Trump's Own Fed Chair Just Turned On Him

[00:00] President Trump's new Fed chair just gave his first speech and he went against President Trump and he said not only are we not going to cut interest rates right now but we're probably not going to cut interest rates at all in 2026 and we might even have to raise interest

[00:16] rates before the year ends. That news came as a shock to the stock market and as a shock to President Trump which caused the stock market to fall the Dow Jones fell by around 500 points on the news.

[00:28] So in this video I want to break down the new Fed chairman's plan because the Federal Reserve Bank is the entity that's in charge of deciding where interest rates are going to go that can influence your mortgage rate, your credit card rate, the savings interest rate that you get money

[00:42] and it can also influence your dollar and the stock market. So let me break this all down. President Trump has been demanding lower interest rates since he entered the White House in 2025. Now the entity that decides interest rates is not the White House it's the Federal Reserve Bank.

[00:58] But the Federal Reserve Bank is not actually a bank because you and I can't go with the deposit money. It's not a reserve because it's not sitting on any cash reserves and it's not federal. It's said so on its website which means President Trump can't tell the Federal Reserve Bank what to do.

[01:13] He can make demands and he can say things but the Federal Reserve Bank gets to make their own decisions. Well the previous chairman at the Federal Reserve Bank his name was Jerome Powell. His term just expired and because his term expired the White House in this case President

[01:28] gets to appoint the new chairman who did he appoint Kevin Worsh. Why did he appoint him because President Trump wanted lower interest rates? At least that's what he said publicly again and again and again. President Trump even said that I would not have appointed Kevin Worsh if I didn't think

[01:44] that I would get lower interest rates. That's what we heard up until now. Kevin Worsh was then sworn in to be the new chairman of the Federal Reserve Bank. Everybody was anticipating lower interest rates.

[01:56] Kevin Worsh came out and said right now we're not cutting interest rates and we're probably going to raise interest rates in 2026. The chances of us raising interest rates in 2026 have almost doubled.

[02:09] That caught the stock market a little bit off guard which then caused the stock market to fall by almost 500 points for the Dow Jones. And this really shouldn't be that much of a shock now if you've been

[02:21] watching my videos or reading my market briefs newsletter. The reason is this because if you study Kevin Worsh's history and you look at what's happening in the economy you can start to see why tides are shifting in the economy at least today. What do I mean? Well Kevin Worsh used to be a part

[02:38] of the Federal Reserve Bank back during the 2008 crash and during that time he was an outspoken critic of what the Federal Reserve Bank was doing. What was the Fed doing back in 2008? Well they were

[02:52] printing money and cutting interest rates. His issue with what the Federal Reserve Bank was doing then was that the Fed is going to create inflation. It could destroy the dollar. It could even create

[03:04] hyperinflation because if we keep printing money and keep stimulating the economy with lower interest rates when we don't need it, it can damage the dollar. Now fast forward to today. In the early part of 2026 a lot of people were hoping, praying and expecting significantly lower

[03:23] interest rates. But then something happened. The United States attacked Iran. What did that do? It caused oil prices to spike. Why does that matter? Higher oil prices mean gas more expensive.

[03:37] It means your diesel is more expensive. It means flights are more expensive. It means gross. So these are more expensive. So those higher oil prices then contributed to higher prices of everything. In fact we just got an inflation report which says that inflation has the highest levels

[03:52] that we have seen in about three years. So inflation is going up and normally when you have high inflation or concerns about inflation the Federal Reserve Bank has to come in and raise interest rates

[04:07] to bring inflation down. If you cut interest rates you do that to stimulate the economy but the consequence is you can make the inflation problem worse. So we just got the report that inflation is very high and that now had a lot of people concerned about what is the Federal Reserve

[04:24] Bank going to do because President Trump wants lower interest rates. If Kevin Warsh now is pushing for lower interest rates that can make the inflation problem worse. Well then things got a little bit more tricky because President Trump recently announced

[04:37] that the war with Iran is over. Now some people don't believe that it's over. I'm not going to get into the politics of whether it's over or not. I'll let you decide that. But if it is true that the wars over oil prices will fall. If oil prices continue to fall that will help drive down the inflation

[04:57] rate but that doesn't mean that the price run up that we have seen and a lot of things is going to go back because that means we would have to see deflation. See there's a difference between the inflation rate and the actual inflation and this is where now Kevin Warsh is going to have a

[05:14] make a decision. If the war does end oil prices do fall the inflation rate does fall is he then can go back to doing what President Trump wanted which is cutting interest rates to stimulate the economy

[05:26] to stimulate the stock market or is he going to rather try to protect the dollar by raising interest rates. And this is a very tough dynamic because we know how to stimulate out of a recession. We've seen a recession pretty much every decade for the last century. In fact, we've seen 16 recessions over

[05:42] the last 100 years. The way we get out of a recession is generally cutting interest rates and printing money. It's stimulating the economy to then boost spending to get us out of a recession. But we haven't seen a dollar crisis in recent history. A dollar crisis is much more difficult to deal

[06:01] with and the last time we almost saw one was in the 1970s. In the early 1970s then President Richard Nixon took the United States dollar off of the gold standard that then led to a lot of money

[06:15] printing by the Federal Reserve Bank that led to then a big inflation problem and people were concerns about a currency crisis, a dollar crisis. So what happened? The Federal Reserve Bank then had to save

[06:27] the dollar by raising interest rates aggressively. At that time, if you wanted to get a mortgage, you weren't going to pay five or six percent. You were going to pay 15 or 16 or 18 percent on a mortgage.

[06:41] It was a painful attack on the economy, but it saved the United States dollar. And so this is where now a lot of people are conflicted as to what's going to be coming next. A lot of people have opinions,

[06:54] a lot of people want to make guesses. They all have their own thoughts. But that's gambling. If you make decisions on that, I want you to be a long-term investor. And I want you to understand how the different decisions will impact the economy. Now, naturally, when Kevin Worsh said that we're not

[07:09] going to cut interest rates right now and we might raise interest rates, he was questioned about this. Did you talk to President Trump? And his response was very simple. What he said was, quote, on the president, I don't have anything for you. Essentially saying, no, I didn't talk to the president.

[07:25] I'm doing what the Federal Reserve Bank needs to do, not what the president wants us to do. And this is where now the question is, well, what is going to come next? Because as a result of what

[07:37] Kevin Worsh said, we saw a knee-jerk reaction in the stock market and the reality is the stock market is emotional, it is volatile. And a lot of people have been expecting for a long time, lower interest rates, because that's what President Trump kept saying. Now, to be honest,

[07:55] a lot of people have been starting to believe that higher interest rates might be coming. We've been talking about this for months now, because as the conflict in the Middle East continue to go on, as the conflict led to higher oil prices, as inflation started to get worse,

[08:11] it started to become clear that the inflation problem is now going to become a new problem that we have to deal with. How fast is inflation going to come down? Well, President Trump says the inflation is going to fall like a rock. Ultimately, we'll have to see what happens.

[08:27] The game of trying to predict what happens in the economy is a very difficult game to win. Instead, you want to be an investor not trying to predict what's going to happen, but just following the money and investing the money for the long term. We also saw that bond yields as a result of

[08:43] Kevin Worsh's speech spiked because now people are preparing for higher interest rates. And what that mean was if you were hoping for lower mortgage rates, if you were hoping for lower

[08:55] credit card rates, you're hoping for lower business loan rates, it might not be coming as soon as people want. Now again, this could change and what could change it is if the inflation rate falls

[09:07] drastically. If we see a sudden drop in the inflation rate over the next 30 to 60 days, everything I just said in this video could flip on a dime. But we don't know if that's going to happen because we don't know number one, what's going to happen with the conflict in the middle east,

[09:22] is there going to be any restarting of conflict? Is there going to be any restarting of oil prices going up? And number two, if oil prices do come down, is they going to trickle down into the rest of the economy with lower inflation rates? So that's what you want to pay attention to. Now,

[09:37] if interest rates do go higher, what does that mean? Generally higher interest rates bring downward pressure to the stock market, generally lower interest rates bring upward pressure to the stock market. Upper pressure and downward pressure do not mean that the stock market is going to go up or down.

[09:51] It just means that's the pressure. The stock market can go up with higher interest rates. It can also go down with lower interest rates. What you have to understand is a higher interest rates just but pressure downward on the stock market. So it's not going up as high as it would if interest rates

[10:06] were being cut. That's the main thing that you want to understand. And it also severe the impacts growth of more speculative investments because speculative investments, these are growth companies,

[10:19] it could be things like Bitcoin, it could be other sort of high tech, high growth, high speculation type of companies, they often rely on outside money, meaning venture capital dollars, bank debt,

[10:35] all their sort of money to help run their operations. Well, when interest rates are going up, investors become pickier. Because as an investor now, I have to pay the bank a higher rate of

[10:47] interest to borrow that money, meaning money is more expensive. And if money is more expensive, I have to be picky with where I'm going to invest my money because if I make a bad investment now, it's going to cost me more. If interest rates are lower, I have access to more dollars,

[11:01] I'm going to borrow more money and I'm going to be more light with how I analyze my investments because even if I make a bad investment, that's okay because the money was cheap. So when interest rates go up, those speculative investments often get hurt, but do you want to know who also gets hurt?

[11:15] The United States government. Because the United States government has 39 some trillion dollars of national debt. The reason why that matters is because the government has to pay interest on that debt. And the fastest growing expense for the United States government is not the military.

[11:31] It is not health insurance or health costs. It's not social security. It's not infrastructure. It's interest payments on our debt. Why? Two reasons. Number one, because the government keeps spending money that it doesn't have. Like we're going to spend something like $2 trillion that we

[11:46] don't have in 2026. And then because interest rates have gone up significantly on that debt. So if the government now has 39 some trillion dollars of debt and interest rates go back up,

[12:00] well, that means now that a piece of the government's debt is now going to be readjusting at a higher interest rate because our $39 trillion is not a 30-year loan. In fact, over the last six years since the pandemic, the government made a shift, actually a very bad shift.

[12:16] And that shift was that the government started issuing loans that are not 30 years, but are five years, two years, one year. This started doing a lot more shorter term loans as a way to save money. And it was a, I call it a bad idea because this was during a time where interest rates were at

[12:31] the lowest ever. And the government said essentially, instead of locking in a 2.5% 30-year loan, how will we do a 2.1% three-year loan, five-year loan, to save a little bit of money?

[12:47] But now as those interest rates have gone up, those loans, the shorter term loans are starting to readjust, which is a big reason why our interest expenses are rising so fast. And so if interest

[12:59] rates go up even more, that means more of the government debt is going to be readjusting at a higher interest rate, which means more of your tax dollars are going to be used not to provide you with the service, but to pay off the government's debt. That's why this is so important. And that's

[13:15] why the president is watching this so much because the president, and this is not a Republican thing or a Trump thing. This is really just a president thing. Every president in the history of time and in the future will want to see the economy boom and the stock market boom under the presidency.

[13:31] Because it's a pretty commonly used measuring stick for success. That if I'm the president and the economy is growing and the stock market is growing, the economy and the presidency was good.

[13:44] Well, who is the biggest spender in our economy? It's not me, you, it's not Nvidia, it's not SpaceX, it's the United States government. And what is our economy based off of? Our economy runs on spending.

[13:58] So if the government is the largest spender, the more the government can spend in the economy, the more our economy grows. Well, if the government has to spend more of its dollars on interest, that means it has less dollars to actually stimulate in the economy, unless the government borrowers

[14:12] were money. But if the borrowers were money, we go deeper into debt and we have to print more money. So you can start to see how that can create more problems. But if the government has less expenses that it has more money to spend in the economy, not that we want an economy that's relied on government spending,

[14:26] it's just the situation that we're in today. But the more government spending then boosts the economy and it can boost the stock market. So as the situation that we're in, now there's a lot of things that could be changing over the next 30 to 60 days. Obviously, we'll be keeping it posted here. I also have a

[14:39] free investing master class that you haven't watched yet. I'll link that for you down in the description. When you sign up for it, you're also going to get access to market briefs, which is my news editor for investors. That's completely free. So if you haven't signed up from a master class and market briefs yet,

[14:51] that link for you down in the description below. But a lot of things could be changing. I'll be working to keep you posted on my channel and I'll also be keeping you posted in market briefs, which is my free news editor for investors. So if you've got value out of this video, the best thank you is a referral.

[15:05] If you could please share this video with a friend. Dan, remember a colleague who followed investor. That way we can continue to spread this type of financial education. Thank you. The United States is about to borrow two trillion dollars to keep our economy running. It sounds great at first because it's going to stimulate our economy. But anytime the government spends

[15:21] money, it doesn't have somebody has to pay the price. I call this a hidden tax because this is not a tax that you're paying to the IRS. It's a tax you're paying with more expensive.