# Paul Krugman and Ryan Lizza

An episode of [Paul Krugman Podcast](https://invisiblenetwork.ai/podcast/1877144831), 27 Aug 2025, 40 min.

Audio: https://api.substack.com/feed/podcast/172110903/f1137c48b091013631cc656cf00c90b4.mp3

Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

## Transcript

[0:00] SPEAKER_00: It's Ryan Lizza here with Paul Krugman.
[0:02] SPEAKER_00: Paul, good to see you again.
[0:03] SPEAKER_00: Our last chat was excellent, very, very popular.
[0:06] SPEAKER_00: And so it's good to do this again with you.
[0:09] SPEAKER_01: Ah, yeah.
[0:11] I mean,
[0:11] it's too bad that nothing happened this past week to talk
[0:14] about,
[0:14] so...
[0:15] SPEAKER_00: Well, you know, yeah.
[0:17] And I texted you after reading your Lisa Cook piece yesterday
[0:21] and naturally said a
[0:23] SPEAKER_00: million crazy things will happen between now and then,
[0:25] SPEAKER_00: which is pretty much what happened.
[0:28] I don't think the crazy Trump cabinet meeting had finished when
[0:31] we were scheduling this.
[0:33] SPEAKER_00: Yeah.
[0:35] SPEAKER_00: But that's,
[0:36] SPEAKER_00: you know,
[0:36] SPEAKER_00: I saw Garrett Graff wrote something today,
[0:38] SPEAKER_00: you know,
[0:39] SPEAKER_00: describing like,
[0:40] SPEAKER_00: you know,
[0:41] SPEAKER_00: two Watergate level things have already happened,
[0:45] SPEAKER_00: you know,
[0:45] SPEAKER_00: two things worse than Watergate have already happened this week.
[0:51] SPEAKER_00: And that's the world we're living in right now.
[0:53] It's,
[0:55] I did write a morning about the crazy,
[1:00] which is now my general term,
[1:02] and there are
[1:03] SPEAKER_01: Now,
[1:04] SPEAKER_01: often,
[1:04] SPEAKER_01: you know,
[1:05] SPEAKER_01: every day,
[1:06] SPEAKER_01: sometimes twice a day that would have been completely off charts before.
[1:11] SPEAKER_01: And yeah,
[1:13] SPEAKER_01: anyway,
[1:14] SPEAKER_01: but yeah,
[1:14] SPEAKER_01: but the Lisa Cook affair is,
[1:18] SPEAKER_01: you know,
[1:18] SPEAKER_01: my alley and boy,
[1:22] SPEAKER_01: quite amazing.
[1:24] I want to get into the economic implications if this plan goes
[1:31] as Trump wants it
[1:32] SPEAKER_00: to,
[1:33] SPEAKER_00: but maybe let's just start a little bit with the law and the
[1:41] SPEAKER_00: politicization of the Fed.
[1:46] SPEAKER_00: Let's start there.
[1:48] How do you see that and how different is this from every other
[1:53] administration
[1:54] SPEAKER_00: that's been frustrated with the Federal Reserve?
[1:57] SPEAKER_01: Well, okay.
[2:00] We have this really kind of strange but historically highly
[2:04] successful institution.
[2:07] SPEAKER_01: We have central banks, which are
[2:10] SPEAKER_01: at a fundamental level, just a branch of government.
[2:12] SPEAKER_01: But the details are a little funny,
[2:17] SPEAKER_01: and it's kind of a quasi,
[2:18] SPEAKER_01: what the Brits sometimes call a quango,
[2:22] SPEAKER_01: a quasi non-governmental organization.
[2:25] SPEAKER_01: But for all practical purposes, it is an arm of the U.S.
[2:30] SPEAKER_01: government, but has been given a lot of autonomy.
[2:33] SPEAKER_01: The governors have long terms.
[2:36] SPEAKER_01: There's supposed to be political pressure.
[2:40] SPEAKER_01: reason, which is that it's so easy to abuse monetary policy.
[2:46] SPEAKER_01: Not
[2:51] pretty much literally on a moment's notice all that if the Fed
[2:57] was a purely
[2:57] political preacher then the president can say pump up those
[3:03] numbers in time for the
[3:05] next election or I've been talking to this guy and he thinks
[3:10] all economists are
[3:11] wrong about everything I believe in so go and do this and you
[3:16] deliberately
[3:17] Once upon a time,
[3:18] we said,
[3:18] well,
[3:18] we have a gold standard,
[3:20] but that turned out too well.
[3:21] So we had a group of technocrats who exercised their
[3:27] professional judgment and
[3:29] SPEAKER_01: basically blow up.
[3:32] SPEAKER_01: Ultimately, they're accountable to politics, but they blow it up.
[3:36] SPEAKER_01: They make it hard to just...
[3:39] Paul,
[3:40] let me just interrupt you for one second,
[3:41] because I think your audio is choppy.
[3:44] SPEAKER_00: Someone actually said that when you turn your head to the left,
[3:48] SPEAKER_00: it's choppy,
[3:48] SPEAKER_00: but I don't think that's just the issue.
[3:50] SPEAKER_00: Is it,
[3:51] SPEAKER_00: um,
[3:51] SPEAKER_00: I don't know if you're using your laptop mic or,
[3:53] SPEAKER_00: or excuse me,
[3:54] SPEAKER_00: your,
[3:54] SPEAKER_00: uh,
[3:54] SPEAKER_00: your,
[3:56] SPEAKER_00: um,
[3:57] SPEAKER_00: and,
[3:58] SPEAKER_00: uh,
[3:58] SPEAKER_00: good work,
[3:59] SPEAKER_00: but let me,
[4:00] SPEAKER_00: uh,
[4:01] SPEAKER_00: Uh,
[4:01] SPEAKER_00: what if I do,
[4:02] it might be one of those where I think Eileen speaks for
[4:06] everyone here when she
[4:07] SPEAKER_00: says,
[4:07] SPEAKER_00: please,
[4:08] SPEAKER_00: please check your mic.
[4:08] SPEAKER_00: I don't want to miss anything.
[4:10] SPEAKER_00: All right.
[4:11] SPEAKER_00: Um, I'm going to do what I can.
[4:13] SPEAKER_00: Um, now it's better.
[4:16] SPEAKER_01: Yeah.
[4:16] SPEAKER_01: I think what's actually happening is the mic might be,
[4:19] SPEAKER_01: uh,
[4:20] SPEAKER_01: uh,
[4:21] SPEAKER_01: getting interfered with by the phone stand.
[4:24] SPEAKER_01: So let's see.
[4:25] SPEAKER_01: How is that doing?
[4:26] SPEAKER_01: How am I?
[4:26] SPEAKER_01: Am I good?
[4:27] SPEAKER_01: Yeah.
[4:28] SPEAKER_01: Okay.
[4:28] SPEAKER_01: Okay.
[4:29] SPEAKER_01: Ah, so anyway, so where we are.
[4:31] SPEAKER_01: So we have this thing where in the United States,
[4:35] SPEAKER_01: there's no legal independence for the Fed,
[4:38] SPEAKER_01: but we have a 75-year understanding that the Fed will be independent.
[4:44] SPEAKER_01: In some other places,
[4:46] SPEAKER_01: it's actually,
[4:46] SPEAKER_01: in Europe,
[4:47] SPEAKER_01: in Britain,
[4:48] SPEAKER_01: it's actually legal,
[4:49] SPEAKER_01: but it has worked.
[4:53] SPEAKER_01: We get, we avoid politicization and irresponsible policy.
[4:59] SPEAKER_01: The Fed is not always right.
[5:02] SPEAKER_01: But it's never stupid.
[5:04] SPEAKER_01: And it's,
[5:05] SPEAKER_01: you know,
[5:05] SPEAKER_01: but now we have Trump coming in there and saying,
[5:10] SPEAKER_01: well,
[5:10] SPEAKER_01: I think,
[5:12] SPEAKER_01: you know,
[5:12] SPEAKER_01: I want interest rates lower.
[5:13] SPEAKER_01: And there is, that's a complicated issue.
[5:16] SPEAKER_01: And there is some case,
[5:17] SPEAKER_01: but he wants interest rates three whole percentage points lower,
[5:21] SPEAKER_01: which is insane,
[5:23] SPEAKER_01: given that we are,
[5:24] SPEAKER_01: you know,
[5:24] we have that inflation is actually a little bit above target
[5:27] and definitely heading
[5:28] SPEAKER_01: higher.
[5:29] SPEAKER_01: But
[5:31] SPEAKER_01: And what's turning now, we were wondering, you know, what might he do?
[5:37] SPEAKER_01: He gets to appoint the next chairman of the Federal Reserve next year.
[5:41] But the idea that he would turn to unsubstantiated accusations
[5:46] of financial Freud,
[5:48] SPEAKER_01: Freud,
[5:49] SPEAKER_01: there,
[5:49] SPEAKER_01: Freudian slip.
[5:50] SPEAKER_01: A true Freudian slip.
[5:51] SPEAKER_01: To try to force out.
[5:58] A member of the Fed's board of governors who just so happens to
[6:01] be a black woman is
[6:04] SPEAKER_01: that's a whole nother level.
[6:06] SPEAKER_01: And it's not just about Lisa Cook.
[6:08] SPEAKER_01: It's about saying to everybody at the Fed,
[6:12] SPEAKER_01: if you don't cooperate,
[6:14] SPEAKER_01: we will find a way to ruin your life.
[6:17] i would go even further than that and say saying to everybody
[6:21] in public life
[6:22] certainly everyone in the government um but we will uh
[6:27] selectively prosecute you we
[6:29] will dig up something on you and you know you've got this guy
[6:33] sitting over there
[6:34] SPEAKER_00: rummaging uh through people's mortgage applications and uh
[6:39] SPEAKER_00: turning mortgage fraud into now the most important crime that the Trump
[6:45] SPEAKER_00: administration is enforcing.
[6:49] SPEAKER_00: And I like what you said about this.
[6:52] SPEAKER_00: I wrote something yesterday on a similar point that I feel almost...
[7:00] embarrassed or getting into the details of Lisa Cook's mortgage
[7:05] applications
[7:06] because it is so patently obvious that this is a pretextual
[7:12] investigation,
[7:13] a selective prosecution that even to get into the weeds of what
[7:19] they alleged they
[7:20] SPEAKER_00: found seems just totally besides the point and frankly irresponsible.
[7:25] SPEAKER_00: I dug through some of these
[7:27] CNN and other pieces where they're spending a thousand words
[7:31] doing the whole
[7:32] SPEAKER_00: background about mortgage fraud.
[7:33] And if you have a primary residence in this,
[7:35] and it's like,
[7:36] who the fuck cares?
[7:39] SPEAKER_00: I mean,
[7:41] SPEAKER_01: and,
[7:41] SPEAKER_01: and just,
[7:42] SPEAKER_01: uh,
[7:42] SPEAKER_01: and,
[7:44] SPEAKER_01: um,
[7:45] SPEAKER_01: you know,
[7:46] SPEAKER_01: she,
[7:47] SPEAKER_01: her,
[7:48] SPEAKER_01: actually only,
[7:49] SPEAKER_01: you know,
[7:49] SPEAKER_01: if,
[7:49] SPEAKER_01: if there was really solid evidence that she'd done something wrong,
[7:52] SPEAKER_01: even if it's not something that's relevant,
[7:54] SPEAKER_01: they would have presented it by now.
[7:57] SPEAKER_01: All we have now are not even the mortgage applications,
[8:01] SPEAKER_01: but the securities backed by those mortgages,
[8:04] SPEAKER_01: which say that she had two places listed as principal residence.
[8:09] SPEAKER_01: And we don't even know if she said that.
[8:12] SPEAKER_01: And principal is not quite the same thing as primary.
[8:16] SPEAKER_01: And, you know, if you asked me...
[8:21] There have been times when I had both a house in New Jersey and
[8:25] an apartment in New York.
[8:29] SPEAKER_01: If you'd asked me about either one, is that your principal residence?
[8:32] SPEAKER_01: I could have plausibly said, well, yeah.
[8:34] SPEAKER_01: I wouldn't have thought about what is the exact legal meaning.
[8:37] SPEAKER_01: Yeah, it's pretty important in my life.
[8:40] SPEAKER_01: So, no, this is crazy.
[8:41] SPEAKER_01: This is nothing that anybody – and it's all taking place.
[8:46] SPEAKER_01: when she's a professor at Michigan State.
[8:48] SPEAKER_01: It's not involved.
[8:50] SPEAKER_01: You can fire somebody at the Fed
[8:53] SPEAKER_01: For cause.
[8:54] SPEAKER_01: But for cause means,
[8:57] it's supposed to mean something like they've been drinking on
[9:00] the job or they've
[9:00] SPEAKER_01: been stealing office supplies,
[9:02] SPEAKER_01: right?
[9:03] SPEAKER_01: Not that when they,
[9:05] SPEAKER_01: at some point in their private life,
[9:07] SPEAKER_01: they may have missed,
[9:10] SPEAKER_01: you know,
[9:11] SPEAKER_01: filled out an application.
[9:13] SPEAKER_01: Just to clarify,
[9:14] SPEAKER_00: what you're saying is,
[9:15] SPEAKER_00: whatever is the truth about these applications,
[9:19] SPEAKER_00: it happened before she ever started at the Fed.
[9:22] SPEAKER_00: That's right.
[9:23] SPEAKER_00: And,
[9:24] SPEAKER_01: uh,
[9:24] SPEAKER_01: and there's nothing,
[9:25] there's been no allegation even that she's done anything wrong
[9:29] in her job at the
[9:30] SPEAKER_01: fed.
[9:30] SPEAKER_01: I mean,
[9:31] SPEAKER_01: it's not,
[9:32] SPEAKER_01: you know,
[9:33] SPEAKER_01: we have,
[9:33] SPEAKER_01: there are plenty of officials in the,
[9:36] SPEAKER_01: in this current administration who do appear to be drinking on the job,
[9:39] SPEAKER_01: uh,
[9:40] SPEAKER_01: who do,
[9:41] SPEAKER_01: uh,
[9:41] SPEAKER_01: who,
[9:42] SPEAKER_01: uh,
[9:42] SPEAKER_01: who,
[9:43] SPEAKER_01: who don't seem to actually be showing up for work.
[9:46] SPEAKER_01: Uh, you know, and, and, um,
[9:48] SPEAKER_01: So this is crazy.
[9:50] SPEAKER_01: And everybody understands that.
[9:52] I mean,
[9:53] this is clearly,
[9:54] in a way,
[9:55] almost the craziness of the charges is part of the message.
[9:58] SPEAKER_01: It is, it doesn't matter.
[10:00] SPEAKER_01: You don't have to have done anything wrong.
[10:01] SPEAKER_01: We will find a way to get you.
[10:04] SPEAKER_00: Yeah,
[10:04] SPEAKER_00: make life extremely difficult for you,
[10:06] SPEAKER_00: pile up the legal bills,
[10:08] SPEAKER_00: and if she resigns,
[10:10] SPEAKER_00: the case probably goes away.
[10:14] SPEAKER_00: Paul,
[10:14] do you have a strong view one way or the other about the
[10:19] legality and the coming
[10:23] SPEAKER_00: litigation over whether Trump can indeed fire someone without cause?
[10:33] I know it's complicated because he's saying the mortgage stuff
[10:36] is the cause.
[10:37] SPEAKER_00: But anyway, any read on the legal merits yet?
[10:41] SPEAKER_01: I mean, I'm not a lawyer, but not only is it really...
[10:47] SPEAKER_01: You know,
[10:47] SPEAKER_01: for causes,
[10:49] everything I've read says that that really involves some kind
[10:53] of dereliction on the
[10:54] SPEAKER_01: job.
[10:55] SPEAKER_01: And that's that's not here.
[10:57] SPEAKER_01: And the Fed,
[10:58] SPEAKER_01: sorry,
[10:58] SPEAKER_01: not the Supreme Court,
[11:00] SPEAKER_01: which gave Trump far too much leeway to fire federal employees,
[11:05] SPEAKER_01: did a carve out for the Fed,
[11:07] SPEAKER_01: especially protecting Fed officials.
[11:09] And it was such an unusual at the time that was very unusual
[11:12] that they did that.
[11:13] SPEAKER_00: You know, it's like they saw this coming.
[11:16] SPEAKER_01: Uh, well, I don't know.
[11:18] SPEAKER_01: Uh,
[11:18] SPEAKER_01: they,
[11:19] SPEAKER_01: um,
[11:21] SPEAKER_00: uh,
[11:21] SPEAKER_00: uh,
[11:21] SPEAKER_01: whatever they were thinking,
[11:23] SPEAKER_01: they may have been thinking,
[11:24] SPEAKER_01: uh,
[11:24] SPEAKER_01: that,
[11:24] SPEAKER_01: that,
[11:25] SPEAKER_01: uh,
[11:25] SPEAKER_01: that,
[11:26] SPEAKER_01: um,
[11:27] SPEAKER_01: I don't know why they – well, I can go on.
[11:31] I'm not a Supreme Court expert except to say that the whole
[11:34] thing was shameful.
[11:35] SPEAKER_01: But the carve-out for the Fed makes this even crazier.
[11:39] SPEAKER_01: And, you know, it's not – did Trump actually fire her?
[11:45] SPEAKER_01: He said he did.
[11:46] SPEAKER_01: But the Fed has not acknowledged that she's been fired.
[11:50] And I don't know if she's going into the office,
[11:56] continuing to do her job.
[11:59] So it's not,
[12:01] we aren't even in a situation where clearly she's been fired
[12:04] and is appealing.
[12:05] SPEAKER_01: The thing,
[12:06] SPEAKER_01: it's something where,
[12:07] SPEAKER_01: you know,
[12:08] SPEAKER_01: Trump said something which may or may not be true,
[12:11] SPEAKER_01: and
[12:13] SPEAKER_01: which is not the first time that has happened.
[12:16] I mean,
[12:18] there's a lot of imaginary stuff that Trump claims that he has
[12:24] that he doesn't.
[12:26] SPEAKER_01: So,
[12:27] SPEAKER_01: you know,
[12:27] SPEAKER_01: the $600 billion from the European Union,
[12:29] SPEAKER_01: which the Europeans claim to have heard nothing about.
[12:34] SPEAKER_01: But what it is, the important point,
[12:38] I mean,
[12:38] I think it's a terrible thing what's being done to Lisa Cook,
[12:41] but she's not the point.
[12:45] SPEAKER_01: It's the Fed and in general.
[12:47] SPEAKER_01: It's the idea that now personal intimidation,
[12:55] SPEAKER_01: kind of you think you have a blameless life,
[13:01] SPEAKER_01: we will find a crime.
[13:03] SPEAKER_01: That's a far-carianism.
[13:06] SPEAKER_01: That's right out of the playbook.
[13:09] SPEAKER_00: 100%.
[13:09] And our criminal code is so riddled with stringent language
[13:16] that goes unenforced
[13:18] SPEAKER_00: that anyone who has a mildly complicated professional life—
[13:24] SPEAKER_00: paying taxes,
[13:26] SPEAKER_00: signing contracts and putting them in the mail,
[13:29] SPEAKER_00: signing lots of mortgage documents,
[13:32] the chances for a slip-up of this nature that then the current
[13:39] regime will describe
[13:42] SPEAKER_00: as some awful crime is very,
[13:45] SPEAKER_00: very high.
[13:46] SPEAKER_00: I wrote about this yesterday.
[13:48] SPEAKER_00: There's this book, Three Felonies a Day by Harvey Silvergate,
[13:52] SPEAKER_00: a guy who started fire,
[13:53] SPEAKER_00: you know,
[13:54] SPEAKER_00: sort of right meaning libertarian,
[13:57] SPEAKER_00: you know,
[13:57] SPEAKER_00: about this issue.
[13:59] SPEAKER_00: And,
[14:00] SPEAKER_00: you know,
[14:01] dozens of Republican congressmen for years have been talking
[14:05] about that and about,
[14:07] SPEAKER_00: you know,
[14:08] That issue and the dangers of a government that started to
[14:13] enforce every law on the
[14:16] SPEAKER_00: books that currently goes unenforced because of prosecutorial discretion.
[14:20] SPEAKER_00: And a version of that world has now arrived as far as I can tell.
[14:27] SPEAKER_00: And this is only month seven of this administration.
[14:30] SPEAKER_01: Yeah,
[14:31] SPEAKER_01: I have to also say,
[14:32] SPEAKER_01: you know,
[14:33] SPEAKER_01: the Federal Housing Finance Agency,
[14:37] SPEAKER_01: which used this,
[14:39] SPEAKER_01: now they have millions and millions of mortgages on their books.
[14:43] SPEAKER_01: So this has to have been a targeted search.
[14:47] SPEAKER_01: And if that isn't illegal, it should be.
[14:49] SPEAKER_01: They're not supposed to be an instrument of political enforcement.
[14:55] I have been wondering the same thing,
[14:56] and I haven't seen much commentary on this.
[14:59] SPEAKER_00: Is this guy,
[14:59] SPEAKER_00: Pulte,
[15:00] SPEAKER_00: I'm not sure if it's Pulte or Pulte,
[15:02] SPEAKER_00: whatever his name is,
[15:03] SPEAKER_00: this former construction guy,
[15:05] SPEAKER_00: is out there attacking her publicly and accusing her of crimes,
[15:11] and nobody has explained why or how he pulled her fairly old
[15:18] mortgage records.
[15:19] SPEAKER_00: Yeah.
[15:22] SPEAKER_00: So, all right.
[15:24] SPEAKER_00: As you said,
[15:24] SPEAKER_00: this just isn't,
[15:25] SPEAKER_00: this isn't just about Lisa Cook as awful as it is what they're doing.
[15:28] SPEAKER_00: It's about the independence of the Fed and give us the rundown.
[15:34] SPEAKER_00: I was watching this yesterday.
[15:35] SPEAKER_00: I was watching like the financial,
[15:37] one of the financial networks and they had some Wall Street guy
[15:40] on there talking
[15:41] SPEAKER_00: about how,
[15:42] SPEAKER_00: you know,
[15:43] SPEAKER_00: they weren't good.
[15:46] SPEAKER_00: This is the next one.
[15:48] SPEAKER_01: What are you going to put on?
[15:49] SPEAKER_01: an hour or so from now, or less, 45 minutes.
[15:52] SPEAKER_01: Sorry.
[15:53] SPEAKER_01: That's okay.
[15:54] SPEAKER_01: We've had a little confusion here.
[15:56] SPEAKER_01: That's okay.
[15:59] SPEAKER_00: You work from home, so the boss is checking in on you.
[16:03] SPEAKER_01: Yeah.
[16:05] SPEAKER_01: Sorry.
[16:06] It's one of those days where,
[16:10] yeah,
[16:11] this is my second,
[16:13] third,
[16:13] whatever of the day.
[16:14] SPEAKER_01: So anyway, okay.
[16:16] If you could see what's on the other side here in this place
[16:19] with the dog and other
[16:21] SPEAKER_00: people working,
[16:22] SPEAKER_00: you would,
[16:22] SPEAKER_00: you know,
[16:23] SPEAKER_00: I know exactly what you're talking about.
[16:25] SPEAKER_00: So, Paul, let's just the independence of the Fed.
[16:29] SPEAKER_00: Is it are we ready to declare that it's over?
[16:32] SPEAKER_00: And what are the, you know, short and long term implications of that?
[16:38] SPEAKER_00: Well, it's.
[16:41] SPEAKER_01: I suspect that it's not over yet.
[16:45] SPEAKER_01: Um,
[16:46] SPEAKER_01: that in fact,
[16:48] SPEAKER_01: um,
[16:48] SPEAKER_01: they current,
[16:50] SPEAKER_01: and there,
[16:51] SPEAKER_01: there's too much into the weeds here,
[16:54] SPEAKER_01: but it turns out that the,
[16:55] SPEAKER_01: the board of governors is only sort of half of the group that's,
[16:59] SPEAKER_01: that sets interest rates and the rest is,
[17:01] SPEAKER_01: uh,
[17:02] SPEAKER_01: regional fed presidents.
[17:04] SPEAKER_01: Um, and they, um,
[17:06] SPEAKER_01: who have their own and can't be appointed or replaced by the president,
[17:15] SPEAKER_01: or at least shouldn't be.
[17:16] So interest rate policy probably doesn't get completely
[17:23] politicized yet unless
[17:24] SPEAKER_01: people are just frightened.
[17:25] SPEAKER_00: Wait, I don't think that's too into the weeds.
[17:27] SPEAKER_01: Just unpack that a little bit.
[17:30] Okay,
[17:30] so we have,
[17:31] there's the Fed,
[17:32] the organization,
[17:33] which has a board of governors.
[17:36] SPEAKER_01: And if Trump manages to force Lisa Cook out,
[17:40] SPEAKER_01: four of the seven governors will have been Trump appointed.
[17:44] SPEAKER_01: But the Board of Governors runs the Fed,
[17:47] SPEAKER_01: which actually has,
[17:49] SPEAKER_01: among other things,
[17:49] SPEAKER_01: does a lot of bank supervision.
[17:51] SPEAKER_01: But interest rate decisions are—so the Fed also, there are regional Feds.
[17:56] SPEAKER_01: There's the New York Fed, the Chicago Fed, the Atlanta Fed—
[18:00] SPEAKER_01: that are independent organizations.
[18:03] Partially,
[18:06] their presidents are chosen in part by the local business
[18:08] community.
[18:12] And decisions on interest rates are made by the Federal Open
[18:16] Market Committee,
[18:17] SPEAKER_01: which is the governors plus a rotating group of regional Fed presidents.
[18:23] SPEAKER_01: And Trump will not have a majority on the
[18:27] SPEAKER_01: Federal Open Market Committee,
[18:32] unless he can start driving out regional Fed presidents for
[18:36] years to come,
[18:37] SPEAKER_01: even if he replaces Jay Powell with some hack,
[18:44] SPEAKER_01: that chairman might be outvoted on interest rates.
[18:49] SPEAKER_01: So at least in a formal sense,
[18:53] we may not yet have presidential control of monetary policy for
[18:57] a while yet.
[18:58] SPEAKER_01: But,
[18:58] SPEAKER_01: of course,
[18:58] SPEAKER_01: the intimidation is taking place,
[19:00] SPEAKER_01: and the odds that somewhere in the next couple of years,
[19:08] SPEAKER_01: monetary policy will,
[19:09] SPEAKER_01: in fact,
[19:10] SPEAKER_01: become a creature of the White House has got to be at least even odds.
[19:18] SPEAKER_01: Now, the reason that matters is
[19:20] SPEAKER_01: is, you know, moderate policy.
[19:24] SPEAKER_01: You know,
[19:26] suppose that a president wants to spend a lot of money on pet
[19:32] projects or wants to
[19:34] SPEAKER_01: cut taxes for his kind of people.
[19:38] SPEAKER_01: That's a fairly involved process.
[19:40] SPEAKER_01: That requires legislation.
[19:41] SPEAKER_01: It needs to be passed by both houses of Congress.
[19:44] SPEAKER_01: They need to reconcile the bills.
[19:46] SPEAKER_01: It needs to be signed.
[19:47] SPEAKER_01: It can take...
[19:50] SPEAKER_01: Even under extraordinary circumstances, it certainly takes months.
[19:56] SPEAKER_01: It's not a frictionless thing.
[19:58] The way that you change monetary policy is that the Federal
[20:02] Open Market Committee
[20:03] SPEAKER_01: takes a vote in Washington.
[20:05] At the end of the meeting,
[20:06] they get on the phone to the open market desk in New York,
[20:10] which...
[20:12] SPEAKER_01: calls up some banks,
[20:14] SPEAKER_01: or actually I guess it's all done with mouse clicks these days,
[20:17] SPEAKER_01: and buys some treasury bills and drives down the interest rates.
[20:22] SPEAKER_01: So it basically happens in a matter of hours.
[20:25] SPEAKER_01: And it's no muss,
[20:26] SPEAKER_01: no fuss,
[20:28] SPEAKER_01: which is tremendously,
[20:29] if you're a politician who wants to make your poll numbers look
[20:36] better in the next
[20:38] SPEAKER_01: few months and are not worried about the long term,
[20:42] SPEAKER_01: Fed is a really easy tool to use.
[20:48] SPEAKER_01: If you have subscribed to Crackpot Economic Theories,
[20:55] SPEAKER_01: We have a really clear example of that in Turkey recently where Erdogan,
[21:01] SPEAKER_01: the autocrat in chief,
[21:04] decided that cutting interest rates actually reduces inflation
[21:10] and persisted with
[21:11] SPEAKER_01: that belief until inflation hit 80%.
[21:16] SPEAKER_01: you can do that very easily.
[21:18] SPEAKER_01: And so this is,
[21:21] the reason we have an independent Fed basically is because it's
[21:24] too powerful and
[21:25] SPEAKER_01: it's too easy to use.
[21:26] And so we've deliberately placed some constraints on the
[21:30] ability of politicians to
[21:33] SPEAKER_01: use this tool.
[21:34] And if that's gone,
[21:37] you know,
[21:38] and if your great concern is that you have a
[21:43] uh a self-serving autocrat with crackpot economic ideas hey we
[21:47] got one so uh um so
[21:51] that's uh that's very very unnerving right so a couple of
[21:55] questions on the on the
[21:57] economics of this one and someone asked this in the chat and i
[22:00] was wondering the
[22:00] same thing what what do you make of the the kind of shrug from
[22:05] the markets so far
[22:06] SPEAKER_00: about this this week
[22:08] SPEAKER_01: Yeah, I'm writing about that as we speak.
[22:11] SPEAKER_00: Oh, good.
[22:11] SPEAKER_00: We've got a preview.
[22:12] SPEAKER_00: People didn't hear us,
[22:13] SPEAKER_00: but before we came on,
[22:14] SPEAKER_00: Paul was saying he only had 26 words of his columns today written.
[22:18] SPEAKER_00: So we've got to get you off of here.
[22:22] SPEAKER_00: We won't keep you too long.
[22:24] SPEAKER_01: So I think the right way to think about this is that markets –
[22:31] SPEAKER_01: We have an idealized economics model where markets take into account all
[22:36] SPEAKER_01: information and think it all through and have and model it.
[22:41] SPEAKER_01: But we really have a nice phrase from Nathan Tankus,
[22:44] SPEAKER_01: who I've talked to,
[22:45] SPEAKER_01: that markets are conventional wisdom processors.
[22:51] SPEAKER_01: And there's a lot,
[22:52] SPEAKER_01: actually,
[22:52] SPEAKER_01: in John Maynard Keynes about that,
[22:54] SPEAKER_01: about how at any given time there's a conventional wisdom,
[22:57] SPEAKER_01: what people believe.
[22:59] SPEAKER_01: And markets very rarely,
[23:01] SPEAKER_01: Um,
[23:03] They're actually very bad at discounting the possibility of
[23:08] catastrophic events,
[23:09] even when it's obvious that those catastrophic events are a
[23:16] real possibility.
[23:18] SPEAKER_01: I've actually been looking through,
[23:20] trying to find examples of sort of catastrophe foretold that
[23:25] was actually showed up
[23:28] SPEAKER_01: in the markets until the last possible minute.
[23:31] SPEAKER_01: And I can't find any.
[23:33] SPEAKER_01: I mean, the housing bubble of the...
[23:38] SPEAKER_01: you know,
[23:39] SPEAKER_01: of the mid-2000s was massive and obvious,
[23:43] SPEAKER_01: and it really didn't take a whole lot of work to see that,
[23:48] SPEAKER_01: you know,
[23:48] SPEAKER_01: not necessarily,
[23:50] SPEAKER_01: I don't think many people expected the depth of the financial crisis,
[23:55] but to expect that there were going to be a lot of defaults on
[23:58] subprime mortgages,
[24:00] SPEAKER_01: that certainly had to be a significant
[24:05] SPEAKER_01: you should have been thinking about that.
[24:07] But we can actually look at the market prices of securities
[24:12] based on subprime
[24:13] SPEAKER_01: mortgages,
[24:14] and they didn't start falling until just a few months before
[24:18] all hell broke loose.
[24:21] SPEAKER_01: If we look at...
[24:24] SPEAKER_01: the euro crisis.
[24:25] SPEAKER_01: And we ask,
[24:26] SPEAKER_01: you know,
[24:26] when did the bond markets start to realize that maybe those
[24:30] southern European
[24:31] countries that have been borrowing vast sums of money from
[24:34] northern Europe were not
[24:37] SPEAKER_01: really good bets?
[24:39] SPEAKER_01: It's really like a month before everything hit the wall.
[24:43] SPEAKER_01: So why expect this to be different?
[24:46] SPEAKER_01: You know, we have a highly professional term.
[24:50] SPEAKER_01: We do talk about Wile E. Coyote moments.
[24:53] SPEAKER_01: Because,
[24:53] SPEAKER_01: you know,
[24:53] SPEAKER_01: according to the laws of cartoon physics,
[24:55] SPEAKER_01: when Wile E.
[24:56] SPEAKER_01: Coyote runs across a cliff,
[24:58] SPEAKER_01: runs off a cliff,
[24:59] SPEAKER_01: he takes 10 steps or so until he looks down.
[25:03] And it's only when he notices that there's nothing underneath
[25:05] him that he falls.
[25:06] SPEAKER_01: And that is the historical behavior of this.
[25:09] SPEAKER_01: So for whatever reason,
[25:10] the conventional wisdom now is that it's business as usual and
[25:14] we're not going to,
[25:16] SPEAKER_01: even though
[25:17] SPEAKER_01: You know,
[25:18] everybody's heard the arguments that says that a politicized
[25:21] Fed is going to be
[25:22] SPEAKER_01: disastrous.
[25:23] SPEAKER_01: It's going to take,
[25:24] probably it's going to take some actually scary inflation
[25:29] reports before this
[25:30] SPEAKER_01: really,
[25:32] SPEAKER_01: really hits.
[25:34] And how would you compare it to the market freakout that did
[25:37] really perhaps affect
[25:39] SPEAKER_00: Trump in the initial stages of tariffs this year?
[25:44] SPEAKER_00: Again, just conventional wisdom?
[25:47] SPEAKER_01: Yeah,
[25:47] SPEAKER_01: I mean,
[25:47] SPEAKER_01: what happened was that the tariffs,
[25:50] the size and the scope and the sheer craziness of the tariffs
[25:54] did come as a shock,
[25:55] SPEAKER_01: and they did shock people out of their equilibrium.
[25:59] SPEAKER_01: And I think partly also there are legends about tariffs.
[26:03] SPEAKER_01: Tariffs are a bad thing,
[26:04] but lots of people have been brought up being told that the
[26:08] Smoot-Hawley tariff
[26:09] SPEAKER_01: caused the Great Depression,
[26:10] SPEAKER_01: which is not true,
[26:11] SPEAKER_01: not remotely true.
[26:13] SPEAKER_01: It was a bad thing, but not that bad.
[26:16] And so the tariffing was big enough to shock Marx,
[26:21] but only for a few weeks.
[26:23] SPEAKER_01: And when people sort of looked around and says,
[26:26] SPEAKER_01: well,
[26:26] SPEAKER_01: it doesn't look like the Great Depression so far,
[26:29] SPEAKER_01: it
[26:31] SPEAKER_01: Marcus went pretty much back to where they'd been before,
[26:33] SPEAKER_01: and the old conventional wisdom reasserted itself.
[26:37] SPEAKER_01: So I think that's—it was interesting.
[26:42] SPEAKER_01: And people have said, you know, we have—
[26:45] There are a lot of really scary things out there,
[26:51] none of which have been reflected.
[26:53] SPEAKER_01: The tariffs caught people's attention, but only for a few weeks.
[26:58] SPEAKER_01: And now it's as if,
[26:59] SPEAKER_01: you know,
[27:01] it's as if it's still January 19th and the world is still the
[27:05] way we thought it
[27:05] SPEAKER_01: was.
[27:06] And anyone who pays any attention to the underlying stuff says,
[27:10] no,
[27:10] it isn't.
[27:11] SPEAKER_01: But the markets aren't ready to accept that yet.
[27:16] SPEAKER_00: All right.
[27:17] SPEAKER_00: Two more economic things on this, Paul.
[27:20] And one is you said at the beginning there might be a case for
[27:23] lower interest rates right now.
[27:25] SPEAKER_00: And I'm just – what are the –
[27:28] best and worst case scenarios of a fed um that is under under
[27:36] the control of the
[27:37] white house and let's start with this white house and then i'd
[27:40] also like to stretch
[27:41] your imagination a little bit and talk about if this ends up
[27:44] being the world we
[27:45] SPEAKER_00: live in and you have a democratic president who decides ah you know what
[27:51] SPEAKER_00: The independence of the Fed is over.
[27:52] SPEAKER_00: I'm going to do the same thing Trump did.
[27:55] SPEAKER_00: What would be the dream,
[27:57] SPEAKER_00: you know,
[27:58] democratic or liberal policy if the Fed was more of a tool of
[28:05] the president?
[28:06] SPEAKER_01: Wow.
[28:07] SPEAKER_01: So, I mean, we are in a situation.
[28:08] SPEAKER_01: This is...
[28:13] SPEAKER_01: You cut interest rates if the economy is weakening.
[28:20] SPEAKER_01: You raise interest rates if inflation is running hot.
[28:23] And we are in a situation right now where the economy is
[28:25] weakening and inflation is running hot.
[28:27] SPEAKER_01: So what do you do?
[28:28] SPEAKER_01: It's a tough call.
[28:33] SPEAKER_01: And you can make an honest case for,
[28:37] SPEAKER_01: both for,
[28:38] SPEAKER_01: even for raising rates,
[28:40] SPEAKER_01: but certainly you can make a case for a standing pad.
[28:42] SPEAKER_01: But you can also make a case that, well, the...
[28:47] SPEAKER_01: You know,
[28:49] some of the anecdotal stuff suggests the economy may be
[28:52] weakening faster than the
[28:54] SPEAKER_01: official numbers show yet.
[28:56] SPEAKER_01: And, you know, cardboard box sales are way down.
[29:00] SPEAKER_01: Believe it or not, think about how we get our stuff.
[29:03] SPEAKER_01: That's a real sort of, as we say, high-frequency indicator.
[29:08] SPEAKER_01: So maybe it's time to cut rates, but on the other hand, inflation is...
[29:14] Stores,
[29:15] the tariffs are really starting to filter through to consumer
[29:18] price.
[29:18] SPEAKER_01: Anyway, so it's a case.
[29:20] SPEAKER_01: I actually don't know what I would do.
[29:26] SPEAKER_01: It's a genuinely hard case.
[29:28] SPEAKER_01: Now, the trouble is that, okay, so, but we have Trump who...
[29:35] SPEAKER_01: will not admit to either side of that.
[29:37] SPEAKER_01: He says the economy is extremely hot and we have no inflation.
[29:42] And furthermore,
[29:43] we should cut interest rates by three full percentage points.
[29:47] SPEAKER_01: which is a completely, you know, incoherent position.
[29:52] And if the numbers actually start to get bad in either
[29:57] direction,
[29:59] we've already seen them.
[29:59] SPEAKER_01: You know,
[30:00] SPEAKER_01: we got some bad numbers on employment growth,
[30:04] SPEAKER_01: so he fired the commissioner of labor statistics.
[30:09] SPEAKER_01: Will...
[30:12] SPEAKER_01: We're probably about to start getting some serious inflation news,
[30:17] SPEAKER_01: which actually comes from the same agency.
[30:19] SPEAKER_01: So maybe there's a purge of the whole staff at the BLS.
[30:23] SPEAKER_01: And so if you're flying blind,
[30:28] SPEAKER_01: if you're flying in a situation where nobody dares,
[30:30] SPEAKER_01: I mean,
[30:31] SPEAKER_01: it's the same thing about people.
[30:32] SPEAKER_01: You know, bombing Iran.
[30:33] If you have a situation where you fire people who bring you bad
[30:36] news and you assert
[30:39] SPEAKER_01: dictatorial power over policy,
[30:41] SPEAKER_01: God knows.
[30:42] SPEAKER_01: Now,
[30:42] I don't – what I actually suspect is that if we do get a
[30:47] democratic president,
[30:48] SPEAKER_01: they will try.
[30:49] SPEAKER_01: to restore some kind of Fed autonomy.
[30:52] SPEAKER_01: Just that, just that itself is a, would be a positive signal.
[30:58] SPEAKER_01: I think by,
[30:59] SPEAKER_01: by the time,
[30:59] SPEAKER_01: you know,
[31:00] SPEAKER_01: if we get to that point,
[31:01] SPEAKER_01: uh,
[31:02] SPEAKER_01: by the time we get there,
[31:03] SPEAKER_01: people will have seen the damage that a politicized Fed can do.
[31:07] SPEAKER_01: And, you know, the, um, uh, uh, uh, in, in Britain, the, um, uh,
[31:17] SPEAKER_01: The Bank of England used to be just a department of the exchequer,
[31:23] SPEAKER_01: the Treasury Department,
[31:24] SPEAKER_01: essentially.
[31:27] But after it did a good job of managing the fallout from the
[31:35] pound crisis of 1992,
[31:36] they decided actually having an independent Bank of England is
[31:41] a good thing.
[31:41] And so they made that actually part of the charter,
[31:44] that they are politically independent.
[31:45] SPEAKER_01: And I could imagine...
[31:46] SPEAKER_01: that,
[31:48] SPEAKER_01: you know,
[31:51] SPEAKER_01: choose your fighter,
[31:52] but President Newsom or President Pritzker or whatever might go
[31:57] ahead and say,
[31:58] SPEAKER_01: and as one of my acts to restore sanity to America,
[32:01] I am passing legislation that formalizes the independence of
[32:08] the Federal Reserve.
[32:10] SPEAKER_01: I think that's probably the most likely outcome.
[32:12] Yeah,
[32:13] to me,
[32:13] this is one of the biggest questions that hangs over the Trump
[32:17] presidency.
[32:18] Assuming a Democrat is back in power is how much of the
[32:26] politicized government is
[32:29] SPEAKER_00: remains and how much Democrats decide.
[32:32] SPEAKER_00: this is just the way things are.
[32:36] Do they go person by person purging the Department of Justice
[32:41] of all these Trump lackeys?
[32:46] SPEAKER_00: One easy question along these lines is, Kosh Patel is the FBI director.
[32:51] SPEAKER_00: He's supposed to have a 10-year term, a norm that used to be sacrosanct.
[32:56] SPEAKER_00: I don't think any Democratic president is going to keep Kosh Patel
[33:02] And everything that Trump has politicized and turned into a
[33:06] tool of the White
[33:08] SPEAKER_00: House,
[33:08] SPEAKER_00: all of the guardrails and internal structures that prevented complete
[33:15] SPEAKER_00: politicization of our government,
[33:18] it's a big question for Democrats is how much they promise to
[33:22] restore that.
[33:22] SPEAKER_00: The independence of the Fed may be an easy call.
[33:26] SPEAKER_01: I think actually,
[33:29] SPEAKER_01: well,
[33:30] SPEAKER_01: I mean,
[33:30] SPEAKER_01: completely out of my field here,
[33:32] SPEAKER_01: but Pritzker,
[33:35] SPEAKER_01: who is clearly one of the contenders now,
[33:38] SPEAKER_01: made a real fire-breathing speech the other day.
[33:41] SPEAKER_01: And one of the things he said is,
[33:42] if you have participated as a government official in illegal
[33:46] actions by this
[33:47] SPEAKER_01: government,
[33:47] SPEAKER_01: you will personally be held legally liable.
[33:51] SPEAKER_01: It's not just that we will fire you, but we will prosecute you.
[33:54] SPEAKER_01: And I think that is,
[33:57] SPEAKER_01: we have to,
[34:00] SPEAKER_01: if we ever come out the other end of this,
[34:02] SPEAKER_01: we're going to have to have a serious process of detrumpification.
[34:06] SPEAKER_01: Now, economic policy may be one of the harder ones, actually.
[34:09] SPEAKER_01: You know,
[34:11] SPEAKER_01: Trump put on some badly conceived tariffs on China in particular,
[34:19] SPEAKER_01: and Biden never tried to undo them.
[34:21] SPEAKER_01: But that was a political calculation.
[34:26] SPEAKER_01: Nobody likes China.
[34:28] SPEAKER_01: Anyone who tried to liberalize trade with China again would be
[34:33] SPEAKER_01: open to accusations, you know.
[34:36] SPEAKER_01: But I would imagine that a Democratic president would find ways to,
[34:41] SPEAKER_01: you know,
[34:42] SPEAKER_01: go back to normal trading relations with the European Union.
[34:45] SPEAKER_01: I mean, these are good guys.
[34:47] SPEAKER_01: These are our friends.
[34:48] SPEAKER_01: And
[34:49] SPEAKER_01: Hopefully,
[34:49] SPEAKER_01: we can get back to—now,
[34:52] it'll take decades to regain the credibility that we had a few
[34:57] months ago,
[34:58] SPEAKER_01: but that's the way I think it goes.
[35:00] SPEAKER_01: I think it's selective.
[35:01] SPEAKER_01: I think that some of what Trump's done,
[35:04] SPEAKER_01: smart or not,
[35:05] SPEAKER_01: is probably going to be politically irreversible,
[35:08] SPEAKER_01: but not all of it.
[35:09] SPEAKER_00: Yeah.
[35:09] SPEAKER_00: I think you're right.
[35:10] SPEAKER_00: With trade and foreign policy,
[35:11] SPEAKER_00: it may be easier to sort of be more traditional,
[35:14] SPEAKER_00: but I think in a lot of other ways,
[35:16] SPEAKER_00: this is a whole nother conversation.
[35:17] SPEAKER_00: I used to think that this was a temporary,
[35:20] SPEAKER_00: you know,
[35:20] SPEAKER_00: rupture and we get past it and we would go back to,
[35:24] SPEAKER_00: you know,
[35:25] the good old days of when I was covering politics that now
[35:28] looks really like a
[35:28] SPEAKER_00: golden age from like the Watergate reforms up until,
[35:32] SPEAKER_00: you know,
[35:33] SPEAKER_00: the end of the Obama administration when,
[35:36] SPEAKER_00: uh,
[35:37] SPEAKER_00: When good government was really,
[35:39] SPEAKER_00: really important,
[35:40] SPEAKER_00: and if you violated any of the sort of principles of good government,
[35:45] SPEAKER_00: there was a pretty steep cost,
[35:47] SPEAKER_00: including from your own party.
[35:49] SPEAKER_00: And boy, that world just seems gone.
[35:54] SPEAKER_01: Well,
[35:54] the idea that you don't redistrict except once every 10 years
[35:57] after the census,
[35:59] SPEAKER_01: you know,
[36:00] SPEAKER_01: that's gone.
[36:01] And it's gone because you can't be unilaterally good guys when
[36:08] the other side is,
[36:12] SPEAKER_01: you know,
[36:14] SPEAKER_01: you don't bring a set of legal,
[36:18] SPEAKER_01: of traditional norms to a gunfight.
[36:20] SPEAKER_00: Yeah, yeah.
[36:23] SPEAKER_00: Last thing, Paul, I'll let you go.
[36:24] SPEAKER_00: Now you've got to write your column.
[36:26] What's the next thing you're watching for in terms of how the
[36:32] Fed deals with this
[36:35] SPEAKER_00: or just in general with this saga between the White House and the Fed?
[36:38] SPEAKER_00: What do you think is the most important thing for us to know next?
[36:42] SPEAKER_01: Well,
[36:42] SPEAKER_01: I think what we're going to need to,
[36:44] SPEAKER_01: first of all,
[36:44] SPEAKER_01: we're going to have to watch the Lisa Cook affair.
[36:46] SPEAKER_01: I mean,
[36:46] the Fed issued a statement which was very Fed-like and that it
[36:52] was slightly obscure
[36:53] SPEAKER_01: language and you sort of had to parse what did they say there,
[36:58] SPEAKER_01: but seemed to say that she still has her job.
[37:02] SPEAKER_01: But there will come a point when Trump says,
[37:05] SPEAKER_01: well,
[37:05] SPEAKER_01: now that she's gone,
[37:07] SPEAKER_01: I'm appointing Mike Lindell,
[37:10] SPEAKER_01: the MyPillow guy,
[37:11] SPEAKER_01: to fill her seat.
[37:13] SPEAKER_01: And at that point, the Fed will not be able to use obscure language.
[37:19] And if they allow him to fill that seat,
[37:23] then they've completely capitulated.
[37:25] SPEAKER_01: I don't think they will.
[37:26] SPEAKER_01: but it's really something... Well, it's an interesting question.
[37:32] SPEAKER_00: Obviously,
[37:33] SPEAKER_00: the Senate will go along with anything Trump proposes,
[37:37] and then the Senate confirms a nominee for a seat that is
[37:41] actually not empty,
[37:43] and then you're going to have this sort of constitutional
[37:47] standoff over who
[37:48] SPEAKER_00: actually is the legitimate occupant of that seat.
[37:52] SPEAKER_01: Well, we also have the...
[37:56] Yet the person Trump is trying to appoint to head the Bureau of
[38:01] Labor Statistics is
[38:03] SPEAKER_01: manifestly unqualified,
[38:06] SPEAKER_01: may be a hardcore QAnon type.
[38:11] SPEAKER_01: There's circumstantial evidence to that effect.
[38:15] SPEAKER_01: Normally,
[38:16] that position is filled without any hearings because it's just
[38:21] a technocrat who's
[38:22] SPEAKER_01: manifestly qualified.
[38:24] SPEAKER_01: But at least the Senate has agreed to hold hearings on this guy.
[38:27] SPEAKER_01: Now, we'll see what happens there, but that may – it's possible.
[38:31] SPEAKER_01: That's going to be another test case.
[38:33] SPEAKER_01: What happens in the hearings over the BLS?
[38:35] SPEAKER_01: Yeah.
[38:38] SPEAKER_01: And then,
[38:39] SPEAKER_01: you know,
[38:41] SPEAKER_01: there will be,
[38:43] SPEAKER_01: sometime next month,
[38:44] SPEAKER_01: there will be the next rate decision from the Fed,
[38:48] SPEAKER_01: which will probably...
[38:49] SPEAKER_01: I mean,
[38:52] my guess is that unless we get some really bad inflation news
[38:55] between now and then,
[38:56] SPEAKER_01: that they will...
[39:00] SPEAKER_01: slightly cut interest rates, but it won't be enough.
[39:03] SPEAKER_01: You know, Trump will rage.
[39:05] SPEAKER_00: Won't be enough to Trump, yeah.
[39:06] SPEAKER_01: Well, he'll say they cut by 25 basis points, but it should be 300.
[39:10] SPEAKER_01: And so that's going to be another flashpoint to watch.
[39:15] SPEAKER_01: And but,
[39:17] SPEAKER_01: you know,
[39:17] SPEAKER_01: given the way the world's been working,
[39:19] I think the most likely thing is that whatever will be
[39:23] dominating our minds three
[39:26] or four weeks from now will be something that we aren't even
[39:28] thinking of now,
[39:29] SPEAKER_01: something we didn't even imagine was possible.
[39:31] As soon as we get off this call,
[39:32] there'll be something,
[39:33] you know,
[39:34] this afternoon.
[39:35] SPEAKER_00: That's just the way it is now.
[39:37] SPEAKER_00: Paul, thanks for doing this.
[39:38] SPEAKER_00: I'll let you get to your column.
[39:41] SPEAKER_00: Great big crowd here.
[39:42] SPEAKER_00: Thanks for building this.
[39:45] SPEAKER_00: Almost 4,000 people on here.
[39:47] SPEAKER_00: And let's do it again soon.
[39:48] SPEAKER_00: Really appreciate it.
[39:49] SPEAKER_00: Good talking to you.
[39:50] SPEAKER_00: Good to talk to you.
[39:50] SPEAKER_00: All right.
[39:51] SPEAKER_00: Take care.
[39:52] SPEAKER_00: Take care.
[39:52] SPEAKER_00: Bye, everyone.
[39:53] SPEAKER_00: Thanks for tuning in.

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