Andrew Ross Sorkin: Janet Yellen, Fed ‘got it wrong’ on inflation, was ‘a bit political’ in response


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The New York Times released a new episode of its “Sway” podcast on Monday featuring 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” about inflation.

Speaking about whether the United States is “heading into a mega recession,” host Kara Swisher noted that Sorkin “recently interviewed Janet Yellen, who kind of missed her” and “the president of Fed Jerome Powell says it’s a possibility, but unlikely,” then asked how he thought the two were “handling things.”

“Well, let’s be honest. They were wrong. They were wrong,” Sorkin replied. “They have said they were wrong. I think why they got it wrong is probably more interesting,” he continued.

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US President Joe Biden (C) meets with Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen, in the Oval Office of the White House May 31, 2022 in Washington, DC.  The three met to discuss the Biden administration's plan to tackle record high inflation.

US President Joe Biden (C) meets with Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen, in the Oval Office of the White House May 31, 2022 in Washington, DC. The three met to discuss the Biden administration’s plan to tackle record high inflation.
(Photo by Kevin Dietsch/Getty Images)

“You know, if you’re Janet Yellen, she’s in political office and they wanted to make this kinda hot economy work. They said that. They felt they needed to. And that was a mistake,” he said. said Sorkin.

“Jay Powell, I’m not sure I want to spin the economy per se, but there was a period where he had the opportunity to try to curb. And he didn’t, in part because he was in place to be renewed [by the president],” He continued.

Sorkin alluded to President Biden’s nomination of Powell for a second term. If Biden had been unhappy with Powell’s monetary policy, he could have named someone else.

“And if he had braked before that, which is when, I think, he would have wanted to, we don’t know if he would still have the job,” he said. “So to me, all of these things are a bit political,” he continued.

Sorkin also expressed fascination with the certainty expressed by Yellen that there will be no recession.

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US President Joe Biden announces the nomination of Federal Reserve Chairman Jerome Powell for a second four-year term, in the South Court Auditorium of the Eisenhower Executive Office Building at the White House in Washington, USA United, November 22, 2021. REUTERS / Kevin Lamarque

US President Joe Biden announces the nomination of Federal Reserve Chairman Jerome Powell for a second four-year term, in the South Court Auditorium of the Eisenhower Executive Office Building at the White House in Washington, USA United, November 22, 2021. REUTERS / Kevin Lamarque

“At your talk, she said there wouldn’t be a recession. I was kind of surprised. I was like, shh, Janet. At one point, I was like, don’t be so adamant,” Swisher recalled.

“I was fascinated that it was so definitive,” Sorkin replied. “And I also think you’re in a position where you have to follow what the president says. If the president says, I need you to be there to say there’s no recession coming. , that’s what you say,” he added.

Sorkin referenced a book that allegedly showed Yellen privately contradicting the public positions of the Biden administration.

“There was a report about a book coming out, where apparently Janet Yellen was saying internally that maybe we shouldn’t be asking for so much stimulus money. That was about a year and a half ago,” he remembers.

“And I actually thought the book, if it was true, made her pretty pretty and smart. But the second the excerpts from the book came out, she was over there putting out press releases saying , no, no, I didn’t. I wasn’t that smart. I wasn’t doing any of those things,” he said.

“Why? She has to do this, 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

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 were rumors around Washington D.C. that Yellen “could lose his job”.

Regarding the Fed’s current policies to reduce inflation, Sorkin said the Fed is trying to tighten the money supply in order to make it harder for consumers to buy things. The objective is to lower prices and fight against 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, it’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 its highest level in 40 years and many economists and business leaders are expecting a recession in the near future. Poor economic conditions have led to a drastic increase in people’s spending on basic necessities, such as energy and meat. Accordingly, Joe Biden the popularity rating has dropped at a historic low.


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