TOLD ME IT’SAL STANDARD ON HOW
YOU DO POLICY.
BRIAN: ALSO WITH ME FROM JACKSON
HOLE.
KEVIN, YOU WERE IN THE ROOM
TODAY.
MARKETS ABSOLUTELY HATED WHAT
THEY HEARD FROM THE CHAIRMAN.
WHAT DID YOU THINK?
>> I LOVED IT.
LARRY KUDLOW AND I HAVE BEEN
TALKING ABOUT THIS FOR MONTHS,
BASICALLY THE FED HAS BEEN TOO
SOFT ON INFLATION.
TODAY THEY CAME OUT WITH GUNS
BLAZING.
HE WAS AS CLEAR AS HE COULD BE.
HE WENT OUT THERE AND LAID DOWN
THE LAW.
THEN HE GOT DOWN -- I HAVEN’T
SEEN THIS COVERED IN THE MEDIA.
BUT AS AN ECONOMIST AND PART OF
THE WHITE HOUSE TEAM THAT
APPOINTED HIM.
HE SAID WE LIFTED THE INTEREST
RATE .75 BASIS POINTS AND IT
WILL TAKE SOME TIME FOR US TO
CONSIDER SLOWING THE RATE OF
INCREASE.
TAKE A WHILE.
THE POINT IS IT’S GOING TO TAKE
A WHILE.
SO THAT’S PAST THE NEXT MEETING.
WHAT IS A WHILE?
I THINK IT MIGHT BE TWO OR THREE
MEETINGS.
IF YOU WERE GOING UP TWO OR
THREE BASIS POINTS A YEAR, HE
ALMOST SIGNALS THAT’S WHAT YOU
HAVE GOT TO DO TODAY.
I WILL PULL A SNIPPET HERE.
IF THE FEDERAL RESERVE WERE
CONFIDENT WE WERE IN A RECESSION
IT WOULD FIGHT INFLATION WITH A
GENTLAL TOUCH OF A BRAIN YOU ARE
JUNLS SCALPEL.
THE DEPRESSION RISKS ARE HIGHER
THAN THEY HAVE BEEN IN OUR
LIFETIMES.
YOU WROTE THAT.
IT SOUNDS LIKE THE FED IS GOING
DOWN THAT ROAD.
ARE YOU GETTING CONCERNED THIS
IS RECESSION TEETERING ON
DEPRESSION?
>> WE ARE IN A RECESSION.
I WENT BACK WHEN I WROTE THAT
PIECE AND LOOKED AT WHAT
RESESSIONS WERE LIKE IN THE PAST
WHEN WE HAD HIGH INFLATION.
THE JOB MARKET STAYS STRONG, AND
THEN THE UNEMPLOYMENT RATE
STARTS TO SKYROCKET.
THE UNEMPLOYMENT RATE IS GOING
TO START TO SKYROCKET AND THAT WILL SIGNAL FROM THE FED THEY
WILL SIGNAL FROM THE FED THEY
CAN STAY THE BASIS POINTS.
EDGE TODAY HE SAID HE THINKS THE
ECONOMY IS STRONG.
THEY ARE LOOK AT THE JOBS
NUMBERS.
THAT’S THE RISK WHEN THEY LOOK
AT THE WRONG TARGET AND THEN
THEY SHOOT TOO MUCH.
IT’S SOME KIND OF BRAIN TRICK
BECAUSE THEY ARE LOOK AT THE
UNEMPLOYMENT RATE.
LIFTING RATES LIKE THIS IN A
RECESSION IS SOMETHING I HAVE
NEVER SEEN BEFORE.
AS AN ECONOMIST YOU HAVE TO BE
HUMBLE ABOUT WHAT CAN HAPPEN.
BRIAN: WE’LL GET A JOBS NUMBER
NEXT WEEK.
DO YOU THINK IT WILL BE A GOOD
NUMBER?
AND IF IT IS DO WE START
PLUNGING DOWN THE ROAD WHERE WE
MISTAKE THAT FOR A STRONGER
ECONOMY THAN IT IS.
NOW THEY WILL TAMP IS DOWN SO
FAR WE’LL GET A WORSE RECESSION.
>> MY EXPECTATION IS WE GET A
JOBS NUMBER AROUND 125 AND THE
UNEMPLOYMENT RATE STARTS TO PICK
UP.
BUT IF WE GET ANOTHER
BLOCKBUSTER JOBS NUMBER, IT’S
DELAYING THE INEVITABLE.
SOONER OR LATER THE JOBS MARKET
WILL CATCH UP WITH THE REST OF
THE ECONOMY.
I THINK THE THIRD QUARTER WILL
BE NEGATIVE.
THAT’S THREE NEGATIVE QUARTERS
IN A ROW.
I THINK THE JOBS MARKET WILL
CATCH UP WITH THAT.
PEOPLE WHO STAYED HOME BECAUSE
OF COVID, ESPECIALLY SENIOR
CITIZENS, HAVEN’T COME BACK IN.
SO THEY HAVE JOB VACANCIES.
EVEN IF HIRING GOES DOWN, THERE
ARE SO MANY VACANCIES YOU HAVE A
POSITIVE JOBS NUMBER.
BRIAN: EVERYBODY TALKING ABOUT
THE STUDENT LOAN HANDOUT.
TO ME THE ISSUE IS, THIS DOES
NOTHING TO TRANSFORM THE COST OF
HIGHER ED.
WHICH MEANS WHATEVER WE ARE
DOING RIGHT NOW, IT WILL BE BACK
WITH US IN A COUPLE OF YEARS.
WE’LL HAVE AS MUCH STUDENT DEBT
THEN AS WE DO NOW.
WHAT’S YOUR READ ON IT?
>> I HAVE TWO READS ON IT.
THE FIRST READ IS WHEN I WAS IN
THE WHITE HOUSE WITH THE LAWYERS
IN THE WHITE HOUSE WE DUG INTO
THE IDEA OF WHETHER THE
PRESIDENT HAD THE AUTHORITY TO
FORGIVE THE DEBT.
DURING THE COVID CRISIS IT WAS
SOMETHING ON THE ABLE TO
CONSIDER.
OUR LAWYER TOLD US WE WERE
ALLOWED TO DELAY PAYMENTS, BUT
WE WEREN’T ALLOWED TO FORGIVE
BECAUSE THAT WOULD BE SPENDING
AND THAT’S SOMETHING CONGRESS
HAS TO DO.
MY VIEW IS IT WILL GET
CHALLENGED IN COURT AND THEY
WILL LOSE.
WE STUDIED THIS REAL HARD WITH
GOVERNMENT LAWYERS AND THEY SAID
YOU CAN’T DO THAT.
IT MAKES THE WHOLE COLLEGE
CALCULUS SO MUCH MORE DIFFICULT
GOING FORWARD.
YOU KNOW THEY WILL FORGIVE IT
AGAIN IF THEY GET AWAY WITH
THIS.
EVERYBODY WILL LOAD UP ON DEBT
THINKING THEY ARE GOING TO GET
OUT OF JAIL FREE.
IT WILL CREATE A HUMUNGOUS
LIABILITY.
AND THE CBO WILL HAVE TO ACCOUNT
FOR THAT AND IT WILL INCREASE
THE DEFICIT.
THE DEFICIT WILL SKYROCKET AS
WELL.
BRIAN: WHO IS GOING TO TAKE A
LOAN AND SAY YOU KNOW I AM GOING
HAVE TO PAY THAT BACK.
BACK.