Can Denmark convince Trump not to “conquer” Greenland?

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1:14Hello, we've got two very big stories playing out today. First off, important talks about the future of Greenland. the foreign ministers of Denmark and Greenland have come here to Washington DC for some talks at the White House. How did they go? We therefore still have a fundamental disagreement, but we also agreed to disagree. There was another extraordinary moment this week, another disagreement, when the world's top central banker, the chairman of the US Federal Reserve, made a video statement basically calling out Donald Trump. Public service sometimes requires standing firm in the face of threats.

1:49I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people. That was Jerome Powell there, breaking the news that a criminal investigation has been launched into him by the Trump administration, and basically saying he thinks that this is entirely politically motivated because he hasn't done what President Trump wants him to and lower interest rates. Therefore, Trump is using the Justice Department against him. Now, that is a very big deal, and we will explain exactly why. Welcome to AmeriCast.

2:51Hello, it's Sarah here in the BBC's Bureau in Washington. And it's Anthony, right next to Sarah here in Washington, D.C. And it's Justin in the worldwide headquarters of AmeriCast in London, England. And we should say before we start, it's late, at least it's late for me. It's after half of six in the evening, which, you know, I mean, it's fine for you guys because it's still the middle of the day. But for me, it's not. But there is a reason why we're doing it slightly late because there is an awful lot to get to. and some of it has yet to happen or is happening as we're on. So we're doing the right thing.

3:22Before we get into Jerome Powell and Donald Trump, we should say that one of the other things we need to keep an eye on is this meeting between J.D. Vance, Marco Rubio and the foreign ministers from Denmark and Greenland at the White House. And we know what that's all about. Very interesting to see what comes out of it and what the tone was like. So hopefully we can get to that. or at least you two can, Sarah and Anthony, later on, though I may have to go to bed because I tend to do that quite early for other reasons that we won't go into now. But OK, Sarah, take us away when it comes to Jerome Powell.

3:55What has actually happened to him this week? Well, this was a fairly astonishing intervention from the chairman of the Federal Reserve, who's normally a rather reserve kind of chap. I mean, that's the sort of person in that role who is very buttoned up and serious and doesn't tend to make splashy news. But on Sunday night, he recorded a video in which he revealed that he was under investigation by the Department of Justice and that he thought that this was an entirely political move based on the fact that he has clashed with Donald Trump, who wants him to lower interest rates faster than he has been doing.

4:31They've had some very public arguments about that. And he set all of this out absolutely foursquare, accusing the president of political interference in this investigation. And I mean, I was pretty surprised by seeing him do that. Anthony, were you? Yeah, I mean, he is, as you mentioned, normally a restrained kind of guy, doesn't get involved in politics. And here he was putting politics directly on the table. All of this investigation is over renovations that have been happening to the Federal Reserve building and testimony that Jerome Powell gave before Congress about those renovations. But let's listen to Jerome Powell in that statement he had released on Sunday night in full.

5:10On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. That testimony concerned, in part, a multi-year project to renovate historic Federal Reserve office buildings. I have deep respect for the rule of law and for accountability in our democracy. No one, certainly not the chair of the Federal Reserve, is above the law. But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure. This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings.

5:51It is not about Congress's oversight role. The Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation.

6:26I have served at the Federal Reserve under four administrations, Republicans and Democrats alike. In every case, I have carried out my duties without political fear or favour, focused solely on our mandate of price stability and maximum employment. Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do with integrity and a commitment to serving the American people. Thank you. My reaction to that, Sarah, is wow, because you don't often hear in those terms, with that degree of bluntness, Jerome Powell say anything about anything that isn't specifically monetary policy.

7:07The fact that he is taking the president on and doing so so nakedly, so openly now, this is a new world. Yeah. Yeah. But he said, didn't he? Public service sometimes requires standing firm in the face of threats. And that's obviously what he has decided to do in this particular case and to call it out publicly. You don't get to be the chair of the Federal Reserve without understanding that every single word, every single pause, every single comma you say matters. You get to the point where you get very good at choosing your sentences carefully because it can move markets. It can shift tectonic plates in the global economy.

7:44So here he was with a conscious decision to go straight at Donald Trump, really the first time he's ever done that publicly, knowing what that would amount to, a declaration of war or a line in the sand that this has to stop. And actually, he has been getting a lot of applause from the left and the right for being somebody who is prepared to stand up to Donald Trump, even in the face of a potential criminal investigation. And there's been a lot of commentary I've seen. You probably have as well, Anthony. People say, if only everybody had the courage to call Donald Trump out when he's using the justice system in this way or when he's trying to bully people into doing something.

8:22So, yeah, a lot of respect going towards Jerome Powell for that, at the very least. Right. I got to remember what these threats are. Donald Trump has said Jerome Powell has been too late to reduce interest rates. He called him Jerome Too Late Powell. He says he's incompetent. But the latest attacks that Donald Trump has been launching are on that building on Constitution Avenue, the headquarters of the Federal Reserve. You can see it. It's not too far from the White House. It's been surrounded by cranes for the past few years. And he says that the cost overruns have have been essentially corruption and mismanagement on the part of Powell.

8:59The building was built in the 1930s. It hasn't been renovated significantly since then. So it needed a lot of work. The original estimates for the renovation were two point five billion dollars. Trump says now it's going to cost maybe upwards of three point one billion dollars to finish the project. There have been accusations that it's full of luxury items. Powell has denied that. He says these cost overruns are because of increased costs of these renovations, just inflation and building costs, but also things like remediating asbestos and other cleanup that has been necessary because it is a 90-year-old building.

9:38That is the focus of this latest investigation. But clearly, from Powell, the way he's characterizing it, that is not what this is about. Yeah, and Donald Trump has been trying to get at him over these building costs for quite a while. I remember a few months ago, President Trump went all the way down to the Fed building to do a tour of the renovations, which is not a normal thing for a president to do, to leave the White House to do something like that. And they ended up bickering about the costs, actually, in front of the TV cameras. So we're taking a look, and it looks like it's about 3.1 billion.

10:08It went up a little bit, or a lot. So the 2.7 is now 3.1. I'm not aware of that. Yeah, it just came out. Yeah, I haven't heard that from anybody at the Fed. Yeah, it just came out.

10:25I know it's at about 3.1 as well. 3.1, 3.2. This came from us? Yes. I don't know who did his name. You're including the Martin renovation. You just added... It's higher capital. You just added in a third building is what that is. That's a third building. It's a building that's being built. No, it was built five years ago. We finished Martin five years ago. Part of the overall work. So we're going to take a look. We're going to see what's happening. Gloriously uncomfortable. And you can hear people feeding Donald Trump the information in the background there. Look, the big picture here is that when Donald Trump discovers who nominated Powell for this role, He's going to be very angry, isn't he?

11:14Because it was one Donald Trump. Yeah, exact some retribution, I would assume. Exact some retribution, exactly. So back in 2017, he gets nominated by Donald Trump. But the relationship, to put it mildly, has soured. How normal is this? Well, the first bit and the second bit, very normal, actually. So presidents do nominate the chair of the Federal Reserve. The second bit is that they fall out. They always fall out or often fall out. George W. Bush certainly fell out with whoever was in charge of the Fed when I was in D.C. doing your job, Sarah. And it was something that people talked about and I think Bush actually wrote about later on.

11:56But crucially, crucially, crucially, because of the centralness of this relationship and the importance for the American economy and potentially for the global economy, which something we'll get to in a bit, they don't fall out publicly. And what they certainly don't do is enter into these threats of criminal proceedings, etc., etc. But the bottom line is Donald Trump has decided, as presidents sometimes do, I want to run the economy hot. So he's got his fiscal policy, his taxing and spending. He's got tax cuts happening and not enough spending cuts to match them. So heat there. But also he wants similar heat with monetary policy.

12:38wants the Fed to lower interest rates, even though the Fed thinks that it would be unwise to lower them too much at the moment. Why? Because it creates inflation. It creates, crucially, inflation further down the road. But this is the point, isn't it, guys? In the immediate short term, i.e. the months going up to November, oh, I wonder what's happening in November. People will feel good. Yeah, you'd reduce interest rates. People feel like they have more money in their pocket, And that would suit Donald Trump very well at the moment, because he is looking at voters complaining about prices and about the affordability issue that there is here.

13:16He continues to say that affordability is a word that was made up by Democrats. But that doesn't stop the problem that voters are concerned about prices and dropping interest rates would make them feel a little bit better. That's the way the system was set up. It was set up to be insulated from the short term political motivations of people who are governors on the Federal Reserve are supposed to be thinking in the long term. They're supposed to be cooling some of the political impulses of presidents and members of Congress. They serve longer terms, terms that overlap different administrations.

13:49And they're not supposed to be able to be fired by a president without cause. We've seen Donald Trump already try to fire Lisa Cook, who is one of the members of the Federal Reserve, a governor alleging that she engaged in some sort of a mortgage mortgage fraud, although that hasn't been proven yet. In that case, actually, ironically enough, is going to be argued before the Supreme Court just next week about how much influence a president has on the makeup of the Federal Reserve, which is supposed to be independent. So all of this is kind of coming together all at once. And the stakes are high because it is the health of the U.S.

14:25economy and the economic system that the Americans have right now that is at stake. There's a delicious irony to this, Justin. Jerome Powell's term actually runs out in May. Donald Trump will be shot of him really quite soon, except he can stay on as one of the governors, so not the chairman anymore, but one of the governors, therefore with an important decision-making role, for another couple of years after that. A lot of people thought he wasn't going to bother. People around the Fed say he's looking burnt out and tired and he'll probably just retire from the whole thing. But if anything is going to make him determined to stay on, it's going to be this row that he's having with Donald Trump.

15:03Plus, not only are Democrats angry about this, you've got some Republicans in Congress deeply, deeply concerned about this, including one, Tom Tillis, who actually chairs the committee that will approve the new Fed chairman whom Donald Trump will get to nominate. He says they're not going to approve that unless this threat against Jerome Powell is taken away. So Donald Trump might end up with Powell on the board for another couple of years and possibly not even being able to replace him as the chairman precisely because he's gone after him quite so hard. It's really interesting. It goes to the heart of what populism is in a way, doesn't it?

15:40And the way that Trump wants to govern, because there is a, I sort of dimly remember this from undergraduate economics. There is an argument about whether or not you are giving away too much democratic power when you allow central bankers to set interest rates, given how important monetary policy is to everything we do. But the counter argument is exactly the one you've just been talking about, both of you, that an economy that is well run and stable and provides long term goods for everyone is an economy where there is a separation between the political and the technical when it comes to monetary policy.

16:18And it's interesting that Donald Trump is moving in the direction of directly challenging that and saying, no, it should be me because I am elected by the people and the people ought to have a say in all of this. And you do wonder the extent to which there are other people around the world, other strong men or potential strong men, perhaps some strong women as well, who are thinking, who are looking at the Fed and what happens with Jerome Powell and whether Trump is successful and indeed whether he's successful with his successor in persuading him to put or her to put interest rates down further than they should be, whether that actually does have a kind of domino effect across the world.

17:00Yeah, you know, it was interesting after Powell made the statement on Sunday night, a bunch of former Federal Reserve governors came out with a statement. And one of the things they said was this is kind of developing country, Tim Pot dictatorship type of behavior that, you know, one of the things that global economists try to prevent is having leaders of countries take over the monetary policy of their nations to try to goose the economy. And what they end up doing is having this incredibly high inflation, whether it's in South America or African nations or elsewhere. This is a pattern that is not one that the United States should follow, not a path that it should go down.

17:41But, you know, if the United States does this, then then is that is it going to be in a position to tell all of these other countries that know what you're doing is a bad economic idea? I mean, we're leading by example one way or the other. Yeah, in this sense, shockwaves around the world. You had central bankers from across Europe all the way to Korea saying this is a terrible thing. You had former chairs of the Fed, all sorts of economists and Wall Street people coming out and saying they were deeply, deeply worried about this. Jamie Dimon, CEO of JPMorgan Chase, actually went on the record saying he was concerned about this.

18:14He's normally pretty careful about what he says in the political arena. So, I mean, it's had repercussions already. It was really interesting what happened to the stock market, because, of course, that's the one thing that might affect Donald Trump's thinking. It fell quite precipitously on Monday morning and the dollar weakened and all sorts of things like that. By the end of the day, Monday, though, things are running so hot in the economy here. It was actually up at an all time high, the SNP. Yeah. And isn't that Trump's point, actually? And he made this point. In fact, we should listen to it.

18:46He made exactly this point to business people quite recently. he was talking directly about Jerome Powell and he was talking to the Detroit Economic Club so he was on his visit to Michigan and he makes that point about the impact that low interest rates could have on the economy and on actual businesses and actual people. Today, if you announce great numbers they raise interest rates to try and kill it so you can never really have the kind of rally you should have. What happens and what we want we're going to have a lot of great months, a lot of great quarters. I want the market to go up. You announce unbelievable numbers and the market goes down because they know you're going to do everything possible in the Fed.

19:31We have a real stiff in the Fed, but that's for another day. If I had the help of the Fed, it would be easier. But that jerk will be gone soon. That jerk will be gone soon. That's interesting from a president who said on Sunday that he knew nothing about this investigation. into Powell, and it had nothing to do with him whatsoever. Right. I mean, he was pretty explicit. But, you know, we've heard Donald Trump talk about prosecuting his political adversaries before. I mean, he was explicit with James Comey and Letitia James, the attorney general of New York, and then indictments came out just a few days later.

20:07He hasn't said anything like that about Jerome Powell, but I think most people think that that is what he's thinking. Certainly a lot of the Republicans who have come out and condemned what Donald Trump did, imply that that was what, that Trump was the one behind this. That is, this didn't just come out of nowhere. But we do see a lot of this hysteria, could I call it? Concern over something Donald Trump does with the economy, whether it's tariffs now or interest rates or the spending bill and the stock market drops. And then, Sarah, as you mentioned, it goes back up again. And nothing seems to be able to put a lasting dent in the economy, at least so far, whether that's because people realize their worst fears are being realized.

20:57They think Donald Trump is more bluster after a day or two to kind of mull over it. But for one reason or another, the economy keeps chugging along. Now, the business cycle being what it is, the economy will eventually have a downturn. But predictions of its demise have been greatly exaggerated over the course of the last year. But isn't that why, actually, the financial community, both inside the US and actually worldwide, have taken this relatively calmly? When you think of the stakes, I mean, this is a huge, huge deal. You know, it's alongside, I don't know, snatching Maduro or all the other kind of big kinetic things that Donald Trump has done or ordered.

21:39this if he if he goes ahead with it and if there is a full criminal prosecution is a massive deal because of the impact that it that it has but actually business people in the united states financiers inside the united states at wall street but also really crucially the bond markets around the world the people who lend america money and would be very worried about rampant inflation in the future. I don't think they think that your television judge, Sarah, is really going to get anywhere with this. Isn't that right? And as Anthony, as you say, the Supreme Court is about to, I mean, it's a different case, isn't it?

22:15But if the Supreme Court decides that the president can't get rid of someone unless they've got very good reason to do it, that presumably bolsters Jerome Powell's standing. And it's funny, one of the things the Supreme Court has said in past cases where it's been looking over Donald Trump's decision to fire supposedly independent heads of agencies, is that the Federal Reserve is different. It's somehow unique. And so a lot of people who are going to be watching the court here are expecting the court to come out and say, you have to have more evidence in order to remove a Fed governor than just you don't like the person's politics, or you have some sort of unconfirmed allegations of impropriety, which is what we have in the case of Lisa Cook.

23:02So it's not to the point, I guess we can say, where the people who really do hold the levers of power in the economy, the global economy, are too worried about Trump. They catch their breath every so often. They express surprise. The monocles pop out of their eyes every now and then. But as far as really being down on all of this and worrying about worst case scenarios, they don't seem to be buying into that. Do we think Jerome Powell carries on this fight now? And you were suggesting he's going to stick around anyway, even when he's not chair. Has Donald Trump picked an enemy who could actually be quite an awkward one?

23:43Yeah, if he sticks around, I mean, that's one vote that is going to be for keeping interest rates more based upon the economic conditions as has been traditionally observed. If the economy continues to click along, they're not going to cut them nearly as much as Donald Trump wants. Trump will still have the chance to name Powell's replacement as Fed chair, which is an incredibly influential position. One of the names I've heard floated is Kevin Hassett, who is at the White House all the time. He's an economic advisor of Donald Trump's. He certainly seems in favor of being more aggressive with cutting interest rates.

24:20But that'll be an interesting fight if people like Tom Tillis dig in their heels and other Republicans who would be normally his allies in the Senate don't want to confirm who he picks because they're worried that Trump is exerting too much influence over the Federal Reserve. It could set up another kind of a head to head battle between Trump and Republicans in the legislature just a few months before the midterm elections, when a lot of these senators are going to be running for a reelection or much more concerned about what voters think than what Donald Trump thinks, maybe for the first time so far since Trump came back to the White House.

25:00One who's not running for election, of course, is the said Tom Tillis, which is why he's suddenly so empowered. Suddenly you see him standing up to Donald Trump. Now he knows he doesn't need to get reelected.