IN THE NEW MOVIE, TRUST ME ON
THAT.
ALL RIGHT.
NOW, LET’S TALK ABOUT ALL THIS.
JOINING US KEVIN HASSETT, FORMER
COUNCIL OF ECONOMIC ADVISORS
CHAIR, AUTHOR OF THE MOST
IMPORTANT BOOK OF THE NEW
CENTURY, IT IS CALLED
"THE DRIFT," THE FIGHT AGAINST
SOCIALISM.
KEVIN BEFORE WE GET TO THE NEW
MOVIE, TALK FOR A MOMENT ABOUT
THE FED.
I THINK THE INTEREST RATE HIKE
IS THE MUCH MORE BORING PART OF
TODAY’S INTEREST RATE STORY.
THEY KIND OF DID WATT MARKETS
EXPECTED.
STOCK MARKET WENT UP.
IN YOUR JUDGMENT HOW CLOSE ARE
THEY TO THEIR GOAL OF A
RESTRICTIVE FED FUNDS RATE OR
BRINGING THE INFLATION RATE DOWN
SIGNIFICANTLY?
>> YOU KNOW I THINK THEY’RE A
LITTLE CLOSER THAN I THOUGHT THE
LAST TIME YOU AND I HAD A PRETTY
PESSIMISTIC CONVERSATION ABOUT
IT BECAUSE THE RECESSION WHICH
WE’RE LIKELY GOING TO SEE
STARTED IN JANUARY WHEN WE GET
THE DATA TOMORROW, IS DRIVING
DOWN A LOT OF COMMODITY PRICES
AND THAT’S USUALLY THE FIRST
STEP.
I KNOW YOU’VE BEEN TALKING ABOUT
GOLD FOR YOUR WHOLE LIFE REALLY.
ONCE THOSE COMMODITY PRICES GO
DOWN, AS YOU SAID YOU SORT OF GO
DOWN FROM NINE TO 10% TO MAYBE
SEVEN OR 6%.
SO THEY MIGHT GET A LITTLE BIT
OF ANTI-INFLATIONARY MOMENTUM
OUT OF THE DECLINING GDP BUT AS
YOU’RE SAYING THEIR RATE HIKES
HAVEN’T REALLY HIT THE GDP YET
AND SO I EXPECT WE ARE PROBABLY
GOING TO SEE A DEEP CONTRACTION,
ESPECIALLY OVER THE SECOND HALF
OF THE YEAR, BECAUSE THAT IS
WHEN THE FED POLICY WILL START
TO BITE.
IT IS GOOD TO SEE THEY WENT TO
3/4 OF A POINT, REMEMBER GETTING
A QUARTER POINT OUT OF THEM WAS
REALLY, REALLY HARD WHEN
INFLATION WAS CLEARLY HAPPENING
ALREADY, BECAUSE THEY SAID IT
WAS TRANSITORY.
THE MARKETS ARE CELEBRATING
BECAUSE A LOT OF TIMES WHAT
HAPPENS MARKETS COLLAPSE WHEN
THEY SEE A RECESSION COMING BUT
THEN THEY START RECOVERING
BEFORE THE RECESSION IS OVER
BECAUSE MARKETS ARE ALWAYS GOING
FORWARD-LOOKING.
WE COULD ALMOST GET TO THAT
POINT.
I THINK WE CERTAINLY GET TO THAT
POINT IF THERE WAS TURNOVER IN
CONGRESS IN NOVEMBER.
THE FED MADE THE RIGHT MOVE.
LET’S HOPE THEY KEEP IT 75 BASIS
POINTS FOR NEXT FEW MEETINGS.
THEN THEY WILL BE CLOSE WHERE
THEY NEED TO BE.
LARRY: THAT IS A GOOD POINT, THE
STOCK MARKET WHICH WAS GETTING
KILLED A FEW WEEKS AGO, HAS, I’M
GOING TO SAY STABILIZED.
I DON’T KNOW THERE IS A RALLY
GOING.
SOME PEOPLE THINK IT’S A BEAR
MARKET RALLY.
I’M NOT SMART ENOUGH TO KNOW
THAT.
I’M NOT IN THE MARKET ANYMORE
BUT THINK ABOUT THIS, KEVIN FOR
A MINUTE, ON AN OPTIMISTIC NOTE
WE’RE NOT GOING TO GET ANY TAX
HIKES BECAUSE JOE MANCHIN WORKED
HIS MAGIC AND SAID NO.
THE SUPREME COURT IN PROBABLY
THEIR MOST CONSEQUENTIAL RULING
RULED AGAINST THE REGULATORY
BUREAUCRACY IN WEST VIRGINIA
VERSUS THE EPA, SAID THEY CANNOT
MAKE THESE SOCIALIST PLANNING
DECISIONS WITHOUT CONGRESSIONAL
LEGISLATION.
YOU KNOW, WE HAD SENATOR
MITCH McCONNELL ON ABOUT THAT
YESTERDAY.
AND THE FED IS TAKING ACTION.
I WATCH COMMODITY INDEXES, THE
PRICE OF GOLD IS DOWN SO FORTH
AS YOU MENTIONED.
THE WORSE OF THAT MAY BE OVER
ALTHOUGH IT WILL BE A LONG HAUL.
THEN THE CAVALRY IS COMING SO
WE’LL TAKE THE HOUSE FOR SURE.
MAYBE THE SENATE.
SO WE’LL CERTAINLY STOP THE BAD
STUFF.
SO MAYBE THE STOCK MARKET IS
KIND OF IN A LONGER-TERM SENSE
SNIFFING OUT BETTER NEWS, IN
EFFECT SNIFFING OUT THAT THE
BIDEN, YOU KNOW, LEFTY,
PROGRESSIVE POLICIES ARE DEAD IN
THE WATER?
>> RIGHT AND LET’S NOT FORGET
THAT YOU KNOW, OUR FRIEND JOE
SULLIVAN HAD THIS GREAT PIECE IN
"NATIONAL REVIEW" TODAY WHERE HE
SHOWED THAT ONLY ONE PRESIDENT
HAS HAD A WORSE STOCK MARKET
OVER THE SAME TIME FRAME IN
THEIR PRESIDENCY, AND THAT WAS
JERRY FORD, BUT AMONGST ELECTED
PRESIDENTS BIDEN IS IN LAST
PLACE IN TERMS OF THE
PERFORMANCE OF THE STOCK MARKET
SINCE HE HAS BEEN INAUGURATED
THROUGH THIS POINT IN HIS TERM
AND I THINK WHAT THAT MEANS
REALLY IS ESPECIALLY AT THE
BEGINNING MARKETS WERE TERRIFIED
THIS RADICAL AOC AGENDA MAYBE
WAS GOING TO BECOME LAW.
NOW THEY’RE SORT OF SEEING THAT,
AS YOU SAID THE CAVALRY IS
COMING.
THE FED HAS ACTED INDEPENDENTLY.
THEY HAVE BEEN TOUGH ON
INFLATION RATHER THAN YOU KNOW,
SORT OF CAVING, TRYING TO YOU
KNOW, HELP THE BIDEN
ADMINISTRATION BY NOT RAISING
RATES.
SO I THINK WE’RE MAYBE MOVING
BACK TOWARDS NORMALCY.
I THINK AN ELECTION TOOK AWAY
THE POWER OF THE RADICAL LEFT
WOULD PROBABLY GET US THE REST
OF THE WAY THERE.
IF I WERE ME I EXPECT THE MARKET
TO LOOK FORWARD TO THAT.
I WOULD WATCH THE BETTING
MARKETS, 80% REPUBLICANS CAPTURE
THE HOUSE.
THE BETTING MARKETS STAY UP
THERE I THINK THE MARKET WILL
START TO GIVE YOU THAT SORT OF
POLITICAL RALLY BEFORE THE
ELECTION.
LARRY: IT IS FUNNY.
LIKE, THE SUPREME COURT SAYS NO
TO BIDEN’S AGENDA.
JOE MANCHIN SAID NO TO BIDEN’S
AGENDA.
JAY POWELL IS DOING WHAT HE IS
IS DOING AND THE POLITICAL
SITUATION SAYS NO TO BIDEN’S
AGENDA.
EVERY POLL REJECTS HIM SO HE HAS
BEEN STOPPED, KEVIN.
I DON’T WANT TO SAY WITH GREAT
CERTAINTY BECAUSE HARD TO FIGURE
THESE THINGS OUT BUT IN A SENSE
YOU AND I LIKE TO TAKE A LONGER
TERM VIEW OF THESE THINGS.
I MEAN THE ECONOMY WILL GO
THROUGH PAIN.
IT IS ALREADY SLUMPING.
WE’RE EITHER IN A RECESSION OR
FRONT END OF A RECESSION BUT
IT’S A SLUMP AND HIGH INFLATION
SLUMP RIGHT, IT WILL BE PAINFUL
TO WRING THAT OUT, BUT, BUT,
BUT, EVERYBODY IS SAYING NO TO
JOE BIDEN AND THEREFORE THAT IS
PROBABLY GOOD FOR AMERICA?
>> RIGHT BUT I ALSO WANT TO SAY
THAT I DON’T THINK THAT BIDEN’S
POLICY MAKE SOMETHING -- MAKING
IS DONE, IN A SENSE I DON’T KNOW
WHAT THE GUY BELIEVES.
IF REPUBLICANS, REPUBLICANS PLUS
MODERATE DEMOCRATS HAVE A BIG
VICTORY IN NOVEMBER, THEY COME
FORWARD NEXT YEAR WITH
REASONABLE PLANS LIKE YOUR PLANS
TO HAVE A SUPPLY SIDE STIMULUS
BILL TO TRY TO GET YOU TO HELP
GET INFLATION DOWN, I’M NOT SURE
HE WOULDN’T SIGN IT, RIGHT?
I THINK THAT MARKETS ARE
PROBABLY THAT WAY TOO.
I THINK REASONABLE BILLS NEXT
YEAR TO FIX THE ECONOMY MIGHT
WELL BE SIGNED BY JOE BIDEN
BECAUSE I DON’T THINK ANYBODY
REALLY KNOWS WHAT HE BELIEVES
BUT A LOT OF TIMES WHAT HAPPENS
WHEN THERE IS DIVIDED GOVERNMENT
THAT PRESIDENTS ARE LOOKING FOR
A WIN AHEAD OF RE-ELECTION
CAMPAIGN AND THEY’RE WILLING TO
SIGN BIPARTISAN BILLS.
I’M QUITE HOPEFUL FOR POLICY
NEXT YEAR.
I THINK ONE OF THE POSITIVE
SIGNS WHICH WAS DISCUSSED AT THE
AMERICA FIRST POLICY INSTITUTE
SUMMIT YESTERDAY A IS THAT KEVIN
McCARTHY IS GETTING READY.
HE IS NOT COUNTING HIS CHICKENS.
HE HAS ALL THE TASK FORCES OUT
THERE PLANNING LEGISLATION THAT
THEY WANT TO PASS NEXT YEAR THAT
IS GOING TO BE SO OBVIOUS,
OBVIOUSLY ADDRESSING THE NEEDS
OF THE COUNTRY THAT BIDEN WILL
HAVE TO SIGN IT.
I THINK THERE IS A CHANCE SOME
OF THAT STUFF WILL GET THROUGH.
I’M STARTING TO GET A LITTLE
MORE OPTIMISTIC MYSELF.
I’VE BEEN PRETTY DARK SINCE
JANUARY.
LARRY: I DON’T KNOW THAT
POSITION HAS HAD A GOOD RUN BUT
THESE THINGS ARE EVOLVING IN
VERY GOOD WAYS WHICH REJECT ALL
OF THE LEFT-WING PROGRESSISM.
KEVIN, LET ME MOVE ON TO MY JOHN
LECLAIR MOVIE BEING CONSTRUCTED
WITH ALL THESE REPORTS OF THE
FED.
THE RESERVE BANKS HAVE HAD
TROUBLE WITH CHINESE-RELATED
RESEARCH ASSISTANTS OVER TIME.
THE FED DID AN INVESTIGATION
BACK IN 2015.
NOW NEW THINGS ARE EMERGING.
THIS GUY WAS IN HIS HOTEL ROOM
AND THEY BROKE INTO IT.
THE HOMELAND SECURITY OPERATION,
THIS IS ROB PORTMAN, WHO CAN
HAVE A STARRING ROLE IN MY
MOVIE.
HE CAN TAKE THE GARY OLDMAN SPOT
IN TINKER TAILOR SOLDIER SPY.
THIS IS VERY SERIOUS STUFF, IS
IT NOT, HACKING ESPIONAGE,
RECRUITING FED STAFFERS TO GIVE
US INSIDE INFORMATION, TELL US
WHAT YOU KNOW OR WHAT YOU THINK
ABOUT THIS, PLEASE?
>> WELL YOU KNOW MY FIRST
INSTINCT TO MAKE LIGHT OF IT, IF
WE WANT TO REALLY HARM CHINA
THEY SHOULD START USING FED
MODEL.
LARRY: [LAUGHTER]
>> IF THEY USE THE FED MODEL
THEY WILL FALL APART LIKE WE ARE
NOW, BUT THE TRUTH IS THOUGH
THAT THERE IS A LOT GOING ON IN
THAT SPACE.
YOU AND I KNOW WE CAN’T TALK
ABOUT EVERYTHING BUT WE KNOW
THAT THE CHINESE ARE VERYING A
AGRESSIVELY PURSUING U.S.
ECONOMISTS HACKING THEIR EMAILS.
THE FED, AND YOU KNOW, THEY TOOK
THIS GUY IN HIS ROOM AND
THREATENED HIM.
I JUST, BEFORE I WENT INTO
GOVERNMENT HAD A CHINESE TRIP
WITH A BUNCH OF SENIOR PEOPLE,
SOME OF THE MOST SENIOR PEOPLE
HAD VERY ATTRACTIVE WOMEN SHOW
UP AT THEIR ROOMS AT 11:00 AT
NIGHT.
I WHILE IN THE WHITE HOUSE
HARASSED NOT RELATED TO THE
CHINESE GOVERNMENT, BUT CHINESE
PEOPLE HARASSING ME AND MY SON
WHILE PLAYING BASKETBALL.
THEY’RE HERE IN THE U.S.
THE THING THAT I WOULD SAY IS
THAT THERE ARE ALL THESE CHINESE
STUDENT THAT ARE INCREDIBLY
TALENTED AND A HUGE SHARE OF
THEM ARE OBVIOUSLY NOT SPIES BUT
A WHOLE BUNCH OF THEM ARE SPIES
OR WORRY ABOUT THEIR PARENTS
STILL BACK IN CHINA.
A LOT OF THOSE FOLKS OVER THE
YEARS HAVE GOTTEN INTO POSITIONS
AT FEDERAL RESERVE BANKS AND THE
FED WHERE THEY HAD ACCESS TO
EXTREMELY IMPORTANT CLASSIFIED
INFORMATION AND I THINK THAT
THOSE INVESTIGATION SUGGESTIONS
THAT TURNED INTO A PROBLEM AND
IF IT WERE ME I WOULD CONTINUE
TO DIG.
I WOULD LIKE TO KNOW, FOR
EXAMPLE, LIKE LET’S GET ACE ARE
OF HOW MANY CHINESE NATIONALS
HAVE WORKED AT THE FED OVER THE
LAST 15 YEARS AND WHERE THEY
WERE AND THEN START TO
INVESTIGATE WHAT THEY’RE UP TO.
BECAUSE WE KNOW, YOU AND I KNOW
THE CHINESE GOVERNMENT HAS A
VERY DETAILED PLAN FOR JUST
ABOUT EVERYTHING AND ONE OF THEM
IS INFILTRATING U.S. GOVERNMENT
AGENCIES THROUGH HACKING AND
THROUGH INDIVIDUAL AND, WE NOW
KNOW THAT THERE ARE EVEN, I FOR
ONE JUST GIVEN MY OWN EXPERIENCE
HERE IN WASHINGTON WOULD NEVER
GO TO CHINA AGAIN.
AND I THINK THAT, I KIND OF
WONDER IF THE FEDERAL RESERVE IF
THERE IS CONFERENCE IN CHINA THE
FEDERAL RESERVE LETTING PEOPLE
GO THERE, THEY NEED TO TRAIN
THEM.
YOU AND I IF WE WERE GOING TO A
COUNTRY LIKE CHINA WHEN WE WERE
IN THE WHITE HOUSE, WHAT DO WE
DO?
WE DITCHED OUR PHONES, GOT A
SPECIAL PHONE JUST FOR THAT.
THEY WILL TAKE OVER THEIR PHONE.
WE DIDN’T TAKE THE LAPTOPS.
THEY GAVE US A SPECIAL LAPTOP
WITH NOTHING ON IT.
EVERYBODY WAS SURE THEY WOULD
GET OUR LAPTOPS AND PHONES.
I WONDER IF THE FED IS TAKING
SECURITY MEASURES?
LARRY: WE KNEW IN THE HOTEL ROOM
WAS COMPLETELY COVERED BY CHINA,
PHONES, LAPTOPS, AS YOU SAY.
>> RIGHT.
LARRY: TO WRAP THIS UP, LOOK,
JAY POWELL IS DENYING THIS BUT
THESE HEADLINES,
"THE WALL STREET JOURNAL," WITH
TIMEROS, CHINA TARGETED FED TO
BUILD FORMAL ACCESS NETWORK
DATA.
SECOND ONE FROM THE
"WASHINGTON TIMES," SENATE
INVESTIGATION REVEALS CHINA’S
EFFORT TO INFILTRATE FED
PRACTICAL RESERVE.
THEN I GOT ONE FROM, WELL, THE
HEAD OF FOX BUSINESS, BIG
HEADLINE, CHINA TARGETED FEDERAL
RESERVE EMPLOYEES IN AN ATTEMPT
TO UNDERMINE AMERICAN MONETARY
POLICY.
WHERE THERE IS SMOKE THERE IS
FIRE AND I DON’T KNOW WHY
JAY POWELL IS GOING TO DENY IT.
JAY POWELL SHOULD SAY WE’RE
WORKING ON IT TO GET GUARDRAILS
AN SAFEGUARDS AND PATCH UP OUR
WEAKNESSES WHERE POSSIBLE.
I MEAN WE WANT THE FED TO HELP
US ON THIS, OTHERWISE THERE IS
GOING TO BE A WAR AND GUYS LIKE
ROB PORTMAN TAKE HOMELAND
SECURITY VERY, VERY SERIOUSLY.
I GIVE YOU THE LAST WORD ON THIS
BUT THIS STORY, I THINK KEVIN IS
GOING TO SPREAD, IT’S A BIG
STORY.
>> NICK’S A GREAT REPORTER, THE
FACT HIS NAME ON THAT, HE IS
REALLY WIRED INTO THE FED OF THE
AS I CAN SAY I WORKED AT FED, I
WAS SENIOR ECONOMIST AT THE FED,
I HAVE A LOT OF FRIEND THERE.
MY UNDERSTAND WHAT IS GOING ON
THERE WAS A PROBLEM DISCOVERED
SOME YEARS BACK.
THEN A LOT OF VERY AGGRESSIVE
MEASURES WERE TAKEN TO THE
ADDRESS THE PROBLEM AND THE
PROBLEM IS VIEWED BY THE FED
RIGHT NOW AS HAVING BEEN
RESOLVED, THAT THEY’RE NOT
MAKING THE MISTAKES THEY MADE IN
THE PAST.
SO I’M NOT SO NERVOUS THAT
THEY’RE INFILTRATED THEY’RE
THERE NOW.
I THINK YOU KNOW THERE WAS
SOMETHING THAT WENT ON THAT
FIXED THINGS IN THE PAST AND IT
WASN’T NECESSARILY COVERED IN
THE MEDIA THE WAY IT COULD HAVE
BEEN.
IT IS NOW COMING OUT IN
"THE WALL STREET JOURNAL" I
THINK WE’LL FIND OUT THE REST OF
THE STORY BUT MY UNDERSTANDING A
LOT OF PEOPLE AT THE FED FEEL
LIKE THERE WAS SOME KIND OF
PROBLEM.
THEY DON’T NECESSARILY ALWAYS
KNOW EXACTLY WHAT IT WAS BUT
TOOK VERY SEVERE STEPS TO
ADDRESS IT.
NOW THE PROBLEM IS FIXED.
THAT IS WHAT THEY THINK.
LARRY: KEVIN IF WE DO A NEW JOHN
LECLAIR MOVIE, DO YOU WANT TO BE
IN IT?
>> I DON’T KNOW, THEY NEED LIKE
A DUMPY ECONOMIST?
LARRY: THEY NEED A FOOD
ECONOMIST.
MI6 NEEDS REALLY FIRST RATE