Speaker 1: Bloomberg Audio Studios, podcasts, radio news. I'm David gera host
Speaker 1: of The Big Take, and today I'm sharing an episode
Speaker 1: from my series of Exit interviews. I spoke with senior
Speaker 1: officials in the Biden administration ahead of Donald Trump's inauguration
Speaker 1: as they prepared to wind down their work. These conversations
Speaker 1: were wide ranging, and in this one, taped on December eleventh,
Speaker 1: Treasury Secretary Janet Yellen discusses her decades long career in
Speaker 1: public service and the challenges she expects her successor will face.
Speaker 1: Treasury Secretary Janet Yellen is in a reflective mood as
Speaker 1: her decades long career in public service comes to an end.
Speaker 2: I just could not feel more positively about the contributions
Speaker 2: that good economic policy making can contribute to American welfare.
Speaker 1: Yellen's path to the Treasury Department has been paved with
Speaker 1: some of the biggest and highest profile jobs in government.
Speaker 1: She was President Clinton's chief economic advisor, a Federal Reserve governor,
Speaker 1: and the head of the Federal Reserve Bank of San Francisco.
Speaker 1: President Obama picked her to be the Fed's Vice chair
Speaker 1: then chair. She is the first and only woman to
Speaker 1: have had that job and the first and only woman
Speaker 1: to be Treasury Secretary, where she oversees a very broad portfolio.
Speaker 1: This week I traveled to Washington to interview Yellen live
Speaker 1: on Bloomberg Television and Radio and now.
Speaker 2: Our exclusive interview with Bloomberg's David Gerr.
Speaker 1: He sat down with the Treasury Secretary Janet Yellen as
Speaker 1: her post nears NN. Let's take a listen here in
Speaker 1: the Treasure Department with Secretary Janet Yellen. Great to be
Speaker 1: with you, and there's a lot I hope to cover.
Speaker 1: We talked about the economic warfare the US is waging
Speaker 1: in support of Ukraine, about Yellen's work on US China policy.
Speaker 1: Then when that live interview ended, we kept talking. Okay,
Speaker 1: we can continue now if we have for a fewer moments.
Speaker 1: Thank you, about what she's accomplished and hasn't about threats
Speaker 1: to the Fed's independent and many of the economic policies
Speaker 1: President elect Trump has put forward. This is the big
Speaker 1: take from Bloomberg News. I'm David Gerra, and today on
Speaker 1: the show, an exit interview with the seventy eighth Secretary
Speaker 1: of the Treasury, Jennet Yellen. Treasury Secretary Janet Yellen and
Speaker 1: I talked just a couple hours after we got the
Speaker 1: latest inflation report. The consumer price index for the month
Speaker 1: of November was in line with what economists expected. Prices
Speaker 1: ticked higher from October and on an annual basis. The
Speaker 1: last time we spoke, back in September, Yellen told me
Speaker 1: she was optimistic the Federal Reserve would be able to
Speaker 1: pull off a soft landing that policymakers could get inflation
Speaker 1: under control without triggering a deep downturn. I asked her
Speaker 1: if she's still confident that'll happen.
Speaker 2: Well, Look, I think inflation has come down very substantially
Speaker 2: from the peaks it reached in twenty twenty one. In
Speaker 2: twenty twenty two, we're still a bit above but getting
Speaker 2: pretty close to the Fed's two percent objectives. And I
Speaker 2: believe that the FED will continue to focus on inflation
Speaker 2: and take whatever her actions prove to be necessary to
Speaker 2: keep inflation hitting toward their two percent target. We've been
Speaker 2: very fortunate so far that it hasn't been necessary to
Speaker 2: weaken the economy or create higher unemployment to accomplish that,
Speaker 2: and I hope that continues to be the case.
Speaker 1: Jenny Allen led the Federal Reserve from twenty fourteen to
Speaker 1: twenty eighteen, and given that I wanted to get her
Speaker 1: thoughts on FED independence. President elect Trump has openly criticized
Speaker 1: the current FED Chair, Jerome Powell, and Trump says a
Speaker 1: president should be able to weigh in on FEDD policies.
Speaker 1: Are you confident that the FED will be able to
Speaker 1: withstand a more actively involved administration or other kinds of
Speaker 1: political pressures.
Speaker 2: Well, independence is absolutely central to the Fed's effectiveness, and
Speaker 2: I believe it's important that it remains an independent institution,
Speaker 2: that politics don't enter its decision making, and it remains
Speaker 2: accountable to Congress to explain how it's pursuing the goals
Speaker 2: that Congress is assigned to it. And in the area
Speaker 2: of monetary policy, it's price stability and maximum employment. And
Speaker 2: I've spent many years of my career at the FED,
Speaker 2: and I can tell you that the FED is not
Speaker 2: a political institution and politics don't matter to its decision making.
Speaker 2: It's a highly professional organzation with a very strong staff
Speaker 2: and a diverse group of policymakers who are trying their
Speaker 2: lowful best to figure out, given all the uncertainties afflicting
Speaker 2: the economy, what is the best path to achieve these
Speaker 2: goals and manage trade offs that they may face, and
Speaker 2: I think they've done a good job. And what general
Speaker 2: research shows is that independent central banks end up delivering
Speaker 2: better macroeconomic results, and not only on inflation, which you
Speaker 2: would expect, but also on real economic performance. And so
Speaker 2: you know, over the last oh i would say, thirty
Speaker 2: or forty years, the trend all around the globe has
Speaker 2: been toward sharing up the independence of central banks, and
Speaker 2: there's been a payoff, and I don't think that that's
Speaker 2: going to change.
Speaker 1: Own. Powell's term as FED chair isn't up until twenty
Speaker 1: twenty six, and in a recent interview, President elect Trump
Speaker 1: says he has no plans to try to replace Powell
Speaker 1: before then. But a proposal that's gotten some attention by
Speaker 1: Scott Besson Trump's pick to succeed Yell in a treasury
Speaker 1: is for Trump to appoint a shadow fedchair. Do you
Speaker 1: see that as being just a potential nuisance or is
Speaker 1: there a real risk of having somebody who's opining with
Speaker 1: some sense of authority about issues of monetary policy.
Speaker 2: I think that this would create a great deal of
Speaker 2: confusion and the aformc that makes monetary Policy is a
Speaker 2: very capable and non political body, and I believe that
Speaker 2: they would go on and make the best possible decisions
Speaker 2: then they can and would not be influenced by somebody
Speaker 2: outside the FID who was trying to play such a role.
Speaker 2: I think it could disrupt financial markets and have an
Speaker 2: adverse on economic performance in the end. I don't think
Speaker 2: it would influence the FED.
Speaker 1: There's been a lot of talk about the dollar, the
Speaker 1: safety of the dollar as the global reserve currency, and
Speaker 1: I wonder if that's something that you think American should
Speaker 1: be preoccupied with. It's something that we hear about from
Speaker 1: the President elect and his team. Something else they've floated
Speaker 1: as it's been put a mar Lago accord where you
Speaker 1: could get the US together with Europe and China and Japan.
Speaker 1: Maybe you talk about domestic production, how narrow trade deficits.
Speaker 1: Is there an appetite or an opportunity for that.
Speaker 2: The use of the dollar in global transactions and financial
Speaker 2: markets and in trade is underpinned by a very strong
Speaker 2: US economy with deep and liquid capital markets, the role
Speaker 2: of treasuries as the safest asset in the world, the
Speaker 2: role of law, a well managed economy with low inflation
Speaker 2: and solid macroeconomic policy. And when you think about what
Speaker 2: other currency could possibly replace the dollar, the list is short.
Speaker 2: Possibly there is no currency that at this point could
Speaker 2: possibly rival the dollar. And in terms of an agreement
Speaker 2: that could affect the value of the dollar, you know,
Speaker 2: the policy that our administration has articulated is that major
Speaker 2: countries should have the value of their currencies determined in
Speaker 2: world markets. So intervention might be appropriate on occasion to
Speaker 2: counter extreme volatility, but we believe that it's best for
Speaker 2: markets to determine the value of the dollar.
Speaker 1: Coming up, as Jennet Yellen's tenure as Treasury Secretary comes
Speaker 1: to an end, how she's trying to protect some of
Speaker 1: the policies she's put in place, Trump proofing at the
Speaker 1: Treasury Department. Plus yeah Ellen's thoughts on tariffs, the future
Speaker 1: of the relationship between the US and China, and her legacy.
Speaker 1: That's after the break. As Treasury Secretary, Jenny Yellen has
Speaker 1: played a big role on the world stage. After Russia
Speaker 1: launched its full scale invasion of Ukraine in twenty twenty two,
Speaker 1: she worked with allies to impose a spate of sanctions.
Speaker 1: Right before my interview, Bloomberg reported the Biden administration is
Speaker 1: considering more sanctions targeting Russia's oil exports and its shadow
Speaker 1: fleet of oil tankers, which have been an economic lifeline.
Speaker 1: I asked the secretary if she could confirm that those
Speaker 1: discussions are underway.
Speaker 2: Well, let me say, we never preview sanctions, and we've
Speaker 2: constantly been tightening our sanctions on Russia. Our overall aim
Speaker 2: is to impair Russia's ability to continue conducting this brutal war,
Speaker 2: to try to deny it the military equipment it needs
Speaker 2: to be able to do that, and we've taken a
Speaker 2: variety of steps to do it. But we have been
Speaker 2: focused since the outset on Russian oil revenue. It's a
Speaker 2: critical component of the Russian budget. Now, what's unusual about
Speaker 2: this moment is that the oil market seems to be
Speaker 2: well supplied.
Speaker 1: Prices are relatively cheap.
Speaker 2: Prices are relatively low. Global demand is down, and there
Speaker 2: really has been an increase in supply. American firms have
Speaker 2: stepped up, We have vastly expanded oil production. OPEC countries
Speaker 2: like Saudi Arabia have excess capacity at this time. So
Speaker 2: the global oil market is softer, and that creates possibly
Speaker 2: an opportunity.
Speaker 1: Let me pivot to China, and this has been a relationship.
Speaker 1: I think you've invested a lot of time and energy
Speaker 1: and rebuilding a conduitive communication between Washington and Beijing. How
Speaker 1: much does that concern if the efforts that you've put
Speaker 1: in to rehabilitate that relationship go to the wayside.
Speaker 2: So I do think it's important to have ongoing communications
Speaker 2: at all levels, from the President and she talking to
Speaker 2: senior US officials to staff that need to communicate. Just
Speaker 2: having open channels of communication, I believe it will be
Speaker 2: seen as continuing to offer value. These are channels by
Speaker 2: which we can make clear what we're unhappy about, where
Speaker 2: our concerns are, and why we have them. We have
Speaker 2: significant concerns about Russia's economic policies that we discuss in
Speaker 2: these channels. We're also using these channels to build trust,
Speaker 2: in channels for cooperation so that we can work together
Speaker 2: where our interests coincide. So there's no question that we
Speaker 2: have serious concerns both from a national security point of
Speaker 2: view and a broader economic view with China's behavior. But nevertheless,
Speaker 2: is the two largest economies in the world. It's critical
Speaker 2: to have open channels of communication. It helps avoid misunderstandings.
Speaker 1: Given the relationship she's developed with Chinese policymakers, I asked
Speaker 1: Yellen what insights she has into how they may respond
Speaker 1: in the face of President Elect Trump's recent threats to
Speaker 1: impose broad putitive tariffs on the US's biggest trading partners,
Speaker 1: including China.
Speaker 2: Well, I really don't want to make a forecast. Many countries,
Speaker 2: when they're faced with unilateral actions of that sort look
Speaker 2: for ways to retaliate, and my guess would be that
Speaker 2: they would do that. We have in areas of concern
Speaker 2: where I've expressed repeatedly concerns with over capacity that is
Speaker 2: developed in Chinese advanced manufacturing industries and clean energy, semiconductors
Speaker 2: and the like. We think it reflects active large subsidies
Speaker 2: that are flooding the world with exports and threaten to
Speaker 2: drive our firms out of business, and areas that we
Speaker 2: think are critical to our own future. We have put
Speaker 2: in place tariffs now they're strategic. They affected eighteen billion
Speaker 2: dollars worth of trade, certainly not all of our trade
Speaker 2: with China, but broad based tariffs. Almost all economists agree
Speaker 2: that what they will do is hurt us by raising prices,
Speaker 2: possibly substantially and making it more expensive for firms that
Speaker 2: need inputs from China to be able to acquire them,
Speaker 2: and harmark competitiveness of firms that rely on those imports.
Speaker 1: The person that Donald Trump is named is your presumptive successor.
Speaker 1: Scott doesn't have suggested that he wants to cut the
Speaker 1: deficit in half by twenty twenty eight. Is that necessary?
Speaker 1: Is that even possible? I guess what I'm asking more
Speaker 1: broadly is how worried are you about the fiscal outlook
Speaker 1: at this point in time?
Speaker 2: Well, I am concerned about the fiscal outlook, and I
Speaker 2: believe the deficit reduction is necessary to keep us on
Speaker 2: a sustainable fiscal course. Now, Congress hasn't really done anything
Speaker 2: to improve the fiscal outlook, and I think that's a shame.
Speaker 2: I'm disappointed in that, and I think Congress needs to
Speaker 2: work hard on that. We proposed a lot of pay
Speaker 2: for us that we think would fairly ask corporations, wealthy
Speaker 2: individuals to pay their fair share. We've negotiated an international
Speaker 2: tax agreement that would create a level play field worldwide
Speaker 2: for multinationals, and that would be a revenue raising measure
Speaker 2: that I think would be very valuable, and there is
Speaker 2: certainly more.
Speaker 1: Jimmy Allen has had a path breaking career. I closed
Speaker 1: out our conversation by asking her what she's reflecting on
Speaker 1: as she wraps up decades in public service.
Speaker 2: I feel terrific about the opportunities that I've had over
Speaker 2: the last four years to serve at Treasury and before
Speaker 2: that at the Federal Reserve in the Council of Economic
Speaker 2: Advisors during the Clinton years, And I just could not
Speaker 2: feel more positively about first of all, the contributions that
Speaker 2: good economic policy making can contribute to American welfare. But
Speaker 2: beyond that, we have an excellent group of senior officials
Speaker 2: that we brought in. But what we found at Treasury
Speaker 2: and have built is a civil servants who have deep expertise, knowledge, commitment,
Speaker 2: operate with integrity, and are able to do the kind
Speaker 2: of analysis and operational management that really serves our economy,
Speaker 2: will and financial markets. And this is a core asset
Speaker 2: of America that we have a devoted civil service that
Speaker 2: has great expertise and contributes to good performance. So as
Speaker 2: I look back on my career, that's really been important
Speaker 2: to me.
Speaker 1: It's not in Secretary. Thank you very much, Thank you
Speaker 1: This is the Big Take from Bloomberg News. I'm David Gera.
Speaker 1: This episode is produced by Alex Segura, who also mixed
Speaker 1: and sound designed it. It was edited by Chris Antsy
Speaker 1: and Naomi Shave, who's our senior producer. He was fact
Speaker 1: check by Adriana Tapia. Our senior editor is Elizabeth Ponso,
Speaker 1: Our executive producer is na Cool Beemster Boorr, and Sage
Speaker 1: Bauman is Bloomberg's head of podcasts. If you liked this episode,
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