Latest / Trumponomics / How the Powell Probe Could Blow Up Trump’s Fed Plans

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How the Powell Probe Could Blow Up Trump’s Fed Plans · Trumponomics

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. He's billions of dollars
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  Speaker 1: over budget.
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  Speaker 2: So he either is a competent or is crooked.
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  Speaker 1: I don't know what he is, but he does it
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  Speaker 1: certainly doesn't do a very good.
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  Speaker 3: Job on the verge of naming his own Federal Reserve chief.
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  Speaker 3: The Trump administration has taken one more shot at the
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  Speaker 3: person in the job now and in the process maybe
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  Speaker 3: triggered a Washington backlash that could derail his whole campaign
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  Speaker 3: to tighten control over the Central Bank. We're recording this
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  Speaker 3: on Tuesday morning, Washington time, and that is all that
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  Speaker 3: everybody in DC and financial markets is talking about. The
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  Speaker 3: Administration's renewed attack on Chairman J. Powell and the FED matters, because,
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  Speaker 3: for better or worse, America's Central Bank is still the
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  Speaker 3: central cog around which much of the global financial system revolves.
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  Speaker 3: If it's under attack, then to some extent, the global
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  Speaker 3: system looks less secure. But that part of the story
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  Speaker 3: we'd heard before. What's new is that the broader reaction
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  Speaker 3: to this latest assault from Republicans in Congress and even
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  Speaker 3: some of the president's own cabinet may just have revealed
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  Speaker 3: a red line. A constraint on the relentless expansion of
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  Speaker 3: presidential power since Donald Trump returned to office last year.
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  Speaker 3: Oh yeah, and it also turns out there's a limit
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  Speaker 3: to j. Powell's patients.
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  Speaker 4: This new threat is not about my testimony last June
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  Speaker 4: or about the renovation of the Federal Reserve buildings. It
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  Speaker 4: is not about Congress's oversight rule. The Fed, through testimony
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  Speaker 4: and other public disclosures, made every effort to keep Congress
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  Speaker 4: informed about the renovation project. Those are pretexts. The threat
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  Speaker 4: of criminal charges is a consequence of the Federal Reserve
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  Speaker 4: setting interest rates based on our best assessment of what
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  Speaker 4: will serve the public, rather than following the preferences of
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  Speaker 4: the president. This is about whether the Fed will be
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  Speaker 4: able to continue to say interest rates based on evidence
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  Speaker 4: in economic conditions, or whether instead monetary policy will be
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  Speaker 4: directed by political pressure or intimidation.
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  Speaker 3: I'm Stephanie Flander's head of government economics at Bloomberg. Welcome
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  Speaker 3: to Trumponomics, the podcast that looks at the economic world
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  Speaker 3: of Donald Trump, how he's already shaped the global economy,
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  Speaker 3: and what on earth is going to happen next. President
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  Speaker 3: Trump took his fight against Federal Reserve Chair Jaypowell one
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  Speaker 3: step further this week when federal prosecutors began investigating Power
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  Speaker 3: for his role overseeing renovation work being done on the
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  Speaker 3: Central Banks headquarters. What was different in this time, as
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  Speaker 3: I've mentioned, is that Pale got mad, and almost simultaneously
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  Speaker 3: so did senior Republican lawmakers on the Senate Finance Committee.
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  Speaker 3: One way or another, that reaction from senators and from
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  Speaker 3: Powell himself could make it a whole lot harder for
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  Speaker 3: the President to put more of his people in charge
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  Speaker 3: of us official interest rates. Could also make it more
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  Speaker 3: difficult for the people who are there now to support
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  Speaker 3: the lower interest rates the President so wants to see,
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  Speaker 3: even if the economy is calling for it. So possibly
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  Speaker 3: not such a bright move on the administration's part, which
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  Speaker 3: might be why the President is distancing himself from the
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  Speaker 3: Department of Justice's decision to serve those subpoenas, why even
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  Speaker 3: the Treasury Secretary, Scott Bessant has said he disagrees with them.
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  Speaker 3: A lot to unpack there, joining us to discuss it all.
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  Speaker 3: From DC Senior Washington correspondent Slaiah Mosen, author of Paper Soldiers,
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  Speaker 3: How the weaponization of the dollar changed the world order.
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  Speaker 3: Welcome Selaia at short notice. Thank you very much.
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  Speaker 2: Great to be here, Stephanie.
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  Speaker 3: And Trumpenomics regular and former FED official Anna Wong, chief
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  Speaker 3: US economist for Bloomberg Economic. Anna, always great to have you.
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  Speaker 1: Great to be here.
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  Speaker 3: So Leah, let me start with you. This effort by
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  Speaker 3: the Department of Justice, which obviously we're reading as yet
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  Speaker 3: another kind of assault on the FED and on Chairman J.
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  Speaker 3: Powell in particular. How quickly has that unraveled? And what
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  Speaker 3: surprised you about the last few days.
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  Speaker 2: I found it very surprising that senior White House officials
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  Speaker 2: were shocked by the subpoena from the DOJ. Any president,
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  Speaker 2: particularly President Donald Trump, has his own governing style. He
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  Speaker 2: likes to be the one making the decisions. He doesn't
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  Speaker 2: like those kinds of surprises. But it seems like his officials,
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  Speaker 2: his staff now are trying to, I don't know, maybe
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  Speaker 2: impress him by taking action unilaterally and say, hey, look
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  Speaker 2: what I did for you, And this one has supremely backfired.
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  Speaker 2: I thought it was really surprising that Trump said to
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  Speaker 2: NBC News he did not know about this. Now there's
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  Speaker 2: a few ways to read that, because at the end
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  Speaker 2: of December, Trump did say, oh, I might file a
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  Speaker 2: lawsuit against J.
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  Speaker 3: Powell.
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  Speaker 2: Maybe he had heard it might be coming. But it
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  Speaker 2: seems very clear that senior White House officials plus Donald
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  Speaker 2: Trump did not give a final sign off to this action.
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  Speaker 3: He has often after the fact, distanced himself from some
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  Speaker 3: of these slightly more contentious things that the DJ has done.
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  Speaker 3: But you think this goes beyond that they genuinely were surprised.
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  Speaker 2: I do. I think it's reasonable and appropriate to apply
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  Speaker 2: that kind of skepticism when you hear that from anyone
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  Speaker 2: in power. Always questioned what they knew when they knew it.
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  Speaker 2: But in this situation, Trump has such a keen eye
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  Speaker 2: turned toward what he wants to do with the Federal Reserve.
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  Speaker 2: He talks about it frequently. He likes to tease it out.
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  Speaker 2: He has really enjoyed this apprentice style public auditioning process
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  Speaker 2: for the FED chair. He likes the attention. He likes
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  Speaker 2: that markets are so curious, hanging on each and every turn.
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  Speaker 2: He would not want to take his eye off the ball,
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  Speaker 2: particularly when it comes to markets. He really watches how
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  Speaker 2: markets moves. He understands these things. He talks to CEOs, banks,
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  Speaker 2: CEOs industries, other companies. He knows that this is a
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  Speaker 2: big one. In his officials, his senior economic team, they
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  Speaker 2: also know how keenly he's watching this. You wouldn't see
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  Speaker 2: Treasure Secretary Besant take a step like this without making
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  Speaker 2: sure that the commander in chief new.
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  Speaker 3: And indeed Scott Bessant has apparently, at least we're hearing
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  Speaker 3: from Axios and others, he's said that he thinks this
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  Speaker 3: is a mistake.
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  Speaker 2: Yeah. He told Trump, according to Axios, that this whole
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  Speaker 2: thing has messed up the somewhat organized process that he
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  Speaker 2: had put in place to keep markets calm, to keep
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  Speaker 2: Trump focused on the larger target when it comes to
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  Speaker 2: choosing a fed chair replacement for Powell coming up in May.
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  Speaker 2: Since June, we've seen a somewhat organized process if we
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  Speaker 2: have eleven candidates and then it's going to be whittled down.
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  Speaker 2: He's been communicating everything working pretty much, and locks up
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  Speaker 2: with Trump and then Poulty comes in and orchestrates the
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  Speaker 2: firing of Lisa Cook when Scott besson is not in town.
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  Speaker 2: That's a matter of public record and also what you
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  Speaker 2: can piece together from what we know publicly. On Friday,
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  Speaker 2: when the DOJ sent the subpoena notices. Bessant was in Minnesota,
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  Speaker 2: so once again he was not in town when this
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  Speaker 2: move happened. He found out later.
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  Speaker 3: And we should explain who Bill Pulty is.
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  Speaker 2: So Bill Poulty is the Federal Housing Finance Agency director.
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  Speaker 2: It is not usually such a public role. It's not
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  Speaker 2: a senior cabinet officer level like a Commerce or Treasury
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  Speaker 2: secretary type role. But he has really come out as
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  Speaker 2: this bulldog for Trump on a lot of issues, from
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  Speaker 2: housing affordability in obviously the Federal Reserve. And this is
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  Speaker 2: kind of how Trump works. He likes to have his
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  Speaker 2: bulldog there, a disruptor Trump. For a long time, we've
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  Speaker 2: been hearing from sources that he really likes Paulty no
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  Speaker 2: matter how much have he's wreaking, how mad Bussont might
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  Speaker 2: get it Pulty, Let's just remember that Busn't a couple
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  Speaker 2: of months ago had a run in with Pulsy over
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  Speaker 2: housing policy and a couple of other things where maybe
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  Speaker 2: he was stepping on Treasury's toes and Busn't said, let's
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  Speaker 2: stop outsiding in a be here. So it's a tense relationship,
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  Speaker 2: but Trump enjoys this kind of theater.
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  Speaker 3: Anna, I couldn't help thinking of you as a pretty
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  Speaker 3: long time Fed official in various capacities before you came
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  Speaker 3: to us. What do you think when you saw that
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  Speaker 3: really unprecedented video message from Chair Pale the weekend?
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  Speaker 1: I thought that the Trump administration's DOJ probe has awakened
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  Speaker 1: the dragon. Powell has a usually very calm demeanor. He
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  Speaker 1: doesn't get ruffled by a lot of things.
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  Speaker 3: He was pretty restrained last year when they were touring
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  Speaker 3: in their hard hats, touring the renovation, and Powell was
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  Speaker 3: picking Trump up on his numbers.
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  Speaker 4: So the two point seven is now three point one.
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  Speaker 1: Yeah, it just came out.
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  Speaker 4: Are you including the Martin renovation? You just add our
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  Speaker 4: entire capital? You just you just added in the third buildings?
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  Speaker 4: When that is that's a third building.
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  Speaker 2: It's a building that's being built.
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  Speaker 4: You know, it's been it was built five years ago
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  Speaker 4: over as part of the overall.
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  Speaker 1: So just looking at the past year, he has refrained
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  Speaker 1: from commenting or pointing out that the administration interference into
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  Speaker 1: monetary policy. But this time you could see that he
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  Speaker 1: has lost his call.
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  Speaker 3: And Seleia, the story we had today was that the
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  Speaker 3: whole effort was going to potentially derail the president's efforts,
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  Speaker 3: in part because this is going to make it much
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  Speaker 3: less likely that the current chair J. Powell, leaves his
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  Speaker 3: place on the board when he stops being chair in May.
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  Speaker 3: That's what we're hearing from really anyone who knows Powe
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  Speaker 3: well or as close to him. We had our own columnist,
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  Speaker 3: Bill Dudley, former New York Fed chair, say that on
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  Speaker 3: Bloomberg in the last day. Is that your belief?
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  Speaker 2: Yeah, you know. And this is something that administration officials
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  Speaker 2: are also worried about. All last week. I was hearing
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  Speaker 2: from officials and sources, people inside and outside the administration
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  Speaker 2: that what if Powell doesn't leave. He hasn't said he's
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  Speaker 2: going to step down in May. Traditionally a chair will
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  Speaker 2: announce it, he will actually step aside. Powell had this
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  Speaker 2: one piece of leverage, and he has used it. It
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  Speaker 2: seems in ways that the Trump administration didn't quite foresee,
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  Speaker 2: and maybe Powell himself didn't see just how important and
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  Speaker 2: significant it was to just keep that to himself. Looking
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  Speaker 2: at the tea leaves, talking to people close to Powell,
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  Speaker 2: it seemed like he would leave in May. He was
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  Speaker 2: just kind of holding that little card in abands in
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  Speaker 2: case he needed to play it. And now not only
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  Speaker 2: could he play it, the subpoena could backfire so significantly
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  Speaker 2: that not only could Powell to side. Oh fine, I'm
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  Speaker 2: going to stay. I can sit quietly in my office
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  Speaker 2: at the headquarter and not oversee any big subcommittees, not
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  Speaker 2: the chair, and I can just go in on FOMC
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  Speaker 2: meetings and cast my vote and make sure I'm a
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  Speaker 2: guard rail against any political interference. He could also end
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  Speaker 2: up staying chair for longer, because we're hearing now from
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  Speaker 2: Congress they are finally standing up. We heard from Senator Tillis.
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  Speaker 2: It was pretty significant that he said he will not
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  Speaker 2: confirm Trump's chair pick unless this is resolved. We've heard
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  Speaker 2: from french Hill on the House side and other senators
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  Speaker 2: on the Banking Committee that are Republicans saying and realizing
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  Speaker 2: they need to protect the FED. So if there is
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  Speaker 2: no chair that has been confirmed by the Senate, that
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  Speaker 2: means Powell stays on until there is one.
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  Speaker 3: And do you also think this is going to make
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  Speaker 3: him less likely to leave in May?
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  Speaker 1: I thought that there are two paths that this could
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  Speaker 1: play out. Not leaving and May is potentially one but
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  Speaker 1: not my baseline. And the second one, rather is that
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  Speaker 1: think the more consequential unintended consequences of this is that
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  Speaker 1: Chris Waller could be on the ascendants as the next
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  Speaker 1: FED chair.
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  Speaker 3: That's Chris Waller, who's been on the Board of Governors
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  Speaker 3: since twenty twenty, and he's one of the considered to
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  Speaker 3: be one of the three main candidates for the chair position.
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  Speaker 4: That's right.
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  Speaker 1: Why I didn't think that Powell would leave, He's just tired.
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  Speaker 1: He has been at the FED since twenty twelve. You
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  Speaker 1: could tell in the video that on one hand you
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  Speaker 1: can see outrage, anger, but on the other hand there
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  Speaker 1: is weariness. He's just not the kind of confrontational person
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  Speaker 1: who would sit in a boardroom in every meeting and
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  Speaker 1: just passively sabotage the next person. He's just not that
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  Speaker 1: type of person. He's either gonna openly fight or leave.
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  Speaker 1: But on the other path, why I think Chris Waller
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  Speaker 1: is ascendant is that given the voting situation that in
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  Speaker 1: the Senate, we have the number of Republican voices from
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  Speaker 1: the Senate that has said that there are potentially going
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  Speaker 1: to oppose any confirmation of FEED chair nominees, suggests that
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  Speaker 1: the person who now who can get through and whose
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  Speaker 1: views aligned with Trump and who the financial market really
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  Speaker 1: respect as Chris Waller. And also if it were Chris Waller,
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  Speaker 1: Powell would probably be resigned to leave, knowing that the
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  Speaker 1: FED independence would be safeguard for sure.
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  Speaker 3: Celia, it seems odd that he would stop being chair
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  Speaker 3: but still be on the board. Remind us how that
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  Speaker 3: works and how many places the president theoretically had to
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  Speaker 3: play for places he was potentially going to be able
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  Speaker 3: to fill on that key committee and the FED, and
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  Speaker 3: how this is how this might be affected.
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  Speaker 2: Looking at tradition, Yes, it would be odd for a
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  Speaker 2: FED chair to no longer be chair but hold onto
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  Speaker 2: his governor's seat, But that's not the weirdest thing that's
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  Speaker 2: happened in twenty twenty six in the first week.
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  Speaker 3: And I guess we should say people come into their
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  Speaker 3: positions as governors and that's kind of independent of the
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  Speaker 3: role they hold. So if they have to be on
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  Speaker 3: the board, to be a vice chair of Banking Division
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  Speaker 3: or to be the chairman of the whole FED, but
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  Speaker 3: their sort of seat as governor operates separately and on
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  Speaker 3: a different timetable. I noticed there's also Michael barrs he's
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  Speaker 3: not technically supposed to finish his term until twenty thirty two.
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  Speaker 3: He was expected to also go this year, but there's
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  Speaker 3: some question that he would stay for similar reasons.
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  Speaker 2: Right even, you see the seat that Stephen Myron, who
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  Speaker 2: is on leave from the White House as head of
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  Speaker 2: the Council of Economic Advisors to Trump as a fed governor,
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  Speaker 2: filling a seat left empty by Adrianna Kugler when she
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  Speaker 2: resigned under some six cloud back in August. That term
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  Speaker 2: expires in a couple of weeks, and he could roll
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  Speaker 2: over and stay or be reconfirmed Powel's seat. Right now,
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  Speaker 2: as governor, he has another two years, but his time
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  Speaker 2: as chair expires in May. Of course he could stay
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  Speaker 2: if there is no sitting chair. If you look at
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  Speaker 2: the rest of the board. Michelle Bowman Chris Waller both
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  Speaker 2: were nominated by President Trump earlier during his first term.
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  Speaker 2: Lisa Cook. We will hear whether the Supreme Court will
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  Speaker 2: uphold her bid to stay on the board. Otherwise that's
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  Speaker 2: an open seat. We don't know what will happen to
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  Speaker 2: the Stephen Myron seat, if he will be asked to
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  Speaker 2: stay in that slot, or if that becomes the Kevin
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  Speaker 2: Hassett slot, and then of course the whole administration, including Trump.
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  Speaker 2: We're just wondering do we also get the Powell slot
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  Speaker 2: to fill.
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  Speaker 3: This threat from Senator Tom Tillis, which I noticed came
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  Speaker 3: out almost moments after his statement came out moments after
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  Speaker 3: the FED released its video, which to those on the
• 15:50
  Speaker 3: outside looked a bit like coordination. But who could possibly
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  Speaker 3: comment but that threat to not confirm any new Trump
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  Speaker 3: nominees to the FAIRE until this potential criminal case is resolved.
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  Speaker 3: How seriously do you take that? We haven't had a
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  Speaker 3: lot of fighting back by Congress in the last year.
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  Speaker 2: No, we really haven't. And Trump doesn't seem to care
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  Speaker 2: about Congress, and he's been able to steamroll them on
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  Speaker 2: a lot of things, including possibly his activities in Venezuela.
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  Speaker 2: But what we're seeing is Tillis. Yes, he came out
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  Speaker 2: very quickly, very strong. It was a big deal, but
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  Speaker 2: just a reminder that he is retiring. So yet another
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  Speaker 2: politician who has.
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  Speaker 3: You know, terribly brave as they Yeah, he's another.
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  Speaker 2: Praise that probably isn't for air, but very brave for
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  Speaker 2: standing up to Trump. Okay, let's take it. Who we
• 16:40
  Speaker 2: haven't heard from Yanda. Senator Tim Scott. He is the
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  Speaker 2: chair of a Senate banking committee, a powerful Republican in
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  Speaker 2: the Senate. He hasn't said anything that's not completely uncharacteristic.
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  Speaker 2: He does tend to stay kind of mom on issues.
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  Speaker 2: But Tillis will need some support. But even others who,
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  Speaker 2: as they say, they have disagreed with power and think
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  Speaker 2: he's a terrible chair still say, oh, but I don't
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  Speaker 2: think he's a criminal. And then we heard from House
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  Speaker 2: Republican French Hill. I'm sure he doesn't. He has doesn't
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  Speaker 2: have a role in confirming the next chair or FED personnel,
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  Speaker 2: but he is a very strong voice on the Republican side,
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  Speaker 2: and he said, this isn't what the FED needs to
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  Speaker 2: be focused on. Is someone going to be indicted and
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  Speaker 2: thrown into jail. They should be focused on the economy.
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  Speaker 3: Anna. Of course, one of the key goals that the
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  Speaker 3: President has in this whole effort one is to just
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  Speaker 3: control the FED as much as he can. But in
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  Speaker 3: theory it's also a means to the end of lowering
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  Speaker 3: interest rates. So you know, how does this potentially affect
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  Speaker 3: that decision? Because you know, it did seem like things
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  Speaker 3: were kind of falling into place, you know, lower interest
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  Speaker 3: rates this year, regardless of who was head of the FED.
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  Speaker 3: So does this make things difficult for people who are
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  Speaker 3: making that decision inside the Fed, whether they're appointed by
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  Speaker 3: President and Trump or not.
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  Speaker 1: Yes, definitely. Before this incident, the data was cooperating right.
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  Speaker 1: So for example, we just had a CPI release which
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  Speaker 1: was surprisingly low. This is following another CPI report that's
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  Speaker 1: very low, and Powell himself said in December that he
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  Speaker 1: expects core goods prices to peak in the first quarter
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  Speaker 1: and for tariff path through to have peaked. So inflation
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  Speaker 1: is definitely improving. And on top of that, we have
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  Speaker 1: a productivity boom that's happening in the second half of
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  Speaker 1: twenty twenty five. We estimate that non farm productivity is
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  Speaker 1: likely going to be a run at a pace on
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  Speaker 1: average of five percent, and that basically helps with the
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  Speaker 1: inflation trajectory as well. So if everything just let the
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  Speaker 1: data play out, long term rates would have declined this
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  Speaker 1: year and now if the administration won't back down from
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  Speaker 1: this attack. But there's a risk of risk premium rising
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  Speaker 1: on the perception that FED independence is being eroded, and
• 19:08
  Speaker 1: also internally there might be some fears that this kind
• 19:13
  Speaker 1: of assault could broad into other Fed of OMC officials
• 19:18
  Speaker 1: who are perceived as hawkish.
• 19:20
  Speaker 3: Just to sort of unpack that a little bit, so
• 19:23
  Speaker 3: you're saying, whoever's Fed, and we know there will be
• 19:26
  Speaker 3: a new FED chair, whatever else happens, and they will
• 19:29
  Speaker 3: be appointed by President Trump, and there will have been
• 19:31
  Speaker 3: all of this lead up to that appointment. It becomes
• 19:35
  Speaker 3: harder for them to convince the financial markets that they're
• 19:40
  Speaker 3: doing something for the right reasons when they cut rates,
• 19:44
  Speaker 3: and long term interest rates could still be higher even
• 19:46
  Speaker 3: though they've cut short term rates. But you're saying, there's
• 19:49
  Speaker 3: that credibility problem with the markets, but there also is
• 19:52
  Speaker 3: potentially a credibility or a persuasion problem internally with FED officials.
• 19:57
  Speaker 3: That's right, And how much do you think they're feeling
• 20:00
  Speaker 3: that now? You've talked on previous programs about how important
• 20:04
  Speaker 3: it was going to be for say Kevin Hassett to
• 20:06
  Speaker 3: spend a few months doing the hard work internally to
• 20:09
  Speaker 3: bring people around. Do you think that is just now
• 20:12
  Speaker 3: a lot harder.
• 20:13
  Speaker 1: Well, in this scenario where Powell's stayed on long after
• 20:18
  Speaker 1: his May expiration as chair, I think it will be
• 20:22
  Speaker 1: harder even for Powell. And Powell has played a critical
• 20:25
  Speaker 1: role in the lowering of rates last year. Had it
• 20:29
  Speaker 1: not been for his leadership, we would not have seen
• 20:31
  Speaker 1: that twenty five bibs cut in December. So Powell is
• 20:35
  Speaker 1: trying to do the data dependent objective thing as opposed
• 20:40
  Speaker 1: to you know, the majority of the FOMC who are
• 20:44
  Speaker 1: hawkish and who are regional presidents, who who despite the data,
• 20:49
  Speaker 1: are leaning on concerns about upside risk to inflation. So
• 20:54
  Speaker 1: I think this incident makes it harder for Powell to
• 20:58
  Speaker 1: play that role that he has been playing in the
• 21:01
  Speaker 1: last a year. So basically the administration is taking out
• 21:06
  Speaker 1: a dove.
• 21:07
  Speaker 3: That is interesting. So you think interest rates are lower
• 21:09
  Speaker 3: now than they would have been under another chair, Yes, yes,
• 21:13
  Speaker 3: because other chairs might well have been more concerned about
• 21:15
  Speaker 3: the inflation risks.
• 21:17
  Speaker 1: Yes, that's right. It's either Powell, Waller, Bowman, or Steve Myern.
• 21:22
  Speaker 1: These are the four doves on the committee. And out
• 21:26
  Speaker 1: of these four, Powell and perhaps Waller have the soft
• 21:31
  Speaker 1: power to persuade the other hawkish regional fed And so
• 21:35
  Speaker 1: now this formula has broken down, Powell has lost this call.
• 21:39
  Speaker 1: So what's up in the air. Is whether he can
• 21:42
  Speaker 1: still be that really objective, honest broker between the Hawkish
• 21:48
  Speaker 1: and the Darvish folks on the committee, or would he
• 21:51
  Speaker 1: rather be like I have had it, I'm going with
• 21:54
  Speaker 1: the Hawkish faction because right now we need to safeguard
• 21:58
  Speaker 1: the optics of FED independence, even if the data would
• 22:02
  Speaker 1: have pushed him to cut further.
• 22:04
  Speaker 3: Finally, to Usulea, we're focusing on the independence of the
• 22:08
  Speaker 3: FED and what it means even for monetary policy, which
• 22:11
  Speaker 3: is what we should do because we're Trump and Noomics.
• 22:13
  Speaker 3: But I did mention at the start that for many
• 22:15
  Speaker 3: people this is also about a kind of broader question
• 22:18
  Speaker 3: of are there going to be any limits to presidential
• 22:21
  Speaker 3: power in this administration? And are there red lines that
• 22:25
  Speaker 3: the president finds he can't cross in trying to extend
• 22:29
  Speaker 3: his purview as president. Over the months, when I've talked
• 22:32
  Speaker 3: to people, even inside the FED, they see themselves as
• 22:35
  Speaker 3: partly that this battle is about the independence of central bank,
• 22:38
  Speaker 3: but also about kind of the rule of law in
• 22:41
  Speaker 3: the US. Do you think some of these people who
• 22:43
  Speaker 3: are concerned about this decision is that part of their
• 22:47
  Speaker 3: justification or is there just a special case when it
• 22:49
  Speaker 3: comes to the Central Bank.
• 22:51
  Speaker 2: I think it's both, or I wonder if it's both.
• 22:54
  Speaker 2: It's really something that in the week where the Trump
• 22:58
  Speaker 2: administration blocked for their investigation of the shooting by an
• 23:02
  Speaker 2: ICE agent of an American citizen in Minnesota, the same
• 23:05
  Speaker 2: administration as saying, we're going to investigate Jerome Powell, and
• 23:09
  Speaker 2: then we also.
• 23:10
  Speaker 3: And the second of those is what's really caused the
• 23:13
  Speaker 3: most republican outright and at.
• 23:15
  Speaker 2: The same time, in an interview with The New York
• 23:17
  Speaker 2: Times on Wednesday, I believe it was last week, not
• 23:20
  Speaker 2: even a week ago, he said to them. In a
• 23:24
  Speaker 2: question about Venezuela, which also happened just in the last
• 23:27
  Speaker 2: couple of days. He was asked about Venezuela, what are
• 23:30
  Speaker 2: the limits? He said, It's not international law, it's my
• 23:34
  Speaker 2: own morality. And I think we should expect him to
• 23:37
  Speaker 2: apply the same rubric when it comes to the Central Bank.
• 23:41
  Speaker 2: It's not laws necessarily, it's what he himself is or
• 23:45
  Speaker 2: isn't willing to do.
• 23:46
  Speaker 3: But it's also about what others around him, and specifically
• 23:51
  Speaker 3: people in Congress. And I guess we might even see
• 23:53
  Speaker 3: this week people in Supreme Court judge is appropriate for
• 23:57
  Speaker 3: a president? Do you think this has signed nilled an
• 24:00
  Speaker 3: overreach in his sort of broader expansion, or as I
• 24:05
  Speaker 3: said before, is it just about the Central Bank? You
• 24:07
  Speaker 3: can take everything else, but protect the Fed.
• 24:09
  Speaker 2: Let's see what the Supreme Court says. I feel like
• 24:12
  Speaker 2: this is we have to protect the FED because that's
• 24:14
  Speaker 2: our economy. That's inflation. That's how much the purchase and
• 24:17
  Speaker 2: power of every American domestically and internationally. And when that
• 24:21
  Speaker 2: goes away, every politician, every lawmaker, every administration official knows
• 24:27
  Speaker 2: that's when voters just a revolt. And we've seen that
• 24:30
  Speaker 2: in recent years. We're looking at a generation who you know,
• 24:34
  Speaker 2: I was born in the eighties. I only learn about
• 24:37
  Speaker 2: inflation and the double digits from my parents. We haven't
• 24:40
  Speaker 2: experienced this, so people are going to get very mad.
• 24:43
  Speaker 2: At the same time, you know, the Federal Reserve and
• 24:46
  Speaker 2: those who support the independence of the Federal Reserve should
• 24:49
  Speaker 2: feel fortunate that we have J. Powell as the chair
• 24:52
  Speaker 2: right now in twenty twenty six. He is a lawyer,
• 24:54
  Speaker 2: but also he has deep decades old relationships on Capitol Hill,
• 24:59
  Speaker 2: and I I think that is really paying off right now.
• 25:02
  Speaker 2: Not every predecessor of his spent as much time cultivating
• 25:06
  Speaker 2: those relationships on both sides of the aisle.
• 25:08
  Speaker 3: Wow, Okay, we're going to maybe see what it takes
• 25:10
  Speaker 3: to see off an effort like this from the Trump administration, although,
• 25:14
  Speaker 3: as we said at the start, one that many members
• 25:16
  Speaker 3: of the Trump administration, including the President, seemed to be
• 25:18
  Speaker 3: quite keen to distance themselves from Anna Wong. Thank you
• 25:24
  Speaker 3: so much, thanks for listening to Trumpomics from Bloomberg. It
• 25:39
  Speaker 3: was hosted by me Stephanie Flanders. I was joined by
• 25:41
  Speaker 3: Selaiah Mosen, Senior Washington correspondent for Bloomberg News, and Anna Wah,
• 25:46
  Speaker 3: chief economist for Bloomberg Economics. Trumponomics was produced by Summer
• 25:50
  Speaker 3: Sadi and Moses and with special thanks to Bob Bragg.
• 25:54
  Speaker 3: Sound design was by Blake Naples and Kelly Garrett. To
• 25:58
  Speaker 3: help others find the show, please rate and review it
• 26:01
  Speaker 3: highly wherever you listen to podcasts.