March 18, 2025 • 15 mins
It’s a busy week for the Federal Reserve, between Trump’s nomination of a new vice chair for supervision on Monday and an anticipated rate decision on Wednesday.
To unpack all the news, host Saleha Mohsin sits down with former Fed and Treasury official Randy Quarles to talk about regulation, DOGE and Trump’s approach to the Fed.
See omnystudio.com/listener for privacy information.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
It's a busy week for the Federal Reserve. On Monday,
President Trump confirmed his pick for the role of vice
chair for supervision, Michelle Bowman. We're also expecting a rate
decision tomorrow at a pretty tenuous time for the economy.
The Central Bank may have to take actions that don't
necessarily align with Trump. So there have been a lot
of questions about the Fed's independence lately, and I wanted
(00:31):
to sit down with someone who knows the system inside
and out. Randy. It is such a pleasure to have
you on the show. Super Randy Quarrels is kind of
rare among public servants. He hasn't worked at just the
Federal Reserve. He's also worked at the Treasury Department. When
I was writing my book about the Power of the Dollar,
I researched Treasury like a historian. I witnessed live bond
(00:52):
auctions and toward the underground tunnels of the building. By
and large, the inner workings of the Fed and Treasury
aren't things that the average American pays the time tention to,
But these days it's kind of gone mainstream, which is surprising,
and it's all because Elon Musk's Doge is rummaging through
Treasury's books. Corals served as a senior Treasury official in
(01:12):
the George W. Bush administration. It was an era of
conservatism that's lost power in the Republican Party in recent
years with Trump's rise. The Corals also was nominated by
Trump to be the first ever Vice Chair for Supervision
at the Federal Reserve, a job he held from twenty
seventeen to twenty twenty one. So I wanted to ask
(01:32):
Quarrels about all of this Doge's interference at Treasury, Trump's
passed threats to the Fed's independence, and the many challenges
facing US financial regulators right now. From Bloomberg's Washington Bureau.
This is the Big Take DC podcast. I'm Saliah Mosen
today on the show, a conversation about the FED in
(01:53):
a busy week for the Central Bank with former Fed
and Treasury official Randy Quarrels. Randy Quarrels was the first
person to hold the role a Vice Chair for Supervision
at the Federal Reserve. It's a role that was created
by the Dot Frank Act after the Global Financial crisis
to have one point person in charge of making policy
(02:15):
recommendations about the regulation and supervision of banks to the board.
And it's the sort of role the average Americans shouldn't
really have to think about. If you are, there's probably
a problem in the economy somewhere, like when Silicon Valley
Bank collapsed in twenty twenty three and suddenly Americans were
worried about their community banks failing. Quarrels told me about
(02:36):
what he was hearing when he first took that vice
chair role in twenty seventeen.
Speaker 1 (02:41):
I was urged by a lot of people, you know,
just burn this to the ground, you know, put a
pack of a palm on your back and smite them
hip and thigh.
Speaker 3 (02:49):
Okay, I could probably.
Speaker 1 (02:52):
Get that done, but they would just get undone when
the next swinging of the political pendulum happened. And that's
not good for anybody. It's not good for policy, it's
not good for the industry, it's not good for stability,
it's not good for the public.
Speaker 3 (03:08):
And so my thought going in.
Speaker 1 (03:10):
Was, if the changes that are made, you know, to
refine the framework that was put in place in the
immediate aftermath of the Great Financial Crisis, you know, if
we have as.
Speaker 3 (03:22):
Much thought put into those changes.
Speaker 1 (03:24):
If we produce as much analysis around that, and if
they benefit from as much input from all sorts of
different places, the changes will be more likely to last.
Speaker 2 (03:35):
Last month, Chair Powell said during a hearing that the
creation of the rule that you had led to more
quote volatility, and I'm actually going to play the exchange
between him and the House lawmaker.
Speaker 1 (03:46):
Do we really need to have a separate vice chair
of supervision?
Speaker 4 (03:51):
So for many years, as you know, we did our
business without advice chare for supervision. What that means is
everything goes through the full board and it was effective.
I think it was all so there was less volatility.
Speaker 1 (04:03):
Explain that why was there less volatility?
Speaker 4 (04:05):
Well, because you've got a group of seven people on
the board and there will be some as appointments changed,
there will be there'll be some changes in the approach
to regulation. But putting it all in a single person,
admittedly just to recommend to the board can lead to
it can lead to some volatility in these things.
Speaker 2 (04:22):
Which which is really I'm curious what you make of that. A.
Speaker 1 (04:25):
I think that Jay's right, it will lead to more
at the margin volatility and regulation. I think when you
look at what has actually happened. The approach of you know,
I'm going to put some extreme changes on the table
and if you don't like it, vote no.
Speaker 3 (04:43):
Didn't work.
Speaker 1 (04:45):
Jay is right that it will lead to more volatility
in debate around this.
Speaker 3 (04:51):
That was the point of the post.
Speaker 1 (04:52):
There are different ways that one could address the issue,
but I think that is actually a good feature. If
you're going to preserve the independence of the FED system
with respect to monetary policy, which I think is a
sensible thing to preserve, the institution has to be willing
(05:14):
to accept that many other things that are within its purview.
Its participation in the payment system, it's regulation of banks,
it's regulation of other financial institutions.
Speaker 3 (05:25):
There are a range of tasks that have been given
to the FED.
Speaker 1 (05:30):
Those are appropriately more subject to political influence, to political direction,
even than monetary policy. And if the FED were to insist, look,
we are seven philosopher kings and we have fourteen year terms.
(05:50):
We are above this political input on everything that we do,
and we will consider the regulatory issues in the same
way as we consider monetary policy issues, and we will
give your input, whatever constituent you are, all the consideration
it is due. Then inevitably we're going to undermine confidence
(06:12):
in the institution and erode the support for the independence
of the FED with respect to what's really important for
it to have independence with which is monetary policy.
Speaker 2 (06:25):
You bring up central bank independence, and Trump has pivoted
quite a bit since he was inaugurated this year. He's
no longer aggressively admonishing j. Powell in public, calling him
a quote bonehead, or talking privately about firing him. Is
this for you a sigh of relief or are you
kind of bracing for something another u turn from this president.
Speaker 3 (06:46):
No, I don't.
Speaker 1 (06:46):
Expect there to be I think that for the reasons
that everyone listen to this would probably agree with. There
are good reasons for the Federal Reserve to be insulated
from the political pressure with regarding mine minitary policy. Now
you can talk about the style in which it was done.
There's a Trump style. It is not to everyone's chase.
(07:08):
And Jay is a very good friend of mine, and
you know so, I was not particularly happy with the
style in which his comments were made earlier.
Speaker 3 (07:15):
But it's not as though it's.
Speaker 1 (07:17):
Illegitimate for a president to comment on monetary policy. It's
not as though it's a violation of norms. It is
not unprecedented. I don't even think it's necessarily appropriate for
a president to comment on the Federal Reserve's monetary policy stands.
I mean, presidents have done that over the century long
(07:39):
history of the FED, many many times to a much
greater degree. You know, Lyndon Johnson famously, you know, pushing
Bill Martin up against the wall, Harry Truman calling the
entire FOMC into his office and saying, you will do
what I say, and then announcing to the press that
they had agreed to do what he.
Speaker 3 (07:59):
Said, even though they had not.
Speaker 2 (08:00):
They've got political motivations there, right, because if you can
juice the economy, cut rates, get growth going, I can
get reelected again.
Speaker 1 (08:07):
Yes, the practice of presidents not commenting on monetary policy
is a relatively recent one. It goes back to Bill Clinton.
You know that it was inappropriate for a president to
say something about monetary policy goes back to Bill Clinton.
Speaker 3 (08:23):
And it was advice, as I.
Speaker 1 (08:25):
Understand it, that it was given to him sort of
early on, which is, don't get in a fight with
the Fed, because you'll lose the lessons of that century
of history of presidents being willing to come in on
monetary policy is that they almost always lost.
Speaker 2 (08:38):
Trump issued an executive Order on Independent Agencies last month,
and that would give the executive branch more authority over
financial regulation that sits inside the FED, but has a
carve out to retain the Fed's authority of or interest rates.
I'm wondering what you make of that.
Speaker 1 (08:54):
Well, I think it's an example of the fact that
there's just a general agreement that monetary policy should be
is appropriately insulated from direct political control and the force
of direct political influence. That doesn't mean that it has
(09:14):
to be or even should be spared political commentary, including
by the president.
Speaker 2 (09:20):
What about allowing the executive branch more authority over financial regulation?
Speaker 3 (09:24):
That's part of the reason for this post.
Speaker 1 (09:28):
Financial regulation is something that is inherently has a strong
political element. A wise political system will not be constantly
churning regulation from one pole to another, but should be
regularly refining regulation. A very reasonable program for any political
(09:49):
administration is to improve the productive capacity of the economic infrastructure,
and you can't really be effective in doing that without
affecting financial regulation. If we're really to address our fiscal situation,
we can only do that by growing the denominator of
(10:10):
the debt to GDP ratio. There's just not enough political
agreement in the country to agree on either tax increases
or spending decreases of the scale that would be necessary
to really change the debt to GDP trajectory.
Speaker 3 (10:29):
And we did it in the aftermath of World War Two.
We can do it again.
Speaker 1 (10:32):
That's absolutely not unattainable.
Speaker 3 (10:35):
But you can only do it by growing the economy.
Speaker 2 (10:40):
When we come back. What quarrels is watching as Trump's
second term unfolds and his thoughts on Doge going under
the hood of Treasury's payment system. So we've been talking
about the Federal Reserve, but I'm a former treasurreer or
that's my favorite building to talk about, and you've been
(11:02):
inside of there. One part of that agency that everyone
is talking about these days is the payment system. It's
gone mainstream. It's within the Bureau of Fiscal Service, which
is inside the Domestic Finance unit that you oversaw as undersecretary.
So you know how sensitive and significant the work that
that bureau does. How do you feel about Doge's access
(11:23):
to the payment system.
Speaker 1 (11:25):
I haven't talked with the folks at the Treasury. You know,
who are directly involved with that about the Doge incident.
Speaker 3 (11:34):
So there are details that I don't know.
Speaker 1 (11:38):
I'm actually a fan of the concept of DOGE, and
you know, the administration has said that Doze has gone
in with read only access to the systems that Treasury runs.
And in that case, that seems like a totally legal
and be a perfectly appropriate thing for a president to do,
(11:59):
to say, look, I want second pair of eyes to
come in and look at this.
Speaker 2 (12:04):
Do you think that there are certain safeguards that need
to be in place.
Speaker 1 (12:07):
I would think that the principal safeguard is that their
access be read only.
Speaker 2 (12:12):
I'm curious, what are you going to be watching for
in the next coming weeks and months of Trump's second term.
Speaker 5 (12:17):
I'll principally be watching for the success in seeking to
accelerate a deregulatory program that can materially improve the productive.
Speaker 1 (12:28):
Capacity of the economy, because I do believe that the
greatest economic and financial issue that the country phases is
not anything in the banking system currently, but it is
fundamentally the debt to GDP ratio and the trajectory that
it's on. So in the Eisenhower Kennedy administrations. Eisenhower tried
to pay down the debt with very high marginal tax rates,
(12:49):
and it wasn't terribly successful. Kennedy came in, had a
big tax cut, and then over time inflation was a
big part of that too, with the Johnson fiscal stimulus.
But over time the denominator grewed in such a way
that the detch GPE ratio was quite reasonable as we
moved into the seventies.
Speaker 3 (13:05):
But our tax level is already relatively low.
Speaker 1 (13:08):
I think it can be brought a little lower, but
it's already relatively low. We can't get that same sort
of juice from cutting taxes that we could in nineteen sixty.
We can get a lot of juice out of streamlining
regulation and rationalizing regulation. So what I'll mostly be looking
for is the success in the administration's program of doing that.
And part of it is that I'm trained as a lawyer,
(13:30):
but that's one of the reasons that the fights over
sort of control of the administrative agencies I find are
very interesting.
Speaker 2 (13:39):
So we've covered what you're looking at in your old
stomping grounds in the executive branch. What about over that
the Fed? This week we've got a rd deecision. Powell
has this balancing act right. He has to make sure
investors are sure that the economy is strong, but that
the FED will step in if it needs to. How
do you see Powell handling this on Wednesday?
Speaker 1 (13:55):
There's a lot of uncertainty right now that's affecting the
stock market. I did not see it actually affecting the fundamentals.
Speaker 3 (14:04):
Of the economy.
Speaker 1 (14:05):
And we aren't completely done with getting inflation back down
under control. So I agree that it's a difficult balancing act,
but that the thumb on the scale definitely ought to
be on the side of ensuring that we keep inflation
under control. And putting the thumb on the other side
of the scale, would I think risk reaccelerating inflation concerns.
Speaker 2 (14:27):
So you don't see tariffs causing a recession from the beginning.
Speaker 1 (14:30):
Of the process, I've said, you know, I expect that
we don't get inflation under control at the end of
the day without a short and shallow recession. Might there
be a recession? If so, it would be short and shallow.
It would not trouble me with respect to the fundamental
strength of the economy. On the other side of that
brief correction and much more important.
Speaker 3 (14:49):
To get inflation right.
Speaker 2 (14:50):
All right, Randy, sir, thank you so much for joining.
It was a pleasure to have you.
Speaker 3 (14:53):
Thanks. It's good to be on.
Speaker 2 (15:00):
This is the Big Take DC podcast from Bloomberg News.
I'm Sialia Mosen. This episode was produced by Julia Press.
It was edited by Aaron Edwards and Reed Pickard. It
was fact checked by Adrianna Tapia and mixed and sound
designed by Alex Sugia. Our senior producer is Niami Shaven.
Our senior editor is Elizabeth Ponso. Our executive producer is
Nicole beemsterbor Sage Bauman is Bloomberg's head of podcasts. If
(15:22):
you liked this episode, make sure to subscribe and review
The Big Take DC wherever you listen to podcasts. It
helps people find the show. Thanks for listening.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
It's a busy week for the Federal Reserve. On Monday,
President Trump confirmed his pick for the role of vice
chair for supervision, Michelle Bowman. We're also expecting a rate
decision tomorrow at a pretty tenuous time for the economy.
The Central Bank may have to take actions that don't
necessarily align with Trump. So there have been a lot
of questions about the Fed's independence lately, and I wanted
(00:31):
to sit down with someone who knows the system inside
and out. Randy. It is such a pleasure to have
you on the show. Super Randy Quarrels is kind of
rare among public servants. He hasn't worked at just the
Federal Reserve. He's also worked at the Treasury Department. When
I was writing my book about the Power of the Dollar,
I researched Treasury like a historian. I witnessed live bond
(00:52):
auctions and toward the underground tunnels of the building. By
and large, the inner workings of the Fed and Treasury
aren't things that the average American pays the time tention to,
But these days it's kind of gone mainstream, which is surprising,
and it's all because Elon Musk's Doge is rummaging through
Treasury's books. Corals served as a senior Treasury official in
(01:12):
the George W. Bush administration. It was an era of
conservatism that's lost power in the Republican Party in recent
years with Trump's rise. The Corals also was nominated by
Trump to be the first ever Vice Chair for Supervision
at the Federal Reserve, a job he held from twenty
seventeen to twenty twenty one. So I wanted to ask
(01:32):
Quarrels about all of this Doge's interference at Treasury, Trump's
passed threats to the Fed's independence, and the many challenges
facing US financial regulators right now. From Bloomberg's Washington Bureau.
This is the Big Take DC podcast. I'm Saliah Mosen
today on the show, a conversation about the FED in
(01:53):
a busy week for the Central Bank with former Fed
and Treasury official Randy Quarrels. Randy Quarrels was the first
person to hold the role a Vice Chair for Supervision
at the Federal Reserve. It's a role that was created
by the Dot Frank Act after the Global Financial crisis
to have one point person in charge of making policy
(02:15):
recommendations about the regulation and supervision of banks to the board.
And it's the sort of role the average Americans shouldn't
really have to think about. If you are, there's probably
a problem in the economy somewhere, like when Silicon Valley
Bank collapsed in twenty twenty three and suddenly Americans were
worried about their community banks failing. Quarrels told me about
(02:36):
what he was hearing when he first took that vice
chair role in twenty seventeen.
Speaker 1 (02:41):
I was urged by a lot of people, you know,
just burn this to the ground, you know, put a
pack of a palm on your back and smite them
hip and thigh.
Speaker 3 (02:49):
Okay, I could probably.
Speaker 1 (02:52):
Get that done, but they would just get undone when
the next swinging of the political pendulum happened. And that's
not good for anybody. It's not good for policy, it's
not good for the industry, it's not good for stability,
it's not good for the public.
Speaker 3 (03:08):
And so my thought going in.
Speaker 1 (03:10):
Was, if the changes that are made, you know, to
refine the framework that was put in place in the
immediate aftermath of the Great Financial Crisis, you know, if
we have as.
Speaker 3 (03:22):
Much thought put into those changes.
Speaker 1 (03:24):
If we produce as much analysis around that, and if
they benefit from as much input from all sorts of
different places, the changes will be more likely to last.
Speaker 2 (03:35):
Last month, Chair Powell said during a hearing that the
creation of the rule that you had led to more
quote volatility, and I'm actually going to play the exchange
between him and the House lawmaker.
Speaker 1 (03:46):
Do we really need to have a separate vice chair
of supervision?
Speaker 4 (03:51):
So for many years, as you know, we did our
business without advice chare for supervision. What that means is
everything goes through the full board and it was effective.
I think it was all so there was less volatility.
Speaker 1 (04:03):
Explain that why was there less volatility?
Speaker 4 (04:05):
Well, because you've got a group of seven people on
the board and there will be some as appointments changed,
there will be there'll be some changes in the approach
to regulation. But putting it all in a single person,
admittedly just to recommend to the board can lead to
it can lead to some volatility in these things.
Speaker 2 (04:22):
Which which is really I'm curious what you make of that. A.
Speaker 1 (04:25):
I think that Jay's right, it will lead to more
at the margin volatility and regulation. I think when you
look at what has actually happened. The approach of you know,
I'm going to put some extreme changes on the table
and if you don't like it, vote no.
Speaker 3 (04:43):
Didn't work.
Speaker 1 (04:45):
Jay is right that it will lead to more volatility
in debate around this.
Speaker 3 (04:51):
That was the point of the post.
Speaker 1 (04:52):
There are different ways that one could address the issue,
but I think that is actually a good feature. If
you're going to preserve the independence of the FED system
with respect to monetary policy, which I think is a
sensible thing to preserve, the institution has to be willing
(05:14):
to accept that many other things that are within its purview.
Its participation in the payment system, it's regulation of banks,
it's regulation of other financial institutions.
Speaker 3 (05:25):
There are a range of tasks that have been given
to the FED.
Speaker 1 (05:30):
Those are appropriately more subject to political influence, to political direction,
even than monetary policy. And if the FED were to insist, look,
we are seven philosopher kings and we have fourteen year terms.
(05:50):
We are above this political input on everything that we do,
and we will consider the regulatory issues in the same
way as we consider monetary policy issues, and we will
give your input, whatever constituent you are, all the consideration
it is due. Then inevitably we're going to undermine confidence
(06:12):
in the institution and erode the support for the independence
of the FED with respect to what's really important for
it to have independence with which is monetary policy.
Speaker 2 (06:25):
You bring up central bank independence, and Trump has pivoted
quite a bit since he was inaugurated this year. He's
no longer aggressively admonishing j. Powell in public, calling him
a quote bonehead, or talking privately about firing him. Is
this for you a sigh of relief or are you
kind of bracing for something another u turn from this president.
Speaker 3 (06:46):
No, I don't.
Speaker 1 (06:46):
Expect there to be I think that for the reasons
that everyone listen to this would probably agree with. There
are good reasons for the Federal Reserve to be insulated
from the political pressure with regarding mine minitary policy. Now
you can talk about the style in which it was done.
There's a Trump style. It is not to everyone's chase.
(07:08):
And Jay is a very good friend of mine, and
you know so, I was not particularly happy with the
style in which his comments were made earlier.
Speaker 3 (07:15):
But it's not as though it's.
Speaker 1 (07:17):
Illegitimate for a president to comment on monetary policy. It's
not as though it's a violation of norms. It is
not unprecedented. I don't even think it's necessarily appropriate for
a president to comment on the Federal Reserve's monetary policy stands.
I mean, presidents have done that over the century long
(07:39):
history of the FED, many many times to a much
greater degree. You know, Lyndon Johnson famously, you know, pushing
Bill Martin up against the wall, Harry Truman calling the
entire FOMC into his office and saying, you will do
what I say, and then announcing to the press that
they had agreed to do what he.
Speaker 3 (07:59):
Said, even though they had not.
Speaker 2 (08:00):
They've got political motivations there, right, because if you can
juice the economy, cut rates, get growth going, I can
get reelected again.
Speaker 1 (08:07):
Yes, the practice of presidents not commenting on monetary policy
is a relatively recent one. It goes back to Bill Clinton.
You know that it was inappropriate for a president to
say something about monetary policy goes back to Bill Clinton.
Speaker 3 (08:23):
And it was advice, as I.
Speaker 1 (08:25):
Understand it, that it was given to him sort of
early on, which is, don't get in a fight with
the Fed, because you'll lose the lessons of that century
of history of presidents being willing to come in on
monetary policy is that they almost always lost.
Speaker 2 (08:38):
Trump issued an executive Order on Independent Agencies last month,
and that would give the executive branch more authority over
financial regulation that sits inside the FED, but has a
carve out to retain the Fed's authority of or interest rates.
I'm wondering what you make of that.
Speaker 1 (08:54):
Well, I think it's an example of the fact that
there's just a general agreement that monetary policy should be
is appropriately insulated from direct political control and the force
of direct political influence. That doesn't mean that it has
(09:14):
to be or even should be spared political commentary, including
by the president.
Speaker 2 (09:20):
What about allowing the executive branch more authority over financial regulation?
Speaker 3 (09:24):
That's part of the reason for this post.
Speaker 1 (09:28):
Financial regulation is something that is inherently has a strong
political element. A wise political system will not be constantly
churning regulation from one pole to another, but should be
regularly refining regulation. A very reasonable program for any political
(09:49):
administration is to improve the productive capacity of the economic infrastructure,
and you can't really be effective in doing that without
affecting financial regulation. If we're really to address our fiscal situation,
we can only do that by growing the denominator of
(10:10):
the debt to GDP ratio. There's just not enough political
agreement in the country to agree on either tax increases
or spending decreases of the scale that would be necessary
to really change the debt to GDP trajectory.
Speaker 3 (10:29):
And we did it in the aftermath of World War Two.
We can do it again.
Speaker 1 (10:32):
That's absolutely not unattainable.
Speaker 3 (10:35):
But you can only do it by growing the economy.
Speaker 2 (10:40):
When we come back. What quarrels is watching as Trump's
second term unfolds and his thoughts on Doge going under
the hood of Treasury's payment system. So we've been talking
about the Federal Reserve, but I'm a former treasurreer or
that's my favorite building to talk about, and you've been
(11:02):
inside of there. One part of that agency that everyone
is talking about these days is the payment system. It's
gone mainstream. It's within the Bureau of Fiscal Service, which
is inside the Domestic Finance unit that you oversaw as undersecretary.
So you know how sensitive and significant the work that
that bureau does. How do you feel about Doge's access
(11:23):
to the payment system.
Speaker 1 (11:25):
I haven't talked with the folks at the Treasury. You know,
who are directly involved with that about the Doge incident.
Speaker 3 (11:34):
So there are details that I don't know.
Speaker 1 (11:38):
I'm actually a fan of the concept of DOGE, and
you know, the administration has said that Doze has gone
in with read only access to the systems that Treasury runs.
And in that case, that seems like a totally legal
and be a perfectly appropriate thing for a president to do,
(11:59):
to say, look, I want second pair of eyes to
come in and look at this.
Speaker 2 (12:04):
Do you think that there are certain safeguards that need
to be in place.
Speaker 1 (12:07):
I would think that the principal safeguard is that their
access be read only.
Speaker 2 (12:12):
I'm curious, what are you going to be watching for
in the next coming weeks and months of Trump's second term.
Speaker 5 (12:17):
I'll principally be watching for the success in seeking to
accelerate a deregulatory program that can materially improve the productive.
Speaker 1 (12:28):
Capacity of the economy, because I do believe that the
greatest economic and financial issue that the country phases is
not anything in the banking system currently, but it is
fundamentally the debt to GDP ratio and the trajectory that
it's on. So in the Eisenhower Kennedy administrations. Eisenhower tried
to pay down the debt with very high marginal tax rates,
(12:49):
and it wasn't terribly successful. Kennedy came in, had a
big tax cut, and then over time inflation was a
big part of that too, with the Johnson fiscal stimulus.
But over time the denominator grewed in such a way
that the detch GPE ratio was quite reasonable as we
moved into the seventies.
Speaker 3 (13:05):
But our tax level is already relatively low.
Speaker 1 (13:08):
I think it can be brought a little lower, but
it's already relatively low. We can't get that same sort
of juice from cutting taxes that we could in nineteen sixty.
We can get a lot of juice out of streamlining
regulation and rationalizing regulation. So what I'll mostly be looking
for is the success in the administration's program of doing that.
And part of it is that I'm trained as a lawyer,
(13:30):
but that's one of the reasons that the fights over
sort of control of the administrative agencies I find are
very interesting.
Speaker 2 (13:39):
So we've covered what you're looking at in your old
stomping grounds in the executive branch. What about over that
the Fed? This week we've got a rd deecision. Powell
has this balancing act right. He has to make sure
investors are sure that the economy is strong, but that
the FED will step in if it needs to. How
do you see Powell handling this on Wednesday?
Speaker 1 (13:55):
There's a lot of uncertainty right now that's affecting the
stock market. I did not see it actually affecting the fundamentals.
Speaker 3 (14:04):
Of the economy.
Speaker 1 (14:05):
And we aren't completely done with getting inflation back down
under control. So I agree that it's a difficult balancing act,
but that the thumb on the scale definitely ought to
be on the side of ensuring that we keep inflation
under control. And putting the thumb on the other side
of the scale, would I think risk reaccelerating inflation concerns.
Speaker 2 (14:27):
So you don't see tariffs causing a recession from the beginning.
Speaker 1 (14:30):
Of the process, I've said, you know, I expect that
we don't get inflation under control at the end of
the day without a short and shallow recession. Might there
be a recession? If so, it would be short and shallow.
It would not trouble me with respect to the fundamental
strength of the economy. On the other side of that
brief correction and much more important.
Speaker 3 (14:49):
To get inflation right.
Speaker 2 (14:50):
All right, Randy, sir, thank you so much for joining.
It was a pleasure to have you.
Speaker 3 (14:53):
Thanks. It's good to be on.
Speaker 2 (15:00):
This is the Big Take DC podcast from Bloomberg News.
I'm Sialia Mosen. This episode was produced by Julia Press.
It was edited by Aaron Edwards and Reed Pickard. It
was fact checked by Adrianna Tapia and mixed and sound
designed by Alex Sugia. Our senior producer is Niami Shaven.
Our senior editor is Elizabeth Ponso. Our executive producer is
Nicole beemsterbor Sage Bauman is Bloomberg's head of podcasts. If
(15:22):
you liked this episode, make sure to subscribe and review
The Big Take DC wherever you listen to podcasts. It
helps people find the show. Thanks for listening.
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