Former Fed Govenor Stephen Miran Talks Fed, Relationship with Trump

Summary

Podcast Summary: Former Fed Governor Stephen Miran Talks Fed, Relationship with Trump

Podcast: Bloomberg Talks
Date: July 17, 2026
Guest: Stephen Miran, Senior Strategist at Hudson Bay Capital, former Federal Reserve Governor, and former White House Economic Adviser
Host: Bloomberg

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Main Theme

This episode features an in-depth conversation with Stephen Miran about the Federal Reserve’s approach to monetary policy, specifically the debate over the relevance of money supply measures and the Fed’s forward-looking responsibilities. Miran explains why he believes the Fed should reconsider the value of money supply as an informative signal without reverting to targeting it directly. He also provides insight into his relationship with former President Trump and offers behind-the-scenes details on Fed priorities and chairmanship selection.

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Key Discussion Points & Insights

1. Should the Fed Reevaluate Money Supply as a Policy Guide?

• Background:

  • Historically, the Federal Reserve closely tracked money supply and its growth rates, informed by monetarist theory (Milton Friedman).
  • The practice fell out of favor in the 1980s/90s due to volatility in the velocity of money and changing financial innovation.

• Miran’s Argument:

  • He is not advocating a return to strict money supply targeting, but asserts money supply contains valuable economic signals often ignored in recent Fed policy.
  • Advances in how money is measured — particularly with proper weighting for different types of financial assets — can restore the usefulness of money aggregates for macroeconomic analysis.

  Quote:

  "We're not going back to targeting money growth, but just that it contains information. That information shouldn't be thrown out."
  — Stephen Miran (03:03)

  Quote:

  "When you do that [measure money correctly], the whole theory actually becomes quite usable again...You would have gotten the post GFC environment correctly. You would have gotten the post Covid environment correct too."
  — Stephen Miran (03:55)

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2. Post-Covid Money Expansion: Why Was the Outcome Different?

• Observation:

  • Post-pandemic, money supply "exploded" — as it did post-GFC — but inflation outcomes diverged.

• Explanation:

  • Money supply rose through both monetary and fiscal means.
  • Monetarist models, when adjusted for the correct measures, predicted both the persistence and magnitude of inflation after the pandemic.
  • Miran stresses the value in not ignoring supply shocks, and that the neutral money growth seen currently signals that current supply shocks are likely to be less persistent.

  Quote:

  "All it tells you is that there's a link between a change in money supply and outcomes in the economy and outcomes in the price level. And so therefore these models did a really good job after the pandemic predicting that inflation would be high."
  — Stephen Miran (04:25)

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3. Should the Fed Have Raised Rates Earlier?

• Host Question: If money data was part of the Fed’s framework, would action have been swifter?

• Miran’s View:

  • “Absolutely” — not just in terms of interest rates, but also with respect to ending unconventional asset purchases.
  • He criticizes the Fed’s continued mortgage purchases even as housing prices soared.
  • Miran explains the lag effect of changes in policy on measured inflation, especially in shelter/housing data.

  Quote:

  "Home prices are up 20% year over year and the Fed is still, still buying mortgage... It's very obvious that it's going to be persistent inflation."
  — Stephen Miran (05:43)

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4. Policy Lags and the “Fool in the Shower”

• Context:

  • The lagged effect of monetary policy (the classic “long and variable lags”) draws a parallel to Milton Friedman's “fool in the shower” anecdote.

• Key Points:

  • Monetary changes take 12–18 months to fully affect the economy; the consensus remains unchanged, though some new research suggests the lags may be lengthening.
  • Some policymakers, Miran notes, fall prey to "momentum trading” logic: recent inflation influences expectations for the future without adequate forward-looking analysis.

  Quote:

  "Monetary policy is variable, long and variable. And President Williams said this and I think it's correct."
  — Stephen Miran (07:23)

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5. Inside Perspective: Miran’s Relationship with Trump and the White House

• Transition from White House to Fed:

  • Miran describes a formal relationship with the former President; no ongoing dialogue post-government.

• On Chair Selection:

  • Miran focused on advising about chair-preparedness qualities, not individuals.
  • He emphasizes forward-looking capability, intellectual flexibility, and an evidence-driven approach.

  Quote:

  "The important qualities in the Fed chairman are to think carefully about what the data say and to be forward looking and to be flexible of mind..."
  — Stephen Miran (10:13)

• On Concern over Speaking with the President While at the Fed:

  • Miran rebuffs concerns, stressing that any policy advice he might have given was not out of the public realm, as the President’s policy views are public knowledge.

  Quote:

  "The President has not been reticent to share his views on monetary policy. He shares them with the entire world all the time."
  — Stephen Miran (11:14)

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Notable Quotes & Memorable Moments

• Why money supply matters but isn’t a silver bullet:

  "We're not going back to targeting money growth, but just that it contains information. That information shouldn't be thrown out." (03:03)

• On models and flexibility:

  "They're kind of like jackets. You need to pull out the right jacket for the weather. You don't wear a down parka in July. Right." (10:36)

• On public visibility of presidential views:

  "If you interview him, he'll tell you on TV, you know, very quickly." (11:32)

• Lighthearted moment:

  • Host and Miran joke about wearing sweaters in summer ("Well, in here it's a little chilly. But it's that tense out." (10:53–10:58))

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Timestamps for Key Segments

• Money Supply and Monetarism Discussion: 01:43–04:14
• Post-Covid Money Expansion: 04:14–05:35
• Would Money Data Have Led to Earlier Rate Hikes?: 05:35–06:57
• Policy Lags & Forward-Looking Policy: 07:03–08:54
• Relationship with Trump & Chair Selection: 08:54–11:08
• On Advice to the President: 11:08–11:44

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Tone & Language

The conversation is candid, occasionally technical but peppered with analogies and humor. Miran is nuanced, technically rigorous, but not dogmatic; the hosts guide the chat with a blend of curiosity and skepticism, resulting in a lively but informative exchange.

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For listeners seeking insight into the evolving debates within the Fed, practical policymaking challenges, and the importance of institutional flexibility and transparency, this episode offers a rare and valuable perspective.

Transcript

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[Stephen Myron]

Bloomberg Audio Studios Podcasts, Radio news

[Podcast Host]

okay, let's talk about the Fed. Recent Fed governor and White House economic adviser Stephen Myron, now a senior strategist at Hudson Bay Capital, arguing policymakers should pay less attention to backward looking data and potentially more attention to the money supply. He writes, Federal Reserve officials often claim to look at everything. Ironically, in recent years, that data set has excluded measures of monetary growth. Stephen joins us now for more. Steve, it's good to see you, sir.

[Stephen Myron]

Morning. Thanks for having me back.

[Podcast Host]

Welcome back to the program. I read the note the unit team puts out. Fantastic read. And I want to say up front before we start this conversation, because I think some economists listening to this will say, oh, not money supply. Here we go. You say in this note, this report that you've put out, that you're not suggesting we should target monetary supply again, that you think there's information that's worth looking at in money supply. So let's start here. This is something we used to do at the Federal Reserve. You had the quantum of money and the velocity of money. And because the velocity of money was largely considered to be stable, we could focus on money supply. That changed and then people stopped focusing on supply. So let's start there. Why we used to look at it, why we stopped, and why you think it's worth looking at again.

[Stephen Myron]

Sure. So there's, as you point out, there's this school of economics called monetarism, heavily associated with Milton Friedman, who was a mentor for Kevin Warsh and someone who Chairman WASH invokes frequently. And monetarism is basically the notion that the money supply determines growth in or leads to or predicts growth in nominal GDP and in real output and in the price level. And so therefore, by controlling the money supply growth, you can control the growth of nominal gdp. And if inflation seems too high, you can put a damper on money growth and it'll come down. Now, as you point out, that stopped being useful in the 80s and 90s because this velocity of money that enters into the, that enters the equation, what economists call money demand started to move around and be volatile and so if money demand is moving around at the same time as money supply, then you can sort of see any supply and demand chart. The equilibrium point is going to be jumping around. And so changes in the money supply no longer serve to be useful in predicting changes in inflation and changes in growth. Now, what we did is we looked at a number of things that Chairman Wash has written and said over the last 10, 15 years and found that he repeatedly focuses on this as a useful input into predicting, into predicting inflation, into predicting growth. Right. This is not to say we're going back to targeting money growth, but just that it contains information. That information shouldn't be thrown out. And what we did was to sort of survey the literature. There's been an active frontier of research in this in the last 10 years or so. What I would describe as rescuing monetarism and the way that it rescues it is to say, hey, this stuff still works. It's just that you weren't measuring money correctly. And the reason why velocity started whipping around is because of financial innovation. When you introduce new forms of money, sometimes it's used as a store of value and not for transactions. And if a money market fund is used as a store of value and not for transactions, then an increase in money supply driven by an increase in a money market fund isn't going to predict GDP growth. And so what these new forms of measuring money do is they basically weight the different types of money based on how money like they are, in the same way that a price index will weight housing more than video games, because you spend more on housing than in video games. When you do that, the whole theory actually becomes quite usable again and serve to predict well, the disinflationary pressure after the gfc, which again, people break these models over the coals because M2 was exploding. And yet we were in a deflationary poor growth environment. And there were all these hysterical letters and op EDS about exploding money supply was going to lead to hyperinflation. It didn't materialize and it was egg on the face for monetarists. But it turns out that if you measure money correctly, you actually would have gotten the post GFC environment correctly. You would have gotten the post Covid environment correct too.

[Podcast Host]

Let's pick up on that. The post Covid environment. Because money did explode. Money supply did explode, rather like what we saw after gfc, but there was a different outcome. Can you just explain why the outcome was different and why it was still useful to look at supply?

[Stephen Myron]

So money supply, money supply exploded after the pandemic as a result of stimulative, stimulative monitoring fiscal policy, right? There was a combination of, of rates being at zero for a long period of time, record levels of qe, of Fed balance sheet expansion, and also fiscal expansions, fiscally driven expansions in the money supply. Now one nice thing about monetourism is it actually doesn't really care what the origin of the expansion, the money supply is. The origin of the expansion could be monetary, it could be a fiscally driven expansion of the money supply, or it could be foreign. You could have a situation in which there's pools of savings abroad that then come and get spent and that results in increasing money supply. All it tells you is that there's a link between a change in money supply and outcomes in the economy and outcomes in the price level. And so therefore these models did a really good job after the pandemic predicting that inflation would be high and predicting that inflation would be persistent. And when you have that type of situation, it leads you to think, hey, you shouldn't look through supply chain shocks, you shouldn't look through negative supply shocks, and you need to start getting policy into, into a, into a right place for, for, for the inflation mandate right now. You don't see that at all. You see the model, you see the model saying that money growth is approximately neutral.

[Interviewer]

If money was part of the Fed calculus, then would they have risen rates sooner?

[Stephen Myron]

I believe so. And I think it's not just rates. I think it was balance sheet stuff too. I mean, the Fed, after the pandemic, the Fed was buying mortgages even when home prices were up 20% year over year. Right? Home prices are up 20% year over year and the Fed is still, still buying mortgage, they're saying more credit into the housing sector. And because of the way that the inflation statistics are calculated. And again, inflation measurement is an area I spend a lot of time thinking about. The way that we measure housing inflation really, really filters into the data for years, right? Measured shelter inflation right now is running closer to 3%. Market rents have been running at 1% for about three years now. And so as a result, it takes a really, really long time for shelter inflation to sort of pass, for changes in rental markets to pass through completion completely through the measured inflation data. Measured inflation data today are still closer to 20, 23, 24 than they are, than they are at present. And so as a result, if you're buying mortgages when home prices are already up 20% year over year, it's very obvious that it's going to be, it's going to be persistent inflation. So I do think that looking at this would have been helpful earlier. I think that looking at it is helpful now. And the fact that these things are neutral now tells you the supply shock that have been elevating inflation recently are a lot less likely to be persistent than they were in 2021. Which tells you the orthodox policy response to a supply shock of looking through it is probably right.

[Podcast Host]

You've sat on this committee. How difficult will it be to convince the rest of the committee to look at the same things?

[Stephen Myron]

So some of them are there in terms of thinking about the supply shocks like that. So if you look at what New York Fed President Williams said a couple of days ago, I think was a couple of days ago he said monetary policy has to be forward looking, which is something that Chairman Marsh has also said. The reason you say that is because there are lags with which monetary policy hits the economy. It doesn't hit the economy for 12 to 18 months. To take this back to Milton Friedman again, he had this parable of the fool in the shower. You know, you turn the water temperature in the shower, it takes a minute for the water to get hot, stays cold, you turn it even hotter and then it finally comes out scalding. And then you turn it down, but it's still scalding. So you turn it even more down and it comes out freezing. And so you never get it right. That's because there are lags with which you change the temperature in the shower and it hits water. Monetary policy is variable, long and variable. And President Williams said this and I think it's correct. Now there's another approach which means you need to focus on where inflation is going to be 12 to 18 months.

[Podcast Host]

Can I ask you though your opinion? How long and valu you actually think they are given the wealth channel now how quickly we price this story in financial markets, has that changed?

[Stephen Myron]

I think that there's some evidence. So when we surveyed this literature on monetary policy, sorry, on monetarism that we, that we covered in the paper, one of the papers that really set off the reinvigoration of research into monetary into monetarism through these divisia aggregates actually found that monetary policy lags had lengthened recently, which was surprising to me. So I'm still inclined to go with the consensus of 12 to 18 months. I'm not inclined to change. There's another approach though, which I think you sort of see from other members of the committee who Basically say something like inflation has been high recently and therefore I expect it to be high in the future. That to me is, you know, treating monetary policy like it's momentum trading. I think that that's not for me, that's not enough. I would want to be forward looking. I worry that some of these people are basically buying inflation at the top.

[Interviewer]

Steve, I haven't seen you since you left the Fed. I was wondering if you could just give us some insight. What was it like in terms of going from the White House to the Fed? You had a very close relationship with the President, the White House. Did he call you when you were at the Fed? Are you saying, do you still have an ongoing dialogue with him?

[Stephen Myron]

I haven't really spoken to the President since I left government. You know, I stopped in, I stopped into the White House to resign and you know, that was, you know, of course, a great experience. You know, I spoke to him when I resigned from CEA as well. I stopped into the White House then and then I spoke to him, you know, a little bit about the chairmanship selection. But you know, I wouldn't say that I had, you know.

[Interviewer]

Oh, he, did he call for advice on who should be the Fed chair?

[Stephen Myron]

Well, you know, I shared some of my views about what qualities that I thought were important in a chairman. And you know, I wanted to be, I wanted to be helpful in sharing those views. Yeah.

[Interviewer]

Did you give a specific name?

[Stephen Myron]

No, I focused on qualities that I thought were important.

[Interviewer]

And what were those qualities?

[Stephen Myron]

Well, I think as I said moments ago, I think forward looking behavior is important. I think a willingness to think deeply and carefully about the data and what the actually say is important.

[Podcast Host]

Did you feel like that needed to come from outside of the Fed, that it needed to be a fresh start?

[Stephen Myron]

Not necessarily. I think I was. In my view, the important qualities in the Fed chairman are to think carefully about what the data say and to be, and to be forward looking and to be flexible of mind enough to sort of say, you know, this works. It doesn't work in my mind. Models are, you know, there's a bunch of different economic models you can, can use for forecasting and for making monetary policy. They're kind of like jackets. You need to pull out the right jacket for the weather. You don't wear a down parka in July. Right. And so it's important to understand that the models aren't universally true in all times and places.

[Podcast Host]

This one wears sweaters in the summer. It's cold.

[Stephen Myron]

Well, in here it's a little chilly. But it's that tense out.

[Interviewer]

I sometimes wear them outside, too.

[Podcast Host]

Steve, can we finish on this? You know, listening to you, some people will find it controversial that you spoke to the President once you were sat on the Fed board. What would you say back to that?

[Stephen Myron]

I would say that I think that it's important to hear all views on monetary policy. Actually didn't even really discuss monetary policy with him. And. But even then, you know, the President has not been reticent to share his views on monetary policy. He shares them with the entire world all the time. Right. So, you know, it wouldn't. I don't think I would. You know, I don't think I would have possibly learned anything that everyone else doesn't know also. And I'm sure that, you know, if you interview him, you know, if you interview him, he'll tell you on tv, you know, very quickly.

[Podcast Host]

I have no doubt he would tell us where you think Ray should be. Yeah, yeah.

[Interviewer]

Lower.

[Podcast Host]

Right.

[Interviewer]

That's how he's always felt since the 80s.

[Podcast Host]

Steve, it's good to see you. Thank you, sir. Appreciate it.

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