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Language: en
Trump's DOJ is threatening a criminal
indictment against Fed chair Jerome
Powell as tensions clearly between the
Trump admin and the Fed are continuing
to escalate.
>> If I had the help of the Fed, it would
be easier, but that jerk will be gone
soon.
>> The threat of criminal charges is a
consequence of the Federal Reserve
setting interest rates based on our best
assessment of what will serve the public
rather than following the preferences of
the president. This is about whether the
Fed will be able to continue to set
interest rates based on evidence and
economic conditions or whether instead
monetary policy will be directed by
political pressure or intimidation. Pal
revealed Sunday evening that the
Department of Justice served the central
bank with a grand jury subpoena and
explicitly threatening a criminal
indictment related to his June 2025
testimony before the Senate Banking
Committee. The probe centers on alleged
misleading statements about the scope
and features of the Fed's ongoing $2.5
billion renovation of its historic
headquarter buildings uh in Washington
DC. It also includes claims of perjury
and false statements to Congress. Now I
think that Jerome Powell is right that
this is a political game being played.
They have not passed down the
indictments yet. So this is just a
threat. Um,
I don't think mathematically there's any
way that we don't end up lowering rates
more throughout 2026. Uh, we're going to
be covering this um later. In fact,
might as well get into it now. So, um,
the, uh, what cell is this? Um, our
interest rate payments have gone up 5%
this year. In the last four years alone,
um, we have, I think, doubled our
interest payments. Like, it is
completely wild. So yeah, US government
payments uh US government interest
payments are now up to uh an annualized
record of 1.47 trillion. This comes as
federal interest payments rose 5%
year-over-year to 1.2 trillion, which is
an all-time high. Federal interest costs
have doubled over the last four years.
So
fiscal dominance, we are in a position
where Powell doesn't have an option. The
debt is growing so rapidly, it is going
to consume an ungodly amount of the
federal budget if we don't lower the
rates so that we can refinance the wall
of debt that is coming to you in 2026.
This is a thing that a lot of people
aren't paying attention to is that 2026
is a unique year. Like if you look at
the graph of how much debt has to be
refinanced in 2026, it is massive. So if
we don't lower rates, we have to
refinance that at the higher rates and
it will escalate rapidly or accelerate I
should say the race towards insolveny of
the US government. So we're not going to
do that. It's one of those like they'll
bluster, they'll posture, but in the
end, no matter who is president, you
have to lower rates. Now that's a
trade-off and it will have consequences
for sure and I've done a deep dive on
that and you should go watch it. But the
reality is that all of this is political
theater. And so I think it's good that
Jerome Powell has stood strong for as
long as he could because raising the
rates is a trade-off, a massive
trade-off. We should be sorry, lowering
the rates is a massive trade-off. We
should be raising the rates. It would
also be a trade-off, but for the reasons
that I just explained, we're not going
to be able to do it. But getting into
all this tit fortat, the two of them
should just be working together to do
this in as thoughtful a way as possible.
But I think both of them are playing a
political game. Trump obviously has
midterms to worry about. He obviously
wants to drive the rates down, not just
to refinance the debt, but to make him
look great because it will burn the
economy extremely hot, which in the
short term will feel awesome. But the
bad news is that over time it creates
the K-shaped economic horror show that
is people with assets get wealthy and
people without end up struggling because
inflation is just eating away at them.
So anyway, would I love to see the two
of them just say listen we're in a very
difficult position. Uh fiscal dominance
is a brutal place to be but here we find
ourselves and so we are going to do this
as definitely as humanly possible. Yes,
I would love to see that. Are we going
to see it? No, we are not. It is not
Trump's style. Uh Trump, we got to come
up with an abbreviation for this. Grab
them in the whatever those letters are.
Uh that's his method of doing
everything. So that is precisely what
he's doing here with the Fed. It needs
to be done, but it doesn't need to be
done like this. So
>> you said both of them. What's Jerome
Pal's motivation?
>> I don't know, man. I don't know if he is
uh just Democrat by nature, but the fact
that he lowered rates at the midterms
when he didn't need to however many
years ago uh to ensure that the
Democrats look good in the midterms, I
know this guy will move rates.
>> I mean, I I feel like we're projecting a
a motive on something.
>> Not me.
>> Well, yeah, you're projecting a motive.
>> Call me out. You're projecting a vote on
something that's not quite there cuz he
just lowered rates ahead of midterms now
and it's going to go down another basis
point. So is he doing what you just said
he did for the Democrats?
>> Yes, that's what I'm saying. He Well, so
we're too far out from the midterms for
him to be doing it specifically for
that. What he's doing it for, I believe,
is that he understands that
>> 2026 so much debt is coming due. It
isn't possible to hold the line. So,
here I've got a guy who cuz I I'm more
on Jerome Powell's side than I am on
Trump's side. Trump, in my opinion, is
just being reckless. It has to get done,
but not in a reckless fashion. I think
Trump wants it more for what it will do
for um Wall Street and how it will
create all this investment, create all
these jobs, hopefully drive wages in the
short term. I think he's doing it for
that reason. I think Powell is being
more sensible in terms of we have to
hold off, we have to hold off, but the
two have allowed this to become a
pissing contest politically. So instead
of them and look, I get it. The Fed has
to be so careful with every word out of
their mouth, but in my fantasy land,
like these two would get together and
they would just say, "Look, we
understand what's going on. We may not
be able to message it publicly. I
understand what's going on. the rate
cuts are going to be coming barring you
know whatever unforeseen thing happening
uh but we need to hold off as long as we
can because this is what's going to
happen to the economy if we don't now I
have a feeling privately Bessant would
agree with that maybe not we'll see but
Bessant understands the economy and he
understands that the rates have to come
down for us to refinance the debt but it
also runs the economy hot it is
essentially inevitable that it's going
to drive inflation and so The card that
Trump and maybe Bessant are keeping in
their back pocket is no, no, no. If you
let me run the economy hot like that,
I'm going to grow our way out of this.
And it it's you're playing a game of
chicken. And so that's where I'm like,
it this does not feel like two rational
adults who are like, hey, uh, I want
this, you want that, we disagree. This
feels like two people where it's like we
both know the rates are coming down and
so still like we're going to privately
remain so antagonistic towards each
other that we can't even like
>> give each other the wink to be like bro
chill like this is coming. Um, so
anyway, that's where my read of this
situation is. And I am not a mind
readader, so I don't know that that's
true. But when the way that I approach
the world is always as a writer and I
say, "What would need to be true for
this character to be acting like this
>> and for Powell to not be back channeling
to the Trump admin and saying, "We
understand that that debt can't be
refinanced at those levels. We
understand that. So you guys have to
give us breathing room. You have to let
us drive this decision-m
>> uh in terms of timing and things like
that because we have an insanely
difficult job to do.
>> Um and then Trump obviously is not prone
to being reasonable. He's prone to just
pushing until he gets what he wants. Uh
ought to be saying, "Yeah, I get it."
And Bessant should be whispering in
Trump's ear saying, "Listen, you need to
hold off on this as long as we can." Um,
it's possible, again, as a writer, it's
possible that both Trump and Besson are
in the just, well, we'll grow away way
out of it, and their behavior would
remain consistent. Pal's behavior,
though, only makes sense when I'm like,
this is a guy who's mad. And so, he's
just going to be stubborn. He's going to
delay. He's going to push it off. He's
not going to signal.
>> Are you thinking that Pal should have
lowered rates sooner?
I think Powell should be communicating
to the Trump administration that he's
obviously going to lower rates and that
they don't need to keep hammering him.
>> We don't know that he's not doing that
though. We just know that Trump isn't
excited is Trump isn't happy about the
pace in which he's doing it.
>> I have a base assumption that there
would be signaling to the public that
those conversations are happening and
there's not. There's no signaling of any
kind. So now he may again what could be
true he may be thinking I can't even
signal that because that's going to
signal something to um
>> the
traders for lack of a better word not
traitors traders
>> uh who are then going to move in the
stock market too rapidly. Yeah, but when
I look at how these two interface with
each other, it isn't that.
>> All right, let's start at the beginning
cuz we came in on this through DOJ
threatening an investigation based off
of the renovations. Do you think there's
any
>> We came into this long, long ago when
Trump was saying you need to lower rates
and they were saying, "We're not going
to lower rates. Inflation is fine even
though inflation was 50% over uh what
they want." Sorry, that's Trump banging
that drum. Inflation is fine even though
it's 50% over. Um, but Powell
having made the move for the Democrats
to lower interest rates when he
shouldn't have, coming into the
midterms, locked in Trump's mind that
this is a guy that does this stuff for
political reasons. They start battering
each other, I'm sure, publicly and
privately. Then over time, Trump has
been just like pressure, pressure,
pressure. Powell has, in my opinion,
rightly been slow to do it, but now
obviously has to his hand is forced
because of fiscal dominance. He's going
to have to lower the rates.
>> So the fact that these guys are getting
in this big of a pissing contest is
my only read is that either Powell is
signaling it to him privately
>> and Trump is just like, "Fuck you.
Either do it now or I'm just going to
keep smashing you." which is all too
possible or they're continuing to have a
pissing match. So, we're now up against
what are my uh biases? What are my
proclivities to how have I mapped the
human mind? How have I mapped Jerome
Powell? Jerome Powell is a political
animal. Uh Jerome Powell, like so many
people, just has a blanket disdain for
Trump. And even though it is
self-evident that he's have he's going
to have to lower the rates, he's going
to make this as um difficult and drawn
out in terms of the um comments that he
makes about Trump publicly so that
tensions between the two remain as high
as humanly possible. I understand that
this is incredibly complex and I hope
that I have sufficiently confessed that
we're now just up against how I map the
world and how I map Powell. But if I
were in this situation, given that I
know I have to lower rates, I'm not
going to make this a political pissing
match. I'm gonna say things like, um, I
understand Trump's drive to want the
rates to come down because we have a
wall of debt coming at us at the Fed.
We're obviously looking at that. We're
going to be very thoughtful. We're going
to be very careful. We have a balancing
act to do. I'm certainly uh I want to
work with the administration on it.
None of those words are being said. Now,
>> please understand, Trump speaks like a
lunatic. If I've not made that clearly
enough, the grab him in the [ __ ]
methodology of everything I [ __ ]
hate.
>> Mhm.
>> But, nonetheless,
that's where Trump's at. So, I
admittedly have written off Trump. He's
never going to be reasonable. So, my
only hope is that I can get some
reasonleness out of Powell.
>> I I think that's a crazy assertion. I
think at the beginning first and
foremost Trump appointed Jerome Powell
so this is his appointee Barack uh
Hussein Obama was the first time Jerome
Powell was hired Donald Trump hired him
again Joe Biden renewed him and then now
Trump is his fourth so that's the four
administrations he's talking about Obama
Trump Biden Trump um in 2022 when he was
uh presiding for the um rep when
Democrats were in power that was when he
was hiking rates that's not when rates
were dropping so this the narrative that
you're saying that He dropped rates for
Democrats but wouldn't do it for
Republicans. Makes it seem like he's
like cutting political favors. But in
2022,
>> pause. Let's take this one step at a
time.
>> Uh he hiked rates. Do you know what our
inflation rate was?
>> 25% over the four years. Yeah.
>> Do you do you know how economically
devastating that is?
>> That that's like unprecedented.
Uh you are spiraling out of control. We
have done untold damage to the economy.
>> Uh Trump is horrific at spending. Biden
was horrific at spending. Call them
equal. I'm not signal singling out
either one. I don't think Trump is good
with money at all in terms of he has an
absolute willingness to spend.
>> But you've got Powell raising rates in a
moment where if you don't, you go off a
catastrophic cliff immediately. It it
just you absolutely cannot do that. So,
of course, now honestly, we should have
raised rates even further. Biden was
never going to do that. So, he was all
too happy to just let inflation keep
running. Trump came in and while he
isn't doing it through fiscal
responsibility, he is doing anything and
everything that he can to reduce
inflation in other ways.
>> But yeah, Biden or Trump don't have
power to reduce or increase inflation
because the Fed Yeah. Confed
>> of course they do. So this is where you
have to think of the economy as a
biological organism. So yes, the Fed is
hugely influential in terms of what they
do with the interest rates.
>> Are we still talking about inflation as
a as defined by the percentage of the
money supply?
>> Uh inflation is definitionally inflation
of the money supply.
>> Yeah. So if that's the case, the Fed is
the only people that control the money
supply, right?
>> Thank you for making me be very precise
with my words. So
>> when people think of inflation, they
think of it as prices going up.
Technically those are two separate
phenomena. Inflation is as you just said
increasing the money supply.
>> Prices going up. That is a thing that
can be influenced by other means other
than just uh economic policy.
>> So you've got Trump doing a whole bunch
of things trying to get the cost of
things down, including invading
Venezuela. Mhm.
>> So there are all kinds of things that he
can do to make the average person at
home go ah inflation as I the average
person think of it as prices going up.
He has had a tremendous impact on that.
So Trump is doing other things to try to
drive that down.
>> Powell is only responsible for
>> the actual monetary policy of the
government. And so Powell is going to go
in and pull his levers. Now again, to be
abundantly clear, I think it's good that
Powell has held off as long as he can, I
have a feeling that the reason that this
is escalating in the public as much as
it is and getting down to the
indictments is a uh Trump is unhinged
and just bullies everybody.
>> And so he's just trying to bully Powell
to do it faster because that suits his
whims. That's being a little unfair, but
nonetheless, if you read the situation
like that, yeah, I think that's
completely reasonable. So, in terms of
my read on Powell, it's pretty minor.
I'm more in Pal's camp than I am Trump.
If you were going to force me to pick
who's your champion in this fight, Pal.
Powell is handling himself far better
than Trump.
>> So, I don't want this to seem like
anything other than a very simple
statement. If you strip the politics out
of this, this situation doesn't look
like this. I don't think you have this
situation the way that you're having it
without ego. This is um political
theater. This is ego of two
extraordinarily powerful men that just
don't want to seem weak. They both want
to seem like It's like when God, this
has been in countless movies. Um,
somebody is desperately tired and they
want to sit down and their boss tells
them to sit and they keep standing long
past when they want to stand because
they don't want to look like they're
just doing what their boss tells them.
So then finally they'll sit down and
they'll say, "Hey, I'm not sitting down
because you told me to. I'm sitting down
because I want to." And it's like Jesus
Christ. Sure. Look, we've all fallen
into that trap.
>> So I'm just saying that trap is real. I
think that uh Powell is in that trap.
Powell is by far the less of the uh my
problem is far less with Powell than it
is with Trump. But seeing this level of
dysfunction makes me very sad. Full
stop. Now I think you've made your
position. You think I'm misreading Pal.
You think I some variation of this is
exactly what he should be doing and
Trump is bullying him and he needs to
stand up.
>> Yes. Because I think charges being
thrown at the Fed chair because they're
not raising the interest rates as fast
as you like isn't okay. And I think that
Trump just trying to bully everybody,
including a federally Senate confirmed
appointed like government official.
There should be a line somewhere.
>> What do you think my stance is on that?
>> I think that you don't like it, but I
think that there's a lot of they both
need to and they both need to. And I
think Trump is the one that is kind of
pushing Pal to this position. I don't
think Pal releases that statement that
he's being investigated if Trump doesn't
threaten the DOJ over him. I don't think
Pal even says anything about the
administration or politics. if Trump
isn't calling him too slow, uh, Fed pal.
So
>> now, what did you hear me say in the
last 10 minutes about Trump's current
strategy
>> that Trump is the grab him by the [ __ ]
strategy? You don't condone it. You
think it's terrible. And although that
that makes you sad, you gave a pope on
him. You're hoping that Pal could be the
one that signals that he's trying to
work with the administration.
>> Very, very close.
>> Okay. So yeah, I think that what in
terms of policy,
>> you push off the lowering the rates as
long as you can, Trump should absolutely
stop pushing. And I would like to see I
if I map why this is being escalatory in
the way that it is, it's a pissing
contest. And I'm just saying I'd really
like to stop seeing pissing contests
everywhere I turn.
>> Agreed.
>> So full stop. from the chat. People are
asking why you're playing both sides so
much. Uh, is there a reason that you
don't just directly say this person's
right, this person's wrong in my view?
>> Yes. And I really hope for your guys'
sake that you don't live in that world.
>> Eric, could we get three set?
>> You want to be in a position where you
understand the fullness of how people
end up in the traps that they end up in
precisely so you can avoid being in that
trap. I will often once it gets down to
decision-making time, I will speak in
binaries. I will speak in this is [ __ ]
or this is amazing. Even though nothing
is ever [ __ ] or amazing, it's usually
just a whole bunch of trade-offs and
you're trying to figure out which one
has less of a trade-off. But when I'm
trying to map a situation, I'm trying to
lay out all of the things that are at
play. So I don't become, this is going
to be old language, but I don't become a
mimograph of a mimioraph of a mimioraph
of a mimioraph where you're just
constantly thinking in these binaries
all the way down and you don't actually
understand what's happening. And I think
most people do that. I think most people
steer by emotion and they make really
[ __ ] stupid decisions as a result of
that. To understand how I parse the
world, I am constantly looking at where
I in my own life am getting trapped in
my emotions. I am extraordinarily
distrustful that other people aren't
trapped in their emotions. I think they
all are. And so when I'm looking at a
situation like this where there is such
obvious exit ramps from the uh political
bickering, then I start going, okay,
what are the emotions that these guys
are tied up in? Now, if you want to come
after my position, the obvious answer
is, okay, hold on. because Trump acts
the more lunatic. You just give him a
pass and now you're focusing your energy
on Powell. And I will say to that, that
certainly isn't what I was uh attempting
to do. I think Drew hated my framing.
And so we ended up zooming in on
something that made it sound like I was
defending
uh or saying that Pal was the one to
blame here, which I'm very much not
saying. Um what I'm saying is this is
human nature. This is how humans
collide. They get in these emotional
states and they cannot pull themselves
out of it. Uh but it would be ve a very
fair critique of my stance to be
that I am so hopeless that Trump will
ever act in any way other than the way
that he does. Uh that I'm often just
like, okay, yeah, well, Trump's doing
that thing. Is there please an adult
somewhere in the room that can um
deescalate this? So anyway, that would
be certainly a fair criticism. Uh beyond
that, I have said all the words. Pal
should be as slow as humanly possible to
lower rates. In the real world, we need
to be raising rates. Trump is being a
bully. He absolutely should not be
pursuing Powell with a federal
indictment. That is [ __ ] insane. Um
and at the same time this is what
happens when people get stuck in