1 00:00:00,240 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,039 --> 00:00:11,560 Speaker 2: Oh, Joe, this is cutting. This is from Neil Dudda, 3 00:00:11,800 --> 00:00:12,799 Speaker 2: a friend of the pod. 4 00:00:13,000 --> 00:00:14,640 Speaker 3: Oh yeah, all right, read it out, Read it out. 5 00:00:14,880 --> 00:00:19,120 Speaker 2: President Trump has picked everyone's least favorite candidate, Kevin Walsh 6 00:00:19,280 --> 00:00:23,000 Speaker 2: for the next Fed Reserve chief. I my hat to Warsh, 7 00:00:23,040 --> 00:00:25,560 Speaker 2: who has managed to get selected after being passed over 8 00:00:25,720 --> 00:00:32,320 Speaker 2: time and again. That's a remarkable achievement for him. Joe, 9 00:00:32,400 --> 00:00:35,680 Speaker 2: I want a T shirt that says ruthless utility maximizer, 10 00:00:36,000 --> 00:00:38,080 Speaker 2: black goal. Let's talk about losers. 11 00:00:38,200 --> 00:00:38,680 Speaker 3: Hoo care. 12 00:00:38,880 --> 00:00:41,480 Speaker 2: I've decided I'm going to base my entire personality going 13 00:00:41,479 --> 00:00:44,720 Speaker 2: forward on campaigning for a strategic pork reserve in the US. 14 00:00:44,880 --> 00:00:45,839 Speaker 3: Skull's unlimited. 15 00:00:45,960 --> 00:00:47,120 Speaker 2: Oh what's the ticker for that? 16 00:00:47,320 --> 00:00:47,479 Speaker 1: No. 17 00:00:47,560 --> 00:00:50,440 Speaker 3: I think that like in a couple of years, the 18 00:00:50,520 --> 00:00:52,720 Speaker 3: AI will do a really good job of making the 19 00:00:52,720 --> 00:00:53,760 Speaker 3: out launch podcast. 20 00:00:53,840 --> 00:00:56,040 Speaker 2: How do I get more popular and successful? 21 00:00:56,360 --> 00:00:59,040 Speaker 3: One day that person will have the mandate of heaven. 22 00:00:59,280 --> 00:01:00,400 Speaker 1: We do have of. 23 00:01:02,520 --> 00:01:04,880 Speaker 2: You're listening to lots More, where we catch up with 24 00:01:04,880 --> 00:01:07,680 Speaker 2: friends about what's going on right now, because. 25 00:01:07,400 --> 00:01:10,399 Speaker 3: Even when the odd lots is over, there's always lots more. 26 00:01:10,680 --> 00:01:12,839 Speaker 2: And we really do have the perfect guest. 27 00:01:18,560 --> 00:01:21,760 Speaker 3: I'm just gonna say what I find interesting right now 28 00:01:21,920 --> 00:01:25,680 Speaker 3: is that, you know, like Trump announces someone and you 29 00:01:25,760 --> 00:01:28,560 Speaker 3: expect a bunch of like liberal ninnies in the media 30 00:01:28,720 --> 00:01:31,440 Speaker 3: to like shake their fists. This isn't good, you know, 31 00:01:31,560 --> 00:01:34,399 Speaker 3: It's like there's a lot of predictable response. But it 32 00:01:34,520 --> 00:01:38,240 Speaker 3: is interesting to my mind. Here's someone like Neil who 33 00:01:38,319 --> 00:01:41,960 Speaker 3: is a I do not associate him with liberal media 34 00:01:42,040 --> 00:01:44,640 Speaker 3: groupthink or anything like that, as well as many others 35 00:01:45,080 --> 00:01:47,360 Speaker 3: who are like, huh interesting pick here. 36 00:01:47,480 --> 00:01:53,040 Speaker 2: Well, I will say, opinions kind of divided. So mohappadel 37 00:01:53,120 --> 00:01:57,120 Speaker 2: Arian tweeted earlier that he thinks Kevin's going to be 38 00:01:57,160 --> 00:02:01,120 Speaker 2: a great FED share and he's observed and this is 39 00:02:01,160 --> 00:02:04,240 Speaker 2: a quote. Having observed and interacted with Kevin during his 40 00:02:04,360 --> 00:02:07,560 Speaker 2: prior tenor as FED governor, in academia and as a 41 00:02:07,560 --> 00:02:09,760 Speaker 2: fellow member of the Group of thirty, I believe he 42 00:02:09,800 --> 00:02:13,120 Speaker 2: brings a strong mix of deep expertise, broad experience, and 43 00:02:13,160 --> 00:02:14,720 Speaker 2: sharp communication skills. 44 00:02:15,320 --> 00:02:19,720 Speaker 3: So, by the way, Jason Furman too, Yeah, yeah, Kevin 45 00:02:19,720 --> 00:02:22,840 Speaker 3: worsh is well above the bar on both substance and independence. 46 00:02:22,840 --> 00:02:24,600 Speaker 3: To be sure of the Federal Reserve, the Senate should 47 00:02:24,639 --> 00:02:27,760 Speaker 3: ask tough questions about his independent and President Trump should 48 00:02:27,760 --> 00:02:29,880 Speaker 3: reduce the thread to it. Hopefully that will make it 49 00:02:29,919 --> 00:02:32,720 Speaker 3: clear Worsh should be confirmed. So it is a mix 50 00:02:32,760 --> 00:02:38,000 Speaker 3: on both sides. It is not dividing in obvious easy ways. Anyway, Sconda, 51 00:02:38,080 --> 00:02:38,600 Speaker 3: what's up. 52 00:02:38,600 --> 00:02:41,079 Speaker 1: Glad to be part of this momentous day it is 53 00:02:41,480 --> 00:02:44,480 Speaker 1: I guess we see that. Yeah, Kevin Worsh is right 54 00:02:44,520 --> 00:02:47,680 Speaker 1: now the successor in waiting if he gets confirmed by 55 00:02:47,680 --> 00:02:50,120 Speaker 1: the Senate. It is funny how he's part of this 56 00:02:50,160 --> 00:02:53,160 Speaker 1: group of thirty, which is a form of former central bankers, 57 00:02:53,360 --> 00:02:56,680 Speaker 1: former finance ministers, and movers and shakers. So you see 58 00:02:56,880 --> 00:03:01,840 Speaker 1: Mohammadel Arian, Jason Furman, George Os. I believe Mark Karney 59 00:03:02,440 --> 00:03:06,440 Speaker 1: certainly not exactly the most America first kind of grouping, 60 00:03:06,480 --> 00:03:10,040 Speaker 1: maybe more globalist in flavor, has definitely kind of rallied 61 00:03:10,080 --> 00:03:13,960 Speaker 1: around Kevin Worsh because I think they've probably converse with 62 00:03:14,000 --> 00:03:15,760 Speaker 1: him a bunch of times and take him to be 63 00:03:15,800 --> 00:03:18,600 Speaker 1: a very serious person. I myself am much more sympathetic 64 00:03:18,639 --> 00:03:21,720 Speaker 1: to what our friend Neil has pointed out. 65 00:03:22,080 --> 00:03:24,880 Speaker 3: By the way we are talking, of course, to longtime 66 00:03:24,880 --> 00:03:28,320 Speaker 3: friend of the Podskanda Eminas co founder and executive of 67 00:03:28,400 --> 00:03:30,960 Speaker 3: Employee America. So what do you see, Like, Okay, so 68 00:03:31,040 --> 00:03:33,920 Speaker 3: someone like Neil and and someone like yourself, and you 69 00:03:33,919 --> 00:03:36,480 Speaker 3: have these reservations, like what is the origin of some 70 00:03:36,560 --> 00:03:37,960 Speaker 3: of these anxieties. 71 00:03:38,640 --> 00:03:41,720 Speaker 1: I think there are a few different anxieties, and I 72 00:03:41,720 --> 00:03:44,240 Speaker 1: think let's start with this is obviously someone who's served 73 00:03:44,240 --> 00:03:46,080 Speaker 1: on the FED before, right, he was a FED governor, 74 00:03:46,560 --> 00:03:48,040 Speaker 1: So we have like a track record. We don't have 75 00:03:48,040 --> 00:03:51,920 Speaker 1: to rely on secondhand validation. We don't have to if 76 00:03:51,960 --> 00:03:53,760 Speaker 1: we didn't have anything about Kevin Worshton. I think probably 77 00:03:53,760 --> 00:03:55,920 Speaker 1: it's probably we're putting a little more emphasis on what 78 00:03:56,680 --> 00:04:00,400 Speaker 1: Jason Furman and Mohammed Alarian and those people are saying. 79 00:04:00,520 --> 00:04:04,120 Speaker 1: And they seem like respectable people. Except he was FED governor, 80 00:04:04,160 --> 00:04:06,440 Speaker 1: and he does have a pretty long body of work 81 00:04:07,160 --> 00:04:11,160 Speaker 1: in terms of a public intellectual, giving remarks, being in 82 00:04:11,160 --> 00:04:14,560 Speaker 1: the Wall Street Journal opinion pages. And the trouble is 83 00:04:14,600 --> 00:04:16,919 Speaker 1: it kind of comes back to like who do you 84 00:04:16,960 --> 00:04:20,560 Speaker 1: want in a crisis? Right, So the FED really tends 85 00:04:20,640 --> 00:04:24,480 Speaker 1: to matter the most in periods of crisis. He was 86 00:04:24,520 --> 00:04:27,000 Speaker 1: a FED governor in the crisis, and he often touts 87 00:04:27,040 --> 00:04:31,560 Speaker 1: it as some financial purpose. Yes, the two thousand and 88 00:04:31,560 --> 00:04:35,320 Speaker 1: eight financial crisis. If you go through what his views 89 00:04:35,360 --> 00:04:38,600 Speaker 1: were through that whole period, what you will find is 90 00:04:39,160 --> 00:04:42,279 Speaker 1: this is someone who is very eager to tout how 91 00:04:42,480 --> 00:04:45,120 Speaker 1: well the financial system was performing, even as it was 92 00:04:45,120 --> 00:04:47,360 Speaker 1: descending into crisis in two thousand and seven and eight. 93 00:04:48,200 --> 00:04:51,159 Speaker 1: He was very eager to really upright the importance of 94 00:04:51,200 --> 00:04:53,960 Speaker 1: inflation in the summer and fall of two thousand and 95 00:04:53,960 --> 00:04:57,960 Speaker 1: eight until Lehman failed. So this is on clearly who 96 00:04:58,279 --> 00:05:01,000 Speaker 1: had his eye on I'd say the wrong ball that time. Okay, 97 00:05:01,120 --> 00:05:03,560 Speaker 1: mistakes happen, Like people had different views. I don't think 98 00:05:03,560 --> 00:05:06,719 Speaker 1: we should be like too precious about that specifically. And 99 00:05:06,800 --> 00:05:10,000 Speaker 1: yet also the moment that sort of came into two 100 00:05:10,040 --> 00:05:12,960 Speaker 1: thousand and nine, and let's say the absolute worst of 101 00:05:13,440 --> 00:05:16,719 Speaker 1: the financial distress may have been behind us, but we 102 00:05:16,800 --> 00:05:20,760 Speaker 1: had historically high and rising unemployment, he basically said this 103 00:05:20,880 --> 00:05:22,680 Speaker 1: was not really a big problem, not something that the 104 00:05:22,720 --> 00:05:24,960 Speaker 1: Fed should be focused on, and that we actually should 105 00:05:24,960 --> 00:05:29,400 Speaker 1: start to shift back towards focusing on keeping UH interest 106 00:05:29,440 --> 00:05:32,719 Speaker 1: rates more normal, not so low. I'm worried about inflation, 107 00:05:33,360 --> 00:05:35,000 Speaker 1: and so he came with a lot of reasons why 108 00:05:35,040 --> 00:05:37,479 Speaker 1: I thought inflation was gonna explode why QWET was really bad, 109 00:05:37,880 --> 00:05:40,640 Speaker 1: and that would ultimately lead to first inflation, then maybe 110 00:05:40,640 --> 00:05:43,880 Speaker 1: some version of acid price inflation, maybe bubbles, maybe it's 111 00:05:43,920 --> 00:05:45,799 Speaker 1: backdoor fiscal policy. He gave with a lot of different 112 00:05:45,800 --> 00:05:48,279 Speaker 1: reasons at different times for why he really hated the 113 00:05:48,279 --> 00:05:50,720 Speaker 1: fact that the Fed's balance sheet was so big, But 114 00:05:50,960 --> 00:05:53,400 Speaker 1: one those predictions weren't really true. I think they reflective 115 00:05:53,400 --> 00:05:55,719 Speaker 1: misunderstanding of what the Fed's balance sheet really does and is. 116 00:05:56,360 --> 00:05:59,359 Speaker 1: And it's still like a big is a favorite hobby 117 00:05:59,400 --> 00:06:02,839 Speaker 1: horse of his, But that's itself like he kind of 118 00:06:02,839 --> 00:06:04,880 Speaker 1: missed the whole financial crisis in a way, right like 119 00:06:04,880 --> 00:06:07,160 Speaker 1: aside from like the absolute worst of it, everyone got 120 00:06:07,200 --> 00:06:09,839 Speaker 1: on the same page in October two thousand and eight. 121 00:06:10,279 --> 00:06:12,359 Speaker 1: But that's like kind of like not like that's not 122 00:06:12,400 --> 00:06:15,679 Speaker 1: a great badge of like of honor that you actually 123 00:06:15,720 --> 00:06:17,560 Speaker 1: figured out that you had to serve to support the 124 00:06:17,560 --> 00:06:20,400 Speaker 1: financial system at that time. I think that's the first 125 00:06:20,400 --> 00:06:24,719 Speaker 1: dimension that probably is of concern. But let's say, like, Okay, 126 00:06:24,960 --> 00:06:27,480 Speaker 1: people have gone through various episodes and missed a lot 127 00:06:27,520 --> 00:06:30,400 Speaker 1: of things, and you'd hope coming out of that people 128 00:06:30,440 --> 00:06:33,719 Speaker 1: kind of have learned something, expressed some humility Okay, I 129 00:06:33,720 --> 00:06:35,880 Speaker 1: missed this part of this problem, the scale of it, 130 00:06:35,920 --> 00:06:38,400 Speaker 1: the duration of it, and I'll do better next time. 131 00:06:38,839 --> 00:06:41,000 Speaker 1: We haven't really heard that, but okay, let's see those 132 00:06:41,080 --> 00:06:44,160 Speaker 1: like missing mea culpus aside. The two things that are 133 00:06:44,200 --> 00:06:48,640 Speaker 1: more concerning that come out of that, though, is we 134 00:06:48,720 --> 00:06:52,600 Speaker 1: see now a growing pattern of both obsequiousness and partisanship 135 00:06:52,680 --> 00:06:56,560 Speaker 1: in how he orientsd his macro and monetary policy beams. 136 00:06:57,120 --> 00:07:00,920 Speaker 1: So let's fast forward to twenty twenty four, right where 137 00:07:00,960 --> 00:07:03,680 Speaker 1: we had for a while. Obviously there was a sense 138 00:07:03,720 --> 00:07:05,160 Speaker 1: of like the fence going to cut rates, but are 139 00:07:05,160 --> 00:07:07,320 Speaker 1: they going to cut rates soon enough? Or are they 140 00:07:07,360 --> 00:07:09,040 Speaker 1: going to wait longer because they want to see more 141 00:07:09,080 --> 00:07:12,520 Speaker 1: progress on inflation? Kevin worsh For most of that year, 142 00:07:13,320 --> 00:07:16,680 Speaker 1: he was pretty clearly in the camp of the Fed 143 00:07:16,840 --> 00:07:19,600 Speaker 1: is risking not keeping interest rates high enough for long 144 00:07:19,720 --> 00:07:22,680 Speaker 1: enough to kill inflation. But when do you think that 145 00:07:22,760 --> 00:07:26,160 Speaker 1: his policy views changed. They've had the change in November 146 00:07:26,200 --> 00:07:28,760 Speaker 1: twenty twenty four, basically, and he basically did a big 147 00:07:29,040 --> 00:07:32,400 Speaker 1: one to eighty on what were probably considered pretty hawkish views. 148 00:07:33,000 --> 00:07:37,280 Speaker 1: But actually they turn dubbish the moment the election changes. Now, Obviously, 149 00:07:37,360 --> 00:07:40,880 Speaker 1: like everyone does a version of inflecting their policy views 150 00:07:40,880 --> 00:07:43,480 Speaker 1: with some level of politics and partisanship, whether they can 151 00:07:43,520 --> 00:07:45,320 Speaker 1: help it or not. I'm not here to say it's 152 00:07:45,360 --> 00:07:48,040 Speaker 1: like anyone's immune, but there's a tendency if you look 153 00:07:48,040 --> 00:07:51,680 Speaker 1: through his track record of basically worrying about inflation and 154 00:07:51,720 --> 00:07:55,440 Speaker 1: worrying about sort of fiscal excesses during periods when it's 155 00:07:55,480 --> 00:07:58,360 Speaker 1: a Democrat that's in the White House, and then it 156 00:07:58,400 --> 00:08:02,280 Speaker 1: tends to flip towards deregularly and productivity growth are going 157 00:08:02,320 --> 00:08:06,640 Speaker 1: to be disinflationary, and that's that's why we can afford 158 00:08:06,640 --> 00:08:09,200 Speaker 1: to keep rates lower. When it's the Republican that's in 159 00:08:09,240 --> 00:08:12,760 Speaker 1: the White House, I think that's been dialed up even further. 160 00:08:12,840 --> 00:08:15,280 Speaker 1: And this is this last call it eighteen to twenty 161 00:08:15,320 --> 00:08:17,960 Speaker 1: four months where you've seen that sort of one to 162 00:08:18,000 --> 00:08:20,760 Speaker 1: eighty take place, and I think that kind of speaks 163 00:08:20,760 --> 00:08:23,520 Speaker 1: to exactly what did you have to promise to President 164 00:08:23,520 --> 00:08:24,560 Speaker 1: Trump to get the job. 165 00:08:25,200 --> 00:08:28,280 Speaker 2: It's funny you mentioned writing op eds in the Wall 166 00:08:28,280 --> 00:08:33,120 Speaker 2: Street Journal, and this is also a Dutta line, he says, 167 00:08:33,320 --> 00:08:35,640 Speaker 2: And all he's done in the years since his time 168 00:08:35,679 --> 00:08:38,120 Speaker 2: at the FED is critique QE and the FED itself 169 00:08:38,240 --> 00:08:40,480 Speaker 2: making a bunch of bad economic calls along the way, 170 00:08:40,520 --> 00:08:42,680 Speaker 2: and writing the same op ed in the Wall Street 171 00:08:42,760 --> 00:08:46,080 Speaker 2: Journal every year. So one thing I was reading, you know, 172 00:08:46,120 --> 00:08:47,920 Speaker 2: I read some of those op eds, but I also 173 00:08:48,000 --> 00:08:52,080 Speaker 2: read a speech that Walsh made last year, and he 174 00:08:52,240 --> 00:08:56,600 Speaker 2: was criticizing the FED for being too dependent on data 175 00:08:56,800 --> 00:09:02,359 Speaker 2: or focusing on data dependency too much near term forecasting, 176 00:09:02,960 --> 00:09:05,640 Speaker 2: and it kind of, you know, it made me think, like, well, 177 00:09:05,679 --> 00:09:08,680 Speaker 2: if you're not looking at the data, what are you 178 00:09:08,760 --> 00:09:10,640 Speaker 2: going to be looking at? Do we have any sense 179 00:09:10,679 --> 00:09:14,200 Speaker 2: of what he actually prioritizes when it comes to making policy? 180 00:09:14,559 --> 00:09:17,600 Speaker 1: Yeah, I mean maybe it's vibes, maybe it's presidential preferences, 181 00:09:17,720 --> 00:09:20,240 Speaker 1: but obviously, like sort of half kidding there, But I 182 00:09:20,240 --> 00:09:21,840 Speaker 1: think it's like, what do we have if we don't 183 00:09:21,840 --> 00:09:24,120 Speaker 1: have data? Right, what do we have if we don't 184 00:09:24,160 --> 00:09:27,199 Speaker 1: have a language that you can talk about facts? Like, 185 00:09:27,240 --> 00:09:29,720 Speaker 1: obviously data has flaws. We all know that there's like 186 00:09:30,040 --> 00:09:33,880 Speaker 1: limitations to what macroeconomic data releases can tell us, what 187 00:09:33,960 --> 00:09:35,880 Speaker 1: various points of information tell us. We're all trying to 188 00:09:35,880 --> 00:09:41,400 Speaker 1: triangulate around this like fuzzy reality of macroegonomics. But it's 189 00:09:41,440 --> 00:09:43,520 Speaker 1: a useful language for being able to like get people 190 00:09:43,559 --> 00:09:48,079 Speaker 1: from different policy preferences, different political orientations to get on 191 00:09:48,120 --> 00:09:50,880 Speaker 1: something of the same page. Right. It's a way of saying, Okay, 192 00:09:51,040 --> 00:09:53,000 Speaker 1: this is a fact about the data. We can tell it, 193 00:09:53,120 --> 00:09:54,839 Speaker 1: say this is the reason why it's too high, it's 194 00:09:54,880 --> 00:09:57,599 Speaker 1: too low, it's biased. This way you can have a 195 00:09:57,600 --> 00:09:59,480 Speaker 1: discussion about it. But at least it's a way to 196 00:09:59,480 --> 00:10:01,720 Speaker 1: make sure we're talk with something other than politics, something 197 00:10:01,760 --> 00:10:05,080 Speaker 1: other than policy that's like outside of the ambit of 198 00:10:05,120 --> 00:10:08,000 Speaker 1: the FED. I think what you actually hear from Kevin 199 00:10:08,040 --> 00:10:10,640 Speaker 1: Worese from the data dependence side, it's pretty worrisome because 200 00:10:10,640 --> 00:10:14,640 Speaker 1: it kind of speaks to a disinterest in being perceived 201 00:10:14,640 --> 00:10:18,000 Speaker 1: as objective and lack of interest in actually doing something 202 00:10:18,040 --> 00:10:21,480 Speaker 1: that can broaden legitimacy around the FED so that people 203 00:10:21,520 --> 00:10:25,280 Speaker 1: really understand, Okay, the FED made this decision because indicators 204 00:10:25,320 --> 00:10:28,040 Speaker 1: moved in this direction, or they think indicators are moving 205 00:10:28,080 --> 00:10:30,640 Speaker 1: this direction. At the same time, we obviously have a 206 00:10:30,640 --> 00:10:34,960 Speaker 1: situation where like there's a lot of risk of eroding 207 00:10:35,000 --> 00:10:39,640 Speaker 1: trust in the FED. When Trump has been saying that 208 00:10:39,720 --> 00:10:42,319 Speaker 1: he wants his guy in who's going to do what 209 00:10:42,400 --> 00:10:45,800 Speaker 1: he wants, and that he really felt burned by picking 210 00:10:46,559 --> 00:10:49,640 Speaker 1: Jerome Powell, so basically that Jerome Powell was not pliant 211 00:10:49,760 --> 00:10:53,240 Speaker 1: enough to what Trump was looking for. I think that 212 00:10:53,240 --> 00:10:55,760 Speaker 1: that just raises a lot of risks going forward. And 213 00:10:55,800 --> 00:10:58,400 Speaker 1: I just to bring it back to the issue of prises. 214 00:10:59,000 --> 00:11:00,680 Speaker 1: The FED has been such an I were an actor 215 00:11:00,760 --> 00:11:03,880 Speaker 1: in periods of crisis and divided government. Right when we 216 00:11:03,920 --> 00:11:07,360 Speaker 1: think about twenty eight and twenty twenty, when periods when 217 00:11:07,760 --> 00:11:10,720 Speaker 1: the White House was controlled by a Republican and there 218 00:11:10,800 --> 00:11:13,960 Speaker 1: was a pretty vociferous opposition from Congress in terms of 219 00:11:14,040 --> 00:11:16,400 Speaker 1: obviously there was a democratic House in twenty twenty and 220 00:11:16,600 --> 00:11:18,680 Speaker 1: both chambers were a democratic in two thousand and eight, 221 00:11:19,320 --> 00:11:23,200 Speaker 1: how did you get to like policies that actually started 222 00:11:23,200 --> 00:11:25,680 Speaker 1: to take like address the scale of the crises in 223 00:11:25,679 --> 00:11:29,560 Speaker 1: front of them. You got there because there was some 224 00:11:29,600 --> 00:11:32,199 Speaker 1: agreement and trust that the FED could be a reliable 225 00:11:32,400 --> 00:11:35,120 Speaker 1: kind of crisis broker of sorts. I think that's gonna 226 00:11:35,120 --> 00:11:37,000 Speaker 1: be a lot harder this time around because Kevin Morrish 227 00:11:37,080 --> 00:11:39,880 Speaker 1: is like track record. Obviously, there's a certain obsequiousness that 228 00:11:40,000 --> 00:11:42,319 Speaker 1: kind of has been very obvious from how he's do 229 00:11:42,480 --> 00:11:45,280 Speaker 1: these policy one eighties. He goes from hawk at one 230 00:11:45,320 --> 00:11:47,640 Speaker 1: point and then the moment Trump wins office, he starts 231 00:11:47,679 --> 00:11:50,199 Speaker 1: to shift towards being more dubbish. He did a version 232 00:11:50,200 --> 00:11:53,320 Speaker 1: of this in twenty seventeen, though less exaggerated, So that's 233 00:11:53,320 --> 00:11:57,520 Speaker 1: something that is concerning. Layer it onto. His tenure as 234 00:11:57,600 --> 00:12:01,200 Speaker 1: Fed governor has this like features a lot of speeches 235 00:12:01,240 --> 00:12:03,840 Speaker 1: in which he's like really going off script in terms 236 00:12:03,840 --> 00:12:05,560 Speaker 1: of what he's talking about. He doesn't just talk about 237 00:12:05,600 --> 00:12:08,520 Speaker 1: monetary policy or just financial regulation. He started to give 238 00:12:08,960 --> 00:12:11,760 Speaker 1: kind of these like bigger concerns about, Hey, I don't 239 00:12:11,760 --> 00:12:14,120 Speaker 1: really like the way the trade policy is going under 240 00:12:14,160 --> 00:12:17,400 Speaker 1: the Obama administration. I don't really like how like we 241 00:12:17,800 --> 00:12:22,160 Speaker 1: risked going down the wrong path on broader regulatory policy, 242 00:12:22,559 --> 00:12:25,240 Speaker 1: things that really shouldn't have been under his domain itself 243 00:12:25,280 --> 00:12:27,800 Speaker 1: to focus on. And yet he kind of veered into 244 00:12:27,880 --> 00:12:30,520 Speaker 1: the political and probably was speaking to a more partisan 245 00:12:30,600 --> 00:12:32,920 Speaker 1: audience at that time. I think everything you've seen since 246 00:12:32,960 --> 00:12:34,679 Speaker 1: two thousand and five six kind of speaks to someone 247 00:12:34,720 --> 00:12:36,559 Speaker 1: who wants to talk to a one side of the 248 00:12:36,559 --> 00:12:38,640 Speaker 1: partisan aisle. But it may be very different in a crisis. 249 00:12:38,679 --> 00:13:05,640 Speaker 1: But you need relationships across this vectrum. 250 00:12:53,040 --> 00:12:56,160 Speaker 3: You know, regardless of what people thought about BERNANKI or Paul, etc. 251 00:12:56,800 --> 00:13:00,720 Speaker 3: Both of them, you know, were reasonably well respect across 252 00:13:00,760 --> 00:13:03,320 Speaker 3: both sides of the aisle, which probably was very helpful 253 00:13:03,440 --> 00:13:04,240 Speaker 3: during the crisis. 254 00:13:04,320 --> 00:13:05,320 Speaker 1: I have a question, and I've. 255 00:13:05,200 --> 00:13:08,120 Speaker 3: Never actually quite known the answer to this, but even 256 00:13:08,559 --> 00:13:11,760 Speaker 3: going back to two thousand and nine, twenty ten, et cetera, 257 00:13:11,920 --> 00:13:14,920 Speaker 3: like a lot of people really liked Worsh, and you 258 00:13:15,000 --> 00:13:18,200 Speaker 3: mentioned that he's in a select community of like some 259 00:13:18,280 --> 00:13:21,760 Speaker 3: pretty like heavy hitters, et cetera. And I think Bernank 260 00:13:22,320 --> 00:13:24,680 Speaker 3: liked Worsh quite a bit. If I recall, what is 261 00:13:24,760 --> 00:13:27,680 Speaker 3: the sort of like worsh origin story of how he 262 00:13:27,800 --> 00:13:30,680 Speaker 3: got to be in the circles of some of the 263 00:13:30,720 --> 00:13:32,960 Speaker 3: most elite and a monetary policy minds. 264 00:13:33,400 --> 00:13:36,240 Speaker 1: So he was one of the youngest people selected to 265 00:13:36,320 --> 00:13:38,720 Speaker 1: be a Fed governor, and there was a lot of 266 00:13:38,720 --> 00:13:43,079 Speaker 1: consternation even about whether he was qualified at that time. 267 00:13:43,640 --> 00:13:47,679 Speaker 1: There's some good background about how there were a lot 268 00:13:47,679 --> 00:13:51,400 Speaker 1: of critics for Price chairman, people who served under Ronald 269 00:13:51,440 --> 00:13:56,120 Speaker 1: Reagan expressing reservation is about picking someone so young who 270 00:13:56,160 --> 00:13:59,280 Speaker 1: had no real track record. He was like an investment 271 00:13:59,280 --> 00:14:03,680 Speaker 1: banquet Morgan Stance and technology media Telcom for a brief period. 272 00:14:04,080 --> 00:14:06,720 Speaker 1: He's kind of known in these circles primarily, and like, 273 00:14:07,120 --> 00:14:09,040 Speaker 1: I don't know how much to ascribe to this, but 274 00:14:09,120 --> 00:14:11,360 Speaker 1: I do think like it matters that probably his father 275 00:14:11,440 --> 00:14:13,560 Speaker 1: in law is one of the big donors to the 276 00:14:13,600 --> 00:14:15,880 Speaker 1: Republican Party and has been a big donor to Trump, 277 00:14:15,920 --> 00:14:19,320 Speaker 1: so Ron laudaiir of es Day Lauter fame. So there's 278 00:14:19,360 --> 00:14:21,680 Speaker 1: ex certain levels of connections that have mattered. I think 279 00:14:22,000 --> 00:14:25,200 Speaker 1: there's a pretty well documented fight between Randy Quarrels, who 280 00:14:25,280 --> 00:14:27,800 Speaker 1: is the head of supervision appointed by Trump in his 281 00:14:27,880 --> 00:14:31,800 Speaker 1: first rum, and Kevin Warsh were fighting over a particular 282 00:14:31,880 --> 00:14:35,360 Speaker 1: job in the Bush Treasury Secretary Office, the Treasure Department. 283 00:14:35,480 --> 00:14:38,640 Speaker 1: So he's been around in those circles. I think he's 284 00:14:38,680 --> 00:14:41,680 Speaker 1: mostly been conversed with, let's call people who are like 285 00:14:41,720 --> 00:14:44,280 Speaker 1: he was on a visiting fellow the Hube Institution, which 286 00:14:44,320 --> 00:14:48,000 Speaker 1: is like an intellectual hub for obviously conservative economic thought. 287 00:14:48,520 --> 00:14:51,480 Speaker 1: But he's also mostly been speaking to a specific crowd 288 00:14:51,480 --> 00:14:54,600 Speaker 1: like the Wall Street Journal op eded Page. Has mostly 289 00:14:54,640 --> 00:14:58,400 Speaker 1: been with those who are of his persuasion. He has 290 00:14:58,440 --> 00:15:01,200 Speaker 1: managed to do a remarkable job of shape shifting to words, 291 00:15:01,280 --> 00:15:05,000 Speaker 1: making sure he's heard well by President Trump. And so 292 00:15:05,160 --> 00:15:08,040 Speaker 1: he has managed to kind of make that transition in 293 00:15:08,040 --> 00:15:10,280 Speaker 1: a way that maybe other people have not. But that 294 00:15:10,400 --> 00:15:13,440 Speaker 1: shape shifting itself has always been with an orientation towards 295 00:15:13,480 --> 00:15:15,960 Speaker 1: I'm really speaking to a Republican audience. And what I 296 00:15:16,000 --> 00:15:18,680 Speaker 1: wonder about that is, if we run into any sort 297 00:15:18,720 --> 00:15:21,440 Speaker 1: of situation where you're going to need the FED to 298 00:15:21,520 --> 00:15:23,360 Speaker 1: kind of put out a fire, or you're gona need 299 00:15:23,400 --> 00:15:26,000 Speaker 1: some institution to do that play that role as there 300 00:15:26,080 --> 00:15:27,840 Speaker 1: was the case in the Cares Act, or was the 301 00:15:27,880 --> 00:15:31,520 Speaker 1: case around Tarp or around any of the other sort 302 00:15:31,520 --> 00:15:33,960 Speaker 1: of bailous of zos and eight, how do you like 303 00:15:34,040 --> 00:15:36,960 Speaker 1: muster that together when like this person has kind of 304 00:15:37,320 --> 00:15:41,560 Speaker 1: been pretty consistently partisan and ideological in some ways, ideological 305 00:15:41,600 --> 00:15:44,320 Speaker 1: maybe more so when it's not Trump at the helm, 306 00:15:44,640 --> 00:15:46,240 Speaker 1: but it's just something that's going to come very hard 307 00:15:46,280 --> 00:15:49,160 Speaker 1: to trust. And we kind of take that for granted 308 00:15:49,280 --> 00:15:52,040 Speaker 1: in terms of like macro and finance about how the 309 00:15:52,080 --> 00:15:54,040 Speaker 1: FED is supposed to step in when there's a crisis, 310 00:15:54,160 --> 00:15:56,000 Speaker 1: but like the FED steps into the crisis when they 311 00:15:56,000 --> 00:15:58,040 Speaker 1: get the backing from both Congress and the White House, 312 00:15:58,760 --> 00:15:59,680 Speaker 1: that may not exist. 313 00:16:00,480 --> 00:16:03,560 Speaker 2: Just going back to things that Orsh has said previously, 314 00:16:03,600 --> 00:16:06,440 Speaker 2: So we talked about he's been very critical of the 315 00:16:06,480 --> 00:16:10,280 Speaker 2: fed's balance sheet, expanded balance sheet and QI and things 316 00:16:10,360 --> 00:16:13,840 Speaker 2: like that. Assuming that he figures out a way to 317 00:16:14,560 --> 00:16:17,400 Speaker 2: do what he wants at the FED and somehow it 318 00:16:17,400 --> 00:16:20,760 Speaker 2: gets support of the FED board or does something else, 319 00:16:21,200 --> 00:16:24,560 Speaker 2: how dramatic could his tenure at the FED actually be 320 00:16:24,800 --> 00:16:27,680 Speaker 2: in terms of monetary policy, because I'm thinking, you know, 321 00:16:28,360 --> 00:16:32,000 Speaker 2: there's been some chat or some suggestion that worsh would 322 00:16:32,040 --> 00:16:37,120 Speaker 2: like to radically redesign the way monetary policy interest rates 323 00:16:37,200 --> 00:16:38,720 Speaker 2: are actually implemented. 324 00:16:40,240 --> 00:16:42,080 Speaker 1: Yeah, that's always been a bit fuzzy to me because 325 00:16:42,280 --> 00:16:44,400 Speaker 1: he's been very eager to criticize, but the nature of 326 00:16:44,400 --> 00:16:47,520 Speaker 1: the criticism has always had to like continuously adapt to 327 00:16:48,160 --> 00:16:51,400 Speaker 1: what I'd call somewhat failed predictions. First it was that 328 00:16:51,440 --> 00:16:52,840 Speaker 1: there are a lot of people said, QUI is going to 329 00:16:52,880 --> 00:16:56,000 Speaker 1: increase some money's supply and mechanically increase inflation. And that 330 00:16:56,120 --> 00:16:57,720 Speaker 1: was the case that people said this like two thousand 331 00:16:57,720 --> 00:17:00,480 Speaker 1: and nine didn't quite pan out that way. Then people 332 00:17:00,560 --> 00:17:01,920 Speaker 1: kind of said, like it's going to lead to acid 333 00:17:01,960 --> 00:17:05,240 Speaker 1: price inflation, slash and bubbles, like maybe there's acid price inflation. 334 00:17:05,280 --> 00:17:07,240 Speaker 1: But there wasn't really like an obvious bubble that Trent 335 00:17:07,240 --> 00:17:10,080 Speaker 1: transpired from it, and then it's sort of that some 336 00:17:10,119 --> 00:17:12,320 Speaker 1: of the criticians shifted towards while it's actually doing something 337 00:17:12,359 --> 00:17:14,359 Speaker 1: on fiscal policy. So I think you have to have 338 00:17:14,400 --> 00:17:15,760 Speaker 1: a career in view of what you actually think the 339 00:17:15,760 --> 00:17:19,200 Speaker 1: Fed balagy does. Like if you ask me, ordinary vanilla 340 00:17:19,240 --> 00:17:21,639 Speaker 1: treasury QI is not really doing much. It's mostly an 341 00:17:21,680 --> 00:17:23,760 Speaker 1: acid swamp of two risk free acids, which is a 342 00:17:23,840 --> 00:17:26,240 Speaker 1: view actually that another person who over institutions John Cochran 343 00:17:26,280 --> 00:17:29,480 Speaker 1: would be abide by. So there's not really any disporting 344 00:17:29,560 --> 00:17:32,280 Speaker 1: effects that people are really the way people are saying, 345 00:17:32,960 --> 00:17:34,400 Speaker 1: and yet he sort of has made this a big 346 00:17:34,440 --> 00:17:36,159 Speaker 1: bug bearer that this is like the big thing that 347 00:17:36,200 --> 00:17:39,200 Speaker 1: needs to shift. He comes at a very awkward time 348 00:17:39,600 --> 00:17:42,400 Speaker 1: because what's been happening is that money markets have been 349 00:17:42,440 --> 00:17:45,119 Speaker 1: basically giving the signal that actually the balance sheet is 350 00:17:45,119 --> 00:17:46,760 Speaker 1: getting to a place where if you try to run 351 00:17:46,800 --> 00:17:49,440 Speaker 1: it down from here and run it down to abruptly, 352 00:17:50,359 --> 00:17:52,280 Speaker 1: you might get more dysfunction, kind of similar to what 353 00:17:52,320 --> 00:17:55,400 Speaker 1: we saw in like September twenty nineteen. So we might 354 00:17:55,400 --> 00:17:59,080 Speaker 1: get into a situation where rebol rates spike because there's 355 00:17:59,080 --> 00:18:01,760 Speaker 1: just not a lot of relative to the banking system 356 00:18:01,760 --> 00:18:04,360 Speaker 1: and the financial system's needs. You do need to have 357 00:18:04,400 --> 00:18:07,880 Speaker 1: some amount of liquidity available, and that amount of liquidity 358 00:18:07,920 --> 00:18:10,320 Speaker 1: is meaningfully more than it was prior to the financial crisis. 359 00:18:10,359 --> 00:18:13,359 Speaker 1: That's probably like one part regulation, one part supervision, and 360 00:18:13,480 --> 00:18:16,320 Speaker 1: one part bank risk management practices. But this stuff is 361 00:18:16,400 --> 00:18:18,280 Speaker 1: kind of like actually hard to pin down how much 362 00:18:18,280 --> 00:18:21,520 Speaker 1: of each, And so he's bide this is like big concern. 363 00:18:22,080 --> 00:18:25,359 Speaker 1: I suspect he's probably gonna have to swallow his pride 364 00:18:25,400 --> 00:18:30,200 Speaker 1: a bit and be more supportive of like gradual battle 365 00:18:30,240 --> 00:18:33,560 Speaker 1: sheet expansion during this period because money market conditions are 366 00:18:33,600 --> 00:18:35,879 Speaker 1: basically signaling that things have tidied up quite a bit 367 00:18:35,880 --> 00:18:38,080 Speaker 1: in terms of if you look at where the FED 368 00:18:38,119 --> 00:18:40,439 Speaker 1: funds rate or money market interest rates are relative to 369 00:18:40,520 --> 00:18:42,920 Speaker 1: the interest that the FED pays on reserves, or the 370 00:18:42,960 --> 00:18:46,520 Speaker 1: interest rate that the FED pays for money market funds 371 00:18:46,520 --> 00:18:49,320 Speaker 1: to the revers reypop facility, those have been converging, right, 372 00:18:49,359 --> 00:18:51,760 Speaker 1: Those are basically been those money market indust rates have 373 00:18:51,760 --> 00:18:54,440 Speaker 1: been kept going up relative to those but rates set 374 00:18:54,480 --> 00:18:56,399 Speaker 1: by the Fed. And that kind of is also a 375 00:18:56,480 --> 00:18:59,199 Speaker 1: sign that like, yeah, you're gonna to have more malleability. 376 00:18:59,240 --> 00:19:01,840 Speaker 1: And it's not exactly be the case that like, oh 377 00:19:01,840 --> 00:19:04,120 Speaker 1: my god, this FED balance sheet is like this big problem, 378 00:19:04,440 --> 00:19:06,720 Speaker 1: or that it's something that if you if you lower 379 00:19:06,720 --> 00:19:08,600 Speaker 1: the balance sheet, that's how you get lower interest rates. 380 00:19:09,440 --> 00:19:11,520 Speaker 1: These views are all kind of incoherent. But I think 381 00:19:11,560 --> 00:19:13,480 Speaker 1: that especially now that he might be in a position 382 00:19:13,520 --> 00:19:16,560 Speaker 1: where has to deal with those hard realities, I suspect 383 00:19:16,640 --> 00:19:18,080 Speaker 1: his views made worse to change. 384 00:19:18,160 --> 00:19:20,320 Speaker 3: It'll be interesting to see what happens. Let's just talk, 385 00:19:20,400 --> 00:19:23,920 Speaker 3: you know, so we know Trump wants lower rates. Kevin 386 00:19:23,960 --> 00:19:26,920 Speaker 3: Warrish has talked about we need lower rates, so there's 387 00:19:26,920 --> 00:19:30,520 Speaker 3: alignment there. Other candidates who were like the sort of 388 00:19:30,760 --> 00:19:34,879 Speaker 3: finalists also talking about that. So Christopher Waller, who I think, 389 00:19:35,280 --> 00:19:37,399 Speaker 3: you know, many people would say perhaps has the best 390 00:19:37,400 --> 00:19:40,359 Speaker 3: track record of the last five years of anyone having 391 00:19:40,400 --> 00:19:44,959 Speaker 3: correctly identified the inflationary turn and then also recognizing when 392 00:19:45,040 --> 00:19:48,400 Speaker 3: the inflationary turn was coming to and he also wants 393 00:19:48,720 --> 00:19:51,360 Speaker 3: lower rates. So like there were presumably no matter who 394 00:19:51,440 --> 00:19:53,760 Speaker 3: was going to come in was going to have this 395 00:19:54,000 --> 00:19:57,240 Speaker 3: lower rates. Now view that being said, you know, does 396 00:19:57,760 --> 00:20:01,120 Speaker 3: the actual execution of lower rates in the short term 397 00:20:01,240 --> 00:20:05,480 Speaker 3: setting aside crisis, does it change at all the dynamics 398 00:20:05,520 --> 00:20:08,959 Speaker 3: when he's just one of multiple voting members. If that 399 00:20:09,040 --> 00:20:11,640 Speaker 3: message is coming from Kevin Walsh versus if it were 400 00:20:11,680 --> 00:20:13,640 Speaker 3: coming from a Christopher Waller. 401 00:20:13,920 --> 00:20:17,240 Speaker 1: I think it definitely matters because at least with Chris Waller, honestly, 402 00:20:17,600 --> 00:20:20,960 Speaker 1: with all of the front runners outside of Borsh, I 403 00:20:21,000 --> 00:20:25,520 Speaker 1: can point to a tangible example where that person supported 404 00:20:25,560 --> 00:20:29,400 Speaker 1: the case for lower interest rates outside of a very 405 00:20:29,600 --> 00:20:34,320 Speaker 1: Trump inflected electoral context. And I'm including even Kevin Hassett 406 00:20:34,359 --> 00:20:39,000 Speaker 1: here and so Rick Reader Chris Waller are people who 407 00:20:39,000 --> 00:20:42,120 Speaker 1: have made the case for radcuts at various times, even 408 00:20:42,160 --> 00:20:43,960 Speaker 1: when Trump was not in office, even when Trump wasn't 409 00:20:43,960 --> 00:20:47,159 Speaker 1: clamoring for lower regist rates. In the case of Kevin Hassett, 410 00:20:47,240 --> 00:20:49,760 Speaker 1: he went on the record in October twenty twenty four, 411 00:20:49,800 --> 00:20:53,040 Speaker 1: I believe, basically defending the Fed's fifty basis point radcut 412 00:20:53,080 --> 00:20:56,320 Speaker 1: in September, back when Kevin Walsh and Scott Bessant and 413 00:20:56,359 --> 00:20:59,440 Speaker 1: Steve Steve Myron were up in arms about the idea 414 00:20:59,440 --> 00:21:01,400 Speaker 1: that could cut rates and thought it was the most 415 00:21:01,440 --> 00:21:05,760 Speaker 1: like politically motivated decision. Ever, so you get people who 416 00:21:05,760 --> 00:21:08,600 Speaker 1: have actually registered their views and are not I can 417 00:21:08,600 --> 00:21:10,880 Speaker 1: show an ability to make judgments outside of that sort 418 00:21:10,880 --> 00:21:14,560 Speaker 1: of presidential context will come with more credibility because in 419 00:21:14,600 --> 00:21:17,240 Speaker 1: the end it, as you rightly point out, the FLMC, 420 00:21:17,560 --> 00:21:20,080 Speaker 1: which is made up of seven Fed governors and a 421 00:21:20,080 --> 00:21:25,399 Speaker 1: set of regional FED presidents, they are not just presidential appointees, 422 00:21:25,600 --> 00:21:28,479 Speaker 1: certainly not of this current president, and even those who 423 00:21:28,520 --> 00:21:31,440 Speaker 1: are appointed by the president in the previous administration. I think, 424 00:21:31,480 --> 00:21:33,879 Speaker 1: to a large extent, I'm talking with Michelle Bollman or 425 00:21:34,359 --> 00:21:38,639 Speaker 1: Chris Waller or j Powell have shown like a capacity 426 00:21:38,680 --> 00:21:43,800 Speaker 1: for independent judgment and assessment. Will someone like Kevin Worrish 427 00:21:43,800 --> 00:21:46,280 Speaker 1: be able to bring more people on board is going 428 00:21:46,320 --> 00:21:48,919 Speaker 1: to be a real challenge, right, Can he be persuasive? 429 00:21:49,240 --> 00:21:51,199 Speaker 1: Can you be persuasive? And especially if he's someone who 430 00:21:51,240 --> 00:21:53,359 Speaker 1: doesn't really take a lot of stock in data, Like 431 00:21:53,400 --> 00:21:55,480 Speaker 1: one of the nice ways that you can be persuasive 432 00:21:55,560 --> 00:21:57,240 Speaker 1: is being able to point to an indicator and saying, 433 00:21:57,240 --> 00:21:58,760 Speaker 1: I think this is going to happen in this way. 434 00:21:59,200 --> 00:22:00,760 Speaker 1: Then if it does happen this way, you get more 435 00:22:00,800 --> 00:22:03,800 Speaker 1: credibility in the next meeting to say, I've things are 436 00:22:03,800 --> 00:22:05,800 Speaker 1: going the way I suspected it, and therefore we really 437 00:22:05,840 --> 00:22:08,080 Speaker 1: need to take policy in the direction I think is right. 438 00:22:08,760 --> 00:22:10,919 Speaker 1: Like that's kind of the data has a way of 439 00:22:10,960 --> 00:22:14,760 Speaker 1: like helping keep people accountable in discussions, not always, but 440 00:22:14,840 --> 00:22:17,199 Speaker 1: like it's better than nothing at all, or better than 441 00:22:17,240 --> 00:22:21,199 Speaker 1: the substitute. And so I think regardless of who was 442 00:22:21,200 --> 00:22:22,560 Speaker 1: gonna be the FED chair, there was gonna be a 443 00:22:22,600 --> 00:22:26,280 Speaker 1: persuasive constraint. We're kind of seeing from the Supreme Court 444 00:22:26,440 --> 00:22:28,960 Speaker 1: that Trump can't just fire everyone on the FED that 445 00:22:29,040 --> 00:22:31,720 Speaker 1: he wants. At least those are the tea leaves we're getting, 446 00:22:32,320 --> 00:22:33,920 Speaker 1: And so you're gonna have to work with the people 447 00:22:33,920 --> 00:22:36,960 Speaker 1: who are already on the FED on the FMC. And 448 00:22:37,040 --> 00:22:40,120 Speaker 1: if that's the case, like persuasive power matters, and like 449 00:22:40,400 --> 00:22:42,800 Speaker 1: what's the reason you're really like expressing this view? Are 450 00:22:42,800 --> 00:22:45,280 Speaker 1: you expressing this view because you believe it or because 451 00:22:45,280 --> 00:22:48,800 Speaker 1: you think it satisfies what the president wants. Unfortunately, over 452 00:22:48,840 --> 00:22:51,760 Speaker 1: the course of last i'd say two decades, Kevin Warsh's 453 00:22:51,840 --> 00:22:54,280 Speaker 1: views kind of have like a strong like political correlation 454 00:22:54,359 --> 00:22:57,240 Speaker 1: to them. Look, everyone's got some political correlation in their views, 455 00:22:57,280 --> 00:23:01,359 Speaker 1: I suspect, but his more predominantly, and especially if he 456 00:23:01,440 --> 00:23:04,480 Speaker 1: wasn't making arguments rooted primarily in data, I think he 457 00:23:04,520 --> 00:23:07,119 Speaker 1: may find it harder to persuade his fellow colleagues, and 458 00:23:07,160 --> 00:23:09,360 Speaker 1: there will be a high level suspicion about just how 459 00:23:10,040 --> 00:23:13,800 Speaker 1: what exactly are the true intentions behind his agenda. 460 00:23:14,119 --> 00:23:17,000 Speaker 2: Just going back to the speech that Warsh made last year, 461 00:23:17,280 --> 00:23:20,080 Speaker 2: he talked about the need for regime change at the 462 00:23:20,119 --> 00:23:24,000 Speaker 2: FED and he said that would involve quote breaking some heads. 463 00:23:24,240 --> 00:23:28,800 Speaker 2: So I imagine the first FMC meeting might be a 464 00:23:28,800 --> 00:23:30,159 Speaker 2: little a little awky. 465 00:23:30,200 --> 00:23:31,800 Speaker 3: He's got to come in and the first thing he says, 466 00:23:31,960 --> 00:23:34,000 Speaker 3: he's like, guys, I didn't mean that literally, like he's 467 00:23:34,040 --> 00:23:35,760 Speaker 3: like trying, you know, he got to come in, And 468 00:23:36,119 --> 00:23:37,639 Speaker 3: I wrote that, but I don't want you guys to 469 00:23:37,720 --> 00:23:39,600 Speaker 3: me and I said it literally, he's got to stay 470 00:23:39,640 --> 00:23:40,760 Speaker 3: there real quickly. 471 00:23:40,840 --> 00:23:44,240 Speaker 2: Skanda, if you were at that meeting, what would be 472 00:23:44,480 --> 00:23:47,320 Speaker 2: the one question or the first question that you asked 473 00:23:47,520 --> 00:23:48,600 Speaker 2: mister Walsh. 474 00:23:49,080 --> 00:23:51,639 Speaker 1: Oh, I I think it's It would be good a 475 00:23:51,680 --> 00:23:53,520 Speaker 1: good sense of just like what he's u what he 476 00:23:53,520 --> 00:23:55,280 Speaker 1: even thinks about where interest rate sho'd be right now, 477 00:23:55,320 --> 00:23:57,199 Speaker 1: because I think part of what he doesn't quite He 478 00:23:57,240 --> 00:23:59,600 Speaker 1: talks a lot about FED policy and the abstract the 479 00:23:59,600 --> 00:24:02,080 Speaker 1: need for real change. We need reform. This would need 480 00:24:02,119 --> 00:24:06,200 Speaker 1: more credibility, more fewer mandates or something along those lines. 481 00:24:06,320 --> 00:24:07,879 Speaker 1: It's all kind of vague and it can kind of 482 00:24:07,880 --> 00:24:10,400 Speaker 1: sound substantive, but I kind of think a little substance 483 00:24:10,440 --> 00:24:13,879 Speaker 1: free because it ends up blurring exactly what he thinks 484 00:24:13,920 --> 00:24:17,160 Speaker 1: about the macro economy right now. Like inflation right now 485 00:24:17,200 --> 00:24:20,560 Speaker 1: is about a percentage point above the fence target. Now, 486 00:24:20,640 --> 00:24:23,000 Speaker 1: that might be freezes that are temporary, that might freezes 487 00:24:23,000 --> 00:24:25,439 Speaker 1: that are more persistent. It'd be good to understand like 488 00:24:25,480 --> 00:24:28,080 Speaker 1: what he thinks will happen why. I mean, we don't 489 00:24:28,119 --> 00:24:30,399 Speaker 1: really know much about that beyond just thinking like, Okay, 490 00:24:30,480 --> 00:24:32,440 Speaker 1: this person's probably going to be for lowering rates because 491 00:24:32,440 --> 00:24:34,960 Speaker 1: he got the job from Trump. The reasoning it seems 492 00:24:35,040 --> 00:24:37,640 Speaker 1: very light at this point. I think it's a there's 493 00:24:37,640 --> 00:24:39,560 Speaker 1: good reason to dublished as maybe good reasons to be hawkish, 494 00:24:39,800 --> 00:24:42,480 Speaker 1: but can he identify those like as someone who will 495 00:24:42,480 --> 00:24:45,480 Speaker 1: be on the FMC year a FED staffer, Like we're 496 00:24:45,520 --> 00:24:49,320 Speaker 1: actually there's more of a black box here, because maybe 497 00:24:49,320 --> 00:24:51,040 Speaker 1: you could have told yourself a story of how he 498 00:24:51,080 --> 00:24:53,800 Speaker 1: was actually a very hawkish person, especially in twenty nine 499 00:24:53,800 --> 00:24:55,840 Speaker 1: and twenty ten and some of his Wall Street Journal 500 00:24:55,880 --> 00:25:00,720 Speaker 1: columns afterwards, but especially ever since we've had Trump in office, 501 00:25:01,240 --> 00:25:04,679 Speaker 1: like his youths have definitely shifted more dubbishly, and you 502 00:25:04,720 --> 00:25:07,080 Speaker 1: just want to wonder, like how much what is he 503 00:25:07,119 --> 00:25:09,720 Speaker 1: putting a high weight on and if that's something I 504 00:25:09,720 --> 00:25:11,680 Speaker 1: can be trusted. Ultimately, he's going to have to figure 505 00:25:11,680 --> 00:25:16,240 Speaker 1: out how to build up more persuasive power and trust 506 00:25:16,520 --> 00:25:19,280 Speaker 1: among the committee to actually be an effective FED chair. 507 00:25:19,640 --> 00:25:21,240 Speaker 1: I think I'll be to be remady to be seen. 508 00:25:21,960 --> 00:25:24,560 Speaker 3: Scotne, We're gonna let you go, but this is not 509 00:25:24,600 --> 00:25:26,879 Speaker 3: going to be the last time we talk about Kevin 510 00:25:26,920 --> 00:25:29,640 Speaker 3: worsh with you and many others. So appreciate your time. 511 00:25:30,200 --> 00:25:31,280 Speaker 1: Thanks, thanks for having me. 512 00:25:32,720 --> 00:25:36,040 Speaker 3: Lots More is produced by Dashel Bennett Kerman, Rodriguez and 513 00:25:36,119 --> 00:25:36,800 Speaker 3: cal Brooks. 514 00:25:37,000 --> 00:25:40,040 Speaker 2: Please rate, review, and subscribe to Odd, Lots and lots 515 00:25:40,040 --> 00:25:42,560 Speaker 2: More on your favorite podcast platforms. 516 00:25:42,040 --> 00:25:44,680 Speaker 3: And for even more beyond lots More, go to Bloomberg 517 00:25:44,680 --> 00:25:47,320 Speaker 3: dot com slash odd logs and chat with fellow listeners 518 00:25:47,359 --> 00:25:50,520 Speaker 3: in our discord Discord dot gg slash odlogs. 519 00:25:50,640 --> 00:25:53,480 Speaker 2: And don't forget that Bloomberg subscribers can listen to all 520 00:25:53,480 --> 00:25:56,720 Speaker 2: of our podcasts absolutely ad free. 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