Charles: J. Powell brought out his inner Jennifer Holiday and said there's no way that he's leaving. Uh the reaction though has been predictably partisan, not a lot of tears. I'm going to bring in Fed uh Fedgu.com principal Joe Wang. And uh you know Joe, uh so J. Pal says that that that this is not about the the testimony, right? He put out a statement and he spoke last night, but about President Trump not getting his way. What interesting what's interesting to me is he also said that the Fed serves the public. Listen, I believe the Fed serves big banks and the wealthy folks out there. Just your thoughts because I think this is a perfect time to remake the Federal Reserve.

Joe Wang: Hey Charles, thanks for having me. And I think what you're saying makes a lot of sense. Now, when I look at the data, what stands out to me is that over the past few decades, labor's share of income has consistently declined. And what we see is tremendous asset price inflation where the rich get richer. So, it's easy to see that people could think that the Fed is really serving the wealthy. And many people feel that way. So that I think that is a big problem. But I think when the Fed chair is saying that this isn't about this, this is really about getting rid of me, I think he's right, too. So what I'm looking at is that the president is having a very different vision of how he wants to run the country. He wants to re-industrialize, not just to help middle America undo those trends of the past few decades, but also because of great power competition. So you can see him going out uh far away to seize natural resources, having those tax incentives that Nancy talked about, taking ownership of some private enterprises and all this stuff is really important. And one of the most important parts of his re-industrialization plan is to have lower interest rates. And so I think the president is frustrated that the Fed is not playing along to trying

uh basically re-industrialize and make the economy work better for uh for the public. So I think this is what the president is doing trying to

re there's no doubt that this is what President Trump is trying to do but there's also no doubt that the Fed is using a playbook that feels at times to be antiquated even the data that they use. I mean I read what you said that pal and and the Fed they're more powerful than ever before haven't necessarily done a good job. So what about the notion of some sort of accountability? I mean real democratic accountability not this twice a month twice a year you go on Capitol Hill most of these law uh one most of these lawmakers don't know what the hell they're talking about. They sound dumb. They're pitching their ideas. They're trying to get pal to to weigh in one way or the other. None of them are really enforcing anything. How do we enforce get accountability?

Joe Wang: Oh, that's a really tough question. So, the Fed initially was just the lender of last resort. Then it began to set interest rates. Now, it's a huge bank regulator. Now, it's doing everything with its balance sheet, being an active market participant, buying trillions of dollars of securities, what it was doing QE. So, I think this is something that has changed. The Fed is a lot more influential and powerful than it was before. So we should have more democratic accountability. It's hard to get that. Like you mentioned, what the Fed does is very opaque. So a lot of people on Congress don't really follow it closely. One way is perhaps to have uh the Treasury Secretary sit on the MOMC as it was initially in the beginning of the Fed's founding. Another possibility is is maybe that we just make the Fed a little bit smaller in its mandate so that u maybe some of that power goes elsewhere.

Charles: You know, I never knew that the Treasury set in. That's a that's you you taught me something. I'm I'm glad you did. You know, every time I read your work, I learn something like the notion of central bank independence, right? I mean, it it's not chisel and stone. At least it wasn't from day one when our Fed was around. And we got a chart here that shows that it barely exists anywhere in the world. By the way, I went to the Richmond Fed. They had a great paper on this. It's no longer available. We'll see what's up with that. But just this notion of of so-called Fed independence. What exactly does it mean? It sounds good. Some politicians grab on to, but what does it mean?

Joe Wang: Central bank independence sounds really sacred but it's actually a really new idea. Uh when I was looking into this I was surprised to find out that the United Kingdom for example first world country did not have an independent central bank until 1997 and before then they were totally fine. Similar for France and if you look across the ocean you can see that China's economy is also doing well. They're doing a lot of good things there. They don't actually have an independent central bank. So this independent central bank thing I think a lot of it is just dogma. We can have a country that has low inflation and an economy that works forever for everyone and not an independent central bank. We have other ways to make uh inflation accountable. For example, we have elections. What happened in 2024? Uh inflation was high. Vice President Harris lost the election. So, we don't really need to have an central bank to get inflation under control. I think that's just maybe an outdated idea.

Charles: Yeah. And and speaking of elections, you know, when Trump when when when the it seems like if if Pal is saying he's working for the people, well, the people elected Trump to be the spokesperson, so maybe they need to interact. But before I let you go, just 30 seconds to go. Uh the Wall Street Journal had an article suggesting that maybe some members who had been spying the exits, they even announced that they were leaving might decide to stay, you know, to form a wall uh with with J. Pal, right? To push back on on on Trump. And of course, J. Pal himself, he could stay after his term expires. The chart behind me shows it's only really happened twice before that a Fed chair stayed after their term is over. I think such a mutiny would hurt the reputation of the Federal Reserve. Just quickly your thoughts on that.

Joe Wang: I think it's a really bad idea. Listen, we everything is changing right now. We have a new economic model that the president was elected by the broader public to do and part of that money model is for the Fed to keep interest rates low so that we can have a reshoring. We could have re-industrialization. having this one man just kind of stubbornly stand there kind of defend the Ansean regime. I I don't think that that accords with democratic principles. I hope he doesn't do that. I think ultimately the president will prevail. I think the public is with him. I think a lot of Congress is with him as well. So I hope that uh you know there isn't any more drama there that would that would distract from what are really pressing problems for the American public.

Charles: You know, I hope there's not either, but if there is, Joe, I'm glad we can count on you. Great stuff. Thank you so much. Like I said, I always learn from you. Always. Thanks a lot.