Adam Posen on a Surreal Jackson Hole in a Post-American World

Joe Weisenthal (0:02)

Bloomberg Audio Studios, podcasts, radio, news. Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:23)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, we're still here at Jackson Hole. It's funny saying things like we're still here because we're recording all these episodes at the same time, and we don't really know exactly when you're listening, but this is yet another Jackson Hole episode.

Tracy Alloway (0:34)

Another special missive from Jackson Hole.

Joe Weisenthal (0:36)

So I think there's an element, if I'm being honest, a certain surreality of Jackson Hole this year, because it is an academic conference, historically, and setting aside the chairman's speech, which we'll talk about more. Setting aside that speech, you know, is a place for like talking about important issues and academic economics, and that's great, and I love that stuff, and it's super interesting and all that. And yet, the big story is really the attack on the whole premise, on the independent central banks. And yet, it feels like everything but that gets talked about.

Tracy Alloway (1:08)

I think that's right. And you said setting aside Powell's speech, but it was very, very noticeable that in his speech, he could have taken it as an opportunity to talk about things like central bank independence, or things like data integrity, given what's been happening at the Bureau of Labor Statistics. But he chose not to.

Joe Weisenthal (1:24)

Yeah, great point. You're right. Like he could have. Because we were wondering, like, you know, this is going to be his last speech, last time speaking as the Federal Reserve Chairman. So he could have said something really big about reflecting on a career of being a central banker and the importance of all these things. He gave a macroeconomic policy speech.

Tracy Alloway (1:43)

There's also this other layer, which is a lot of what he's trying to do now, which seems to be to focus on labor market deterioration and maybe look through some of the upside risks to inflation right now. That only happens if you have a credible central bank that can pin longer-term expectations for inflation down. The only reason he's able to do some of this is because of the credibility of the social capital that the Fed has built up over decades.

Joe Weisenthal (2:09)

Exactly right. And the reason why we're talking about this, just to be very clear, it's because of the attacks from the Trump administration on Jerome Powell, also other Fed governors, also the whole thing. And this is just part and parcel of one attempt to sort of restructure how the US does both domestic and international policy, because there's the tariffs, obviously, and those intersect with monetary policy. But then there's just also the sort of changing relationship with other countries that gets into things like, let's get payment for security or something like that. Like big, many like big hinges and pivots at one point.

Tracy Alloway (2:47)

It's, I mean, I don't think it's hyperbole to say it's an attempt at a restructuring of the global order, both in terms of the economy via the international financial system and also in terms of security. I think the confusing part for me is, it is a fact that America has the world's biggest economy. America came through the pandemic a lot better than a lot of other countries. We ended up having lower inflation than a lot of other parts in the world. And yet the Trump administration seems very, very convinced that the US is somehow losing out from the current international order, or maybe they feel that there's just more that they could get from restructuring it. So I think we should talk about maybe the motivations behind some of this and then what the new world could possibly look like.

Joe Weisenthal (3:35)

Well, we literally have the perfect guess. Someone we've had on the podcast, someone who we always catch up with in Jackson Hole.

Tracy Alloway (3:41)

It's becoming a tradition.

Joe Weisenthal (3:42)

It's a tradition. And he's literally the perfect guess, because he used to be on the Monetary Policy Committee at the Bank of England, so he has all the monetary policy bona fides. He is currently the president of the Peterson Institute for International Economics. And he is the author of a recent article, The New Geography, Who Profits in a Post-American World that was in Foreign Affairs. And he's not one to sort of dance around big issues.

Tracy Alloway (4:07)

He doesn't mince his words.

Joe Weisenthal (4:08)

Yeah, so this is what I think perfect goes to talk about. There's someone that was like, OK, if we talk to Adam Posen, we can actually really like talk about all these things that maybe many people are anxious to talk about. So Adam, thank you so much for coming back on Odd Lots. Great to see you again here at Jackson Hall.