Trump's Economy: Inflation, Instability, and Influence

Summary

Talking Feds – “Trump's Economy: Inflation, Instability, and Influence”

Date: July 13, 2026
Host: Harry Litman
Panelists: Dean Baker, Paul Krugman, Stephanie Ruhle

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Episode Overview

This special economics roundtable on Talking Feds brings together renowned economists and journalists—Dean Baker, Paul Krugman, and Stephanie Ruhle—for an unflinching, deeply informed discussion about the shape of the U.S. economy under President Trump’s second term. Topics include the ongoing economic fallout of the war in Iran, stubborn inflation, Trump’s self-enrichment, the altered role of the Federal Reserve, mass deportation, and the dangers of institutional corruption. The tone is urgent, sharply critical, and occasionally darkly humorous, with all three guests dissecting the numbers, policies, and political maneuverings at the heart of American economic life in 2026.

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Key Discussion Points & Insights

1. The War in Iran: Unpredictable Economic Fallout

• Oil Price Anomalies ([04:00-06:48])

  • Despite expectations, crude oil prices dropped back close to prewar levels—attributed to continued Iranian exports and the industry’s longstanding tendency to overreact both up and down.
    • Krugman: “We’ve gone from the war that wasn’t a war to a peace that isn’t a peace. But so much Iranian oil is flooding the market, it’s not all the way back but almost.” (04:48)
    • Baker: “We’re near the bottom in terms of our ability to draw down stocks. Are we seeing an overreaction on the downside?” (05:48)

• Public Impact & Political Rationales ([06:48-10:05])

  • Ruhle: Critiques Trump for shifting justifications for the war: “Look at how much power we’ve lost. Look at how empowered Iran is. And what has it done for the American people?” (06:48)
  • Krugman: “All a total disaster... We lost the war. The Iranian nuclear program is intact. There’s a tremendous loss of U.S. credibility.” (08:24)
  • Baker: “We had a deal with Iran that prevented them from developing nuclear weapons... Trump comes in and says it’s all worthless—an absolutely pointless war.” (10:05)

• Ripple Effects

  • Accelerated green transition worldwide; China’s exports of electric vehicles up 100% YoY, though the U.S. lags behind. (10:31)
  • Broad erosion of dollar dominance, undermining the U.S. in global finance due to unreliability and weaponizing sanctions. (08:24, 11:32)

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2. Persistent Inflation, the Fed, and Trump’s Influence

• Inflation’s Puzzles ([13:34-15:48])

  • Despite wage growth slowing, inflation persists—panelists see this as structurally different from the classic “wage-price spiral” of the 1970s.
    • Krugman: “We really are seeing rockets and feathers: when oil goes up, gasoline shoots up; when oil falls, gas drifts down like a feather. That’s visible now.” (13:34)
    • Baker: “If we do see an inflationary dynamic, it’s going to be qualitatively different [from the 1970s].” (15:05)

• Impact of Federal Reserve Leadership

  • Kevin Warsh, Trump’s appointee, is less transparent; perceived as less influential than predecessors, possibly unable to move the FOMC. (44:12-48:48)
    • Baker: “There really had been a turn toward openness ... Warsh says we’ve been talking too much. I do worry.” (44:37)
    • Krugman: “My sense is Warsh is well on track to being the least influential Fed chairman in generations... He’s the dog who caught the school bus. Now what?” (46:23)

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3. Mass Deportation and Its Macro/Microeconomic Effects

• Labor Markets and Immigrant Contributions ([17:18-23:10])

  • Deportation of TPS holders will hit key sectors: health care, hospitality, construction, agriculture.
    • Ruhle: “If you thought the assisted care facility your mother lived in was expensive—now, giddy up.” (17:18)
    • Baker: “That’s definitely an inflation story. I just paid a lot for tomatoes at the supermarket yesterday.” (18:43)
    • Krugman: “Cities like Springfield, which saw a revival because of immigrants, will lose out. Removing them leaves big holes. Native-born Americans aren’t ready or willing to fill these jobs.” (19:21, 20:47)

• Political and Social Backlash

  • Even some Republicans urge Trump to avoid mass deportations; it’s widely seen as an economic and humanitarian own-goal. (23:10-23:38)
  • Ruhle: “Only one person is president. These are Donald Trump’s decisions. He owns them. He’ll take them to the moon or the grave.” (23:55)

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4. Trump Family Self-Dealing and Crony Capitalism

• Presidential Corruption via Cryptocurrency ([24:53-31:09])

  • Trump’s family, particularly via crypto enterprises, have realized unprecedented windfalls—$1.4B from a single Emirates transaction.
    • Ruhle: “They weren’t willing to do business with us... banks had know-your-client regulations, didn’t feel comfortable... That’s when we turned to crypto. Highlight that, write it in the sky. There’s no transparency.” (26:26)
  • Crypto’s legitimate use cases are dubious; serves primarily for illicit transactions and Trump family fortunes. (26:00-26:56)
    • Krugman: “We are becoming crony capitalism... Can a business even thrive if it’s not funneling money to the Trump family?” (27:35)
    • Krugman: “We are basically having a Teapot Dome–sized scandal every day now. That’s the scale of the corruption.” (29:21)

• Business Under Duress—No Rules, Just Favors

  • Trump refuses to sign USMCA, weaponizing trade and regulation for personal gain. Business leaders panic, pay for access, or lose out.
    • Ruhle: “Why pay for government relations when you can just call Trump direct and offer him an airplane? ... Many want to talk, but none will come on TV—they’re afraid of Trump’s wrath.” (35:05)

• Regulatory Capture: Supreme Court Risks

  • Recent Supreme Court ruling allows the President to fire agency heads, raising the risk of regulatory or FDA capture by bribery. (32:38–34:37)
    • Baker: “If you’re Pfizer, want your new Alzheimer’s drug approved, maybe it really isn’t effective—go to Trump with $5 million and say, can you get us approved?” (33:15)
    • Krugman: “It’s not just that you can bribe to get approval; you can also be denied for not bribing.” (34:37)

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5. Institutional Decay and the Threat to Democratic Norms

• Questionable Elections and Democratic Erosion ([37:25–38:36])
  • The Save Act and voter suppression, threats to the integrity of the electoral process.
    • Baker: “I don’t know anyone who could say with a straight face that we’re sure we’ll have a fair election this fall.” (37:25)
  • Ruhle: “What do businesses need? Stability, regularity, a government that functions, a Federal Reserve that’s independent. Look at Russia—it works for the oligarchs for a while, but not for long.” (38:13)

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Notable Quotes & Memorable Moments

• On Unpredictability:
  • Krugman: “Make a list of horrible things Trump or those around him could do, then say they won’t do that—that has been wrong every time.” (42:06)
• On Executive-Driven Corruption:
  • Krugman: “We are becoming, very quickly, crony capitalism. Not what you know, who you know—and who you bribe.” (27:35)
• On Institutional Independence:
  • Baker: “If Warsh goes in there with the idea—‘I got the orders from Trump’—maybe he’ll get one or two others... But even Trump appointees have shown independence.” (50:11)
• On the Bond Market as Guardrail:
  • Ruhle: “At the end of the day, the bond market is the daddy. That’s the one guardrail we have seen in the world of Trump.” (52:00)
• On the Long-Term View:
  • Ruhle: “If the market turns, then what is the world going to look like? Income inequality is a huge issue that is only getting worse.” (39:35)

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Important Timestamps

• Oil & Iran discussion: 04:00–13:34
• Inflation, Fed, & consumer impact: 13:34–15:48
• Immigration & inflationary risks: 17:18–23:38
• Trump family self-dealing & business climate: 24:53–31:09
• Regulatory capture & Supreme Court: 32:38–35:05
• Election integrity & business consequences: 37:25–38:36
• Fed independence debate: 44:12–53:13
• Final concerns & economic bellwethers: 55:26–59:13

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Economic Bellwethers for the Next Six Months

• AI & Tech Investment Bubble:
  • Ruhle: “If the AI bubble bursts or even air comes out of it, I’m worried about what could be ahead.” (56:21)
• Dean Baker: Watching for bubble to burst sooner rather than later, worrying about profits in the face of Chinese competition—a tech correction could be painful. (57:47)
• Krugman: “I do feel competent to analyze the psychology of people piling into AI. And boy, does that feel irrational.” (59:03)

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Overall Tone & Takeaways

• The aftermath of the Iran war leaves U.S. power diminished and credibility in tatters.
• Inflation persists beyond the commodity shock, with consumer pain especially around food and fuel.
• Trump’s presidency is marked by unprecedented self-enrichment through crypto, policy favors, and regulatory manipulation.
• Core American business, labor markets, and democratic institutions are destabilized by mass deportations and widespread cronyism.
• The Federal Reserve’s independence is under threat, with markets and agency heads caught between professional integrity and political loyalty.
• The panel repeatedly emphasizes “unanticipated consequences” and warns of lasting, possibly compounding, damage accumulating as long as Trump remains in office.
• Business leaders are risk-averse and transactional, but in the long run instability and corruption may hurt them as well as ordinary Americans.

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For listeners: This episode is essential for understanding the entwined crises of institutional decay, inflation, corruption, and political unpredictability dominating America's economy in mid-2026. Both richly detailed in analysis and direct in tone, the conversation offers stark warnings and detailed explanations for anyone seeking to grasp the reality behind today’s headlines.

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Transcript

[Dean Baker]

And we're live on Matchday as Doug reaches for a Buffalo wing. He's got it. Oh, and he's gone for a can of Pepsi, too. What a finish.

[Paul Krugman]

There's no doubt about it. It just tastes better.

[Dean Baker]

Matchdays deserve Pepsi.

[Stephanie Ruhle]

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[Harry Littman]

Welcome to Talking Feds, a roundtable that brings together prominent former federal officials and and special guests for a dynamic discussion of the most important political and legal topics of the day. I'm Harry Littman. It's our periodic economics roundtable where I'm joined by our non parrell group of experts for a deep look at the fortunes of the American economy under Trump. Just as crude oil prices were approaching their pre war lows, the the new fighting between the US And Iran made clear that the conflict's economic impact is far from over. The war has become predictably unpredictable, meaning more expensive gas for Americans in the short term and possibly much larger costs to the country's economic power in the long term. But Trump himself is doing fine. New financial disclosures show that the president and family recorded an unconscionable $2 billion in income last year, much of it from cryptocurrency. And Kevin Wash, Trump's handpicked man, has taken the helm at the Federal Reserve. Walsh has moved quickly to implement his own vision for the Fed, which includes sharply reduced visibility to discuss stubbornly high prices that are dampening consumer confidence ahead of the midterms. Trump's raw and prolific self enrichment and the state of play at a Federal Reserve now led by a handpicked Trump appointee. I'm thrilled to welcome back our regular panel of experts, three of the shrewdest observers of the American economy. And they are Dean Baker, the co director and co founder of the center for Economic and Policy Research, a think tank that produces research on US national affairs. He writes widely, including for his terrific column Beat the Press. Dean, great to see you.

[Dean Baker]

Thanks for having me on.

[Harry Littman]

Paul Krugman, a Nobel Prize winning economist, a professor of economics at the City University of New York, and he for 25 years wrote one of the leading and finest columns in the New York Times. These days. You can find his writing at his essential substack, which is under his name, Paul Krugman, and often includes really, to my mind, invaluable music tips. Thanks as always for joining.

[Paul Krugman]

Thanks.

[Harry Littman]

And Stephanie Rule, now The host of MSNOW's brand new show Money Power Politics, a new home for her after her long command of the network's 11 o' clock hour. Previously, Steph was managing editor and anchor for Bloomberg Television and spent over a decade as a senior executive in the finance industry. Great to see you. Thanks for joining.

[Stephanie Ruhle]

Thanks for having me.

[Harry Littman]

Okay, so our periodic discussions often veer into economic nuts and bolts, but in preparing for the roundtable, it struck me that there are underreported economic angles and implications to several of the current news headlines. So I'd like to put our focus there, beginning with the war in Iran. So crude oil prices are just about down to where they were before Trump started the war in Iran. And I think a lot of experts, including some among us, had thought the fallout would be far worse and longer. Why are these prices, including for domestic gas, diving so quickly after a pretty significant disruption to the global oil supply?

[Paul Krugman]

Yeah, I mean, there is a little bit of a puzzle. What is true is that a lot of oil was already finding its way out even before this, whatever this. I guess we've gone from the war that wasn't a war to a peace that isn't a peace, but still. So the actual flow of crude oil to markets is most of the way back, although it's not all the way back. And you would think there'd be some deficit. And I think there's a lot that we don't fully understand here. But I think one of the issues is that Iran is exporting an enormous amount of oil. There's been a huge flood of Iranian oil now because, you know, they never had a problem with transiting the Strait of Hormuz because they were basically blockading it. So there is a lot of oil flowing to markets. But interestingly, you know, nobody except people in the business cares about crude oil prices and the prices of the stuff we actually use, gasoline, diesel heating oil, are nowhere close to back to pre war levels. So it's an interesting story.

[Dean Baker]

I'll throw in something there. And Paul, I've been reading your stuff on this and so I know you're aware of the issue that, you know, we had been drawing down stocks and that allowed us to prevent the oil price from rising further. Now, presumably at some point we stopped drawing down stocks. Whether at that point or not, I don't know. But in any case, we've been, again, I'm not an expert in this area. I've been reading some people who are. We are near the bottom in terms of our ability to draw down stocks. So whether that means we'll see a jump or not, I really don't know. We are getting oil out of the Gulf, as you know, Paul said. We're, you know, oil's coming there, the Saudi pipeline, some oils coming that way, but we still are looking at a shortfall from where we were pre war. So, you know, one of the things, and you know, again, not an expert on the oil market, but we know that often they overreact both directions. So I just wonder whether we're seeing an overreaction on the downside that they're going, oh, peace, you know, all good. And maybe that's not the case.

[Stephanie Ruhle]

But let's just go beyond that for a moment. The President has become now suddenly laser beam focus on the price of gas and understanding that this shortage around the world, what it's the jet fuel shortage around the world, the potentially catastrophic economic impact. Now the President seems to care about that. What are we actually getting out of this war? The position that the United States is in today versus before they launched the war, economically, national security. Take your whatever vertical you want to look at. You can't find something where we are better off. So the President is, is doing everything possible to address oil prices, which then addresses gas prices as we go into the summer. And the average American voter cares. But we can't stop caring about the impact of this war and where it's left America and the American people because it goes beyond the price of gas. And remember, three, four weeks ago, the President was saying, I don't care about the economy, I don't care about the price of gas. This is about nuclear capability. Nothing has changed with regard to nuclear capability. In fact, the President argued that the reason he launched this war is because Iran was two weeks away from having a nuclear weapon that they plan to use. At the time, there was absolutely no evidence backing that up. And then when the President says now this is all about them giving up their nuclear capabilities. There's actually no evidence that they've given any of that up. So the big question is, look at the amount of money that has been spent. Look at how much power we've lost. Look at how empowered Iran is and what has it done for the American people. I think it was Mark Zandi who said, this war thus far has cost the American household 1,000 bucks.

[Paul Krugman]

I mean, I just want to say that the attempt to somehow, the ever changing justifications of the war is basically, it's a barometer, among other things, of the fact that the war, we lost the war. I mean, that Trump took us to war against a third rate military power and lost. And by any standard, America is weaker, not just in the obvious ways. I mean, we expended a large part of our, you know, hard to replace weaponry. We failed to subdue another country. The Iranian nuclear program is completely intact. But also there is a tremendous loss of U.S. credibility. And something I've been writing about a bit, we've seen a lot of sort of acceleration, extra push behind alternatives to the dollar as a payments mechanism. Doesn't mean that the dollar is about to be displaced in global business. But now the world has seen that, you know, U.S. financial sanctions, basically U.S. everything is a lot weaker and there are lots of ways around it. So, no, this is all a total disaster. There still is an interesting question about what is gonna do to consumer prices, whether there's any way that Trump can somehow escape the damage he did to himself politically through this. And my guess is no. But what do I know?

[Stephanie Ruhle]

This is Taco, the war edition.

[Harry Littman]

Yeah, a whole plate of tacos, really. Right.

[Stephanie Ruhle]

I mean, we just saw JD Vance to a room of members of the military. This president will never ask you to go to war without explaining why. That's exactly what he just did. It's exactly what he just did to our military, exactly what he just did to the American people. It's exactly what he just did to our NATO allies who he's been dumping on every possible day, saying that they weren't here to support him on a war that he never justified.

[Dean Baker]

I just want to go back because I don't think we should ever let this drop. We had a deal with Iran that was preventing them from developing nuclear weapons. And it wasn't a question of trusting them. So we should just be 100% clear. No one was trusting Iran. I wouldn't trust. No, we shouldn't trust them. We had independent verification, we had cameras, we had independent inspectors. They could not develop a nuclear weapon with that in place. Trump comes in and goes, oh, it's all worthless.

[Paul Krugman]

Well, this is just Trump fantasy.

[Dean Baker]

He doesn't like Obama because the guy's black or whatever. You could decide what reason he doesn't like him. But he had to one up him. So he had to say this was no good. And he ended a deal that was keeping them from developing nuclear Weapons. And so again, this was an absolutely pointless war for that reason. But one other thing in terms of ramifications, and this is, I mean you can see it's a positive or negative. I see it as overwhelmingly positive that he really did jumpstart the green transition. I've been joking about this, that, you know, if we imagine that Kamala Harris had won the election, there's no way she could have done as much to get, you know, a shift to clean energy to electric vehicles as Trump just did. Now we aren't doing it here in the US but they're doing it like crazy in the rest of the world. China's exports of EVs were up 100% from where they were a year ago last month. Last month meaning May. I haven't seen the June data. I mean, this is really incredible. And again, it's a fantastic thing. Now from the standpoint of the US and the world doesn't look great, you know, who are people going to China? But from the standpoint of a green transition. Wow, that was fantastic.

[Harry Littman]

Well, I just want to put a pin in the point both you guys are making about the ripple effects here. So for instance, your piece on the dollar, Paul, it's not exactly the normal analysis of the strength and weaknesses. It's more really what happens when you have a president on the world stage who has so completely undermined the normal American role and what sort of outsize down the line effects. In fact, if I can continue on that, you know, as you put it, to adapt Twain, the reports of the war's end have been greatly exaggerated, but it will end. And the question is, what about the medium term? What parts of the economy as you see it, can't really adapt or can't really recover quickly after the straight is passable and the guns go silent. Where will we still be hobbled economically and I guess on the world stage.

[Stephanie Ruhle]

But just think about where we are now. The President asked Congress for $11 billion to help farmers and let's talk about why. Is it because we're having a drought right now? No, it's because of what he did on tariffs. It's because the impact of the war on Iran. It's because we've ended USAID and because many of the places where our farmers had been selling their products to have now sourced their product elsewhere. And so we don't even have to say what's going to be the medium and the long term. You talk about gas prices, diesel fuel has been through the roof.

[Dean Baker]

Yeah, I think we'll have to see how quickly these, you know, the end price, you know, Paul saying no one consumes petroleum, that's of course right. And the question that I don't think any of us are in a position to answer is what does this look like for jet fuel, for diesel fuel, for all the various derivative products that, you know, will those prices come back down? And this gets back to this issue about storage. Have the stores run dry, you know, or, you know, are they bottoming out as some have claimed? And again, I'm not in position to analyze that, but if that's really true, it's going to be a while before those prices come back down all the way.

[Paul Krugman]

There are a lot of puzzles in there. Dean saying he's not an expert on the oil business. And I think one of the effects of all this has been to drive home to me that I really, really am not an expert on the oil business. There's just so many ramifications, both positive and negative, that I didn't understand. We did have a huge run up in fertilizer prices, which has gone away. And that went away even before they sort of reached developments. And not at all true that I know what's going on there. But we're saying though that first of all, the prices of refined products are still way above pre war levels and we really are seeing rockets and feathers. When the price rises, price of gasoline shoots up like a rocket. When the price of oil falls, it drifts down like a feather. And that's really very visible right now, by the way. We have Trump demanding that the oil companies cut the price of gasoline to 250 a gallon, which aside from that being a totally unreasonable number. It's also imagine, just imagine Kamala Harris demanding that oil company Communism, communism. So this is completely bonkers. And there's also a fair bit of evidence that inflation overall has developed some extra momentum. And that is real reading tea leaves, numerology and so on to try and figure that one out. But it's enough that a few months ago it was, oh well, will Trump be able to get his man at the Fed and force him to cut interest rates? And now the question is, well, is it possible that the Fed will not

[Dean Baker]

raise interest rates with the inflation momentum? Obviously it's a really fundamental question and I'm very much agnostic on that. I don't know how it could be otherwise. You know, usually the classic story we have is the 70s, of course, the wage price spiral and wage growth has actually slowed. So in that context you go, how does inflation continue? I'm not saying it can't, but what does that mean? Profits will get ever larger as a share, which they might. I'm just, you know, it's not the inflation spiral. I'll just say it's not the inflation spiral we had in the 70s. If we do see an inflationary dynamic, it's going to be qualitatively different.

[Harry Littman]

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[Stephanie Ruhle]

Without a doubt. Just look at what we've done in terms of Haitians and Syrians and temporary protective status. Where do they work? I mean, they work in all sorts of industries, but most specifically, they work in health care, they work in hospitality, they work in construction. If you look at the last 10 years, when you look at jobs reports on a monthly basis, one area where we continue to see growth, it's in health care. We have an aging population. If you have someone in your family who's in a nursing home, an assisted care facility, a rehab center, do you know who's working there? Immigrants. In large part. It's where we see an enormous amount of Haitians working. And this idea that if these people would leave our country, then finally hardworking Americans can slide into those jobs. No, they won't. We've had a labor shortage in this country for years. When you talk to CEOs of every single different industry, they're not advocating for illegal immigration. And to be clear, no one here on temporary protective status is here illegally. They are currently here legally or they were brought to this country legally, but, what, decades ago? Correct. What CEOs have been looking for is comprehensive immigration reform. But this idea that suddenly you're gonna deport all of these people and Americans that are gonna jump into those jobs. Well, if you thought that the assisted care facility that your mother or father lived in, if you thought it was expensive. Now giddy up. Guess where we're going.

[Dean Baker]

Stephanie, you left out agriculture is one of the industries.

[Stephanie Ruhle]

Yes. Oh, my goodness. Oh, my goodness.

[Dean Baker]

Yes. I just paid a lot for tomatoes at the supermarket yesterday.

[Stephanie Ruhle]

There you go.

[Dean Baker]

That's definitely an inflation story. We'll see how much of that, you know, percolates through. But that's definitely inflation story. And I'll just add. I mean, I just. In the campaign when you had Trump and Vance going on about pet eating migrants, I mean, and they admitted it was a lie. I mean, it was just this absurd story. But, you know, again, you could have an argument as to how many immigrants we should have. I mean, these are legitimate questions. But, you know, you make up an absurd story. So you could say we have to have mass deportation. That's old news. That I know.

[Paul Krugman]

So many dimensions to that. Because it all turns. Springfield, the town with the alleged pet eating Haitians, is a declining heartland industrial town that has been, if not really a massive revival, at least has been stabilized by immigrants, which is a very common story. My original hometown, Utica, New York, is on that freezing cold Mohawk Valley belt, is one of the cities that is holding up better. And it's largely because there was a big immigration of Bosnian refugees in the 90s. And that's where Chobana yogurt comes from, actually.

[Harry Littman]

Yeah, that's a common story right there. Specific institutions where really certain nationalities, I think care of the elderly or even hospice, but also certain hotels and stuff that really have been largely populated by people who are now gonna be shown the door.

[Stephanie Ruhle]

But, Harry, even those who are saying, I don't like these demographic changes in this country, my cities don't look like the way they used to be. I hear that. I feel that those cities aren't going back. So let's say you take whether it's the Bosnians and Utic out, or you take the Haitians out of Springfield. Okay, take them out. Who is going to replace them? Who are the big businesses? What is the booming industry that is coming to that town where Americans are gonna flood to go work? There's. Tell me the name of those businesses. Bring those CEOs on any of our shows, and we'd Be glad to hear their stories. They're not.

[Paul Krugman]

It's actually one of the big discoveries by the whole, the whole economic study of immigration. It was kind of a revelation, which is decades old now. But it turns out that, that immigrants generally do different jobs. Even if they seem, you know, they have the same level of education as a native born US worker, there they are actually filling different jobs. Which means that if you try to kick them out, then you're leaving big holes in the economy. And it's not. People who were lucky enough to be born here are not, by and large not only not willing to fill those jobs, in many cases just not ready. We talk too much about skill as if it just meant having a higher degree. But there's a lot of skill involved in many jobs. I mean, how would you or I do as a healthcare worker for the elderly? So there's a whole series of really disastrous decisions, most of which in terms of economics, they're more like, I don't know where this came from, but they're termites, not tornadoes. It's not catastrophic damage, but it undermines things.

[Stephanie Ruhle]

But think about immigrant labor, right? We're about to slide into the hottest months of the year if suddenly we're implementing mass deportation policies. I don't know. In places like Florida or Texas, who do they think is gonna step in to tar a roof on a new construction in America's hottest city, Miami? Or in Austin, Texas? Who do they think are going to fill those jobs after ICE raids take, you know, hit Home Depot parking lots?

[Dean Baker]

Yeah, Paul, if this is literally, you know, if they really do go whole hog, and I don't know how many people they could envision, deporting, how quickly, but I think it is a tornado story. So, you know, if you really do mass deportations over the next two, three, four months, you're going to have a lot of jobs that we were counting on being filled that suddenly are not going to be filled. And we'll see that. I'll just add one other thing. I was actually, you know, I've changed my views as suppose a lot of us have on immigration. The sense that, you know, I did think that there was competition at the low end, that you were seeing some depression of wages. And I'm sure there are cases where that's true. How could that not be? But I, you know, I've been moved by the research that for the most part they are different jobs. So that you're not, you know, all these people go away. You're not going to have us Born people taking those jobs.

[Paul Krugman]

Dean, you would never make it in the MAGA movement. You would never make the MAGA movement because you actually change your views in the face of evidence.

[Stephanie Ruhle]

We're actually hearing from Republican lawmakers, right? Mike Lawlor, who's a congressman in New York, who represents Hudson county, parts of Hudson County, Rockland county, publicly urging the president, don't allow these deportations to happen. They have huge immigrant communities in his district. But it's like, hey, Mike Lawler, why would Donald Trump carve out the Haitians in your district? He's the one who asked for this. This is his baby.

[Harry Littman]

I think the common theme of this and everything we've talked about so far is completely unanticipated consequences that whatever else you say, the prospect that either Donald Trump or Stephen Miller actually considered, you know, seemed to me less than nil.

[Stephanie Ruhle]

May I interrupt you? I think we give way too much credit and way too many headlines to Stephen Blanking Miller. Only one person is the President of the United States. The decisions get made in the Oval Office. The buck stops there. You can take Iran, for example. Donald Trump can dance JD Vance out there and let him be the scapegoat for Iran. I. I'm not gonna allow, like, enough with this. Well, I don't know about Trump, but this is what Stephen Miller wants. You know what Donald Trump wants? He wants Stephen Miller sitting one inch away from him. And as long as he does, these are Donald Trump's decisions. These are Donald Trump's policies. He owns them. He will take them to the moon or he'll take him to the grave. But Stephen Miller, nobody voted for him.

[Harry Littman]

Fair enough. Although I remember the big quote. Was it Kristi Noem who said, I ran this all by the president. And Stephen, he is, you know, kind of throwing his weight around in inner circles.

[Stephanie Ruhle]

And guess what? If it doesn't work out for Trump, he'll fire Stephen Miller just like he did Kristi Noem.

[Harry Littman]

Yeah, 100%. All right, let's move into a topic that I think also has economic implications. Even that's not how it's playing. The gobsmacking Trump family self dealing. So we have the new financial disclosures showing just a repulsive and unprecedented kind of business windfall. During the first year of his second term, this perennially unsuccessful businessman has found the golden ticket. About $1.4 billion, it seems, in income from his family's cryptocurrency enterprise since being in office. A big chunk of that is when Emirates bought half of his main crypto Company just like, what the hell, not only is it all as corrupt as it seems, but is there an economic case to be made against allowing this level of raw corruption and flat out money printing by a President of the

[Stephanie Ruhle]

United States in an industry that five years ago he said was destined to fail and was a scam? But I'll let the gentleman go.

[Dean Baker]

Yeah, well, I think Trump was right five years ago. I mean Paul's been on this more than anyone. But it just go like, well, what is the use case for crypto? I mean, you know that I always tell people, I'm sure Paul's the same line, that it's great for illegal transactions. If you want to get ransom and you want $10 million in ransom, well that's $100,100 bills, you know, and that, that's kind of bulky but you know, with crypto you could bing, you know, put it in my account. So that's dean.

[Stephanie Ruhle]

That's how Trump got introduced to crypto. Eric Trump said it at a crypto conference last year. It was after January 6th when banks were cracking down. Eric said they weren't willing to do business with us, not because they were anti Trump, because they had know your client regulations where they didn't feel comfortable with where the money or the business was coming from. So he said they weren't. The banks wouldn't do business with us. That's when we turned to crypto. Highlight that, underline it, write it in the sky. Yes, because there's no transparency.

[Dean Baker]

Yeah, it's, you know, the one case, you know, the pseudo use case is that you can do some transactions, particularly international transactions. So if someone in Bolivia wants to trade with someone in Thailand, they could both get dollars, but their currencies, trading those currencies back and forth would be awkward. And if they have to both get dollars, that's extra expense. But you could do it instantly with crypto. Now if we had digital currency, which they're banning research into, it could be done with that. But from an economic standpoint, it's a total waste. It's an invitation to corruption. And I mean you've already see it. We had Sam Bankman fried and clearly going to see much more because they don't want it regulated.

[Paul Krugman]

I think going beyond, I mean crypto has been an integral mechanism again if you want, you know, enabling Trump self enrichment. But the broader thing is that we are becoming very quickly, in my parents generation, people my parents age used to say it's not what you know, it's who you know. And we are becoming very much accent included. Hey, I mean, this is the, you know, I did spend my early years in Utica, but after that I spent on Long Island. So the, this is rapidly where we're becoming. Where, I mean, there was a big article I think, about can Anthropic, which clearly has, you know, the best AI model out there so far, unless it's the Chinese. But can they actually get by? Because they're not playing the game. They're not. They don't have a Trump whisperer on their staff. They're not funneling lots of money to the Trump family. And is it possible for a business to thrive without doing that? So this is becoming quickly. I mean, we are becoming, we've made a massive transition to crony capitalism just in the past year and a half.

[Stephanie Ruhle]

Trump is refusing to sign the latest version of the usmca, which was the trade deal that came after nafta, that Jared Kushner. I would argue it was Jared Kushner's best achievement in Trump 1.0. USMCA was basically NAFTA 2.0. Mexico signed. It's the trade agreement between us, Mexico and Canada. Mexico just signed off on it. Canada just signed off on it. And Trump said, no, no, no, I don't think so. Why? Cuz this is going to be another example where Trump can hold people hostage, choose winners, choose losers, get favors. We're seeing it. You know what I mean? It's like, oh, I know how I did this with the trade war. I know how I did it in every other industry. And people came to me with gifts and offerings in airplanes. Let's try this, the Mexican version.

[Paul Krugman]

Oh, and by the way, if you go back to nafta, what did NAFTA do? Tariffs were already very low before NAFTA. The average US tariff on Mexican product was only about 2% before NAFTA went into effect. But what NAFTA did was it gave companies what they thought was some certainty, some assurance, you can put a plant in Mexico to supply components to your U.S. plant and vice versa, because we have this agreement and trade between our nations will be free forever after. Except it isn't. And now you can ship stuff between the US And Mexico if you've somehow managed to channel enough money to the President or his family. And that's aside from the grotesqueness of it, the scale of it. I've done the math. We are basically having a teapot dome size scandal every day. Now, that's the scale of the corruption. But it also means that fundamental business Decisions are absolutely subject to the whims of a corruption administration. So, my God, how are we supposed to prosper?

[Stephanie Ruhle]

Listen, even if you felt great, I'll bet this idea that the US Is making domestic investments in rare earth minerals, even if you said we should make direct investments in companies, right. Many, many people. Bernie Sanders has been arguing for a very long time that drugs are getting developed on the back of NIH funding and research, and the American people, the American taxpayers, should get a cut of that. But that's not actually what we're seeing. And in some of these cases where you're like, yeah, maybe the government should do this, the problem is then you look under the hood and either the Lutnick boys or the Trump boys are in on these deals, right? It's the grift, it's the corruption that's the problem. I don't think any of us would argue we don't want to have a pro business administration. We want a pro good, smart business. It's the corruption, it's the grift, it's the lack of transparency in terms of the impact.

[Dean Baker]

I was just looking because we just got new data on factory construction. We're down about 25% from where we were in 224. And this, this is one of the things that it kills me, like, almost. I've had economics reporters at major outlets, they go, oh, what are you talking about? Here's the data. We had a massive increase in factory construction under Biden. It more than doubled. I'm going from 219. So I'm not playing games with the pandemic. So from Pre pandemic to 224, real factory construction more than doubled it. Controlling for inflation, it's now down about 25%. So here we have Trump running around, oh, we have everyone coming in $18 trillion. And I have no idea where that number comes from, but the reality is it's actually way, way down. I will say a thing on drugs because it's kind of a pet thing for me, because I know no one ever talks about this one, but we make drugs expensive. And, you know, I'd like to go Bernie Sanders one further. Pay for the research. Pay for all the research as it is now, the industry pays about two times, maybe two to three times as much as we pay. NIH and other agencies pay for all of it. Have it available as generics, and we'd all have cheap drugs, and we wouldn't have big fights over it. And, you know, like to be the economist here, have it Sell at its marginal cost. And to my mind, you know, particularly with health care, why on earth do you want to have people worried that here they have a drug for cancer and it's going to cost $100,000 and the insurer doesn't want to pay for it. And you go, well, it actually doesn't cost $100,000. Maybe it costs 500. It very rare that it's actually expensive to manufacture and distribute a drug.

[Harry Littman]

I wanted to follow up on Stephanie's point about basically Trump's favorite and maybe only mo for doing what he does, which is the ability to individually shake people down, make them ask for favors and they like, because this is another instance in which our different worlds really did braid together. And Dean, maybe I can stay with you because you warn that the Supreme Court's ruling in Slaughter, where they said the President can fire heads of regulatory agencies, could make all of this much worse. Can you explain?

[Dean Baker]

Yeah. So in principle, I mean, we have these agencies, you know, the FDA for drugs, you know, the Federal Aeronautics Administration for airlines. You know, you can go down the whole list of things. The ftc, of course, for antitrust practices, trade practices. And the idea was that these were going to be run by independent experts and they would be at least somewhat insulated by politics. You can never insulate anything completely from politics. But the idea was that you had commissioners that set fixed terms. They were appointed. In principle, they'd have some representation in the minority party. So even if the Republicans or Democrats controlled the White House, Congress for two decades, you'd still have some members of the other party. But the key thing is that you hand fix terms that the President couldn't just say, I don't like you, or I don't like your ruling. When you get rid of that, as the court just did, you're saying the President can in effect tell the head of the fda, I want you to approve this drug. Maybe it's not safe, but I want you to approve it or you can get fired. And if you don't agree, then the person after you, if they don't approve it, they're going to get fired. And that just opens the door. So if you're Pfizer, you want your new Alzheimer's drug, and maybe it really isn't very effective, you want it approved. Well, you could try to prove somehow it is effective, or you can go to Donald Trump with $5 million and say, can you get us approved? And the way things stand now, it looks like that might be the better route.

[Paul Krugman]

Now we can Also say no, by the way. It's not just that he can say that a company that bribes Trump can get approval. It's also that a company that has a product that should be approved may be turned down because they refused to kick in money for the arch to Trump that's supposed to go up in Washington. So replacing a rules based, expert based system with nothing but political lackeys everywhere is really, really destructive. Again, it's not what you know, but who you know and basically and largely who you're going to bribe.

[Stephanie Ruhle]

But just think about this. Jamie Dimon is probably the last CEO I can think of, JP Morgan who said, we're not giving it, we're not cutting a check for the East Wing Ballroom, because whomever the next Democratic administration is, they're gonna come for us. They're gonna file suits against us, they're gonna call this corruption. Trump's next move after that was filing a lawsuit against Jamie Dimon and against JP Morgan. I don't even know where that lawsuit stands. But in the last four days, what headlines have I read? That Citigroup CEO Jane Frazier has quietly found herself in the good graces of Donald Trump and she's now the banking's Donald Trump whisperer. I see how business operates. However, doesn't it seem to you gentlemen shortsighted? Donald Trump's approval rating is in the low 30s at this point. And I get it, businesses big and small, less small because it's harder for them to pay them off, have decided if you can't beat them, join them. It's not what you know, it's who you know. Make friends with Howard Lutnick, make friends with Scott Besson, make friends with the Trump son. Why pay to have government relations employees for your company when you can just call Trump direct and offer him an airplane or something else? However, the American people are showing, look at the primaries, look at the protests out there. Many people who have no political affiliations whatsoever that are saying, I don't like this system, I don't like these incumbents, I don't like the corruption. So the pendulum is going to swing. And I think it's going to be so interesting, right? I have so many business leaders that are my sources that want to talk all day long, every day, tomorrow and yesterday, but, but none of them wanna come on television because they are afraid of the wrath that they will experience from Donald Trump. I think it's gonna be interesting if we see huge, huge swings in the midterms or more of the American people say, this isn't working for me. Where are those business leaders gonna go then? What are they gonna say at that point?

[Paul Krugman]

You know, I wonder also whether business leaders are betting either that we won't have fair elections or that Democrats will be pathetic pussycats again, that even if they were clearly aiding and abetting Trump corruption, that they won't pay a penalty. Now, I think that they may be wrong. I think that in some ways the CEOs may be the last people able to read the room on the mood of the American electorate. But that's history would suggest that they're right. I'm hoping that history is not a good guide this time around, but that's really important.

[Dean Baker]

Yeah, well, the outcome of the election will be enormously important. And again, the question that I think we all have is whether we'll have fair elections. We hear the Save act and, you know, we all know this is nonsense. I mean, they, you know, again and again, again, if there's any evidence of large scale evidence of vote fraud, because I always post that on Twitter or something and someone finds some guy or woman who, you know, got arrested, you know. Yeah, yeah, there's someone somewhere. Most of the time they seem to be Republicans. But we're concerned about is, are there, you know, hundreds of thousands, millions? And that's just literally absurd on its surface face. And clearly this is an effort to keep people from voting or keeping votes from being counted. And obviously, if you do that, you could win a lot of close seats and that I don't know anyone who could say with straight face that we're sure we're going to have a fair election this fall.

[Stephanie Ruhle]

But don't you find that interesting? Because what do businesses need? Stability, regularity, a government that functions right, three separate but equal branches of government, a Federal Reserve that's truly independent in the long run. Look at countries like Russia. It temporarily works for the oligarchs who are closest to the supreme leader. But not for long.

[Harry Littman]

Well, that's true, but in the long, I mean, let's talk about the short and medium and it's the things we've been talking about the last few minutes. You've reported on this, Steph, from all your sources. There's this whole kind of courtly coterie in the White House trying to broker these individual deals with them. And he just loves it. And, you know, many ways in which he is a retail politician.

[Paul Krugman]

I think the point is that first of all, businesses, you know, they're not deciding on the overall outcome. They're in their own self interest and if they don't face consequences for having aided and abetted Trump, then it's in their interest to have gone along with it and then say, oh, we were against it all along. And also you're saying, in the long run this doesn't work. Well, you know, I don't know how many business leaders quote John Maynard Keynes, but in the long run, we were all dead. So from their point of view, you know, point is don't. Do not count on big business to save us.

[Stephanie Ruhle]

I'm not counting on them to save us. I'm counting on them to say, what is your long term view? Right. What do you want to do? Right. When I talk to business leaders now, it's like they're panicked over Democratic socialism. Why are they panicked over? What they should be panicked over is the fact that their CEO pay is ballooning while worker pay isn't. That rage is against what they are doing. It's not Mamdani leading that. It's their actions that's causing people, especially young people. Right. When all of us started in the workforce, none of us were questioning Social Security. Right now young people, and it's justified, say, why am I going to pay into a Social Security system? That last I checked, the Social Security trust fund isn't just running out. It's going to run out a year sooner than was predicted. Business leaders want to continue operating into the future. Right. They need to keep their shareholders happy, they need to keep their employees from not quitting, and they need to keep their customers doing business with them. And they have to have at least somewhat of a long ish term view. And right now it's like we just need to roll with Trump because we love having no regulation. And the market's working for me. But this is temporary. Imagine if the markets turn, then what is the world going to look like? Right. Income inequality is a huge issue that is only getting worse.

[Dean Baker]

I want to get back to my factories for a second. So I think that is the short term in the sense that we're seeing this big fall in factory construction. And if you pull out, AI investment's horrible. And this is a case where the businesses are voting with their feet that it's not a question. You know, they're not bucking Trump. It's just they don't think the US Is a good place to invest right now. That's both foreign and domestic. So they are seeing that. I will just throw in a thing about Social Security. People should not be worried about Social Security, though. Obviously if the Republicans vote To get rid of it all bets are off the table. But if we just let it go on autopilot, kids today, they will get much more than I ever will. So even if it doesn't pay full scheduled benefits, which my bet is it will, it's going to be there.

[Harry Littman]

All right, let's take this as an exit question on this area, because the medium term is becoming the short term, right? You know, he's a highly unpopular lame duck looking at midterms. He's going to act the same, I think we can assume, certainly for this question. So do we reach a point where his time ban narrows, that he really can no longer hurt the economy writ large in his remaining term? Is there a time where we breathe that kind of sigh or not really? As long as he's in office, economic damage accumulates daily to the last day.

[Paul Krugman]

Make a list of horrible things that Trump or the people around Trump could do, and then you'll say, well, but they won't do that. And that has been wrong every time. So I don't think you should rule anything out. And unfortunately, we have set up a system in which one sundowning guy, who, as is always the case, becomes more like himself. All his worst tendencies brought to the surface can do enormous damage and will do enormous damage. I mean, I don't think we can breathe easy until somebody actually sane is installed in the White House, which.

[Stephanie Ruhle]

But also, whether you like him or you don't like him, I don't foresee this lame duck not getting much done. Look what he's willing to do via executive order. Look what is happening in terms of self dealing. What I would argue, with the exception of the war in Iran, I think Trump has never been happier. He lives in a gilded cage between the White House and Mar A Lago. And when he's in either one of those places, he is surrounded by extraordinary sycophants. There is absolutely no one in his current orbit who says no to him. And make your way down to Mar A Lago, you can pay a million dollars, you can pay $5 million. Who knows, maybe you can walk by him in the hallway for 500 grand. But everything he's doing, every possible day, he or his family is profiting off of. And the question is, what does that mean for the American people, for the American voter, for our national security? If you think any of that is going to let up in the next two years, brother, please.

[Dean Baker]

I was going to add in terms of, you know, the harms, because again, we have to think, obviously we get the broader macro numbers, you know, what's GDP growth, you know, what's the unemployment, you know, obviously those matter. But he could, you know, do horrible things and he has to millions of people without it even getting much attention. So look how many people already lost health care coverage. And it's going to be much, much more after the midterms when the cuts from the big beautiful bill go into effect. So he's in a position to do enormous harm till the day he actually leaves office.

[Paul Krugman]

I'd like to say that every cloud has a silver lining, but in this case I think it has a decaying epoxy lining. We are all living in the reflecting pool.

[Harry Littman]

Let's spend a couple minutes talking about the Fed. You know, Kevin Marsh is now there. The mainstream press are making much of a supposed new approach. He's already putting his own stamp on the Fed. To a layperson like myself, I haven't, you know, the changes seem minor but what's your sense? Is this like a big new era with Warsh at the helm?

[Dean Baker]

Well, I do worry that, I mean there's obviously a lot of things I worry about, but one that I think gets less attention is that there really had been a turn towards openness from the Greenspan days. So Greenspan was took pride that no one could figure out what he was talking about. And Bernanke took a big step away from that and Yellen and then Powell, you know, the idea was, and I think Powell said this explicitly, maybe not exactly these words. He didn't want people to be surprised by the Fed's action. I think that's great. I think there's enough uncertainty in the economy that we can't control. We don't know about a next pandemic or wars could happen. But you don't want the Fed to be a source of uncertainty. Now Warsh just said no, we've been talking too much. So I don't know exactly what that means, but I do worry about that

[Stephanie Ruhle]

that so I would argue that I have time and space for Kevin Warsh's argument that he feels like because in his words they over communicate that it gives the Fed even less tools to take action when they need to because they're backed into a corner. I would buy that and be okay with it if we felt trust in who was running the Fed, in the independence of the Fed. But we're living in a situation where, listen, you always have an administration that wants to put pressure on the Fed to lower rates, to make borrowing costs lower, which is easier for the American people. I get that. But we're now in a situation where you've got Donald Trump trying to fire Lisa Cook, getting rid of the head of the ftc, firing the head of the Bureau of Labor Statistics. The fact that we're now going to a place of even less transparency makes me worried.

[Harry Littman]

And one more crossroads of the legal world and the economic world. It's clear they still think that they can go after Cooking. How does the market view the supposed independence that the Supreme Court nodded toward with the Fed, do you think?

[Paul Krugman]

I think the market is. First of all, they think that the Fed is going to be off limits for a while. I don't think that's anything you can count on. I mean, I don't know what the market is thinking. My sense is that Warsh is well on track to being the least influential Fed chairman and generations, that he's basically not going to be able to pull the Open Market Committee with him if he wants to go anywhere. I'm getting a definite sense that he's looking lost, that he's the dog who actually caught the school bus. Now what? And so I don't think there's anything really going to happen on that front.

[Dean Baker]

Let me throw something out there. Warsh in his prior history was an inflation hawk. So you go back when he was on the Fed in the past, he was yelling about hyperinflation. And just to remind people this is after the, the, this is the Great recession. We had 10% unemployment, near zero inflation. He was worried about hyperinflation. You know, so that's his background, you know, who knows what his innermost thoughts are? But let's for the moment imagine that actually he is worried about inflation. Now if he were to raise rates, truth social would be, you know, they'd have to have overtime, you know, for Trump to have all his diatribes. Now he's also said he wanted to reduce the Fed's balance sheet. And this is a little nerdy, but we had quantitative easing beginning under Bernanke as we'd gotten to zero interest. So what do you do? You buy up lots of long term debt, you increase the Fed's balance sheet, in other words, and that was way to lower long term rates, which are the ones that actually matter most directly for the economy. Mortgage rates, car loans. Now I don't know if I should give worse credit for this. I'll throw this out there. You think if it's crazy, if he really wants to dampen inflation, he can't raise rates because Trump will go nuts on him. So suppose he just hugely reduces the balance sheet and that will have the effect of slowing the economy. Again, I'm not advocating this route, but I'm just wondering if that could be in the back of Warsh's mind. Maybe I'd be giving him too much credit for that. Again, not something I'd want to see, but I'm just wondering whether that could be in his mind.

[Paul Krugman]

Well, if you've actually ever read Warsh's articles and speeches from that era, if you skim quickly, it sounds like there's something there. If you actually read it carefully, it's complete gibberish, that's all. So he's a hawk, but only when a Democrat is in the White House. So I don't think there's any there there. But I also think that the other members of the board know that there's no there there. His signature line is we'll create a task force on that. So the business cable guys are already saying we need a drinking game on task force.

[Stephanie Ruhle]

Listen, I like Kevin Warsh. I think he's a highly qualified guy for the job. But remember he had to tie himself into a pretzel and knock out Rick Reeder and potentially Scott Bessen and anybody else who wanted this Fed chair job and do a tap dance for Donald Trump now trying to thread that needle. Now that he has that job, now that he has to deal with all of these other governors and their intention, easier said than done.

[Harry Littman]

This is so interesting to me because again, the storyline from the Supreme Court is they irrationally and with no legal basis. I can throw that lob in as the lawyer here. Preserve the independence of the Fed. Dean said pretty much in passing, oh, he can't raise interest rates because Trump wouldn't like that. And of course that is the classic dynamic that made Congress want to give independence to the Fed. There's always that exact political pressure and you want them to be able to countermand it. Let me just, this is sort of a closing question about who this guy is. But do you agree that basically notwithstanding the nominal independence that the Supreme Court recognized that really Warsh at least and maybe Fed chair going forward are no longer independent in their sort of biggest decisions? They're handcuffed.

[Dean Baker]

Well, I'll go back to what Paul was saying that the Open Market Committee is, you know, you have the 12 voting members and you have seven other bank presidents sitting there. So you have 19 people that are in on the discussion. You could argue, you know, how much the other, the non voting members Influence it. But the point being, the Fed chair can't by themselves make a decision to raise or lower rates. Historically had enormous influence. So I look back on this, there's never been a case where the Fed was in the minority on a vote. But that's partly because people respected the chair, you know, so whether you like them or not, I mean, people respected Volcker, they respected Greens, you know, so. And there was discussion, you know, so if the chair knew that they were out of line, I'm sure they would change their vote, you know, but if War goes in there with the idea, oh, I got the orders from Trump, you know, maybe I'll get one or two others. But even the Trump appointees, you know, they might not share my views or anything, but they've shown independence, so they'd have a long way to go. I mean, if Trump's in a position to appoint the whole board, I can't see how that would happen. Then, maybe. But we're not in it now.

[Paul Krugman]

I mean, like I said, I think Warsh is actually in a very difficult place because he's not stupid. And he knows what he would do to his credibility within the Fed, his credibility with the markets if he follows orders from Trump. But he also knows that Trump is not going to cut him any slack on that. So I don't know, maybe I'm his wishful thinking, but I imagine he's probably lying awake at night wondering, why did I want this job?

[Stephanie Ruhle]

Okay, that's okay. Because by the way, every person in those jobs, every single one of them are the woman who thinks they're gonna change that jerk. O, they're gonna be the one to change the asshole. Guess what, ladies? You can never change a guy who's a jerk.

[Harry Littman]

But I think we're broadening the topics.

[Stephanie Ruhle]

You're never gonna change. You know, if he was a jerk, he's always gonna be a jerk.

[Dean Baker]

I bring my wife in to talk about that.

[Harry Littman]

He's just not that into you.

[Stephanie Ruhle]

But you watch person after person come in and get burned. Come in and get. But in the case of the Fed, right, We brought up Taco, you know, Taco as it related to tariffs, Taco as it relates to Iran. We just saw this week Taco Supreme Court as it relates to the Fed, right? Donald Trump now has the ability, a president now has the ability to fire agency heads at his will. But they carved it out as it relates to Lisa Cook. Why? Because they realize the bond market will say absolutely no bueno. Okay? And as soon as the bond market shakes. Trump then realizes, oh, because at the end of the day, the bond market is the daddy. That is the one guardrail we have seen in the world of Trump. And you see the listen, the market went up for a variety of reasons, but the market certainly liked that decision because they want the Fed to remain independent. And clearly, clearly the Supreme Court understands the importance of that.

[Harry Littman]

And I'll just say that they understand it, but there's no legal purchase to what they said to do it, and they're being understandably pilloried for the legal bankruptcy of it.

[Dean Baker]

It was basically the Fed's important the other agencies aren't.

[Harry Littman]

Not true. Right?

[Paul Krugman]

Who cares about food safety and all that, right? It's interest rates that are the only thing that matters anyway.

[Stephanie Ruhle]

Yeah.

[Harry Littman]

All right. It is now time for a spirited debate brought to you by our sponsor, Total Wine and More. Each episode you'll be hearing an expert talk about the pros and cons of a particular issue in the world of wine, spirit and beverages.

[Total Wine and More Host]

Thanks, Harry. In today's spirited debate, we break out the three types of vodka to see if there's a clear difference. Vodka is typically a colorless, flavorless spirit served neat and freezer chilled. Simple, right? But long before the shot glasses are topped off and toasts are shouted, there's a fermenting process for vodka. That process involves distilling an organic base like barley, rye, wheat, even potatoes or corn to make one of three types of vodka. Plain flavored and infused. Rye can add a heavier texture and spice. Barley may be a little lighter and mild, while potatoes can add a creamy mouthfeel. Unflavored is the simplest and most traditional form of vodka. With a mixture of 40% ethanol and 60% water flavored, vodka has recently become extremely popular, adding flavors that range from fruit to dessert. Inspired options like chocolate. A charcoal filtered vodka provides a smoother taste perfect for creating a chocolate martini that tastes as great as it sounds. Lastly, there's infused vodka, also known as botanical vodka, where the distillers infuse the vodka by adding ingredients like herbs, flowers, spices and fruit, which are steamed into the spirit during the distillation process. It's an excellent choice to dial your drink in any flavor direction you want. The best part of them all is that you don't have to travel the world to find the greatest vodkas. Your local Total Wine and more has a large selection of every type and flavor, so all you have to do is clear out a little extra room in your freezer. So find what you love and love what you find only at Total Wine and More. Cheers.

[Harry Littman]

Thanks to our friends at Total Wine and More for today's a spirited debate. Okay, we only have a few minutes left, but it strikes me that our overall discussion has identified the outsized influence of a single guy who's willing to do whatever he wants to feather his nest. And everyone expects that to continue. So I'm just wondering, as we move forward, I think you assume that Trump is Trump, that center of the cosmos remains. What are you looking toward, concerned about seeing as possible economic bellwethers over the next. Let's say I very much hope we can do this every six months. That'll make our next after the midterms. What are you sort of following closely over the next several months?

[Stephanie Ruhle]

So I would say my concern would be over investment or overexuberance when it comes to investing in AI. I absolutely believe AI is our future. It's going to change every element of the way we work, the way we live, the way we play. But look no further than the dot com bubble. Was the Internet the Future? Absolutely. Come 2004, come 2005. But in 1999, it was too early. There was a headline, I think Business Insider had the story of a shoe company, a sneaker company that was failing. And so what did they do? They said, don't think of us as an athletic brand anymore. Think of us as an AI company. When I saw that headline, I said, take us back to 1998. And that same business would be saying, think of us as an Internet company. And so I'm not saying that AI isn't the future. It is. I'm just worried about this massive potential overinvestment, even an overinvestment in data centers right now and where that's going to leave us because Trump and others are so thrilled about the markets. Look under the hood when you go beneath the magnificent seven Technology companies that are not impacted by immigration, that are not impacted by tariffs, that are truly riding this extraordinary unregulated AI wave. If you look under those businesses, this country is filled with small, medium large businesses that are struggling. And if that AI bubble bursts or even air comes out of it, I'm worried about what could be ahead.

[Dean Baker]

Well, Stephanie is still on my line. I am looking for the bubble to burst. And, you know, I'm hoping the sooner the better. I mean, it's, you know, the housing bubble had burst two years earlier, it would have been much less painful. Same with the dot com bubble. And I'm focused on the profits. You just go where Are they going to get the money? And I'm looking, you know, if you compare RAI companies to the Chinese AI companies, you know, again, not an expert on this, but reading the people who are Chinese AI companies are very close, but they don't have to be cutting edge. The question is how much? You know, for the typical business, they don't need cutting edge. You know, just like, you know, when I get a computer, I don't need the most advanced computer or does need to do some basic things. Same thing with AI. And the Chinese companies are charging a fifth, even a tenth as much as our companies. They won't make money if they have to charge a fifth or a tenth as much as what they're doing now. So I don't see the profits there that justify those prices. And that's going to be bursting of the bubble. Was that in the next six months? I guess we'll have a chance to talk about that.

[Paul Krugman]

You might remember that a year ago we would have been talking a lot about crypto and there was a huge surge in crypto when Trump came in because he's crypto friendly. And then just sort of quietly the air went out of that. Bitcoin has lost more than half its values from its peak.

[Stephanie Ruhle]

This is such a good point.

[Paul Krugman]

It's funny. I don't feel competent to analyze the economics of AI really, but I do feel competent to analyze the psychology people who are piling into it. And boy, does that feel irrational.

[Harry Littman]

Paul, Dean, Stephanie, these conversations are among the most informative but also fun for me. Thank you so much for being here. We'll see what the next six months bring and really look forward to our next roundtable. Thank you so much Dean, Paul and Stephanie. And thank you very much listeners for tuning in to Talking Feds. If you like what you've heard, please tell a friend to subscribe to us on on Apple Podcasts or wherever they get their podcasts. And please take a moment to rate and review the show. Check us out on [e-mail] where I'll be posting two or three bulletins a week breaking down the various threats to constitutional norms and the rule of law. Paid Substack subscribers can now get Talking Feds episodes completely ad free. You can also subscribe to us on YouTube where we are posting full episodes and my daily takes on top legal stories. Talking Feds has joined forces with the contrarian. I'm a founding contributor to this bold new media venture committed to reviving the diversity of opinion that feels increasingly rare in today's news landscape, where legacy media seems to be tacking toward Trump for business reasons rather than editorial ones. Find out [e-mail] thanks for tuning in, and don't worry, as long as you need answers, the Feds Will keep talking. Talking Feds is produced by Lou Cregan and Katie Upshaw, associate producer Becca Haveian sound Engineering by Matt McArdle, Rosie Dawn Griffin, David Lieberman, Hamsam Mahadranathan, Emma Maynard and Hallie Necker are our contributing writers and production assistants by Akshaj Turbailu. Our music, as ever, is by the amazing Philip Glass. Talking Feds is a production of Deledo llc. I'm Harry Littman. Talk to you later. Sam.