I don't even know if there's a credible case to raise at all because, I mean, you could argue that core CPI is only 2.4%, that a lot of what is keeping inflation hot is a supply shock driven by higher oil prices, which theoretically should be temporary, and that the economy isn't showing classic cases of overheating, which is why the Fed would step in to slow things down.

Yeah, I agree.

There are a lot of opinions on whether a rate hike is needed at all.

The way I think about it is the narrative hasn't changed.

And the CPI report of a few days ago really didn't change the narrative.

And the narrative is they have had elevated inflation for over five years.

The labor markets, the employment side of the mandate are stable and solid.

So it's not obvious to me that the Fed can really do much about this.

We'd love to get your thoughts on your perception of Chairman Greenspan and his legacy.

Well, I didn't work with him directly, but I certainly heard a lot about him and his style of managing the Federal Open Market Committee when I was there at the Fed.

Certainly a great chair, 18 and a half years.

I would say for 15 of those 18 and a half years, he presided over the great moderation and his overall approach to policy was very successful.

as so often happens, sometimes long periods of success sow the seeds of trouble.

That's the insight that Hyman Minsky had, and I agree with it.

And I think in the last three years of Alan Greenspan's tenure, he may have not seen the signs of the coming real estate crisis and perhaps relied too heavily on his basic belief in the market system and his light touch in terms of regulation.

dennis we now have a new chairman of the federal reserve kevin warsh and we the market heard from mr warsh for the first time last week with this statement and with the press conference what was your takeaway

What do you think happens next?

It depends a lot on the Department of Justice and perhaps the White House's influence on the Department of Justice.

I don't know.

I have no inside information, but I think the near-term picture is set that Senator Tillis is not going to back off his position as long as this investigation continues.

And Jay Powell will stay as long as the investigation continues.

So it could very well delay the confirmation of Kevin Warsh, could delay it for conceivably quite some time.

So it's a very uncertain picture it seems to me going forward as to how this will play out.

For the balance of this year, do you think there is the potential for a rate cut to actually happen this year? Or do you think no matter who's in charge that we should expect to just be on hold for longer?

What do you think?

Oh, I think it's a positive decision.

Kevin, I think, will be a very fine chair.

He really checks off all the boxes.

Policy experience, particularly policy during a crisis period in 2008.

I think that kind of background or that kind of experience is really valuable in this world.

He's had private sector experience.

What do you think it's gonna be like for, hypothetically, a Fed chair that may or may not be Kevin Warsh by the time it's all said and done in terms of how he has to navigate the different kinds of challenges he will face now as opposed to what he's seen over the course of the last decade and a half?

What do you think is appropriate Fed policy for a moment like this? And what do you expect to play out now with both the DOJ subpoena into Powell and the way that the board in that nomination process is going to play out?

First, the economic situation is pretty strong growth in the fourth quarter, at least as indicated by some of the early calls.

For example, the Federal Reserve Bank of Atlanta's GDP now indicator, 5.3% annualized real growth in the fourth quarter.

That's carried over.

It looks to me like the economy at the moment is running pretty hot.

I think the committee is likely to interpret all that as a good time to wait and see how things develop over the coming weeks and even conceivably the coming months.

So I think the action taken by the Department of Justice could very well backfire.

So while we debate, you know, kind of what's happening with the economy and with inflation, what do you think about just the sheer kind of fact of the Fed chair getting the subpoena? What do you think the impact of that is going to be both in a policy sense and in terms of the independence question?

Well, it seems to me that we're potentially in a position where anything questionable, there hasn't been a criminal ruling on this or a court ruling of any kind, anything questionable that someone has done in the past, either during their tenure or before, could be cause in this frame, and that that could lead to a certain politicization, if I can say it straight, politicization of the Fed itself, which is supposed to be non-political, no?

Yeah, we'll see how this plays out.

It's very early.

Of course, the news only came out 24 hours ago or less.

And there's a lot of ambiguity around the situation.

So every day we'll probably get an update.

But as of now, it appears that Lisa Cook is going to resist this and say it's wrongful dismissal or wrongful termination.

Your sense that perhaps a cut could be warranted here?