Trump And Powell Are Fighting Again And There's A CLEAR LOSER

0:00Hello, everyone. The Fed chairman is under fire. Critics are screaming lawfare. Trump wants to cap credit card interest rates, and the political leaders that run the economy. Hot, hot, hot. We are live today from the desk of Anthony Poppliano.

0:23Before we get into today's episode, I need your help. Go ahead and hit that subscribe button. Help us get to our goal of 1 million subscribers. People are saying we can't do it, but with your help, we're going to achieve our goal. Hit the subscribe button and let's get into today's show. All right, for our first question today. News broke last night that the Department of Justice is investigating Federal Reserve Chairman Jerome Powell over his comments to Congress related to the Fed's new building renovations. What do you think of the situation? My initial reaction, frankly, is this entire thing sucks for America.

0:54If you liked Trump before we went into the weekend, then you're going to defend this and you're going to say, hey, you know what? We should actually understand, did the Fed chairman go in front of Congress and actually lie? Did he mislead the people who are supposed to be overseeing him? If he did, he should be held accountable for it. No one should be above the law. None of that seems crazy to me if he actually did mislead Congress. Now, if you didn't like Trump going into the weekend, then of course, you're going to be yelling and screaming and saying this is just lawfare. It's abuse of the legal system.

1:22And we can't have a situation where the executive branch and the president is trying to pressure the Federal reserve into making certain interest rate decisions. That also doesn't seem crazy to me. And that's the thing about these controversial current events is that there's always a hint of truth in everyone's argument. And that's why there's controversy is because people feel really excited. They feel really passionate about the fact that they're right and the other side is wrong. But the truth is somewhere in between here. And I think that ultimately it comes back to what are they ultimately fighting over?

1:51It's all about interest rates. And there's a big disagreement as to where interest rates should be because there's a disagreement on the economic data. If you go and you ask the government, the Bureau of Labor Statistics, where exactly is inflation today? They'll tell you that it's somewhere in the 2.6, 2.7, 2.8 range. That is nearly 50 % higher than the Fed's target of 2%. If inflation is high, and you also are of the belief that tariffs and other economic policies being implemented by the administration is going to lead to higher inflation, then you sitting at the Fed would not want to lower interest rates.

2:23You don't want to create another inflationary tailwind. But on the other hand, if you go and you look at something like Truflation, a real-time alternative inflation metric that uses the internet to better measure inflation, they are saying that inflation today is at 1.87%. That is below the Fed's 2 % target. And if you're of the belief, like I have been since April of last year, that tariffs are actually deflationary, not inflationary, then you understand that the U.S. economy needs lower interest rates because you're going to have to spur economic activity. You're going to have to stimulate the economy.

2:58So ultimately, this is really a disagreement on interest rates, not so much as to what should happen with the interest rate, but what is the current measurement of inflation and what is likely to happen in the economy moving forward if we do nothing. Now, of course, I believe that inflation is crashing. I see truflation. I understand that the tariffs are deflationary, but I also see the big, what Elon Musk calls supersonic tsunami of artificial intelligence. We are essentially removing labor. We are going and squeezing efficiency out of the economy. That is going to be a deflationary force as well.

3:31And so my belief is that we have to get interest rates down so that we can stimulate. There's a reason why they call it stimulus. We need to stimulate economic activity. Now, if we bring that back to this disagreement, this investigation, this controversy between the Department of Justice and Jerome Powell. There's a lot to unpack here. First of all is how did we learn about this and why are we learning about it right now? You should always ask yourself that about any piece of news. Well, on Sunday night, right as the stock market futures were opening, all of a sudden, the New York Times posted a report saying that there was subpoenas, not a charge, but just subpoenas for more information from the Department of Justice to Jerome Powell.

4:09Now, why did it come out Sunday? Hmm, I wonder if it came out because Jerome Powell understood that Trump really cares about the stock market. And if the news came out and the stock market went down, which it did, that would hurt Trump and that would help him kind of grab the story and get ahead of it. Now, the reason why I think that Jerome Powell and the Fed probably leaked the story of the New York Times is because minutes after the story broke, Jerome Powell published a video online of him basically defending himself. Now, I don't know about you, but the Federal Reserve is not exactly a world-class content creator.

4:39It takes time to write a script, to set up the video, to edit the video, to then publish it. All of that to happen in a couple of minutes is very unlikely that it was unscripted or unplanned. Now, again, it's not a sin. It's not against the law to go and leak something to the media or to go ahead and have a response ready. But again, you ask yourself, why are we seeing this now? And why are we seeing it in the way that we're seeing it? I think that we'll get more information later that will make that clear. Now, the other big thing that I come at here is that ultimately the disagreement is on how Jerome Powell answered questions in front of Congress when he was talking about the Federal Reserve renovations.

5:15I spent time, probably too much time that I would rather not admit to, and I went into the National Planning Commission and I went and I saw exactly what the plans were. They have all of the meetings. They were done on Zoom. There's three hour meetings that are up on YouTube that you can go and you can watch. And when I went and I looked at it, I had one single reaction to all of the renovations at the Fed. They are going to spend somewhere around$2.5 billion to build a castle that is fit for a king. And they are going to do it at the exact same time that half of Americans say that they can't afford a normal life.

5:47They also are going to spend$2.5 billion on this mammoth, lavish, crazy building. And they're going to do it at a time where the country's broke and we are in trillions and trillions and trillions of dollars of debt. It makes no sense to me. See, if the Fed was going to do this and they wanted to do it with private dollars, that'd be a whole different situation. Make the place as nice as you want. But the fact that they're using U.S. public taxpayer money to go and do a$2.5 billion renovation of their building, that seems absurd. And if you just look at the photos, we're not talking about kind of your normal corporate office.

6:23We are talking about a lavish marble, indoor waterfalls, big skylights. I mean, this is insane. And yes, of course, people will immediately point to the White House ballroom. I thought that people were tweeting at me a pretty good thing. Well, if we're going to complain about the Federal Reserve, shouldn't we complain about the White House ballroom that's being renovated as well? Well, I got on the interwebs. I went and I did some research and it appears again, it appears we'll see what ends up happening. But it appears that the Federal Reserve building is using public taxpayer money, whereas the White House ballroom is using private donor money.

6:57Again, if that is true, that's a pretty big difference. I don't think that we should be using public taxpayer money to go and do these types of renovations. Instead, if we want to use private dollars, it's a whole different situation and probably okay. Sure, we can build nice things as long as private citizens are actually donating their money rather than using public taxpayer money. And so where does this all bring me? I am reserving the right to make a final decision as to how I feel about this situation because I feel like we don't have all the information. It's going to be really important to understand, did Powell actually mislead Congress?

7:27And it's also going to be pretty important to understand, did the administration tell the Department of Justice to go do that? We don't have the answers to those two questions. And until we have the answers to those two questions, it's going to be really hard to make a decision here. And as many of you know, I always just look to the market to understand, what does the market think about this? Well, the S &P is down to start the day on the news. And that doesn't mean that the S &P is still not up about 19 % in the last year or over 80 % in the last five years. But the market doesn't like when the president and the Federal Reserve chairman are fighting in any form or any factor.

7:59And that's why you see stocks going down to start the day. And so ultimately, I just zoom out for a second and I say, whenever you have this type of controversy, it's bad for the country. We are being distracted instead of doing the things that are important in terms of getting interest rates down, spurring innovation and economic growth, and also making life more affordable for Americans. we instead now are sitting here all talking about the fact that the Federal Reserve Chairman may or may not have lied to Congress about renovations that are using billions of dollars of public taxpayer money.

8:30And we don't know if the president, the executive branch, and the administration is using the Department of Justice to go after that guy. It is crazy that this is all going on. But ultimately, this is what I think is going to be the future. This morning, you woke up and we're all talking about Federal Reserve Chairman and what's going on with the potential warfare. But that means that from a week ago, you already forgot that Maduro, we went down and captured him and he's sitting inside a jail in the United States. And oh, by the way, don't remember, the United States is watching the Iran protest and whether we're gonna do a military action there or not.

9:04The world's spinning. Information is coming at you fast and furious. And sometimes you just gotta take a step back and say to yourself, why am I seeing what I'm seeing? And why am I seeing it right now? For our second question today, President Trump announced plans to cap credit card interest rates at 10%. Is this a good idea? Now, the first thing you got to go and you got to look at is, are interest rates high on credit cards? Absolutely. Right? If you go and you look at the average credit card interest rate in this year, it's somewhere between 20 to 24%. 20 to 24 % is a big number. The way to think about that is, let's say you have$1 ,000 of debt starting in January of 2026.

9:41If you owe 24 % on that$1 ,000 and you don't pay it for the next 10 years, at the end of 10 years, your$1 ,000 of debt, you will now owe$8 ,500 over a 10-year period. Now, the reason why it's 20 % to 24 % is that the credit card game is actually highly competitive. People are constantly trying to figure out, how do I underwrite the risk by lending money to these people? If I can figure out a way to lend them money at a lower rate, that means I'll get more customers. If I get more customers, that means I get more revenue. So every credit card company in the world, counterintuitively, is actually incentivized to try to figure out how to get the lowest rate to their customer, not the highest rate.

10:22The more that they have to charge, the harder it is for them to get customers. But that's not how non-business people think. Business people think that the credit card companies are sitting there and they're trying to be nefarious or malicious. Instead, it's the free market that is driving these interest rates to 20 to 24%. The credit card companies are saying, depending on how many delinquencies there are and how how many people don't pay us back, we have to charge a certain rate in order for us to have a profitable business. So that brings us to this idea of President Trump capping credit card interest rates at 10%.

10:50If you go into the market and you tell credit card companies, you can't charge more than 10%, that means that the credit card companies are now going to be in a position where they can't lend out money profitably. So guess what they're going to do? They're going to stop lending money to a large percentage of people. They're just going to go to them and say, we can't give you a credit card because if we only charge 10 % interest, we can't account for the fact that you're likely not to pay us back. And so there's going to be the removal of a lot of Americans, maybe millions of Americans who can no longer get credit cards.

11:20Well, guess what? Those Americans still need credit. And so guess where they're going to turn? They're going to turn to buy now, pay later, which is basically just credit cards in a different form for the modern age. And those interest rates are going to go through the sky or the Americans are going to turn to things like loan sharks, kind of private hard money lenders. And so in a weird way, by the president stepping in and saying that he wants to cap credit card interest rates at 10%, it actually will push people to other forms of credit because the credit card companies won't lend to them anymore.

11:48And then on top of that, you're going to see the interest rates for buy now, pay later, or hard money lenders, loan sharks, et cetera, all skyrocket. And so the average American will actually end up paying more interest rather than less. And so this is why free markets are so important. This is why credit cards charge 20 to 24%. And ultimately going back to personal finance 101. It's why it's important for you to pay off your credit card at the end of every month. All right, for our final question today, the U.S. economy is being run hot by political leaders. Can you explain what that means and why it's important for investors?

12:22Well, if you go back to the start of Trump's administration, what you remember is that they launched DOGE, this whole idea of Department of Government Efficiency. We were going to go, we're going to balance the budget by spending less money. That obviously didn't go the way that they described it. They were not able to save nearly as much money, whether it's because there wasn't fraud, waste, and abuse, or because they ran into roadblocks. But all of a sudden, you saw a couple of months into the administration, they then changed their tune and they said, we are going to grow our way out of it.

12:50See, if you can't stop spending, then you got to grow faster to grow faster than the spending. And that's exactly what's happening. So when we talk about running the economy hot, that's really what we're saying here is we're trying to drive GDP growth as high as possible. Now, the Atlanta Fed GDP Now measurement is showing that the GDP number for Q4 could be as high as like 5.4%. Compare that to the historical average of 3.2 % going back all the way to 1947. We are growing faster than we normally grow. But the question is, why are we doing it? How are we doing it? And what are we going to do moving forward?

13:23I saw a recent clip from Howard Lutnick. He was on the All In podcast with Chamath Palapatiya. and he specifically talks about why he believes the economy is going to boom in 2026. Take a listen to this. Our fourth quarter GDP will be a point and a half lower than it otherwise would be for this oddity. Just the furlough. That's 150 basis points. Like the common economists think the fourth quarter growth is going to be a point. Okay. They're just like raw. I said they were wrong in the third quarter. I said they were wrong in the second quarter. we have a 3.8 and then 4.3, it would probably be like two and a half.

14:00But that would have been to your point four. Four. Right. Fives. You're going to see fives in the greatest economy in the world. You're going to see fives. And people think you can't, you can't. I mean, 5 % GDP on a base this big is just, it's enormous. We have a$30 trillion, so 5 % is 1.5 trillion in growth. and if we cut rates, you'll see six. Now that's coming from somebody who is sitting as the Commerce Secretary, David Sachs. He's also in the administration and he's in the room hearing what's going on with artificial intelligence and cryptocurrency and economic policy. And so David went on that same exact podcast a week later and this is what he had to say about why he believes that there's going to be a big economic boom this year.

14:50I'm going to say that the Trump boom is going to be the biggest political winner of 2026. The good economic news has started breaking out before 2025 was even over. We have 2.7 % inflation, core CPI 2.6. Both those are 40 basis points below expectations. 4.3 % GDP growth in Q3. Lowest trade deficit since 2009. The Challenger Gray report out today showed that job cuts dropped 50 % from November, which was itself down about 50 % from October. Give us a number for the boom. What is it going to be? Hold on. The S &P 500 keeps making record highs. People are paying less for gas. Mortgage costs have fallen by$3 ,000.

15:31Real wages are up over$1 ,000. And by June, I predict we will see more rate cuts, possibly 75 to 100 basis points. And big tax refunds are coming in April, thanks to a bigger standard deduction and no tax on tips over time and social security. So I think there is so much good economic news coming and it's already started. And I think that it's going to have a huge impact not just on the economy, but also on political perceptions for next year. So if you take a step back here for a second, you think we have Lutnik and Sachs who are both talking about this economic boom, this kind of innovation golden age.

16:05But if you look at what the politicians are doing, is they basically are trying to create an environment that is conducive to economic growth. They want GDP at 6%, 8%. Elon Musk thinks it could hit 10 % at some point. And the reason is because if we can't stop spending, we got to grow our way out of this. So what exactly are some of the things that they're doing? Well, if you see that President Donald Trump talking about that credit card announcement, then that is part of running the economy hot. He's trying to get more money into the pockets of people so they go and they spend it. They drive economic activity.

16:35On top of that, we saw that the president said he wants Fannie and Freddie to go take$200 billion off their balance sheet and go buy mortgage-backed securities. That, he believes, would get the mortgage rates down. If you get mortgage rates down, that gets more money in the hands of the people. It's a version of quantitative easing without having to go through the Federal Reserve or go through Congress. And so ultimately, this is what the government is trying to do, is they are trying to spur economic activity. They're trying to stimulate the economy. They wanna run it hot, hot, hot. And that's exactly what they're doing.

17:06They're gonna pull every single thing that they possibly can, whether it's give money directly. Remember, Trump gave$1 ,776 to a bunch of military veterans. You see them advocating for lower interest rates. You see them increasing the defense budget from$1 trillion to$1.5 trillion. All of these things are being done to actually stimulate the economy. When you stimulate the economy, that means asset prices usually go up. And frankly, it means that the dollar usually gets debased more. And so seeing things like Bitcoin, gold, real estate, all of those should do well. And then if you're going to stimulate the economy, you should expect stocks to go up as well.

17:40And so right now, what we are watching is a GDP growth number that is likely to continue to tick higher. Both artificial intelligence and economic policy are going to be big drivers of that. And it's going to ultimately come back to, we have two different economies. We have one economy full of investors who own assets that are going to do very well going forward. And we have another economy of savers who are not going to do well because they're simply holding dollars and those dollars are being devalued right in front of their face. And so your job is not only to become an investor. your job is also to teach every single person in your life, your kids, your friends, your spouse, your family, anyone that you come in contact with.

18:15Help them become an investor and hopefully put them on the right path where they can benefit from these economic policies. They can benefit from a hot economy rather than suffer from it. That's it for today's show. Thank you guys so much for watching. Please remember to subscribe on YouTube and I'll see you guys live tomorrow from the desk of Anthony Pompliano.