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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: His single best idea, and we say good morning. It's

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Speaker 2: been just an extraordinary not August, it's as close to

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Speaker 2: November or February as there could be. The idea of

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Speaker 2: doldrums in the end of summer has been twenty four

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Speaker 2: to seven. Of course, all of this on the uproar

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Speaker 2: of the President and our central Bank, the Federal Reserve System.

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Speaker 2: We had a wonderful cross section of guests today. Of course,

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Speaker 2: Libby Cantrell at PIMCO, I think yesterday or the day before,

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Speaker 2: was incendiary about the importance of the Senate Banking Committee.

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Speaker 2: Her colleague Anthony Cassenzi showed up today. He is expert

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Speaker 2: on short term paper. Tony Cassenzi of PIMCO.

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Speaker 1: On the uproar, what we should expect is something that

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Speaker 1: we all learned in grade school, which is the idea

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Speaker 1: that there's checks and balances, and so so far the

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Speaker 1: checks and balances are working. We know one major check

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Speaker 1: in balance, and this whole story will be of course,

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Speaker 1: the Senate Banking Committee will be very difficult question. They'll

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Speaker 1: be kentroll.

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Speaker 3: She will tell you that she was on fired.

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Speaker 1: It's just one one one seat majority, two seat majority

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Speaker 1: in the Senate Bank Committee, three c majority of the

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Speaker 1: Senate makes it very difficult to push nominees through and

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Speaker 1: it's proven in fact in the in the first Trump administration,

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Speaker 1: five uh suggested appointees did not make it through the Senate.

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Speaker 1: So there are checks and balances here, and so it's

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Speaker 1: part of the reason why markets are even keeled about

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Speaker 1: the story. They expect us checks and balances to work out,

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Speaker 1: and so we'll have to wait and see, and we

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Speaker 1: would expect that will be the case in the end,

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Speaker 1: but but one can't know for sure.

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Speaker 2: Tony Cresni of PIMPCO here's discussion today on this again

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Speaker 2: Adam with us a Jackson hole and the urge the

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Speaker 2: matter is so urgent and so front and center his

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Speaker 2: Peterson Institute in Washington that we lined him up again

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Speaker 2: today here with a bit of a dissertation on FED independence,

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Speaker 2: a lesson for all of us from doctor Posen.

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Speaker 3: The first is the argument rate by the brilliant Ken

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Speaker 3: Rogoff in nineteen eighty six that there's inherently an inflation

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Speaker 3: bias to various degrees and monetary policy, because if you

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Speaker 3: pump up the economy, at least temporarily you get some growth,

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Speaker 3: but in the end all you get is the inflation

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Speaker 3: whence people expect that, and so the point of the

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Speaker 3: independence is to anchor expectations, as the saying goes, so

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Speaker 3: you basically get rid of this extra inflation that's totally avoidable,

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Speaker 3: and all the data suggests this is right, that you

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Speaker 3: get a lower average inflation rate with an independent center

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Speaker 3: bank at no costs. The next two are very straightforward.

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Speaker 3: When you have a politician who wants to have a

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Speaker 3: rate cut time for a particular initiative or ahead of

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Speaker 3: an election, out of whack with what the economic fundamentals are,

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Speaker 3: that's bad. When you have a government that wants the

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Speaker 3: central bank to directly finance its debts so that it

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Speaker 3: doesn't the government doesn't have to behave in a responsible way,

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Speaker 3: that's bad. We saw that in Italy, we saw that

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Speaker 3: in Argentina, we saw it to a limited degree in

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Speaker 3: Britain in the seventies. It's bad news. And so this

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Speaker 3: election cycle installation, this prevention of fiscal dominance is the

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Speaker 3: other two main reasons why you do central bank independence. Again,

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Speaker 3: I want to stress the late Stan Fisher former or

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Speaker 3: vice Chair of the FED former Government Bank of Israel.

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Speaker 3: Stress the distinction between operational independence and goal independence. It's

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Speaker 3: still the Congress, the legislature that sets what ultimately is

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Speaker 3: the Fed's goal, whether it's in the Humphrey Hawkins Act

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Speaker 3: or two percent inflation or whatever, evaluates that. But the

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Speaker 3: day to day means the month independence is what we're

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Speaker 3: talking about. Well jump and then finally, the issue is

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Speaker 3: just the same way that the Trump administration is gutting

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Speaker 3: expertise and technocracts and bureaucrats have experienced throughout the government,

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Speaker 3: they're now doing the same thing to the FED, and

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Speaker 3: that just makes policy making worse.

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Speaker 2: Just brilliant, What a clinic that was from Adam Posen

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Speaker 2: Harvard and of course Adam Posen of the Peterson Institute

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Speaker 2: in Washington. We will continue our coverage of this the

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Speaker 2: leadership of Michael McKee driving all of our economics on Apple,

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Speaker 2: on Spotify, on YouTube podcasts. It's single best idea by

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Speaker 2: it