In a Perfect World, Powell Would Not Be Fed Chairman and Trump Would Be President

Transcript of Peter Navarro's Taking Back Trump's America Podcast

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Hi. I’m Peter Navarro. It’s March 8, 2023. And yes, in a perfect world, Jerome Powell never would have been appointed to be Federal Reserve Chairman by Donald Trump and, in a not unrelated event, Trump would likely still be president. I tell this story in my book Taking Back Trump’s America, but it is worth retelling here given Jerome Powell’s tanking of both the stock and bond markets yesterday in his testimony before Congress. But first a quick word from one of our sponsors:

Okay my friends, let’s cut to the chase. Let’s go back to in our time machine to 2017 and the deliberations inside the White House over whether to reappoint Democrat Janet Yellen for a second term as Fed Chair or go with a Republican alternative. 

I favored Yellen for several reasons. First and foremost, she had been dovish at the Fed through her entire tenure; and I thought she could be counted to maintain an easy credit posture when it came time for the 2020 election. Truth be told, the Boss thought that too.

Politically, I also thought it would be a nice outside the box appointment by keeping both a Democrat and a woman at the helm of the Fed based on what had been up to that point a solid turn as Chair. Given that the Boss was hated by the Democrats and had a “woman problem” among the Liberal elites, I frankly thought it would be a nice punch in the nose to the Left and openly wondered aloud how CNN and MSNBC and the New York Times and the Washington Post would all handle a situation like this. It would be very hard for even these left-wing clowns not to say something nice about the Boss.

Of course, virtually everyone else in the West Wing thought otherwise and argued that our best bet would be a Republican that we could “trust”. So, a Republican it would be, and in the ensuing search, Treasury Secretary Steve Mnuchin would talk Donald Trump into arguably his worst personnel decision, at least in the economic sphere, of his administration. That would be with the appointment of Jerome Powell on November 2, 2017.

Now here’s what you won’t read anywhere else: Steve Mnuchin favored Jay Powell for one simple reason – Mnuchin thought Powell would be his Bitch.

It Steve Mnuchin’s Machiavellian Lite brain, the fact that Jay Powell was not an economist and had no real credentials meant that Powell would surely have to be dependent on Stevie for advice. Ergo, by Mnuchin’s calculation, Powell would set monetary policy whichever way Mnuchin dictated.

Kingdoms have been lost for less stupidity. Powell would indeed demonstrate that he had no real credentials to be Fed chair and that he was out of his depth. Jay Powell is, if nothing else, a punctilious arrogant fool who takes advice as often a Donald Trump drink alcohol – which is to say never.

Over the ensuing three years, Jay Powell would consistently run a distinctly non-Janet Yellen-like Fed policy that, in this distinction, was consistently too tight and contractionary. What Jay Powell simply did not understand, the lack of any inflationary evidence notwithstanding, was that the Trump economy was very capable of growing at much higher rates without inflation than the Obama-Biden economy had done precisely because the Boss instituted significant positive structural changes in the economy that would allow for such higher growth.

I’m talking here, of course, about the obligatory lowering of the tax and regulatory burdens for families and businesses. But most importantly, what Trump did was also begin to level the global trading field. Instead of falling victim and prey to the mercantilist of free trade, Donald Trump, with the help of people like United States Trade Representative Bob Lighthizer and me, adopted a fair trade model that would lower our trade deficit and stimulate growth.

Jay Powell just never understood us, and he and he alone – Steve Mnuchin gets an assist – is responsible for shaving a point of GDP growth off the Trump economy annually through the 2020 election. That’s the difference between a 3% growth rate and a 4% growth rate, and, as the Boss might say, that’s HUGE.

If we had been able to grow faster, unhindered by Jay Powell, Trump surely would’ve won reelection. 

The only consolation prize I had was the ability to torment Steve Mnuchin in the Oval Office any time I so chose simply by bringing up the topic of Jay Powell in front of the Boss.

To be clear, I’m not a sadist.  I wouldn’t do this just to torture poor Stevie. But when I needed the Boss to maybe listen a bit more closely to whatever idea I was pitching and Mnuchin was fighting it, that would be a great time to play the Jay Powell card.

Two last points about Jay Powell: One, as a day trader, if you happen to short the stock market every time Jay Powell made a speech, you would’ve made a bundle of money virtually every time. Powell just has a very unique way of triggering market plunges, just like he did yesterday.

The second point I want to make this a more sympathetic one. This is a very important teaching point both for our Washington politicians and the touts and analysts at CNBC and FOXBusiness.

In the stagflationary environment, where both inflation and recession are the jokers in the deck, the Federal Reserve is a totally impotent institution. If the Fed tries to control inflation by raising interest rates, it will deepen any recession. In contrast, if the Fed tries to fight a recession by lowering interest rates, it will fuel inflation.  At its core, during stagflation, the Federal Reserve is just a one trick pony that can’t even perform a trick.

In fact, this was the harsh lesson of the 1970s stagflationary era when first President Gerald Ford and then President Jimmy Carter were whipsawed back and forth by a Federal Reserve trying to fight force one problem and then another.

I had to laugh at Senator Elizabeth Warren yesterday playing her populist card by berating Jay Powell for putting Americans out of work through recession in order to solve the inflation problem. The laughter came from Elizabeth Warren’s total lack of self-awareness about her role in the whole crisis to begin with.

Memo to Pocahontas: You voted for every single inflationary IED that the Biden regime has been exploding the economy with – from massive overspending to shutting down our oil and gas sectors.

My lasting broader point here is that there is much at stake in the coming debt ceiling negotiations; and from a pure structural economic perspective, it is critical that the Speaker of the House Kevin McCarthy hold firm in his ability to roll back and claw back a significant share of the Biden excessive expenditures in exchange for agreeing to raising the debt ceiling. These are indeed the times that try men’s souls and Kevin will be tested like he never has been before. Peter Navarro. Out.  If you want a transcript of this podcast, please go to