Former adviser on Trump’s economic worldview | FRONTLINE

So, I'd love to start back in actually So, I'd love to start back in actually that the first Trump term. What was the that the first Trump term. What was the that the first Trump term. What was the disagreement about the Fed and what it disagreement about the Fed and what it disagreement about the Fed and what it was doing by raising rates early on was doing by raising rates early on was doing by raising rates early on Trump's first term? Trump's first term? Trump's first term? >> Well, Donald Trump is an old real estate >> Well, Donald Trump is an old real estate >> Well, Donald Trump is an old real estate guy. So, real estate people like low guy. So, real estate people like low guy. So, real estate people like low interest rates. And so, Trump was always interest rates. And so, Trump was always interest rates. And so, Trump was always harping on the fact that uh harping on the fact that uh harping on the fact that uh he believed that the Fed was restraining he believed that the Fed was restraining he believed that the Fed was restraining economic growth by holding interest economic growth by holding interest economic growth by holding interest rates too high. And so, rates too high. And so, rates too high. And so, that was his central complaint about the that was his central complaint about the that was his central complaint about the Fed. And Fed. And Fed. And there was a big debate about whether there was a big debate about whether there was a big debate about whether Jerome Powell was the right guy to run Jerome Powell was the right guy to run Jerome Powell was the right guy to run the Fed. People forget that Powell was the Fed. People forget that Powell was the Fed. People forget that Powell was Donald Trump's appointment. And so, uh Donald Trump's appointment. And so, uh Donald Trump's appointment. And so, uh that was what was going on there. There that was what was going on there. There that was what was going on there. There there was no question that one thing I there was no question that one thing I there was no question that one thing I remember pretty vividly is that it I remember pretty vividly is that it I remember pretty vividly is that it I think it was the think it was the think it was the I'm pretty sure it was the Christmas I'm pretty sure it was the Christmas I'm pretty sure it was the Christmas season of 2018. season of 2018. season of 2018. And the stock market just crashed. You And the stock market just crashed. You And the stock market just crashed. You know, I remember Christmas Eve it was know, I remember Christmas Eve it was know, I remember Christmas Eve it was like a 500 point decline in the stock like a 500 point decline in the stock like a 500 point decline in the stock market. And it was pretty clear that the market. And it was pretty clear that the market. And it was pretty clear that the Fed had been too tight. And by the way, Fed had been too tight. And by the way, Fed had been too tight. And by the way, that was when Powell was new to the Fed.

that was when Powell was new to the Fed. that was when Powell was new to the Fed. He had just taken over as Fed chairman. He had just taken over as Fed chairman. He had just taken over as Fed chairman. And then the Fed decided to lower rates. And then the Fed decided to lower rates. And then the Fed decided to lower rates. And Trump was right about that. As soon And Trump was right about that. As soon And Trump was right about that. As soon as as as at that time as soon as the rates came at that time as soon as the rates came at that time as soon as the rates came down, the economy we just had a boom down, the economy we just had a boom down, the economy we just had a boom period. So, the the Fed was choking off period. So, the the Fed was choking off period. So, the the Fed was choking off growth then and I think Trump was right growth then and I think Trump was right growth then and I think Trump was right about that. about that. about that. >> You say the Fed was choking off growth >> You say the Fed was choking off growth >> You say the Fed was choking off growth then. Explain that to me. then. Explain that to me. then. Explain that to me. >> Well, first of all, I do think overall >> Well, first of all, I do think overall >> Well, first of all, I do think overall Washington and Wall Street over obsessed Washington and Wall Street over obsessed Washington and Wall Street over obsessed about what the Fed is doing. I want to about what the Fed is doing. I want to about what the Fed is doing. I want to make something pretty clear that the make something pretty clear that the make something pretty clear that the there is a mythology out there that the there is a mythology out there that the there is a mythology out there that the Fed sets interest rates. The Fed doesn't Fed sets interest rates. The Fed doesn't Fed sets interest rates. The Fed doesn't set interest rates. It it has it sets set interest rates. It it has it sets set interest rates. It it has it sets the it sets what's called the federal the it sets what's called the federal the it sets what's called the federal funds rate, which is an overnight rate. funds rate, which is an overnight rate. funds rate, which is an overnight rate. Nobody even borrows at that rate. So, Nobody even borrows at that rate. So, Nobody even borrows at that rate. So, um um um the market is what sets the interest the market is what sets the interest the market is what sets the interest rates. And the interest rates are rates. And the interest rates are rates. And the interest rates are determined by the supply and demand for determined by the supply and demand for determined by the supply and demand for credit, but also one of the driving credit, but also one of the driving credit, but also one of the driving forces of what drives up interest rates, forces of what drives up interest rates, forces of what drives up interest rates, as we saw for example in the 1970s when as we saw for example in the 1970s when as we saw for example in the 1970s when we had historically high rates, is when we had historically high rates, is when we had historically high rates, is when the market believes that there's going the market believes that there's going the market believes that there's going to be inflation. It's very simple. If um to be inflation. It's very simple. If um to be inflation. It's very simple. If um If you think that inflation over the If you think that inflation over the If you think that inflation over the next 10 years is going to be 7%. Are you next 10 years is going to be 7%. Are you next 10 years is going to be 7%. Are you going to lend me money at 5%? No.

going to lend me money at 5%? No. going to lend me money at 5%? No. You know, you'd lose money on that. So, You know, you'd lose money on that. So, You know, you'd lose money on that. So, if the market perceives that we're going if the market perceives that we're going if the market perceives that we're going to have higher inflation, then the the to have higher inflation, then the the to have higher inflation, then the the price for borrowing money is going to go price for borrowing money is going to go price for borrowing money is going to go up. And so, that is uh something also up. And so, that is uh something also up. And so, that is uh something also people forget about the responsibilities people forget about the responsibilities people forget about the responsibilities of the Fed. Um but I do think that most of the Fed. Um but I do think that most of the Fed. Um but I do think that most people believe that the Fed is like a is people believe that the Fed is like a is people believe that the Fed is like a is like uh the Wizard of Oz behind the like uh the Wizard of Oz behind the like uh the Wizard of Oz behind the curtain. He can just push a button or curtain. He can just push a button or curtain. He can just push a button or pull a lever and it will repair the pull a lever and it will repair the pull a lever and it will repair the economy. And and I believe that's a myth economy. And and I believe that's a myth economy. And and I believe that's a myth a myth. a myth. a myth. >> Well, we saw some consternation develop >> Well, we saw some consternation develop >> Well, we saw some consternation develop between the president and Chair Powell between the president and Chair Powell between the president and Chair Powell rather quickly in that first term. rather quickly in that first term. rather quickly in that first term. >> What do you attribute that to? >> What do you attribute that to? >> What do you attribute that to? >> It was what happened in 20 late 2018 >> It was what happened in 20 late 2018 >> It was what happened in 20 late 2018 when we were really ready for a boom. We when we were really ready for a boom. We when we were really ready for a boom. We passed the tax cut. Everything was passed the tax cut. Everything was passed the tax cut. Everything was looking good. And then there was a big looking good. And then there was a big looking good. And then there was a big market sell-off, a big sell-off. And uh market sell-off, a big sell-off. And uh market sell-off, a big sell-off. And uh Trump was very frustrated with Jerome Trump was very frustrated with Jerome Trump was very frustrated with Jerome Powell at that point. Powell at that point. Powell at that point. >> Because the market sell-off, because the >> Because the market sell-off, because the >> Because the market sell-off, because the markets reacted to the interest markets reacted to the interest markets reacted to the interest >> thought he was slowing the economic >> thought he was slowing the economic >> thought he was slowing the economic growth that that the economy was capable growth that that the economy was capable growth that that the economy was capable of. of. of. >> And you share that view?

>> And you share that view? >> And you share that view? >> At that time, yes. I think he was right. >> At that time, yes. I think he was right. >> At that time, yes. I think he was right. That we we were too tight. And we know That we we were too tight. And we know That we we were too tight. And we know that by the way that by the way that by the way with pretty much certainty because as with pretty much certainty because as with pretty much certainty because as soon as the Fed started lowering rates, soon as the Fed started lowering rates, soon as the Fed started lowering rates, it was uh just um it was uh just um it was uh just um you know, like letting you know, just you know, like letting you know, just you know, like letting you know, just like a a boom, like uncorking a a a from like a a boom, like uncorking a a a from like a a boom, like uncorking a a a from a champagne bottle. a champagne bottle. a champagne bottle. >> Was it seen as somehow political? I >> Was it seen as somehow political? I >> Was it seen as somehow political? I mean, there's a lot of talk about mean, there's a lot of talk about mean, there's a lot of talk about whether the Fed is indeed political. Did whether the Fed is indeed political. Did whether the Fed is indeed political. Did you see the Fed's moves to raise rates you see the Fed's moves to raise rates you see the Fed's moves to raise rates at that point as at that point as at that point as political? political? political? >> I didn't. I just think they made a >> I didn't. I just think they made a >> I didn't. I just think they made a mistake. But, what's evolved over time mistake. But, what's evolved over time mistake. But, what's evolved over time is I do believe that Jerome Powell has is I do believe that Jerome Powell has is I do believe that Jerome Powell has been a very political been a very political been a very political Fed chairman. It's no Fed chairman. It's no Fed chairman. It's no uh uh uh uh secret that Donald Trump and Jerome uh secret that Donald Trump and Jerome uh secret that Donald Trump and Jerome Powell don't like each other personally Powell don't like each other personally Powell don't like each other personally and they're trading barbs back and and they're trading barbs back and and they're trading barbs back and forth. And I think that's uh you know, forth. And I think that's uh you know, forth. And I think that's uh you know, look, Trump has been political when it look, Trump has been political when it look, Trump has been political when it comes to the to trying to strong-arm the comes to the to trying to strong-arm the comes to the to trying to strong-arm the Fed, but I think Powell has also been Fed, but I think Powell has also been Fed, but I think Powell has also been influenced in his decision-making by the influenced in his decision-making by the influenced in his decision-making by the fact that he's not a fan of Trump's. And fact that he's not a fan of Trump's. And fact that he's not a fan of Trump's. And then, that's not been a healthy thing then, that's not been a healthy thing then, that's not been a healthy thing for the country, frankly. One thing I do for the country, frankly. One thing I do for the country, frankly. One thing I do remember about the, you know, his first remember about the, you know, his first remember about the, you know, his first term, try that is Donald Trump's first term, try that is Donald Trump's first term, try that is Donald Trump's first term, is, you know, when I would go and term, is, you know, when I would go and term, is, you know, when I would go and and see him, he would say things like to and see him, he would say things like to and see him, he would say things like to me like, "I made a big mistake with me like, "I made a big mistake with me like, "I made a big mistake with Jerome Powell." And I would say, "Yes, Jerome Powell." And I would say, "Yes, Jerome Powell." And I would say, "Yes, sir. I think I think you probably did."

sir. I think I think you probably did." sir. I think I think you probably did." And that was sort of the beginning of And that was sort of the beginning of And that was sort of the beginning of when Trump uh because remember, Trump when Trump uh because remember, Trump when Trump uh because remember, Trump didn't really know Jerome Powell. Uh it didn't really know Jerome Powell. Uh it didn't really know Jerome Powell. Uh it was kind of an odd choice that he picked was kind of an odd choice that he picked was kind of an odd choice that he picked someone who he was not familiar with. Uh someone who he was not familiar with. Uh someone who he was not familiar with. Uh Steve Mnuchin, who had been the Treasury Steve Mnuchin, who had been the Treasury Steve Mnuchin, who had been the Treasury Secretary, was the one who kept pushing Secretary, was the one who kept pushing Secretary, was the one who kept pushing uh Trump to pick uh Powell. And I do uh Trump to pick uh Powell. And I do uh Trump to pick uh Powell. And I do believe Trump was right that that was a believe Trump was right that that was a believe Trump was right that that was a mistake. mistake. mistake. >> If you could sum up why Jerome [snorts] >> If you could sum up why Jerome [snorts] >> If you could sum up why Jerome [snorts] Powell, in in your view, was a mistake. Powell, in in your view, was a mistake. Powell, in in your view, was a mistake. >> I think Powell um has been political. >> I think Powell um has been political. >> I think Powell um has been political. I think that he's made mistakes with I think that he's made mistakes with I think that he's made mistakes with respect to rate decisions. It didn't respect to rate decisions. It didn't respect to rate decisions. It didn't make a lot of sense why you'd be why the make a lot of sense why you'd be why the make a lot of sense why you'd be why the Fed would be lowering interest rates at Fed would be lowering interest rates at Fed would be lowering interest rates at a time when we still had 3 to 4% a time when we still had 3 to 4% a time when we still had 3 to 4% inflation. Remember, the Fed's inflation. Remember, the Fed's inflation. Remember, the Fed's target rate for inflation is 2%. So, we target rate for inflation is 2%. So, we target rate for inflation is 2%. So, we were above that level. So, if your goal were above that level. So, if your goal were above that level. So, if your goal is to keep, you know, stay in that is to keep, you know, stay in that is to keep, you know, stay in that margin, it didn't make a lot of sense to margin, it didn't make a lot of sense to margin, it didn't make a lot of sense to be lowering that rates at that time. I be lowering that rates at that time. I be lowering that rates at that time. I believe, and I think a lot of others do, believe, and I think a lot of others do, believe, and I think a lot of others do, I don't have evidence of this, but I I don't have evidence of this, but I I don't have evidence of this, but I think Powell was being political. In think Powell was being political. In think Powell was being political. In September of 2024, Jerome Powell cut September of 2024, Jerome Powell cut September of 2024, Jerome Powell cut the interest rate by 50 basis points.

the interest rate by 50 basis points. the interest rate by 50 basis points. That's a fairly large point reduction, That's a fairly large point reduction, That's a fairly large point reduction, and that came 2 months before the and that came 2 months before the and that came 2 months before the election. And I do believe that he might election. And I do believe that he might election. And I do believe that he might have been putting his thumb on the scale have been putting his thumb on the scale have been putting his thumb on the scale to try to help to try to help to try to help Kamala Harris get elected by putting Kamala Harris get elected by putting Kamala Harris get elected by putting some juice in the economy before the some juice in the economy before the some juice in the economy before the before the election. Now, I don't have before the election. Now, I don't have before the election. Now, I don't have evidence of that, but that is my sense. evidence of that, but that is my sense. evidence of that, but that is my sense. >> Now, >> Now, >> Now, we all know Jerome Powell is just one we all know Jerome Powell is just one we all know Jerome Powell is just one vote on a committee. So, that would that vote on a committee. So, that would that vote on a committee. So, that would that the insinuation then is that the entire the insinuation then is that the entire the insinuation then is that the entire committee was trying to be committee was trying to be committee was trying to be >> not exactly. I mean, >> not exactly. I mean, >> not exactly. I mean, I'm not an expert on the Fed. I mean, I'm not an expert on the Fed. I mean, I'm not an expert on the Fed. I mean, how its inner operations work. But, I how its inner operations work. But, I how its inner operations work. But, I will say this, that if you look over the will say this, that if you look over the will say this, that if you look over the last 40 years or so, last 40 years or so, last 40 years or so, it's very uncommon for the Fed board to it's very uncommon for the Fed board to it's very uncommon for the Fed board to overrule the chairman. It happens, but overrule the chairman. It happens, but overrule the chairman. It happens, but not very often. I mean, you could put not very often. I mean, you could put not very often. I mean, you could put look those numbers up, but I remember look those numbers up, but I remember look those numbers up, but I remember there was one time, I think Paul Volcker there was one time, I think Paul Volcker there was one time, I think Paul Volcker when he was chairman, that the board when he was chairman, that the board when he was chairman, that the board went against him, and there might have went against him, and there might have went against him, and there might have been a time or two when Ben Bernanke been a time or two when Ben Bernanke been a time or two when Ben Bernanke was. But, it's it's rare. So, was. But, it's it's rare. So, was. But, it's it's rare. So, the in most cases, in all in almost all the in most cases, in all in almost all the in most cases, in all in almost all cases, that the board follows the cases, that the board follows the cases, that the board follows the chairman.

chairman. chairman. >> Soon after Trump is elected, [snorts] >> Soon after Trump is elected, [snorts] >> Soon after Trump is elected, [snorts] he's talking to Davos 3 days after his he's talking to Davos 3 days after his he's talking to Davos 3 days after his election about wanting rates to come election about wanting rates to come election about wanting rates to come down. There's a big Fed meeting 9 days down. There's a big Fed meeting 9 days down. There's a big Fed meeting 9 days after that, at which the Fed holds after that, at which the Fed holds after that, at which the Fed holds steady. steady. steady. >> At that time, >> At that time, >> At that time, I believe that Jerome Powell was I believe that Jerome Powell was I believe that Jerome Powell was basically saying, "I'm not going to let basically saying, "I'm not going to let basically saying, "I'm not going to let Trump, you know, boss us around. We're Trump, you know, boss us around. We're Trump, you know, boss us around. We're independent." So, I think to some extent independent." So, I think to some extent independent." So, I think to some extent by Trump by Trump by Trump really pushing so hard on getting the really pushing so hard on getting the really pushing so hard on getting the Fed to lower rates, Powell Fed to lower rates, Powell Fed to lower rates, Powell resisted that, partially because Powell resisted that, partially because Powell resisted that, partially because Powell does you know, I think he does believe does you know, I think he does believe does you know, I think he does believe the Fed should be independent. I believe the Fed should be independent. I believe the Fed should be independent. I believe it should be independent. And he I you'd it should be independent. And he I you'd it should be independent. And he I you'd have to ask him this directly, but I have to ask him this directly, but I have to ask him this directly, but I believe he thought this was an assault believe he thought this was an assault believe he thought this was an assault against Fed independence. against Fed independence. against Fed independence. >> I think um at that point in time I've >> I think um at that point in time I've >> I think um at that point in time I've talked to Fed officials, and they say talked to Fed officials, and they say talked to Fed officials, and they say that look there the president came in that look there the president came in that look there the president came in with a very ambitious economic agenda. with a very ambitious economic agenda. with a very ambitious economic agenda. Right? There were tariffs, there was Right? There were tariffs, there was Right? There were tariffs, there was immigration policy, there were tax cuts. immigration policy, there were tax cuts. immigration policy, there were tax cuts. So, the Fed sort of took this kind of So, the Fed sort of took this kind of So, the Fed sort of took this kind of wait-and-see attitude.

wait-and-see attitude. wait-and-see attitude. >> I think this is one of my disagreements >> I think this is one of my disagreements >> I think this is one of my disagreements with the Fed generally, not even with with the Fed generally, not even with with the Fed generally, not even with respect to Powell. It's been a problem respect to Powell. It's been a problem respect to Powell. It's been a problem in my opinion and a lot of other, you in my opinion and a lot of other, you in my opinion and a lot of other, you know, free market supply-side know, free market supply-side know, free market supply-side economists. So, what really drives um economists. So, what really drives um economists. So, what really drives um the the the uh inflation? You go back to Milton uh inflation? You go back to Milton uh inflation? You go back to Milton Friedman's famous uh Friedman's famous uh Friedman's famous uh uh uh uh phrase, which is inflation is just too phrase, which is inflation is just too phrase, which is inflation is just too many dollars in the economy chasing too many dollars in the economy chasing too many dollars in the economy chasing too few goods. So, that means when you few goods. So, that means when you few goods. So, that means when you increase the money supply, you're going increase the money supply, you're going increase the money supply, you're going to have more inflation. But if you to have more inflation. But if you to have more inflation. But if you increase the amount of goods and increase the amount of goods and increase the amount of goods and services in the economy by increasing services in the economy by increasing services in the economy by increasing the productive capacity of the economy, the productive capacity of the economy, the productive capacity of the economy, what's going to happen to prices? They what's going to happen to prices? They what's going to happen to prices? They will go down. And this is something the will go down. And this is something the will go down. And this is something the Fed for 40 years doesn't get. And at Fed for 40 years doesn't get. And at Fed for 40 years doesn't get. And at least it's not in the mentality of many least it's not in the mentality of many least it's not in the mentality of many of the Fed members, which is that's why of the Fed members, which is that's why of the Fed members, which is that's why by the way they call people like myself by the way they call people like myself by the way they call people like myself and Art Laffer and Larry Kudlow and and Art Laffer and Larry Kudlow and and Art Laffer and Larry Kudlow and Steve Forbes supply-siders because we Steve Forbes supply-siders because we Steve Forbes supply-siders because we believe that one of the solutions to believe that one of the solutions to believe that one of the solutions to inflation is increase the output of inflation is increase the output of inflation is increase the output of goods and services. If goods and services. If goods and services. If uh as as I like to say, you know, if if uh as as I like to say, you know, if if uh as as I like to say, you know, if if the US economy produces more apples, the US economy produces more apples, the US economy produces more apples, what happens to the price of apples?

what happens to the price of apples? what happens to the price of apples? They go down, they don't go up. And They go down, they don't go up. And They go down, they don't go up. And that's what we had in the 1980s, for that's what we had in the 1980s, for that's what we had in the 1980s, for example. We had we had uh example. We had we had uh example. We had we had uh a lot of increased output, and the a lot of increased output, and the a lot of increased output, and the inflation rate rate fell very inflation rate rate fell very inflation rate rate fell very dramatically with tax rate reductions. dramatically with tax rate reductions. dramatically with tax rate reductions. So, Trump is sort of borrowing from that So, Trump is sort of borrowing from that So, Trump is sort of borrowing from that Reagan model of reducing tax rates will Reagan model of reducing tax rates will Reagan model of reducing tax rates will reduce inflation. But I bet you if you reduce inflation. But I bet you if you reduce inflation. But I bet you if you ask a lot of economists and they're ask a lot of economists and they're ask a lot of economists and they're sitting in this in this in this chair, sitting in this in this in this chair, sitting in this in this in this chair, they would say the opposite. Oh, tax they would say the opposite. Oh, tax they would say the opposite. Oh, tax cuts are going to increase demand for cuts are going to increase demand for cuts are going to increase demand for goods and services, and that means the goods and services, and that means the goods and services, and that means the prices will go up. But, I think I have prices will go up. But, I think I have prices will go up. But, I think I have history on my side to show that's not history on my side to show that's not history on my side to show that's not true. By the way, I want to be clear on true. By the way, I want to be clear on true. By the way, I want to be clear on this. I'm not a big advocate for lower this. I'm not a big advocate for lower this. I'm not a big advocate for lower rate cuts right now. I I rate cuts right now. I I rate cuts right now. I I I I think, you know, that I I'm more I I think, you know, that I I'm more I I think, you know, that I I'm more worried about inflation than than maybe worried about inflation than than maybe worried about inflation than than maybe some of my Republican colleagues are. some of my Republican colleagues are. some of my Republican colleagues are. So, I don't think, for example, right So, I don't think, for example, right So, I don't think, for example, right now there's much of a case for lowering now there's much of a case for lowering now there's much of a case for lowering rates. I mean, my goodness, we've seen rates. I mean, my goodness, we've seen rates. I mean, my goodness, we've seen because of the oil crisis prices rising. because of the oil crisis prices rising. because of the oil crisis prices rising. So, um So, um So, um >> So, what was your view at the time? Have >> So, what was your view at the time? Have >> So, what was your view at the time? Have you been Look, we you been Look, we you been Look, we >> So, I've been kind of in the I don't >> So, I've been kind of in the I don't >> So, I've been kind of in the I don't I've been sort of in the middle on this.

I've been sort of in the middle on this. I've been sort of in the middle on this. I don't I can see both sides of the I don't I can see both sides of the I don't I can see both sides of the argument, um but argument, um but argument, um but I think the most Let me just start with I think the most Let me just start with I think the most Let me just start with a very a very a very basic point. The purpose of the Fed is basic point. The purpose of the Fed is basic point. The purpose of the Fed is not to stimulate the economy. The not to stimulate the economy. The not to stimulate the economy. The purpose of the Fed is to keep inflation purpose of the Fed is to keep inflation purpose of the Fed is to keep inflation under control. It goes right down to the under control. It goes right down to the under control. It goes right down to the very essence of why do we have a very essence of why do we have a very essence of why do we have a currency in the first place? Well, we currency in the first place? Well, we currency in the first place? Well, we have a currency for two main reasons. have a currency for two main reasons. have a currency for two main reasons. This is economics 100, right? You want a This is economics 100, right? You want a This is economics 100, right? You want a currency to retain its value over time, currency to retain its value over time, currency to retain its value over time, so a dollar today will be worth pretty so a dollar today will be worth pretty so a dollar today will be worth pretty much what it's going to be worth a year much what it's going to be worth a year much what it's going to be worth a year from now or 2 years or 5 years from now. from now or 2 years or 5 years from now. from now or 2 years or 5 years from now. And it's a means of exchange, and it And it's a means of exchange, and it And it's a means of exchange, and it can't be a means of exchange if the can't be a means of exchange if the can't be a means of exchange if the value of the dollar is going up and down value of the dollar is going up and down value of the dollar is going up and down and up and down. So, I just want stable and up and down. So, I just want stable and up and down. So, I just want stable money. money. money. >> Donald Trump is not alone in wanting low >> Donald Trump is not alone in wanting low >> Donald Trump is not alone in wanting low rates as president. What was your view, rates as president. What was your view, rates as president. What was your view, however, of however, of however, of >> [snorts] >> [snorts] >> [snorts] >> his calls and demands for low rates? Did >> his calls and demands for low rates? Did >> his calls and demands for low rates? Did you think that you think that you think that >> Well, by the way, I don't think it's >> Well, by the way, I don't think it's >> Well, by the way, I don't think it's inappropriate for the president to say, inappropriate for the president to say, inappropriate for the president to say, "Hey, I want lower rates or higher rates "Hey, I want lower rates or higher rates "Hey, I want lower rates or higher rates or you know, for him to opine on or you know, for him to opine on or you know, for him to opine on monetary policy." But, I also believe monetary policy." But, I also believe monetary policy." But, I also believe the Fed has to be independent, and the Fed has to be independent, and the Fed has to be independent, and that's an important component of a good that's an important component of a good that's an important component of a good monetary policy. I am an inflation hawk.

monetary policy. I am an inflation hawk. monetary policy. I am an inflation hawk. I believe the Fed should not be trying I believe the Fed should not be trying I believe the Fed should not be trying to, you know, increase economic growth. to, you know, increase economic growth. to, you know, increase economic growth. I don't think they should be concerned I don't think they should be concerned I don't think they should be concerned about climate change or racism or about climate change or racism or about climate change or racism or thisism. Their one job is to make sure thisism. Their one job is to make sure thisism. Their one job is to make sure that the dollar remains stable in price. that the dollar remains stable in price. that the dollar remains stable in price. We are incredibly advantaged as a nation We are incredibly advantaged as a nation We are incredibly advantaged as a nation over almost every other country in the over almost every other country in the over almost every other country in the world because the dollar is the world world because the dollar is the world world because the dollar is the world reserve currency. And what I, for reserve currency. And what I, for reserve currency. And what I, for example, example, example, said to Kevin Warsh, who I think will be said to Kevin Warsh, who I think will be said to Kevin Warsh, who I think will be an outstanding Fed chairman, he an outstanding Fed chairman, he an outstanding Fed chairman, he understands this, understands this, understands this, "Make sure whatever you do, you maintain "Make sure whatever you do, you maintain "Make sure whatever you do, you maintain the dollar as the world reserve the dollar as the world reserve the dollar as the world reserve currency. We don't want it to be the currency. We don't want it to be the currency. We don't want it to be the yuan, we don't want it to be the yen or yuan, we don't want it to be the yen or yuan, we don't want it to be the yen or the euro. We are tremendously advantaged the euro. We are tremendously advantaged the euro. We are tremendously advantaged in that every financial major financial in that every financial major financial in that every financial major financial transaction in the world happens with transaction in the world happens with transaction in the world happens with dollars." dollars." dollars." >> You'd mentioned that the president had >> You'd mentioned that the president had >> You'd mentioned that the president had come to you in the first term and come to you in the first term and come to you in the first term and basically said, basically said, basically said, "Maybe I made a mistake with Powell." "Maybe I made a mistake with Powell." "Maybe I made a mistake with Powell." Was there any talk of firing Powell in Was there any talk of firing Powell in Was there any talk of firing Powell in the first term that that you were part the first term that that you were part the first term that that you were part of? of? of? >> I'm aware of. I I don't By the way, I'm >> I'm aware of. I I don't By the way, I'm >> I'm aware of. I I don't By the way, I'm not a constitutional scholar, so I don't not a constitutional scholar, so I don't not a constitutional scholar, so I don't know, know, know, you know, you know, you know, uh uh uh I mean, I've wondered a lot about this.

I mean, I've wondered a lot about this. I mean, I've wondered a lot about this. Um Um Um I do believe in Fed independence, but if I do believe in Fed independence, but if I do believe in Fed independence, but if you have you have you have a Fed chairman who is not competent, um a Fed chairman who is not competent, um a Fed chairman who is not competent, um you know, you know, you know, should the Fed be should the Fed be should the Fed be should they be should they be should they be uh responsible or who do they uh responsible or who do they uh responsible or who do they In other words, if the if the president In other words, if the if the president In other words, if the if the president can't can't can't uh uh uh uh fire the Fed chairman, who can? uh fire the Fed chairman, who can? uh fire the Fed chairman, who can? And is it Is that a healthy thing to And is it Is that a healthy thing to And is it Is that a healthy thing to say, "Oh, he could just stay in" I mean, say, "Oh, he could just stay in" I mean, say, "Oh, he could just stay in" I mean, this is one of the most powerful this is one of the most powerful this is one of the most powerful positions in America, the Fed positions in America, the Fed positions in America, the Fed chairmanship. If he isn't accountable to chairmanship. If he isn't accountable to chairmanship. If he isn't accountable to the president, then who is he the president, then who is he the president, then who is he accountable to? accountable to? accountable to? >> Well, the Fed was set up to be >> Well, the Fed was set up to be >> Well, the Fed was set up to be accountable to Congress, right? But accountable to Congress, right? But accountable to Congress, right? But but are you basically but are you basically but are you basically >> But do you think that Do you think that >> But do you think that Do you think that >> But do you think that Do you think that Powell is accountable to Congress? I Powell is accountable to Congress? I Powell is accountable to Congress? I don't. I I think it's a bit dangerous don't. I I think it's a bit dangerous don't. I I think it's a bit dangerous that one of the most powerful people in that one of the most powerful people in that one of the most powerful people in the world can who has control of the world can who has control of the world can who has control of important important important hand on the economy hand on the economy hand on the economy can't be replaced.

can't be replaced. can't be replaced. I think that's a flaw. I don't know how I think that's a flaw. I don't know how I think that's a flaw. I don't know how it should happen, but it should happen, but it should happen, but you know, we we've we saw in the 1970s you know, we we've we saw in the 1970s you know, we we've we saw in the 1970s what damage bad Federal Reserve what damage bad Federal Reserve what damage bad Federal Reserve policy can do to the country. policy can do to the country. policy can do to the country. >> Do you I saw you were essentially saying >> Do you I saw you were essentially saying >> Do you I saw you were essentially saying that you think in some ways that you think in some ways that you think in some ways independence shields the Fed from independence shields the Fed from independence shields the Fed from accountability. accountability. accountability. >> I do. >> I do. >> I do. I do. I do. I do. >> What what did you make of the >> What what did you make of the >> What what did you make of the the building, right? I just I'm curious the building, right? I just I'm curious the building, right? I just I'm curious about these cost overruns. Do you think about these cost overruns. Do you think about these cost overruns. Do you think that it's emblematic of something? that it's emblematic of something? that it's emblematic of something? >> Yeah, I do. I think it was a real black >> Yeah, I do. I think it was a real black >> Yeah, I do. I think it was a real black eye for eye for eye for for Jerome Powell. I mean, look, the Fed for Jerome Powell. I mean, look, the Fed for Jerome Powell. I mean, look, the Fed has oversight of our money supply. has oversight of our money supply. has oversight of our money supply. They're supposed to be financially They're supposed to be financially They're supposed to be financially responsible responsible responsible responsible and this is ridiculous. It responsible and this is ridiculous. It responsible and this is ridiculous. It was outrageous to spend that amount of was outrageous to spend that amount of was outrageous to spend that amount of money and and Trump, you know, who's a money and and Trump, you know, who's a money and and Trump, you know, who's a who's a builder and been in the who's a builder and been in the who's a builder and been in the construction construction construction business was right. He said, look, I business was right. He said, look, I business was right. He said, look, I could have could have could have this this is a $2 billion project. We this this is a $2 billion project. We this this is a $2 billion project. We could have probably done it for 1/10 the could have probably done it for 1/10 the could have probably done it for 1/10 the cost. Now, I don't know if that's true, cost. Now, I don't know if that's true, cost. Now, I don't know if that's true, but I I think it it just sends a bad but I I think it it just sends a bad but I I think it it just sends a bad signal that the Fed was spending money signal that the Fed was spending money signal that the Fed was spending money so irresponsibly.

so irresponsibly. so irresponsibly. >> Um as you know, I mean, I again, I'm >> Um as you know, I mean, I again, I'm >> Um as you know, I mean, I again, I'm asking for your reaction to certain asking for your reaction to certain asking for your reaction to certain moments here, but you know, moments here, but you know, moments here, but you know, Powell comes out on a video address and Powell comes out on a video address and Powell comes out on a video address and says that he's under criminal says that he's under criminal says that he's under criminal investigation by the Department of investigation by the Department of investigation by the Department of Justice. Justice. Justice. >> So, what was your response to that? >> So, what was your response to that? >> So, what was your response to that? >> I thought that was outrageous. I thought >> I thought that was outrageous. I thought >> I thought that was outrageous. I thought that the the allegation was that the the allegation was that the the allegation was unsubstantiated. unsubstantiated. unsubstantiated. It looked blatantly political and I It looked blatantly political and I It looked blatantly political and I think it was a mistake. And so, my view think it was a mistake. And so, my view think it was a mistake. And so, my view of of of Jerome Powell is I do think he's been Jerome Powell is I do think he's been Jerome Powell is I do think he's been political. I do think he's been made political. I do think he's been made political. I do think he's been made mistakes that have been expensive for mistakes that have been expensive for mistakes that have been expensive for our country, but I do not believe the our country, but I do not believe the our country, but I do not believe the man is a criminal. I mean, look, man is a criminal. I mean, look, man is a criminal. I mean, look, even if even if Powell had even if even if Powell had even if even if Powell had was guilty of these charges, he's was guilty of these charges, he's was guilty of these charges, he's leaving in four or five or six months. leaving in four or five or six months. leaving in four or five or six months. Why not? You know, my attitude was just Why not? You know, my attitude was just Why not? You know, my attitude was just wait him out, you know, why why bring wait him out, you know, why why bring wait him out, you know, why why bring this up? So. this up? So. this up? So. >> I mean, do you how do you view these >> I mean, do you how do you view these >> I mean, do you how do you view these efforts? I mean, [snorts] efforts? I mean, [snorts] efforts? I mean, [snorts] some people have described it to us as a some people have described it to us as a some people have described it to us as a sort of power grab. Do you think that sort of power grab. Do you think that sort of power grab. Do you think that this was an attempt to recompose the this was an attempt to recompose the this was an attempt to recompose the board to essentially carry out his board to essentially carry out his board to essentially carry out his desired desired desired >> Well, Trump, I mean, there's no question >> Well, Trump, I mean, there's no question >> Well, Trump, I mean, there's no question Trump would like to have a majority of Trump would like to have a majority of Trump would like to have a majority of people he appointed on the board.

people he appointed on the board. people he appointed on the board. Uh although ironically, Jerome Powell is Uh although ironically, Jerome Powell is Uh although ironically, Jerome Powell is one of those people he's appointed to one of those people he's appointed to one of those people he's appointed to the board. But, uh the board. But, uh the board. But, uh I I'm much more comfortable with letting I I'm much more comfortable with letting I I'm much more comfortable with letting the Fed be independent, putting really the Fed be independent, putting really the Fed be independent, putting really good smart people on the Federal Reserve good smart people on the Federal Reserve good smart people on the Federal Reserve board, and I don't think it's a problem board, and I don't think it's a problem board, and I don't think it's a problem to have people with differing views on to have people with differing views on to have people with differing views on the Fed. Uh you know, I think it would the Fed. Uh you know, I think it would the Fed. Uh you know, I think it would be a problem to have everyone, be a problem to have everyone, be a problem to have everyone, you know, just being yes-men to the you know, just being yes-men to the you know, just being yes-men to the chairman. chairman. chairman. >> Tell me about why why did you call for >> Tell me about why why did you call for >> Tell me about why why did you call for Powell to resign? Powell to resign? Powell to resign? >> Uh cuz I I I have believed that uh the >> Uh cuz I I I have believed that uh the >> Uh cuz I I I have believed that uh the Fed has been overly political under Fed has been overly political under Fed has been overly political under Powell's leadership, and I think he's Powell's leadership, and I think he's Powell's leadership, and I think he's made some major mistakes, and uh made some major mistakes, and uh made some major mistakes, and uh he would do well, especially now that he would do well, especially now that he would do well, especially now that he's kind of a lame duck, why not just he's kind of a lame duck, why not just he's kind of a lame duck, why not just step aside and let Trump put someone step aside and let Trump put someone step aside and let Trump put someone else in? That would be my view. else in? That would be my view. else in? That would be my view. >> You say he's been overly political, but >> You say he's been overly political, but >> You say he's been overly political, but it sounds like you've basically agreed it sounds like you've basically agreed it sounds like you've basically agreed with what the Fed has done during the with what the Fed has done during the with what the Fed has done during the second Trump presidency. second Trump presidency. second Trump presidency. >> I I generally would say that um >> I I generally would say that um >> I I generally would say that um holding pat has probably been a pretty holding pat has probably been a pretty holding pat has probably been a pretty pretty wise idea. Although the the until pretty wise idea. Although the the until pretty wise idea. Although the the until what happened what happened what happened with Iran, with Iran, with Iran, the the the um the the the um the the the um inflation rate was coming down pretty inflation rate was coming down pretty inflation rate was coming down pretty rapidly. So, you could have made a case rapidly. So, you could have made a case rapidly. So, you could have made a case at that point, okay, now you can um at that point, okay, now you can um at that point, okay, now you can um lower rates. You I think it would be a lower rates. You I think it would be a lower rates. You I think it would be a big mistake to do that right now, big mistake to do that right now, big mistake to do that right now, though, because we're probably going to though, because we're probably going to though, because we're probably going to see the consumer price index go to three see the consumer price index go to three see the consumer price index go to three to four percent or more because of the to four percent or more because of the to four percent or more because of the big spike in the oil price.

big spike in the oil price. big spike in the oil price. >> Last November's election appeared to be >> Last November's election appeared to be >> Last November's election appeared to be kind of referendum on the economy. kind of referendum on the economy. kind of referendum on the economy. >> That's it. >> That's it. >> That's it. >> And that um >> And that um >> And that um there's widespread discontent in the there's widespread discontent in the there's widespread discontent in the United States with the economy. United States with the economy. United States with the economy. And And And I'm just curious if you think, you know, I'm just curious if you think, you know, I'm just curious if you think, you know, the president came out soon after the the president came out soon after the the president came out soon after the electoral losses in November of 2025 and electoral losses in November of 2025 and electoral losses in November of 2025 and you know, certainly pointed to Jerome you know, certainly pointed to Jerome you know, certainly pointed to Jerome Powell and the Fed and said that if only Powell and the Fed and said that if only Powell and the Fed and said that if only they lowered rates, things would become they lowered rates, things would become they lowered rates, things would become more affordable. more affordable. more affordable. I'm curious though. I mean, how is it I'm curious though. I mean, how is it I'm curious though. I mean, how is it that you see that? How is it that you that you see that? How is it that you that you see that? How is it that you see the see the see the kind of whether whether or not kind of whether whether or not kind of whether whether or not >> was um >> was um >> was um frustrated frustrated frustrated as I have been that, you know, when I if as I have been that, you know, when I if as I have been that, you know, when I if you looked objectively at the economy, you looked objectively at the economy, you looked objectively at the economy, it was doing very well. And we actually it was doing very well. And we actually it was doing very well. And we actually had evidence I showed Trump the evidence had evidence I showed Trump the evidence had evidence I showed Trump the evidence that, you know, if you looked at that, you know, if you looked at that, you know, if you looked at people's wages and salaries and their people's wages and salaries and their people's wages and salaries and their incomes, they were rising faster than incomes, they were rising faster than incomes, they were rising faster than inflation. So, people's just if based on inflation. So, people's just if based on inflation. So, people's just if based on the statistics, pe- people's uh the statistics, pe- people's uh the statistics, pe- people's uh affordability was going up, not down.

affordability was going up, not down. affordability was going up, not down. And yet And yet And yet there was this there was this there was this perception um that by the public that perception um that by the public that perception um that by the public that everything's more expensive. And then everything's more expensive. And then everything's more expensive. And then part of that is just people would focus part of that is just people would focus part of that is just people would focus on it's maybe human nature to to see, on it's maybe human nature to to see, on it's maybe human nature to to see, "Oh, my grocery price is going up." "Oh, my grocery price is going up." "Oh, my grocery price is going up." Well, did you look at what's happening Well, did you look at what's happening Well, did you look at what's happening to airline prices or these things and to airline prices or these things and to airline prices or these things and that So, I think there was a frustration that So, I think there was a frustration that So, I think there was a frustration that people were um overly pessimistic that people were um overly pessimistic that people were um overly pessimistic on the economy on the economy on the economy more than they should have been. Now, more than they should have been. Now, more than they should have been. Now, we're in a different world now because we're in a different world now because we're in a different world now because prices really are going up because of prices really are going up because of prices really are going up because of what's happening with uh with the oil what's happening with uh with the oil what's happening with uh with the oil prices. But, at that time, we had a prices. But, at that time, we had a prices. But, at that time, we had a really strong economy and yet the public really strong economy and yet the public really strong economy and yet the public wasn't feeling the love. wasn't feeling the love. wasn't feeling the love. >> And why do you think that is? >> And why do you think that is? >> And why do you think that is? >> I don't I think partly it is >> I don't I think partly it is >> I don't I think partly it is that you know, we're We're polarized that you know, we're We're polarized that you know, we're We're polarized country today. It's just as a fact, and country today. It's just as a fact, and country today. It's just as a fact, and I believe that uh you know, half the I believe that uh you know, half the I believe that uh you know, half the country would not country would not country would not as I used to say, you know, even if as I used to say, you know, even if as I used to say, you know, even if Trump gave us the garden of Eden, half Trump gave us the garden of Eden, half Trump gave us the garden of Eden, half of the country would have still been of the country would have still been of the country would have still been angry and saying we don't like the way angry and saying we don't like the way angry and saying we don't like the way things are going. And then look, part of things are going. And then look, part of things are going. And then look, part of that was also true under Biden's that was also true under Biden's that was also true under Biden's presidency, too. I mean, again, we're in presidency, too. I mean, again, we're in presidency, too. I mean, again, we're in an unhealthy polarized situation in the an unhealthy polarized situation in the an unhealthy polarized situation in the country where, you know, Democrats are country where, you know, Democrats are country where, you know, Democrats are on Venus and Republicans are on Mars.

on Venus and Republicans are on Mars. on Venus and Republicans are on Mars. >> But what about the claim at the time? I >> But what about the claim at the time? I >> But what about the claim at the time? I mean, at the time President Trump went mean, at the time President Trump went mean, at the time President Trump went to swing states like Pennsylvania and to swing states like Pennsylvania and to swing states like Pennsylvania and made speeches saying one, affordability made speeches saying one, affordability made speeches saying one, affordability is a hoax, and two, if only Jerome is a hoax, and two, if only Jerome is a hoax, and two, if only Jerome Powell and the Fed would lower rates, Powell and the Fed would lower rates, Powell and the Fed would lower rates, then you know, things would be more then you know, things would be more then you know, things would be more affordable. Mortgages, car loans affordable. Mortgages, car loans affordable. Mortgages, car loans >> have said that you know, affordability >> have said that you know, affordability >> have said that you know, affordability crisis is a hoax, crisis is a hoax, crisis is a hoax, but I would say that but I would say that but I would say that you know, objectively speaking, people, you know, objectively speaking, people, you know, objectively speaking, people, you know, look at what has happened to you know, look at what has happened to you know, look at what has happened to people's incomes relative to inflation, people's incomes relative to inflation, people's incomes relative to inflation, and I think he made a should have made and I think he made a should have made and I think he made a should have made the case better that, you know, yeah, the case better that, you know, yeah, the case better that, you know, yeah, sure, some things are up in price, but sure, some things are up in price, but sure, some things are up in price, but you know, people's paychecks are up, you know, people's paychecks are up, you know, people's paychecks are up, too. too. too. >> And I'm curious though, I mean, did >> And I'm curious though, I mean, did >> And I'm curious though, I mean, did in your view that does rebut the in your view that does rebut the in your view that does rebut the argument of that there's an argument of that there's an argument of that there's an affordability crisis? affordability crisis? affordability crisis? >> Yeah. I mean, look, >> Yeah. I mean, look, >> Yeah. I mean, look, I think what's been happening is that I think what's been happening is that I think what's been happening is that the the price of three things have gone the the price of three things have gone the the price of three things have gone up up up pretty substantially. Groceries, pretty substantially. Groceries, pretty substantially. Groceries, uh housing, uh housing, uh housing, and health care. and health care. and health care. >> My my own wife, you know, she'd >> My my own wife, you know, she'd >> My my own wife, you know, she'd complain, you know, come home and she'd complain, you know, come home and she'd complain, you know, come home and she'd say, you have no idea what the groceries say, you have no idea what the groceries say, you have no idea what the groceries cost, you know, so people that's a cost, you know, so people that's a cost, you know, so people that's a natural thing.