Gordon Gekko: How far they let it advance. With the reciprocal tariffs (or, before, with which he applied to his commercial partners, Mexico and Canada), he did not prosper and had to quickly put the back. Full. He returned to zero pages. To this day. But yes, the “show” must continue. If it collides with a wall, install a new theme. Never give the center of the scene.
GG: As is. “No Pain, no Gain,” he says. No cost, without sacrifice, there is no gain. That is justification. The problem is that it promotes an agenda loaded with ruinous costs that promises benefits that are out of reach. That therefore will not be able to deliver. “We are enriching ourselves with tariffs,” he says in a living voice as if foreigners paid them and not the population. It is a misfortune, because the damage is terrible and occurs without need.
Q.: How long will it take to the population to realize?
GG: Trump’s popularity is minced, but because he collapses between the Democrats and the independents. His voter base still supports him, although he also begins to perceive the fast deterioration of the activity, and at the same time to wait for a higher inflation.
Q.: Powell’s Fed is the new scapegoat. Trump claims a low rates, screams. If you insist it must be because it serves politically.
GG: The rise of tariffs has created a problem. Very serious, above all, after the day of liberation, on April 2. Trump does not have a hand solution, perhaps he thinks that with time this is the way to recover industrial employment in the US. But, because of the doubts, it already has a culprit of the economic parate that sees coming.
Q.: Jerome Powell who ignores him, that he resists lowering the rates, and that he does not want to see what is the appropriate time to prevent a recession.
GG: And that also plays politics. Because well that he reduced it quickly when the president was Biden and Kamala Harris fought the electoral campaign.
Q.: What does Trump intend? Do you think so the Fed is going to lower the rates? Rather, it prevents it. Because if I got to cut them, it would be destroying their reputation. The remedy would be worse than the disease.
GG: Trump does not ignore it. He knows that Powell already set his position. And that will not move from there.
Q.: In the economic club it was very clear. The decision is to see and wait until there is more clarity. He also said that the economy is in full employment, that tariffs rose much more than anticipated, and that the Fed has no background to know what its specific effects will be accurate.
GG: This is a duel to the sun. Predictable, because it is a “remake” of what we saw in the first presidential term. But, this time, of unpredictable result.
Q.: Powell says that the law supports its continuity to the Fed rud until April 2026. And then it could remain as governor of the Board. Although it is clear that there would be voluntarily move away. Do you think it’s not like that?
GG: The composition of the Supreme Court changed. And issued recent failures that encourage Trump’s idea that he is in his powers to remove it and that justice will not revoke its determination.
Q.: No matter how much the FED is an independent agency.
GG: That was clear after these sentences. Independence is not a sufficient shield. What Powell argues is that as the Constitution gives Congress the control of finance and taxation, and not to the Executive, expressly, it is Congress (which approved its designation) and not Trump who can cease him in his functions.
Q.: Do you think the president will want to say goodbye to him the same?
GG: I think so, and that the operation has already begun.
Q.: Trump would give a taste, but the consequences would be tremendous.
GG: It would be the coup de grace to the weak situation in which we are standing today. The mere struggle and uncertainty will be very harmful.
Q.: A direct ticket to the Bear market, to the recession that Trump wants to avoid a greater escape of capital, which is the innovation that the president introduced with his policies. I exaggerate? Or am I forgetting something?
GG: It will not be easy to conduct monetary policy thus, under these conditions. Although I think that the Fed can do so, basically giving priority to keep inflation expectations anchored. It will be difficult to save everything else, what you mentioned, because you are already very detained. And I think that we go to a political crisis, sooner or later. But the Fed must ensure that the rise in inflation is perceived only as a transitory and non -permanent rise. With Powell in order or without him. That should be his contribution to prevent double Nelson from a stagflation conato. And credit problems that could be more serious.
Q.: The Fed cannot lower rates like that. And future discount a cut in June and four, in total, in the remainder of the year.
GG: The official point map sets out two sales. But reality will impose its conditions. It will be necessary to display the commercial policy, and disassemble tariffs, so that the rates can go down. And we will have to forget the tax reduction that the government foster in Congress. How will a growing fiscal deficit be financed if the government struggles for the control of monetary policy and markets already flee the dollar and treasure bonds? Let us not forget, between September and December, the Fed lowered the short rates a complete point and the long bonds climbed that point plus 0.20% additional. The problem is not Powell or the Fed. They can be part of the solution, but only if the White House stops manufacturing complications.
Source: Ambito
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