Speaker 1: Bloomberg Audio Studios, podcasts, radio news for anyone listening. That
Speaker 1: paper was written before my consideration for this role.
Speaker 2: Stephen Myron went viral in the wonky world of economic policy.
Speaker 2: It's all because of a forty one page economic paper
Speaker 2: from November that offered some pretty jarring strategies for trade
Speaker 2: policy and currency intervention, including what everyone refers to as
Speaker 2: the marl Lago Accord. It made huge waves, and to
Speaker 2: Myron's dismay, he can't quite shake it.
Speaker 1: It's not advocacy, and nobody should construe it that way.
Speaker 1: It's just it's been a zombie that I just haven't
Speaker 1: been able to kill.
Speaker 2: There's more going on for this economist. Since the Senate
Speaker 2: confirmed him in March as Chairman of the White House
Speaker 2: Council of Economic Advisors, Myron has been part of the
Speaker 2: administration's efforts to reshape US economic policy, from near universal
Speaker 2: tariffs that triggered a massive upheaval in markets to tax
Speaker 2: policy still in progress. He's also focused on sharing Trump's
Speaker 2: pro growth message and touting the president's transparency.
Speaker 1: Almost every single day, the president hosts a press conference
Speaker 1: straight from the Oval, and he tells you exactly what
Speaker 1: he's thinking exactly what he wants to accomplish, exactly what
Speaker 1: he's going to do, and one by one he does
Speaker 1: what he says he's going to do, and he's very
Speaker 1: transparent about that.
Speaker 2: And as news of fresh trade deals with the US
Speaker 2: come through, triggering angst across currency markets, we had some
Speaker 2: questions for the chairman himself. I'm Saliah Mousson and this
Speaker 2: is the Big Take DC from Bloomberg News. Today. On
Speaker 2: the show, I sit down with key White House economists
Speaker 2: Stephen Myron to take a deeper look at the volatility
Speaker 2: and uncertainty hitting global markets, and I ask him what
Speaker 2: every investor is wondering, what's the future of the US dollar?
Speaker 2: Chair Stephen Myron, so great to have you here, Thanks
Speaker 2: for having me.
Speaker 1: It's great to see you again.
Speaker 2: The world's economic landscape has shifted rapidly since you were
Speaker 2: confirmed for your job in March. We've had the shock
Speaker 2: of the April second tariffs, the change after the ninety
Speaker 2: day pause, and right as the Sell America trade was
Speaker 2: starting to look stale, we saw that Moody's cut the
Speaker 2: US's pristine credit rating. And I'm curious, what do you
Speaker 2: make of all this turmoil.
Speaker 1: It shouldn't be surprising there would be some volatility in
Speaker 1: the wake of the president's historic actions. You know, the
Speaker 1: move in teriff rates that we've seen has been substantial.
Speaker 1: Tariff rates have been used like that by a president
Speaker 1: to defend America in many decades. However, that volatility, as
Speaker 1: we've seen, doesn't last forever, right it peters out. Policy
Speaker 1: has limited effects on the long term. With that, and
Speaker 1: the volatility has come around. With respect to Moody's, what
Speaker 1: I would say is it's somewhat backward looking. You know,
Speaker 1: the fiscal scenario of America really deteriorated a bit during
Speaker 1: the Biden administration. One of the issues with both Moody's
Speaker 1: as well as well as the CBO scoring. The Congressional
Speaker 1: Budget Office puts a score in the legislation that's in
Speaker 1: front of Congress. They tend to focus on the tax
Speaker 1: legislation in a very narrow sense, and they tend to
Speaker 1: miss a number of things that are going on in
Speaker 1: the background, which we'll serve to reduce deficits.
Speaker 2: The shift that you're talking about is huge. We're seeing
Speaker 2: near universal tariffs for the first time in many, many
Speaker 2: decades coming from the US we're seeing an addition to
Speaker 2: the deficit from the tax bill, at least in the
Speaker 2: short term, until the growth kicks in at a time
Speaker 2: when our deficits are expected to be the largest ever. Sure,
Speaker 2: it's backward looking, but the outlook ahead is cumulative effect.
Speaker 2: You're also talking about doge, but we've seen cuts and
Speaker 2: savings in billions, not trillions, in such a small timeframe,
Speaker 2: for so many changes to happen, it sounds like a
Speaker 2: really big gamble on the shifts that President Trump is
Speaker 2: imposed on the economic landscape. How do you deal with
Speaker 2: You have such confidence when you're sharing the figures. Are
Speaker 2: you worried at all that one little thing shifting? A
Speaker 2: black swan event, a pandemic. No one saw that coming,
Speaker 2: something could break.
Speaker 1: So look, of course we're concerned about deficits. And this
Speaker 1: underlines why it's so unfortunate that we inherited such a
Speaker 1: bad fiscal hand from the previous administration, and why previous
Speaker 1: administration's policy was so misguided. You want to run deficits
Speaker 1: when you're in the middle of a significant emergency. These
Speaker 1: are things like a war, right or when you're in
Speaker 1: a recession that's so deep that Monterey policy alone can't
Speaker 1: handle it, and you want to engage in material degrees
Speaker 1: of fiscal support to the economy. This was something like
Speaker 1: COVID like the depth of the pandemic with the Cares Act,
Speaker 1: when Monterey policy alone wasn't enough to get the economy
Speaker 1: through a problems.
Speaker 2: Some of the growth forecasts that you're talking about their predictions.
Speaker 2: Of course, you don't know what's going to come, but
Speaker 2: we're seeing retailers who visited the White House talking about
Speaker 2: empty shelves at their stores because of supply chain constraints
Speaker 2: depending on what tariffs kick in. We're talking about in
Speaker 2: consumers maybe seeing price increases. And Trump has acknowledged that
Speaker 2: there's going to be short term pain for long term gain.
Speaker 2: That short term pain is going to come at a
Speaker 2: time when we are teetering at the edge of deficits
Speaker 2: that maybe the US can't handle. We haven't found out
Speaker 2: what that threshold is. So talk to me a little
Speaker 2: bit about the short term pain. Are you prepared for
Speaker 2: a recession, because that's what it sounds like Trump is
Speaker 2: talking about.
Speaker 1: I don't expect the deficit to be nearly as bad
Speaker 1: as some of these numbers that are being tossed GDP growth.
Speaker 1: Do you think we're going to say that short term?
Speaker 1: As I said, it's a mistake. It's a mistake to
Speaker 1: focus exclusively on something like a CBO score and ignore
Speaker 1: all the other things that are going on, like tariff revenues.
Speaker 1: I mean, I think that's just bonkers, and yet that's
Speaker 1: what people seem to want to do. But I think
Speaker 1: it's a mistake. And sometimes, you know, people people live
Speaker 1: in narratives, and they focus in a narrative and then
Speaker 1: eventually the market realizes it's wrong, and that'll happen in
Speaker 1: this case too, And it similarly won't be surprising if
Speaker 1: there's volatility in other economic data as well. For instance,
Speaker 1: we're in the middle of more than twenty serious trade
Speaker 1: negotiations with our partners. There's one hundred others that have
Speaker 1: expressed interest in talking. Right These are very material and
Speaker 1: we will get resolution on these within coming months, and
Speaker 1: we will get resolution on the tax bill, hopefully very soon.
Speaker 1: And while we're waiting on resolution, you know, it is
Speaker 1: not surprising if a company delays an investment or delays
Speaker 1: hiring or whatever, you know, delays some economic activity from
Speaker 1: one month to another, from one quarter to another. But
Speaker 1: waiting for the resolution dealing with the uncertainty that doesn't
Speaker 1: cause a recession, that just pushes activity from one time
Speaker 1: period to another.
Speaker 2: Talk to me a little bit more about the short
Speaker 2: term volatility. The President has signaled, essentially given almost forward
Speaker 2: guidance that there could be a couple of quarters of
Speaker 2: pain as we work on the long term picture. That
Speaker 2: is sort of the essence of any kind of revolution
Speaker 2: in economic landscapes. What are you expecting? What's the worst
Speaker 2: that could happen? Do you have any estimates of where
Speaker 2: you expect the fourth quarter of this year to end?
Speaker 1: So I don't have a precise number, in part because
Speaker 1: the policy is still fluid and I can't prejudge the
Speaker 1: outcome of those policies, right, and so you know, there
Speaker 1: can be differences based on the ability of other countries
Speaker 1: to make the concessions they need to keep the teriff
Speaker 1: rates where they are or even lower, you know, and
Speaker 1: prevent the April second tariffs from snapping back. It really
Speaker 1: would be wrong for me to prejudge their outcome and
Speaker 1: give a precise number.
Speaker 2: Do you have any sense of when we would expect
Speaker 2: to see a smaller trade deficit? Since that is the
Speaker 2: ultimate goal here.
Speaker 1: Yeah, So first you have to continue making the trade deals,
Speaker 1: and I am confident that we will be able to
Speaker 1: finish off a number more in coming weeks. And as
Speaker 1: we succeed in creating a fairer trade environment in which
Speaker 1: other countries treat us the way we treat them, that
Speaker 1: will succeed in bringing trade deficits down because we will
Speaker 1: be able to export so much more. And that's a
Speaker 1: world of more trade. That's a world of more balanced trade.
Speaker 1: It's a world of fair trade, and it's still a
Speaker 1: world of prosperity for America and prosperity for everyone, for
Speaker 1: all countries.
Speaker 2: Before we shift gears here, Steve, you're an economist, your
Speaker 2: spokesman for the administration's economic agenda. If things get a
Speaker 2: little hairy later this year, early next year, as the
Speaker 2: trade deals are being hammered out, as tariffs kind of
Speaker 2: hit companies, as the world adjusts, what is your message
Speaker 2: going to be to investors, to everyday consumers when they're
Speaker 2: worried is this a blip or is this a deeper
Speaker 2: economic slowdown?
Speaker 1: So, look, I think it's really important to have some
Speaker 1: context here. And at the end of the day, imports,
Speaker 1: our fourteen percent of the economy. Right, there are limits
Speaker 1: to how much fourteen percent of the economy can move
Speaker 1: the whole. And you have to look at what we're
Speaker 1: doing on the other stuff as well. If you look
Speaker 1: at the tax policy, if you look at deregulation, if
Speaker 1: you look at energy abundance, these affect eighty six percent
Speaker 1: of the economy. Right, they affect everything, and so there
Speaker 1: are really just profound limits on the ability of fourteen
Speaker 1: percent of the economy to matter so much that it
Speaker 1: can create mark.
Speaker 2: It's reacted strongly based on what could happen to this
Speaker 2: fourteen percent of the economy.
Speaker 1: Well, as I said, I think that financial markets were
Speaker 1: a little surprised at the scope of the president's policies.
Speaker 1: And also financial markets are maybe a little bit more
Speaker 1: dependent on the international environment than the economy is right,
Speaker 1: they're not. You know, financial markets in the economy are related,
Speaker 1: but they're not exactly the same thing.
Speaker 2: It's a very big shift to do for fourteen percent
Speaker 2: of economy based on that number.
Speaker 1: Yeah, but I mean stocks have recovered right, most of
Speaker 1: their losses. So what I would say is is this
Speaker 1: is an extremely pro growth administration. We are focused on
Speaker 1: one hundred percent on getting the tax bill over the line,
Speaker 1: on creating an investment boom in America, cutting red tape,
Speaker 1: which I think is profoundly powerful and really underappreciated by economists.
Speaker 1: Economists dramatically underappreciate the importance regulation because it's not quantitative,
Speaker 1: and it's difficult to study. The regulations you're subject to
Speaker 1: vary based on what line of work you're in, how
Speaker 1: big your firm is, how old your firm is, what
Speaker 1: your aisstictions you operate in. All of this stuff is qualitative,
Speaker 1: and we've made enormous progress already, but it still takes time.
Speaker 1: We're a nation of laws. It takes time to change
Speaker 1: the rules. It takes time to write regulations, their question periods,
Speaker 1: their common periods. This is a process, and so we
Speaker 1: think that over the next few years we can get there.
Speaker 2: After the break, I ask CEA chair Stephen Myron about
Speaker 2: the Trump administration's plans for currency policy and the possibility
Speaker 2: of a Mara Lago accord. There's a lot of talk
Speaker 2: about currencies these days. Markets are just it seems insatiable,
Speaker 2: there appetite for any kind of detail on this. Oddly,
Speaker 2: what is the connection between the trade deals that are
Speaker 2: being worked out right now, you said there's twenty currently
Speaker 2: being worked out.
Speaker 1: And currency policy, there is none there, you know, there
Speaker 1: there is none.
Speaker 2: So when we hear from the Japanese finance minister that
Speaker 2: I'm going to bring up currencies when I speak with Besant,
Speaker 2: that's the other side bringing you to the.
Speaker 1: Table, not the US Secretary. Bessant is the one who
Speaker 1: you know, has the policy authority over over the dollar,
Speaker 1: and he's been He's been pretty clear in saying that,
Speaker 1: you know, the United States continues to continues to have
Speaker 1: the same dollar policies it's had for decades, right, the
Speaker 1: United States continues to have the strong dollar policy. The
Speaker 1: United States will you know, Will Will Will Will continue
Speaker 1: with the policies that we've had for a really long time.
Speaker 2: He has been very clear. The nature of currency accords
Speaker 2: is that they seem to happen in secret, right, the
Speaker 2: Plaza accord, the Liubra accord, they happened when no one
Speaker 2: realized that they were being planned. And I think that
Speaker 2: is something that's on Trader's minds quite a bit about
Speaker 2: what could be happening behind the scenes that we don't know.
Speaker 2: But I'm wondering what you're thinking, is that we've heard
Speaker 2: from Trump for a long time that he wants a
Speaker 2: weaker dollar. I mean, this goes back to the nineteen eighties.
Speaker 2: We have people like you and Lutnik and especially Scott Besten,
Speaker 2: the Treasure Secretary, saying over and over again that the
Speaker 2: US does have a strong dollar policy. We want investments
Speaker 2: in the US that drives up the dollar. But the
Speaker 2: markets don't seem to believe it. Do you have any
Speaker 2: sense as to why.
Speaker 1: I think folks in markets often, you know, they get
Speaker 1: these little obsessions and it takes ten thousand reiterations at
Speaker 1: the same point to finally get them to believe us
Speaker 1: when when we say something. And I think you saw
Speaker 1: something similar with this, like a decade ago. I remember
Speaker 1: the FED being extremely clear that it was never going
Speaker 1: to do negative interest rates, and you know, like every
Speaker 1: day they'd come in and get that question, and every day,
Speaker 1: you know, they had to say, that's ridiculous, We're never
Speaker 1: going to do that. And I remember at the time,
Speaker 1: you know, like being really annoyed. Why am I seeing
Speaker 1: this red headline on my Bloomberg every day that you know,
Speaker 1: FED speaker X says will never do negative interest rates?
Speaker 1: And now I have some sympathy because now we have
Speaker 1: to do the same thing. Almost every single day. The
Speaker 1: president hosts a press conference straight from the Oval, where
Speaker 1: he's got lots of reporters directly there, asks him questions,
Speaker 1: and he answers those questions, and he tells you exactly
Speaker 1: what's on his mind, and he tells you exactly what
Speaker 1: he's thinking, exactly what he wants to accomplish, exactly what
Speaker 1: he's going to do, and one by one he does
Speaker 1: what he says he's going to do.
Speaker 2: It's interesting that there's so much talk about a currency
Speaker 2: accord when actually in the nineteen eighties, the last time
Speaker 2: we had a real one, central bankers and finance ministers
Speaker 2: had a lot more sway in currency markets. Currency markets
Speaker 2: were much smaller. Now we have something like eight trillion
Speaker 2: dollars changing hands. Even if you wanted to do an accord,
Speaker 2: is it even possible because of the some of the
Speaker 2: constraints for central bankers and finance.
Speaker 1: Ministers in general. I tend to think that policymakers can
Speaker 1: be creative when they need to. But like you know, again,
Speaker 1: like there's no there's nothing here, right, there's you know,
Speaker 1: we're not secretly at work on any of this stuff.
Speaker 1: There's nothing there.
Speaker 2: There's no work going on right now on a marlogo
Speaker 2: accord or any kind of currency accord.
Speaker 1: This look, you know, Secretary has been has been clear.
Speaker 2: It's a little confusing as to what the dollar policy is.
Speaker 2: I know has said several times that the US is
Speaker 2: strong dollar policy is intact. But you have said, and
Speaker 2: the President has said, and Vesson has signaled that there
Speaker 2: are benefits to a week dollar, and that came from
Speaker 2: Trump's first term. His first treasure Secretary, Stephen Mnushin also
Speaker 2: said some of the same things. Do you think that
Speaker 2: a week dollar is okay for America, that it's okay
Speaker 2: for the exchange rate to be a little bit lower.
Speaker 1: This is really the type of thing that you should
Speaker 1: address the Treasury Secretary and not to me. And you
Speaker 1: know what I could do is repeat his words that
Speaker 1: you know, a strong dollar is good for America. And
Speaker 1: that's not just merely a statement about levels. It's a
Speaker 1: statement about the strength of the dollar system and dollar
Speaker 1: dominance and the fact that that gives us many other
Speaker 1: benefits that come with that.
Speaker 2: It looks like we're seeing finance ministers wanting to talk
Speaker 2: to Bassant the right person to talk to you about
Speaker 2: currency policy. They want to talk to him about currencies.
Speaker 2: We're seeing in Asia that some of the you know,
Speaker 2: the South Korean Wan, the Taiwan dollar, they are increasing.
Speaker 2: It looks as if economic authorities in those countries are
Speaker 2: letting their currencies appreciate, whereas before they targeted them, weaken them,
Speaker 2: letting them appreciate against the dollar to kind of pave
Speaker 2: the way for a trade deal. So is it kind
Speaker 2: of a case of Trump wants a weeker dollar but
Speaker 2: he doesn't really have to ask for it.
Speaker 1: Now, Look, you know again, I can just say the
Speaker 1: same thing, which is that, you know, I think that
Speaker 1: we've all been very straightforward in what we say about
Speaker 1: this policy, and nothing has changed. There's been no change
Speaker 1: in currency policy.
Speaker 2: All right, Well, thanks so much for joining the show.
Speaker 1: Steven, thanks for having me.
Speaker 2: This is the Big Take DC from Bloomberg News. I'm Salaiavosen.
Speaker 2: This episode was produced by Rachel Lewis Chrisky. It was
Speaker 2: fact checked by Julia Press and mixed and sound designed
Speaker 2: by Alex Sugia. Special thanks to Brendan Palmer, Nicholas Bach,
Speaker 2: Susie McCrory and Wendell Thorman. If you like this episode,
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