Janet Yellen says Trump doesn't understand macroeconomic policy


I I'm gonna play you to a piece of tape that we had on this program on Monday. And then we're gonna talk about it. You're ready ready? Okay. Here we go. Do you think the president has a grasp of macroeconomic policy? No not. So that was me obviously and one Janet Yellen in her office at Brookings. We spoke last week we aired at this Monday. Here's Dan my question for you. Were you surprised that she said it out loud? You know, what I like how Dr Janet Yellen is really letting jelly from BK step at the forefront and let you know with really good. Jelly from vk is not playing around. I, and you know, what this is the thing. Here's the thing that so many economists so many economic strategies so many market strategist have told me over time. It's clear that the president doesn't understand how macroeconomic policy or economic policy or even monetary policy. I don't think he understands how fiscal policy works and for her to step out and say it, I think was really great because it's been the sort of unspoken secret. And, you know, everyone in the the president's cabinet everyone on, you know, on Capitol Hill seems to save these things, and I love the genuine was just wants to know. Now, he doesn't so Gina. I'm going to play one more piece tape from you this is from the following day. It's a hearing on Capitol Hill. You may actually well have been there. I don't know the first force you're gonna here is shared Brown democratic Senator of Ojo, and then the current fetter jay-paul Hugo, thank you. Thank you again for being here term yesterday, your predecessor Janet Yellen said. He doesn't think President Trump has a grasp of macroeconomic policy is she right? I won't have any comment on that for you Senator. All right. Guess I'm not surprised of of course, he was going to say that Gina, but two point about sanding out loud. How much does it matter? Yes. I think it's an interesting question. Certainly I was really surprised to read that in your interview transcript twinning came out. I had to eat totally honest, just because. So was I. Honesty. So as I- jelly from vk because they have been so careful about avoiding sort of getting into the political fray avoiding being critical in an outright way of the Trump administration. And there's a good reason for that. You know, when they criticize politicians they open themselves up to criticism. And I think we should be clear. Janet Yellen is no longer at the fed. But that doesn't mean she has no influence at the fed. She's in regular communication with Jay pal? She said that in the interview you had with her. And so I think it's surprising to me that she would sort of open up this conversation in in such a sort of forthright way. Jay testimony since since he's the guy with the job. Now was up on the hill twice this week. Once the house wants the Senate, basically said everything's all right? You know? Yes, we have a little too much dead. And you know, I'm little worried about the economy run on gas sometime. But basically everything's fine. Right. Yeah. That's what he said. And I I was having a conversation today with a macro economist, and the interesting thing that he also said in his testimony that I really thought didn't get enough play was talking about stopping the balance sheet runoff, essentially, what he's saying is the fed is going to continue to buy hundreds of billions of dollars of bonds in perpetuity with no end in sight, the fetishes stork Lee held about one or two trillion dollars on this balance sheet. It's got more than double that right now. And the idea was if we're running this healthy economy where things are functioning as they're supposed to where people have jobs. Unemployment's low all these macroeconomic indicators are pointing up that the fed should be able to stop stimulating the economy by buying all these bonds and Powell saying, no, you know, we. Think we're probably going to stop doing that this thing that was supposed to be on automatic pilot as he said for the rest of the year really says that wow, this economy can't stand on its own. That's something I think people should pay more attention to art so Gina with with the caveat that you too are. You know fed aficionados I'm going to turn us to trade here for a second. Right. Because there were China talks last week. Robert lighthizer was on Capitol Hill this week saying you will see the deal goes it's going to be really hard your thoughts on on perhaps where or when this ends. Yes. So I think there's a really interesting question here because what Robert lighthizer said was a little bit at odds with what President Trump had previously said, you know, Trump was pretty declared. If they're making progress in lighthizer got up and had a lot of ifs as my pops. And so my call Jenny Leonard reported that US is actually I ING potentially as she Trump's on it as she from being from China Trump's summit potentially as soon as mid-march so actually. Pretty accelerated timeline there. Now that is just, you know, an anonymous source in we're not sure how realistic that is time line. But it does seem like there is still some impetus from the White House to get something done on this fairly soon. We'll let me ask you both actually in India, and you get to go first the same question. I asked last Friday, which was has the president put himself in a corner where he now has to make a deal excuse me has to make a deal because there will be and people are starting to feel the macroeconomic macroeconomic impact. Yeah. I mean, the short answer is. Yes. Like everyone on the market that I've talked to and not just recently going back six months, twelve months really since he got elected has expected that there's going to be a deal with China. We're gonna have some marginal changes a lot like what happened with NAFTA. And we're going to get a deal the president's going to call it the best ever everyone goes home for dinner that's been the expectation for the market for a long time. And everything else really has just been noise. Which is why you haven't seen a lot of market moves during the process, raw Gina, thirty seconds. Same question to you is has the president put himself in a corner here. So I'm gonna agree that yes is the short answer. I would add. Twenty six seconds. A caveat to that at this moment is that a lot of the things that were making that a really essential move that Trump had to make a lot of the cracks in the data have seemed to sort of play out not such a bad way in the last couple of weeks. You know, the stock market really rebounded. Thanks to the fed. I think we've seen fourth quarter GDP numbers came in looking grit ease knowledge, you know, the year year over year GDP was really good in the fourth quarter. And so I think those things do take some of the pressure off. Although clearly not all of it. And I think there is still the expectation certainly beacon markets that there is going to be some kind of an agreement here

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