[Music]


Bloomberg
Audio
Studios
podcasts,
radio


news.


[Music]

>> Hello
and
welcome
to
another
episode
of


the
OLOTS
podcast.
I'm
Tracy
Aloway

>> and
I'm
Joe
Weisenthal.

>> Joe,
another
day,
another
emergency


episode.
I
mean,
we're
back
to
emergency


episodes,
and
this
is
obviously
one
of


the
big
ones.

>> Yeah.
So,
we
are
recording
this
on


August
26th,
and
we
had
news
overnight


that
President
Donald
Trump
intends
to


fire
Lisa
Cook
from
the
Federal
Reserve


Board.
Obviously,
this
feeds
right
into


the
debate
over
central
bank


independence
and
what
the
president


actually
has
a
right
to
do
when
it
comes


to
hiring
and
firing.
And
uh
the
market


reaction
this
morning,
gold
up
a
bit,


the
dollar
down,
but
what's
really


interesting
is
we
have
yields
at
the


long
end
of
the
Treasury
market
picking


up,
which
would
suggest
there's
more
of


a
risk
premium
being
built
into
that


market.

>> No,
totally.
The
concerns
over
Fed


independence
sort
of
cast
a
whole
shadow


of
the
recent
Jackson
Hole
event.
And
of


course,
okay,
so
we're
recording
this


August
26th.
this
morning
an
episode


with
Adam
Posen
which
was
sort
of
about


this
surreal
experience
there
where


everybody
knew
that
the
threats
to


central
bank
independence
were
the


number
one
story
in
monetary
policy
and


yet
no
one
was
really
talking
about
it.


Maybe
people
are
trying
to
lay
low


trying
to
act
business
as
usual
and
then


we
get
this
and
so
what
was
something


that
maybe
people
hoped
to
imagine
a
way


or
sort
of
not
you
know
look
at
the


other
direction
is
now
right
here.
Well,


we
also
had
Trump
tweeting
that
he


wanted
to
fire
Lisa
Cook
while
Pal
was


giving
his
speech,
which
definitely


underscores
the
tone
of
Jackson
Hole


recently.
Okay,
so
there's
clearly
a
lot


to
talk
about,
including
whether
or
not


Trump
can
actually
do
this
from
a
legal


perspective.
And
I
am
glad
to
say
we


have
the
perfect
guest,
someone
we
have


spoken
to
before
on
this
exact
topic
of


central
bank
independence.
We're
going


to
be
speaking
with
Lev
Manand,


professor
at
Columbia
Law
School
and


also
the
author
of
The
Fed
Unbound.
Lev,


thanks
so
much
for
coming
on
the
show


again.

>> Thanks
for
having
me
back.

>> So,
I'm
going
to
start
with
a
very


simple
question.
Is
there
any
precedent


in
history
for
a
president
firing


someone
from
the
Federal
Reserve
Board


in
this
way?

>> No.
There
have
been
no
firings
of


members
of
the
Fed
board
by
the


president
since
the
Fed
board
was
first


created
by
Congress
in
1913.
And
there


haven't
been
any
attempts
by
presidents


to
remove
any
officers
of
the
United


States
for
cause
in
over
a
century.
And


so
we're
in
unchartered
waters
here
in
a


number
of
different
respects.
We're


going
to
get
into
the
ostensible
reasons


for
the
firing
obviously,
but
as


lawyers,


what
does
for
cause
mean?

So
for
cause,
one
of
the
legal
questions


here
is
what
constitutes
cause
under
the


statute?
And
in
federal
law,
in


independent
agency
law,
usually
Congress


specifies
the
causes.
And
there


are
three
common
ones.
Inefficiency,
neglect


of
duty,
and
malfeasance
in
office.


These
are
the
classic
causes.
The


Federal
Reserve
Act
is
unusual
for
not


specifying
specific
causes
but
saying


simply
for
cause.
So
one
issue
here
is


is
it
just
the
standard
causes
or
do


other
things
count?
And
that's
really


important
because
the
standard
causes


all
have
to
do
with
your
conduct
in


carrying
out
your
job.
Malfeasants
in


office
as
opposed
to
malfeasants
out
of


office.
there
was
an
intent
by
Congress


not
to
include
private
misconduct
as
a


ground
for
presidential
removal
from


office.
And
so
one
question
here
is


whether
private
misconduct
even
counts.


I
think
something
that's
very
clear
we


should
just
say
upfront
allegations
of


private
misconduct
definitely
don't


count.
That
does
not
come
within
the


statute
and
that's
one
of
the
reasons
this

>> why

>> because
of
all
the
due
process
concerns


that
are
associated.
Um,
right.
An


allegation
isn't
sufficient
for
a


removal
for
cause
because
for
cause


requires
a
determination
that
misconduct


took
place.
An
allegation
isn't


sufficient
for
a
determination.<
You


know,
an
allegation
is
totally


sufficient
to
fire
the
secretary
of
the


treasury
because
that
person
serves
at


the
pleasure
of
the
president.
And
the


president
can
say,
I
fired
the
secretary


because
the
secretary
there
are


allegations
that
the
secretary
engage
in


misconduct.
That's
totally
sufficient.


But
Lisa
Cook
is
not
an
official
that


serves
at
the
pleasure
of
the
president.


Lisa
Cook
is
closer
to
being
a
federal


judge,
an
official
who
has
a
tenure
in


office,
a
vested
legal
right
to
serve
in


their
position.
And
to
take
that
away,


the
president
has
to
follow
a
process


and
have
a
ground
and
make
a
conclusion.


And
none
of
that
has
happened
here,


which
is
another
reason
that
this
is
an


illegal
firing.
So
just
before
we
go
any


further,
give
us
a
recap
of
the


accusations
against
Lisa
Cook
because
as


you
point
out,
they
feed
into
the
debate


over
whether
this
could
count
as


malfeasants,
particularly
in
office.

>> Yeah.
Okay.
So
I
will
do
that.
I
just


think
we
should
note
at
the
sort
of
at


the
top
that
there's
a
way
in
which


while
this
is
about
Lisa
Cook,
it's
also


not
about
Lisa
Cook
at
all.
This
is


about
J
Pal.
This
is
about
the
rest
of


the
board.
This
is
about
the
president's


determination
to
subordinate
one
of
the


most
powerful
parts
of
the
government
as


part
of
a
larger
campaign
to
control
as


much
of
the
government
as
possible.
And


the
move
against
Cook
is
a
preview
of


coming
events
for
other
board
members
if


in
fact
the
firing
is
able
to
take


effect.
Okay.
So
what
is
the
specific


case
against
Cook?
It
has
to
do
with
two


mortgages
that
she
took
out
before
she


became
a
governor
of
the
Federal


Reserve.
And
so
it
appears
as
though
the


administration
has
been
digging
around


in
mortgage
records
and
they
found
I


don't
know
whether
they
were
looking
at


Lisa
Cook
in
particular
or
government


officials.
They
found
that
Lisa
Cook
had


two
mortgage
applications,
both
of
which


claimed
that
she
intended
to
make
the


property
that
was
collateral
for
the


loan
her
primary
residence.
And
so
the


allegation
is
that
this
is
mortgage


fraud.
Of
course,
fraud
requires
an


intent.
And
so
on
its
face,
just
the
two


documents
is
not
sufficient
to
convict


somebody
of
a
crime.
nor
can
you
be
sort


of
convicted
of
a
crime,
you
know,
on


the
Twitter
sphere.
The
ordinary
way
in


which
it
would
get
worked
out
whether


there
was
fraud
here
is
there
would
be
a


private
government
investigation
by


prosecutors,
they
could
get
an


indictment,
etc.
None
of
that
has


happened,
right?
This
is
guilty
until


proven
innocent.
And
it
doesn't
seem
to


even
be
the
goal
of
the
administration


to
to
run
a
proper
proceeding
to


determine
whether
this
private


misconduct
took
place.
The
point
is
to


point
to
this
private
misconduct
and


say,
"Now
I
can
fire
you
from
the


Federal
Reserve."
And
that's
where


there's
just
a
big
disconnect
because


allegations
of
private
misconduct,


there's
just
no
precedent
that
supports


a
removal
for
cause
from
a
government


position
on
that
basis.
And
the


president
has
pointed
to
none
and
the


white
house
has
pointed
to
none.
Mostly


what
they're
pointing
to
and
what
this


is
going
to
ultimately
be
a
case
about


is
their
inherent
constitutional


authority
as
president,
which
is
what


the
court
has
allowed
the
president
to


invoke
in
a
number
of
other
instances
to


ignore
statutes,
to
ignore
law,
and
to


trample
on
people's
rights.
And
so


that's
going
to
that's
part
of
why
also


this
is
a
big
case
because
this
is
not


just
a
big
case
for
the
Federal
Reserve.


It's
also
just
a
big
case
for
the
rule


of
law
in
our
system
and
the
extent
to


which
we
are
a
government
of
laws
and


not
of
people.

>> These
are
extremely
important
things


that
we
have
to
get
across.
What
happens


now
in
terms
of
like
the
questions


because
she's
going
to
fight
it.
I


believe
her
lawyers
put
out
a
statement


last
night.
What's
your
understanding
of


how
things
could
play
out
in
terms
of


like
even
her
going
to
her
office
at
the


building
and
being
included
in
meetings


because
these
processes
take
time
if


it's
going
to
go
to
the
Supreme
Court.

Yeah,
this
is
a
very
messy
moment.
And


so
the
initial
clarification
will
come


from
the
courts
because
presumably
Lisa


Cook's
lawyers
will
seek
a
preliminary


injunction
reinstating
her
from
federal


district
court
in
the
same
way
that
Gwyn


Wilcox
at
the
NLRB
did
that
Bedoya
at


the
FTC
did
when
they
were
removed


earlier
this
year.
Right?
So,
we
know


how
that
process
kind
of
works,
but


there's
this
period
of
time
between
when


the
president
tries
to
fire
someone
who


is
statutoily
protected
from
being
fired


by
the
president
and
the
federal
courts


make
a
decision
about
whether
that


person's
going
to
get
to
continue
to


work
in
their
job
while
the
litigation


is
going
on
where
who
knows.
So
right


now
to
your
question,
the
Federal


Reserve
Board
and
Jay
Powell
as
the


active
executive
officer
of
the
board
is


in
a
difficult
position
where
they
have


to
decide
does
she
still
have
her
office


and
they're
under
an
independent


obligation
to
follow
the
law,
right?


They
don't
get
to
just
say
the
president


told
me
so.
They
swore
to
uphold
the


law.
So,
they
have
to
make
their
own


determination
about
whether
she
was
in


fact
fired
by
a
social
media
post,


right?
That
didn't
follow
any
of
the


proper
process.
And
it's
an
invalid


firing
on
its
face.
And
under
existing


law,
it
doesn't
have
any
legal
effect.


Maybe
Supreme
Court's
going
to
change


the
law
like
they've
done
before,
but
I


think
Pal
here

>> has
to
let
her
in
the
building.
And


that's
going
to
create
a
separate


showdown
between
the
board,
its
lawyers,


J.
pal
as
active
executive
officer
of


the
board
and
the
president.

>> That's
interesting.
So
there's
two


parallel
legal
arguments
going
on.
One


at
the
Fed
and
one
in
the
court
system.


Just
going
back
to
the
court
system
for


a
second,
we
have
of
course
had
firings


at
other
agencies
this
year.
And
as
part


of
those,
the
Supreme
Court
basically


carved
out
an
exception
for
the
Fed


saying
that
I
think
it's
uniquely


structured.
And

>> it's
different
because
it's
different.

>> It's
different
because
it's
different.


as
we
said.
So,

>> yeah,
there's
a
carveout.
Would
that


come
into
play
here
or
could
they
just


cancel
the
carveout?

>> So,
the
carveout
isn't
direct
to
this


issue.

>> Okay.

>> So,
there
are
these
other
independent


agencies
just
like
the
Fed,
Federal


Trade
Commission,
SEC,
National
Labor


Relations
Board,
and
they
all
say
that


people
have
tenure
in
office
for
a
term


of
years,
and
the
president
can
only


remove
for
cause.
And
we
were
talking


about
how
usually
those
causes
are


specified.
What
the
president
did


earlier
this
year
is
say,
"I
don't
need


to
follow
that
statute.
I
don't
have
any


cause
to
remove
you.
I'm
just
going
to


remove
you
as
if
you
serve
at
pleasure


because
under
the
Constitution,
I
can
do


that."
And
that
case
went
after
the


Supreme
Court.
And
that's
what
you're


referring
to.
And
that
case
is
called


Will
Cox.
And
in
May,
the
court
said,


"Yeah,
you're
probably
going
to
win
on


that,
president,
because
we're
into
this


theory
of
your
inherent
powers
that's


pretty
much
unmed
from
the
American


legal
tradition,
but
we're
going
to


probably
endorse
it
when
we
get
this


case
on
the
merits
next
year."
And
so,


in
the
meantime,
all
these
people
are


out
of
jobs.
And
then
they
said
out
of


nowhere,
because
the
case
doesn't


involve
the
Federal
Reserve
at
all,
they


say,
"Oh,
by
the
way,
just
in
case


anybody's
like
watching
who's
wondering


like,
can
I
fire
people
at
the
Federal


Reserve?
We
think
the
Federal
Reserve


probably
is
a
different
situation,
but


that's
with
respect
to
whether
the
cause


language
is
binding
on
the
president.


And
so
the
president
read
that

>> this
is
actually
all
downstream
of
the


Will
Cox
order
from
the
court
because


the
White
House
lawyer
said,
"Okay,
now


we're
going
to
go
out
and
try
to
find


causes
that
we
can
sort
of
manufacture,


cook
up,
and
push
the
envelope
on
this


legal
provision."
And
so
the
court


didn't
protect
the
Federal
Reserve
from


this
in
Willox.
It
in
some
sense
invited


the
White
House
to
try
this.
And
so
now


the
ca
this
case
will
go
back
to
the


Supreme
Court
presumably.
And
the


Supreme
Court
will
have
to
say
does
this


for
cause
thing
is
it
for
real
or
is
it


just
a
paper
requirement?
Is
it
just


proforma?
because
the
president
is


treating
it
like
it's
nothing
more
than


putting
out
a
press
release
alongside


the
removal,
which
is
definitely
not
how


Congress
understood
it
when
they
wrote


the
Federal
Reserve
Act
or
how
this
was


litigated
in
the
past
when
this
was
a


bigger
issue
in
American
government.

This
is
really
important
clarification


that
when
Trump
fired
some
of
those


other
people,
they
were
trying
to


establish
the
notion
that
these
sort
of


so-called
like
independent
agencies
were


actually
just
constitutionally


illegitimate.
Right.
There
was
a


specific
point
there.

>> Exactly.

>> And
so
there
was
no
pretext
for
invoking


the
cause
because
that
wasn't
the
goal.


The
goal
was
to
establish
their


illegitimacy,
not
to
necessarily
change


the
partisan
makeup
per
se,
though
maybe


that
was
uh
the
case.
In
the
case
of
the


Fed,


I
mean,
you
say
that
this
firing
was


downstream
from
the
Willox
decision,
but


was
it
I
mean,
the
for
cause
ability
has


never
like
the
idea
that
you
could
fire


for
cause
has
always
been
there,
right?


Like
they
didn't
need
the
carveout
from


Will
Cox
to
fire
someone
for
cause,
even


if
even
if
we
dispute
that
this
actually


rises
to
that
level.

Yeah,
I
think
this
is
a
great
question
and
it's
come
up
a


few
times
in
conversations
that
I've


had.
I
think
the
thing
to
understand


about
the
Will
Cox
order
is
how
radical


it
was
for
the
Supreme
Court
to
say
that


this
bedrock
precedent
on
which
the
US


government
is
designed


is
probably
invalid
and
therefore
the


president
can
fire
all
these
people


don't
don't
get
to
work
while
they


litigate
their
cases.
They're
out
of


their
jobs.
And
so
the
court
in
Willox


embraced
such
a
broad
conception
of
the


presidency


in
such
a
sort
of
unorthodox


unmed
fashion
that
the
main
signal
from


that
isn't
that
the
Fed
is
protected
but


it's
that
this
court
is
going
to
bend


over
backwards
for
very
broad
conception


of
the
president's
power.
And
so
when


you
read
that
as
a
lawyer
for
the


president,
what
you
think
is,
okay,
they


don't
want
to
be
tagged
with
concluding


that
central
bank
independence
is
on
its


face
legally
invalid
in
the
United


States,
but
they
also
are
going
to
let


us
do
what
we
want.
And
so
the
thing
to


do
is
to
now
push
on
this
for
cause
and


act
like
it's
not
actually
a
very


rigorous
bar
and
we'll
get
what
we
want


because
it
was
so
surprising
that
they


got
what
they
want
with
respect
to
the


FTC
and
the
NLRB.
And
so
there's
this


sense
that
people
had
after
Will
Cox,


oh,
the
court
is
protecting
the
Fed.
But


the
real
message
in
Willox
that
overrode


that
sense
of
protection
is
the
court's


going
to
come
up
with
reasons
when
push


comes
to
shove
not
to
pen
in
the


president.

[Music]


Why
do
you
think
the
Trump


administration
wants
to
exert
control


over
the
Federal
Reserve?
Because,
you


know,
we
just
had
a
speech
from
Jerome


Pal
at
Jackson
Hole
where
he
opened
the


door
to
interest
rate
cuts
in
September.


So,
it
would
seem
things
are
sort
of


heading
in
the
direction
that
Trump


wants
even
though
I
will
point
out


there's
a
tension
there
because
he
says


the
economy
is
great,
but
also
he
wants


rate
cuts.
Why
is
this
important
to
him?

So
the
Federal
Reserve
is
the
most


powerful
agency
in
the
federal


government
and
alongside
the
Supreme


Court
and
the
White
House,
those
are
the


three
most
powerful
government
bodies
in


the
United
States
in
2025.


And
the
Fed's
power
has
expanded


dramatically
since
the
2008
financial


crisis.
and
it
has
turned
its
balance


sheet
into
an
active
policy
tool.
And


that
means
that
it
is
a
very
shiny
prize


for
a
president
that
does
not
want
to


have
to
go
to
Congress
for


appropriations
to
carry
out
various


policies.
Here
you
have
an
infinitely


extensible
balance
sheet.
Now,
it's


meant
to
be
used
to
ensure
stable


monetary
expansion
over
time,
but
what


we've
seen
is
it
can
be
put
to
other


uses.
I
think
some
of
those
are
legally


questionable,
but
you
can
imagine
a


president
who
doesn't
believe
in


following
laws,
believes
in
inherent


executive
authority
with
control
over
an


infinitely
extensible
central
bank


balance
sheet,


can
do
all
sorts
of
different
stuff.
So


this
is
a
very
shiny
prize
even
beyond


interest
rate
policy.
I
I
think
I


wouldn't
underemphasize
the
interest


rate
policy
component.
Yes,
Trump
wants


lower
rates
and
there's
a
indication


that
rates
will
be
lowered
at
the
next


meeting,
but
not
by
the
amount
Trump
is


demanding.

>> Trump
wants
to
run
a
boom
economy,


overheated
economy.
And
in
order
to
do


that,
he
wants
to
create
very
easy


credit
conditions
and
loose
monetary


policy
and
monetary
expansion.
And
the


Fed
is
not
going
to
do
that
on
its
own.


He's
going
to
have
to
take
over
the


institution
if
he
wants
them
to
do
that.


The
whole
institution
is
designed
not
to


engage
in
such
a
boom
and
bust
type
of


macroeconomic
management.
And
that's


actively
what
he
wants
and
I
think
what


we
will
get
and
the
markets
are
only


very
slowly
waking
up
to
that.
M

>> yeah
it
it
does
seem
well
I
mean
who


knows
I
mean
you
look
at
some
of
the
the


way
asset
prices
are
flying
maybe
the


market
is
clued
to

>> maybe
the
market
is
clued
in
yes
because


the
way
this
goes
is
we
get
asset
bubble


right
we
get
a
lot
of
leverage
in
the


financial
system
because
we
deregulate


bank
balance
sheets
and
we
lower


short-term
interest
rates
that's
going


to
lead
to
lots
of
credit
expansion
and


that's
going
to
be
an
inflationary
boom


the
reason
why
we
don't
run
the
economy


like
that
normally
is
it
ends
in
tears


Um,
there's
going
to
be
a
bust
later,


but
you
know,
as
I
believe
it
was
Chuck


Prince
once
said,
when
the
music
is


playing,
keep
dancing.

>> Maybe
the
uh
the
bust
will
be
four
years


later,
right?
And
Trump
won't


necessarily
care
if
he's
out
of
the


presidency.

>> It
could
certainly
go
for
years.
You


know,
we've
seen
irrationally
exuberant


markets
led
by
actual
underlying


structural
credit
expansion
fuel
bubbles


for
for
a
long
period
of
time.
By
the


way,
I
think
if
I
were
like
a
banker
or


a
lender
or
a
professional
trader,
I


would
know.
I
would
get
out
right
at
the


top.
I
just
have
that
feeling
that
I


could
do
it.
It's
like,
let's
keep
it


going.
And

>> why
doesn't
everyone
do
that?

>> I
know
it's
a
I
know
it's
a
bubble
or


boom,
but
I
just
have
this
feeling
that


I
would
be
able
to
time
the
top.

>> It's
the
OddLots
podcast.
That's
how
you


know
that's
where
you
get
your
special


insight.
Could
the
question
of
whether


Powell
and
like
again,
you
know,
who


knows
what's
going
to
happen
today?
Uh,


let
Cook
back
into
the
building.
Could


that
be
a
pretext
for
an
attack
on
Paulo


himself?

>> Absolutely.
I
mean,
I
think
that
this


president
or
the
White
House
more


generally
has
floated
any
number
of


possible
sort
of
constructed
cases
to


remove
officials.
And
so
they
obviously


floated
the
renovations,
but
a
failure


to
follow
a
presidential
order.


Everything
the
president
says
is
not


law.
This
is
a
common
misconception.
But


this
president
thinks
it
is
law.
And
so


it
would
be
easy
to
for
the
president
to


say
this
is
law.

>> But
you
know,
I'm
sure
these
are
the


types
of
things
that
people
debate


forever
in
law
school.
And
every
time
I


talk
to
lawyers,
I'm
reminded
it's
like


all
law
is
just
what
people
agree
is
law


at
any
given
moment,
right?
Including


the
most
anything
can
be
re
anything


could
be
reinterpreted.
Anything
can
be


contrived.
Anything
can
be
turned
into
a


loophole.
Like
at
the
end
like
the
only


thing
Butcherson
written
laws
is
some


sort
of
stomach
to
enforce
them,
right?

Yes.
Law
is
a
social
coordinating


mechanism
and
in
order
for
it
to
work,


we
have
to
have
the
shared
understanding


and
follow
it.
And
that's
why
things


like
this
have
such
high
stakes
because


when
a
government
actor
flagrantly


violates
what
the
prior
understanding


is,
it
sort
of
tears
at
the
fabric
of


law
as
a
consensus
building
mechanism.


By
the
way,
11:26
uh
headline
just


flashing
through
the
terminal.
Lawyer


for
Fence
Cook
says
she
will
file


lawsuit
challenging
firing.
So
that's


confirmed.

>> Clearly
still
a
live
issue.
Just
to


recap,
I
just
want
someone
to
lay
out


this
argument
very
clearly
and
you
tend


to
do
that,
Lev.
Uh
you
tend
to
do
it


very
well.
So

>> why
is
central
bank
independence


important?

This
is
a
big
question
that
could


probably
support
an
entire
episode
and
I


think
you
guys
have
we
have
explored


this
at
other
times
and
you've
explored


it
with
some
other
guests.
I
saw
your


episode
with
Corolla
Binder.
Central


bank
independence
is
important
for
the


reasons
that
the
economists
put
forward


which
have
to
do
with
credibility
and


long-term
decisionm
being
best
furthered


by
special
purpose
officials.
Right?
You


don't
want
to
overload
people
with


competing
priorities.
You're
going
to


get
less
quality
policy.
And
so
that's


why
you
have
a
14-year
term
of
office


here
because
we
want
Fed
officials


making
long-term
decisions.
We
don't


want
short-term
decisions
about
changes


in
the
money
supply.
And
so
all
of


that's
true.
There's
a
time


inconsistency
problem.
This
is
a


long-term
policym
domain.
But
I
actually


think
right
now
it's
important
to


emphasize
something
that's
not
actually


a
big
part
or
really
any
part
of
the


economics
literature
and
that
has
to
do


with
the
separation
of
powers
and


democracy.
And
you
don't
want
to


concentrate
too
much
power
in
a


government
in
any
one
person.
And
that's


actually
a
foundational
idea
in
the


American
constitutional
system.
Arguably


the
founders
went
too
far
in
separating


powers.
They
made
it
very
difficult
for


the
government
to
do
stuff.
And
what's


happened
here
is
we've
concentrated


power
in
the
president
in
a
way
that


would
have
all
of
the
framers
of
the


constitution
rolling
in
their
graves
and


to
allow
the
executive
to
control
the


money
supply.
That's
literally
an
issue


that
led
to
the
glorious
revolution
in


1688.
It's
one
of
the
key
concerns
of


the
founders
is
to
separate
control
of


the
money
supply
from
the
executive.
And


so
central
bank
independence
is
also


about
good
government
and
preventing


tyranny.
And
Alexander
Hamilton
said


this
in
his
report
on
a
national
bank.


And
so
it's
not
just
about
having


optimal
long-term
monetary
policy.
It's


also
about
preventing
one
person
from


controlling
way
too
much.
You
know,
for


the
maybe
the
last
15
years
or
maybe


from
2010
through
20
through
co
there


was
like
a
left
critique
of
central
bank


independence
but
it
was
very
you
know
it


seemed
to
be
very
focused
on
this
idea


that
the
central
bank
by
having
this


like
you
know
a
was
just
not


democratically
accountable
that
it
was


accountable
to
the
interests
of
money


holders
to
not
lose
the
value
of
their


money
that
that
was
constraining
the


rebound
of
labor
etc.
Are
those


critiques
suddenly
vanishing
because
it


feels
more
important
to
make
the


argument
that
you're
making?

>> So,
I
always
felt
those
critiques
were


part
right
and
part
wrong.

>> Okay.

>> And
the
part
that
was
right
is
that
the


central
bank
in
the
United
States
was


structured
in
a
way
that
made
it
too


responsive
to
financial
interests
and


not
responsive
enough
to
the
Congress


and
to
the
American
people's
interest.


and
that
led
to
an
excessively
tight


monetary
policy
over
an
extended
period


of
time.
But
the
solution
to
that
is
not


to
have
a
Federal
Reserve
under
the


control
of
the
White
House.
That
is
not


a
solution
to
an
insufficiently


democratic
monetary
policy.
The
solution


is
to
change
the
structure
of
the


Federal
Reserve
system
and
who


influences
those
officials.
And
that


means
increasing
the
influence
of


Congress.
It
might
mean
increasing


opportunities
for
judicial
review.


There's
almost
no
judicial
review
of
the


Fed.
It
might
mean
removing
the
bankers


from
the
boards
of
the
regional
Federal


Reserve
banks.
It
might
mean
changing


the
Fed's
responsibilities
and
the


statutory
scheme
that
it's
executing.


There
are
all
sorts
of
ways
to
create
an


administrative
agency
that
is
more


responsive
to
democratic
interests


besides
putting
it
under
the
president.


and
actually
putting
an
agency
under
the


president.
We
have
actually
a
bunch
of


experience
with
what
that
looks
like
and


that
makes
most
policy
as
a
general


matter
more
favorable
to
wealthy


business
interests.
And
so
there's


definitely
a
valid
critique
that
central


bank
independence
as
we
knew
it
as


central
banks
were
constructed
led
to
a


bias
in
central
bank
policy
towards


certain
interests.
But
the
solution
to


that
problem
isn't
let's
bring
in
the


president
that
will
make
the
central


bank
policy
more
appealing
and


appropriate.

>> Levand,
thank
you
so
much
for
coming


back
on
OddLotss
for
yet
another
central


bank
independence
episode.
Appreciate


it.

>> Thank
you
for
having
me.

[Music]


Joe,
always
good
to
get
Levan.
I
feel


like
he
explains
the
issue
very,
very


clearly.
I
guess
we'll
see
what
happens


both
in
the
court
system
and
also
within


the
Fed
itself
because
I
thought
it
was


really
interesting
this
idea
of
like
two


parallel
legal
tracks
here
where
the
Fed


is
obligated
to
also
follow
the
law
and


so
they
need
to
figure
out
for


themselves
whether
or
not
the
firing
is


legal.

>> Absolutely.
I
mean
this
is
very
serious


like
sort
of
high
stakes
immediate
stuff


that
there
are
questions
that
are
not


easily
resolved
by
the
time
they
uh
get


to
the
Supreme
Court.
I
also
just
found

>> his
argument
very
like
persuasive
that


like
an
allegation
is
not
cause
right


like
setting
aside
like
you
know
what


constitutes
cause
and
maybe
that
is


ambiguous
in
this
particular
case
etc.


All
we
have
is
an
allegation,

>> right?
There's
supposed
to
be
due


process
to
figure
out
whether
or
not
the


allegation
is
in
fact
true.
Also,
an


allegation
that
didn't
actually
happen


while
Lisa
Cook
was
in
office,
which


also
plays
into
that
malfeasance


argument.

>> I'm
guessing
we'll
have
plenty
more
to


talk
about
on
this
topic
in
the
future.


So,
uh,
shall
we
leave
it
there
for
now?

>> Let's
leave
it
there.

>> This
has
been
another
episode
of
the
Odd


Thoughts
podcast.
I'm
Tracy
Aloway.
You


can
follow
me
at
Tracy
Aloway

>> and
I'm
Joe
Weisenth.
You
can
follow
me


at
the
stalwart.
Follow
our
guest
Lev


Manand.
He's
Lev
Manand.
Follow
our


producers
Kerman
Rodriguez
at
Kerman


Arman
Dash
Bennett
at
Dashbot
and


Kalebrooks
at
Kalebrooks.
For
more


OddLots
content,
go
to


bloomberg.com/odlots


where
we
have
a
daily
newsletter
and
all


of
our
episodes.
And
you
can
chat
about


all
of
these
topics
24/7
in
our
Discord,


discord.gg/odlots.

>> And
enjoy
OddLots.
If
you
like
it
when


we
do
these
emergency
episodes,
then


please
leave
us
a
positive
review
on


your
favorite
podcast
platform.
And


remember,
if
you
are
a
Bloomberg


subscriber,
you
can
listen
to
all
of
our


episodes
absolutely
adree.
All
you
need


to
do
is
find
the
Bloomberg
channel
on


Apple
Podcast
and
follow
the


instructions
there.
Thanks
for


listening.

[Music]


Hey.


[Music]