Furious Fed Chair Drops Truth Bomb Trump Feared Most

Summary

Legal AF – “Furious Fed Chair Drops Truth Bomb Trump Feared Most”

Date: September 24, 2025
Host: Michael Popok (MeidasTouch Network)
Main Guests: Senator Jack Reed (introduction), Federal Reserve Chair Jay Powell
Summary compiled by: [Your Name]

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Episode Overview

This episode dives deep into Federal Reserve Chair Jay Powell’s much-anticipated Rhode Island speech, his sharp warnings on the US economy, and the monetary policy dynamics under the Trump administration. Host Michael Popok unpacks the critical public comments made by Powell, contextualizing their implications for financial markets, ordinary Americans, and the Trump administration—which faces harsh scrutiny for its economic maneuvers, especially around the Fed's independence.

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Key Discussion Points and Insights

1. Setting the Stage: Fed-Independence under Fire

[00:00-01:25]

• Senator Jack Reed’s introduction underscores the immense challenges facing average Americans and attacks the Trump administration for its “chaotic policy agenda” (tariffs, healthcare cuts, debt increases, and direct assaults on the Fed’s autonomy).
  • Notable Quote:
    “Everywhere, but particularly here, the policy chaos is extended into a direct assault on the Fed's independence and personal, personal attacks by the President against members of the Feds.” — Senator Jack Reed [01:15]

2. Powell’s Economic Reality Check: The Twin Mandates in Peril

[02:57-05:27]

• Powell’s speech signals caution about future rate cuts, surprising markets that had priced in further easing.
• Explanation of the Fed’s ‘dual mandate’: Keeping inflation low and job creation high is becoming increasingly difficult amid conflicting data—rising inflation and dropping job numbers.
  • Quote from Powell:
    “If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later to fully restore 2% inflation. If we maintain restrictive policy too long, the labor market could soften unnecessarily.” — Jay Powell [04:23]

3. Dissecting Economic Data: Stalling Growth & Persistent Inflation

[06:09-07:08]

• Powell details recent economic slowdown:
  • GDP growth: Slowed to 1.5% vs. 2.5% previously
  • Job growth: “Job gains have slowed and the downside risks to employment have risen.”
  • Inflation: Rising, driven largely by tariffs, not general price pressures.
• Memorable Moment:
  • “Incoming data and surveys suggest that those price increases largely reflect higher tariffs rather than broader price pressures... Disinflation for services continues.” — Jay Powell [06:44]

4. Tariffs: The ‘Biggest Tax Increase’ on Americans

[08:26-09:23]

• Popok explains that tariffs, ultimately, are a tax shouldered by American consumers, with most of the burden (70% per JP Morgan Chase) passed down to them.

  • Quote:
    “Tariffs are the biggest tax increase on the American consumer and the American voter in history.” — Michael Popok [08:36]

• Powell’s concern: Companies are holding off on hiring and expansions due to policy uncertainty and tariff effects.

5. Labor Market Dynamics: Immigration Policy's Economic Fallout

[10:00-11:19]

• Powell’s ‘final nail in the coffin’ comment:

  • Plummeting immigration drastically reduces the labor supply, compounding weak labor demand.
  • “Immigration ... has really gone close to zero. And immigration is not really contributing to the labor force ... and now at the same time, you've got declining demand and also declining supply of workers.” — Jay Powell [11:36]

• Companies uncertain about policy are postponing hiring and capex, exacerbating the situation.

6. Fed Communications: The Art & Significance of Jay Powell’s Remarks

[12:32-14:10]

• Popok highlights the nuanced way the Fed Chair sends market signals—not bombastic, but weighty and measured.
• Discussion of the Fed’s structure and the significance of its decision-making forums.

7. The Stephen Mirren Scare & Division within the Fed

[14:10-16:05]

• Stephen Mirren, Trump’s new Fed appointee, pushed for a larger rate cut (50 basis points versus the consensus 25).

• Reason: Mirren had exclusive access to White House economic data—Popok suggests this signals the administration’s far more dire internal outlook.

  • Quote:
    “The other 11 were like, what do you know that I don't know? What do you know about the Trump White House that we don't know? That was … a scary moment.” — Michael Popok [15:38]

• Markets “freaked out” when Powell communicated uncertainty about additional rate cuts, shattering hopes for quick economic relief.

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Notable Quotes and Memorable Moments

• “Chair Powell deserves credit for navigating those choppy waters. Nevertheless, average Americans are still facing significant economic challenges due to the chaotic policy agenda of the current administration.”
  — Senator Jack Reed [01:11]

• “There is no risk free path.”
  — Jay Powell [04:25]

• “Tariffs are the biggest tax increase on the American consumer and the American voter in history.”
  — Michael Popok [08:36]

• “Immigration ... has really gone close to zero. ... you've got declining demand and also declining supply of workers, of new workers.”
  — Jay Powell [11:36]

• “What do you know about the Trump White House that we don't know? That was … a scary moment.”
  — Michael Popok [15:38]

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Timestamps for Important Segments

• 00:00-01:25 — Senator Jack Reed introduces Jay Powell, critiques Trump’s economic policy.
• 04:20-05:27 — Powell on the dangers of moving too quickly or slowly with rate changes.
• 06:09-07:08 — Powell details GDP slowdown and tariffs effect.
• 08:26-09:23 — Popok: Tariffs as a tax on consumers.
• 09:23-10:00 — Powell on business hesitation and labor market uncertainty.
• 11:19-12:32 — Powell: Immigration policy, shrinking labor force.
• 14:10-16:05 — Stephen Mirren’s dissent, deeper worries inside the Trump White House.

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Overall Tone and Style

The tone is hard-hitting but analytic, with Michael Popok providing context, translation, and commentary following each clip. The episode scrutinizes the Trump administration’s economic policies and their effects on everyday Americans, with a consistent theme of concern for independence and stability at the Fed.

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Conclusion

This episode delivers a nuanced, critical look at Federal Reserve Chair Jay Powell’s recent warning signals to the market—a warning the Trump administration hoped to avoid. The discussion offers potent insights into monetary policy mechanics, internal fractures at the Fed, and the broader economic uncertainty driven by tariffs, immigration policy, and White House interventions. Powell’s carefully worded speech is unpacked for its real-world implications for both the economy and politics, making this a must-listen for anyone seeking to understand the crossroads of law, policy, and financial stability in 2025.

Transcript

[Michael Popak]

Federal Reserve Jay Powell in public comments today, his first speech since the Federal Reserve had a lower rates to try to bail out Donald Trump. In those public statements, he threw up the caution sign saying in effect that there are mixed messages in the economy. We have inflation inching up. We have jobs dropping off the shelf. And as a result, the Federal Reserve is going to have to be cautious with any future rate cuts. And the markets responded. This is how Federal Reserve Chair people have to communicate with the White House. They show up in places like Rhode island at the Chamber of Commerce, and they give a speech. This one was introduced by Senator Jack Reed of Rhode Island. And listen, Jay Powell knows how Jack Reed is going to introduce him. So I'm going to show you some clips today. That was a harsh criticism in Jay Powell's own way of the Trump administration and the markets reacting. It kicks off first with Jack Reid, Senator Jack Reid introducing him. And listen to these introductory remarks and harsh criticisms of Donald Trump and his economy, which by extension, Jay Powell implicitly adopts because he's following those introductory remarks with his own speech and interview. Let's play Senator Jack Reid first.

[Senator Jack Reed]

Chair Powell deserves credit for navigating those choppy waters. Nevertheless, average Americans are still facing significant economic challenges due to the chaotic policy agenda of the current administration. Tariffs, health care cuts, a massive debt increase, and interventions in the operations of major corporations and universities have all proved disruptive and costly. Real wages for most American workers remain stagnant. We still have not fully tamed inflation. Roughly 36 million Americans are experiencing poverty, and housing is too expensive and in too short a supply. Everywhere, but particularly here, the policy chaos is extended into a direct assault on the Fed's independence and personal, personal attacks by the President against members of the Feds. But Chair Powell has met these challenges with equanimity and professionalism. He understands that a strong and independent central bank can contribute to sound economic policy in this nation. He understands the impact that monetary policy has on communities and families and businesses. He has somehow managed to stay laser focused on achieving the Fed's dual mandate to achieve maximum employment and stable prices.

[Michael Popak]

Okay, now, from there, what impacted the markets the most today is that they were hoping for a series of interest rate cuts by the Federal Reserve. I mean, the blunt instrument of the Federal Reserve to try to positively impact the economy. They only have really one it's interest rate adjustment. They lower the overnight interbank rate between banks to somewhere between four and a quarter and four percent. And then it has a cascading impact on all interest rates that are charged to consumers and businesses for loans, for credit cards, for mortgages, for student debt, for home loans, you name it. All starts with the Fed's rate. Now we just had on Wednesday the monthly or quarterly meeting of the Federal Reserve Open markets committee. There's 12 members of it, but it's led by Jay Powell of the Federal Reserve and they voted to lower the rate a quarter of a point. Except for Steven Mirren who just got put on there by Trump and still works in the White House, who had access to all the White House data, all the White House economic data he pushed for a half a point cut. But today during this Rhode island meeting, Jay Powell pumped the brakes on any more rate cuts. Here's a clip of him talking about that there is no risk free environment. Let's play the clip.

[Jay Powell]

Turning to monetary policy. Near term risks to inflation are tilted to the upside and risks to employment are tilted to the downside. A challenging situation. Two sided risks mean that there is no risk free path. If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later to fully restore 2% inflation. If we maintain restrictive policy too long, the labor market could soften unnecessarily. When our goals are intentioned like this, our framework has long called for us to balance both sides of our dual mandate. The increased downside risks to employment have shifted the balance of risks to achieving our goals. We therefore judged it appropriate at our last meeting to take another step to more toward a more neutral policy stance. Lowering the target range for the Federal Funds Rate by 25 basis points to 4 to 4 and a quarter percent. This policy stance, which I personally see as still modestly restrictive, leaves us well positioned to respond to potential economic developments.

[Michael Popak]

Now what is he talking about? Got the twin mandates that have been given to the Federal Reserve by Congress. Really just two? Isn't it nice to have a job? You only have to do two things.

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[Michael Popak]

Two things reasonably not complicated. Either you need to keep inflation low. At the same time you need to keep job creation high. But those two things are often intention. The more the more full employment we have and higher wages we have, the more higher inflation we have. So it's always a delicate balance of oil and gas, if you will, for the engine of the American economy. Here's how Jay Powell during his Rhode island interview today, how he put the downward pressures on Trump's economy.

[Jay Powell]

Recent data show that the pace of economic growth has moderated. The unemployment rate is low but has edged up. Job gains have slowed and the downside risks to employment have risen at the same time. Inflation has risen recently and remains somewhat elevated. In recent months, it has become clear that the balance of risks has shifted, prompting us to move our policy stance closer to neutral. At our FOMC meeting last week, GDP rose at a pace of about one and a half percent in the first half of this year, down from two and a half percent last year. The moderation in growth largely reflects a slowdown in consumer spending. Activity in the housing sector remains weak. Goods prices after falling last year, are driving the pickup inflation. Incoming data and surveys suggest that those price increases largely reflect higher tariffs rather than broader price pressures. Disinflation for services continues, including for housing.

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[Michael Popak]

Then you had the discussion over the tariffs and what the tariff impact would be and that one was relatively straightforward. Tariffs impact jobs because in this environment, in this economy, as we're waiting to see that large tariff numbers get passed through to consumers because that's all tariffs are. Tariffs are the biggest tax increase on the American consumer and the American voter in history. You know when you put a 15 or 50% tax on another nation and it's goods, what do you think eats that? In the beginning? There's some burden sharing. Maybe some of the importers will eat some of the costs, some of the exporters, some of the retailers, some of on the supply chain until it gets to the consumer. So the prices won't go up much. But those days will be over. JP Morgan Chase, their analyst believes that 70% or more of the tariffs are going to get passed and paid by the American consumer. And that concerns Jay Powell. Here's a clip.

[Jay Powell]

A lot of what we're doing with our time is trying to understand the current position of the economy. What's actually going on in the economy today. Pardon me. So part of that is hiring rate has really dropped. Job creation has dropped very sharply. So does that, what are the factors there? So I mentioned earlier, I think part of it just is there's a lot of uncertainty about the direction of public policy. And so companies are holding off, they're, they're not hiring. And when you, when you don't hire through attrition, your labor force shrinks and you save money that way.

[Michael Popak]

And then you had sort of his final nail in the coffin of the Trump economy. And you could see how, you know, very genteel and very, you know, his personality is one that provides a fair amount of gravitas and stability. He's low key, he's not reactionary, he's not a bomb thrower. That's what we need as our central banker. There's a reason the Jay Powell's of the world, the Mark Carney's of Canada who used, who's now the Prime Minister but had been the central banker, they all sort of fit the same, you know, they're cut from the same cloth. But then he was asked particularly about why jobs aren't being made, why what's happening with immigration and how is that impacting the job market. Remember twin goals of the Fed, keep inflation down to 2%. So far it's moving up to 4% and keep job people employed. Let's hear his clip about that, which I consider to be the final nail in the coffin.

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Well, if you could elaborate, what are some of the factors that is that are leading to depressed demand for labor?

[Jay Powell]

So depressed demand for labor, you know, based on surveys and talking to people who are doing hiring, a big chunk of it is that they're just unsure about what to do businesses and I'd like to love to talk to people after this. You know, businesses don't, they don't want to do a lot of hiring. They may be postponing major capex, major initiatives, major acquisitions and you know, they'll maybe they'll replace Workers who retire, but they're not looking to grow. This isn't every company and every part of any. Every company in the world. It's just an effect kind of at the margin. That's got to be part of it. I think that's the demand side. The supply side, of course, has a lot to do with immigration policy. Immigration was at a very high level for two or three years before this year. And now immigration has really gone close to zero. And immigration is not really contributing to the labor force, to labor force growth now, whereas it's been most of what the labor force growth was. And now at the same time, you've got declining demand and also declining, you know, declining supply of workers, of new workers.

[Michael Popak]

Now, this is how the Federal Reserve communicates. Jay Powell gives a speech. He may give a speech in Jackson Hole, Wyoming, a month or so ago with all of the central bankers from around the world. He might go to the Rhode Island Chamber of Commerce and give a speech that everyone on Wall street and in financial services is, sits at rapt attention to get the results. He might or others there. You know, let's be frank. There's 12 regional bank presidents for the Federal Reserve. There's seven board of governors and on the Federal Open markets committee, there's 12 of them on there, seven of the board of governors, five that come off the rotating group of central bankers for the different Federal Reserve regional banks. So they each take a turn creating a gang or committee of 12, and they go out and give speeches. They're not gagged. And everybody's sitting there with their. Especially when it's Jay Powell, you know, what did he just say? Look, I'm doing a hot take about it. And so that's the rationale. That's how they speak. Now, the thing that was the scariest, which he, which he's too polite to mention, is that Stephen Mirren, who just got appointed by Donald Trump to be the replacement for a person named Kugler, who Biden had appointed, who stepped down. Stephen Mirren didn't really have access to the Federal Reserve, the Fed's economic data. He had access only to where he last worked, where he currently works, which is for the White House as the chairman of the Council of Economic Advisors, his data was so scary to him that whereas 11 people raised their hand out of 12 and said, well, let's do a quarter rate cut and get it down to about 4% again, you're going to pay, we're going to pay many points above that in interest rates, depending upon your credit and collateral that's, you know, that's involved with the, with the loan or the credit extension. He only had the data for the White House. He raised his hand and said, we need a big, we need a bigger boat. We need a half a point cut. But the other 11 were like, what do you know that I don't know? What do you know about the Trump White House that we don't know that was, that's sort of a scary moment when Stephen Mirren sort of, you know, everybody steps forward and he steps back. Now the market is already hoping that had been hoping since Wednesday last week that there was going to be another couple of cuts between now and the end of the year to maybe even push rates, the interbank overnight rate by set by the Federal Reserve below four. And they're already sort of pricing in that. That's why they freaked out. When Jay Powell said today in his own inimitable fashion, there's no risk free environment. We don't know about rate cuts just yet. So we're going to continue to follow it. It's a little bit like the Oracle of Delphi, a little bit like, what did he just say? Let me translate that for you. But that's what we have to do and that's what we do here on the Midas Dutch network and on Legal af. I'm glad you're here. Take a moment, hit the Free subscribe button here on Midas Touch, come over to legal AF YouTube, do the exact same thing. You want to become a full fledged card carrying member of Legal af? Join our substack, become a paid member on the Legal AF substack as well. So until my next report, I'm Michael Popak. Can't get your fill of Legal af. Me neither. That's why we formed the Legal AF substack. Every time we mention something in a hot tub, whether it's a court filing or a oral argument, come over to the substack. You'll find the court filing and the oral argument there, including a daily roundup that I do called Wait for it Morning af. What else? All the other contributors from Legal AOFF are there as well. We got some new reporting, we got interviews, we got ad free versions of the podcast and hot takes where Legal AF on substack. Come over now to Free Subscribe.

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