01:15 Sam Stein Hey everybody, it's me, Sam Stein, Managing Editor at The Bullork. 01:17 I'm joined by Catherine Rampell and JVL for a fresh What the Hell is This? 01:22 newscast on Sunday night. 01:24 Feels like we can't go a weekend without something dramatic dropping. 01:26 In this case, we have news reports that the Justice Department is opening a criminal investigation into the 01:34 The Fed, the Federal Reserve, apparently, and I'm just going off of what we have from the reports because we don't really have much else. 01:40 They're looking into testimony that Jay Powell, the chairman of the Fed, gave to Congress in which the allegation is that he may have lied about the renovation costs for the renovated Fed headquarters. 01:52 Powell put out a remarkable video, uncomfortable, but remarkable. 01:57 We're going to play it in one second, but quick reactions to the news before we play it. 02:02 Catherine, I'm going to go with you first because you write about and live in this world, and you've talked to Jay Powell. 02:08 Just how significant is this? 02:11 Catherine Rampell It's huge. 02:12 Look, Donald Trump has been trying to politicize the Fed for years, including since he appointed Jay Powell himself to the chair of the Federal Reserve during his first term. 02:23 And Powell is being punished not for whatever crime he's alleged to have committed here, which is probably completely made up, but for the worst crime of not doing exactly what Trump wants. 02:37 Trump does not recognize that the Federal Reserve is supposed to be politically independent. 02:42 has been politically independent for decades and relies on political independence to do its job, which is to maintain stable prices and maximum employment. 02:52 Donald Trump thinks that it's his plaything and that the Federal Reserve should cut rates if he says cut rates. 02:58 And Jay Powell did not do that or did not shepherd the fellow members of the Fed to do that when Trump wanted him to. 03:07 And so now he's being punished for it. 03:09 But, like, it's bizarre. 03:11 The timing on this is bizarre. 03:12 Trump has been railing about Powell, you know, not doing his bidding for years now, again, since his first term. 03:20 And now Powell's on his way out. 03:23 Like, his term as chair ends in a few months. 03:27 Why bother doing this? 03:28 It's not like this is going to pressure Powell to change course, you know, in terms of interest rates, if he even could. 03:35 JVL No, if anything, it would be the opposite. 03:36 Catherine Rampell But I just mean he's going to be gone anyway. 03:39 Trump gets to put his own guy in. 03:40 This is just going to... 03:42 I mean, I can't imagine what markets are going to look like tomorrow. 03:45 They're going to go nuts, probably. 03:46 But this is just going to harden the resolve of anyone in Congress who might be willing to stand up for Fed independence, which... 03:57 Like maybe sounds like a fantasy, but they have 401ks, too. 04:01 And their constituents and their donors are not going to be happy if we have hyperinflation because Trump politicized the Fed. 04:09 Sam Stein All right. 04:09 So why, JVL? 04:10 Why now? 04:12 JVL I mean, first of all, it is, I think, instructive that nobody... 04:17 Nobody has bothered to say this isn't Donald Trump. 04:21 Pam Bonney is the attorney general and she has total independence from the president. 04:25 So our law enforcement functions like that's all just broken. 04:28 And we all assume that, of course, the attorney general would never attempt to indict somebody that the president hasn't told her to do. 04:35 We've seen the DMs, right, that he posted his public things. 04:40 I mean, why would he do it now? 04:42 I mean, look, he invaded Venezuela to distract people from all the stuff about his friendship with the notorious pedophile ring leader Jeffrey Epstein. 04:52 And then he talked about invading Greenland to distract everybody from Venezuela. 04:57 And then he had his masked secret police execute a mother in Minneapolis to distract them from the Greenland talk. 05:04 And now he's attempting to jail the head of the central bank 05:09 distract them from that i mean this is just what he does right it's i'll just say that that happened in nine days that's so nine days because this is i mean we've seen this for a decade this is what he does and it is one one battle after another and we're recording this on sunday evening and i promise you by by dusk tomorrow there will be something else 05:34 Sam Stein Yeah. 05:35 Yeah, no, I don't doubt it. 05:37 It is a bit wild to see it happen in real time. 05:40 I totally had the same reaction as you did, which is no one even, you know, did a double take that the DOJ would do this, right? 05:47 It's like, oh yeah, of course. 05:48 And no one even really believes the pretext for the investigation. 05:54 Everyone is just like, oh yeah. 05:55 Catherine Rampell Yeah, Trump has had it out. 05:58 Yeah, Trump has had it out for Powell for a while. 06:01 You know, they've been like ginning up this 06:03 A fake allegation about misuse of funds or whatever for a renovation, because, of course, the only thing that Trump cares about is renovations, as we've learned. 06:15 And, you know, I'm sure he's never had a cost overrun in his life when it comes to what type of marble you have to replace or whatever. 06:23 JVL I'm sorry, we got to move on to like the actual substance of this. 06:27 Sure. 06:27 But the idea that Donald Trump is attempting criminal prosecution because the general idea is here that the scope of this renovation project got too big. 06:42 Donald and that Powell lied about it. 06:44 All right. 06:45 Trump is the guy who said the East Wing won't be touched. 06:49 just a couple of weeks before he demolished the entire East wing of the white house and who then fired his own architect. 06:57 Also the cost has risen. 06:59 Wouldn't make the bigger, wouldn't make the ballroom bigger. 07:04 Catherine Rampell Yeah, I know. 07:05 This is like a, yes, this is a failure of imagination. 07:07 Like the only thing that Trump can come up with for like what this guy must have done wrong is something related to renovation. 07:13 Yeah, exactly. 07:14 And you're missing the funnier part, which is the cost. 07:17 Sam Stein Confession. 07:18 And the cost of the East wing has in his public utterances has gone up. 07:21 It was like, Oh, it's going to be 200 million. 07:23 It's 250. 07:24 Now it's 300. 07:24 And we might actually have to raise the West wing too, to match it. 07:27 So it's like, you know, it is a confession. 07:30 Let's move to the substance of it. 07:31 And let's, let's focus first with Powell and his response, which I referenced up top sort of this, 07:37 I don't want to say uncomfortable, but there was a little bit of awkwardness to it. 07:41 He's not really probably used to these types of settings. 07:44 But it puts out this video, and it is quite remarkable for what it says both about him and about everyone else who prior to him took a different route. 07:52 I want to talk about that after we play the video now. 07:56 Jay Powell On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. 08:08 That testimony concerned, in part, a multi-year project to renovate historic Federal Reserve office buildings. 08:16 I have deep respect for the rule of law and for accountability in our democracy. 08:21 No one, certainly not the chair of the Federal Reserve, is above the law. 08:26 But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure. 08:33 This new threat is not about my testimony last June, 08:37 or about the renovation of the Federal Reserve buildings. 08:40 It is not about Congress's oversight role. 08:42 The Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project. 08:50 Those are pretexts. 08:53 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. 09:05 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. 09:17 Sam Stein All right. 09:18 So look, maybe he's like I have four or five months left. 09:24 I don't have anything to really lose here, right? 09:26 Like my tenure is going to end one way or another. 09:29 And he feels a little bit liberated because of that. 09:32 Maybe he just doesn't give a shit anymore. 09:34 But I can't help but watch that video and think, man, you know, here's someone who understands that you can't really just acquiesce. 09:41 You can't just go silently. 09:42 You can't play by the traditional playbook, which in Washington would have been. 09:46 We're the Fed. 09:47 We don't talk. 09:47 We don't engage. 09:48 We don't fight back. 09:49 We're not going to pick a war with the White House. 09:52 And our colleague Ben Parker made the very astute comparison to Chris Wray, who basically took his ball and went home before he could get fired. 10:00 Didn't even make Donald Trump fire him. 10:03 And I appreciate Jay Powell for doing that. 10:07 I mean, who knows where this goes? 10:08 I can't imagine this is a fun predicament for him to be in. 10:12 But God bless someone for just calling it like it is and saying, you know what, I'm not going to stand by and do the norms thing because we're not in a normal situation. 10:21 Catherine Rampell I mean, I think he is doing the norms thing in the sense that he is standing up for his institution, which is what we have expected of Federal Reserve presidents since Paul Volcker. 10:33 You know, he wants to go down as Paul Volcker and not Arthur Burns. 10:37 is a former Fed chair who notoriously acquiesced to pressure from Richard Nixon and LBJ to keep interest rates lower and as a result contributed to the stagflation that, you know, basically destroyed the U.S. economy in the 1970s and destroyed Jimmy Carter. 10:54 Carter's presidency, you know, or his reelection chances as well, even though, you know, Jimmy Carter is deserves credit ultimately for helping fix the problem by appointing Paul Volcker. 11:06 Paul Volcker came in, did some really painful things, including 11:11 jacking up interest rates to sort of win back the credibility of the Federal Reserve, that they really cared about inflation, that they were willing to do what it took to administer this really bitter pill to the U.S. economy in order to save the U.S. economy. 11:27 to get inflation back under control. 11:29 And it caused a painful recession. 11:33 And it, again, destroyed Jimmy Carter's chances of reelection. 11:39 But it got inflation under control. 11:41 And ever since then, the Fed has been able to credibly say, you know, we are not going to let... 11:47 Prices spin out of control. 11:49 Price growth spin out of control. 11:51 You can trust us. 11:52 We are willing to do the unpopular thing. 11:54 We are willing to do the politically inconvenient thing because we know it'll be better for the U.S. economy. 12:02 Everyone wants to be Paul Volcker. 12:03 They want to be the statesman who takes the tough stand because they know it's the right thing in the long run, even if it makes them the most hated person on earth. 12:12 Sam Stein I wish everyone wanted to be Paul Volcker. 12:15 I don't – maybe a lot of people do, but I look at – who's the guy who heads Paul Weiss? 12:22 Whatever the hell his name is. 12:23 I know who you're talking about, yeah. 12:25 I look at the presidents of these universities that cut deals. 12:27 I look at media moguls who have tons of money and just did not do something even remotely like this to say this is extortion or this is – 12:35 I don't know. 12:36 Someone trying to bend me and break me. 12:38 Yeah. 12:38 So go ahead. 14:47 JVL Right. 14:48 I mean, Chris Ray told himself, I'm I'm not going to make trouble here because I have so much respect for I don't want the FBI to get caught in the middle. 14:58 I want to preserve the integrity of the institution. 15:01 And I appreciate that. 15:04 I think that's clearly a misunderstanding of the situation and a misunderstanding of what is actually in the best interest of the institution. 15:11 But it's one thing to misunderstand that in the early January before Trump is sworn in. 15:17 You know, it's another thing to be sitting in 2026 having seen what we've seen and do that. 15:25 And that's why, if I can just say, though, because this is something I really want to get Catherine's 15:31 view on here. 15:32 So I am slightly obsessed with the question of what happens if we win somehow? 15:39 Like what happens if it's 2029 and we have, whether it is Nikki Haley or Gavin Newsom, but we have a normal liberal person, liberal, not meaning not illiberal as president of the United States. 15:54 And I think that what Chairman Powell understands is that there's an enormous trap here, which is that if he, whether he is forced out or not, 16:06 If he is persecuted here and then he's replaced by a political hack like Kevin Hassett, who I think is like the odds-on favorite to wind up as the next chairman of the Federal Reserve, a guy who is... We'll see. 16:17 Catherine Rampell We'll see. 16:18 JVL We'll see. 16:19 But I mean, certainly... Then you wind up in this trap where, well, can the next president remove Kevin Hassett or isn't that... You know what I'm saying? 16:27 Like you wind up in this vicious circle. 16:29 So if you get a political hack in the job and you've broken down and turned the Fed into a partisan operation... 16:34 Then even the act of fixing it damages it. 16:38 Right. 16:39 And he's trying to avoid that. 16:41 I mean, he's trying to really have a fight here. 16:44 I think part of this is meant to stiffen the spines of Senate Republicans and try to get them to hold the line so that they don't wind up approving because they will have to confirm that. 16:57 somebody who's a political hack coming after him. 17:00 So I think that's part of what his calculus is here is he's trying to to get the Fed out of this future trap that Trump is laying for it. 17:09 Catherine Rampell Yeah, I think that's a very astute analysis. 17:12 And I think Trump doesn't realize how much what he's doing right now is likely to backfire because what's going to happen here. 17:20 Well, let me back up. 17:22 I interviewed Jay Powell like 10 days after the 2024 election. 17:27 This had been scheduled long before that. 17:29 It was a public event in Texas. 17:31 And of course, Donald Trump had just won. 17:35 There was a lot of fear that Trump might do something to try to lean on the Fed again. 17:41 And I asked Powell a few different questions about, you know, he was clearly extremely uncomfortable talking about any possible tension with the president, that you can read that in his body language. 17:54 You can see that. 17:55 And other times he had been asked, like, 17:59 Would you, you know, if can the president fire you? 18:01 And he would just be like, no, and that's it. 18:03 And he like wouldn't elaborate. 18:05 So this was a really awkward conversation in some ways. 18:09 But I got to ask a lot of follow up questions, which was nice because usually in these press conferences, you can't really do that. 18:14 In any event, so I asked him some questions like, why does Fed independence matter? 18:20 Because I knew he wasn't going to say anything to create beef with the president if he didn't need to. 18:26 Because he just wants to stick to his knitting and do his job. 18:30 He's a statesman. 18:31 Anyway, and so he talked a little bit about why Fed independence matters. 18:35 I asked him. 18:37 was there a time when the Fed was not seen as credibly independent? 18:41 And what happened? 18:42 And he said, yes, when I was in college in the 1970s, which is the example I was just talking about when Arthur Burns let everything go to hell. 18:51 And then he added, but you know what? 18:55 Something to the effect of, 18:57 Lawmakers in the Senate and the House know that, know that Fed independence is really important. 19:03 And he basically said, they have my back. 19:05 He didn't say it in exactly those words, but that was the gist of what he was saying. 19:09 None of this, we shouldn't really worry about any of this because the members of Congress will protect the institution. 19:18 And in the year plus since that interview, I have been wondering, was he correct? 19:24 about the fact that lawmakers would have his back. 19:28 The first Trump term, it was true that Republicans in the Senate, because the Senate has to confirm Fed members, they would not get through some of Trump's very worst picks, including like Stephen 19:43 Moore, who was never formally nominated, but he was supposed to be nominated. 19:48 Herman Cain, Judy Shelton. 19:50 There were a bunch of really bad choices who would have politicized the Fed. 19:53 And Republicans, you know, found the spine then to not let them get through. 19:58 But like a lot of those people have left. 20:00 And it does seem like senators have, you know, the whole Republican Party has capitulated. 20:05 JVL They confirmed Robert F. Kennedy to lead HHS. 20:08 They'll do anything. 20:10 Catherine Rampell Exactly. 20:11 So there's a long wind up to saying I have been really pessimistic about that. 20:16 But now that Trump went out of his way, said, like, try to punish Jay Powell when Powell is on his way out. 20:25 You know, Trump is, as you alluded to, Trump is about to name who he would like to succeed Jay Powell. 20:32 And there's this big question about, like, is he going to appoint Kevin Hassett, who's like a known sycophant? 20:36 Is he going to appoint someone who might be a little bit more normal, who the markets trust and will be seen as more independent? 20:42 This act is going to have such a huge reaction. 20:50 Tom Tillis has come out. 20:51 Sam Stein Let me get to that. 20:53 Let me pick up on what you're saying. 20:56 It's one of these classic Trump situations where... 20:58 The guy does step on rakes. 21:00 Let's just be honest about it. 21:01 He's not going to make life easier for himself. 21:05 If he had just been patient for three or four months, he might have had a much easier hand to play with the sycophane he wants to put in there than he does now. 21:13 That's just a fact. 21:14 Secondly, we do have a Trump comment about the situation, according to NBC News. 21:18 He says, quote, I don't know anything about it, but he's certainly not very good at the Fed and he's not very good at building buildings. 21:24 I believe Trump. 21:25 He doesn't know anything about it. 21:27 How could he not? 21:28 All right. 21:29 Putting that aside, Tom Tillis, which you referenced, I think this is a very valid point. 21:33 So Tillis comes out there. 21:35 Tom Tillis also retiring, we should note. 21:38 He says, and this is just a tweet, we could put it up if, yeah, there it is. 21:42 If there are any remaining doubt about whether advisors, there's so much in this tweet to unpack, whether advisors within the Trump administration are actively pushing to end the independence of the Federal Reserve. 21:51 I'm going to get to that. 21:52 There should now be none. 21:54 It's now the independence and credibility of the Department of Justice that are in question. 21:57 I will oppose... 21:58 The confirmation of any nominee for the Fed, including the upcoming Fed chair vacancy until this legal matter is fully resolved. 22:03 OK, to start with, advisors, give me a break. 22:06 JVL If only Comrade Stalin knew what these terrible people around him were doing. 22:11 Sam Stein You don't have to do that, Tom. 22:12 Tom, you don't have to do that. 22:14 You're retiring, Tom. 22:15 You don't have to play these games. 22:16 Come on. 22:17 And then also, it's not the independence and credibility of the Justice Department there in question. 22:22 Just now? 22:24 We're only hitting that point. 22:26 There's a question. 22:27 All right. 22:29 Putting the ridiculous throat clearing aside, there is some significance to this statement. 22:33 I'm not like a total student of the Senate, but my old colleague, Burgess Everett is. 22:39 And Burgess over at Semaphore notes, and I'm sure they have ways to get around this so people can get in my mentions and say it's not a big deal. 22:47 But the banking committee is 13 to 11 Republicans. 22:52 Tell us if he says no to these things, it's going to be 12-12, which means you can't report a nominee out of the committee, which means that the majority leader, John Thune, will have to get it to the floor. 23:02 He can do that by pulling the nominee straight to the floor. 23:06 But according to Burgess, at least... 23:09 If you do that, it's a 60 vote threshold for confirmation, not a 50 vote threshold for confirmation. 23:14 Again, I haven't had time to fact check this, sue me, kill me, whatever. 23:18 But I trust Burgess. 23:20 And to the larger point, Catherine, there are going to be, and I'm going to dispute a little bit, there are going to be elements of pushback. 23:27 And I just think back to our boy E.J. 23:29 Antony, who was supposed to run BLS by now and never got a hearing because he was a clown. 23:35 And clearly enough, Republicans in the Senate said, no, we're not going to we're not going to stomach that vote. 23:40 So there is a possibility, JVL, that we get a little bit of, I don't know, possible resistance. 23:48 I don't know. 23:50 Catherine Rampell I think they care more about screwing up the economy. 23:52 Sam Stein But yeah, you care more about that. 23:53 Yeah, that matters. 23:54 Catherine Rampell No, I think I think they do. 23:55 I think they do. 23:56 JVL Yeah, I mean. 23:58 I think a lot of that resistance is market dependent. 24:01 And if there is like, you know, if the market opens down 500 points tomorrow morning, that would be bad and would concern people. 24:11 But if it doesn't, if the market shrugs over this the way it has over a lot of the Trump stuff. 24:18 Maybe people think to themselves, well, what am I going to do? 24:22 Wall Street is fine with it. 24:25 I have a real question about this. 24:27 Can I have like 45 seconds here to put a theory to Catherine? 24:32 Catherine Rampell Sure. 24:33 I'm sorry. 24:34 I'm listening, but I'm also looking at futures markets as well. 24:37 JVL So I have a theory about Trump and real estate and his approach to interest rates. 24:46 And all real estate people want interest rates low. 24:51 Always, right? 24:52 They are a very distinct class of economic animal. 24:56 And for them, ZERP, zero interest rate, is always the best possible thing. 25:03 And that's different from like finance guys. 25:06 And so when you're in the world of finance people, they understand the bond market. 25:10 They understand sort of the importance of debt and credit markets and how all those things work. 25:17 And so they are not universally in favor of low interest. 25:21 They're much more concerned with sort of broader health of the market. 25:25 So a real estate guy like Trump is always going to think the interest rates should be super low. 25:32 Other people will think, well, that really depends on the other the other signals you're getting about the economy. 25:38 The tech guys. 25:41 I think are more like real estate guys, because for them, access to capital is the most important thing. 25:48 And when you're in Zerp land, the way we had been for, what, 12 years, then it becomes very, very easy for you to get as much cash as you want for whatever cockamamie idea you have. 26:01 I'm going to go to Mars. 26:02 I'm going to build the fifth pet food website. 26:07 I'm going to, you know, all the, we're going to have a thing that delivers pizza, slice line from Silicon Valley. 26:16 And it is the tech companies which are currently propping up the market. 26:22 And so if tech is basically okay with lower interest rates, uber alice, no matter whether or not it causes stagflation, because it's good for their little section of the world, and they're able to prop up the market in the short term so they're not panicked about this, then maybe the market signal is a little muted. 26:43 This is like my grand, I feel like the guy from Always Sunny in Philadelphia, like, you know, pointing at all the Pepe Silva. 26:49 Sam Stein Pepe Silva here. 26:50 JVL Do you have the red strips of ribbon? 26:53 On a scale of 1 to 10, is that like a 14 of crazy? 26:59 Catherine Rampell I think you are basically right in your analysis of which industries want what. 27:07 in the sense that, yes, real estate guys want zero rates. 27:12 If you are a company that is basically entirely dependent on future cash flow, because you have no cash flow now, yes, you want very low interest rates. 27:24 As an aside, I remember like... 27:26 when the Fed was debating whether to raise rates during COVID, there was a block in my neighborhood where I was like, none of these establishments should still exist. 27:36 They only exist because money costs zero. 27:41 There was one place where you could... 27:44 They would throw you ice cream as a baseball. 27:47 And it was like, it made no sense as a business. 27:49 Anyway, there were a lot of businesses that made no sense for a while. 27:51 Movie pass. 27:52 JVL Movie pass. 27:54 When they're interesting to zero, you get the movie pass economy. 27:57 Catherine Rampell Right. 27:57 So like a lot of bad ideas can persist. 27:59 JVL Movie pass is back. 28:00 Did you see that last week, Catherine? 28:02 Catherine Rampell I did not. 28:04 JVL It's back. 28:05 You're trying to basically combine movie pass with polymarkets. 28:08 Great. 28:08 Catherine Rampell There you go. 28:09 There you go. 28:10 JVL Everything's batting out. 28:11 Catherine Rampell A lot of poorly thought out ideas can persist, but also a lot of ideas that like, you know, are long run bets. 28:18 They, you know, which, which, yeah, which they are contingent on having very, very cheap capital. 28:26 And you are right that the Magnificent Seven, you know, these, these tech companies 28:32 mega cap stocks are propping up the market. 28:35 But there are a lot of other market participants out there who reasonably understand that this is like also very bad for the long run future of the economy if we have hyperinflation. 28:48 As an example, I'm not saying we're going to get hyperinflation, but I am saying that other countries where they have had central banks that were politically independent and then took away their independence, where basically the money supply gets put under the control of politicians, they have had hyperinflation. 29:04 Right. 29:05 Like you can look to I mentioned the example of the stagflation here in the United States in the 1970s. 29:10 But you could also look to like, I don't know, Turkey, Argentina, free Euro Italy, Venezuela, all of these places where the central bank is not credibly independent. 29:21 And you have all sorts of problems that are bad for every industry. 29:25 Sam Stein Whether we're talking about that. 29:27 Funny that you say that. 29:29 Our friend Jason Furman has this tweet saying, 29:32 Noting other countries where you've prosecuted or threatened to prosecute central bankers, many of which you just said, Argentina, Russia, Turkey, Venezuela, and Zimbabwe. 29:41 I think you had about four of those right there. 29:45 Yeah. 29:46 Catherine Rampell No, I mean, this is not an original thought to me. 29:48 The idea that central banks need to be independent or else you have very bad inflationary outcomes, there's like a huge, 29:57 whole ton of economic research that confirms this. 30:01 So the idea that like multiple people might be making this point, not a coincidence. 30:06 It's like, this is common knowledge. 30:08 JVL Catherine, do you have a percentage decline in the S and P tomorrow that would make you feel like that is an unambiguous signal? 30:20 Catherine Rampell Um, 30:22 An unambiguous signal of what? 30:25 JVL That the markets are spooked by this and they do not like it. 30:30 The markets are going, no, no, no, no. 30:33 Catherine Rampell I don't know. 30:34 Let me see. 30:34 That's what I was saying. 30:35 I was looking up markets. 30:38 They're down. 30:38 They're not down that much. 30:40 JVL Yeah. 30:41 I wrote a column about this after Liberation Day. 30:45 It was some crazy thing that Trump did on a weekend. 30:50 This is why I have PTSD over this. 30:53 I did a deep dive on percentage declines in the S&P at moments of inflection. 31:01 And so I was like, you know, well, if it's one and a half percent, that's one thing. 31:05 If it's three to five percent, that's another, et cetera, et cetera. 31:08 And then like we got to the next day and it was like one point two percent market was fine. 31:13 Nobody cared. 31:14 It was like stock markets don't care. 31:16 Sam Stein they just they're in hold on hold on that's because there's and this is my theory is that there's always like this ability to rationalize that things are going to be okay right and like this is what happens when trump goes after lisa cook and the case gets pushed and no one and she's not fired it's like well you know they won't actually do it and it's going to be in january and the scotus will take it up and they won't actually do it and you know you have liberation day the same thing it's like well you know the tariffs weren't that 31:41 bad. 31:42 And then you look at this. 31:46 And then you just read the New York Times article. 31:48 And if you read the article, I mean, it's just such thing gruel. 31:52 I mean, if I were a rational person reading that article, I'm like, oh, come on. 31:55 This is a joke, right? 31:57 They're not going to indict this guy. 31:58 They haven't been able to indict James Comey. 32:02 They haven't been able to put evidence for Adam Schiff yet. 32:06 They can't even get to the point where they're introducing an indictment against Adam Schiff. 32:10 I mean, this is just thin, thin gruel. 32:13 But in a way, that helps Trump, doesn't it? 32:15 Yes, that's my point. 32:18 He gets the headline. 32:19 The markets remain unrattled. 32:21 That's why I'm kind of an accelerationist. 32:24 Catherine Rampell Well, okay. 32:25 Sam Stein I mean, yes, a little bit. 32:28 You want to accelerate the badness? 32:30 Yes. 32:30 Just get it over with? 32:31 Rip the bandit? 32:33 Catherine Rampell Honestly, I've heard a number of economists almost rooting for... 32:39 some, if not a market crash, some very strong signal to chasten the administration. 32:46 They're not hoping a lot of people get hurt. 32:48 They're not hoping for a recession. 32:51 JVL To be very clear. 32:53 Catherine Rampell Right, right, right. 32:54 But the idea being that they want that signal to spook the administration so that the administration tries to rein in the tyrant. 33:03 Yes, exactly. 33:04 And I wanted to mention a couple of things about, like, will lawmakers show spines? 33:11 I think that they're more likely to oppose a bad pick for the Fed than they are a bad pick for HHS because there's money on the line and for the very same reason. 33:22 The Supreme Court has also been like kind of tying itself into knots over this Lisa Cook case, as well as the Rebecca Slaughter case. 33:33 So there are two different cases before the Supreme Court right now about whether the president can fire someone on an independent agency. 33:43 One has to do with somebody who was a commissioner at the FTC. 33:48 Yeah. 33:48 who was fired not for cause, but just because Trump said he didn't want this person. 33:56 It was Rebecca Slaughter and who was the other person? 34:01 Alvaro Bedorio, maybe? 34:03 Anyway, it doesn't matter. 34:05 So in any event... 34:08 He fired two people. 34:09 They sued and said, you can't fire me. 34:12 We are an independent agency. 34:13 And then he tried to fire Lisa Cook, allegedly, for cause. 34:18 And they're both before the Supreme Court. 34:20 And when the slaughter case was heard, I don't know, like a month ago, maybe, Kavanaugh even literally said aloud, like, is there a way that we can justify saying he can fire this person but not the Fed? 34:35 Yeah. 34:36 And in a previous footnote, there was also something saying when they said that like temporarily they could, you know, Trump could fire Rebecca Slaughter. 34:46 You know, it was like the, you know, as it worked its way through the courts, it was like, but this doesn't apply to the Federal Reserve. 34:51 Sam Stein This definitely raises the stakes for the Cook decision because if the Supreme Court says he can fire Cook, then he's just going to turn around and say, well, I have cause to fire Powell too, right? 35:00 Catherine Rampell Yeah, but I think that they're not going to. 35:03 Sam Stein I don't think they are either, but it does raise the stakes for SCOTUS here. 35:08 Catherine Rampell Yeah, but my point is that SCOTUS knows bad for markets, bad for economy. 35:13 Let's backfill, let's reverse engineer some principles. 35:19 Sam Stein You don't think they're textualists? 35:20 Come on. 35:21 Catherine Rampell What? 35:24 That allow us to get to that conclusion. 35:26 JVL That's crazy talk. 35:29 Look, I'm not a lawyer. 35:32 Catherine Rampell I'm not a lawyer. 35:33 Maybe there are some lofty principles that differentiate between these two different cases. 37:11 JVL We're going to wrap up in about three minutes. 37:13 I have more questions for Catherine. 37:15 Go, go, go, go. 37:16 Quick, quick, quick. 37:16 Yeah. 37:17 So you, you sort of blanched when I said, Kevin has it odds on favorite. 37:21 Do you, if you were just sort of laying odds, 37:25 would you pick him or the field? 37:27 And who else is in the field? 37:28 Because if it's not him, like, I mean, maybe it's somebody respectable, but maybe it's Dana White. 37:35 I mean... 37:36 Catherine Rampell I'm going to tell you what Polly Market thinks right now. 37:39 Okay. 37:40 So right now, it says Kevin Warch and Kevin Hesse, the two Kevins, are basically about the same odds. 37:48 They're both at... No, they're literally at the same odds since I started speaking at 41%. 37:53 They're each at 41%. 37:56 And then you have Christopher Waller, who's at 9%, and Rick Reeder, who's the dark horse, who's a black rock guy, who's at 3%. 38:03 Sam Stein Hold on. 38:04 What's Barron Trump at? 38:06 Just trying to get rid of it. 38:07 Catherine Rampell He does not. 38:09 He does not. 38:10 JVL Jared. 38:11 Catherine Rampell Sorry. 38:12 JVL Jared Kushner, chairman of the Fed. 38:15 Catherine Rampell Why not? 38:16 I'm like scrolling down. 38:17 You can see that, you know, there's like less than one. 38:20 No, no. 38:21 I stand corrected. 38:22 Barron Trump is on there. 38:24 Oh, my God. 38:27 He is at less than one percent. 38:32 And there's been... 38:33 Sam Stein I was totally joking. 38:34 I did not... No. 38:35 Catherine Rampell Anyway, yeah, he's at less than 1%. 38:37 He's a buy at 0.1 cents if you think he's got good odds. 38:42 Sam Stein Make some real money there. 38:44 All right, what are the other questions for Catherine? 38:46 Catherine Rampell Yeah. 38:47 JVL So you didn't answer my question before, which is that I didn't really ask it, but I am curious. 38:53 So if you do wind up with a thoroughly politicized chairman of the Fed and you wind up with a liberal as your next president, 39:06 Do you fire him? 39:06 Catherine Rampell You are obsessed with this question. 39:08 JVL I am, because I think this is like a question about everything. 39:11 Like, it's a question about the FBI director. 39:13 It's a question about do you keep... 39:15 The FBI director, you can easily fire. 39:18 I mean, you could, except that we've... You could easily fire. 39:21 Well, you could, but we've all said it's bad. 39:23 Oh, yes, but he fired the FBI director. 39:26 So he's already crossed that Rubicon. 39:29 Right. 39:30 But what I'm saying is old people like us were like, hey, it's bad. 39:33 You shouldn't fire the FBI. 39:35 It's a 10 year term. 39:36 This is the question was posed to Catherine. 39:38 So, Catherine, you answer it. 39:41 Like, what do you do? 39:42 Again, this is the question about all of the government. 39:45 Like, this is just, you know, the Fed chairman is just one little piece of it. 39:50 Catherine Rampell Well, the question, you know, like, will the Supreme Court let you is one other question about all of this. 39:55 Right. 39:57 Do you want to? 39:58 I think it depends on how bad the person is. 40:02 The Fed is an institution where there it's like the chair of the Fed doesn't actually set interest rate policy. 40:09 He is he or she is in charge of like fostering consensus among a bunch of the other people. 40:19 So, you know, in the case of the Fed, I don't even know that you would need to try to force out that person because there are enough other people who will like maybe behave themselves. 40:31 There are all of the regional Fed presidents who Donald Trump... 40:36 cannot displace. 40:38 They are appointed by completely separate bodies, and they have recently all been reappointed, so I think they're going to stick up for the institution. 40:48 There are other people who are on the Federal Reserve Board, and they will cycle 40:52 on and off. 40:54 So you may not need to face this difficult choice. 40:57 But if it's a really bad person and Trump has put in place a bunch of other really bad people in those Fed board positions, yeah, I think the most important thing you can do for the credibility of that institution is put in place good people. 41:09 who are politically independent, who take their job seriously, who are boring technocrats, who all they care about is trying to get the answer right. 41:19 They may not get the answer right all the time when it comes to like interest rates, but they are trying to get it right and they're not trying to do the bidding of a politician or a political party. 41:29 The only way you can get any of that to happen is by having the right people at the job who take their job seriously. 41:36 Sam Stein Preach, sister. 41:39 Okay, well, let's just summarize quickly. 41:42 We have an extraordinary announcement of an investigation, a criminal investigation into the Fed over what appears to be Jay Powell's testimony to Congress. 41:54 We have Tom Tillis coming out saying he will not vote for another nominee to any Fed vacancy until this is resolved. 42:02 We have the Supreme Court hearing Lisa Cook coming at some point this month, we believe. 42:07 We have the corruption of both the DOJ and now the attempted corruption of the Fed as well. 42:14 And we're all sort of waiting to see what the future markets look like in our market opening tomorrow morning. 42:19 Okay. 42:20 That was fun. 42:21 A little bit scary. 42:23 I'm tired of doing these on the weekend. 42:26 Last weekend was Maduro. 42:27 Now we got this. 42:29 It just never ends. 42:30 Any closing thoughts from either of you guys? 42:33 JVL Yeah, you and I look like we just crawled out from under a highway overpass. 42:37 Catherine is like super total profesh. 42:41 Catherine Rampell She's on TV. 42:42 Do you know that I just did three hours of live TV on? 42:46 JVL I do, because you're a professional. 42:48 I'm just saying, like, you're amazing. 42:49 And, like, Sam and I look like hobos. 42:51 Catherine Rampell Well, but they did my hair and makeup is my point, so I didn't have to gussy myself up. 42:56 They did it for me. 42:58 Sam Stein Well, I appreciate that, that you put in an extra hour for us. 43:00 That's very kind. 43:01 Catherine Rampell No problem. 43:02 No problem. 43:03 Sam Stein Hey, guys, for those who are watching, we appreciate that as well. 43:06 These are late nights. 43:07 They are hard work, but they're fun work. 43:09 We like doing it together with our community. 43:11 If you're not part of the community yet, join the community because we'd like to do this all together, get through these times together. 43:21 So become a Bulwark subscriber. 43:23 It's easy to do. 43:24 Substack YouTube, whatever. 43:26 Appreciate you guys. 43:27 Thank you very much, JVL. 43:28 Catherine, enjoy the rest of your weekend. 43:30 A couple more hours left. 43:31 Take care, guys.