00:07Great piece in The Hill, op-ed on nomination of Jay Powell as the worst Fed chairman in history.
00:16And I want to just share with you, the American people, the case against Powell.
00:22It's really important to understand that we're in a situation now where the Federal Reserve
00:26is holding interest rates artificially high, contrary to the data.
00:32They should be at least 50 basis points lower, maybe more.
00:36And why does that matter to you, the American people?
00:39Let me count the ways.
00:41If you think about rates that are 50% higher than they should be,
00:46that's a loss of about a quarter to a half point of real gross domestic product growth.
00:53And that translates into lost jobs to the tune of about 750,000 jobs we don't create.
01:01It translates into lost tax revenues.
01:05And when the Fed holds rates higher than it otherwise should, 50 basis points higher, for example,
01:13we have to pay for our national debt.
01:16And about 20 to 30% of that debt is financed through short-term debt rather than long-term bonds.
01:22So if you're paying it 50% higher, that's a couple hundred billion dollars added to our debt
01:28because of higher interest costs.
01:31So he's making a really big mistake.
01:34And what I do in the op-ed in The Hill is I talk about how this is not Powell's first major blunder.
01:41It's his third.
01:43And let me walk you through that.
01:45When I was here, standing right here, years ago during the first Trump administration,
01:52Jay Powell decided to raise rates even though there was no sign of inflation.
01:59He just didn't understand Trumpnomics.
02:02He was seeing our tariffs.
02:04He was seeing our tax cuts.
02:07He was seeing what we were doing in energy policy deregulation.
02:10He didn't understand that that was going to create robust economic growth without inflation.
02:17And he went ahead and raised the interest rates.
02:19And the Fed's own analysis after the fact showed that we lost about a point of gross domestic product growth,
02:28which is like that's trillions of dollars over time.
02:31And when Biden was in the White House, Powell wanted to get reappointed,
02:41so he coddled up to Joe Biden.
02:45And the practical result of that was he refused to raise rates even as inflation was rising dramatically.
02:56And then once he got appointed, he raised the rates, but it was too late.
03:02And we wound up with that horrible inflation.
03:05And the other thing I hold Jay Powell accountable for during the Biden years
03:08is the responsibility of the Federal Reserve chairman to speak out
03:16if the executive branch or the legislative branch are acting fiscally irresponsible.
03:23So even as Biden and the Democrat Congress were passing these incredibly fiscally irresponsible bills
03:32like the misnomer, the Inflation Reduction Act, and all the tradings of dollars, the debt they added,
03:38Powell kept his mouth shut.
03:41He didn't say a word.
03:42All he did was accommodate, that's the Fed lingo,
03:46accommodate the inflation by printing money and keeping rates too low for too long.
03:53And so he was very much implicated in all this.
03:56And now he comes along and he's sitting there saying,
03:59well, I'm not going to lower rates.
04:01I don't know what the tariffs are going to do.
04:02It's like, hey, Jay, what happened in the first term?
04:05It's like nothing.
04:07We had zero inflation from the tariffs.
04:10So this is a serious problem for the American people that the Federal Reserve is causing.
04:18What I'm suggesting is that the July 29, 30 meeting of the Board of Governors,
04:23that if Jay Powell continues down this path of refusing to lower rates when the data says he should,
04:31that the rest of the Board of Governors should just simply vote to do what should be done,
04:35which is to lower rates.
04:37The last thing I should say, the interesting part of the Hill piece is,
04:41for you journalists, is a little bit of background history.
04:44I worked my way through bad Fed chairs and good, right?
04:49One of the bad ones was Arthur Burns, who during the Nixon years helped Nixon get re-elected
04:56by printing a bunch of money and going into the 72 election.
05:01And that unleashed the stagflation.
05:03And then a guy named G. William Miller was head of the Fed, succeeded Burns,
05:09and he was so bad they got rid of him in like 500 days.
05:13And like Powell, he's a lawyer, not an economist.
05:16The only two guys who've been lawyers have been Powell and Miller.
05:20And what they share in common is a terrible performance.
05:24And then you had Greenspan.
05:25I'm old enough to remember, maybe there's a few of you here who remember that Greenspan was the guy
05:31who didn't understand that technology in the 90s was going to be productivity enhancing
05:37and hold inflation down.
05:39And he talked about irrational exuberance, raised rates, and what did we have?
05:43We had a stock market crash.
05:44So that was a major one.
05:47And then Bernanke, Ben Bernanke, going into what would turn out to be the Great Recession
05:54and stock market crash, he underestimated the level of systemic risk.
06:01And he didn't act quick enough.
06:02And he turned what could have been a manageable crisis into what was almost a total meltdown.
06:09So Powell has a lot of competition for bad-fetched air, but all of the people I mentioned only made one mistake.
06:18Powell's on his third here.
06:19So I think this is a good thing, and I hope you'll write about it, look at it, look at my piece, and do that.
06:28Here's what I'll promise you.
06:28I'll come back here tomorrow and talk about the tariffs issue because the letters are still coming out.
06:34And it's not systematic now, but I'll come back tomorrow when we get a good set of things.
06:40One thing I'll say about it is that we have a situation where the world cheats us.
06:48And we have 15 major countries that account for something like 95 percent of the trade deficit we run.
06:57And in our negotiations, what we're seeing is they're having so good, screwing the American people,
07:04I just got to tell it like it is, that they're reluctant to give up their advantage.
07:09So what the president, what the president, I'll come back tomorrow.
07:14But you personally said 90 days and 90 days.
07:16I'm very happy, I'm very happy, I am very happy with where we're at.
07:21We have had a global baseline tariff in place of 10 percent.
07:26We're collecting billions of dollars in tax revenues that are going to pay down for tax cuts.
07:34We've got continuing negotiations, and I think this is great.
07:38But I'll come back tomorrow and answer this question.
07:40Why were there not 90 days and 90 days?
07:41Because the rest of the world has it so good that they're dragging their heels.
07:48But the president will not allow that.
07:50That's why the letters went out.
07:51And why should countries take the administration seriously that you guys are not going to push the August 1st deadline back even further?
07:58And that those tariffs will actually go into it back?
08:00It doesn't matter in the sense that we're collecting billions of dollars on behalf of the American people.
08:05And the negotiations are going well.
08:08Anyway, that's...
08:09I will come...
08:10The Fed chair, okay.
08:11Are you, as the White House, looking for a new Fed chair, are you way into that debate?
08:15I'm not here to weigh into that debate.
08:17No.
08:17So you weren't part of the interview?
08:19No, no, no, no, no.
08:20Absolutely not.
08:20My expertise, Jennifer, as you know here, as a macroeconomist, I've been writing about Powell going back to the first term and the Fed long before that.
08:33And it just, it troubles me that Powell, it's not well understood how badly Powell has performed.
08:42I mean, fact check me on that.
08:43Read the Hill.
08:44If there's anything I've said that's inaccurate, I think it's just a fact of the matter that Powell's made two major blunders.
08:54There's no question about that.
08:56Two major blunders.
08:57He was too early Powell in the first Trump term, too late Powell in the Biden term.
09:03And the only question is whether what he's doing now is wrong and causing more trouble.
09:13And that's an open question, but the data tells me that he's wrong, okay?
09:18Is anybody else in the administration reaching out to the board with your suggestion about?
09:21I have no visibility.
09:24All right, we'll see you guys tomorrow.
09:27Why tomorrow?
09:28Because, as you know, letters are still going out and things are still being done.
09:33I never get ahead of the president.
09:34Were you still involved in those trade negotiations?
09:36The leads are Howard and Jameson and the certain countries, Scott.
