Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Oh, Joe, this is cutting. This is from Neil Dudda,
Speaker 2: a friend of the pod.
Speaker 3: Oh yeah, all right, read it out, Read it out.
Speaker 2: President Trump has picked everyone's least favorite candidate, Kevin Walsh
Speaker 2: for the next Fed Reserve chief. I my hat to Warsh,
Speaker 2: who has managed to get selected after being passed over
Speaker 2: time and again. That's a remarkable achievement for him. Joe,
Speaker 2: I want a T shirt that says ruthless utility maximizer,
Speaker 2: black goal. Let's talk about losers.
Speaker 3: Hoo care.
Speaker 2: I've decided I'm going to base my entire personality going
Speaker 2: forward on campaigning for a strategic pork reserve in the US.
Speaker 3: Skull's unlimited.
Speaker 2: Oh what's the ticker for that?
Speaker 1: No.
Speaker 3: I think that like in a couple of years, the
Speaker 3: AI will do a really good job of making the
Speaker 3: out launch podcast.
Speaker 2: How do I get more popular and successful?
Speaker 3: One day that person will have the mandate of heaven.
Speaker 1: We do have of.
Speaker 2: You're listening to lots More, where we catch up with
Speaker 2: friends about what's going on right now, because.
Speaker 3: Even when the odd lots is over, there's always lots more.
Speaker 2: And we really do have the perfect guest.
Speaker 3: I'm just gonna say what I find interesting right now
Speaker 3: is that, you know, like Trump announces someone and you
Speaker 3: expect a bunch of like liberal ninnies in the media
Speaker 3: to like shake their fists. This isn't good, you know,
Speaker 3: It's like there's a lot of predictable response. But it
Speaker 3: is interesting to my mind. Here's someone like Neil who
Speaker 3: is a I do not associate him with liberal media
Speaker 3: groupthink or anything like that, as well as many others
Speaker 3: who are like, huh interesting pick here.
Speaker 2: Well, I will say, opinions kind of divided. So mohappadel
Speaker 2: Arian tweeted earlier that he thinks Kevin's going to be
Speaker 2: a great FED share and he's observed and this is
Speaker 2: a quote. Having observed and interacted with Kevin during his
Speaker 2: prior tenor as FED governor, in academia and as a
Speaker 2: fellow member of the Group of thirty, I believe he
Speaker 2: brings a strong mix of deep expertise, broad experience, and
Speaker 2: sharp communication skills.
Speaker 3: So, by the way, Jason Furman too, Yeah, yeah, Kevin
Speaker 3: worsh is well above the bar on both substance and independence.
Speaker 3: To be sure of the Federal Reserve, the Senate should
Speaker 3: ask tough questions about his independent and President Trump should
Speaker 3: reduce the thread to it. Hopefully that will make it
Speaker 3: clear Worsh should be confirmed. So it is a mix
Speaker 3: on both sides. It is not dividing in obvious easy ways. Anyway, Sconda,
Speaker 3: what's up.
Speaker 1: Glad to be part of this momentous day it is
Speaker 1: I guess we see that. Yeah, Kevin Worsh is right
Speaker 1: now the successor in waiting if he gets confirmed by
Speaker 1: the Senate. It is funny how he's part of this
Speaker 1: group of thirty, which is a form of former central bankers,
Speaker 1: former finance ministers, and movers and shakers. So you see
Speaker 1: Mohammadel Arian, Jason Furman, George Os. I believe Mark Karney
Speaker 1: certainly not exactly the most America first kind of grouping,
Speaker 1: maybe more globalist in flavor, has definitely kind of rallied
Speaker 1: around Kevin Worsh because I think they've probably converse with
Speaker 1: him a bunch of times and take him to be
Speaker 1: a very serious person. I myself am much more sympathetic
Speaker 1: to what our friend Neil has pointed out.
Speaker 3: By the way we are talking, of course, to longtime
Speaker 3: friend of the Podskanda Eminas co founder and executive of
Speaker 3: Employee America. So what do you see, Like, Okay, so
Speaker 3: someone like Neil and and someone like yourself, and you
Speaker 3: have these reservations, like what is the origin of some
Speaker 3: of these anxieties.
Speaker 1: I think there are a few different anxieties, and I
Speaker 1: think let's start with this is obviously someone who's served
Speaker 1: on the FED before, right, he was a FED governor,
Speaker 1: So we have like a track record. We don't have
Speaker 1: to rely on secondhand validation. We don't have to if
Speaker 1: we didn't have anything about Kevin Worshton. I think probably
Speaker 1: it's probably we're putting a little more emphasis on what
Speaker 1: Jason Furman and Mohammed Alarian and those people are saying.
Speaker 1: And they seem like respectable people. Except he was FED governor,
Speaker 1: and he does have a pretty long body of work
Speaker 1: in terms of a public intellectual, giving remarks, being in
Speaker 1: the Wall Street Journal opinion pages. And the trouble is
Speaker 1: it kind of comes back to like who do you
Speaker 1: want in a crisis? Right, So the FED really tends
Speaker 1: to matter the most in periods of crisis. He was
Speaker 1: a FED governor in the crisis, and he often touts
Speaker 1: it as some financial purpose. Yes, the two thousand and
Speaker 1: eight financial crisis. If you go through what his views
Speaker 1: were through that whole period, what you will find is
Speaker 1: this is someone who is very eager to tout how
Speaker 1: well the financial system was performing, even as it was
Speaker 1: descending into crisis in two thousand and seven and eight.
Speaker 1: He was very eager to really upright the importance of
Speaker 1: inflation in the summer and fall of two thousand and
Speaker 1: eight until Lehman failed. So this is on clearly who
Speaker 1: had his eye on I'd say the wrong ball that time. Okay,
Speaker 1: mistakes happen, Like people had different views. I don't think
Speaker 1: we should be like too precious about that specifically. And
Speaker 1: yet also the moment that sort of came into two
Speaker 1: thousand and nine, and let's say the absolute worst of
Speaker 1: the financial distress may have been behind us, but we
Speaker 1: had historically high and rising unemployment, he basically said this
Speaker 1: was not really a big problem, not something that the
Speaker 1: Fed should be focused on, and that we actually should
Speaker 1: start to shift back towards focusing on keeping UH interest
Speaker 1: rates more normal, not so low. I'm worried about inflation,
Speaker 1: and so he came with a lot of reasons why
Speaker 1: I thought inflation was gonna explode why QWET was really bad,
Speaker 1: and that would ultimately lead to first inflation, then maybe
Speaker 1: some version of acid price inflation, maybe bubbles, maybe it's
Speaker 1: backdoor fiscal policy. He gave with a lot of different
Speaker 1: reasons at different times for why he really hated the
Speaker 1: fact that the Fed's balance sheet was so big, But
Speaker 1: one those predictions weren't really true. I think they reflective
Speaker 1: misunderstanding of what the Fed's balance sheet really does and is.
Speaker 1: And it's still like a big is a favorite hobby
Speaker 1: horse of his, But that's itself like he kind of
Speaker 1: missed the whole financial crisis in a way, right like
Speaker 1: aside from like the absolute worst of it, everyone got
Speaker 1: on the same page in October two thousand and eight.
Speaker 1: But that's like kind of like not like that's not
Speaker 1: a great badge of like of honor that you actually
Speaker 1: figured out that you had to serve to support the
Speaker 1: financial system at that time. I think that's the first
Speaker 1: dimension that probably is of concern. But let's say, like, Okay,
Speaker 1: people have gone through various episodes and missed a lot
Speaker 1: of things, and you'd hope coming out of that people
Speaker 1: kind of have learned something, expressed some humility Okay, I
Speaker 1: missed this part of this problem, the scale of it,
Speaker 1: the duration of it, and I'll do better next time.
Speaker 1: We haven't really heard that, but okay, let's see those
Speaker 1: like missing mea culpus aside. The two things that are
Speaker 1: more concerning that come out of that, though, is we
Speaker 1: see now a growing pattern of both obsequiousness and partisanship
Speaker 1: in how he orientsd his macro and monetary policy beams.
Speaker 1: So let's fast forward to twenty twenty four, right where
Speaker 1: we had for a while. Obviously there was a sense
Speaker 1: of like the fence going to cut rates, but are
Speaker 1: they going to cut rates soon enough? Or are they
Speaker 1: going to wait longer because they want to see more
Speaker 1: progress on inflation? Kevin worsh For most of that year,
Speaker 1: he was pretty clearly in the camp of the Fed
Speaker 1: is risking not keeping interest rates high enough for long
Speaker 1: enough to kill inflation. But when do you think that
Speaker 1: his policy views changed. They've had the change in November
Speaker 1: twenty twenty four, basically, and he basically did a big
Speaker 1: one to eighty on what were probably considered pretty hawkish views.
Speaker 1: But actually they turn dubbish the moment the election changes. Now, Obviously,
Speaker 1: like everyone does a version of inflecting their policy views
Speaker 1: with some level of politics and partisanship, whether they can
Speaker 1: help it or not. I'm not here to say it's
Speaker 1: like anyone's immune, but there's a tendency if you look
Speaker 1: through his track record of basically worrying about inflation and
Speaker 1: worrying about sort of fiscal excesses during periods when it's
Speaker 1: a Democrat that's in the White House, and then it
Speaker 1: tends to flip towards deregularly and productivity growth are going
Speaker 1: to be disinflationary, and that's that's why we can afford
Speaker 1: to keep rates lower. When it's the Republican that's in
Speaker 1: the White House, I think that's been dialed up even further.
Speaker 1: And this is this last call it eighteen to twenty
Speaker 1: four months where you've seen that sort of one to
Speaker 1: eighty take place, and I think that kind of speaks
Speaker 1: to exactly what did you have to promise to President
Speaker 1: Trump to get the job.
Speaker 2: It's funny you mentioned writing op eds in the Wall
Speaker 2: Street Journal, and this is also a Dutta line, he says,
Speaker 2: And all he's done in the years since his time
Speaker 2: at the FED is critique QE and the FED itself
Speaker 2: making a bunch of bad economic calls along the way,
Speaker 2: and writing the same op ed in the Wall Street
Speaker 2: Journal every year. So one thing I was reading, you know,
Speaker 2: I read some of those op eds, but I also
Speaker 2: read a speech that Walsh made last year, and he
Speaker 2: was criticizing the FED for being too dependent on data
Speaker 2: or focusing on data dependency too much near term forecasting,
Speaker 2: and it kind of, you know, it made me think, like, well,
Speaker 2: if you're not looking at the data, what are you
Speaker 2: going to be looking at? Do we have any sense
Speaker 2: of what he actually prioritizes when it comes to making policy?
Speaker 1: Yeah, I mean maybe it's vibes, maybe it's presidential preferences,
Speaker 1: but obviously, like sort of half kidding there, But I
Speaker 1: think it's like, what do we have if we don't
Speaker 1: have data? Right, what do we have if we don't
Speaker 1: have a language that you can talk about facts? Like,
Speaker 1: obviously data has flaws. We all know that there's like
Speaker 1: limitations to what macroeconomic data releases can tell us, what
Speaker 1: various points of information tell us. We're all trying to
Speaker 1: triangulate around this like fuzzy reality of macroegonomics. But it's
Speaker 1: a useful language for being able to like get people
Speaker 1: from different policy preferences, different political orientations to get on
Speaker 1: something of the same page. Right. It's a way of saying, Okay,
Speaker 1: this is a fact about the data. We can tell it,
Speaker 1: say this is the reason why it's too high, it's
Speaker 1: too low, it's biased. This way you can have a
Speaker 1: discussion about it. But at least it's a way to
Speaker 1: make sure we're talk with something other than politics, something
Speaker 1: other than policy that's like outside of the ambit of
Speaker 1: the FED. I think what you actually hear from Kevin
Speaker 1: Worese from the data dependence side, it's pretty worrisome because
Speaker 1: it kind of speaks to a disinterest in being perceived
Speaker 1: as objective and lack of interest in actually doing something
Speaker 1: that can broaden legitimacy around the FED so that people
Speaker 1: really understand, Okay, the FED made this decision because indicators
Speaker 1: moved in this direction, or they think indicators are moving
Speaker 1: this direction. At the same time, we obviously have a
Speaker 1: situation where like there's a lot of risk of eroding
Speaker 1: trust in the FED. When Trump has been saying that
Speaker 1: he wants his guy in who's going to do what
Speaker 1: he wants, and that he really felt burned by picking
Speaker 1: Jerome Powell, so basically that Jerome Powell was not pliant
Speaker 1: enough to what Trump was looking for. I think that
Speaker 1: that just raises a lot of risks going forward. And
Speaker 1: I just to bring it back to the issue of prises.
Speaker 1: The FED has been such an I were an actor
Speaker 1: in periods of crisis and divided government. Right when we
Speaker 1: think about twenty eight and twenty twenty, when periods when
Speaker 1: the White House was controlled by a Republican and there
Speaker 1: was a pretty vociferous opposition from Congress in terms of
Speaker 1: obviously there was a democratic House in twenty twenty and
Speaker 1: both chambers were a democratic in two thousand and eight,
Speaker 1: how did you get to like policies that actually started
Speaker 1: to take like address the scale of the crises in
Speaker 1: front of them. You got there because there was some
Speaker 1: agreement and trust that the FED could be a reliable
Speaker 1: kind of crisis broker of sorts. I think that's gonna
Speaker 1: be a lot harder this time around because Kevin Morrish
Speaker 1: is like track record. Obviously, there's a certain obsequiousness that
Speaker 1: kind of has been very obvious from how he's do
Speaker 1: these policy one eighties. He goes from hawk at one
Speaker 1: point and then the moment Trump wins office, he starts
Speaker 1: to shift towards being more dubbish. He did a version
Speaker 1: of this in twenty seventeen, though less exaggerated, So that's
Speaker 1: something that is concerning. Layer it onto. His tenure as
Speaker 1: Fed governor has this like features a lot of speeches
Speaker 1: in which he's like really going off script in terms
Speaker 1: of what he's talking about. He doesn't just talk about
Speaker 1: monetary policy or just financial regulation. He started to give
Speaker 1: kind of these like bigger concerns about, Hey, I don't
Speaker 1: really like the way the trade policy is going under
Speaker 1: the Obama administration. I don't really like how like we
Speaker 1: risked going down the wrong path on broader regulatory policy,
Speaker 1: things that really shouldn't have been under his domain itself
Speaker 1: to focus on. And yet he kind of veered into
Speaker 1: the political and probably was speaking to a more partisan
Speaker 1: audience at that time. I think everything you've seen since
Speaker 1: two thousand and five six kind of speaks to someone
Speaker 1: who wants to talk to a one side of the
Speaker 1: partisan aisle. But it may be very different in a crisis.
Speaker 1: But you need relationships across this vectrum.
Speaker 3: You know, regardless of what people thought about BERNANKI or Paul, etc.
Speaker 3: Both of them, you know, were reasonably well respect across
Speaker 3: both sides of the aisle, which probably was very helpful
Speaker 3: during the crisis.
Speaker 1: I have a question, and I've.
Speaker 3: Never actually quite known the answer to this, but even
Speaker 3: going back to two thousand and nine, twenty ten, et cetera,
Speaker 3: like a lot of people really liked Worsh, and you
Speaker 3: mentioned that he's in a select community of like some
Speaker 3: pretty like heavy hitters, et cetera. And I think Bernank
Speaker 3: liked Worsh quite a bit. If I recall, what is
Speaker 3: the sort of like worsh origin story of how he
Speaker 3: got to be in the circles of some of the
Speaker 3: most elite and a monetary policy minds.
Speaker 1: So he was one of the youngest people selected to
Speaker 1: be a Fed governor, and there was a lot of
Speaker 1: consternation even about whether he was qualified at that time.
Speaker 1: There's some good background about how there were a lot
Speaker 1: of critics for Price chairman, people who served under Ronald
Speaker 1: Reagan expressing reservation is about picking someone so young who
Speaker 1: had no real track record. He was like an investment
Speaker 1: banquet Morgan Stance and technology media Telcom for a brief period.
Speaker 1: He's kind of known in these circles primarily, and like,
Speaker 1: I don't know how much to ascribe to this, but
Speaker 1: I do think like it matters that probably his father
Speaker 1: in law is one of the big donors to the
Speaker 1: Republican Party and has been a big donor to Trump,
Speaker 1: so Ron laudaiir of es Day Lauter fame. So there's
Speaker 1: ex certain levels of connections that have mattered. I think
Speaker 1: there's a pretty well documented fight between Randy Quarrels, who
Speaker 1: is the head of supervision appointed by Trump in his
Speaker 1: first rum, and Kevin Warsh were fighting over a particular
Speaker 1: job in the Bush Treasury Secretary Office, the Treasure Department.
Speaker 1: So he's been around in those circles. I think he's
Speaker 1: mostly been conversed with, let's call people who are like
Speaker 1: he was on a visiting fellow the Hube Institution, which
Speaker 1: is like an intellectual hub for obviously conservative economic thought.
Speaker 1: But he's also mostly been speaking to a specific crowd
Speaker 1: like the Wall Street Journal op eded Page. Has mostly
Speaker 1: been with those who are of his persuasion. He has
Speaker 1: managed to do a remarkable job of shape shifting to words,
Speaker 1: making sure he's heard well by President Trump. And so
Speaker 1: he has managed to kind of make that transition in
Speaker 1: a way that maybe other people have not. But that
Speaker 1: shape shifting itself has always been with an orientation towards
Speaker 1: I'm really speaking to a Republican audience. And what I
Speaker 1: wonder about that is, if we run into any sort
Speaker 1: of situation where you're going to need the FED to
Speaker 1: kind of put out a fire, or you're gona need
Speaker 1: some institution to do that play that role as there
Speaker 1: was the case in the Cares Act, or was the
Speaker 1: case around Tarp or around any of the other sort
Speaker 1: of bailous of zos and eight, how do you like
Speaker 1: muster that together when like this person has kind of
Speaker 1: been pretty consistently partisan and ideological in some ways, ideological
Speaker 1: maybe more so when it's not Trump at the helm,
Speaker 1: but it's just something that's going to come very hard
Speaker 1: to trust. And we kind of take that for granted
Speaker 1: in terms of like macro and finance about how the
Speaker 1: FED is supposed to step in when there's a crisis,
Speaker 1: but like the FED steps into the crisis when they
Speaker 1: get the backing from both Congress and the White House,
Speaker 1: that may not exist.
Speaker 2: Just going back to things that Orsh has said previously,
Speaker 2: So we talked about he's been very critical of the
Speaker 2: fed's balance sheet, expanded balance sheet and QI and things
Speaker 2: like that. Assuming that he figures out a way to
Speaker 2: do what he wants at the FED and somehow it
Speaker 2: gets support of the FED board or does something else,
Speaker 2: how dramatic could his tenure at the FED actually be
Speaker 2: in terms of monetary policy, because I'm thinking, you know,
Speaker 2: there's been some chat or some suggestion that worsh would
Speaker 2: like to radically redesign the way monetary policy interest rates
Speaker 2: are actually implemented.
Speaker 1: Yeah, that's always been a bit fuzzy to me because
Speaker 1: he's been very eager to criticize, but the nature of
Speaker 1: the criticism has always had to like continuously adapt to
Speaker 1: what I'd call somewhat failed predictions. First it was that
Speaker 1: there are a lot of people said, QUI is going to
Speaker 1: increase some money's supply and mechanically increase inflation. And that
Speaker 1: was the case that people said this like two thousand
Speaker 1: and nine didn't quite pan out that way. Then people
Speaker 1: kind of said, like it's going to lead to acid
Speaker 1: price inflation, slash and bubbles, like maybe there's acid price inflation.
Speaker 1: But there wasn't really like an obvious bubble that Trent
Speaker 1: transpired from it, and then it's sort of that some
Speaker 1: of the criticians shifted towards while it's actually doing something
Speaker 1: on fiscal policy. So I think you have to have
Speaker 1: a career in view of what you actually think the
Speaker 1: Fed balagy does. Like if you ask me, ordinary vanilla
Speaker 1: treasury QI is not really doing much. It's mostly an
Speaker 1: acid swamp of two risk free acids, which is a
Speaker 1: view actually that another person who over institutions John Cochran
Speaker 1: would be abide by. So there's not really any disporting
Speaker 1: effects that people are really the way people are saying,
Speaker 1: and yet he sort of has made this a big
Speaker 1: bug bearer that this is like the big thing that
Speaker 1: needs to shift. He comes at a very awkward time
Speaker 1: because what's been happening is that money markets have been
Speaker 1: basically giving the signal that actually the balance sheet is
Speaker 1: getting to a place where if you try to run
Speaker 1: it down from here and run it down to abruptly,
Speaker 1: you might get more dysfunction, kind of similar to what
Speaker 1: we saw in like September twenty nineteen. So we might
Speaker 1: get into a situation where rebol rates spike because there's
Speaker 1: just not a lot of relative to the banking system
Speaker 1: and the financial system's needs. You do need to have
Speaker 1: some amount of liquidity available, and that amount of liquidity
Speaker 1: is meaningfully more than it was prior to the financial crisis.
Speaker 1: That's probably like one part regulation, one part supervision, and
Speaker 1: one part bank risk management practices. But this stuff is
Speaker 1: kind of like actually hard to pin down how much
Speaker 1: of each, And so he's bide this is like big concern.
Speaker 1: I suspect he's probably gonna have to swallow his pride
Speaker 1: a bit and be more supportive of like gradual battle
Speaker 1: sheet expansion during this period because money market conditions are
Speaker 1: basically signaling that things have tidied up quite a bit
Speaker 1: in terms of if you look at where the FED
Speaker 1: funds rate or money market interest rates are relative to
Speaker 1: the interest that the FED pays on reserves, or the
Speaker 1: interest rate that the FED pays for money market funds
Speaker 1: to the revers reypop facility, those have been converging, right,
Speaker 1: Those are basically been those money market indust rates have
Speaker 1: been kept going up relative to those but rates set
Speaker 1: by the Fed. And that kind of is also a
Speaker 1: sign that like, yeah, you're gonna to have more malleability.
Speaker 1: And it's not exactly be the case that like, oh
Speaker 1: my god, this FED balance sheet is like this big problem,
Speaker 1: or that it's something that if you if you lower
Speaker 1: the balance sheet, that's how you get lower interest rates.
Speaker 1: These views are all kind of incoherent. But I think
Speaker 1: that especially now that he might be in a position
Speaker 1: where has to deal with those hard realities, I suspect
Speaker 1: his views made worse to change.
Speaker 3: It'll be interesting to see what happens. Let's just talk,
Speaker 3: you know, so we know Trump wants lower rates. Kevin
Speaker 3: Warrish has talked about we need lower rates, so there's
Speaker 3: alignment there. Other candidates who were like the sort of
Speaker 3: finalists also talking about that. So Christopher Waller, who I think,
Speaker 3: you know, many people would say perhaps has the best
Speaker 3: track record of the last five years of anyone having
Speaker 3: correctly identified the inflationary turn and then also recognizing when
Speaker 3: the inflationary turn was coming to and he also wants
Speaker 3: lower rates. So like there were presumably no matter who
Speaker 3: was going to come in was going to have this
Speaker 3: lower rates. Now view that being said, you know, does
Speaker 3: the actual execution of lower rates in the short term
Speaker 3: setting aside crisis, does it change at all the dynamics
Speaker 3: when he's just one of multiple voting members. If that
Speaker 3: message is coming from Kevin Walsh versus if it were
Speaker 3: coming from a Christopher Waller.
Speaker 1: I think it definitely matters because at least with Chris Waller, honestly,
Speaker 1: with all of the front runners outside of Borsh, I
Speaker 1: can point to a tangible example where that person supported
Speaker 1: the case for lower interest rates outside of a very
Speaker 1: Trump inflected electoral context. And I'm including even Kevin Hassett
Speaker 1: here and so Rick Reader Chris Waller are people who
Speaker 1: have made the case for radcuts at various times, even
Speaker 1: when Trump was not in office, even when Trump wasn't
Speaker 1: clamoring for lower regist rates. In the case of Kevin Hassett,
Speaker 1: he went on the record in October twenty twenty four,
Speaker 1: I believe, basically defending the Fed's fifty basis point radcut
Speaker 1: in September, back when Kevin Walsh and Scott Bessant and
Speaker 1: Steve Steve Myron were up in arms about the idea
Speaker 1: that could cut rates and thought it was the most
Speaker 1: like politically motivated decision. Ever, so you get people who
Speaker 1: have actually registered their views and are not I can
Speaker 1: show an ability to make judgments outside of that sort
Speaker 1: of presidential context will come with more credibility because in
Speaker 1: the end it, as you rightly point out, the FLMC,
Speaker 1: which is made up of seven Fed governors and a
Speaker 1: set of regional FED presidents, they are not just presidential appointees,
Speaker 1: certainly not of this current president, and even those who
Speaker 1: are appointed by the president in the previous administration. I think,
Speaker 1: to a large extent, I'm talking with Michelle Bollman or
Speaker 1: Chris Waller or j Powell have shown like a capacity
Speaker 1: for independent judgment and assessment. Will someone like Kevin Worrish
Speaker 1: be able to bring more people on board is going
Speaker 1: to be a real challenge, right, Can he be persuasive?
Speaker 1: Can you be persuasive? And especially if he's someone who
Speaker 1: doesn't really take a lot of stock in data, Like
Speaker 1: one of the nice ways that you can be persuasive
Speaker 1: is being able to point to an indicator and saying,
Speaker 1: I think this is going to happen in this way.
Speaker 1: Then if it does happen this way, you get more
Speaker 1: credibility in the next meeting to say, I've things are
Speaker 1: going the way I suspected it, and therefore we really
Speaker 1: need to take policy in the direction I think is right.
Speaker 1: Like that's kind of the data has a way of
Speaker 1: like helping keep people accountable in discussions, not always, but
Speaker 1: like it's better than nothing at all, or better than
Speaker 1: the substitute. And so I think regardless of who was
Speaker 1: gonna be the FED chair, there was gonna be a
Speaker 1: persuasive constraint. We're kind of seeing from the Supreme Court
Speaker 1: that Trump can't just fire everyone on the FED that
Speaker 1: he wants. At least those are the tea leaves we're getting,
Speaker 1: And so you're gonna have to work with the people
Speaker 1: who are already on the FED on the FMC. And
Speaker 1: if that's the case, like persuasive power matters, and like
Speaker 1: what's the reason you're really like expressing this view? Are
Speaker 1: you expressing this view because you believe it or because
Speaker 1: you think it satisfies what the president wants. Unfortunately, over
Speaker 1: the course of last i'd say two decades, Kevin Warsh's
Speaker 1: views kind of have like a strong like political correlation
Speaker 1: to them. Look, everyone's got some political correlation in their views,
Speaker 1: I suspect, but his more predominantly, and especially if he
Speaker 1: wasn't making arguments rooted primarily in data, I think he
Speaker 1: may find it harder to persuade his fellow colleagues, and
Speaker 1: there will be a high level suspicion about just how
Speaker 1: what exactly are the true intentions behind his agenda.
Speaker 2: Just going back to the speech that Warsh made last year,
Speaker 2: he talked about the need for regime change at the
Speaker 2: FED and he said that would involve quote breaking some heads.
Speaker 2: So I imagine the first FMC meeting might be a
Speaker 2: little a little awky.
Speaker 3: He's got to come in and the first thing he says,
Speaker 3: he's like, guys, I didn't mean that literally, like he's
Speaker 3: like trying, you know, he got to come in, And
Speaker 3: I wrote that, but I don't want you guys to
Speaker 3: me and I said it literally, he's got to stay
Speaker 3: there real quickly.
Speaker 2: Skanda, if you were at that meeting, what would be
Speaker 2: the one question or the first question that you asked
Speaker 2: mister Walsh.
Speaker 1: Oh, I I think it's It would be good a
Speaker 1: good sense of just like what he's u what he
Speaker 1: even thinks about where interest rate sho'd be right now,
Speaker 1: because I think part of what he doesn't quite He
Speaker 1: talks a lot about FED policy and the abstract the
Speaker 1: need for real change. We need reform. This would need
Speaker 1: more credibility, more fewer mandates or something along those lines.
Speaker 1: It's all kind of vague and it can kind of
Speaker 1: sound substantive, but I kind of think a little substance
Speaker 1: free because it ends up blurring exactly what he thinks
Speaker 1: about the macro economy right now. Like inflation right now
Speaker 1: is about a percentage point above the fence target. Now,
Speaker 1: that might be freezes that are temporary, that might freezes
Speaker 1: that are more persistent. It'd be good to understand like
Speaker 1: what he thinks will happen why. I mean, we don't
Speaker 1: really know much about that beyond just thinking like, Okay,
Speaker 1: this person's probably going to be for lowering rates because
Speaker 1: he got the job from Trump. The reasoning it seems
Speaker 1: very light at this point. I think it's a there's
Speaker 1: good reason to dublished as maybe good reasons to be hawkish,
Speaker 1: but can he identify those like as someone who will
Speaker 1: be on the FMC year a FED staffer, Like we're
Speaker 1: actually there's more of a black box here, because maybe
Speaker 1: you could have told yourself a story of how he
Speaker 1: was actually a very hawkish person, especially in twenty nine
Speaker 1: and twenty ten and some of his Wall Street Journal
Speaker 1: columns afterwards, but especially ever since we've had Trump in office,
Speaker 1: like his youths have definitely shifted more dubbishly, and you
Speaker 1: just want to wonder, like how much what is he
Speaker 1: putting a high weight on and if that's something I
Speaker 1: can be trusted. Ultimately, he's going to have to figure
Speaker 1: out how to build up more persuasive power and trust
Speaker 1: among the committee to actually be an effective FED chair.
Speaker 1: I think I'll be to be remady to be seen.
Speaker 3: Scotne, We're gonna let you go, but this is not
Speaker 3: going to be the last time we talk about Kevin
Speaker 3: worsh with you and many others. So appreciate your time.
Speaker 1: Thanks, thanks for having me.
Speaker 3: Lots More is produced by Dashel Bennett Kerman, Rodriguez and
Speaker 3: cal Brooks.
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