Ep 78 | Brian Wesbury | How Has the “Chairman in Name Only” Performed so Far? | ROI Podcast

Brian Wesbury discusses the impact that the Trump administration’s immigration and trade policies have had on the economy so far, as well as how Keven Warsh is navigating the early stages of his term as Chairman of the Fed.

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Transcript

Big Policy Questions Ahead

Ryan 0:12

How will changing immigration policies, new tariff policies, and a new Fed chair impact the economy? Joining today on the First Trust ROI podcast is Brian Westbury, chief economist at First Trust. I hope you enjoy.

The Monday Morning Outlook Origin

Ryan 0:40

Okay, so give me give me a little background of the uh the Monday morning outlook. Um how did that come about?

Brian 0:45

Yeah, well, I uh that's a good question. The so uh back I I started at the Harris Bank in Chicago. It's now called Bemo, B uh Bank of Montreal, but they they bought us in the mid-80s. But um there was a trading desk for currencies and bonds, and we were the econ department, and I and they started getting me to come up and talk to them on Monday morning. And and then I'm finally like, well, I should I should just write up my thoughts like over the weekend, like what happened last week, what I expect this next week, or just some topic, and then I would hand it out to them, and and then I slowly but surely got connected with the press, like Wall Street Journal, New York Times, USA Today. And back then, this is the 80s, I would literally write my Monday morning outlook and stand over the fax machine and send them out one at a time. And and then we got a new fax machine that you could put a list of numbers in there. Yeah, and then you only had to hit one button, and I didn't have to do them one at a time. But back then, if your fax machine on the other end was out of paper, it would send a signal back out of paper. So then I had to call and go, your fax machine's out of paper, and they would fix the problem, and then it would go. Um, and slowly but surely, like literally, I had five people, 10, 20, 40 on this list, and then today it's 62,000 people on the Monday morning outlet. Um, and technology has made it a lot easier to get out. But I literally stood over the fax machine for hours sending that thing out.

Ryan 2:46

It would take a lot of interns standing over a lot of fax machines for 62,000 at this point. Um that's uh yeah, that's a great story.

Immigration Policy And Economic Ripples

Ryan 2:55

So there was a recent uh Monday morning outlook that you and uh your team wrote where you were connecting immigration policies to the impact that that's having on the economy. So the Trump administration comes in, they change radically some of the immigration policies. Um, so a two-part question for you. First off, um, have you been able to like maybe quantify what the change has been? And then secondly, um let's talk about the impact on the economy. Sure.

Brian 3:23

Like, well, we we know, I mean, conservatively, the figure in the four years of the Biden administration, eight million people came across the border. Like, some people say it's 10, some people say it's 12. We just went with eight. But it does it doesn't really matter because it was a lot of people. And then in the last 18 months, we've probably had negative net immigration, like because we've stopped it, the border is closed, and we've deported a lot of people, or and and a lot of people have self-deported as well. So it's probably negative immigration. And what this does from an economic point of view is obviously affect the population of the country, and therefore it affects uh demand for rental housing, uh, it affects jobs, uh, it affects income. Um, and and so we what we did in our last Monday morning outlook was dissect all of uh those impacts. And you can actually see at the lower levels of income, like low kind of I don't want to call it low I like just labor, like like low uh IQ labor. I I hate saying it that way, um, but mowing along or landscaping. Yeah, jobs that don't require a lot of intellectual. They're not a college degree job. Uh what's happening is the incomes in that sector are rising way faster than incomes at the higher levels of of uh education, let's say. And and so uh this is having a massive impact. It's also uh slowed down job growth in the U.S. But but that would be expected if you have less population growth. Um, and it's also brought rents down because there's less demand for rental housing. So so the point is is that this is, I mean, it's a it's a huge change um in immigration policy, but it's having an impact all across the economy.

Ryan 5:37

So that labor cohort that's the low-skilled labor, the you know, the sort of physical labor um has had uh a boost. Um can you tell that it's not just the whole um, you know, the whole labor market that's getting boosted income? Well, how's that compare to the the higher skilled labor?

Brian 5:56

Yeah, well, we know that incomes for the 25th percentile are going up faster than the 75th percentile. And that suggests that uh I mean, and I I mean I could give you numbers, but all of this, like we we actually don't even know what the population is perfectly in this country. We we can guess, we know, but we know immigration policy has changed. And then we can look at these incomes, we can look at job growth, we can look at rental uh costs, and it's having an amaz a major impact on the economy.

Ryan 6:33

And do you think that that is a net positive for the overall economy? Or I mean there's probably puts and takes, but overall is it a net positive? I think it is.

Brian 6:42

Like, yeah, we we you know everybody complains we we lack a middle class. I still think the number one problem is the size of the government, and we haven't changed that. Um but but the but the point is is that by having less immigration, yes, um, with incomes going up at the lower levels, this is it's a good thing.

Tariffs Revenue Trade And Reshoring Doubts

Ryan 7:05

Um the other hallmark policy of the Trump administration, there, you know, the immigration has been a big, a big change to your point. Um the other really big change when the Trump administration came into power was the implementation of tariffs um and that had a big impact on markets, big impact on um sentiment. Certainly, I'm not sure um the impact on the economy was as as big as some might have expected it to be. Maybe you can inform us otherwise. But um what's your what's your take on where we are now? There's been some Supreme Court decisions that have um you know kind of changed things for that a bit. And so where are we with respect to uh tariffs?

Brian 7:46

You know, you know what's interesting is the is the Supreme Court ruled, and they and they were right that tariffs are a tax, and the president does not is not by the Constitution given the power to tax. Um and so they were right, but what he's done is he's run around them and put them back in anyway, uh using other they're gonna have to rule again because he's got 15 different ways to do these things. And um uh and and what I I guess the the most important thing I would say is it it has raised revenue for the government, and it still is. We have record revenue this year from tariffs. Um at the same time, the average tariff rate is lower than it was, and and yet uh the world is still trading. So what's what's fascinating is we're putting these tariffs on, but trade hasn't gone down. In fact, it's gone up. So uh I mean the the the point of the tariffs was we want to reshore manufacturing. And I I still believe that the tariffs are tariffs themselves are the wrong way to do that. It's like Maha. Um Maha says uh there's something wrong with our food supply, and all we do is we treat the symptoms of it obesity, diabetes, inflammation. And I would argue that tariffs are the same thing. What we're treating is the symptoms of bad government policy, big government like spending, uh boosting consumption, high taxes, high regulation, all of these things uh lead us to a bigger trade deficit. And it's kind of like a bad food policy leading to obesity, or bad food leading to obesity. And then we put a tariff on to fix the problem. And what we should be doing is cutting taxes, cutting spending, and cutting regulation. That's what we should be doing. Um, tariffs are the wrong answer, they're treating the symptom, not the cause. And so then the question is that well, uh President Trump has said it. What we want to do is we're gonna put a tariff on so we reshore manufacturing. Well, manufacturing is up today, but it's up because of data centers. It's up because of AI, it's up, it's it's all of the massive uh a trillion dollars being spent on data centers. And there's little evidence, little evidence that um that the tariffs have led to any reshoring at all. And I would argue one of the reasons is because the next president may not use them. And and so if if if if a president puts a tariff on, the next one may take it away. And so would you really invest a billion dollars to build a plant today? And and my answer is probably not. And so we we we do see production up in the US, but I think it's all related to AI and data centers. You take that out, and GDP is growing less than 1%.

Ryan 11:16

So do you think then that companies are kind of looking through um the tariff policies as being temporary in you know, semiconductor companies in particular, I'm thinking of, where the Biden administration and and Congress implemented the CHIPS Act. And so you had all these semiconductor companies.

Brian 11:33

I mean, President Trump has continued it. Like we're we're still investing in these companies. So, no, that's happening, but I think that's related to AI. I think it's related to the data.

Ryan 11:45

Without a doubt, yeah.

Brian 11:46

And so so outside of all of that, we don't see big evidence or any real evidence of a massive increase in in reshoring or or bringing manufacturing back to the U.S. Uh we have had an increase in manufacturing jobs, and I and I think that uh has it it's partly because the but it's it's hard to like when you build a data center, you need everything. You need air conditioning, you need steel, you need corrugated metal, you need cement, you need like refer like you need everything. Yeah, and and so yes, we we've seen. Yeah, all those supply chains need to be tilled, right? And the question is how much of this production is related to that, and how much is related to to let's say tariff induced reshoring, and it's really hard to tell. Like it it's it's almost impossible to tease out of the data. And I would argue that without data centers, our economy would be growing less than half of what it's growing right now.

Ryan 12:58

Right. Yeah. Uh and I so data centers have a lot of electricity that they need, so all that infrastructure needs to be one place. Then the generation side.

Brian 13:06

I mean, you need cyclone fencing and barbed wire to go around.

Ryan 13:09

Like you need all the time. But and then those companies aren't all of a sudden they have this surge of demand and they're not equipped to meet that demand. So then they have their own capex cycle. Yep. So there's kind of like an echo, but it's all linked. Yeah.

Brian 13:21

I I believe it's all linked to AI, yeah, and and data centers. Like, and and so when people claim there's evidence of reshoring because manufacturing is picked up, yeah. I mean, like I said, you gotta build cyclone fences to go around the the power stations and barbed wire and all all of those, you know, you need screws and nuts and bolts and like all of those things. And the question is, is that because we have tariffs, or is that because we have this huge surge in data center investment? And I my belief is it it's data centers.

Ryan 14:01

Yeah. So in the absence of the tariffs, you think it wouldn't have really changed any of that dynamic?

Brian 14:07

If I'm gonna build a billion-dollar paper mill or aluminum smelter or whatever it is, and I'm gonna do it because it there's a terraf on today, like well, in two years it could go away. Yeah. Like that does it's gonna take me two years to build this thing. Of course. And and so I I I do not believe it has changed people's decisions about manufacturing in the U.S.

Ryan 14:33

Yeah. Well, maybe that's a good thing if if companies are looking beyond the short-term variation of policies, because if the you know, if if someone else comes to power that's not gonna have those policy preferences, maybe that doesn't stop the the rationale for reshoring or data centers or something like that.

Brian 14:50

I I I mean, look, uh these are grown-ups. They they make big decisions, billions of dollars of of decisions, and and if if you're gonna make them on a short-term uh policy, you you can make a big mistake.

Ryan 15:08

Yeah.

Kevin Warsh Takes The Helm

Ryan 15:09

Okay, the other thing that is uh kind of new since we last spoke is Kevin Walsh is the new Fed chair. Yes, he is. And um, well, I I think he was kind of the dark horse for a while, and then everyone kind of uh coalesced behind him. But um, how's he done so far?

Brian 15:27

Um, well, is it it's really hard to tell so far. He's had two meetings. Yeah, um, he's had dissents at the meetings. Jerome Powell is still at the Fed. Um, and he even though he uh didn't dissent, you you can kind of feel his presence because uh he he it we we we actually call Kevin Walsh uh chairman in name only because there's two chairmen there now. By the way, there's only been three chairmen in history uh of the Fed that haven't left when their term expired. Um the uh the first one was the very first chair of the Fed. So this goes all the way back to 1915 or like the the first chair, thirteen, I guess 1917. And um I think it I think he didn't leave because they thought of it sort of like the CPA Society or the CFA Society. You're the you're the treasurer, and then you're the secretary, and then you're the vice chair, and then you're the chair, and then for two years, and then you go back to be a member, and maybe you get to be a chair again someday. Like they they didn't know how to do it. Like and and the second one that didn't leave was Eccles. Um, and he he hated Harry Truman, so he didn't leave. And uh Jerome Powell's not leaving because he didn't like President Trump, and he claims it's all about independence of the Fed, and he's gonna stick around and and fight for independence. So what's happening is he's actually undermining the new chairman, um, I I believe, like in behind the scenes. We we don't know for sure. Um, but let's die, let's dig into Kevin Warsh. What he

Forward Guidance And Market Manipulation

Brian 17:18

has said is we want to shrink the balance sheet. Um, I everybody believed all he's gonna do is cut interest rates. He he can't do that. There's not enough evidence of low inflation or slow growth to cut cut interest rates. But the other thing that he said is that I want to get rid of forward guidance. So forward guidance was started by uh uh Ben Bernanke back in 2008, and and what he did is he set short-term interest rates at zero, and then he basically said we're gonna hold them there forever. And if you do that, so think about this. If if you if you if you if you're looking at a two-year bond, what is a two-year bond? Well, it's two one-year bonds, or it's four um or eight, excuse me, three-month bonds, or it's twenty-four thirty-day bonds. And and so if I tell you I'm gonna hold short rates, the one month, like let's say, at zero forever, what's gonna happen to the two-year? Well, it's gonna go to zero. Because a two-year is just two one years, or as I said, eight, three months. And and and so forward guidance was his way of manipulating long-term interest rates. That's that's why they did it. And Kevin Warsh says, this is crazy. We we shouldn't be doing this, we shouldn't be trying to influence the market. And and and this is driving a lot of people crazy because what they want actually, you know what's interesting, um uh Ryan, it is there are there's this whole belief in in the world that all the Federal Reserve does is follow the futures market. So if if the futures market says there's an 80% chance of the Fed raising rates, then they'll just raise rates. So people go, well, this is easy. Like I I can forecast the Fed because the futures market says this is what they should do, so they're gonna do it. Well, why does the futures market say there's an 80% chance of raising rates? Because of forward guidance. In other words, the Fed says we're gonna raise rates, so the market goes, the Fed's gonna raise rates, and then people go, Well, see, all the all the all the Fed did was follow the market. When in reality, what the Fed did was push the market, and then they followed through on what they the forward guidance was. They they followed through on what they said they were gonna do. And and so this whole thing needs to go away. And Kevin Walsh has said he's gonna get rid of forward guidance, and it's driving people crazy. Because and and in fact, uh Scott Bissent, uh the Treasury Secretary, just went after uh Nick Tim Timoros, right? Timorrose. Yeah, Timor. Wall Street Journal? Yeah, Wall Street Journal. He just went after him because all he ever did, he he's the Fed reporter. And by the way, I believe Jerome Powell has him on speed dial. Um, and he says, hey, we're gonna raise rates. And then Nick Timorows would write an article that says the Fed's gonna raise rates, and this is all part of forward guidance, and and that's why Scott the Sentman after him, because he's like he's just a mouthpiece for Jerome Powell. And he knows now that Jerome Powell is still in the Fed, he still has the ear of the Wall Street Journal, Nick Nick Timorows, um, and Kevin Walsh is the chairman, and but what what's happening is there's this battle, and that's why Scott Bissent went after Nick Timorows.

Ryan 21:25

So as a result of maybe uh I don't know, curtailing completely, but eliminating to some degree forward guidance, is that going to result in a more sort of market-based rates? Is that is that the goal

Abundant Reserves And A Bloated Fed

Ryan 21:40

is the goal?

Brian 21:41

Hopefully, yeah, that's that's the whole point. The problem is as long as they have abundant reserves instead of scarce reserves, there is no trading of federal funds. And I and we've talked about this before. It's it it gets tedious, it gets boring. I put People to sleep when I talk about it. Um, it but but what's happened is when you do abundant reserves, when you throw that many reserves in the system, banks no longer have to trade them. Like every bank used to have a federal funds trading desk. They they used to have one. They don't have them anymore because they're overwhelmed with reserves. They don't have to trade, they don't have to borrow them, they got more than reserves than they need. And so what happens is we don't have a market for federal funds anymore. Um, and and so where does this interest rate, the federal funds rate, come from? It it come the Fed just makes it up. Like they literally set it wherever they want. I call it price fixing. They they fix the price of short-term money. And and and so that's by the way, that's where forward guidance comes from. We're gonna set it at zero and we're gonna hold it here for five years. Like they they never set it exactly that way, but they basically said, we're gonna hold it here till conditions change or warrant a change or whatever they said. But but they they they always had different words. But the bottom line is it the reason they were able to give forward guidance is because they set the rate. Well, what we really want is the market to set the interest rate. Like it it should be about the supply of money and the demand for money. It should be about growth and inflation and tax rates. Uh, those are the things that influence interest rates, not 12 people sitting around a table just deciding, oh, it's zero. And and so so that's what Kevin Walsh wants to get rid of. But in order for him to really succeed, he has to get rid of abundant reserves and go back to scarce reserves, completely go back. Um, and I don't think he's willing to do that. I remember he he was on the Fed in 08 in 2008, and he voted for the first round of QE. And if you read all his public statements, what he says is, well, that first QE was we saved the world. But everything after that, that was bad. So I'm afraid that what he'll do is kind of take us back to that first QE, but not all the way back to where we have a market for federal funds. How big is the Fed's balance sheet? Oh, it's uh almost 7 trillion. So and it used to be 800 billion. Yeah, like they they think Elon Musk is rich. Like, yeah, the Fed, the Fed is bigger than the top 10 sovereign wealth funds all combined.

Ryan 25:01

Seems like a big task if you want to decrease the size of that balance sheet.

Brian 25:05

Yeah, well, they what people say is it will mess up the market. Well, I believe having that big of a balance sheet messes up the market. Good point. And so I I'm like, they they shouldn't have it. It it it shouldn't, it does, it's not necessary. It's created more problems uh than it's solved. Um the the Federal Reserve has gone. They they've increased their workforce from I think 17,000 to 22,000 people working at the Fed. For what? They they don't clear checks anymore. It's all a it's all electronic now. They why? Why do they have 22,000 people working at the Federal Reserve? And why do they need a three and a half billion dollar building? They they don't, they don't need any of this. They need about 50 people, like and a couple of computers, and and they could do their job.

Ryan 26:00

So I think one of the expectations or at least narratives when Kevin Warsh was coming in uh would be that he's kind of the you know the Trump puppet and he's gonna be very dovish and he's gonna lower rates, and and that was kind of the feeling that some people had, or at least talked about. Um, he has since not been that. He is not, I mean, he he's come in and and expectations for rate hikes uh materialized, and some of that is probably unrelated to him, related to things like the war in Iran and oil prices. And um, but one of the things that surprised me has been that the president hasn't really pushed on him, at least publicly, to the degree that he did his predecessor public. Yeah.

Brian 26:41

Is that surprising to you, or is that no, I you know what's interesting about that is I think I think Scott Bassent he's a good friend of ke of Kevin's uh Kevin Walsh's. Um and I think what they did is they impressed on the president the fact that um if Walsh wanted to cut rates, let's let's say he did, and I and I actually don't think he does, but let's say he did. He has to win a vote. And if he loses the vote, then um what happens is his he's undermined. And so by I think what they did is they like first of all, there's another thing going on too, and that is the Supreme Court said, hey, the executive branch has control over all these agencies, but not the Fed. So the Supreme Court defended the Fed. And and and I believe what the uh Scott Passant and Kevin Warsh were able to tell the president that look, if you push me too hard and I lose a vote, then I lose confidence. Like the Fed loses confidence. So um, and I can't win a vote for a rate cut right now. So I think the president packed off. And and he actually there's a couple of statements from the president that sort of, you know, he's pretty transparent. And um, and he has said things that make it clear that he gets it. Like that this is this is like he can't push him around like you can a developer, uh like a framer, a like glass blower, like whatever. Like if you're building a building, you you can't do that. And so he um I I it it's it's fascinating that they've been able to convince him to lay off. But but um and and that's why I called Warsh like chairman in in name only, because Powell stayed. And he's got a a cohort of I I believe the three dissents from, by the way, they were all from regional bank presidents. And and you know who gets to name the regional bank presidents? It's the chairman, is a huge influence on who they are. And so I I believe so Powell didn't dissent last meeting, but three regional bank presidents who are affiliated with him did. And and so what's what there is a war at at the Fed and be and people don't realize it because Walsh one of the things I really like is he's going back to the pre-Bernanke era where they just don't talk. Like they they shouldn't. Um in the end, like I hope by the end of Walsh's term, people don't know who he is. Because people shouldn't know the chairman of the Fed. Because it it should be a completely neutral entity, like all it's supposed to do is keep inflation down and keep the dollar stable. It's not like if you listen to the Fed, Bernanke, Yellen, Powell, they're they're gonna fix inequality, they're gonna fix climate change, they're gonna fix employment, they're gonna fix the economy, they're gonna fix everything. And Warsh knows they can't. And that's the great thing about him, is that he's not uh gonna let the Fed go down that road

A Rules Based Fed And Good Deflation

Brian 30:26

again.

Ryan 30:26

It sounds to me like you your position would be that the the Fed would be better as just like a formula. If you didn't have a person, but you just had you know this formula to determine rates, that'd be better.

Brian 30:38

Yeah, yeah. Well Milton Friedman said we ought to replace it with a computer and just increase the money supply by three percent a year. That'd be that would be like and let interest rates go where they go. Seriously, like Friedman said that. Like, what we need is a computer, just increase the money supply at a steady pace, and that's it. Actually, I don't even think you would need I I if you froze the money supply today, just froze it. Like everybody thinks that would be terrible. It'd be great. Like it the the we there's enough money in the world, like there's plenty of money. It the question is what's the price? Every dollar has a hundred cents. So if something cost a dollar today and you don't increase, like, well, maybe it should cost 99 cents tomorrow, 98, 97. Like it in in the real state of the world without a Federal Reserve, you would have slight deflation, and that's good. Like people will get scared of deflation. Deflation is bad when the money supply collapses. Um, but if you kept the money supply stable, like didn't change it one bit, don't add one more dollar, and then productivity increases, so we increase output, so we have more goods, more services from productivity, but the same amount of money. Well, what happens to the price? Guess what? They go down. They it it's like TVs, like you know, it used to cost twenty thousand dollars to put a 60-inch TV on your wall. Now it takes $499. Is that bad? No, it's good. Like it that's we we've learned to live with deflation in technology. Why can't we learn to live with it with everything? Yeah, and so what happens then is you really don't get a pay raise unless you become way more productive, way more profitable. You sell if you're a salesperson and you have uh you you uh uh live on commissions, you sell more, you get more. That that's fine. But what I'm saying is you don't need a pay raise because the things you buy keep falling in price. So your living standard goes up even if you didn't have a pay raise. And so the this whole thing about money, it it's an illusion. You print a bunch of money, everybody feels wealthier, but in reality, it's because you just flooded the zone. That's you printed too much money. If we never increased the value of the money supply, we'd have deflation. And and that's that's actually a positive thing because it wouldn't be because we it was it, there's good deflation, there's bad deflation, and there's ugly deflation. And and and ugly deflation comes when banks fail and the money supply contracts. That's where it comes from. But but the the Fed has gotten into this business. We we should not have a 2% inflation target. And by the way, one of the things Warsh has said is I'm for two percent or less, not two per like Powell said, we need to average two percent over over time. And and that that meant we could have four if we had one, and then it averages like, and then nobody knows. At least Warsh has been serious about this. We're gonna bring inflation down to two percent or less. I think it should should be zero.

Ryan 34:30

Okay,

Fort Knox Coin Clipping And Money Abuse

Ryan 34:31

so this is a whole longer conversation that we don't have time for today, but I I'd be curious. Um the gold standard, um, I I heard you talk about it a little bit before, but um, I guess the direction I'll take uh my question here because we don't have time to dig into the gold standard as much as I'd like to. But uh Rand Paul, you were just on the remnant committee earlier this year. I I just saw a tweet um that he actually was able to visit the uh U.S. gold supply. He went to Fort Knox. So it did was what did he find there? Did he did he find gold?

Brian 35:05

Says it's there. There's uh like conspiracies on Twitter about you know that they melted coins down and they weren't pure gold, and we we need to assay all the probably chocolate coverage chocolate uh covered. Exactly. I I I don't buy that. I I believe all that gold is there, but it but we aren't on a gold standard. There's not enough gold to back our money, and and we're not on a gold standard. So at least it's at least he saw it. At least it's there. I bet he lifted one up and said, uh, it's heavy. Um, you know, so uh chocolate wrapped in gold foil. It's not well we don't think we don't think we I'm sure he didn't check every single bar, but um, but it like it's interesting how many people like circle this whole issue of money, um, and and the goal, like they're interested in Fort Knox. Is it really there? Is it not? But it like ever, I mean, for ever since humans existed, ever since we invented currencies, like coins, um the money has been a play box, if you will, for politicians. And so the Romans, what they did is they clipped coins. So you had to pay your taxes, and you gave them your Caesar coin, whatever it was. And then what they would do at the treasury in Rome is they would clip around the edge and take a little sliver off of it, and then they would do that to every coin, and then they'd melt them and make more coins, which is inflation, right? So I'm I'm putting more coins in circulation because I clip the edge of a coin. Well, that's what we I mean we do it different ways now. We do it with the Is that why we have the ridges around the quarter and the dime? Yes. I think that may actually be true. I I need, you know what? Grok that um or or or claw that because I bet you that's why. So you can tell if they've clipped the coin or not. But that we do the same thing today with the printing press. We print more money, um, and and it's the same thing as clipping coins. And monetary policy has been abused forever, and the way you fix that is you go on a gold standard or you let a computer run the money supply. Um, and Milton Friedman was all over this. He taught us all about it. It's where I learned it. Um, and then I read history too. But uh the the point is monetary policy is ripe for abuse. And and politicians, one of the one, one of my uh I I won't go too far on this, but one of my the most disappointing things that I see today is that the Federal Reserve, because of quantitative easing, because of all what they have done in 08 during the great financial crisis, and then again during COVID, um, is that they became involved with politics. They they've and we don't have time to go in all the different ways, but they financed government spending. They, I believe they've influenced the political environment by creating inequality. Um and and and then if politicians, that's what they're supposed to respond to, is political attacks or or anything that pierces the political gene um uh cell, they respond to. That's what politicians do. And and now Jerome Powell is saying, well, President Trump is violating the independence of the Fed. And I would argue the Fed violated the independence of politicians by by printing all this money, by getting involved with the great financial crisis and the COVID and doing all this quantitative easing. So in reality, it's both sides' fault, not just one. And and and I'll I'll finish here because this makes me sad, if you will. It makes

Fed Independence And Final Takeaways

Brian 39:37

me worried, because politicians should not be in charge of monetary policy ever, ever. And that's why a computer would be a great thing, because it keeps everybody out of it. You don't let the Fed do it, you don't let the politicians do it, you just let the computer do it. You know, and and and but because the Fed move too far into the political realm, politicians are reacting. And now the Fed's complaining that their independence is under attack. And I would argue it's their fault, not the politicians' fault. And we don't want politicians in charge of monetary policy either side, whether they're on the Fed or whether they're elected, I don't care. Don't let them control money because they always abuse it. They've done it, we've done it since human beings invented money. And the Roman Empire is a perfect example of that.

Ryan 40:36

That's a good place to wrap up our uh conversation. I uh as usual have about seven more topics to ask you about, but we don't have time today. But uh we'll save that for sometime this fall. All right, absolutely. All right, very good. Brian Westbury, thank you for joining us. Thanks, Brian. And thanks to all of you as well for joining us on this episode of the First Trust ROI podcast. We'll see you next time.