The New Fed Chair Wants To Rewrite Inflation

本站添加: 2026-06-03

[00:00:00]So, as we talked about previously, he also wants to change how inflation is measured. So, he wants to take out the outlier. So, anything that's super high or anything that's super low, he wants to erase those and just focus on the middle on what and what inflation is.

[00:00:14]Now, currently, that would make inflation go down. It's not always the case because sometimes these low outliers help inflation go lower, but right now, you know, with oil and energy and food because of the oil, if you remove that, then it it takes inflation down to a more reasonable level. So, that is something he's really aggressively proposing.

[00:00:36]But also, on top of that is he does not want to use and this is probably the biggest thing is he does not want to use this recorded data. He doesn't want to use necessarily just the jobs numbers or the unemployment numbers or the inflation numbers. He wants to look at real world things. So, he wants to focus on what's actually happening in the economy versus all this data. So, what do you >> be nice?

[00:00:59]>> Well, yeah, he's saying the Fed is going to be let data-driven and more driven by what's actionable, what's actually happening, what people are feeling in the economy.

[00:01:07]>> That part is going to be refreshing, but again, it's it's going to be interesting to see what he deems that is, right?

[00:01:15]>> Correct. And well, so this is where it gets a little wonky, right? Like cuz we always have to think like is this somebody that Trump has appointed to do everything that he wants to do and is that kind of worse as belief as he's going to make the president happy or is he going to really run the Fed independently? And when he starts saying things like he's not going to look at the data, like I get that and I'm actually all for that, but what but what are then are you looking at, you know?

[00:01:38]Like what It can't just be a feeling.

[00:01:40]There has to be some data behind whatever you're deciding.

[00:01:44]>> Well, I I I don't I I don't think it's black and white when he says he's not looking at the data. I don't think he's never going to look at data. He's going to look at different data.

[00:01:54]>> Yes.

[00:01:55]>> It's still going to be data, but it might not be the data that's you know, presented. It's kind of like that unemployment number that I just said, you know, that the real data is um, you know, the 818,000 jobs that we lost last year. That that's real. So, you know, that that's significantly different than what was reported.

[00:02:17]>> But you can always find data that's going to follow your story. So, that is going to be interesting what data he chooses to use.

[00:02:25]>> Yeah, it will be. Yeah, and and I'm sure that's true right now inside the walls of the Fed currently, you know, I somebody told me once, there's so many economists that work at the Fed. Like I I I couldn't believe how many it was.

[00:02:38]It's it's a lot of people. It's a whole departments looking at the stuff, right?

[00:02:44]So, it'll be interesting to see how he unpacks all that and puts it back together.

[00:02:48]>> And I think the biggest thing that Kevin Warsh said on the last week was that Fed independence is not assumed, it has to be earned. So, he's saying, yes, the Federal Reserve is independent, but we have to earn that independence, it's not just assumed. So, what he said by that is they need to be hitting benchmarks.

[00:03:07]So, if they say, you know, they're going to hit this benchmark and they're going to hit that benchmark, and if they're not able to do it, essentially what he's saying is that they have to earn their independence by hitting benchmarks. He didn't go into if they don't hit them, but when you say they have to be earned by hitting them, there is a another side of that where if you're not hitting benchmarks, then maybe you're not as independent, you know, you should not be run as independently as perceived.

[00:03:32]>> The Fed does not do anything to impact unemployment.

[00:03:39]They do not, in my opinion, do anything that impacts inflation. They're reactionary on both accounts.

[00:03:46]And those are the two primary things that the Fed does. It it it's supposed to um you know uh you know have pricing, you know, not not run, right? I mean, I think >> Right, what they do prevents like the reactionary cuz when they see something they're always they're supposed to react to it. But if they react too late or too early, it's problematic.

[00:04:10]>> Right. Well, I can't imagine a scenario where they would react too early.

[00:04:15]But Well, that's what happens when they react too late is they're afraid of reacting too early and there's a >> see some a point where they might react late. But I can't imagine that they would react early only to create something.

[00:04:28]But on on the reacting late, I totally understand and that's for sure happened under Powell.

[00:04:35]Um you know, but once again, the when the economy shut down and you know, we we issued stimmy checks or when we went to war or when Trump decided to do tariffs, that had nothing to do with the Fed. He didn't call them up and say, "What do you think, guys?" Like he didn't you know, all they can do is sit back and try to figure out a way to you know, instill balance based on decisions that are being made. And and that's my kind of my point. You know, and and so um you know, and the the Fed is supposed to be independent on those things anyway. And that's why I'm saying, I don't believe that the Fed drives those.

[00:05:20]The Fed for sure does not have any policies that drive unemployment.

[00:05:25]>> So, you kind of glossed over the fact that the Fed independence has to be earned because that's like a huge statement from the Fed chair when the Fed's always been independent and now he's saying it needs to be earned if they're going to be independent.

[00:05:38]>> I actually agree with that.

[00:05:40]Like Like if you think about it, right?

[00:05:42]Like you know, there's no question that Powell has made that clear.

[00:05:48]And this is what one of the reasons why I like him. Like there's not very many people that can stand up to Trump, right?

[00:05:53]And he did. And he's like, "F you. You know, this is the way." And this is partly like if you're MAGA, you don't like Powell.

[00:06:02]You know, and you know, but I again, he's got a very very difficult situation. Don't forget, you know, Trump Trump cuts people right and left. Like everyone like we every single two or one or two or three weeks or every month we people we see people cycling through that administration.

[00:06:22]He's got to feel out of control here.

[00:06:25]And and so that's part of the reason why I give Powell a a high grade be able to stand in the fire when you got a a president that that is this persuasive, I guess is another one way to say it.

[00:06:39]You know, and what I don't want to see is Wurst do the it is, you know, is is agree kind of like what you want me to agree. I don't want to see that. I want to see somebody who stands in their own position and agrees with what they want. And maybe gets into a conflict with the with the president. That to me is independence.

[00:07:00]And that I think would, you know, we'll see. We will see. These are all just positioning political statements at the moment. I want to be a little bit more independent. Well, what does that really mean? I think Powell has done a masterful job of showing the world that he has is not beholden to Trump. Okay? So to me that means independence. But to some people that means he's not doing a good job. So so that's what I mean. You know, I I I think it would be great to see, but we will see, won't we? Well, we will see.

[00:07:33]>> Well, that's the thing. The next 6 months are going to be really interesting to see exactly what Wurst does. I do think I'm a little concerned that he wants to take away the communication. While I understand it, it also kind of makes it so, you know, there's a less outside influence, you know, he wants to really run a tight ship.

[00:07:50]>> I will tell you one of the things that we do see with that is when the Fed releases something, the world reacts, right? The stock market reacts. And when Powell, you know, or whoever the chairman is goes on and says something, you know, the markets sometimes is baked in. Some I hear people say, "Oh, you know, they've already priced all that in." I mean, you guys have probably all heard this. So, maybe without, you know, I don't really know. We none of us really know. But if they stop producing all this stuff, maybe, um, you know, the market won't react.

[00:08:23]Maybe you don't want to cuz I would imagine just just the aftermath of a leak or a press release or a report or whatever it might be is got to create a whole level of management, you know, and and, uh, you know, so uh, you know, it'll be interesting to see whether they could pull this off.

[00:08:41]>> Yeah, plus people obsessing over interest rates, you know, I was talking to the lenders that I work with and I'm like, "Have people ever asked about interest rates?" They're like, "No, like people never really, you know, they got the rate they got and they never asked about it."

[00:08:54]>> And they look at the Right, but now they're like obsessing over these interest rates and it's so funny cuz one of my lenders sends me like a weekly rate update. So, now he literally attaches a full economic report. Like, because of the war in Iran and the oil shipments, this is like, you know, and it's like, "This is so weird and out of the ordinary." Like, that never happened before. It was like, "These are the rates. You didn't need a weekly rate report." And if you got one, it didn't certainly didn't have economic news attached to it.

[00:09:19]>> is what happens when you're not doing loans. You can do >> Right, you have more time.

[00:09:23]>> do narratives about rates.

[00:09:25]>> But I just think people I think it just shows though that people are obsessing over the rates and why they're going lower and why they're going higher and what they're going to do. But to your point, you know, there it it doesn't make that big of a difference in a payment unless they're going to massively move.

[00:09:40]>> Right. Right. And and you know, again, you know, these are opinions, feelings, whatever you want to call them.

[00:09:47]>> thing.

[00:09:47]>> Well, they're just every time I hear somebody speak, it drives me nuts.

[00:09:54]Because not not that, but but then if you look back like like when Powell said, you know, inflation's transitory.

[00:10:03]Like those kinds of things drive me nuts and they're political positioning statements. And everyone does them, by the way. Blue, red, doesn't really matter. So so I always look at what people do, not what they say. So again, like everybody's, you know, obviously there's a spotlight on them. It'll be interesting to see what happens.

[00:10:25]It's going to be fascinating to see the moves that are being made by the committee and by the chairman, not independently, but as as it relates to the committee.

[00:10:36]And and and then we will see. We will see how much influence he might have with Powell as part of the committee.

[00:10:44]And what what what what really happens between this administration. Um and let's not forget, you know, he's also going to go through an election, right? Cuz Trump's going to be done and Worsh will still be there.

[00:10:58]Uh and and so you know, but there is one thing everybody wants and what I want and what same thing as you want is we want rates slower. But ro- lower rates will produce an inflationary economy.

[00:11:11]And just like they did before and higher rates, what they did what that does is it it it pulls down inflation, which is exactly what the Fed did in 2022 and 2023.

[00:11:24]Um they reacted late to the high inflation, but with and what lever did they use? They used increasing the federal funds rate. Um and and that pulled the economy back down to 2 3% uh which is was their target. Um and so it could also go the other way. Uh and don't forget when inflation went up like that, it was partially also due to basically a zero fund federal funds rate. Like, you know, like you could borrow borrowing was free basically below inflation. So, um you know, that happened and uh you know, so it's very very interesting.

[00:12:03]Both both happened um under the watch of Powell and which is part of the reason why I think that kind of experience is what you want on a committee.