the Ukraine crisis. And even in the US  

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where you could think there was no real reason 
why they would have to spend that much money.

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It seems that they want to spend a lot of 
money and political polarization, sorry,  

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in the US is so acute that it's very hard to see 
how they could very easily take control of their  

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fiscal policy again. So public debts on 
trend continue continues to rise. So for  

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the generation coming now, it might be a bit 
painful. Painful because rates are rising.  

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So if you're at the beginning of your capital 
accumulation trajectory, it's going to be more  

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complicated than 20 years ago. And if you count 
on government spending to help you along with your  

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studies with the beginning of your professional 
life, ensuring you against the big risks,  

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while governments are going to have a hard time 
providing you with the same kind of support.

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I am tempted to throw in another question 
actually to address the theme I mentioned in  

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my introduction. Did we Xennials somehow benefit 
more than other generations from globalization,  

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from the start, the emergence of the 
digital economy? Were we a golden era?

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I find it hard to answer that because I tend to be 
a bit allergic to the current generational wars.  

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That's a new theme. The boomers are responsible 
for everything because they spent far too much  

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money. Those Xennialsp actually had it very 
good and now the new generation is really going  

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to struggle. I have trouble with that because 
what we constantly fail to see is how much the  

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previous generation had to do and take to get us 
where we are now. I talked about the eighties. A  

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lot of baby boomers had a hard time during the 
1980s and we forget that if you were a boomer,  

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but you happened to be working in mining in coal 
mining in the UK in the late seventies, my god,  

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you didn't have a great life. So we had to be 
super careful with that idea. The other thing,  

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and again I'm a sad person, is that 
in any case, we didn't know that.

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I mean the nineties, yes, in retrospect it was 
probably actually a good time to be 20. I was 20,  

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19 90. It was a good time to be in your twenties. 
But we did not realize it because again,  

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the unemployment rate was still very high. 
Interest rates at the beginning were high.  

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I could not even dream of being a house a 
flat in Paris at the time. When I read today,  

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I cannot buy anything in Paris. Well 
try to buy a flat in Paris in 1992  

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when interest rates were 12%. So we have to 
be super careful with these sort of things.

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Thank you very much, Gilles. I 
think it's time for a Xennials quiz.

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Okay.

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Alright so Gilles, your 
favorite album of the 1990s?

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Okay, I want to have the right to two because 
I'm French and there will be one in French and  

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one sung in English. The one in French is "Paris 
Ailleurs", Étienne Daho, 1991. Just looked up  

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before coming on your string device, you can 
see what you listen from a certain period. So  

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barrier 1991. If you've never listened to a Indo, 
please do. Great guy. The English, the one sung  

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in English because the guy is actually Irish, 
Neil Hannon, divine Comedy, Promenade 1994. A  

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great piece of the revival of British pop. 
I mean it's a great album. Promenade 1994.

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I remember the Divine Comedy. I used to 
listen to them a lot during the 1990s  

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and of course Etienne Daho. He's 
from Brittany, exactly, like you,  

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and I so he would be up there, of 
course. Your favorite film of the 1990s.

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00:26:14,520 --> 00:26:20,800
Okay, so the obvious answer would be something 
that by Tarantino, but I actually don't like  

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his movies never liked them even at the time. 
So actually same thing, sorry it's going to  

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be French, but if you happen to find this 
film one day, the Sentinel, La Sentinelle  

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came out in 1992. Super interesting complex film 
about basically the end of the Cold War and the  

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ramifications of the Cold War in France. Great, 
great film. Arnaud Despleschin, The Sentinel.

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Thank you very much. Your 
favorite gadget of the nineties.

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I thought about it and remembered all of a sudden, 
do you remember the Psion series five? It was an  

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00:26:58,360 --> 00:27:05,920
organizer with a little keyboard. Obviously 
there was no connection so it could not be  

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00:27:05,920 --> 00:27:11,920
a proper tablet, but it looked like the tablet 
came out in 95, 96. I had one for my birthday.  

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00:27:12,640 --> 00:27:20,120
You could actually write small text on this small 
little keyboard. You could run your diary. I dunno  

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00:27:20,120 --> 00:27:25,680
what happened. It was a British company and 
the design was super slick. Psion Series 5.

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00:27:25,680 --> 00:27:30,440
I will ask Ben Wood, who was on the 
previous podcast to tell us more  

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about this device in another episode. 
Your favorite book of the nineties.

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It's funny because on my way in, I was thinking 
book from 1990s. I really enjoyed and the first  

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00:27:43,240 --> 00:27:47,520
that came to my mind, I was Less Than Zero 
by Brett Easton Ellis. And then I realized  

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00:27:47,520 --> 00:27:53,640
that it was actually written in 85, but 
I read it in the nineties And Less than  

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00:27:53,640 --> 00:28:02,160
Zero feels so nineties actually, because it's 
so postmodern. It's really about sort of pre  

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00:28:02,760 --> 00:28:13,400
bohemian youth lost in a university, engaging in 
very hedonistic activities. It feels really 1990s.

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And finally, one word to 
describe the decade, the 1990s.

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Cool. But we did not know it.

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00:28:21,520 --> 00:28:24,240
And you can't say cool anymore 
because that's massively uncool  

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00:28:24,240 --> 00:28:26,019
apparently. Gilles Moec, thank you so much.

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Most welcome.

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That was, Gilles Moec, AXA Group Chief 
Economist and AXA IM Head of Research.