Jerome Powell And The Fed Are Making A HUGE MISTAKE

0:00Hello, everyone. Big Jerome Powell and the Federal Reserve Reserve, they made their big interest rate decision today. President Trump, he confirmed his plan to weaken the U.S. dollar and the K-shaped economy's rearing its head once again. We're live today from the desk of Anthony Pompliano.

0:24Before we get into today's episode, I need your help. I got a pinstripe suit on and you all need to hit the subscribe button. We currently got 42 ,286 of you. Hit the button. Let's get to our goal of 1 million. Let's get into today's episode. All right, ladies and gentlemen, we got to have a conversation here. Jerome Powell, the big dog of the Federal Reserve, he came out in his press conference today and he said they are not going to do an interest rate cut. This is absolute insanity. I don't know how any other way to say this. We have an economy where we know the labor market is weakening. We know that inflation is falling at a rapid pace.

0:58Even if you just believe the government numbers, it's ice cold compared to expectations. But if you look at something that's more accurate, like trueflation, inflation is now lower than 1.2%. What the heck is the Federal Reserve looking at? Now, on top of that, we know that AI is a big deflationary force. It's going to smack into the economy and it's going to further bring down inflation. So the only thing I can conclude here is that the Federal Reserve is one of three things. Either they're asleep at the wheel, they're dumb, or it's political. I don't know any other reason why they would not be cutting interest rates right now.

1:29We have seen 75 basis points of cuts, but we still have three and a half or higher percent interest rates. You want to get mortgages down? Cut interest rates. You want to help people actually invest in the future? Cut interest rates. You want to actually deal with potential deflation on the horizon? Cut interest rates. Every single thing that we're trying to address means that we should be cutting interest rates. That's not what the Fed's doing. So we are going to sit at 3.5 % to 3.75 % until Jerome Powell is either gone or he finally gets enough data. And my guess is, I'm not Nostradamus here, but when I look at true inflation and I see inflation falling off a cliff, and then I look and see the CPI number, my guess is that the CPI number is going to come down over the next couple of months.

2:10And all of a sudden, everyone's going to be like, the Fed's behind the curve. That is why this is so crazy, is right now the Federal Reserve is using a CPI calculation where 40 % of the inputs are estimates. They have no clue what the inflation number is if you use their methodology. Instead, we have real-time metrics that are telling us inflation is down. We know the labor market is weakening. If those two things are happening, then let's get down to business. Rick Reeder, as we talked about yesterday, he is saying that he thinks interest rates need to be cut 100 basis points. I agree with him.

2:39Two and a half percent is where I would like to see interest rates. And so if Powell's not cutting, but the potential next Fed chairman is saying we need to cut 100 basis points. One of the two of them was wrong. And Powell don't got a good track record. If you remember, he's the one who told us that inflation was transitory. Wrong. Then he's the one who told us he was going to keep interest rates at 0%. Wrong. Because then he hiked interest rates at the fastest pace in history. And now he's basically telling us, you know what? We got it. The Federal Reserve, we got our hands on 10 and 2. We got this under control.

3:08They got nothing under control. These people got no clue what's going on in the economy. They are completely oblivious to what they should be doing. And as I have been saying, the Trump administration, whether you like them, you don't, you like the language they use or you don't, they are going to wrestle control away from the Fed of the economy. And that's why you're seeing the tariffs. That's why you see them doing all these things to weaken the US dollar. That's why you see the deregulation and the tax cuts. It's also why you see them doing all the certain things to make sure AI is winning in America.

3:36Talk about more of that in a second. But ultimately, I think that the Federal Reserve is going to be met by market forces and all All I know is that when the Fed and the market meet, the market usually wins. All right, ladies and gentlemen, the U.S. dollar is one of the America's greatest assets. But President Trump and his administration have a different view of the dollar's role in the global economy. The plan can be summarized in four simple points. Use tariffs to drive revenue. Two, weaken the dollar to offset the tariff impact. Then three, deregulate and cut taxes to drive growth. And four, allow technology like AI to create a deflationary impact.

4:09The ideal goal from this plan is to create a high-growth, low-inflation economic boom. This is the dream of every economist and central banker. But historically, the quote-unquote experts, they only knew how to drive growth if it was coupled with high inflation. Now, the reason we know that this is the administration's plan is because they did the Babe Ruth. They stepped up to the plate, they pointed at center field, and they called their home run shot. You can clearly read the plan in Economic Advisor Stephen Myron's infamous paper titled A User's Guide to Restructuring the Global Trading System.

4:39Myron lays out the administration's plan for the dollar on the very first page. He writes, quote, The desire to reform the global trading system and put American industry on fairer ground vis-a-vis the rest of the world has been a consistent theme for the President Trump for decades. We may be on the cusp of generational change in the international trade and financial systems. The root of the economic imbalances lies in persistent dollar overvaluation that prevents the balancing of international trade. And this overvaluation is driven by inelastic demand for reserve assets. As global GDP grows, it becomes increasingly burdensome for the United States to finance the provision of reserve assets in the defense umbrella as the manufacturing and tradable sectors bear the brunt of the cost.

5:19Now, we got confirmation that the administration is implementing Myron's plan yesterday. President Trump was asked, you know, in one of these press conferences, are you worried about the decline in the dollar? The leader of the free world said the dollar is doing great despite the persistent fall. and he specifically referenced the business we are doing as a sign of the positive impact. Go ahead and take a listen right here.

6:04because it's hard to compete when they devalue. But they always fought, no, our dollar is very good. Now, immediately following, the dollar began to plummet even further. It was like almost the world recognized Trump's comments as official confirmation that the administration was intentionally pushing the dollar lower, and that they have hopes they can spur even greater GDP growth. But again, this should not be news. Myron clearly states the plan in his original paper. He wrote, quote, tariffs provide revenue, and if offset by currency adjustments present minimal inflationary or otherwise adverse side effects consistent with the experience in 2018-2019.

6:41While currency offset can inhibit adjustments to trade flows, it suggests that tariffs are ultimately financed by the tariff nation whose real purchasing power and wealth decline and that the revenue raised improves burden sharing for reserve asset provision. The president and his economic advisors have been telling us exactly what they were going to do and why they were going to do it. You just had to listen. Now, the other side of this equation is that the U.S. economy really needs artificial intelligence and other innovative technologies to accelerate. We desperately need the deflationary force to smack America in the face and ensure that we get high growth without the inflation.

7:16Don't take my word for it, though. Citadel's Ken Griffin. He's pretty smart. He's pretty rich. He clearly stated at the World Economic Forum that AI is the big bet for the U.S. economy. Take a listen right here. The area of recklessness is the spending of governments around the world, who are all, with little exception, all spending well beyond their means. That's the recklessness of this moment in history. This is not a parallel to the 1920s in terms of the recklessness of the private capital markets. It's a story of the recklessness of government spending. Within the private sector, There's a huge question as to where AI will take us.

7:58And I was carefully taking notes and listening to what Larry has to say or to what Madame Lagarde has to say, because this is one of the big issues of our moment. Will AI create the productivity acceleration that is honestly hoped for in Washington and in the halls of government around the world as a way to overcome the profit and spending that we're currently engaged in. Like the world, the world needs a savior. And the hope is that AI is the savior that we need for productivity. Now, thankfully, the U.S. economy does seem to be booming. Stephen Moore recently went on CNN. He explained why economic growth is red hot.

8:45Take a listen to what Moore had to say. The facts of the economy, it is a booming economy. The latest report is almost 5.5 % growth in the fourth quarter, which is an incredible number. We haven't seen that in recent memory. We've got gas prices down. Inflation is headed down to the 2 % target. Median family income last year was up 2 ,500. Those are people in the exact middle adjusted for inflation. I mean, I could go on and on with the positive. So now the Federal Reserve is back into a corner. The economy is red hot and inflation is nowhere to be found. The Trump administration has implemented a plan to reorder global trade.

9:22They've engineered a high growth, low inflation economy where deflation is likely a much bigger risk than inflation. My personal view is that the Fed should have cut interest rates by 50 basis points today. They won't do it, though. Of course they won't. They will remain behind the curve as usual. Eventually, people need to wake up and realize that many of the economic problems we have are actually created by the arsonist at the Fed. until we accept that, we will continue to find ourselves in a situation where monetary policy creates more problems than it solves. And we're going to continue to see an administration that is going to do everything in their power to reorder global trade and to engineer high growth and low inflation.

9:58And so far, their plan is working. The K-shaped economy is all anyone can talk about. I recently saw my friend Ryan Dietrich tweet two actual headlines today. Consumer confidence at a 12-year low. Stocks at all-time highs. Those two things don't seem to go together, right? Well, Jim Bianco shared this chart, and he said, K-shape. And the chart shows the S &P continuing to surge higher and the Michigan sentiment survey plummeting. Exactly what Ryan was talking about. But here's the thing. We all have to stop listening to the University of Michigan. They don't know a damn thing about economics. This sentiment survey is just political propaganda, and I can prove it to you.

10:37Bianca goes on to show that the Democrats are currently reporting a sentiment of 41%. So if you identify as a Democrat and you answer the survey, you have a 41 % confidence in the US economy. That's atrociously low. But Republicans, they're reporting a sentiment of 96%. So which is it, 41 or 96? Well, you would expect the average of this survey to be somewhere in the middle if you surveyed an equal number of Republicans and Democrats. That isn't what the University of Michigan does though. These people can't count. They continue to survey two-thirds Democrats and only one-third Republicans. So the sentiment survey skews negative, not because the economy is actually being viewed negatively by the population.

11:16It's just political propaganda due to faulty survey methodology. Careful who you listen to out there. The economic data is overwhelmingly positive. Half the country thinks things are going great, 96 % sentiment. Half the country thinks things are going horribly, 41 % sentiment. But it's not anything to do about wealth or your current situation. Instead, it all has to do as to whether you subscribe to red or blue. Me, I'm an independent. I try to look at the economic data. I think sometimes the Republicans are right. I think sometimes the Democrats are right. But right here, this is all just insanity to me.

11:50GDP is growing. Inflation is nowhere to be found. The stock market is surging. And we just need to convince everyone who doesn't own assets to become an investor. And then they'll benefit from this situation along with all the wealthy people as well. That's it for today's show. Thank you guys so much for watching. Remember, please hit the subscribe button. Really appreciate it. And we'll see you guys live tomorrow from the desk of Anthony Pompiano.