YOU WERE READY AND HAD YOUR
HOMEWORK DONE AND I APPRECIATE
THAT.
IN PENNSYLVANIA.
GO TO MICK MULVANEY, YOU HAVE
THE POLITICAL STUFF, THE
ECONOMIC STUFF, THE FEDERAL
RESERVE POISED TO INCREASE RATES
3/4S POINT, FROM VANTAGE POINT
THAT IS THE CRUCIAL DEVELOPMENT,
FORMER WHITE HOUSE CHIEF OF
STAFF, FORMER OMB DIRECTOR.
HE KNOWS HIS NUMBERS, HE KNOWS
HIS STUFF, WHATEVER YOU MIDDLE
EAST THINK OF POLITICS.
WE GET ON LEFT AND RIGHT PEOPLE
SHOUTING AND SCREAMING AT EACH
OTHER, HE IS A SMART MAN WHETHER
IT COMES TO THESE TYPE OF
ISSUES.
MICK, THANK YOU FOR TAKING THE
TIME.
I WANT TO FOCUS IF I CAN ON THE
FED AND YOUR THINKING BECAUSE,
RIGHT NOW THE BETTING IS WE’LL
SEE RATES GO UP BY ANOTHER 3/4
OF A POINT.
PEOPLE FROM GOLDMAN TO
MORGAN STANLEY SAY MAYBE THE
OVERNIGHT LENDING RATE TOPPING
AT OR ABOUT THE 5% LEVEL AND
WHEN YOU STEP BACK AND YOU LOOK
AT THAT, THAT IS FIVE FULL
PERCENTAGE POINTS MEYER THAN
HIGHER THAN WE WERE A YEAR AGO.
WHAT DO YOU MAKE OF THAT.
>> 12 POINTS THAN WHERE WE WERE
IN THE 1970S.
IT IS A VERY DIFFERENT WORLD.
NEIL: VERY GOOD POINT.
>> I WONDER HOW HIGH THEY CAN
RAISE RATES.
KEEP IN MIND WE’RE BORROWING
MONEY TO CARRY THE INTEREST
CARRY.
THE AMOUNT OF INTEREST EACH DAY
COMES OUT OF ADDITIONAL DEBT.
OUR DEBT IS GOING UP SO WE PAY
ON INTEREST OF DEBT WE HAVE.
WE’RE PRINTING MORE MONEY.
WE’RE STARTING ON A VICIOUS
CYCLE DOWN.
IF THE FED RAISES RATES MUCH
MORE THAN THEY ALREADY HAVE, THE
THING THAT PAYS THE MOST
INTEREST IS THE FEDERAL
GOVERNMENT.
I THINK THEY’RE RESTRICTED HOW
MUCH THEY CAN RAISE THE RATES.
I THINK THAT IS A GOOD THING.
I’M NOT SURE RATES SOLVE A
PROBLEM.
NEIL: WAIT A MINUTE.
THAT IS A FASCINATING POINT.
YOU THINK THE FED WOULD BE KIND
OF FORCED TO RESERVE A LITTLE
BIT BECAUSE OF ALL THAT DEBT.
YOU’RE QUITE RIGHT, ADDING 180,
$200 BILLION A YEAR IN HIGHER
RATE COSTS WE’RE LOOKING AT NOW.
EVEN IF INFLATION WERE A PROBLEM
STILL THE FED WOULD SLOW DOWN,
MAYBE EVEN STOP?
>> YEAH.
I THINK THE AVERAGE DEBT RIGHT
NOW, OUR MATURITIES, AVERAGE
MATURITIES IN OUR DEBT IS ABOUT
FIVE YEARS.
SO SOMEPLACE BETWEEN THE
TWO-YEAR AND THE 10, AND THOSE
COSTS ARE 3 1/2, 4% DEPENDING
WHERE YOU ARE IN THE WEEK SO
FORTH THAT IS A HUGE AMOUNT OF
MONEY.
IF THAT GOES TO 10%, IF THE
GOVERNMENT’S BORROWING COSTS
GOES TO 10% ON $30 TRILLION,
THAT MATH IS PRETTY EASY, JUST
$3 TRILLION A YEAR JUST IN
INTEREST PAYMENTS.
AN OBSCENE AMOUNT OF MONEY.
I THINK THE FED IS RESTRICTED,
IN THE BACK OF THEIR MINDS THEY
CAN’T DO THE SAME THING THEY DID
IN THE 1970s BECAUSE WE’RE TOO
HEAVILY IN DEBT.
NEIL: THIS IS WHERE WE WEIGH
INTO MORE THE POLITICAL STUFF
YOU GENERALLY TRY TO ASKEW THESE
DAYS AND I UNDERSTAND, IF YOU
THINK ABOUT IT THERE, IS POPULAR
WAVE AGAINST GOVERNMENTS WHETHER
LIBERAL OR CONSERVATIVE.
LIZ TRUSS TURNED ON HER OWN
PARTY IN BRITAIN AND THE
FINANCIAL INSTITUTIONS TURNED ON
HER AS WELL.
EVEN IN BRAZIL RIGHT NOW
FAVORING A LEFTIST OVER THE MORE
MODERATE PRESIDENT FOR THE
TIME-BEING, BUT I SEE THIS
PLAYING OUT AGAIN AND AGAIN.
WHAT, YOU THINK IT SHOULD BE A
REMINDER TO REPUBLICANS THAT YOU
KNOW, WAVES LIKE THIS AREN’T
CONFINED TO PARTIES, JUST FOR
THE TIME-BEING, PARTIES IN
POWER?
>> YEAH.
WAVES CAN BE STRANGE, RIGHT?
THEY CAN BE A WAVE FOR YOU OR A
WAVE AGAINST SOMEBODY ELSE AND
YOU ALWAYS HAVE TO BE REAL
CAREFUL AS TO WHAT THAT IS
BECAUSE IT GIVES YOU IF YOU’RE
ON THE WINNING SIDE OF THAT WAVE
YOU HAVE DIFFERENT POLITICAL
CAPITAL DEPENDING HOW YOU GOT
INTO OFFICE.
I DO THINK THE GET INTO POLITICS
A LITTLE BIT, ONE OF THE THINGS
WE’RE SEEING, AWAY FROM
ECONOMICS FOR A SECOND, I COME
BACK IF YOU WANT TO, REPUBLICANS
ARE REALLY ONLY CANDIDATES
TALKING TO UNDECIDED VOTERS
ABOUT THINGS THINK CARE ABOUT.
UNDECIDED VOTERS ARE UNDECIDED
FOR A REASON.
THEY DON’T FOLLOW A PARTY,
POLITICS VERY CLOSELY.
WHAT DO THEY CARE ABOUT NOW?
INFLATION AND MAYBE CRIME AND
THE REPUBLICANS ARE TALKING
ABOUT THAT.
THE DEMOCRATS ARE TALKING ABOUT
ABORTION.
IT IS A REALLY TOUGH SORT OF
CAMPAIGN STRATEGY TO GO OUT TO
THE VOTER TO SAY I KNOW YOU WANT
TO TALK ABOUT X BUT YOU’RE WRONG
ABOUT THAT LET’S TALK ABOUT Y.
THAT TENDS TO TURN VOTERS OFF
AND DRIVE THEM TO THE OTHER
PARTY WHERE I THINK THE
DEMOCRATS ARE MAKING A BIG
MISTAKE RIGHT NOW ASIDE FROM ALL
GOING WRONG WITH THE ECONOMY
ITSELF.
NEIL: YOU KNOW IF I GO BACK
DIRECTLY WHAT COULD BE A
POTENTIAL FED PIVOT, NOT FOR
WHAT A LOT OF FOLKS THINK, IF
YOU’RE RIGHT, THEY’RE CONCERNED
ABOUT OVERBURDENING THE U.S.
DEBT WITH ADDED INTEREST RATE
COSTS, THAT I MIGHT GET.
IT MIGHT LEAD TO SOME, THEY
WON’T BE DONE WITH THE INFLATION
FIGHT AND DONE WITH ANOTHER
BATTLE.
WHAT DO YOU THINK?
>> I THINK THE FED IS LIMITED.
WE’RE IN A PROBLEM CAUSED A
LITTLE BIT BY THEIR INTEREST
RATE POLICIES OVER THE COURSE OF
THE LAST DECADES.
ALSO BECAUSE OF THE SUPPLY
RESTRICTIONS THAT WE’VE HAD.
YES WE HAVE COVID THAT HAS BEEN
A PROBLEM.
THAT IS PROBLEM.
RUSSIA IS A SIGNIFICANT PROBLEM.
BUT YOU ALSO HAVE THE
REREGULATORY POLICIES OF THIS
ADMINISTRATION. SO AS YOU SIT HERE LOOK AT
SO AS YOU SIT HERE LOOK AT
INFLATION TOO MUCH MONEY CHASING
TOO FEW GOODS, THEY’RE HURTING
ON SUPPLY OF MONEY AND MAKING IT
HARD ABOUT GETTING STUFF TO
MARKET.
THE BIDEN ADMIN STRANGE MAKES IT
TOUGH TO GET STUFF TO MARKETS.
IF YOU LOOK AT INFLATION I DON’T
THINK IT IS GOING AWAY ANYTIME.
NEIL: DO YOU APPLY THE SAME
STANDARDS TO TAX CUTS THE SAME
WE DO WITH SPENDING, IF YOU
DON’T PAY FOR THEM WE’RE IN
TROUBLE?
LIZ TRUSS FOUND THAT OUT.
WILL REPUBLICANS WILL HAVE TO
PAY FOR THEM.
>> WE LOOK AT THEM DIFFERENTLY,
BEST DEFICITS LET YOU KEEP YOUR
MONEY, THAT IS MORE ALLOCATION
OF EFFICIENT CAPITAL.
THE WORST DEFICITS ARE WELFARE,
INCOME REDISTRIBUTION, BECAUSE
THAT IS THE LEAST TYPE OF
EFFICIENT DEBT YOU CAN PROBABLY
HAVE.
I DON’T KNOW IF PEOPLE CARE YET
ABOUT DEBT.
KEEP IN MIND, HALF OF THE PEOPLE
IN THIS COUNTRY SEEM TO THINK
INFLATION IS CAUSED BY CORPORATE
GREED AND OLLIE GOLL UNTIL WE
CHANGE PEOPLE’S MIND WHAT IS
CAUSES INFLATION, IT WILL BE
HARD TO FIX.
I THINK IT WILL BE HERE FOR A
WHILE.
YOU TALK ABOUT HOW SLOW THE
GOVERNMENT SPENDS MONEY.
THEY ALLOCATED APPROPRIATED ALL
THAT MONEY OVER THE COURSE OF
THE LAST YEAR.
NOWHERE NEAR ALL OF THAT MONEY
LEFT THE GOVERNMENT COVERS.
IT IS NOT OUT IN THE ECONOMY.
WHEN I TOOK OVER OMB, WE STILL HAD MONEY WE HADN’T SPENT FROM
HAD MONEY WE HADN’T SPENT FROM
HURRICANE SUPERSTORM SANDY OR
KATRINA.
NEIL: I ALWAYS LEARN A LOT, MICK
MULVANEY, THANK YOU VERY MUCH.
FORMER WHITE HOUSE CHIEF OF