WASHINGTON, DC – NOVEMBER 30: U.S. Treasury Secretary Janet Yellen (L) and Federal Reserve Board Chairman Jerome Powell (R) testify during a hearing before Senate Banking, Housing and Urban Affairs Committee on Capitol Hill November 30, 2021 in Washington, DC. (Photo by Alex Wong/Getty Images)
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The New York Times published a new episode of its ‘Sway’ podcast Monday that featured New York Times financial columnist and CNBC anchor Andrew Ross Sorkin saying that Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell “got it wrong” on inflation.
Talking about whether the U.S. is “headed for a mega recession,” host Kara Swisher noted that Sorkin “just recently interviewed Janet Yellen, who kind of missed it,” and “Fed Chairman Jerome Powell says it’s a possibility, but not likely,” then asked how he thought the two were “handling things.”
“Well, let’s be honest. They’ve gotten it wrong. They’ve gotten it wrong,” Sorkin responded. “They’ve said they’ve gotten it wrong. I think why they got it wrong is probably more interesting,” he continued.
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U.S. President Joe Biden (C) meets with Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen, in the Oval Office at the White House on May 31, 2022 in Washington, DC. The three met to discuss the Biden Administration’s plan to combat record-high inflation. (Photo by Kevin Dietsch/Getty Images)
“You know, if you’re Janet Yellen, she’s in a political job, and they wanted to run that economy a little hot. They said that. They felt they needed that. And that was a mistake,” Sorkin said.
“Jay Powell, I’m not sure wanted to run the economy hot per se, but there was a period of time where he had an opportunity to try to put the brakes on. And he didn’t, in part because he was up to be reappointed [by the president],” he continued.
Sorkin alluded to President Biden’s nomination of Powell for a second term. Had Biden been displeased with Powell’s monetary policies, he could have nominated somebody else.
“And had he put the brakes on prior to that, which is when, I think, he would have wanted to, it’s unclear whether he’d still have the job,” he said. “So all of these things to me are a little political,” he continued.
Sorkin also expressed fascination at Yellen’s expressed certainty that there will not be a recession.
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U.S. President Joe Biden announces the nomination of Federal Reserve Chair Jerome Powell for a second four-year term, in the Eisenhower Executive Office Building’s South Court Auditorium at the White House in Washington, U.S., November 22, 2021. REUTERS/Kevin Lamarque
“At your conference, she said there’s not going to be a recession. I was sort of surprised. I was like, hush, Janet. At some point, I was like, don’t be so definitive,” Swisher recalled.
“I was fascinated that she was as definitive,” Sorkin responded. “And I also think you’re in a position where you have to follow what the president is saying. If the president says, I need you to be out there saying there’s no recession coming, that’s what you say,” he added.
Sorkin referenced a book which allegedly showed Yellen privately contradicting the Biden administration’s public stances.
“There was a report about a book that’s coming out, where, apparently, Janet Yellen internally was saying maybe we shouldn’t be going for so much stimulus money. This is about a year and a half ago,” he recalled.
“And I actually thought the book, if true, made her look pretty good and smart. But then the second the excerpts of the book came out, she was out there putting out press releases, saying, no, no, I didn’t do that. I wasn’t that smart. I wasn’t doing any of those things,” he said.
“Why? She has to do that, because politically, again, she’s in this box.”
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Treasury Secretary Janet Yellen testifies during the House Financial Services Committee hearing in Washington, U.S., September 30, 2021. Sarah Silbiger/Pool via REUTERS
Swisher noted that there are rumors around Washington D.C. that Yellen “may lose her job.”
Regarding the Fed’s current policies to bring down inflation, Sorkin said that the Fed is trying to tighten the money supply in order to make it harder for consumers to buy things. This is intended to drive down prices and combat inflation.
“It’s perverse to say, but the Federal Reserve, by raising interest rates, is trying to slow things down by making everything more expensive. And so far, that’s working,” he said.
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Sorkin noted that it is “by design” that “more and more people are going to have less and less money.”
Inflation is at a 40-year high, and many economists and business leaders expect a recession in the near future. The poor economic conditions have led to drastic increases in people’s expenses for basic necessities, such as energy and meat. As a result, Joe Biden’s approval rating has sunk to an all-time low.
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