This Is What No One Is Talking About After Trump & Powell's Ultra-Awkward Meeting At Federal Reserve

Forbes

On "What's Moving Your Money with Spencer Hakimian," Spencer reacted to the meeting of President Trump and Fed Chair Jerome Powell at the Federal Reserve.  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Hey everyone, it's Spencer Akimian and welcome back to a yet another episode of What's Moving

00:05Your Money with Forbes. On today's episode we're going to be talking about the verbal dispute

00:11between President Trump and Chairman of the Federal Reserve Jerome Powell. We're also going

00:16to be talking about Trump's proposed idea for tariff rebates, whether that would be good,

00:22whether that would be bad, whether that's logically consistent at all. And we're going to end the

00:26episode talking about Japan's recent allegations that they do not fully agree to every part of the

00:34supposed trade deal that was made earlier in this week. So sit back tight, grab yourself something to

00:40eat and drink, and I hope you guys enjoy. So the biggest news in markets yesterday was the meeting

00:48between Trump and Powell that happened at the Federal Reserve. It's memes galore all over the

00:53internet already. We have pictures of Trump and Powell and hard hats. They were disputing line

00:59item budget costs for a project that finished five years ago. They were also talking about interest

01:06rates. They were also hinting at the fact of whether or not Powell will Powell would either be fired or

01:13quit and more. Now the bottom line is despite all the distractions that we got for the cable news

01:21crowd, we have to understand what is happening here because there is an underlying shift and an

01:31underlying current that is much more important than anything that we are seeing in these verbal

01:36disputes. And it is that over time, and this is not just Trump's fault, you can blame multiple

01:43presidents for this. But over time, we are slowly but surely losing monetary credibility as a country.

01:53Monetary independence is slowly being taken away. We have Democrat presidents that only elect

02:00partisan Democrats to serve on the Fed board. We have Republican presidents that only elect

02:07partisan Republicans to serve on the Fed board. And over time, we risk letting the Federal Reserve,

02:14which in my opinion, is the most important institution, public institution in the United

02:20States, because they are the lender of last resort. They are the ones that can make decisions

02:25unilaterally without having to debate for long times within Congress. When there is an emergency,

02:31it is the Fed that is there being the firefighter. It is nobody else. We risk allowing the Fed to become

02:39a partisan institution that will only do what its side wants. You know, in many ways, this mimics the

02:48evolution of what happened to the Supreme Court. The Supreme Court used to be considered a neutral third

02:54party that was simply calling balls and strikes. But over time, it changed to a partisan court where you

03:03can guess the vote on any case in your head before it comes out. That's not good, right? That does not mean

03:12that they're applying rule of law entirely perfectly. It means that they are doing what they politically

03:18believe to be right. If we get a Federal Reserve that begins to drift in that way, we are going to get

03:26higher bond deals, higher mortgage costs, higher auto loans, higher construction costs, higher credit

03:33card interest, and a lot more. The Fed must remain independent, particularly the chair, because he is

03:41the front-facing person on that committee. The Fed Board of Governors is seven people. 99.5% of Americans

03:49cannot name you one other person on that board, despite how important they are. Most people know

03:55that Jerome Powell is the chairman of the Fed, and that's about it that they know about it. So if you have

04:01the most prominent member being essentially a puppet of the president who got to choose him, you are going

04:08to pay the price substantially for it. If you check out my TikTok, my Twitter page, my Instagram, my YouTube,

04:15my personal YouTube, I made a short reel on what this means for your wallet. A Fed independence is a lot

04:23more important than you would otherwise think. Monetary policy is half of the puzzle in the United States,

04:30so it is very important that we maintain the sacredness and the independence of that institution.

04:39By the way, do not think I am the biggest defender of Jerome Powell. I've essentially disagreed with

04:46everything that Powell did from January 2021 and beyond. I highly supported what he was doing during the

04:55coronavirus crisis of 2020 because it was urgent. But after 2021, he kept his foot on the stimulus

05:03gas too long. Signs of inflation were popping up everywhere by the spring of 2021, yet he did not act

05:12until the spring of 2022. And that full year of sitting on his hands likely was part of the reason

05:20why we got 9% inflation at its peak in the United States. And by the way, inflation never comes back

05:27down. So that was a permanent tax hike, cost of living hike, sales tax hike, whatever you want to call

05:34it on the American people. Now, let's get into a different topic that I found very interesting.

05:43This morning, President Trump came out and said that he is strongly considering

05:48passing a law within Congress that would give rebates to Americans for the tariff revenue collected.

05:56Now, he himself is marketing this in a certain way. The way he is marketing this is that this is

06:02essentially a transfer from foreign governments, from foreign producers, from foreign consumers,

06:07directly into the pockets of Americans. Now, that is obviously false. We are already seeing

06:14things that are the most heavily tariffed rise in price. And guess who's paying for it? It's the

06:20American consumer that is paying for it. What is really happening here is that Trump has an

06:26inflation problem. In the exact same way that Biden had an inflation problem in 2022 and it stuck with

06:33him throughout his entire presidency, Trump now has an inflation problem. There's so much polling out

06:39right now amongst independent voters, amongst the entire American electorate, amongst Democrat or

06:46Republican voters that the single issue that Trump has lost the most ground on has been on inflation.

06:54Some reputable polls from pollsters like Atlas Intel, who was the most accurate pollster in 2016,

07:022020 and 2024. They have been considered one of those pollsters that really has their pulse on the Trump

07:08voter, on the Trump base. They are saying Trump has lost 35 points on inflation since January. This was

07:18the reason he got elected was because Americans were fed up with the inflation they experienced during

07:24Biden's presidency. So they took another chance on Trump and he appears to be losing ground on that.

07:30Now, if Trump is noticing that these tariffs are unpopular because of their inflationary impact,

07:39one way he can mitigate that unpopularity is by offering rebates, offering money back from the

07:46tariffs collected to Americans. But this kind of defeats the whole purpose. This is kind of somewhat

07:53incoherent. You are taking money out of the right pocket of Americans and then you are putting it

07:59back into their left pocket. Why don't you just not take the money into the start? Why must we do

08:06these two extra steps for no reason? This does not seem logically consistent. But beyond the inconsistency

08:13of the logic, this actually poses an inflationary problem and a risk. Think about it. Prices are rising

08:21because companies have to pass on the cost increases that they're getting to consumers because that's

08:28the only way that this can be settled one way or another, which is causing inflation. If you give

08:34Americans money back and they can afford to buy those products, you are creating a self-fulfilling cycle.

08:43You are getting inflation through the tariffs. You're giving Americans stimulus. They are using

08:48that money to afford the tariffs and you're putting two ends of inflation pressure that were not there

08:55six months ago. This is really not a smart idea. It's showing in the polling. It's showing in inflation

09:03numbers. I don't understand why we are doing this. Yes, there are some benefits to be had from tariffs.

09:09Absolutely. Yes, tariff revenue goes up. Yes, when you raise taxes, tax revenue goes up. That's exactly what it

09:17means. But is this the smartest way to do it? Is taxing consumption? This is essentially a sales tax.

09:24Is taxing consumption the best way to generate tax revenue? There are millions of different ways that

09:31you can generate tax revenue. Taxing consumption, especially on poor and middle class people,

09:38might be economically deflationary because these are the people that spend the most back into the economy.

09:43economy. Listen, I myself would get hurt if you raise capital gains tax in the country. I wouldn't

09:50want that to happen. But my consumption wouldn't change. I'm doing well, right? But if you raise taxes

09:59on someone that is paycheck to paycheck, they pull back their consumption. That literally impacts the

10:04economy immediately in the form of lower consumption, lower business sales, lower everything.

10:10Now, one final note here. We have to talk about something that the Financial Times reported on

10:17this morning. They are reporting on something alarming, if you ask me. Japan is heavily disputing

10:25many parts of the so-called trade deal that the United States and Japan allegedly agreed to. They are

10:31disputing specifics about rice imports. They are disputing specific about car quotas. They are disputing that

10:39$550 billion signing bonus quote unquote. There is a lot of stuff that Japan is disputing. Now,

10:48this doesn't come as much of a surprise to me, but I think what it shows is there is a lack of teeth to

10:57these deals, right? Anyone can sign a memorandum of understanding, if you want to call it that. But if

11:03nobody goes through with these actions, what is this all for? If you remember back in 2018 and 2019,

11:11when we reached phase one of a trade deal with China, they had agreed to increase their soy,

11:16corn, wheat purchases from American farmers. They never got anywhere close to those numbers. Why?

11:23Because these deals are not legally binding. A deal on Truth Social is quite a lot different

11:30than a deal that can be enforced by a court of law or in contract law or whatever it may be.

11:37So I just want you to keep an eye out on this in the coming weeks as we head to the August 1st deadline,

11:42that not just for the deals, but can these deals actually be enforced? Because if they cannot be

11:48enforced, what is the point of it all? That's my time today, guys. You can watch our episodes on Forbes

11:54website, on Forbes YouTube page, on my Twitter page, on my Instagram, on my TikTok, and on my personal

12:01YouTube page as well. So I hope you guys have a great weekend and I'll see you guys back again on Monday.

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