Fed Under Fire: Politics, Powell, and the Future of Monetary Policy

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Welcome to Something More with Chris Boyd.

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Chris Boyd is a certified financial planner practitioner

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and senior vice president financial advisor at Wealth

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Enhancement Group, one of the nation's largest registered

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investment advisors.

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We call it Something More because we'd like

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to talk not only about those important dollar

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and cents issues, but also the quality of

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life issues that make the money matters matter.

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Here he is, your fulfillment facilitator, your partner

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in prosperity, advising clients on Cape Cod and

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across the country.

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Here's your host, Jay Christopher Boyd.

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Welcome to Something More with Chris Boyd.

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I'm Chris Boyd and I'm here with Russ

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Paul.

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We are both of the AMR team at

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Wealth Enhancement and glad to have you joining

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us.

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You know, the Fed has been in the

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news quite a bit these days.

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So I thought we would talk a little

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bit about what is going on with the

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Fed.

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It seems like a lot of activity and

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a lot of speculation and so let's get

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into it.

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Let's start off with Russ.

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It seems like the president has maybe, we

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know for the last several months, he's been

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really focused on the Fed chair and the

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desire for the Fed chair Powell to reduce

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interest rates for the Federal Reserve Fed funds

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rate to go down as an effort to

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stimulate more economic growth.

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And the Fed has been somewhat hesitant to

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do that, paying attention to data and saying

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it's unclear.

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And lately the president's, what's he calling him?

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It's like too slow or something.

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I forget.

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He's definitely hurling insults, right?

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He's got some nickname for him.

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I forget what it is now, but the

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idea that he's too late, maybe it was.

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Something like that.

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Oh yeah, yeah.

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But anyway, after the whole, when inflation kicked

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in in 2022 or 21 and the Fed

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was somewhat late to jump on that.

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Now, the Fed is concerned because on the

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one hand, there is signs of inflation while

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at the same time, there are signs of

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weakening in the economy, whether it's unemployment or

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wherever.

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So what will happen remains to be seen.

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I think this week, the Fed has a

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meeting that'll be in the news quite a

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bit with their Jackson Hole summer meeting.

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And so that's one aspect of this, but

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it seems as though like we saw maybe

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a week or two ago, the president went

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out to the Federal Reserve where they're doing,

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they have some big construction thing going on

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with renovations.

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And I think the president was trying to

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call attention to potential cost overruns in an

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effort to try to undermine Fed chair because

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he has a term that doesn't end until

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sometime in 2026.

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And the president would like to replace him

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right away.

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But so one way he's trying to do

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that is to say, oh, malfeasance, he hasn't

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done a good job as Fed chair and

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he hasn't been paying attention to some of

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these issues.

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And that may be the attack, the approach

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they get at trying in an effort to

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remove the Fed.

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Now, the Fed has historically been independent of

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political pressures by and large.

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Most administrations do not try to pressure the

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Federal Reserve in terms of monetary policy.

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The Federal Reserve, the central bank is responsible

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for monetary policy and monetary policy relates to

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this effort to try their dual mandate of

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trying to manage inflation on the one hand

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and employment on the other hand.

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Russ, I know you have some insights for

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the historical context of the Federal Reserve.

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Maybe we can take a minute to talk

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about that.

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And then we can come back to this

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issue of what the president's trying to do

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and maybe a different tack he's been taking

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over the last week or so.

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Yeah, definitely.

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I think because the Fed has been in

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the news so much recently, I mean, pretty

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consistently, but maybe more so recently with Trump

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putting the microscope on Powell and really trying

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to create a full court press against Powell

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himself.

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Yeah.

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So anyway, going back into the history of

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the Fed was kind of interesting.

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Basically in the early 1900s, it was more

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enmeshed with the executive branch and the treasury

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secretary was essentially the Fed chair initially.

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Then in World War I, the Fed was

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trying to basically help banks subsidize the costs

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of the World War I by lending money

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to banks for buying Liberty Bonds.

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Anyway, fast forward to the 1950s, there's-

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Well, when did the Fed get actually created

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as an independent?

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I think, wasn't it in the aftermath of

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like the 1920s, you know, that with the

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crash, was it part of that legislation that

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led to the FOMC and all of this?

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So I don't know the exact details, but

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I think that there was a period after

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the, there was some more independence prior to

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the Great Depression.

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And then after the Great Depression, Roosevelt kind

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of stepped in and took more ownership of

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the Fed and monetary policy in order to,

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you know, help deal with the aftermath-

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With the Great Depression.

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Of the Great Depression, exactly.

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And then, you know, slowly started shifting a

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little bit into the 1950s.

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And it was not until the 1950s where

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the Federal Reserve really became its own-

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Sort of independent.

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Its own independent entity.

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So in the case of the Fed right

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now, although, you know, where it falls in,

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you know, oversight and all of that, it's

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funded to some extent by the Congress.

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However, the Fed is run with a lot

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of autonomy.

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And, you know, this is sometimes a complaint

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that people have about, you know, is it

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accountable?

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So in any case, this is one of

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those challenges that I think often we've seen,

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whether it was Ron Paul or, what's, who's

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the Senator Paul now?

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Rand Paul.

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Rand Paul.

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So the, these, they both have had, and

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he's, Ron Paul's retired, but, you know, they

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both have had those critiques of the Federal

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Reserve over time.

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And the desire for audits and all this

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kind of stuff.

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Yeah, there is this like historical push and

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pull between the independence of the Fed versus

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should it be something that, you know, is

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run by elected officials and is more in

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line with the leading party, that kind of

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thing.

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And the merits of the argument of its

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independence, I think, is one that largely markets

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have appreciated because it's not a political move.

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It's for the benefit of stability in the

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economy.

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And that is appealing to markets.

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So you don't super juice the economy and

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then have, you know, a overheated economy and

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then a crash of a recession of some

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kind.

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You know, you tend to get this effort

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to create greater stabilization within the economy so

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that if it's running too hot, they slow

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it down.

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If it's running too cool, they speed it

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up.

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So that kind of thing.

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And various tools.

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The largest, most commonly utilized today is that

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the interest, the short-term interest rate that

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the Fed focuses on.

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During the Great Recession, we saw the Fed

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try to also move long-term interest rates

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through what became known as quantitative easing and

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quantitative tightening later on, you know.

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So there's some, the purchase of bonds on

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the far end, the longer-term bonds has

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been a newer development as a consequence of

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the Great Recession.

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But it has not historically been an active

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part of what the Fed does.

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The Fed primarily focuses on money supply and

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the short-term interest rates.

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Fair enough?

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Yeah, exactly, exactly.

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And I think, you know, going back to

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some of those periods in history where there

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was that dynamic of, is it gonna become,

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you know, more enmeshed with the executive branch

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or is it gonna remain independent?

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Those sort of battles have taken place throughout

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history.

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This is not the first time that this

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has happened.

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And it really, the Fed really took a

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stance in the 1950s with Truman, who was

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looking to lower interest rates so he could

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pay less for the obligations from World War

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II.

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And- Soon after, what was it, Eisenhower,

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you've got the infrastructure that came, a lot

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of highway system and all that kind of

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stuff that came out with a lot of

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expense.

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Yeah, so there was a lot of borrowing

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for those and if their interest rate is

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higher, that means that, you know, we're gonna

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end up paying more for those debts.

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So Truman tried to basically talk to the

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Fed chair and try to talk him into

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lowering interest rates.

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The Fed took a stance and decided, no,

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we really need to maintain our independence here.

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If we don't, we're gonna lose all credibility

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and that's gonna create another economic issue, you

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know, down the road.

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Yeah, interesting.

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So Truman relented and the Fed really became

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independent once more.

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That kind of consisted until Nixon came in

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and then at a push for Nixon's reelection

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campaign, he wanted interest rates to come down

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again.

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And for the most part, presidents want interest

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rates to come down to improve the economy

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and make conditions.

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Yeah, so that was the case with Nixon.

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And very interestingly, there was a similar sort

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of smear campaign against the Fed chair at

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the time.

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And in that case, Nixon sort of won

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over and it created this whole stagflation issue

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in the 70s.

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So, I mean, it wasn't, you know, there

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are other factors as well, of course, but

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that was a big issue was, you know,

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the decisions that Nixon made, the pressure he

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put on the Fed chair at the time

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really created issues down the road.

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It wasn't immediate, but it showed up down

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the road.

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So that brings us to the 70s and

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the stagflation that was seen there that was

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hugely momentous for that time.

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And- In comes Paul Volcker.

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In comes Paul Volcker.

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And interestingly with Volcker, he was, you know,

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when he was courted by Jimmy Carter to

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be the Fed chair, he was insistent on

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having that independence because he knew that it

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was gonna take radical measures to be able

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to reduce inflation and bring the economy back

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into order.

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So basically his agreement with Jimmy Carter was,

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all right, let's get some independence and I'll

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do it.

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Jimmy Carter said, yes.

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And Volcker, as you know, history knows, it

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really had a huge impact.

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00:12:07,780 --> 00:12:10,020
Shocks the economy by raising interest rates sharply

275
00:12:10,020 --> 00:12:12,520
to get inflation under control.

276
00:12:13,700 --> 00:12:19,000
And then of course, simultaneously we had fiscal

277
00:12:19,000 --> 00:12:22,340
policy under the Reagan administration with a revised

278
00:12:22,340 --> 00:12:23,100
tax code.

279
00:12:23,860 --> 00:12:26,520
And we're off to the races for some,

280
00:12:26,640 --> 00:12:30,280
you know, a decade plus as the U

281
00:12:30,280 --> 00:12:33,600
.S. economy really seemed to heat up.

282
00:12:33,600 --> 00:12:36,580
Of course we had other factors in that,

283
00:12:37,020 --> 00:12:41,440
the emergence of technology in that era.

284
00:12:42,100 --> 00:12:43,880
So in any case, like, so all these

285
00:12:43,880 --> 00:12:48,660
kinds of contributing factors to have greater stimulus

286
00:12:48,660 --> 00:12:50,860
in the U.S. economy.

287
00:12:52,220 --> 00:12:53,460
You have more on that?

288
00:12:53,600 --> 00:12:54,400
I wanted one other thing.

289
00:12:54,880 --> 00:12:55,440
One more piece.

290
00:12:55,820 --> 00:12:59,860
So with Volcker, he knew that what his,

291
00:13:00,460 --> 00:13:03,680
raising the interest rates and, you know, restricting

292
00:13:03,680 --> 00:13:07,000
the monetary supply was going to have dramatic

293
00:13:07,000 --> 00:13:08,280
effects on the economy that it was gonna

294
00:13:08,280 --> 00:13:08,940
cause a recession.

295
00:13:09,120 --> 00:13:11,340
He basically forecasted that.

296
00:13:11,640 --> 00:13:14,680
It did happen, multiple recessions during that timeframe,

297
00:13:15,320 --> 00:13:17,180
but he stuck to the game plan.

298
00:13:17,680 --> 00:13:20,860
And as painful as it was, the economy

299
00:13:20,860 --> 00:13:23,840
did recover and started on this new phase

300
00:13:23,840 --> 00:13:25,440
of prosperity.

301
00:13:25,440 --> 00:13:29,620
This huge period of time under Greenspan, who

302
00:13:29,620 --> 00:13:36,480
was maybe in some arguments, more friendly to

303
00:13:36,480 --> 00:13:38,560
business in the process.

304
00:13:40,260 --> 00:13:41,540
You know, one of the things that I

305
00:13:41,540 --> 00:13:43,640
was thinking about when we talk about the

306
00:13:43,640 --> 00:13:46,360
history of the Fed, and I wanna get

307
00:13:46,360 --> 00:13:48,300
into the current politics of it a little

308
00:13:48,300 --> 00:13:53,380
bit too, but we've talked about cryptocurrency a

309
00:13:53,380 --> 00:13:54,900
bit on the show from time to time,

310
00:13:55,260 --> 00:13:59,200
and the idea that people are attracted to

311
00:13:59,200 --> 00:14:03,080
it because of decentralized finances, the DeFi as

312
00:14:03,080 --> 00:14:04,220
they refer to it.

313
00:14:04,500 --> 00:14:07,120
And this notion that we don't want, you

314
00:14:07,120 --> 00:14:08,320
know, government involved.

315
00:14:08,820 --> 00:14:11,880
And I often make the comment that there's

316
00:14:11,880 --> 00:14:15,860
a real virtue to what the Fed has

317
00:14:15,860 --> 00:14:20,120
done when we look at, for example, most

318
00:14:20,120 --> 00:14:22,960
not long ago in recent memory with the

319
00:14:22,960 --> 00:14:29,820
financial crisis and the Fed's active, maybe beyond

320
00:14:29,820 --> 00:14:33,760
their powers in some arguments, the things they

321
00:14:33,760 --> 00:14:37,420
did to stabilize the financial system and the

322
00:14:37,420 --> 00:14:38,140
banking system.

323
00:14:38,560 --> 00:14:40,220
But more recently, we saw it under Powell

324
00:14:40,220 --> 00:14:42,760
with a couple of years back when there

325
00:14:42,760 --> 00:14:45,780
were some problems with Silicon Valley Bank and

326
00:14:45,780 --> 00:14:47,680
First Republic, and a few of these banks

327
00:14:47,680 --> 00:14:49,680
that had some problems.

328
00:14:49,680 --> 00:14:53,320
It gave a real clear visual of what

329
00:14:53,320 --> 00:14:54,840
is it that the Fed has done at

330
00:14:54,840 --> 00:14:57,940
times is be able to step in, stabilize

331
00:14:57,940 --> 00:15:02,020
the banking system to a point where the

332
00:15:02,020 --> 00:15:06,840
public doesn't, we don't see these panics.

333
00:15:07,020 --> 00:15:09,280
They used to call them panics, but these

334
00:15:09,280 --> 00:15:12,480
panics where people would wanna have the run

335
00:15:12,480 --> 00:15:15,280
on the bank and pull their money because

336
00:15:15,280 --> 00:15:17,780
they have this backing from the Federal Reserve

337
00:15:17,780 --> 00:15:18,480
structure.

338
00:15:18,480 --> 00:15:21,460
And I pointed out from time to time,

339
00:15:21,540 --> 00:15:24,120
because when people think about, there's been a

340
00:15:24,120 --> 00:15:26,220
lot of focus on stable coin and some

341
00:15:26,220 --> 00:15:32,700
recent regulatory developments, there's still a difference in

342
00:15:32,700 --> 00:15:36,040
the banking structure with the Federal Reserve having

343
00:15:36,040 --> 00:15:39,940
the ability to offer backstop and various resources

344
00:15:39,940 --> 00:15:42,800
when there are times of stress on the

345
00:15:42,800 --> 00:15:43,140
system.

346
00:15:43,600 --> 00:15:45,800
And that's why we have a Federal Reserve

347
00:15:45,800 --> 00:15:47,440
in many respects, right?

348
00:15:47,440 --> 00:15:51,200
It's a combination of these dual mandate, try

349
00:15:51,200 --> 00:15:55,600
to help with and mitigate inflation, keep inflation

350
00:15:55,600 --> 00:15:59,360
in check, and have a more full employment.

351
00:15:59,860 --> 00:16:03,600
If the economy is so disrupted or the

352
00:16:03,600 --> 00:16:07,620
banking system is so disrupted, that will create

353
00:16:07,620 --> 00:16:10,440
a lot of unemployment and a lot of

354
00:16:10,440 --> 00:16:11,340
problems.

355
00:16:11,500 --> 00:16:14,100
So the banking system is part of what

356
00:16:14,100 --> 00:16:16,920
the Federal Reserve has a hand in monitoring

357
00:16:16,920 --> 00:16:20,300
and governing in respects with the requirements that

358
00:16:20,300 --> 00:16:21,300
are placed upon the banks.

359
00:16:22,540 --> 00:16:26,700
So with all that said, a little bit

360
00:16:26,700 --> 00:16:27,740
of the history, thank you.

361
00:16:28,340 --> 00:16:30,440
But there's also what's going on now.

362
00:16:30,540 --> 00:16:33,640
So we were talking about the president pressuring

363
00:16:35,040 --> 00:16:40,980
Chairman Powell and trying to move interest rates

364
00:16:40,980 --> 00:16:44,380
with the intention of maybe replacing the Fed

365
00:16:44,380 --> 00:16:44,700
chair.

366
00:16:45,380 --> 00:16:48,120
The president seems to have, or his administration

367
00:16:48,120 --> 00:16:50,540
seems to have maybe moved on a different

368
00:16:50,540 --> 00:16:54,880
tack slightly where they had a recent resignation

369
00:16:54,880 --> 00:16:59,480
from a Fed governor who was replaced with

370
00:16:59,480 --> 00:17:02,200
someone who's more friendly to the president's agenda

371
00:17:02,200 --> 00:17:03,940
of lower interest rates.

372
00:17:04,640 --> 00:17:07,420
And then this week we saw the president

373
00:17:07,420 --> 00:17:14,839
going after another Fed governor with, Cook was

374
00:17:14,839 --> 00:17:15,060
it?

375
00:17:15,180 --> 00:17:18,359
With this interest in saying there was some

376
00:17:18,359 --> 00:17:21,740
perceived controversy and saying you should resign.

377
00:17:21,920 --> 00:17:25,220
So he's looking to start packing the Fed

378
00:17:25,740 --> 00:17:29,100
with people who are more sympathetic, maybe a

379
00:17:29,100 --> 00:17:33,160
more MAGA agenda with lower interest rates.

380
00:17:33,780 --> 00:17:36,640
So now this, just as an aside, this

381
00:17:36,640 --> 00:17:38,180
question, I don't know if you saw this

382
00:17:38,180 --> 00:17:44,240
article about Lisa Cook, the Fed governor who

383
00:17:44,240 --> 00:17:45,940
was accused of mortgage fraud.

384
00:17:47,100 --> 00:17:51,180
And essentially what happened is she has two

385
00:17:51,180 --> 00:17:52,260
mortgage loans.

386
00:17:52,600 --> 00:17:54,680
She has a home in Michigan and a

387
00:17:54,680 --> 00:17:58,720
condo in Georgia and they're both on the

388
00:17:58,720 --> 00:18:03,100
mortgage application apparently as primary residences.

389
00:18:03,800 --> 00:18:08,420
And you get a better mortgage terms when

390
00:18:08,420 --> 00:18:11,840
it's a primary residence than a secondary residence.

391
00:18:12,580 --> 00:18:18,240
And so the president put out a Trump

392
00:18:18,240 --> 00:18:23,180
social tweet or whatever you call those, Cook

393
00:18:23,180 --> 00:18:24,620
must resign now.

394
00:18:25,820 --> 00:18:28,360
So a little bit of pressure trying to

395
00:18:28,360 --> 00:18:33,160
remove, now whether or not this is actually

396
00:18:33,160 --> 00:18:36,980
whether, people are saying, well, there's one question

397
00:18:36,980 --> 00:18:39,540
of like, how it's raised on the application

398
00:18:39,540 --> 00:18:40,280
could be relevant.

399
00:18:40,760 --> 00:18:43,420
Was it that she lied on the application?

400
00:18:43,580 --> 00:18:44,740
That could be a problem.

401
00:18:45,280 --> 00:18:48,020
It wasn't that there was a question, do

402
00:18:48,020 --> 00:18:49,680
you plan to make this your primary residence?

403
00:18:49,820 --> 00:18:51,500
And maybe she did, right?

404
00:18:51,720 --> 00:18:54,140
So I don't know the answer to those

405
00:18:54,140 --> 00:19:00,200
things, but in any case, she's one of

406
00:19:00,200 --> 00:19:02,420
the members of the Fed who is saying

407
00:19:02,420 --> 00:19:05,320
it has been thus far keeping interest rates

408
00:19:05,320 --> 00:19:09,940
steady as opposed to trying to want to

409
00:19:09,940 --> 00:19:10,740
see things change.

410
00:19:11,100 --> 00:19:12,940
So you can see where that's going, right?

411
00:19:13,120 --> 00:19:16,620
Okay, so now there's also been some Fed

412
00:19:16,620 --> 00:19:19,420
minutes released recently, did you see that one?

413
00:19:20,660 --> 00:19:23,280
So basically the idea that there's a little

414
00:19:23,280 --> 00:19:28,380
bit of dissension first time since the 90s,

415
00:19:28,420 --> 00:19:31,880
I think it was 93 that we had

416
00:19:31,880 --> 00:19:36,520
a public dissension from the Fed minutes where

417
00:19:36,520 --> 00:19:42,560
some wanted one set of policies and others

418
00:19:42,560 --> 00:19:43,000
did not.

419
00:19:43,280 --> 00:19:46,120
Usually, even though there may be differing views,

420
00:19:47,680 --> 00:19:51,160
what is publicly put forward is a uniform

421
00:19:51,160 --> 00:19:52,720
perspective.

422
00:19:53,420 --> 00:19:55,460
So in any case, we do see currently

423
00:19:55,460 --> 00:19:59,340
there were two dissents that wanted interest rates

424
00:19:59,340 --> 00:19:59,980
to be lowered.

425
00:20:00,360 --> 00:20:02,600
I think there's conversation on the one hand,

426
00:20:02,600 --> 00:20:06,020
some people think that inflation is a concern.

427
00:20:06,380 --> 00:20:07,740
So they're on the other end of the

428
00:20:07,740 --> 00:20:08,100
spectrum.

429
00:20:08,480 --> 00:20:10,020
And then you have a lot of people

430
00:20:10,020 --> 00:20:11,680
in the middle who are saying, let's wait

431
00:20:11,680 --> 00:20:12,140
and see.

432
00:20:12,320 --> 00:20:14,240
We've got tariffs on the one hand, we've

433
00:20:14,240 --> 00:20:17,580
got some various data that suggests that could

434
00:20:17,580 --> 00:20:22,540
be modestly impacting inflation, but will it be

435
00:20:22,540 --> 00:20:24,080
long-term, will it be temporary?

436
00:20:24,440 --> 00:20:29,060
And then there's also some weakening employment data.

437
00:20:29,060 --> 00:20:34,220
So multiple views on this, how it will

438
00:20:34,220 --> 00:20:35,140
be played out.

439
00:20:35,360 --> 00:20:38,420
But I just think it's interesting that it

440
00:20:40,050 --> 00:20:42,170
seems like the approach the president and his

441
00:20:42,170 --> 00:20:44,830
team are taking is, well, let's try to

442
00:20:44,830 --> 00:20:45,870
replace some of these people.

443
00:20:46,490 --> 00:20:48,730
Yeah, it seems pretty clear that that's the

444
00:20:48,730 --> 00:20:49,930
agenda.

445
00:20:52,890 --> 00:20:55,630
Well, there's also been a lot of speculation

446
00:20:55,630 --> 00:20:57,730
when it comes to the Fed as to

447
00:20:57,730 --> 00:21:00,730
who may be the next Fed chair.

448
00:21:02,870 --> 00:21:08,070
And I think there's a lot of, I

449
00:21:08,070 --> 00:21:11,710
guess they're economists, vying for the job, essentially.

450
00:21:12,430 --> 00:21:15,490
Yeah, and I think we'll start seeing more

451
00:21:15,490 --> 00:21:19,270
dissenting views if interest rates remain unchanged.

452
00:21:19,450 --> 00:21:20,550
Yeah, yeah.

453
00:21:20,990 --> 00:21:24,110
A lot of interplay for that potential role

454
00:21:24,110 --> 00:21:26,650
when it becomes available next year.

455
00:21:26,650 --> 00:21:29,870
So in May of 26 is when Jerome

456
00:21:29,870 --> 00:21:32,790
Powell's role is set to expire as chair.

457
00:21:33,430 --> 00:21:36,010
Now, whether or not he stays on as

458
00:21:36,010 --> 00:21:38,430
a Fed governor or not is an unknown

459
00:21:38,430 --> 00:21:39,050
question.

460
00:21:40,010 --> 00:21:44,150
He could, I guess it's more common for

461
00:21:44,150 --> 00:21:47,530
once a Fed chair finishes their term to

462
00:21:47,530 --> 00:21:49,330
kind of move on, you know.

463
00:21:49,890 --> 00:21:53,910
But I don't know that it's necessarily mandatory.

464
00:21:54,570 --> 00:21:57,430
No, I think he would be able to

465
00:21:57,430 --> 00:21:59,210
be there until 2029 or something like that.

466
00:21:59,210 --> 00:22:00,590
So he could stay on.

467
00:22:00,910 --> 00:22:03,010
Yeah, seems pretentious.

468
00:22:03,130 --> 00:22:05,750
What a thankless deal for him if he

469
00:22:05,750 --> 00:22:06,570
does, but yeah.

470
00:22:07,130 --> 00:22:11,010
So in any case, who might be the

471
00:22:11,010 --> 00:22:11,850
next Fed chair?

472
00:22:13,570 --> 00:22:15,870
We pulled out some stuff to say, oh,

473
00:22:15,930 --> 00:22:17,130
who are they looking at?

474
00:22:17,690 --> 00:22:25,050
And there's supposedly about 11 candidates right now

475
00:22:25,050 --> 00:22:30,190
that are most prominent.

476
00:22:31,290 --> 00:22:33,310
Some names you might recognize.

477
00:22:33,470 --> 00:22:37,290
Some of these are former Fed governors and

478
00:22:37,290 --> 00:22:37,890
things like that.

479
00:22:38,010 --> 00:22:39,810
And some of you might not know, but

480
00:22:39,810 --> 00:22:42,490
people may have heard of James Bullard.

481
00:22:43,270 --> 00:22:48,190
He's been a frequent CNBC person who's a

482
00:22:48,190 --> 00:22:51,550
former Fed governor, I think, St. Louis Fed.

483
00:22:52,010 --> 00:22:56,090
And he's pretty plain spoken.

484
00:22:56,310 --> 00:22:58,590
I think he's interesting to hear, you know.

485
00:22:59,630 --> 00:23:02,790
Larry Lindsey has been a Fed governor and

486
00:23:02,790 --> 00:23:05,050
I think he's been in government as well.

487
00:23:05,530 --> 00:23:07,630
Kevin Hassett is a name people will recognize,

488
00:23:08,050 --> 00:23:11,390
former director of National Economic Council and the

489
00:23:11,390 --> 00:23:15,450
current treasury secretary, Scott Besant is one of

490
00:23:15,450 --> 00:23:18,610
the names that is being kicked around as

491
00:23:18,610 --> 00:23:18,950
well.

492
00:23:19,450 --> 00:23:24,530
So as well as some other highly regarded,

493
00:23:24,790 --> 00:23:28,490
you know, Wall Street types that are in

494
00:23:28,490 --> 00:23:29,950
the names as well.

495
00:23:30,630 --> 00:23:32,910
So, I mean, who the heck knows, right?

496
00:23:32,910 --> 00:23:35,190
At this point, it's like to maybe make

497
00:23:35,190 --> 00:23:38,090
a guess about next May is way too

498
00:23:38,090 --> 00:23:38,430
soon.

499
00:23:38,430 --> 00:23:42,930
On the other hand, will the president be

500
00:23:42,930 --> 00:23:46,350
more successful at placing pressure on trying to

501
00:23:46,350 --> 00:23:49,250
pull Powell from the role?

502
00:23:50,210 --> 00:23:50,730
I don't know.

503
00:23:51,470 --> 00:23:54,930
It seems like that has been dissipating and

504
00:23:54,930 --> 00:23:56,370
he's kind of taking a different tact.

505
00:23:56,850 --> 00:23:57,070
I agree.

506
00:23:57,690 --> 00:23:59,710
Yeah, I mean, it is important to note

507
00:23:59,710 --> 00:24:02,390
that almost all, at least most of the

508
00:24:02,390 --> 00:24:06,350
candidates you mentioned are leaning towards lowering interest

509
00:24:06,350 --> 00:24:06,690
rates.

510
00:24:06,690 --> 00:24:08,670
And I feel like that would be a

511
00:24:08,670 --> 00:24:11,970
prerequisite to them getting, you know, that seat.

512
00:24:12,510 --> 00:24:14,270
Yeah, absolutely, absolutely.

513
00:24:14,450 --> 00:24:17,490
They're gonna be in that mold, right?

514
00:24:17,650 --> 00:24:23,330
Of trying to be furthering the president's agenda.

515
00:24:23,690 --> 00:24:23,890
Yes.

516
00:24:23,970 --> 00:24:25,310
Right, as kind of a given.

517
00:24:28,600 --> 00:24:30,700
What else did we plan to talk about

518
00:24:30,700 --> 00:24:34,800
on the Fed topic?

519
00:24:35,380 --> 00:24:39,080
Well, I think it's important to look at

520
00:24:39,080 --> 00:24:43,460
the historical context and see like what has

521
00:24:43,460 --> 00:24:47,280
happened when the Fed lost independence or lost

522
00:24:47,280 --> 00:24:48,540
some semblance of independence.

523
00:24:48,980 --> 00:24:49,160
Yes.

524
00:24:49,440 --> 00:24:51,400
There has not been a lot of evidence

525
00:24:51,400 --> 00:24:53,900
that that is the best course of action.

526
00:24:54,440 --> 00:24:55,120
Policy, yeah.

527
00:24:55,560 --> 00:24:59,360
And you look at what the scenario I

528
00:24:59,360 --> 00:25:02,000
described with Nixon and while there wasn't an

529
00:25:02,000 --> 00:25:05,140
immediate impact, it was, you know, lowering of

530
00:25:05,140 --> 00:25:07,580
interest rates in the face of increasing inflation

531
00:25:08,320 --> 00:25:11,200
to help with the election odds, which ended

532
00:25:11,200 --> 00:25:14,360
up winning, you know, worked out for him

533
00:25:14,360 --> 00:25:16,360
in that sense, but then the country suffered

534
00:25:16,360 --> 00:25:19,000
tremendously as a result down the road.

535
00:25:20,020 --> 00:25:21,140
Yeah, I mean, you can make, I mean,

536
00:25:21,180 --> 00:25:24,140
the whole stagflation thing is beyond the role

537
00:25:24,140 --> 00:25:25,880
of the Fed, obviously, you know, and you

538
00:25:25,880 --> 00:25:28,400
made that point earlier, but it's worth reiterating

539
00:25:28,400 --> 00:25:30,300
that, you know, what was going on in

540
00:25:30,300 --> 00:25:32,880
the economy at that time, you know, there's

541
00:25:32,880 --> 00:25:35,740
a lot of varying forces that were driving

542
00:25:35,740 --> 00:25:39,800
that in the process of, you know, fuel

543
00:25:39,800 --> 00:25:44,060
shortages and just the economy was in a

544
00:25:44,060 --> 00:25:47,620
different, it was a very different economy then

545
00:25:47,620 --> 00:25:48,560
than it is now.

546
00:25:49,220 --> 00:25:51,120
Yeah, I definitely don't wanna make it like

547
00:25:51,120 --> 00:25:53,920
it was just that one, you know, event

548
00:25:53,920 --> 00:25:56,060
or that one driver, there are definitely multiple

549
00:25:56,060 --> 00:25:58,920
factors, but there's always gonna be multiple factors

550
00:25:58,920 --> 00:26:00,640
and it's, the fact is.

551
00:26:00,780 --> 00:26:01,340
This is an important one.

552
00:26:01,340 --> 00:26:03,740
Yeah, the factors that are combining to create

553
00:26:03,740 --> 00:26:08,160
a certain economic forecast is, you know, that's

554
00:26:08,160 --> 00:26:11,000
what's gonna change, make or break what happens.

555
00:26:11,740 --> 00:26:13,660
I think one of the articles I was

556
00:26:13,660 --> 00:26:17,080
reading in Barron's was also talking about the

557
00:26:17,080 --> 00:26:21,300
equivalent of the Fed chair in Greece in

558
00:26:21,300 --> 00:26:24,720
the last decade and the, I don't know

559
00:26:24,720 --> 00:26:28,120
if it's the president or prime minister of

560
00:26:28,120 --> 00:26:32,760
Greece, but whoever was making those Fed decisions

561
00:26:33,540 --> 00:26:35,720
kept changing out the Fed chair if they

562
00:26:35,720 --> 00:26:38,700
wanted to increase interest rates to combat inflation.

563
00:26:38,920 --> 00:26:40,280
To make sure they were getting their policy

564
00:26:40,280 --> 00:26:40,780
addressed.

565
00:26:40,880 --> 00:26:43,220
Exactly, and that did not shape up well

566
00:26:43,220 --> 00:26:43,780
for Greece.

567
00:26:44,460 --> 00:26:45,460
Yeah, and you can look to a lot

568
00:26:45,460 --> 00:26:48,100
of other locations where you've seen similar kind

569
00:26:48,100 --> 00:26:51,840
of stories where when the policy of the

570
00:26:51,840 --> 00:26:56,940
central bank is politicized or politically driven, it

571
00:26:56,940 --> 00:26:59,600
often does not help the economy.

572
00:26:59,860 --> 00:27:04,220
It often is, undermines the credibility of that

573
00:27:04,220 --> 00:27:11,460
central bank and makes the, the predictability of

574
00:27:11,460 --> 00:27:17,900
policy and the expectations of industry to be

575
00:27:17,900 --> 00:27:21,380
more suspect or, you know, circumspect of what's

576
00:27:21,380 --> 00:27:21,980
gonna happen.

577
00:27:22,320 --> 00:27:22,540
Yeah.

578
00:27:22,540 --> 00:27:28,300
And it ultimately, it tends to undermine economic

579
00:27:28,300 --> 00:27:28,820
conditions.

580
00:27:29,800 --> 00:27:32,540
Yeah, I mean, when there is alignment between

581
00:27:32,540 --> 00:27:35,460
the leading branch of government and the Fed,

582
00:27:35,900 --> 00:27:38,400
to that extent, it does make the Fed

583
00:27:38,400 --> 00:27:40,160
lose credibility because then it's not really a

584
00:27:40,160 --> 00:27:41,060
data-driven approach.

585
00:27:41,140 --> 00:27:43,500
It's not a neutral, like outside perspective.

586
00:27:43,640 --> 00:27:46,500
It's whatever the president says goes.

587
00:27:48,040 --> 00:27:51,100
And, you know, I look back at examples

588
00:27:51,100 --> 00:27:53,840
where Trump was pointing out Powell and saying

589
00:27:53,840 --> 00:27:55,940
he should resign or he's gonna kick him

590
00:27:55,940 --> 00:27:56,160
out.

591
00:27:56,780 --> 00:27:59,080
The next day, the market had a negative

592
00:27:59,080 --> 00:28:01,400
reaction pretty consistently.

593
00:28:01,620 --> 00:28:04,560
So every time that's come up, he had

594
00:28:04,560 --> 00:28:07,360
to take his foot off the gas against

595
00:28:07,360 --> 00:28:08,680
Powell to some degree.

596
00:28:08,960 --> 00:28:10,080
Yeah, I think that's a fair point.

597
00:28:10,640 --> 00:28:13,660
So, well, none of us knows how this

598
00:28:13,660 --> 00:28:14,160
will play out.

599
00:28:14,260 --> 00:28:15,740
We thought this was kind of interesting just

600
00:28:15,740 --> 00:28:17,820
because there's so many variables that have been

601
00:28:17,820 --> 00:28:18,800
in the news of late.

602
00:28:18,800 --> 00:28:20,560
Thought we'd take a minute to kick it

603
00:28:20,560 --> 00:28:22,940
around and point out some of these issues.

604
00:28:23,600 --> 00:28:26,520
You know, it's one of many things that

605
00:28:26,520 --> 00:28:30,120
you as an investor need to be mindful

606
00:28:30,120 --> 00:28:32,840
of when you think about your portfolio.

607
00:28:33,420 --> 00:28:35,960
There's so many things to be looking at.

608
00:28:36,220 --> 00:28:38,600
What's happening in the world around us is

609
00:28:38,600 --> 00:28:39,540
one of those.

610
00:28:39,980 --> 00:28:43,460
What's happening in the economy and which sectors

611
00:28:43,460 --> 00:28:45,860
and economic data.

612
00:28:46,440 --> 00:28:49,040
This speculation on what's happening with the Fed

613
00:28:49,040 --> 00:28:52,780
Reserve is in some respects more of the

614
00:28:52,780 --> 00:28:55,980
drama than it is the policy that, you

615
00:28:55,980 --> 00:28:58,060
know, but there are some policy implications.

616
00:28:58,860 --> 00:29:02,420
And ultimately what I wanna like walk away

617
00:29:02,420 --> 00:29:04,560
as we wind down the show is say,

618
00:29:04,900 --> 00:29:06,080
you know, there's a lot for you to

619
00:29:06,080 --> 00:29:08,440
be paying attention to as an individual investor.

620
00:29:08,680 --> 00:29:11,940
And when it's possible, you may benefit from

621
00:29:11,940 --> 00:29:13,700
having some help in the process.

622
00:29:14,340 --> 00:29:18,820
And looking at not only some of these

623
00:29:18,820 --> 00:29:22,500
shiny objects that are out there, but also

624
00:29:22,500 --> 00:29:26,520
some of the mundane data points that can

625
00:29:26,520 --> 00:29:29,980
be relevant to how you think about what's

626
00:29:29,980 --> 00:29:33,660
happening in the economy and ultimately how you

627
00:29:33,660 --> 00:29:35,600
might wanna be positioning your portfolio.

628
00:29:36,920 --> 00:29:40,960
That is how a financial advisor might be

629
00:29:40,960 --> 00:29:43,260
a resource to you to help in a

630
00:29:43,260 --> 00:29:45,940
way that's outside of the kind of things

631
00:29:45,940 --> 00:29:47,720
you might be looking at regularly.

632
00:29:48,020 --> 00:29:49,680
In any case, if we can be a

633
00:29:49,680 --> 00:29:52,480
resource in that process, don't hesitate to reach

634
00:29:52,480 --> 00:29:53,020
out to us.

635
00:29:53,120 --> 00:29:55,860
We are inclined to start with a financial

636
00:29:55,860 --> 00:29:58,780
plan and then move to how does that

637
00:29:58,780 --> 00:30:02,200
impact your portfolio and then review how that

638
00:30:02,200 --> 00:30:04,020
portfolio is structured to see if we've got

639
00:30:04,020 --> 00:30:05,360
the right structure for you.

640
00:30:05,680 --> 00:30:07,340
If we can be a resource to you

641
00:30:07,340 --> 00:30:10,180
with a second opinion or if you'd like

642
00:30:10,180 --> 00:30:12,820
a complimentary consultation, just reach out.

643
00:30:13,100 --> 00:30:13,980
Thanks for being with us.

644
00:30:14,120 --> 00:30:16,600
Until next time, keep striving for something more.

645
00:30:17,860 --> 00:30:19,780
Thank you for listening to Something More with

646
00:30:19,780 --> 00:30:20,460
Chris Boyd.

647
00:30:20,780 --> 00:30:22,940
Call us for help, whether it's for financial

648
00:30:22,940 --> 00:30:26,880
planning or portfolio management, insurance concerns, or those

649
00:30:26,880 --> 00:30:28,920
quality of life issues that make the money

650
00:30:28,920 --> 00:30:30,020
matters matter.

651
00:30:30,340 --> 00:30:33,660
Whatever's on your mind, visit us at somethingmorewithchrisboyd

652
00:30:33,660 --> 00:30:36,860
.com or call us toll free at 866

653
00:30:36,860 --> 00:30:42,360
-771-8901 or send us your questions to

654
00:30:42,360 --> 00:30:47,340
amr-info at wealthenhancement.com You're listening to

655
00:30:47,340 --> 00:30:49,300
Something More with Chris Boyd Financial Talk Show.

656
00:30:49,460 --> 00:30:51,900
Wealth Enhancement Advisory Services and Jay Christopher Boyd

657
00:30:51,900 --> 00:30:54,220
provide investment advice on an individual basis to

658
00:30:54,220 --> 00:30:54,760
clients only.

659
00:30:54,960 --> 00:30:56,920
Proper advice depends on a complete analysis of

660
00:30:56,920 --> 00:30:58,060
all facts and circumstances.

661
00:30:58,340 --> 00:31:00,180
The information given on this program is general

662
00:31:00,180 --> 00:31:02,220
financial comments and cannot be relied upon as

663
00:31:02,220 --> 00:31:03,820
pertaining to your specific situation.

664
00:31:03,820 --> 00:31:05,980
Wealth Enhancement Group cannot guarantee that using the

665
00:31:05,980 --> 00:31:07,980
information from this show will generate profits or

666
00:31:07,980 --> 00:31:09,100
ensure freedom from loss.

667
00:31:09,320 --> 00:31:11,460
Listeners should consult their own financial advisors or

668
00:31:11,460 --> 00:31:13,580
conduct their own due diligence before making any

669
00:31:13,580 --> 00:31:14,420
financial decisions.