Fed Independence & Powering AI 11/12/24
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Hi, i'm cnd c producer Katie cramer. Today on square A I is changing the world and fast. But making IT go requires literal infrastructure, data centers, author technologies, geared coin on the piece of the A I race we don't talk enough about, but is actually the revolution.

These large language models can be transformative in terms of capturing energy efficiency. The problem is, in the short term, in order to run these language models, you need a lot .

of baseload power. And the debate over the federal reserves role in a new trump t administration and even the central bank's independence.

It's almost herrera. It's almost IT reminded me of religion.

It's such a sacred cow. As fed chairman j power start a new phase of monetary policy.

this acceleration we calibrating or retaliation ating policy.

retaliation ation of our policy that is supposed to be post pandemic, post inflation. President trumps former fed pig ty shelton says IT is time to break through the way things have been.

This idea that an authoritarian president is gonna try to brow be the fed. When the fed made that decision in september, only one member, the board of governors, disagreed, and IT was the first time in nineteen years .

plus the market moves this november. Elon mosques baLances sheet and filling out the staff directory for the trumpet transition. r. amin. Java is in west pom beach.

The fact that they are moving so quickly does give you a sense that .

a lot of this .

was pre big IT is tuesday, november twelve, twenty.

twenty four, was only a week ago, only a week ago.

Squab begins right now.

Stand back to buy. And three, two, one cure place.

Good morning. Everybody welcomed the squad box right here on cnbc. We are alive from the nazi markets in times square.

I'm becking quick, along with joker n and an Andrew ross sorkin. It's tuesday. Joes, right? It's only been a week since the election, but boy have we seen some moves.

Ever sense both the S M P and the aztec set new records get again? Yesterday, IT does come after the dow was up by three hundred and four points as well. In yesterday's session, S M P five hundred nc inched marginally higher.

But again, we are talking about the major moves. I think the S P. Is up about four percent since the election day.

If you're looking at much bigger moves, you might be checking up big point. It's up about thirty two percent since election day. And then you got tesla shares that are up about forty percent since election day. If you're watching the treasury market this morning, IT was closed yesterday for veterans day this morning, you are looking at higher yields ten year at three fifty nine and the two year at four thirty one.

President and electron continues to staff key roles in his new uh, administration. Aim jewels has been so let, oh, no, no, I am. So you know, that wouldn't be I would thought that what I was leading to him and I was just reading, join us now from west palm e beach, florida with the latest. You not expecting the a call or .

now I would be wildly unqualified for any of these positions show. But look, yesterday on veteran's day, we saw the trump administration, the incoming trump administration, trump transition, fleshing out the the defense side, the national security side, the diplomatic side of their upcoming administration, starting with marco rubio, the florida senator who is expected now to be named as secretary of state.

Rubio, of course, a one time trump opponent who is now so work, is way back into trumps good Graces. He is seen as acceptable to the mega base, but also simpatico with Donald trump on the two key foreign icy issues, that is a on the issue of, uh china, uh robbia very much china hawk and also on the issue of ukraine funding is a skeptic on ukraine funding also covers min. Mike walks expected now to be named national security advisor mike walls is a former U.

S. Army Green berry who served overseas. He's also somebody who played a key role for the trump campaign during the convention back in ml.

Walker and south dakota governor Christine no. Now expected to be named the secretary of homeland security. SHE is somebody who was considered by president elect trump as a possible running made as a vice president. Now she's apparently going to be getting homeland security. All this is a little bit TBD until the official announcements come, but we do expect that you will get that slid and that puts her in charge of a key piece of Donald trumps domestic policy, that is, immigration sh'll be running border, a issues for the administration. And so that will be a key priority for then. We expect now Donald trump to travel to washington tomorrow to meet joe biden and also to meet with speaker the house mike Johnson and republican ader ship TBD on which republican leader he'll meet with because they're in the middle of their senate republican election today and tomorrow so we'll see who exactly trumps its down within washington but he'll have a chance to reset in the nation's capital as well as picking all the folks that he's picking for his new administration down .

here monolog o guys back do you have any idea, amy um whether rick got has been getting more vote and he did previously was that he was sort of a dark course is do Scott button or does soon have the inside don't you know what's .

funny is down here, everybody's focused on the new administration and let much less chatter about what's going on among senate republicans. Obviously, in washington, that's a crucial area and was so fascinating to see over the weekend Donald trump tweet out or posting out. I should say, you know, anybody who wants to run for leader in the republican senate needs to support recess appointments, which is an idea that might give Donald trump a lot more attitude in getting his nominees through up on the capital hill. If they do enter a recess very early on in the new term, trump could nomad a lot of people to his cabinet without necessarily getting that senate confirmation. And so if he has people who wants to pick on his mind down here and morale go, and he doesn't think they can get a senate confirmation vote, if he can get republican leadership to go along with that, and they all seem to be very willing to fall in line, then know he might be able to get people, we could get you the other way, be able to be .

that when we could get you, all the totally unqualified people get in. It's during A A recess appoint. And I think, right.

I would qualify totally unqualified joe, all i'm trying to do down here, all I want is, is an invite to maroo go for lunch. I hear it's fantastic. Let me know if you know anybody.

all right? I I will let you know that you, you have, you will get, you are ready to talk. I thought I know you.

I know I was going to ask you if I used, I wanted to know about Scott bott around some of the financial figures .

in jury down there.

treasury, commerce, anything like if there was anything new to the names that we've already heard, banded about.

aimed yet, nothing yet. But, you know, they did sort of national security and defense all at once. So you wonder if I going to do the economy team all that wants to coming up to me voting around the same names that we've been hearing for a week. You think a lot of this has, yes, the fact that they're moving so quickly does give you a sense that a lot of this was pretty a lot of this have been thought through already.

And and that's probably susie wiles at work and in SHE said, I think he told donors yesterday that they're looking at this is this they have two years to get things done, not for which is smart. You ve got ID term elections that can change agenda. And presidents also often have to deal with that two years. And so IT sounds like they want to hit the ground running again. As much accomplish as quickly as possible .

are they are moving very fast. And what a change from what we saw last time around after the twenty sixteen election. Where was real chaos on the trump side? This is much more efficient, much more smooth in terms of the rollout. You do get the sense that they are prepared and they know what they're doing.

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Shares of tesla have jumped nearly forty percent since president trims electoral Victory last week. As of yesterday's closed, those gains have lifted elan mosques networks by about seventy billion dollars to close to three hundred and twenty billion dollars that, according to four, that puts him ahead of Larry ellison, who is now the world's second Richard person, by nearly ninety dollars. That's ninety ninety billion dollars.

Elon mask ahead of him. About ninety billion dollars. There was a blubb report talking about how hedge funds betting against elan must could lost about five point two billion dollars in paper losses since the election last week. Anybody who was shorting the stock obviously has gotten hurt pret badly a right now shares of test let three .

hundred and forty dollars twenty eight ten ron Brents trolling somewhere um but we're back .

to boosters .

millions have you spend a quickly up? You just can never three and twenty .

billion do you know?

That's why you know what you do? You build a really nice house on mars, I think. I mean, with a lot of land, I mean, you probably got, I don't here. You need fences, I don't think, but he could do that that that much money, he could build a house, a mars. What else would you do .

with that is to mars.

I think I is not even his money. So i'm just trying to figure out what that would feel like to I don't know what I would not your life would not be about money. That's all the Ursula and be about politics.

Cheese will be next .

coming up next on spot. What's powering the artificial intelligence revolution author, former google and golden sex exact jared cohen says solar and wind energy won't cut.

You need baseload powers to think nuclear, coal, natural gas. We have plenty of that in the us. The problem is we can't transport IT from where IT is through multiple jurisdictions because of not in my backyard .

where that leaves amErica A S A I innovation and how we stack up against the competition where after this.

This is squared up an under .

q watching squabs on C M.

B C M, andros unc and Becky ick. Artificial intelligence requires an abundant amount of energy, and the AI boom means the companies are pouring cute money into building data centres for more on this and whole bunch of other topics want to bring in jarred colonies. The president of global affairs of golden sex is the code of goldman sax is global institute. He's also former seo of google gig zug of morning to you morning talk about A I but really you talk you're talking these days about sort of the diplomacy that may be required around the idea of these data centres and how much energy is being consumed and how much entry being used. But when you talk about diplomacy as IT relates to AI, what are you talking about?

Well, first, let's let's start with with the problem. There's a lot of known and unknown around gender AI large language models for small models. Will the use cases ever justify the spend? But to be the more urgent.

But by the way, what do you think to those kind .

is too early to know. Think there's a much more urgent question, which is, can we actually build enough capacity to meet all this demand? And the short answer is we can, but not exclusively.

In the U. S. The us. Doesn't have enough powered land IT. Does not have enough differentiated data centres. IT doesn't have enough baseload power that I can transport to those data center.

What is differentiated data center mean? So if you look at data centers for cloud workload versus data centres for AI workloads, data centres for AI workloads um require ultra high density. They require concentrated power source.

And so interminable power like wind and solar, they don't fit the bills. So you need baseload powers. So I think nuclear, coal, natural gas, we have plenty of that in the us.

The problem is we can't transport IT from where IT is through the multiple jurisdictions because of not in my backyard. And so the us. Is going to need some kind of an overflow option if he wants to continue leading in this space. And there's not a single geography that I would say represents a panic .

into this problem. So when you talk about sort of diplomacy around this is the idea that you'd put these data tres, in mexico and in canada and hope that you could somehow benefit from them that way. Where would you be placing these things?

So the U. S. Has three options for where this overflow could happen, and none of them are ideal. One option is you keep IT in the democratic world, which would obviously be this preferable option in canada, australia, the other countries which is good for liquid cooling. France.

you could do IT in australia and still get the benefit here, given the how much you need to communicate back and place.

Also one of things one of things that happened with technological innovation is we have a separation now between training and inference. So that's unlocked a lot of new geography. Um the problem with kept in the democratic world is all these countries I just mentioned. They have the same issue that we have in the us.

right? Know e sg concerns, not my backyard concerns. And so what are the other two options? One option is you kind of go with the default choice, which is no persists where IT already exist in the global self.

So think malaysia, indonesia, where you have cheap energy. The problem is a lot of that capacity goes to china, so you have a national security concern. And then the third option, you know, probably has the best conditions, which is the medal, is right, cheap energy.

They don't have to build massive amounts of infrastructure at scale. They can build. They have plenty of land.

They can do IT near the sea for liquid cooling. They they have the sovereign bike to do IT. The chAllenge is, once they have all that capacity, these are geopolitical swing states. So how do you keep them on sides?

How do you keep them on sides? So what would you do? What are you telling clients to do? Well.

first, first, informal. This is really A U. S. It's the U. S.

Government's choice first, informal most because of export controls, right? So the U. S. Gets to decide um who can get uh the chips and who can get the chips right. And so this is an interesting uh, policy question that's going to play out in the new administration. So when you think about these three different options, you have to view IT through the lens of the new administration that was just elected.

but it's through its export controls the matter in this regard.

So IT turns out that there's a limit, if you about the geopolitical ing states, right, these are countries that have a, these are countries that benefit from to stay intentions between the U. S. In china because they were differentiated amount of the supply, a supply chain, the attractive for new showing, offshoring and friend shoring, then a button amount of capital, and they're LED by swing states.

Well, they swing on the issue by issue basis, right? You think about in india stayed neutral on ukraine as aligned with the us. On china.

If you look at the countries in the middle ast, these countries pick in shoes what issues they want to alive with the us. On, right? And so IT turns out that there's a limit, though, to how hard they can swing these.

These countries can just do whatever they want when IT comes to AI. Because at the end of the day, they need the U. S. Government to be able to allow them to actually have access to the technology.

He is that the question about why we have so much control over the chips when the lot of these aren't even U. S. Companies we were talking about this year yesterday, and i'm not even understand, is IT because we are the biggest purchaser and and you have to make sure that you listen to us if you wanted.

do business with us. So IT comes down to huge about dominant in the us because of the hyper scalers elders of the biggest purchases. Um you know of this of the chips obviously in the video video has no a massive of amount of influence in terms of of allocation.

They are not the only player but have a master mt of influence in terms of the allocation. Um and so the U S. Has kind of an income advantage in this.

And what's interesting is if you asked me before um before generate AI what the technology story was between the U. S. In china, I would have said the us.

Had a three decade first mover advantage over china and kind of looks like I was editing in a tie. And then when we all found out about general AA eye at the same time on november thirty, november thirty, twenty twenty two um IT gave the U S. A technology lifeline because china didn't have the pute power um that was required to run these large language models. Interestingly, IT was because export controls had been put in place on graphic processing units um which are the chips that that are required to run these large language models just a month before we all found out about ChatGPT.

So do you see any company that outside the us excelling in this space? Look, there are certainly plenty .

of incentive for that to happen, but that hasn't happened because you were talking about china.

And where is china on a relative basis, you think so right now.

china has an appeal battle when IT comes to generate AI and large language models. I mentioned the lack of computer already. They also don't want to train their existing models at internet scale in the way they govern their models is restrict tive.

Um that being said, one of things that we're starting to see in china is um a sort of efficiency innovation renaissance. They're are using the compute constraint to capture efficiency within the models itself. Now this is largely an R N D story right now.

Um but what I would say is this is where the whole question of open models versus closed models comes in the play. Every time there's a open waited model that gets released, that model kind of you puts code out um you into the public domain. And then china has access to that as well.

That we have once again the luxury of taking esg concerns seriously here because we can pay more we need to if we want the inflation. But if capital flows down hill, it's going to places that aren't quite as concerned with that crap. They are going to get they're going to get the least expensive energy sources.

Is if he goes there, is that a problem? That security is that it's not here again, we're going to be back to say, oh my god, we're vulnerable because we need on shore all this stuff. And will we be able to use the cheapest and the hydrocarbons, will we be able to do of the hypo dr covers here where you know that what they are going to do, if if if in if it's something like that, they may do coal for of this.

There's two separate questions here. One is is there are risk and having too much of this capacity um inside of countries who you may decide to share that capacity with an adversary or or not let us have IT or not let us have IT right is another concern. This is one of the chAllenges with having IT in a country that is not aligned with the us.

A geopolitical spring state is never gona fully pivot away from the U. S. So I would argue that that's not a bad choice. But there's a contradiction um um with some of this technology and some of the esg goals. And this is trouble for um I workloads and also by the way, for for um for electric vehicles.

So if you think about electronic vehicles, they require critical minerals and where earth to be processed refine ninety plus person of that happens in china to go into the batteries, right? And so we outsource the dirty are part of IT gets outsource to china so we can have cleaner cars is the same thing. You know, with AI, these large language models can can be transformative in terms of capturing energy efficiency.

The problem is, in the short term, in order to run these large language models, you need a lot of baseload power. And so there is a sort of short term contradiction that we have to grapple with. And this not a good answer to this, right? Because, again, you can't use internet and power because because these AI workloads are ultra high.

Deny in a trump world, there could be a lot more hyder carbons doing this domestically. And we would sort of of dates that the problem that you just talked about that could be domestic and we still have a chip.

You're saying they're still not enough. There's still. So my feeling is the U. S. Has plenty of potential to do this, but the need to meet this capacity is so urgent, right? We're going up to probably bring another thirty five plus of gig watts of.

Our online relative to the seventeen gigawatts of power that are art online feeding these data centers in just the next couple of years. That's not enough. That's not enough time, right? And so the us is going to continue to lead in this space, but it's not going to be able to lead on its own.

You sure in australia, if it's going this way instead of that way, it's not going to be it's not going to work. You mean doesn't working on the same? Sure he does.

Before we let you go, we ve got, imagine we ve got to mention the jar's, also an author I see now moonlighting as a children's book, author of a very cool book, is best selling now called speaking of america. Tell everybody was about real quick.

So the book takes one line, spoke in by every single president. IT talks about what was happening in the country when they set IT what they meant by the words and how the words had an impact. I wrote, speaking of america, because I think we have no choice but to talk to our kids about politics at a Young ridge, because they hear IT on TV.

They see IT on social media, they hear us parents gapping about IT. I wanted to have a resource for parents to be able to talk to their kids about politics and get a little refresher on american history. At the same time.

I can't .

thank you centry presidents. Which one of them has a name very similar to a dance?

Thanks to a dance.

And this was an jeep lesson. I got IT. Nobody got IT.

what? I don't think that I had that one of .

them guest rough for chase. I'm like what they how was that?

I just like saying.

rather talk is poa poker?

Poa.

that was the antro jeopardy. That is your power report. I give a boost report every day. Yes.

that was one of the thanks for being here .

for the meeting. What is James? But who is James for that? You had to put in forward question. Let you know.

Maybe no thanks for come. right. Thank you.

Next, unsquared, aside from the staffing shuffles happening at morlock, the battle brewing in a new tromp administration is the president elect verses the federal reserve chair j. Powell, who has said he won't be fired.

Not permitted under the law, not let, not permitted under the law.

while loyalists to the new regime, including in the senate question, the fed independence established more than one hundred and ten years ago, as our Steve leete's men reminds us by the legislate of branch.

the federal ve is a creation congress. If you have a problem with the federal reserve and federal reserve act, it's a problem of .

congress will hear from one skeptic of the central bank's internal agreement on rate policy, judie shelton says.

That amounts to think nobody got fired after we had the worst inflation in forty years. I think it's healthy to chAllenge some of the powers that have been accumulated by the real.

C, N, B, C has quick and easy to understand business news updates at the open midday and close every weekday. Markets, money and more from wall street to main street. M, cnbc, Jessica, and follow and listen to see nbc business news updates wherever you get your podcasts. You're listening to school pot from cnbc stand .

by joe is my q the fed's independence have .

been called in the question you to center Mickey calling for an end to the fed and a tweet he wrote um in his word's executive branch should be under the direction of the president. That's how the constitution was designed. The federal reserve is one of many examples of how we have deviated from the constitution in that regard.

Yet another reason why we should hashtag in the fed our next guess says the senator is standing up for the constitution with, in her words, courage and inside and join us now independent institute senior fellow duty shelf. And he was one of president electrons original federal reserve board. Dominy is also with us or see least I was thinking about the substrate.

It's good to see you I was thinking about from the context that all it's got to a point where if it's a discussion, it's almost herrera, it's almost IT reminding me of religion to even talk about the idea almost as such a sacred cow. And instead of talking about what might be very good reasons to at least at least look at the inner workings of the fed is it's what you always bring to us. The idea that the way the fed is set up that IT benefit the big money set of banks and IT actually caused them to to horn money because they made they could made a trillion dollars combine between all of, instead of lending IT out. So instead of questioning the way the fed works, everybody's like, oh my god, this is hersey. It's almost like saying you're going to, you know, get rid of, I don't know, apple pie and hot dogs.

Well, I think IT has become kind of seo sank in a way that prevents us from talking about improvements at the fed and and if if the definition of central bank independence means no legislative oversight, if IT means no limits on the financial capabilities of the federal reserve, and if IT means no real account to a, the fed often claims IT has responsibility for stable Prices. But nobody got fired after we had the worst inflation in forty years. So I think it's healthy to to chAllenge some of the the powers that have accumulated by the .

federal thormod xi, which is another giant term that I think.

well, should there be limits on how much government det the federal reserve can purchase? Should they be limits on how much base money IT can create with a computer keystroke? Should they be limits on the amount of interest that can pay to commercial banks at taxpayer expense to keep reserves sitting at the fed in the position accounts, doing nothing to provide capital resources to the real economy?

And I question, here's one of the great conditions of this. If you left the fetal serve to effectively be controlled by an executive branch or some or effective the american public to effect vely vote on what they think the federal serve shooter should not be doing, which to some degree is what you're talking about. I think there's degrees here about what we're really talking about in most cases.

I hate to say this. I think the american public would actually make the wrong decision almost every single time. And I think the uh, aftermaths of the financial crisis of two thousand eight is a prime example of that given the way way the public felt at that time.

I was the fat that what the public .

brought no would have happened is left to their own devices. We would have shut down the entire system because people would say we don't want to give any money to banks, right? That's what would have happened if you would I say you have done a straw votes of american public of what to do. They would be like, don't give any money these horrible bankers, they get nothing.

You mean in the math of of a global financial meltdown and I don't know any other institution that would be more responsible for properly calibrating the amount of money and credit in the system. The federal reserve now you're talking about .

is not solving this, is not to defend the photo. But i'm saying there are we mistakes made repeatedly. The question is if you let, there will always be mistakes. Let's let's just accept you don't believe that mistakes will always get made. I invariably there's going .

to some level of yeah but I think you're talking about who should have the ability to manipulate interest strates. You're saying I wouldn't want that to be in the executive brand or the legislative and and but as the federal reserve, should they be doing that?

One point that we've made is that we've never seen a president who wanted higher interest rates because it's counter to what they're trying to do.

which is stop the economy and keep .

things now like one point of fact.

which is that senator mike lee is barking up the wrong tree.

barking up the wrong neck of the wood.

Whatever the federal serve is a creation of congress. The problem is not that the executive brand is not have controlled over the fed, because the executive brand did not create the fed. The fed is not part of the executive branch.

If you have a problem with the federal reserve and the deal reserve act, it's a problem of congress. This flows from the controls of the purse, which is the dragged tive of congress. And I think the questions that judas are, are interesting and worth expLoring. Should they be limits on how much that, that but those are periodicals of congress to put on. And there's a reason for that because of some of things that Andrew said.

Whether or not you want to be paying banks to limit the floor on intestate tes is an interesting question um but you can't say that like senator mike leader, which kind of think is a little embarrassing, right, that the problem is the executive branch think it's not the executive, it's congress. Congress must to limit these things. IT is every ability to get together and do so but IT hasn't done so.

IT is given the fed what duty points out an interesting article is a trip type Mandate, not just to there's inflation, unemployment as well as stable credit to great interesting piece on that. But if it's not doing, and I would just pushed back a little bit on duty in the sense that there is oversight of the feed congress, they report twice a year in the hungry a hockins. Any time the fed, the congress wants a fed, a fiction, al to come, they go and they do provide testimony and they also respond. If that oversight is not sufficient, it's a problem of congress.

is what I would point. Well, Steve is exactly right in the sense that the fed does answer to congress because that's in the constitution. That's article one, section eight. And and so it's up to congress to regulate the money and they have formed out that responsibility to a government agency, right? And so I think that we're talking about.

I I just want to say too, though you mentioned trumping a real state guy in twenty fifteen when he was first beginning to run for president, he acknowledged that he said, i'm a real state guy. Of course, I love low rate frequent, also said, but think of the people who are being responsible, who don't own financial assets, who are putting money in the bank to save a retirement every week. He said they are getting creamed. But that was .

before he was president too. Mean, literally have never heard a presidents said, we wish, no.

but but think would happen to him. He came in. And the very next month, the fed raised interest rates.

This was under Janet yelling, in twenty seventeen, they raise them another three times. Then palemon, in twenty eighteen, they raise them another four times. So eight consecutive increases after being near zero for all those years post two thousand eight.

And trump made, I think, the logical argument. He said, we have we haven't hit the target or under your two percent target rate. We have record low unemployment that's benefiting minority groups and bringing in more worker participation. We have good economic growth, productivity. Why would you deliberately, preemptively curtail growth .

and limit employment?

And the down, and everyone said, either did they take them, did they come around to agree with him?

Can we favor to what duty things we want to do? Now you have this very weird landscape, right? Interest rates are rising, the fed is cutting, gold is down, the crb is down. If you look at inflation expectations in the tips market, they're up a bit. What's the prescription duty?

Well, I said and I said on this, this program, I think for zero rates make no sense when the fed started raising by december twenty two, they hit a target range of foreign quarter to four and a half. That's where I would have said, look, you have a real rate of return on capital that makes IT more productive. You don't get the male investment in the distortions that IT accepts their two percent inflation rate.

And then I would get hands off. It's the constant racing up and ratcheting down. Right now. The fed has set itself up with two frameworks. The original framework for most of this year has been if we see good growth numbers and high employment, then we're going to keep rates high because that means there will be inflationary. Then suddenly in september, they flip to the new retaliation approach.

And you know this whole thing about that, I think the media sets up this, this idea that an authoritarian president is going to try to browbeat the fed. When the fed made that decision in september, only one member, the board of governors, disagreed. And IT was the first time in nineteen years.

I mean, if there's any browbeating going on, it's to get consensus at the fed. And so suddenly now they they flip to to drop in interest rates, then they reaffirm that with another quarter point drop. But now this is the first time at a press conference that I heard the chairman start talking about fiscal responsibility and kind of hinting that what we might have to increase interest rates. I like the second approach of the fed, which is to retaliate ate because I think IT fitz in with a supply side program, if you had more growth because of lower taxes, less regulation, um if the fed had a concomitant reduction and interest state that have tails the way possible, available and affordable and that expends supply, the fed model targets cutting demand. Go for chairman .

pal talking now about fiscal responsibility as there's been ramp ed up pressure on the fed to do something like that, especially as you've watch the the longer and yields rise as theyve been cutting rates but and .

then interest and interesting change in priority, he would only mention IT remember how passive he used to be and say staying in our lane, we take fiscal is given.

I just say we've had investor after big investors come on and said that the feed should .

be saying something .

like that market. I think it's worth.

by the way, to talk about what powers said because a lot has been made. Is he talking about raising interest rates? He was asked a question, would you raise interest rates? And he said.

You know, I don't want to say, but a year from now, we might do IT, who knows? But it's not our plan. So that's not really what he've talking about the same.

I think it's a little bit much to put words in his mouth and say he's saying talking about raising interest rates. And I also believe that the idea of the fed thinking, by the way, joe has been hot at the on this idea. We have a running argument, which is an interesting debate. I think should the fed act in a way to limit ability of congresses to bar governor judy thinks.

yes.

I think I mean, the youth .

thought they shouldn't have at least liked at this. Be like like really like look at like maybe they don't do anything, but when they see more things getting passed, you know they like possible like this.

And i've called you, i've called your kids. I've called your kids joe, and i've said, your dad want not you to have lived .

that the problem I am like the fed.

I think there's a new emphasis, and that's why I welcome even reexamining our thoughts on the appropriate role of the fed, a new emphasis on sound finances and some money.

right? Instead of a hair, instead of a hair on fire moment, I think at least admit that. And we also know we have watched on his like why do they keep talking? I don't know he's going to have anything to do with in the future, Kevin, at some point is like stop with the guidance. Stop with to get know they .

are having a press conference at every rate setting. Meeting eight times a year was share pal idea? 没有。

They originally had IT on just the meetings where they had the new forecast. Look, i'm a in favor of a lot more transparency.

I'm not even forget where .

the fed what are you going to do?

Put music.

what your entire beat.

your entire beat would be.

Every question here, which is how do you have this conversation like there may be as important conversation we had about all of the reforms or things you may want to do to the fed or an debate about that. But there's also a danger in the debate itself in a very kind of twisted way, which is if the public and really the investor, the bond market think said this is all you know going to come on down or is in this array or or just just that unto itself can be dangerous.

So there's sort of a very interesting question about how do you have that how do you have that debate if you believe a debate is needed? How you have IT at the same time that you have stability? Like a very question.

we do have to consider IT, but that is a symptom of of the problem. The markets are fixated on the fed. The fed is too prominent in financial markets.

That may be, but that's like telling the viewers that they are too powerful because they can change the channel, that the the public has the ability or the bond market has the ability. You can change them now.

but you can have a less activist fed, and I think that would be very helpful. I think the fed has self a grand eyes and now sees itself as almost dinner in a dual with with a democratically elected president whose whose who was elected because of his policies and his promises related to the the economic grievances of voters. I mean, we've seen the fed in the last four years.

We've had forty two trillion in U. S. Household wealth and increased sixty two percent of that went to the top tens. Ten percent wealth est americans and nine percent tile. And I think that creates a sense of of monetary favoritism is great.

If you own answer, you expecting .

vely for truth to do with you, nominate you again. Have you talked to him? I mean.

with that I don't know. I'm no, I have talked with him about that. I I was honor. He nominated me twice, both before and after the election, because after january, you have to read a nomination and did that for me, and i'll always be honor by that.

Could you come back? You going .

to end the fed, what are you going to replace IT with? I even figured that out you and see .

that you on the.

Up and that's the pod for today. Thanks for listening. Square x is hosted by joe carin, the quin Andrew ross sorkin.

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Thanks, guys.

Cnbc has quick and easy to understand business news updates at the open midday and close every weekday markets, money and more from wall street to main street. I'm cnbc Jessica, adding to follow and listen to C, M, C. Business news updates wherever you get your podcasts.