1 00:00:02,720 --> 00:00:16,480 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:18,680 --> 00:00:21,680 Speaker 2: Hello and welcome to another episode of the Odd Thoughts podcast. 3 00:00:21,760 --> 00:00:25,000 Speaker 2: I'm Tracy Alloway and I'm Joe Wisenthal. Joe, I feel 4 00:00:25,040 --> 00:00:29,720 Speaker 2: like we're what about ten days, twelve days into twenty 5 00:00:29,760 --> 00:00:33,400 Speaker 2: twenty six, and how many emergency episodes have we recorded 6 00:00:33,440 --> 00:00:34,840 Speaker 2: so far? This is going to be our fourth. 7 00:00:35,000 --> 00:00:38,199 Speaker 3: Our poor producers, you know, and they keep happening on 8 00:00:38,240 --> 00:00:42,800 Speaker 3: weekends too, which is not the big development. Keep happening 9 00:00:42,880 --> 00:00:44,800 Speaker 3: on weekends, but I think it's going to be a 10 00:00:44,840 --> 00:00:46,040 Speaker 3: busy year for us. 11 00:00:47,000 --> 00:00:49,360 Speaker 2: Sad, but I am sure you are correct. I mean 12 00:00:49,840 --> 00:00:52,960 Speaker 2: from the news business perspective, there's certainly no shortage of 13 00:00:52,960 --> 00:00:54,320 Speaker 2: news flow and that can be a good thing, but 14 00:00:54,400 --> 00:00:56,920 Speaker 2: it is hard to keep up nowadays, as you mentioned. 15 00:00:56,960 --> 00:01:00,120 Speaker 3: So I know I want to do a clawed Code episode. 16 00:01:00,400 --> 00:01:01,640 Speaker 3: When are we going to get around to that? 17 00:01:02,040 --> 00:01:04,520 Speaker 2: So this is the second weekend of twenty twenty six, 18 00:01:04,600 --> 00:01:08,960 Speaker 2: and the news this weekend is that FED Chairman Jerome 19 00:01:09,040 --> 00:01:11,399 Speaker 2: Powell said that the Central Bank has been served with 20 00:01:11,480 --> 00:01:16,759 Speaker 2: a grand jury subpoena from the DOJ threatening a criminal indictment, 21 00:01:16,920 --> 00:01:20,160 Speaker 2: and this has to do with the renovation of a 22 00:01:20,200 --> 00:01:23,520 Speaker 2: federal Reserve building, which you know Trump has made noises 23 00:01:23,560 --> 00:01:28,800 Speaker 2: about before specifically, Apparently the wrongdoing for this particular indictment 24 00:01:28,880 --> 00:01:32,760 Speaker 2: or potential indictment is that Jerome Powell might have lied 25 00:01:32,920 --> 00:01:35,720 Speaker 2: when he gave his congressional testimony back in I think 26 00:01:35,720 --> 00:01:38,160 Speaker 2: it was June of last year. But as we said, 27 00:01:38,200 --> 00:01:40,880 Speaker 2: you know, our timelines are starting to all melt and 28 00:01:40,959 --> 00:01:45,280 Speaker 2: blur into one. But basically, this is the next big 29 00:01:45,640 --> 00:01:49,320 Speaker 2: escalation in the Trump versus FED fight. 30 00:01:49,960 --> 00:01:52,920 Speaker 3: Yes, exactly right, And I think there's a few interesting 31 00:01:53,000 --> 00:01:56,080 Speaker 3: things here. I mean, obviously Jerome Powell is on his 32 00:01:56,160 --> 00:01:59,320 Speaker 3: way out already as FED chair, though he could stay 33 00:01:59,360 --> 00:02:02,360 Speaker 3: on the board. That's interesting, And now I think people 34 00:02:02,400 --> 00:02:04,320 Speaker 3: are thinking, well, maybe he's going to stick around more 35 00:02:04,800 --> 00:02:08,359 Speaker 3: because of this. And then the other element, too is 36 00:02:08,880 --> 00:02:10,840 Speaker 3: what I would say is like one of the most 37 00:02:11,000 --> 00:02:16,079 Speaker 3: direct statements in response. Yesterday evening, Jerome Powell put out 38 00:02:16,080 --> 00:02:18,840 Speaker 3: a video and a statement in which he said that 39 00:02:19,400 --> 00:02:25,480 Speaker 3: this subpoena is really about the administration's frustration with interest 40 00:02:25,560 --> 00:02:30,040 Speaker 3: rate policy. And of course Paul has been very diplomatic 41 00:02:30,360 --> 00:02:33,880 Speaker 3: with all the criticism, really not commenting at all about 42 00:02:34,360 --> 00:02:36,520 Speaker 3: all of the various critiques. We're just gonna do our job. 43 00:02:36,560 --> 00:02:38,200 Speaker 3: We're going to do the job for the American people, 44 00:02:38,240 --> 00:02:41,520 Speaker 3: et cetera, basically deflecting any questions on the politics surrounding. 45 00:02:41,760 --> 00:02:46,079 Speaker 3: And this is a major break our colleague Cameron Christ 46 00:02:46,080 --> 00:02:47,880 Speaker 3: as he put it, this is the straw that broke 47 00:02:47,919 --> 00:02:50,079 Speaker 3: the camel's back. And he's being more direct than almost 48 00:02:50,120 --> 00:02:53,000 Speaker 3: anyone else in public service or government, etc. And saying 49 00:02:53,400 --> 00:02:59,200 Speaker 3: this is essentially extortion, this is intimidation, this is thug behavior, 50 00:02:59,680 --> 00:03:02,040 Speaker 3: and and this is not how he's talked about the 51 00:03:02,080 --> 00:03:02,880 Speaker 3: pressure in the past. 52 00:03:04,000 --> 00:03:06,480 Speaker 2: Right And if you watch the video, I mean Pal 53 00:03:06,639 --> 00:03:11,480 Speaker 2: has annoyed Grandpa, that has had you know, enough of 54 00:03:11,520 --> 00:03:13,960 Speaker 2: all of this nonsense just written all over his face. 55 00:03:14,240 --> 00:03:17,280 Speaker 2: Bad weekend for Powell, by the way, because the guitarist 56 00:03:17,360 --> 00:03:20,640 Speaker 2: from his favorite band, Grateful Dead, also died, so, you know, 57 00:03:21,040 --> 00:03:23,600 Speaker 2: not a great weekend for Powell. But obviously, on a 58 00:03:23,639 --> 00:03:26,120 Speaker 2: serious note, we need to talk about what all of 59 00:03:26,160 --> 00:03:30,320 Speaker 2: this means, how it fits into the ongoing tensions between 60 00:03:30,360 --> 00:03:33,840 Speaker 2: the Central Bank and the Trump administration. And who better 61 00:03:34,120 --> 00:03:37,080 Speaker 2: who's the man that we always call when this happens, 62 00:03:37,080 --> 00:03:40,240 Speaker 2: and I guess it's happening more frequently nowadays, but we 63 00:03:40,280 --> 00:03:42,920 Speaker 2: always call Lev menand he is, of course a professor 64 00:03:42,960 --> 00:03:46,640 Speaker 2: at Columbia Law School and the author of the Fed Unbound. 65 00:03:46,800 --> 00:03:50,280 Speaker 2: So Lev, welcome back to the Odd Thoughts podcast. Thanks 66 00:03:50,280 --> 00:03:51,400 Speaker 2: for coming on at short. 67 00:03:51,200 --> 00:03:52,960 Speaker 4: Notice, Thanks for having me back. 68 00:03:53,560 --> 00:03:55,960 Speaker 2: So why don't we start with let's just put this 69 00:03:56,040 --> 00:03:58,440 Speaker 2: in context. I've seen a lot of people talking about 70 00:03:58,480 --> 00:04:02,600 Speaker 2: this kind of criminal indictment or you know, possible criminal 71 00:04:02,640 --> 00:04:08,080 Speaker 2: indictment as an unprecedented escalation in terms of central bank 72 00:04:08,320 --> 00:04:12,760 Speaker 2: versus presidential tensions. I guess how unprecedented is this. 73 00:04:13,280 --> 00:04:16,599 Speaker 5: I think this is about more even at this point 74 00:04:16,640 --> 00:04:20,680 Speaker 5: than the central bank and central bank independence. This is 75 00:04:20,760 --> 00:04:27,520 Speaker 5: an attempt by this administration to force out its perceived 76 00:04:27,720 --> 00:04:29,800 Speaker 5: political opponents from the government. 77 00:04:30,400 --> 00:04:32,919 Speaker 4: And so this is quite unprecedented. 78 00:04:33,040 --> 00:04:37,359 Speaker 5: We haven't seen anything really quite like this even in 79 00:04:37,400 --> 00:04:42,640 Speaker 5: this administration over the past year. You know, something analogous 80 00:04:42,680 --> 00:04:46,400 Speaker 5: would be, you know, a criminal investigation of Chuck Schumer 81 00:04:46,520 --> 00:04:51,359 Speaker 5: or King Jeffries, or you know a Supreme Court Justice j. 82 00:04:51,560 --> 00:04:56,200 Speaker 5: Powell is a senior government official, and the administrations made 83 00:04:56,279 --> 00:05:00,480 Speaker 5: quite clear that it would like him to to carry 84 00:05:00,520 --> 00:05:03,800 Speaker 5: out his duties differently from how he is doing it. 85 00:05:04,360 --> 00:05:08,080 Speaker 5: And now they are basically threatening to throw him in 86 00:05:08,160 --> 00:05:12,159 Speaker 5: jail if he doesn't step down or comply. And so 87 00:05:12,279 --> 00:05:16,040 Speaker 5: this is a very very significant escalation that is different 88 00:05:16,080 --> 00:05:18,239 Speaker 5: in kind even from what we saw over the summer, 89 00:05:19,000 --> 00:05:25,880 Speaker 5: where the administration was sort of pursuing potential removal actions 90 00:05:26,000 --> 00:05:30,040 Speaker 5: against various members of the Board, including Powell. This is 91 00:05:30,080 --> 00:05:33,200 Speaker 5: a criminal investigation, which I think I think is different 92 00:05:33,200 --> 00:05:37,120 Speaker 5: in kind and should be understood to be a very 93 00:05:37,160 --> 00:05:41,560 Speaker 5: different set of issues that go well beyond the FED itself. 94 00:05:42,160 --> 00:05:45,240 Speaker 3: Right, I think what's striking here is we're talking about 95 00:05:45,240 --> 00:05:49,280 Speaker 3: this in the context of FED independence questions. Right, can 96 00:05:49,480 --> 00:05:55,040 Speaker 3: the President remove a FED chair or a FED governor whatever? 97 00:05:55,160 --> 00:05:58,520 Speaker 3: Can they be fired? But this is kind of separate 98 00:05:58,560 --> 00:06:01,960 Speaker 3: because this is a really there is this question, and 99 00:06:02,000 --> 00:06:04,839 Speaker 3: this question we'll get to the Supreme Court at some point, 100 00:06:05,000 --> 00:06:07,640 Speaker 3: but this is sort of like a sideways thing or 101 00:06:07,640 --> 00:06:10,520 Speaker 3: a parallel thing from that. This is about accusation of 102 00:06:10,560 --> 00:06:10,919 Speaker 3: a crime. 103 00:06:11,360 --> 00:06:12,200 Speaker 4: Yeah, exactly. 104 00:06:12,320 --> 00:06:16,960 Speaker 5: And so there are now multiple different sort of legal 105 00:06:17,000 --> 00:06:24,400 Speaker 5: proceedings underway involving the administration's effort to basically cow the 106 00:06:24,440 --> 00:06:27,440 Speaker 5: Federal Reserve into submission and also sort of get to 107 00:06:27,520 --> 00:06:30,799 Speaker 5: a four vote majority on the Board of Governors. One 108 00:06:31,360 --> 00:06:35,400 Speaker 5: dispute involves Lisa Cook, And incidentally, we're just days away 109 00:06:35,480 --> 00:06:38,920 Speaker 5: from Supreme Court oral argument in the dispute over whether 110 00:06:39,240 --> 00:06:43,559 Speaker 5: President Trump's efforts to terminate Lisa Cook, you know, last 111 00:06:43,640 --> 00:06:47,560 Speaker 5: year were legally adequate. Right now, the courts have kept 112 00:06:47,560 --> 00:06:50,320 Speaker 5: her in her job, so he was not actually able 113 00:06:50,360 --> 00:06:52,919 Speaker 5: to fire her. But he's still moving to do it, 114 00:06:52,920 --> 00:06:54,760 Speaker 5: and the Supreme Court's going to weigh in on whether 115 00:06:54,800 --> 00:06:57,919 Speaker 5: he can in a matter of days. This is not 116 00:06:58,560 --> 00:07:02,560 Speaker 5: a similar action against Pale. Trump has not at this 117 00:07:02,680 --> 00:07:07,599 Speaker 5: point attempted to remove him from office under the statute. 118 00:07:08,040 --> 00:07:10,520 Speaker 4: This is an attempt to basically. 119 00:07:10,040 --> 00:07:14,280 Speaker 5: Bully him out of office using the Department of Justice, 120 00:07:14,840 --> 00:07:17,400 Speaker 5: which is a very different thing. You know that his 121 00:07:17,840 --> 00:07:20,680 Speaker 5: liberty is threatened. You know, it's not just that he 122 00:07:20,720 --> 00:07:22,200 Speaker 5: could lose his job, it's that he could. 123 00:07:22,080 --> 00:07:22,720 Speaker 4: Go to jail. 124 00:07:23,440 --> 00:07:26,200 Speaker 5: And I can't think of any analog in the history 125 00:07:27,560 --> 00:07:30,800 Speaker 5: of the US Central Bank or any you know, US 126 00:07:30,840 --> 00:07:36,440 Speaker 5: agency to this sort of action by an administration against 127 00:07:36,760 --> 00:07:40,080 Speaker 5: a member of the government, an official in the government. 128 00:07:40,640 --> 00:07:43,840 Speaker 2: So how should we actually think about the timing of 129 00:07:43,880 --> 00:07:46,920 Speaker 2: all of this, because I mean, you know, everyone knows 130 00:07:47,000 --> 00:07:50,080 Speaker 2: pal is on his way out anyway. It's not that 131 00:07:50,200 --> 00:07:52,880 Speaker 2: long until we're going to have a new FED chair. 132 00:07:53,280 --> 00:07:57,320 Speaker 2: So the idea of going after him with a potential 133 00:07:57,320 --> 00:08:01,320 Speaker 2: criminal proceeding when you know pretty soon he's not going 134 00:08:01,360 --> 00:08:05,360 Speaker 2: to be there anyway, doesn't necessarily make much sense in 135 00:08:05,480 --> 00:08:08,800 Speaker 2: terms of influencing actual FED policy. But maybe it makes 136 00:08:08,800 --> 00:08:12,800 Speaker 2: a lot of sense to your earlier point about seeking 137 00:08:12,840 --> 00:08:15,880 Speaker 2: revenge against people who are perceived this is. 138 00:08:15,880 --> 00:08:17,880 Speaker 4: About to be anything once. I think that's right. 139 00:08:17,920 --> 00:08:21,320 Speaker 5: It's like, maybe let's try to tease out some of 140 00:08:21,320 --> 00:08:24,920 Speaker 5: the different things that are going on here. One is 141 00:08:24,960 --> 00:08:27,920 Speaker 5: that Pale is still serving as chair and his term 142 00:08:28,560 --> 00:08:31,840 Speaker 5: runs until May, and Trump has been clear that he 143 00:08:31,880 --> 00:08:35,719 Speaker 5: would like to replace Pala's chair and that he has 144 00:08:35,760 --> 00:08:39,040 Speaker 5: in fact identified who he wants in that job, and 145 00:08:39,120 --> 00:08:42,800 Speaker 5: so on one level, this may be about getting Paled 146 00:08:42,840 --> 00:08:46,840 Speaker 5: to step down before May so that he can be replaced, 147 00:08:47,240 --> 00:08:49,000 Speaker 5: you know, months earlier. 148 00:08:49,400 --> 00:08:52,520 Speaker 4: I agree with you. That doesn't seem. 149 00:08:52,360 --> 00:08:58,400 Speaker 5: Like justification for this sort of escalation on its own. 150 00:08:59,320 --> 00:09:02,600 Speaker 5: As Joe mentioned earlier, Pale is also serving a term 151 00:09:02,640 --> 00:09:03,320 Speaker 5: as governor. 152 00:09:03,400 --> 00:09:05,280 Speaker 4: That term runs until twenty twenty eight. 153 00:09:06,160 --> 00:09:09,920 Speaker 5: And if Pal were to choose to stay on the 154 00:09:09,920 --> 00:09:14,160 Speaker 5: board not to resign as governor when his chair term, 155 00:09:14,280 --> 00:09:18,400 Speaker 5: it buyers that would take a seat that Trump would 156 00:09:18,440 --> 00:09:23,120 Speaker 5: otherwise be able to nominate someone to fill. And that 157 00:09:23,400 --> 00:09:27,800 Speaker 5: is relevant because the board at the beginning of Trump's 158 00:09:27,880 --> 00:09:32,280 Speaker 5: term had seven governors on it and so it was full. 159 00:09:32,679 --> 00:09:35,600 Speaker 5: And those governors have fourteen year terms that are staggered 160 00:09:35,640 --> 00:09:39,400 Speaker 5: every two years, designed to prevent a president from being 161 00:09:39,440 --> 00:09:41,880 Speaker 5: able to quickly take control of the board with their 162 00:09:41,920 --> 00:09:46,400 Speaker 5: own appointees. Right, it insulates the board from the White 163 00:09:46,440 --> 00:09:50,480 Speaker 5: House to have fourteen year term governor seven of them 164 00:09:50,559 --> 00:09:55,080 Speaker 5: who are only turnover every two years. But if a 165 00:09:55,120 --> 00:09:58,720 Speaker 5: lot of those governors can be induced to resign early, 166 00:09:59,000 --> 00:10:02,040 Speaker 5: then the president can put you know, his or her 167 00:10:02,080 --> 00:10:05,520 Speaker 5: own people in And so one thing that could be 168 00:10:05,559 --> 00:10:08,840 Speaker 5: going on here is an effort to get pal to 169 00:10:09,000 --> 00:10:13,720 Speaker 5: step down from his governor's seat. Famously, Manner Eccles, who 170 00:10:13,880 --> 00:10:18,199 Speaker 5: was the chair of the Board in the thirties and forties, 171 00:10:18,360 --> 00:10:21,600 Speaker 5: when he was no longer here, he stayed in his 172 00:10:21,679 --> 00:10:27,480 Speaker 5: governor's seat. And that is unusual, but can happen when 173 00:10:27,520 --> 00:10:30,720 Speaker 5: the stakes for who's in those seats are high, like 174 00:10:30,800 --> 00:10:31,600 Speaker 5: they are now. 175 00:10:32,080 --> 00:10:33,080 Speaker 4: But I also think. 176 00:10:32,960 --> 00:10:38,000 Speaker 5: It's worth recognizing that there's something going on that's bigger 177 00:10:38,040 --> 00:10:41,480 Speaker 5: than the Fed here, that it isn't just sort of 178 00:10:41,520 --> 00:10:45,800 Speaker 5: this micropolitics of you know, Jerome Pal's seat as chair, 179 00:10:45,880 --> 00:10:51,320 Speaker 5: Jerome Pal's seat as governor. That's about Jerome Pal, as 180 00:10:51,880 --> 00:10:57,440 Speaker 5: a high profile, prominent government official who has not bent 181 00:10:57,559 --> 00:11:01,960 Speaker 5: the knee, being made an example of so that everybody 182 00:11:02,000 --> 00:11:05,520 Speaker 5: else on the Board of Governors and throughout the US 183 00:11:05,640 --> 00:11:11,280 Speaker 5: government can see what could happen to you if you 184 00:11:12,360 --> 00:11:14,720 Speaker 5: defy the administration. 185 00:11:15,240 --> 00:11:16,839 Speaker 4: And that's why I feel the stakes for this. 186 00:11:16,840 --> 00:11:22,559 Speaker 5: Are actually quite high, and it's about the larger dynamic 187 00:11:23,120 --> 00:11:26,800 Speaker 5: of what happens in a government where people are scared 188 00:11:27,040 --> 00:11:27,959 Speaker 5: of the White House. 189 00:11:29,480 --> 00:11:32,120 Speaker 3: Right, There's a few different things going on here, which 190 00:11:32,160 --> 00:11:35,160 Speaker 3: is that, like you know, you could it's not crazy 191 00:11:35,200 --> 00:11:37,800 Speaker 3: to think that we should have a set like one 192 00:11:37,800 --> 00:11:40,280 Speaker 3: could argue, and I'm sure other countries have this. I 193 00:11:40,360 --> 00:11:43,640 Speaker 3: don't know about the monetary policy structure and other countries, 194 00:11:43,679 --> 00:11:46,040 Speaker 3: but I'm sure other countries have it such that the 195 00:11:46,120 --> 00:11:47,600 Speaker 3: chairman of the Central Bank, at the head of the 196 00:11:47,600 --> 00:11:50,880 Speaker 3: central bank is directly accountable to the head of state 197 00:11:50,920 --> 00:11:53,079 Speaker 3: and can be fired, et cetera. Like these are reasonable 198 00:11:53,520 --> 00:11:57,280 Speaker 3: things to debate about. What is the optimal structure, et cetera. 199 00:11:57,760 --> 00:12:02,360 Speaker 3: The idea of criminal charge or the perception which many 200 00:12:02,400 --> 00:12:05,680 Speaker 3: people share right now, that criminal charges because you don't 201 00:12:05,760 --> 00:12:08,559 Speaker 3: like essentially because someone doesn't like the job you're doing, 202 00:12:08,760 --> 00:12:11,880 Speaker 3: obviously gets to an even deeper issue of governance that 203 00:12:11,920 --> 00:12:15,760 Speaker 3: would apply in any governmental system anywhere. One thing I 204 00:12:15,800 --> 00:12:18,520 Speaker 3: just want to know, polymarket has a bet on Jerome 205 00:12:18,600 --> 00:12:20,680 Speaker 3: Powell out of the FED board by the end of 206 00:12:20,679 --> 00:12:23,720 Speaker 3: the year. That was trading in the mid eighties last night. 207 00:12:24,040 --> 00:12:26,760 Speaker 3: That's down to the mid seventies today. So clearly there's 208 00:12:26,800 --> 00:12:28,679 Speaker 3: not a lot of money on this. It's just sort 209 00:12:28,720 --> 00:12:31,200 Speaker 3: of an interesting thing to note that already there's maybe 210 00:12:31,240 --> 00:12:34,240 Speaker 3: this expectation that he will now just like step away 211 00:12:34,679 --> 00:12:39,520 Speaker 3: quietly now is expected. Also Tom Tillis, the Republican on 212 00:12:39,600 --> 00:12:43,400 Speaker 3: the Senate Banking Committee, already said he's gonna block any 213 00:12:43,440 --> 00:12:47,520 Speaker 3: FED nominations at this point. So that's another impediment to who, 214 00:12:48,160 --> 00:12:50,679 Speaker 3: you know, some other Republicans stand up to Trump on this, 215 00:12:51,080 --> 00:12:53,600 Speaker 3: whether Trump can get that majority that he craved. 216 00:12:54,200 --> 00:12:57,400 Speaker 5: Yeah, I think it's very unclear how this is going 217 00:12:57,440 --> 00:13:03,200 Speaker 5: to play out at this point. Jay Powell is somebody 218 00:13:03,240 --> 00:13:07,560 Speaker 5: with allies on Capitol Hill. Allies in the Senate Republican Caucus. 219 00:13:07,600 --> 00:13:09,559 Speaker 5: He is in fact a Republican, He was in fact 220 00:13:09,600 --> 00:13:14,240 Speaker 5: nominated to this job by President Trump, and he could 221 00:13:14,240 --> 00:13:20,160 Speaker 5: fight this and stay in the job. You know, it's 222 00:13:20,160 --> 00:13:23,760 Speaker 5: hard to know, and to some extent it's a personal 223 00:13:23,880 --> 00:13:28,480 Speaker 5: choice for him whether to whether to resign in May 224 00:13:28,760 --> 00:13:32,520 Speaker 5: or now or to stay in the job. And it's 225 00:13:32,520 --> 00:13:35,319 Speaker 5: also early to tell whether there'll be an attempted removal 226 00:13:35,480 --> 00:13:38,720 Speaker 5: of Powell, the way there was an attempt to remove 227 00:13:38,760 --> 00:13:39,360 Speaker 5: Lisa Cook. 228 00:13:55,520 --> 00:13:59,160 Speaker 2: What's the actual status of the Lisa Cook proceedings because 229 00:13:59,200 --> 00:14:02,000 Speaker 2: this is the other common thread. There are many common 230 00:14:02,000 --> 00:14:05,320 Speaker 2: threads running between the Lisa Cook action and this potential 231 00:14:05,400 --> 00:14:09,199 Speaker 2: action against Powell, which is that Bill Poulti, the fhf 232 00:14:09,280 --> 00:14:14,160 Speaker 2: A director, is supposedly the sort of mastermind or the 233 00:14:14,280 --> 00:14:19,840 Speaker 2: driving force perhaps between both of these uh not charges, 234 00:14:19,880 --> 00:14:22,320 Speaker 2: but well, one is a potential charge and the other 235 00:14:22,360 --> 00:14:25,760 Speaker 2: one is potential firing for misconduct. 236 00:14:26,240 --> 00:14:28,520 Speaker 4: Yeah, so the cookcase is set for. 237 00:14:28,640 --> 00:14:31,240 Speaker 5: Oral argument and you know in a matter of days 238 00:14:31,240 --> 00:14:33,160 Speaker 5: from now at the court, and then the court. 239 00:14:32,960 --> 00:14:36,920 Speaker 4: Could issue a decision. 240 00:14:36,520 --> 00:14:41,920 Speaker 5: In that matter anytime between now and June, at the 241 00:14:42,000 --> 00:14:43,239 Speaker 5: end of its term. 242 00:14:43,760 --> 00:14:46,000 Speaker 4: And given the stakes of the case. 243 00:14:46,400 --> 00:14:50,000 Speaker 5: You know, often high stakes cases are decided right at 244 00:14:50,000 --> 00:14:52,400 Speaker 5: the very end, you know, June, there's this like you know, 245 00:14:52,560 --> 00:14:55,200 Speaker 5: period of tubs when the Supreme Court, you know, issues 246 00:14:55,200 --> 00:14:56,240 Speaker 5: a lot of important decisions. 247 00:14:56,280 --> 00:14:59,040 Speaker 4: I wouldn't be shocked if this case was, you. 248 00:14:59,000 --> 00:15:03,200 Speaker 5: Know, u resolved in June, when the Court will also 249 00:15:03,240 --> 00:15:06,680 Speaker 5: be considering a case involving Rebecca Slaughter that was argued 250 00:15:06,720 --> 00:15:11,360 Speaker 5: in December about whether there can be any agencies where 251 00:15:11,360 --> 00:15:16,280 Speaker 5: the president only remove the heads for cause. And it's 252 00:15:16,360 --> 00:15:18,720 Speaker 5: expected that the FED is going to be carved out 253 00:15:18,760 --> 00:15:23,520 Speaker 5: from a decision that would invalidate those provisions in other statutes. 254 00:15:23,560 --> 00:15:26,520 Speaker 5: But if the FED wasn't carved out, and the Court 255 00:15:26,560 --> 00:15:30,560 Speaker 5: decided in that case to just invalidate all of the 256 00:15:30,680 --> 00:15:34,000 Speaker 5: laws that limit the president's ability to remove officials to 257 00:15:34,200 --> 00:15:37,720 Speaker 5: situations involving cause, then of course Trump could just fire 258 00:15:37,760 --> 00:15:41,280 Speaker 5: everybody on the board without any reason, and that would 259 00:15:41,360 --> 00:15:44,040 Speaker 5: move the least of Cook dispute and she would be removed. 260 00:15:44,240 --> 00:15:47,600 Speaker 4: So that case is also likely to be decided in June. 261 00:15:48,000 --> 00:15:50,520 Speaker 5: And so those two cases are sort of those are 262 00:15:50,560 --> 00:15:53,800 Speaker 5: sort of you know, making their way towards a decision. 263 00:15:53,880 --> 00:15:58,680 Speaker 5: Right now, this is barely begone, and there's no parallel 264 00:15:58,960 --> 00:16:04,200 Speaker 5: sort of removed action. But it's a criminal proceeding and 265 00:16:04,320 --> 00:16:08,120 Speaker 5: so it will raise a lot of different legal issues 266 00:16:08,120 --> 00:16:09,320 Speaker 5: from those other two cases. 267 00:16:09,720 --> 00:16:12,400 Speaker 3: So, according to Nick tim Morose at The Wall Shreet Journal, 268 00:16:12,760 --> 00:16:16,720 Speaker 3: Jerome Powell had already hired the firm Williams and Connolly 269 00:16:17,200 --> 00:16:21,400 Speaker 3: on his own dime. Paul is a rich guy, successful businessman, lawyer, 270 00:16:21,560 --> 00:16:24,320 Speaker 3: can afford to hire great lawyers, and he's going to 271 00:16:24,360 --> 00:16:27,680 Speaker 3: have to defend himself. How does that work though, like 272 00:16:28,400 --> 00:16:31,160 Speaker 3: these sort of just maybe in general, I don't know, 273 00:16:31,360 --> 00:16:34,360 Speaker 3: like in terms of the expectations of you know, if 274 00:16:35,040 --> 00:16:37,000 Speaker 3: if people at the Fed are going to be subject 275 00:16:37,040 --> 00:16:41,320 Speaker 3: to criminal proceedings or charges or subpoenas or whatever, the 276 00:16:41,520 --> 00:16:46,160 Speaker 3: obligation or the incidents of expense for these for these defenses, 277 00:16:46,280 --> 00:16:48,400 Speaker 3: what does the law say about who has to pay 278 00:16:48,400 --> 00:16:49,000 Speaker 3: for these things? 279 00:16:49,760 --> 00:16:55,280 Speaker 5: Yeah, the law does not permit the agencies to pay 280 00:16:55,360 --> 00:16:56,560 Speaker 5: for this in any way. 281 00:16:56,760 --> 00:16:59,240 Speaker 4: And so the officials are on their own. 282 00:16:59,520 --> 00:17:03,160 Speaker 5: The legal staff at the Board of Governors cannot represent 283 00:17:03,320 --> 00:17:09,760 Speaker 5: Powe in proceeding being brought against him by the Justice Department. 284 00:17:10,240 --> 00:17:16,080 Speaker 5: They can't represent him in a removal action by the President, 285 00:17:16,680 --> 00:17:22,200 Speaker 5: and so these matters require you to hire your own counsel, 286 00:17:23,040 --> 00:17:28,800 Speaker 5: and there are organizations that arrange for lawyers to represent 287 00:17:28,800 --> 00:17:32,520 Speaker 5: people in these positions pro bono or we'll pay the 288 00:17:32,600 --> 00:17:36,120 Speaker 5: legal fees. But it definitely has an impact on who 289 00:17:36,680 --> 00:17:38,880 Speaker 5: can you know, serve in the government. 290 00:17:39,400 --> 00:17:40,760 Speaker 4: This is part of why the states of this are 291 00:17:40,800 --> 00:17:41,439 Speaker 4: quite high. 292 00:17:41,800 --> 00:17:44,760 Speaker 5: This is this sort of thing scares people away from 293 00:17:44,840 --> 00:17:49,480 Speaker 5: government service and leads to resignations. Recall over the summer 294 00:17:49,520 --> 00:17:54,400 Speaker 5: that you know, Governor Kugler resigned abruptly and without explanation, 295 00:17:54,600 --> 00:17:58,080 Speaker 5: six months before the end of her term. And I 296 00:17:58,119 --> 00:18:00,800 Speaker 5: think there's a fair amount of information in the public 297 00:18:00,840 --> 00:18:05,520 Speaker 5: domain now that she was also being investigated. And you know, 298 00:18:05,600 --> 00:18:09,359 Speaker 5: Alvaro Bedoya, for example, was a commissioner on the Federal 299 00:18:09,400 --> 00:18:13,600 Speaker 5: Trade Commission, like Rebecca Slaughter, who was removed by President 300 00:18:13,640 --> 00:18:17,520 Speaker 5: Trump in the spring, and you know, he had to 301 00:18:17,560 --> 00:18:20,960 Speaker 5: go out and get another job, and so he can 302 00:18:21,040 --> 00:18:24,960 Speaker 5: no longer sue to be reinstated in his current job. 303 00:18:25,320 --> 00:18:27,960 Speaker 4: You know, he can only sue for damage. Now. 304 00:18:28,440 --> 00:18:31,879 Speaker 5: Rebecca Slaughter has held out to try to get reinstated, 305 00:18:31,920 --> 00:18:34,800 Speaker 5: but it requires her not to work right now, and 306 00:18:34,840 --> 00:18:38,680 Speaker 5: not everybody can do that. And That's part of the 307 00:18:38,720 --> 00:18:42,679 Speaker 5: issue here is when the US federal government you know, 308 00:18:42,880 --> 00:18:47,400 Speaker 5: throws its full weight against an individual, very few people 309 00:18:47,480 --> 00:18:53,320 Speaker 5: can afford personally financially to you know, to fight back, 310 00:18:53,359 --> 00:18:57,000 Speaker 5: and so a lot of people are frightened, and and 311 00:18:57,240 --> 00:19:00,320 Speaker 5: a lot of people don't stand up, and and so 312 00:19:00,520 --> 00:19:03,399 Speaker 5: part of the story here is all of the sort 313 00:19:03,440 --> 00:19:06,679 Speaker 5: of bullying that doesn't have to happen because people you know, 314 00:19:07,400 --> 00:19:12,439 Speaker 5: on their own change their behavior to avoid drawing the 315 00:19:12,800 --> 00:19:14,680 Speaker 5: ire of the White House. 316 00:19:15,440 --> 00:19:17,560 Speaker 3: Just real quickly. I recall, you know, of course, at 317 00:19:17,560 --> 00:19:20,680 Speaker 3: the beginning of this term in office, Trump got these 318 00:19:20,720 --> 00:19:24,280 Speaker 3: settlement agreements with major law firms. I believe Williams and 319 00:19:24,320 --> 00:19:27,640 Speaker 3: Connolly was not one of them. But does that create 320 00:19:27,680 --> 00:19:31,119 Speaker 3: an additional complication of like people fearing that they can 321 00:19:31,200 --> 00:19:35,600 Speaker 3: even get adequate legal defense in certain situations from law 322 00:19:35,640 --> 00:19:38,480 Speaker 3: firms or from a legal community that to some extent 323 00:19:38,760 --> 00:19:41,560 Speaker 3: feels itself under pressure from the administration. 324 00:19:42,160 --> 00:19:42,320 Speaker 4: Yeah. 325 00:19:42,320 --> 00:19:44,720 Speaker 5: Absolutely, There's a lot of elite lawyers that are scared 326 00:19:45,200 --> 00:19:49,480 Speaker 5: to represent people who the administration perceives to be enemies 327 00:19:49,520 --> 00:19:51,719 Speaker 5: because the administration has made clear that they will go 328 00:19:51,840 --> 00:19:53,760 Speaker 5: after the lawyers who represent those people. 329 00:19:54,200 --> 00:19:58,080 Speaker 4: It's not even like wink wink, not not. It's pretty explicit. 330 00:19:58,560 --> 00:19:59,240 Speaker 4: There are a. 331 00:19:59,240 --> 00:20:03,280 Speaker 5: Number of firms that are representing clients who are in 332 00:20:03,359 --> 00:20:08,520 Speaker 5: litigation with the administration, and they tend to be firms 333 00:20:08,520 --> 00:20:14,679 Speaker 5: that specialize in litigation and specialize in litigation against the government. So, 334 00:20:15,320 --> 00:20:19,120 Speaker 5: like a Wilmer Hale is a firm that represents routinely 335 00:20:19,480 --> 00:20:22,040 Speaker 5: clients that are in litigation with the government. 336 00:20:22,240 --> 00:20:24,840 Speaker 4: So it's a natural posture for them to. 337 00:20:24,840 --> 00:20:28,600 Speaker 5: Take on, you know, the case of say an individual 338 00:20:29,240 --> 00:20:34,040 Speaker 5: who's in litigation with the government, but firms that aren't otherwise, 339 00:20:34,240 --> 00:20:37,680 Speaker 5: you know, in litigation with the government, you know, may 340 00:20:37,760 --> 00:20:42,159 Speaker 5: decline to represent clients like this altogether. And that is 341 00:20:42,240 --> 00:20:46,600 Speaker 5: also a big problem that goes, yeah, goes beyond this 342 00:20:46,680 --> 00:20:47,960 Speaker 5: specific case. 343 00:20:48,640 --> 00:20:50,480 Speaker 2: So Love, I know you're not sat in front of 344 00:20:50,520 --> 00:20:53,720 Speaker 2: a Bloomberg terminal right now, but Joe and I both are. 345 00:20:54,080 --> 00:20:55,080 Speaker 4: I can't afford it. 346 00:20:56,359 --> 00:20:59,920 Speaker 2: We're recording this, uh, you know, early on Monday morning, 347 00:21:00,320 --> 00:21:04,080 Speaker 2: and the market reaction has been you know negative. So 348 00:21:04,240 --> 00:21:07,600 Speaker 2: we've seen stocks are down, yields are up a little bit, 349 00:21:08,320 --> 00:21:10,719 Speaker 2: gold has been rising, but we haven't seen you know, 350 00:21:11,359 --> 00:21:13,840 Speaker 2: panic in the market. Certainly if you look at the 351 00:21:13,880 --> 00:21:16,120 Speaker 2: yield on the long bond, which is where you would 352 00:21:16,160 --> 00:21:19,800 Speaker 2: expect a lot of concerns about central bank independence to 353 00:21:19,840 --> 00:21:23,480 Speaker 2: actually show up. It's not, you know, selling off massively. 354 00:21:24,200 --> 00:21:27,280 Speaker 2: What do you think about the market reaction at this point, 355 00:21:27,440 --> 00:21:29,920 Speaker 2: or let me phrase it another way. Even though we've 356 00:21:29,960 --> 00:21:33,280 Speaker 2: now had, you know, basically a year of concerns about 357 00:21:33,359 --> 00:21:36,919 Speaker 2: central bank independence and the idea that Trump is going 358 00:21:37,000 --> 00:21:40,240 Speaker 2: to push for lower interest rates at a time when 359 00:21:40,280 --> 00:21:44,480 Speaker 2: perhaps they're not warranted, the market's kind of been shrugging, right. 360 00:21:44,520 --> 00:21:48,240 Speaker 2: We haven't seen a huge reaction in things like tips 361 00:21:48,359 --> 00:21:51,800 Speaker 2: and stuff like that. What's going on here? What accounts 362 00:21:51,800 --> 00:21:55,520 Speaker 2: for maybe the disconnect between some of the commentary, which 363 00:21:55,560 --> 00:21:59,439 Speaker 2: is very worried about the future direction of independence versus 364 00:21:59,480 --> 00:22:02,160 Speaker 2: the actual short term market action. 365 00:22:03,720 --> 00:22:08,800 Speaker 6: I think that the way the market prices this sort 366 00:22:08,880 --> 00:22:14,800 Speaker 6: of potential nonlinearity, sort. 367 00:22:14,560 --> 00:22:18,160 Speaker 4: Of regime change in our. 368 00:22:18,960 --> 00:22:24,120 Speaker 5: You know, monetary and financial architecture is it's a bit 369 00:22:24,240 --> 00:22:25,920 Speaker 5: like what they say about bankruptcy. 370 00:22:26,000 --> 00:22:28,760 Speaker 4: It happened gradually and then suddenly. 371 00:22:29,680 --> 00:22:34,879 Speaker 5: I think that as long as the board continues to 372 00:22:35,280 --> 00:22:40,919 Speaker 5: in fact be controlled by non Trump appointees, you're not 373 00:22:41,000 --> 00:22:46,080 Speaker 5: going to see a lot of market pricing reaction. But 374 00:22:46,840 --> 00:22:48,959 Speaker 5: if and when we could reach a sort of tipping 375 00:22:49,000 --> 00:22:54,960 Speaker 5: point where there's a sort of rapid and dramatic negative reaction, 376 00:22:55,560 --> 00:22:57,880 Speaker 5: I don't know that we will reach that. You know, 377 00:22:58,040 --> 00:23:00,560 Speaker 5: it felt like we might have been approaching one over 378 00:23:00,600 --> 00:23:05,480 Speaker 5: the summer leading up to the Cook firing, and then 379 00:23:05,560 --> 00:23:08,760 Speaker 5: there was a real step back from that by the administration. 380 00:23:09,440 --> 00:23:12,000 Speaker 5: But I think we're still several seats on the board 381 00:23:12,119 --> 00:23:19,320 Speaker 5: away from the market seriously considering and pricing in a 382 00:23:19,359 --> 00:23:23,720 Speaker 5: central bank that engages in sort of an inflation tax 383 00:23:23,760 --> 00:23:28,760 Speaker 5: based policy or monetary financing or something like that. I 384 00:23:28,800 --> 00:23:31,159 Speaker 5: also think that there's a lot of issues being raised 385 00:23:31,240 --> 00:23:35,040 Speaker 5: right now that this policy is about that aren't really 386 00:23:35,119 --> 00:23:39,840 Speaker 5: related to value of the dollar and the excessiveness or 387 00:23:39,880 --> 00:23:44,040 Speaker 5: appropriateness of the manor policy stance. The Central Bank is 388 00:23:44,080 --> 00:23:46,359 Speaker 5: a very powerful organization that carries out a lot of 389 00:23:46,400 --> 00:23:52,600 Speaker 5: other responsibilities which could potentially be weaponized by a board 390 00:23:52,760 --> 00:23:55,119 Speaker 5: in control of the White House that would have no 391 00:23:55,160 --> 00:23:59,080 Speaker 5: effect on the value of the dollar. You know, the 392 00:23:59,119 --> 00:24:04,040 Speaker 5: whole payments system, the sort of financial infrastructure backbone runs 393 00:24:04,040 --> 00:24:07,040 Speaker 5: through the Federal Reserve, and putting that infrastructure in the 394 00:24:07,080 --> 00:24:09,600 Speaker 5: hands of an actor that's willing to a view that 395 00:24:09,800 --> 00:24:11,800 Speaker 5: is are very dangerous, but isn't going to change the 396 00:24:11,840 --> 00:24:12,679 Speaker 5: value of the dollar. 397 00:24:13,040 --> 00:24:15,240 Speaker 4: And so, you know, not everything that happens with the 398 00:24:15,240 --> 00:24:16,280 Speaker 4: respect to the FED. 399 00:24:16,760 --> 00:24:19,960 Speaker 5: We should, like, you know, calibrate how concerned we are 400 00:24:20,000 --> 00:24:22,960 Speaker 5: based on whether we're seeing you know, the long bonds move. 401 00:24:23,560 --> 00:24:26,119 Speaker 3: Seting aside president or whatever. You know, I think you 402 00:24:26,160 --> 00:24:29,920 Speaker 3: could make a really good argument that the monetary functions 403 00:24:30,000 --> 00:24:32,919 Speaker 3: of the Federal Reserve, the FMC, the rate Setting Committee 404 00:24:33,440 --> 00:24:36,119 Speaker 3: that's under the purview of Congress, this is the power 405 00:24:36,119 --> 00:24:39,360 Speaker 3: to coin money in a different version, it's quasi fiscal 406 00:24:39,400 --> 00:24:43,960 Speaker 3: in nature, especially when there's targeted direct lending programs, et cetera. 407 00:24:44,240 --> 00:24:45,800 Speaker 3: On the other hand, you know, I think you could 408 00:24:46,359 --> 00:24:49,560 Speaker 3: the supervisory stuff, you'd say, well, this is executive branch stuff. 409 00:24:49,560 --> 00:24:52,800 Speaker 3: This is about enforcement of the law, et cetera. How 410 00:24:52,840 --> 00:24:56,159 Speaker 3: does it done? Like can are the how interlinked? I 411 00:24:56,160 --> 00:24:58,840 Speaker 3: think actually does a lot of your work. How interlinked 412 00:24:59,080 --> 00:25:04,919 Speaker 3: are these two functions, the supervisory stuff and the monetary 413 00:25:05,119 --> 00:25:09,200 Speaker 3: policy setting such that the FED can't really be cleanly 414 00:25:09,320 --> 00:25:13,760 Speaker 3: described as belonging to one of those two branches of government. 415 00:25:14,800 --> 00:25:16,600 Speaker 4: It is a very deep question. 416 00:25:17,480 --> 00:25:22,560 Speaker 5: My view on this is that monetary policy is bank 417 00:25:22,600 --> 00:25:28,679 Speaker 5: regulation and vice versa. That the money supply in the 418 00:25:28,760 --> 00:25:35,360 Speaker 5: twenty first century is created by investor on banks JP Morgan, 419 00:25:35,480 --> 00:25:38,520 Speaker 5: Bank of America. They're the ones actually issuing the money 420 00:25:38,520 --> 00:25:43,440 Speaker 5: in circulation that people are using, and it's their expansion 421 00:25:44,280 --> 00:25:47,760 Speaker 5: of the money supply or contraction that is affecting the 422 00:25:47,840 --> 00:25:52,640 Speaker 5: rate of inflation and all of the macro economic variables. 423 00:25:52,640 --> 00:25:55,840 Speaker 5: What the Federal Reserve is doing when it conducts monetary 424 00:25:55,880 --> 00:26:01,040 Speaker 5: policy is changing the incentives and constraints on the collective 425 00:26:01,160 --> 00:26:04,320 Speaker 5: balance sheet of the banking system to expand and contract, 426 00:26:04,840 --> 00:26:09,440 Speaker 5: and the main way we adjust those constraints is through 427 00:26:09,440 --> 00:26:13,359 Speaker 5: the overnight interest rate. But the overnight interest rate itself 428 00:26:13,960 --> 00:26:17,280 Speaker 5: is not what's important. It's about the decisions of JP 429 00:26:17,359 --> 00:26:21,000 Speaker 5: Morgan and Bank of America loan officers to expand or 430 00:26:21,040 --> 00:26:26,000 Speaker 5: contract the amount of deposits in circulation, and there are 431 00:26:26,080 --> 00:26:30,840 Speaker 5: a lot of other government tools that affect that, and we. 432 00:26:31,200 --> 00:26:33,920 Speaker 4: Have chosen for good reasons to. 433 00:26:34,119 --> 00:26:37,280 Speaker 5: Focus on the overnight interest rate as the primary tool 434 00:26:37,400 --> 00:26:40,000 Speaker 5: for adjusting the rate of expansion. 435 00:26:40,240 --> 00:26:41,760 Speaker 4: And contraction of the money supply. 436 00:26:41,880 --> 00:26:47,679 Speaker 5: But obviously capital requirements, liquidity requirements, supervisory expectations all have 437 00:26:47,760 --> 00:26:52,639 Speaker 5: an influence on the balance sheet of the banking system 438 00:26:52,840 --> 00:26:55,400 Speaker 5: and the rate of which it expands and contracts. And 439 00:26:56,000 --> 00:27:00,840 Speaker 5: so the idea that we could split these functions and 440 00:27:00,920 --> 00:27:03,720 Speaker 5: that we would just have this bank regulator that isn't, 441 00:27:04,200 --> 00:27:07,800 Speaker 5: you know, affecting macroeconomic conditions is fanciful. 442 00:27:08,080 --> 00:27:12,080 Speaker 4: We might hope to create a bank regulator that is. 443 00:27:13,520 --> 00:27:19,320 Speaker 5: Not adjusting its regulatory and supervisory posture in an effort 444 00:27:19,640 --> 00:27:23,399 Speaker 5: to influence macroeconomic conditions, and that that meant it sits 445 00:27:23,480 --> 00:27:27,240 Speaker 5: only with an overnight interest rate authority. But we would 446 00:27:27,280 --> 00:27:31,159 Speaker 5: have to recognize that this other organization that has the 447 00:27:31,200 --> 00:27:36,879 Speaker 5: regulatory and supervisory responsibilities could perhaps even more effectively influence 448 00:27:37,520 --> 00:27:40,760 Speaker 5: you know, macroeconomic conditions by adjusting its posture. 449 00:27:41,320 --> 00:27:44,240 Speaker 4: And certainly in this sort of. 450 00:27:44,280 --> 00:27:52,359 Speaker 5: Environment where we're trying to insulate from executive influence the 451 00:27:52,440 --> 00:27:56,840 Speaker 5: rate of expansion of the money supply, you would not 452 00:27:57,480 --> 00:27:59,960 Speaker 5: achieve that. If you hand it over to the white 453 00:28:00,000 --> 00:28:04,000 Speaker 5: ho regulatory and supervisory policy and left in an independent 454 00:28:04,040 --> 00:28:07,600 Speaker 5: agency just the overnight interest rate policy, you'd have quite 455 00:28:07,680 --> 00:28:10,080 Speaker 5: a struggle between those two bodies. 456 00:28:10,400 --> 00:28:12,560 Speaker 4: There's a lot of other issues with splitting them. 457 00:28:12,440 --> 00:28:13,880 Speaker 7: Up, but I think this is sort of the bottom 458 00:28:13,880 --> 00:28:17,359 Speaker 7: line point is the money supply is bank issued, so 459 00:28:17,400 --> 00:28:21,920 Speaker 7: bank regulators are fundamentally involved in monetary policy broadly construed, 460 00:28:21,960 --> 00:28:24,040 Speaker 7: no matter which way you slice it. 461 00:28:24,720 --> 00:28:27,520 Speaker 2: All right, Lev we could probably talk to you about 462 00:28:27,560 --> 00:28:30,080 Speaker 2: this for a few more hours, but we're going to 463 00:28:30,160 --> 00:28:31,639 Speaker 2: have to leave it there just because we want to 464 00:28:31,640 --> 00:28:34,040 Speaker 2: get this episode out as soon as possible. But thank 465 00:28:34,040 --> 00:28:36,880 Speaker 2: you so much for coming back on all blots. Really 466 00:28:36,920 --> 00:28:37,560 Speaker 2: appreciate it. 467 00:28:38,080 --> 00:28:53,320 Speaker 8: Thank you for having me back, Joe. 468 00:28:53,760 --> 00:28:56,520 Speaker 2: That was such an interesting discussion. Obviously there's the sort 469 00:28:56,560 --> 00:28:59,600 Speaker 2: of short term developments of what will and won't happen 470 00:28:59,680 --> 00:29:02,920 Speaker 2: right now, but also I guess the long term meditations 471 00:29:03,240 --> 00:29:07,160 Speaker 2: on the relationship between the FED and the US government, 472 00:29:07,200 --> 00:29:09,800 Speaker 2: the federal government, I find very interesting as well. And 473 00:29:09,840 --> 00:29:13,800 Speaker 2: it is true, you know, in a high interest rate environment, 474 00:29:14,560 --> 00:29:18,400 Speaker 2: interst rate payments become a huge, huge chunk of the 475 00:29:18,440 --> 00:29:23,800 Speaker 2: federal government spending, and so interest rates become much more 476 00:29:23,880 --> 00:29:26,800 Speaker 2: of a constraint on what the US government can and 477 00:29:27,000 --> 00:29:30,520 Speaker 2: actually cannot do, and so to some extent, I guess, 478 00:29:30,600 --> 00:29:33,720 Speaker 2: I guess it's unsurprising that Trump would go after this 479 00:29:33,920 --> 00:29:38,680 Speaker 2: as a limiting factor what he feels as a limiting 480 00:29:38,720 --> 00:29:40,840 Speaker 2: factor on his own actions. We know that Trump doesn't 481 00:29:40,880 --> 00:29:43,680 Speaker 2: like to feel limited in any way. But on the 482 00:29:43,720 --> 00:29:46,920 Speaker 2: other hand, you know, I guess the ad hocness of 483 00:29:46,960 --> 00:29:51,240 Speaker 2: it all feels very very strange and chaotic totally. 484 00:29:51,280 --> 00:29:53,720 Speaker 3: I mean, I think the thing that really strikes me 485 00:29:54,080 --> 00:29:58,200 Speaker 3: is that, look, there's no separation of you know, we 486 00:29:58,280 --> 00:30:01,440 Speaker 3: could all accept, including people at the White House, that 487 00:30:01,840 --> 00:30:05,120 Speaker 3: the interest rate setting is an independent function and you 488 00:30:05,160 --> 00:30:08,000 Speaker 3: can't fire the FED chair and this is not part 489 00:30:08,040 --> 00:30:10,400 Speaker 3: of the executive branch. They could do whatever they want. 490 00:30:10,800 --> 00:30:13,680 Speaker 3: This could all be accepted by everyone. But when you 491 00:30:13,720 --> 00:30:16,440 Speaker 3: bring in the thought of prison time, which, let's be honest, 492 00:30:16,440 --> 00:30:20,479 Speaker 3: that's what that's what a you know, potential criminal charge is, 493 00:30:21,080 --> 00:30:24,960 Speaker 3: I mean, then you're you're striking at something much deeper 494 00:30:25,400 --> 00:30:28,360 Speaker 3: than just well, what do the court say about where 495 00:30:28,400 --> 00:30:31,040 Speaker 3: the FED sits within the three branches of government? 496 00:30:31,120 --> 00:30:31,239 Speaker 8: Right? 497 00:30:31,280 --> 00:30:34,120 Speaker 3: I mean, then you're you're really into You're into some 498 00:30:34,160 --> 00:30:35,440 Speaker 3: new territory. 499 00:30:34,920 --> 00:30:35,760 Speaker 8: Here, right. 500 00:30:35,880 --> 00:30:38,200 Speaker 2: And also, I mean we talked about it, but the 501 00:30:38,280 --> 00:30:40,040 Speaker 2: idea that people are going to have to pay their 502 00:30:40,080 --> 00:30:41,920 Speaker 2: own legal fees for all of this is going to 503 00:30:41,960 --> 00:30:45,960 Speaker 2: have a massive chilling effect on anyone who's even thinking 504 00:30:46,120 --> 00:30:49,640 Speaker 2: about going into public office. At this point, and I 505 00:30:49,640 --> 00:30:52,200 Speaker 2: don't know, you know how you kind of fix that. 506 00:30:52,720 --> 00:30:55,600 Speaker 3: I'm always disturbed by, you know, like I'll meet very 507 00:30:55,640 --> 00:30:59,080 Speaker 3: impressive people from time to time. They're very charismatic and 508 00:30:59,360 --> 00:31:02,840 Speaker 3: they have interested thoughts about policy, And I was like, hey, 509 00:31:02,960 --> 00:31:05,200 Speaker 3: you ever thought about running for office? And no one 510 00:31:05,240 --> 00:31:08,800 Speaker 3: ever says yes, Like, no sane person. Seriously do you, like, 511 00:31:09,040 --> 00:31:12,000 Speaker 3: can you think of a sane person you know that 512 00:31:12,080 --> 00:31:15,080 Speaker 3: would subject themselves to public office right now of any sort? 513 00:31:15,200 --> 00:31:15,240 Speaker 4: No? 514 00:31:15,360 --> 00:31:17,920 Speaker 2: I mean, this is the classic problem with public office 515 00:31:18,000 --> 00:31:20,080 Speaker 2: is everyone who's in it shouldn't be right. 516 00:31:20,160 --> 00:31:21,160 Speaker 4: That's a cliche. 517 00:31:21,280 --> 00:31:25,080 Speaker 3: Yeah, it's just like you'd be so crazy, it'd be 518 00:31:25,120 --> 00:31:27,880 Speaker 3: so crazy sitting us said, going to prison, just like 519 00:31:28,280 --> 00:31:30,840 Speaker 3: no one I know who is a two brain cells. 520 00:31:30,920 --> 00:31:33,280 Speaker 3: Now that's a little bit unfair, but three brain cells 521 00:31:33,800 --> 00:31:35,720 Speaker 3: would like think like, oh yeah, I really want to 522 00:31:35,800 --> 00:31:38,280 Speaker 3: run for office right now? Like we are truly selecting 523 00:31:38,440 --> 00:31:41,880 Speaker 3: for You have to be a real sociopath, basically, and 524 00:31:41,960 --> 00:31:44,280 Speaker 3: I don't know that a government of sociopaths is going 525 00:31:44,360 --> 00:31:46,200 Speaker 3: to lead to optimal policy. 526 00:31:46,720 --> 00:31:49,360 Speaker 2: Okay, well, on that very fun note, shall we leave 527 00:31:49,360 --> 00:31:49,600 Speaker 2: it there. 528 00:31:49,640 --> 00:31:50,320 Speaker 4: Let's leave it there. 529 00:31:50,440 --> 00:31:52,720 Speaker 2: This has been another episode of the All Thoughts podcast. 530 00:31:52,760 --> 00:31:56,000 Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway. 531 00:31:55,680 --> 00:31:58,480 Speaker 3: And I'm Joe Wisenthal. 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