[00:02] Warsh just selected members who are going to be part of the task forces and oh boy, you are in for a treat on who these freaking people are. One of the these freaking people are. One of the boys literally has me blocked on Twitter
[00:17] or X as they say. And you know what I think about when people block me on X. Going into this video, I just want to be clear the thesis I hold is that Warsh
[00:31] wants interest rates to go to zero to fulfill his probable campaign promise to will likely get there though it will probably take more time than people expect. I do think that he is buying time during this transitory inflation
[00:44] period without saying it just by going dark basically. We're not going to say going to say nothing. And we are using these task forces to buy time. That is bullish for now, but in the long term it's probably bad
[00:57] because Warsh is, in my opinion, based on his history, read of what the heck he did in 2008, not that good. This frankly means that when the economy starts to struggle, which it will one day,
[01:11] probably already has in some places, Warsh won't be our best friend beyond cutting interest rates to zero. That sucks for anyone with debt. It's really really bad. It's probably worse than ever before.
[01:23] than ever before. And today he's picked a whole bundle of people who are going to give us some entertainment guaranteed. Woo. All right, let's get into it. First things first, we got Thomas Sargent, NYU
[01:35] bro. Basically, he he wrote this paper that says some unpleasant monetarist arithmetic. And he essentially said that all debt eventually just gets printed away by the money printer, which frankly, everybody
[01:49] kind of already knows that. He wrote that in 1981 and that's exactly what's happened for the last like almost 50 years here is we just print our way out of debt. Because when we print money, you know, we we issue debt the United
[02:02] States. Let's say it's a hundred billion dollars of debt, okay? Then we grow the economy for 50 years, and now we have a 23 trillion dollar economy. That once hundred billion dollars was worth a lot. But because we've inflated our fiat to
[02:14] nothing over 50 years, purchasing power has plummeted of these currencies. dollar especially. Well, then that hundred billion dollars doesn't seem
[02:26] Sounds like a maybe four month vacation in Iran. Sorry, I I misread vacation for operation in Iran. But anyway, he's got
[02:39] some banger lines. Some of them were my favorite out of the lines that he comes favorite out of the lines that he comes up with are quote, "Inflation died through the incredible or the credit the credible regime change." I hear I am
[02:53] thinking about the credit credit coaster from Disneyland. It's great. In flight, hyperinflation died through credible regime change, not gradual rate hikes. There we go. So basically, we never actually fight inflation by raising
[03:07] rates. We fight inflation through credibility. How do we prove credibility? We prove credibility by using good data. When we use good data believe the government data. We pretty much all agree with that. It's super
[03:21] lagging. It's subject to a lot of revision, and it's not forward looking. >> Well, I guess that's redundant with lagging. But anyway, the point there is how do you get credible regime change? With credible data. And you kill
[03:33] inflation with credibility, not by gradually hiking rates. Boom, there you go. Write this guy down for anti rate hikes. Good. But probably also not great for the
[03:48] money printer. His overall message has been you got to get people to believe in the Fed, and it is not fair for us to just forward guidance our way out of problems." It's kind of an interesting take. Uh he
[04:03] also believes that we should basically uh never monetize the debt, which is basically getting rid of the debt by running the money printer. That it would definitely be one heck of a change for the Federal Reserve, since
[04:18] Worstall doesn't have to pick up everything this guy says. So far, my takeaway from that first guy right there is credibility through better better is credibility through better better data, bring rates down, but stop running
[04:30] that's a theme in just a moment. Greg Mankiw. This is a uh m- Mankiw. Uh man It's It's It's m a n k i w.
[04:42] I'm not even going to try again. It's probably not Mankiw. These two We've been talking about avoiding tits. Yesterday, we were talking about the the cow is milk dry through the great suckening.
[05:01] Anyway, this Greg guy from Harvard wrote the textbooks on uh like a lot of Federal Reserve junk. In 29 In 2009, he wrote a column that the Federal Reserve should actually consider negative interest rates to
[05:14] stimulate the economy back. Now, that's pretty freaking incredible. Because he thinks that money printing to do helicopter money is a bad idea. He He
[05:26] said in 2021 after COVID that stimulus, the money printing, went way too far, interest rates. That's what he said back in 2009 to help support an economy. Now, what's really interesting about that is in 2022,
[05:40] I made a thesis. It's still my 10-year thesis today. I It's the same freaking hunt. By 2032, my thesis is we will have lower interest rates than ever before we might actually be back to negative interest
[05:52] rates. We had those before COVID in Europe. You know, they were charging you to leave money in a savings account to get you to go spend it. You had to pay money to save. Crazy, right? Anyway, he literally
[06:06] argued for negative rates to drive growth. And by doing that, you're not just blanket helicoptering money to everybody. You're saying, "All right, cheap. And whoever has the balls to actually borrow at the bottom of the
[06:19] actually borrow at the bottom of the economy, whoever has the big balls to turn this pile of into a rose garden, by all means go borrow money at negative rates cuz you deserve the profits if you can pull it off."
[06:36] >> Kind of interesting because it's been my thesis for 4 years now. Interesting to see a negative rateist. >> [laughter] >> On the uh
[06:49] on the war camp. Then we got William White. Ah, Bill White. This guy was a little bit of a doomer. He told Greenspan in 2003 that there was going to be a credit bubble.
[07:01] right, but he was 5 years early. And he basically says that ultra easy money breeds malinvestment, debt, and instability. That is probably the most consistent anti-quantitative easing guy that you
[07:16] Basically, don't run the money printer to bail people out. Let bad businesses die. That's kind of very like great reset-ish. Like just kill off the crap.
[07:29] Again, see where we're going here? We will get rid of the money printer, get rid of ultra easy money, but we'll enable the potentially strongest to borrow at cheaper prices. Which, if you think
[07:43] about it, it means all the rich people with cash are going to do just fine and with cash are going to do just fine and anyone with debt is going to get burned.
[07:55] Okay, let's keep going here. Then we got Oh, I screwed this one up. Raghuram Rajan, Chicago Booth guy, okay, this guy in 2005 wrote a Jackson Hole whole paper that said that money easy money breeds
[08:10] dangerous risk taking. Uh and obviously then 2008 happened ridiculous money policies that led up to it. And so he's a big fan of believing
[08:22] that you can crush inflation by having inflation targeting and not running the money printer. See the theme here? He argues that QE makes banks addicted to reserves. So the best thing to do is slowly shrink
[08:39] the balance sheet. Don't do things too quickly. You don't want markets to seize quickly. You don't want markets to seize up. So even though he kind of seems a up. So even though he kind of seems a little anti-low rates here, my take is
[08:51] he's much more concerned about the balance sheet. Run the balance sheet off slowly. Warsh will side with him on that and then we'll win this guy over on low to negative interest rates. Give them one thing, ask for another, win-win
[09:05] deal. Jeremy Stein, Harvard guy, actually used Jeremy Stein, Harvard guy, actually used to sit on the Fed board 2012 to 2014. Of course we just lost Bernanke to uh Anthropic. He's got to run the real
[09:17] money printer over there, huh? That's where they're running the tits. If you saw my last video, man, who doesn't love E-tits? E-tits? Please before taxes, interest, and
[09:29] training. Oh, we just come up with new stuff every day. It's crazy. Anyway, uh this guy is uh a believer Let's put it this way. This guy is of the mindset that whatever you can do at
[09:41] the Fed, make sure that you have monetary and plumbing stability. So, that would be like make like we're okay to hold short-term treasury bills to make sure there's liquidity in the market. But, let's not go buy long bonds
[09:55] because if we go buy long bonds, we artificially drive down the 20 and price. Uh and we also pump up stocks. And by Uh and we also pump up stocks. And by pumping up values, we're really just
[10:09] pumping up our balance sheet with long-term assets, which we should not do. That's very bad. We should only have a balance sheet made purposes. So, think of this guy as the plumber. Okay, he's he's going to keep
[10:22] things seizing up. All right, that's fine. Then you've got Karen Dynan. She's a Harvard former Treasury chief economist, ex-Fed staff. Basically,
[10:34] economist, ex-Fed staff. Basically, she's an interesting one because it's just not that hard. Pro low rates and we're going to run the Fed so efficiently that it doesn't run at operating losses, which is a little
[10:47] project 2025-ish. Shrink the Federal Reserve and how many expenses we have over here. And we'll well, basically, stop there. as like somebody who's like I run the books. We're going to clean this place
[11:01] up. We're going to lower the costs. No no more no more green garden, no green no more no more green garden, no green roof, no green new scam on the roof of the Fed building. Kill the garden. We don't want any solar or your whale
[11:15] killers, the windmills. We don't want any of that. We want the Fed to spend That's basically her. So, she really doesn't change anything from a macro point of view. You can kind of almost ignore that. Mervyn King, former Bank of
[11:29] England governor, big name right here, launched QE in Britain and then ended up writing a paper about how bad QE is called the end of alchemy where it called the end of alchemy where it literally blasts QE and how the Federal
[11:43] Reserve is basically addicting economies to money printing. Hates the machine of QE even though he launched QE himself. obvious. But so far all of these people align
[11:59] with what I feared for Kevin Warsh. Is that we would have By the way, thank you about Max's duck. He's very happy for that. Um anyway, um he's very, how should I put this?
[12:15] and then I lose my train of thought. It's okay. Warsh from day one has always been anti the money printer. He was talking about fighting inflation and
[12:27] not running the money printer throughout 2008, 2008, 2009, 2010, 2011, and then he quit the Fed because nobody listened to him. People literally said that Kevin Warsh
[12:40] is allergic to data. So what you can see here is he's trying to fix his reputation. Well, I'm going to get this panel of people who are going to provide me the data. So that way nobody could say I'm
[12:55] allergic to data. And in the meantime, I'm going to get what I want. Which is promise to have gotten this job. And two, no more QE. Quantitative Just to clarify, QE quantitative easing.
[13:10] It's basically when they run the money printer, it's not actually a printer, it's just a spreadsheet. Okay. Hey, we need another couple trillion dollars. Okay, Fed. Boom. It's on the balance sheet. Boom. Treasury Department gets
[13:22] it. Now they got two trillion dollars. What do they do? They do some big coordinated attack with Congress. Stimulus, $1,000 for everybody, you know, new tax cuts and this, that, or whatever, right?
[13:35] Or or lending programs or lending facilities. And that's how it all ends it's really hard to discriminate and say we're only going to give it to productive companies or productive businesses or productive people. And so
[13:50] so far all of these people argue the best way to do that is just give people cheap debt when they're capable and they are willing to take the risk of it. You don't need to run the money printer
[14:03] to give it to everybody. Just have low rates. So far everyone is pointing pretty much in that same direction. Peter Fisher, University of Washington, well, so first of all, he ran the New York Fed open market desk, basically
[14:18] where these Treasury purchases happen. Not the biggest fan of printing either. In fact, he's a big fan of making no promises of printing, which is a very papers on this as well, actually many
[14:32] years of essays attacking quantitative easing and forward guidance. Both very Kevin Warsh-y. Then you have a They're trying to, in my opinion, put this guy in because he signals
[14:45] Central Bank of Brazil in the 1999 crisis, floated the real, and then installed inflation targeting and basically built credibility from the ground up. That's pretty dang impressive. And that's what Kevin Warsh
[15:01] wants, credibility. Remember some of the first people? It was all about inflation dies with Fed credibility. Yeah. Raj Chetty from Harvard. He built a
[15:14] COVID-era real-time economic tracker for private payroll data and other data so policy makers could see what was going on in the economy many weeks before it
[15:26] actually happened, which is useful. Sort of that forward-looking data, right? Using AI and using technology and new statistics to figure out what's actually going on in the economy helps prevent you from raising rates and pulling an
[15:39] Alan Greenspan mistake where you raise rates and mark the top of the market and then you crash the market. Nobody wants to crash the market. Certainly not Donald Trump. Doug McMillon, former Walmart CEO.
[15:54] inspiration. Started in a warehouse. Ran the company from 2014 to 2025. And basically, he's a big guy around, "Hey, store shelves." Now, he said that in
[16:08] '23, so that was sort of before the tariff and Trump shocks of Iran and all But, he's not wrong, and I think that's why Walmart's investing so much in interesting play. The problem is you have so much concentration risk at
[16:22] Symbotic. Symbotic's up 3% today, but it's certainly well off its peak. Uh you know, it's I think Symbotic's usually a buy somewhere between 40 to 50 bucks. In that range is sort of a fair price.
[16:34] Although, we started pitching Symbotic back when it was $19. It's $43 now, but it's real crazy run-up to like 87 before. Not personalized he's probably right. Deflation probably is coming, uh and that's why we'll end
[16:48] up having lower rates. And we just have to get through these hiccups first. So, he kind of fits right in. Uh Kevin Murphy, this guy, another Kevin, says Murphy, this guy, another Kevin, says that CPI overstates true inflation.
[17:00] What a shocker. And then here we go. Here we go. Marc Andreessen, Netscape co-founder, obviously venture capitalist, A16Z big shot in AI argues
[17:12] that technology is deflationary. Artificial intelligence supercharges it. Super aligned with the Trump administration. This is the guy who says, "We're going to turn that money printer right back on when poop hits the
[17:25] fan because we want to grow some roses." But this is going to be our AI abundance deflation is coming guy. Same as the guy you know Charles Jones productivity growth is going to raise the equal rate. But if our leading data
[17:42] says you know and then we have to raise rates. But if our leading data says hey you know the economy is actually slowing then these people are all going to be on board with zero rates. And Andreesen's going to be the guy who's like no no run
[17:56] the money printer because he's a venture capital guy. But he is going to love capital guy. But he is going to love love love love the cheaper debt. No freaking doubt about that. Uh then you even have
[18:08] you know we've got one more person on there. You've got Asha Sharma product there. You've got Asha Sharma product operator over at Meta as a VP and Microsoft's AI business. This was really interesting. So this person has zero
[18:23] monetary record kind of like Andreesen. Uh probably a big fan of well we're just an AI hire. And AI's deflationary. So what does this mean? In the short term all these task forces are supposed to report by December. We're
[18:39] We're probably going to see liquidity slowly drain out of the system. The suckening continues under wush. And long term you know between now and 2032 I personally think rates continue to slow bleed to zero. Not saying there'll be a
[18:54] they'll instantly go to zero. But rates will slowly begin to and then bleed to zero once we get through the Iran shock and all this tariff inflation stuff the economy. Uh in fact some say only 50% of tariff
[19:06] through. Uh and the worst thing to know about all of this is that if you have a lot of debt or you think you're going to be saved with debt in this next crisis, you might be horribly mistaken. I hate
[19:20] I think leverage holders are going to be boiling in a lobster pot of hell that you do not want to be in. So, make sure you get your legs out of the pot of debt
[19:33] because your boy Kevin's going to have to spend 10 years telling you to get out of debt as fast as freaking possible. And this Warsh guy should be grabbing you by the shoulders and shaking you until you realize it. And not good. It's
[19:48] not good. But, uh we'll see. So, my take is as a result bottom line out of all of is as a result bottom line out of all of this, the next crash will really suck because they're not going to run the money printer. It will literally be like
[20:02] money printer. It will literally be like the great reset. to borrow less, fewer renovations for your home, fewer credit lines, don't buy your home, fewer credit lines, don't buy a new car, you know, whatever you can do
[20:17] to relax on debt over the next 5 years, well, you will probably be extremely thankful in the very long term for that. So, big fan. Be careful. But, the Warsh regime, regime in my opinion, reiterates rates
[20:31] aren't going up in the short term, will kill the dot plot, liquidity is going to grinding down the balance sheet. Unfortunately, that also kind of can have the effect of softening how fast asset prices can go up. But, ironically,
[20:46] by not [music] hiking rates yet, we're actually pumping up stimulus before we actually like before the pain hits. So, remember this, in the short term, Kevin Warsh going silent probably means no rate hikes,
[21:02] which is bullish. But, if poop hits the fan and Kevin >> [music] >> Then it turns bad >> Why not advertise these things that you told us here? I feel like nobody else
[21:14] see how it goes. >> Congratulations, man. You have done so you. >> Kevin Paffrath there, financial analyst and YouTuber, Meet Kevin. Always great to get your take.