Speaker 1: There's almost no doubt that Pal's going to be out
when his time is up, and he's realistically not going
to be reappointed. President Trump has really made no secret
about that, and I think President Trump would fire him
if he could, but he can't. So this is why
he's doing what he believes is the next best thing
and looking at shadow fed chairs.
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Speaker 3: And welcome.
Speaker 4: You are listening to and watching the Financial Survival Network.
Speaker 3: I'm your host Carrie Lutz.
Speaker 4: And well, we know there's a big stink that's been
going on between the President and chair Jerome Powell. Has
he outlived his usefulness? Is he on his way out?
What's the real story here? Well, Paragh el Amin is
with us now an attorney and well you can find
him at lawpla dot com.
Speaker 3: Parukh great to have you on the show.
Speaker 4: So you're an attorney, but obviously interested in economics and
economic policy here. What's your take on what's going on
with the FED?
Speaker 1: That's right, Kerrie, and I've got a background in finance.
I mean, in terms of what's going on in the FED.
This is something we've seen which is classic President Trump style,
which is he's running the government more like Trump organization
than as the president. And what I mean by that
is President Trump is very used to having a lot
of control over his organization and decision making ability, and
I think we've seen time and time again where he
gets frustrated when other people aren't doing what he wants
them to do. And that's what we're seeing here with
Jerome Powell and President Trump hinting at the fact that
he may end up appointing a shadow FED chair, which
is unprecedented, We've never seen anything like that before, but
all because he doesn't really like the fact that Jerome
Powell is continuing to allow higher interest rates than President
Trump would like.
Speaker 3: Right.
Speaker 4: So I have a theory that this is the first
AI driven administration in history. All the policies coming down,
whether it's immigration, legal policies, economic, it's all.
Speaker 3: Driven by AI.
Speaker 4: And if in fact it is what do you think
the AI is pointing to in terms of monetary policy.
Speaker 1: Well, that's an interesting theory. I haven't heard that before, Carrie.
So to clarify what you're saying and asking, are you
saying that you believe that the Trump administration is using
literally AI to help come up with its policies.
Speaker 3: Oh, there's no question in my mind.
Speaker 4: I call it Trump GPT, and having used AI pretty
extensively for the past three years, I can just pick
up the patterns and such like. For instance, you know
as an attorney that to drift an executive order, it's
not just the thing where you just write it out.
A lot of research, memorandums have to be done. Every
law that's on the books has to be run through
to make sure that you're not conflicting with the law,
constitutional aspects, all these things, and the fact that he
had so many of them literally ready the moment he
took his hand off the Bible and was sworn in,
he was signing executive orders. And there's two reasons why
I know that this is AI driven. Number one is
the secrecy he knew about this, which means there's a
very small core group that's responsible for this and to
have a law firm do it could take months, years,
dozens of.
Speaker 3: Lawyers running around, running up hours.
Speaker 4: Not to say that lawyers haven't reviewed it, but that
the core of it probably is AI generated. And then
just pattern recognition where I can see AI rearing its head,
where just certain certain things that happen.
Speaker 3: It's just a pattern.
Speaker 4: So it's my theory and nobody has proven.
Speaker 3: Me wrong yet. But if I'm wrong, I'm wrong. Yeah.
Speaker 1: And so you think that President Trump's idea of maybe
a shadow fed chair came from AI.
Speaker 4: Uh, very possible, or it might have come from somebody else,
and then run through the AI to see if it
could in fact be accomplished, and you know it'll run
itself out. I know for sure for legal strategy, it's happening.
I can see it there. We've never seen cases go
to the Supreme Court. He's only been in power five
months and yet three or four cases have already hit
the Supreme Court and been decided.
Speaker 3: And that's just something. As a follower, as an.
Speaker 4: Attorney, recovering attorney, I've never seen anything like where Supreme
Court taking cases on an emergency basis the way they have.
Speaker 1: That's right, And look part of this is traditional Trump fashion.
President Trump likes to move quickly and he makes a
lot of moves at any given time, so a lot
of his presidency has a lot of unprecedented moves, including
the potential appointment of a shadow FED chair before Jerome
Powell's appointment is up May in May twenty twenty six.
But look, the reality is that President Trumps hasn't made
it a secret that he is frustrated at your own
Powell being slow to lower the interest rates. And look,
something to keep in mind is the Fed has a
tough job to balance between economic growth as well as inflation.
And as a core component of this employment because the
reverse to the challenge is that low interest rates will
spur economic growth, which is good. But what happens with
economic growth is most of the time it will also
lead to inflation. And that's one of the core pieces
of the mandate of the Fed is to also control inflation.
So many times it becomes very difficult between finding the
balance of lower interest rates to spur economic growth, which
is something that President Trump has made no secret about
the fact that he's an avid supporter of and I
think he believes that he wants it to be a
core part of his legacy. So it's balancing that while
still also tempering inflation. And so President Trump seems to
make a lot of decisions from the gut, as he
has as a businessman, and Jerome Powell is much more
by the books, by the data, and he's very cautious
about the moves he makes. And I think that's the
dichotomy and the just the position that we're seeing between
these two people.
Speaker 4: Yeah, yeah, for sure, he doesn't have an easy job
Jerome Powell, for sure. And the inflation, yes, definitely a factor. Well,
what do you think of DOGE though, as far as
bringing down the federal deficit and perhaps bringing that under control.
Speaker 1: Well, I would look to the head of DOGE, which
was once Elon Musk and him no longer being involved
in DOGE and then simultaneously now criticizing President Trump's latest bill,
and he's criticized both sides.
Speaker 3: And so this is.
Speaker 1: Why Elon Musk has said that he wants to form
a third party is because the challenge I think Elon
Musk is faced and seen firsthand from being involved INDULGE
is it's seemingly impossible with the way government is structured
to really get the balance or the debt in control
and balance because of the way the government spends money
in both sides vying for control, in favoritism amongst their lobbyists.
And that's the big challenge here, is that everybody is
looking to short term rather than looking at what's best
for the long term future of America.
Speaker 4: Yeah, and you know, interest rates, well, they might be
higher than zero percent where they were a couple of
years ago, are probably right around where they should be
on a normalized basis prior to the Great Financial Crisis
which set off all these negative interest rates. You don't
really want negative interest rates, negative real interest rates. It's
unhealthy for the economy. And somebody's got to buy these treasuries, right.
Speaker 3: That's right.
Speaker 1: And so what a lot of people don't realize is
there's the balance between the monetary policy, the buying and
selling of bonds to control the money supply in the economy,
as well as fiscal policy in terms of how a
government is spending money. And ideally those really should be
balanced against each other, but typically many times, unfortunately they
kind of go their separate ways and each side is
kind of doing what they believe is best without necessarily
looking at what's best for America as a whole, because look, ultimately,
monetary policy and fiscal policy are each wings to a bird,
and you need both for the economy to be able
to soar. And it is interesting that unfortunately the US government,
whether it's under Democratic party rule or Republican Party rule,
is still spending far more than it should be and
not really accounting for how it's going to reduce the debt,
because some amount of debt is good, but an excessive
amount of debt is really really bad.
Speaker 4: Yeah, and all lower interest rates do is increased debt.
As we know, you know, there's some interesting cases I
think that we'll be coming up this term. First and
foremost is the Impoundment Control Act of nineteen seventy four,
which basically said that if Congress allocates the money, if
they say it's getting spent, then it's getting spent, no
matter how absurd the program might be. And that really
wasn't the way that the Constitution was designed. Presidents had
impoundment authority up until you know, fifty years ago. And
now he wants it back, and I believe he's going
to get it. I believe the case is coming and
it's just it'll probably come up this term in one
way or another.
Speaker 1: That's right carried it. Unfortunately, this use it or lose
it type financing with Congress and the allocation of funds
is something we typically see throughout the government, and the
challenge is balancing the two. For example, I worked for
a summer in private consulting where the consulting company did
consulting for veterans' affairs, which I'm an avid believer in
that we should be taking care of our veterans, caring
for war years. And unfortunately, regardless of which department you're in,
there is a competitive eating process, and part of it,
regardless of which agency it is, they do look at
the prior year's budget and whether it was fully allocated,
and many times if it wasn't, what will happen is
the government will take back that money and reallocate it.
So it does create this perverse incentive to spend spend
because the challenge and the risk is, for example, let's
say you don't necessarily need all those funds this year, Well,
if you don't use them, what might happen is if
you need them the following year, they might not be
available for distribution. And that's the biggest challenge here is
that therefore, unfortunately, it fuels this never ending spending cycle,
which with each agency trying to max out their budgets
year after year.
Speaker 4: Yeah, and for an example of the absurd things they
could do, put this in an article. If Congress decides
that they're going to have a tomb for the faceless bureaucrat,
all right, like we have the tumb of the unknown soldiers,
so we have one with a tumb for the faceless bureaucrat,
and they're going to fund it. They're going to have
a bond are running twenty four to seven, and the
bonfire will be fed with freshly printed one hundred dollars
bills from the Federal Reserve. All the president can do
under the current state of the law is like the match.
He really has no ability to actually rein in this
insane spending. And I mean, this is like absurd. You know,
they're I don't think they're going to do it, but
I wouldn't put it past them because we've seen from
Doge the types of insane things they're spending money on.
Speaker 3: That's right.
Speaker 1: Well, President Trump is in sort of a unique and
special situation, which is where he's the president of the
Republican Party, as well as having the Republican Party control
both the Senate and the House. So in terms of
the best chances of being able to get some sort
of cooperation from the two portions and segments of the
US Congress, both the Senate and the House of Representatives,
President Trump has a unique advantage in being able to
do that. And we've still seen the dysfunction that goes
on between the executive branch and the legislative branch, including
in terms of how policies are supposed to be put
forth and how spending is supposed to occur, including with
this latest spending bill. With President Trump.
Speaker 4: Yeah, so, and still getting the Congress to do things,
it's like herding cats.
Speaker 3: That's right.
Speaker 1: And you know part of this is I've joked with
friends that if members of the government were treated the
same way as we are in the private sector, which
is you're going to get paid and get raises for
your results, and if you don't do your job, you're
going to get fired, I think we'd have a lot
less dysfunction on Capitol Hill and in Washington, DC.
Speaker 4: And that's probably another case that's coming up in this
term that we don't know about yet, but basically the
ability to reschedule all these employees under Section F and
then get rid of them as needed. You know, the
government is seriously out of step with technology, with modern
economics and the world for that matter, and he's trying
to bring the government up to date here and as expected,
getting resistance from all parties.
Speaker 1: That's right. Unfortunately, what we're saying is the effects of complacency. Unfortunately,
many government employees and parts of government have become very
complacent with America's place in the world economy. But the
reality is they've been gifted that privilege by the people
before them who did all the work to make America
the great country that it is. And unfortunately, we have
a lot of government employees who don't necessarily make it
their job to look at the advancement of the United States,
including things like AI, which is going to be a
major part of the future, and understanding it. I mean,
we've seen this Carrie with some of the hearings even
relating to for example, Facebook or social media, where the
questions from the various senators re laughable in terms of
the types of questions they were asking shown showed a fundamental,
in complete misunderstanding as to how technology works, how social
media platforms work, and what they're able to do. And
it's not just the social media hearings. Anytime we have
a hearing relating to technology, we see this over and
over again, where we have congress people, government employees who
don't understand fundamentally most parts of the technology, if any
part of the technology.
Speaker 4: Yeah, well they think they still think email and texting
are major innovations, and we're way past that now.
Speaker 3: But the AI.
Speaker 4: Doge forget about the optics of musk leaving and all that.
That is a permanent fixture now of the government, and
I think we're going to see it spread to state
and local governments as well, and internationally to the UN
and countries around the world, because every country is basically
the way they spend is modeled after the US to
some extent. They're all running deficits, They've all over promised
and at some point they're going to have to underdeliver
and there's really no way out. The only thing that
can kind of contain this is AI.
Speaker 1: Well, that's right, and unfortunately, many times government is a
repeated series of under delivery, and unfortunately, what happens is
politicians then just point the fingers at each other and
don't take full responsibility for what happened or try to
fix it, so unfortunately becomes a blame game. So the
reality is, if US households ran their budgets the way
the US government is currently running their budgets, regardless of
whether it's Republican or Democrat controlled, the reality is you
cannot run a household even if you drop a bunch
of the numbers and reduce them to ones that we
could all make sense of. For example, if we've got
a median household income of let's say sixty thousand dollars
and allocating those funds between groceries, insurance taxes, food, those
various things, you would be running an astronomical deficit to
the point where you'd never be able to pay it off.
And unfortunately, because the numbers with the US deficit and
the budget are so large, it makes it very difficult
to really understand that. But I saw this one calculation
where if you look at those numbers and simply drop
off a bunch of the zeros, the vast majority of
those zeros, and make it into numbers that somebody can
actually understand and they're used to seeing. You'll see very
quickly how problematic this is in terms of actually being
able to pay it off.
Speaker 4: Yeah, I couldn't agree with you more. So, what do
you think will be the net outcome? You think Powell
is out?
Speaker 1: Well, I think that there's almost no doubt that Palell's
going to be out when his time is up, and
he's realistically not going to be reappointed. President Trump has
really made no secret about that, and I think President
Trump would fire him if he could, but he can't.
So this is why he's doing what he believes is
the next best thing and looking at shadow fed chairs
to be able to say, here's my next fedchair pick.
Speaker 4: All right, well we're gonna sit back, wait and see
what happens. Just tell us again, how we connect with
you on the web, how we find out more about you?
Speaker 1: He Garry Yes, on Instagram, on parrague PA r ag A,
me A, M I n E s Q. And on
the web. My website is www dot law p l
A dot com. Again, that's www dot law PLA dot com.
Speaker 4: And the links in the show notes to this interview
on Financial Survival Network dot com. Go click it and
we just ask if you go there, please sign up
for your free newsletter, got one coming out shortly and
if you've got a question, comment for myself or Parague,
or just tell us what you think of this.
Speaker 3: Do you think it's time for Powell to go?
Speaker 4: Just shoot me an email, klatcarrieluts dot com.
Speaker 3: Parag been a pleasure, Thanks for stopping by.
Speaker 2: Thank you, Kerry, thanks for listening to Carrie Lets's Financial
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