Legal AF by MeidasTouch - Furious Fed Chair Drops Truth Bomb Trump Feared Most

Episode Date: September 24, 2025

Less than a week after the Fed marginally cut interest rates, Chairman of the Fed Board Jerome Powell remarked that rising inflation and slow hiring pose a “challenging situation” going forward. M...ichael Popok of @LEGALAFMTN reports. MUDWTR: Start your new morning ritual & get up to 43% OFF your @MUDWTR by going to https://mudwtr.com/LEGALAF #mudwtrpod Visit https://meidasplus.com for more! Remember to subscribe to ALL the MeidasTouch Network Podcasts: MeidasTouch: https://www.meidastouch.com/tag/meidastouch-podcast Legal AF: https://www.meidastouch.com/tag/legal-af MissTrial: https://meidasnews.com/tag/miss-trial The PoliticsGirl Podcast: https://www.meidastouch.com/tag/the-politicsgirl-podcast The Influence Continuum: https://www.meidastouch.com/tag/the-influence-continuum-with-dr-steven-hassan Mea Culpa with Michael Cohen: https://www.meidastouch.com/tag/mea-culpa-with-michael-cohen The Weekend Show: https://www.meidastouch.com/tag/the-weekend-show Burn the Boats: https://www.meidastouch.com/tag/burn-the-boats Majority 54: https://www.meidastouch.com/tag/majority-54 Political Beatdown: https://www.meidastouch.com/tag/political-beatdown On Democracy with FP Wellman: https://www.meidastouch.com/tag/on-democracy-with-fpwellman Uncovered: https://www.meidastouch.com/tag/maga-uncovered Coalition of the Sane: https://meidasnews.com/tag/coalition-of-the-sane Learn more about your ad choices. Visit megaphone.fm/adchoices

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Starting point is 00:01:43 that there are mixed messages in the economy. We have inflation inching up. We have jobs dropping off the shelf. And as a result, the Federal Reserve is going to have to be cautious with any future rate cuts. And the markets responded. This is how Federal Reserve, chair people have to communicate with the White House. They show up in places like Rhode Island at the Chamber of Commerce and they give a speech. This one was introduced by Senator Jack Reed of Rhode Island. And listen, Jay Powell knows how Jack Reed is going to introduce them. So I'm going to show you some clips today that was a harsh criticism in Jay Powell's own way of the Trump administration and the markets reacting.
Starting point is 00:02:30 It kicks off first with Jack Reed, Senator Jack Reed introducing him, and listen to these introductory remarks and harsh criticisms of Donald Trump and his economy, which by extension Jay Powell implicitly adopts because he's following those introductory remarks with his own speech and interview. Let's play Senator Jack Reed first. Chair Powell deserves credit for navigating those choppy waters. Nevertheless, average Americans are still facing significant economic challenges due to the chaotic policy agenda of the current administration. Tarras, health care cuts, a massive debt increase, and interventions in the operations of major corporations and universities have all proved disruptive and costly. Real wages for most American workers remain stagnant.
Starting point is 00:03:28 We still have not fully tamed inflation. Roughly 36 million Americans are experienced in poverty, and housing is too expensive and in too short a supply everywhere, but particularly here. The policy chaos is extended into a direct assault on the Fed's independence and personal tax by the President against members of the Fed. But Chair Powell has met these challenges with equanimity and professionalism. He understands that a strong and independent central bank can contribute to sound economic policy in this nation.
Starting point is 00:04:07 He understands the impact that monetary policy has on communities and families and businesses. He has somehow managed to stay laser focused on achieving the Fed's dual mandate. to achieve maximum employment and stable prices. Okay. Now, from there, what impacted the markets the most today is that they were hoping for a series of interest rate cuts by the Federal Reserve. I mean, the blunt instrument of the Federal Reserve to try to positively impact the economy, they only have really one.
Starting point is 00:04:43 It's interest rate adjustment. They lower the overnight interbank rate between banks to somewhere between 4.5%, And then it has a cascading impact on all interest rates that are charged to consumers and businesses. For loans, for credit cards, for mortgages, for student debt, you know, for home loans, you name it, all starts with the Fed's rate. Now, we just had on Wednesday the monthly or quarterly meeting of the Federal Reserve Open Markets Committee. There's 12 members of it, but it's led by Jay Powell of the Federal Reserve. And they voted to lower the rate a quarter of a point, except for Stephen Mirren, who just got put on there by Trump and still works in the White House, who had access to all the White House data, all the White House economic data. He pushed for a half a point cut. But today, during this Rhode Island meeting, Jay Powell pumped the brakes on any more rate cuts. Here's a clip of him talking about that there is no risk-free environment. Let's play the clip. Turning to monetary policy, near-term risks to inflation are tilted to the upside, and risks to employment are tilted to the downside, a challenging situation.
Starting point is 00:06:00 Two-sided risks mean that there is no risk-free path. If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later to fully restore 2% inflation. If we maintain restrictive policy too long, the labor market could soften unnecessary. When our goals are in tension like this, our framework has long called for us to balance both sides of our dual mandate. The increased downside risks to employment have shifted the balance of risks to achieving our goals. We therefore judged it appropriate at our last meeting to take another step toward a more neutral policy stance, lowering the target range for the federal funds rate by 25 basis points to 4 to 4.4%. quarter percent. This policy stance, which I personally see as still modestly restrictive,
Starting point is 00:06:51 leaves us well positioned to respond to potential economic developments. Now, what is he talking about? That the twin mandates that have been given to the Federal Reserve by Congress, really just two. Isn't it a nice to have a job? You only have to do two things. Two things. Reasonably not complicated either. You need to keep inflation low. At the same time, you need to keep job creation high. But those two things are often intention. The more full employment we have and higher wages we have, the more higher inflation we have.
Starting point is 00:07:22 So it's always a delicate balance of oil and gas, if you will, for the engine of the American economy. Here's how Jay Powell, during his Rhode Island interview today, how he put the downward pressures on Trump's economy. Recent data show that the pace of economic growth has moderated. The unemployment rate is low, but has edged up, job gains have slowed, and the downside risks to employment have risen. At the same time, inflation has risen recently and remains somewhat elevated.
Starting point is 00:07:54 In recent months, it has become clear that the balance of risks has shifted, prompting us to move our policy stance closer to neutral at our FOMC meeting last week. GDP rose at a pace of about 1.5% in the first half of this year, down from 2.5% last year. the moderation in growth largely reflects a slow down in consumer spending. Activity in the housing sector remains weak. Goods prices after falling last year are driving to pick up inflation. Incoming data and surveys suggest that those price increases largely reflect higher tariffs rather than broader price pressures.
Starting point is 00:08:34 Disinflation for services continues, including for housing services. Can I share a little secret with you? I kick my coffee habit and I swapped it out. for mud water and wow what a difference no more jitters no afternoon crashes just smooth balance energy that helps me focus and crush my day mud water is this amazing blend of cacao chai turmeric and adaptogenic mushrooms like lion's mane and corticeps that actually taste delicious and fuels my brain without the usual coffee chaos i love making it it's super easy just scoop stir and go sometimes i add a a creamer or honey to make it my perfect cup, plus it's USDA certified organic, non-GMO,
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Starting point is 00:09:41 After you order, when they ask you how you found them, please let them know we sent you. Again, that's mudwater.com slash legal AF and code legal AF. Get ready for clean, delicious energy all day long with mudwater. Then you had the discussion over the tariffs and what the tariff impact would be. And that one was relatively straightforward.
Starting point is 00:10:03 Tariffs impact jobs because in this environment, in this economy, as we're waiting to see that large tariff numbers get passed through to consumers, because that's all tariffs are. Tariffs are the biggest tax increase on the American consumer and the American voter in history. You know, when you put a 15 or 50% tax on another nation and its goods, what do you think eats that? In the beginning, there's some burden sharing. Maybe some of the importers will eat some of the costs, some of the exporters, some of the retailers, some of the supply chain until it gets the consumer. so the prices won't go up much, but those days will be over.
Starting point is 00:10:40 J.P. Morgan Chase, their analyst, believes that 70% or more of the tariffs are going to get passed and paid by the American consumer. And that concerns J. Pell. Here's a clip. A lot of what we're doing with our time is trying to understand the current position of the economy, what's actually going on in the economy today. Pardon me. So part of that is hiring rate has really dropped job creation has dropped very sharply. So does that, what are the factors there? So I mentioned earlier, I think part of it just is there's a lot of uncertainty about the direction of public policy.
Starting point is 00:11:17 And so companies are holding off. They're not hiring. And when you, when you don't hire through attrition, your labor force shrinks and you save money that way. And then you had sort of his final nail in the coffin of the Trump economy. And you can see how, you know, very genteel and very, you know, his personality is one that provides a fair amount of gravitas and stability. He's low key. He's not reactionary.
Starting point is 00:11:54 He's not a bomb thrower. That's what we need as our central banker. There's a reason the Jay Powell's of the world, the Mark Carney's of Canada, who's now the prime minister, but had been the central banker. They all sort of fit the same, you know, they're cut from the same cloth. But then he was asked particularly about why jobs aren't being made, why what's happening with immigration. And how is that impacting the job market? Remember, twin goals of the Fed keep inflation down to 2%. So far, it's moving up to 4%. And keep job people employed. Let's hear his clip about that, which I consider to be the final nail in the coffin.
Starting point is 00:12:38 Well, if you could elaborate, what are some of the factors that are leading to depressed demand for labor? So depressed demand for labor, you know, based on surveys and talking to people who are doing hiring, a big chunk of it is that they're just unsure about what to do. Businesses, and I'd like to love to talk to people after this, you know, businesses don't, They don't want to do a lot of hiring. They may be postponing major cap X, major initiatives, major acquisitions. And, you know, maybe they'll replace workers who retire, but they're not looking to grow. This isn't every company and every part of any, every company in the world.
Starting point is 00:13:20 It's just an effect kind of at the margin. That's got to be part of it. I think that's the demand side. The supply side, of course, has a lot to do with immigration policy. So immigration was at a very high level for two or three. three years before this year. And now immigration has really gone close to zero. And immigration is not really contributing to the labor force, to labor force growth now, whereas it's been most of what the labor force growth was. And now so you, so at the same time, you've got declining
Starting point is 00:13:53 demand and also declining, you know, declining supply of workers, of new workers. Now, this is how the Federal Reserve communicates. Jay Powell, a speech. He may give a speech in Jackson Hole, Wyoming a month or so ago with all of the central bankers from around the world. He might go to the Rhode Island Chamber of Commerce and give a speech that everyone on Wall Street and in financial services is, is, sits at rapt attention to get the results. He might, or others, there, you know, let's be frank, there's 12 regional bank presidents for the Federal Reserve. There's seven board of governors. And on the Federal Open Markets Committee, there's 12 of them on there, seven of the Board of Governors,
Starting point is 00:14:41 five that come off the rotating group of central bankers for the different Federal Reserve regional banks. So they each take a turn, creating a gang or committee of 12. And they go out and give speeches. They're not gagged. And everybody's sitting there with their, especially when it's Jay Powell, you know, what did he just say? Look, I'm doing a hot take about it. And so that's the rationale. That's how they speak.
Starting point is 00:15:09 Now, the thing that was the scariest, which he's too polite to mention, is that Stephen Mirren, who just got appointed by Donald Trump, to be the replacement for a person named Coogler, who Biden had appointed who stepped down, Stephen Mirren didn't really have access to the Federal Reserve, the Fed's economic data. He had access only to where he last worked, where he currently works, which is for the White House as the chairman of the Council of Economic Advisors. His data was so scary to him that whereas 11 people raised their hand out of 12 and said, let's do a quarter rate cut and get it down to about 4%. Again, you're going to pay, we're going to pay. many points above that in interest rates depending upon your credit and collateral that's uh you know
Starting point is 00:16:02 that's involved with the with the loan or the credit extension he only had the data for the white house he raised this hand and said we need a big we need a bigger boat we need a half a point cut but the other 11 we're like what do you know that i don't know what do you know about the trump white house that we don't know that was that's sort of a scary moment when stephen miren sort of you know, everybody steps forward and he steps back. Now, the market is already hoping that had been hoping since Wednesday last week that there was going to be another couple of cuts between now and the end of the year to maybe even push rates, the intrepank overnight rate set by the Federal Reserve below four.
Starting point is 00:16:46 And they're already sort of pricing in that. That's why they freaked out when Jay Powell said today in his own inimitable fashion, there's no risk-free environment. We don't know about rate cuts just yet. So we're going to continue to follow it. It's a little bit like the Oracle of Delphi, a little bit like, what did he just say?
Starting point is 00:17:06 Let me translate that for you. But that's what we have to do, and that's what we do here on the Midas Touch Network and on Legal AF. I'm glad you're here. Take a moment. Hit the free subscribe button here on Midas Touch. Come over to Legal AF YouTube.
Starting point is 00:17:16 Do the exact same thing. You want to become a full-fledged card-carrying member of Legal AF. Join our substack. become a paid member on the Legal AF substack as well. So until my next report, I'm Michael Popock. Can't get your fill of LegalAF. Me neither. That's why we form the Legal AF substack. Every time we mention something in a hot take, whether it's a court filing or an oral argument,
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