In January 2026, President Trump picked Kevin Warsh to replace Jerome Powell as chair of the Federal Reserve. In Episode 025, Luke Tatum, Nicky P and Rob Brayton look at why they expect him to push for lower rates, whether the Fed is really independent, and why an interest rate is a price no committee can set well. They close with what you can control while Washington decides.
“What is an interest rate? It is the price of money across time”
President Trump has named Kevin Warsh as his pick to replace Jerome Powell at the Fed, and there's a lot to pick apart. Rob and I talk about what the pick says about where rates are headed, and why I think the whole idea of a committee setting the price of money is the real problem.
What We Covered
The candidate most likely to cut rates. Rob isn't surprised by the pick. Of the names in the running, he sees Warsh as the one most likely to go along with lower rates.
Does that make numbers go up? I don't think economics is the president's strong suit. His approach seems to be pushing for whatever makes the numbers go up now, and Rob points out that manipulating the business cycle only kicks the can down the road.
Economics in One Lesson. I bring up Henry Hazlitt's one lesson: look past the immediate effects of a policy to its effects on everyone, over time. Every intervention has knock-on effects across the economy.
“It’s creating a bigger and bigger bubble, and then at some point it will pop.”
Is the Fed really independent? The Fed is called independent, but its chair is nominated by the president and confirmed by the Senate. A truly independent body wouldn't need political sign-off for its leadership.
The price of money across time. An interest rate is the price of money across time. It reflects how people choose between spending now and saving for later, and no central planner can know the right price for 330 million people. I reach for a favorite Hayek line here and admit I butchered it.
Simple money works best. Rob points out that people traded across long distances for centuries without central planning, all the way up until 1913. Stable, simple money is what lets that kind of commerce work.
“You cannot do that without having broader repercussions across the economy.”
Will AI be deflationary? Warsh believes AI will bring prices down. I'm not so sure when the cost of computer parts and electricity keeps climbing.
The S&P 500 priced in gold. Rob points to one of our favorite sites, PricedInGold.com, which by his reading shows the S&P 500 at a 12-year low measured in gold. Priced in dollars it looks great. Priced in real money, not so much.
A Morgan Stanley man. Warsh came out of Morgan Stanley, and to me he's about as conventional as big banking gets. Rob's advice is to see what happens and focus on what you can control.
Key Takeaway
We can't control who runs the Fed, but we can control where our own money sits. Rob and I keep ours in what I call the most boring financial instrument there is: dividend-paying whole life insurance from mutual companies. Cash value grows on a contractually guaranteed basis, and we can use it through policy loans without asking a bank for permission.
Key Moments
[1:00] The Candidate Most Likely to Cut Rates
[2:00] Does That Make Numbers Go Up?
[4:00] Kicking the Can Down the Road
[5:00] Economics in One Lesson
[8:00] Is the Fed Really Independent?
[10:00] The Price of Money Across Time
[14:00] Commerce Comes Naturally
[16:00] Will AI Be Deflationary?
[17:00] The S&P 500 Priced in Gold
[19:00] The Most Boring Financial Instrument
“We can’t control this decision, so what can we do with our own money?”
Related Episodes
Episode 004: Is the Fed's Dual Mandate Failing America? Jerome Powell, the 2% Inflation Target and the Volcker Era
Episode 008: What Does a Fed Rate Cut Mean for You? Easy Money and Who Benefits First
Episode 045: The Fed's $41 Trillion Problem: Why the White House Stopped Showing the Numbers
Want the full conversation, including Rob on the S&P 500 priced in gold? Listen to the full episode and grab the free toolkit at PerfectSpiralCapital.com/podcast.
FAQ
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Is the Federal Reserve independent?
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What is an interest rate?
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How can I protect my money from Fed decisions?
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You can't control who runs the Fed, but you can control where your money sits. Luke Tatum and Rob Brayton use dividend-paying whole life insurance from mutual companies. Cash value grows on a contractually guaranteed basis, and policy loans let them use that money without asking a bank for permission.
Show full transcript
Between The Lies: Episode 025 Transcript
Nicky P: As we prepare for the Fed to change leadership, I am reminded that Trump might be the worst person in the world at making political appointments. Welcome to the Between The Lies Podcast, your weekly lesson on how to approach an uncertain world with positivity and balance. I'm Nicky P here with my good friends and money brains, Luke Tatum and Rob Brayton from Perfect Spiral Capital, as they help us navigate the snares in pitfalls in a world of trust me bro, economics.
Stick around to the end of the video for their free toolkit and be sure to like and subscribe if you enjoy what we're doing. Gentlemen, what are your thoughts on the man waiting in the wings? Am I too much a pessimist?
Trump's Pick to Replace Jerome Powell [0:00]
Luke Tatum: You know, I think there's a lot that we need to pick apart here, but we're dealing with this Kevin Warsh gentleman and his, potential taking over of Jerome Powell's job at the Fed.
You know, I don't see a lot to like, I guess is my quick one sentence answer, but, we can, we can dig in. I mean, Rob, what's your first pass at this?
The Candidate Most Likely to Cut Rates [1:00]
Rob Brayton: I would say I'm, I mean, I'm not surprised, right? I mean, we kind of knew that going into this, Trump was gonna try to pick someone who would at least be most likely to follow through on what he feels is necessary for the economy.
Then again, we all know how great of an economist the president is, so, that, that may or may not be a good thing. But from what we can tell, you know. It. It's hard to say if he's going to be great or not great, but it does seem that he's most more likely than not going to try to. Cut interest rates at some level.
You know, as we've talked about before on this show, is that the right way to go if you're truly trying to strengthen the quality of the currency, the quality of the money supply? I mean, we, I think we all agree that's not actually the best thing to do right now, but hard to do that when you're trying to.
When you have a administration that's so focused on trying to keep pumping the number as high as you know, bigger, number better, faster is the way to go. Right? So seems to be the direction.
Does That Make Numbers Go Up? [2:00]
Luke Tatum: We were joking before we started recording, you know, about how it's like. Trump has a meeting with economic advisors and I feel like it's just like, does that make numbers go up?
Okay, let's do that. You know, I mean, it's like, so not, he's not an economist, I guess is the nice diplomatic way to say it. Not even close. Whatever is the most opposite thing from an economist. You know, and he's shown that over and over again, right? With going back to even like COVID stimulus checks and all these other things.
But it's just like. Oh, we need the interest rates to go down. 'cause interest rates going down means more business and more business means more money and whatever it is that he thinks, you know, I don't know. And it's not just Trump. I mean, we live in kind of this mercantilist, Keynesian sort of world these days where, you know, it's prop up prices.
Everything always has to be increasing. You know, that's kind of. You know, two thousands and onward. Corporate America is just, you know, every shareholder must be happy all the time. You know, we can't have, we can't have the business cycle, right? And we could talk about business cycle theory, but like, you know, things have to correct from time to time, right?
Because humans have imperfect information. And so. Are we just exacerbating the problem? I, you know, I don't, I don't necessarily wanna turn this into like a Austrian business cycle theory like episode, you know what I mean? But
Kicking the Can Down the Road [4:00]
Rob Brayton: Yeah, but I do think it ties in here though, right? Because you actually see how the, those who are in power have been trying to manipulate the business cycle to prevent the correction.
And they've been taking lots of steps to be able to do that. But all it's doing is kicking that proverbial can down the road. It's creating a bigger and bigger bubble, and then at some point it will pop. Like there is no way around it. And I think that's the really sad thing is because who suffers for that?
Everybody else, all of the average person in the United States who trusts their politicians to do the right thing, they're the ones who suffer for it. I mean, how many people in Congress can you definitively say, especially those on like the economic committees and stuff, actually really understand how economy works.
We can clearly see from their rhetoric that we know they don't.
Economics in One Lesson [5:00]
Luke Tatum: The people who do will never get onto those committees. I mean, that's kind of the idea, right? What a silly thing to put to a committee and to have, you know, political favors determine who gets on these boards. It's like. You know, it's an exercise in futility.
It's like the, you know, give a million monkeys, a million typewriters sort of thing. You know, it's like I'm still waiting on the Great American novel to be produced by these jokers, you know? And so it's so like, it's sad and it's like comically sad, but, you know, you are reading right now Henry Hazlitt's book Economics in One Lesson, so, you know, wonderful book.
And, but the lesson is, you know, the one lesson is to consider what happens in all parts of the economy, not just what happens in one particular thing. And so we talked about this kind of in our morning meeting, you know, that wasn't recorded, but it's like the, you know, you say, oh, farm. Prices, crop prices are down, so we're gonna do X thing to help that.
We're gonna prop up the price of corn or whatever. And there, you know, you get into ethanol and all these things that have kind of spawned from that, but it's like that's not a onetime thing. It doesn't happen in isolation. You can't support farmers or support. Auto manufacturing workers or support, you know, wall Street or any, anything, you cannot do that without having broader repercussions across the economy.
And those repercussions are not all gonna be good, right? I mean, you are causing problems when you intervene in the economy.
Every Intervention Has Knock-On Effects [6:00]
Rob Brayton: I think the way that you've mentioned that works really well because if you do one thing in one area. It will have a some or some sort of an effect in another area of the economy.
It what unintended consequence or not it will. And the challenge that we see is there's so many of these things that have taken place over time that any shift now has drastic impacts across the entire us. It doesn't matter what industry you start in, it has knock on effects someplace else. And then you take a Fed chair, you know, who's gonna probably listen to the president and say, well, we're only gonna focus on interest rates.
Well, that's another one of those areas where you're doing one thing and it has all these other impacts over the rest of the economy. And you know, I just, that's the thing that, you know, I think Hazlitt did a great job of. Highlighting is you have to look at all pieces. And that's really hard for a lot of people to do.
It's deeply conceptualized thinking. And let's face it, most people don't think that way. I think e even both of us have struggled with that at times, you know, prior to doing what we do, right? So, and, and it's a growth process. It's something that we all have to learn how to do. And, you know, as we grow, as we learn more.
We see things differently and are we sitting here saying, well, we should be the Fed chair? No, we're not. But could we, I mean, using our collective wisdom and understanding, could we potentially do a better job? I'd argue to say yes, but there's a reason why. There's a reason why we would never get that role, and it's because we would do a better job and other people wouldn't like it.
Is the Fed Really Independent? [8:00]
Luke Tatum: Because the Fed is, and always has been a politically like pressured organization, right? You have this such a strange position that the Fed is in, and I, we may have talked about this in a previous episode, but like, just to recap for a moment, a private company does not have. You know, nominations at from the president for who's gonna be the next Fed chair.
You know, that, and it doesn't have confirmation of who gets to take that role from Congress. You know, like why? Is the political establishment involved at all? If the Fed is an independent organization free from political bias, right? Like that doesn't make sense. You know, Ford Motor Company doesn't go through that process to decide how they're gonna run their business.
Right? And it's not even just that, like the US has stock in the Fed or something like that. Like it's a, you know, for-profit publicly traded company or something. But. It's this weird, kind of like unique entity that is not independent, right? And, and so you have this situation where presidents are vying to control.
It's just like the Supreme Court in that way, right? They're vying to decide who gets to be the guy. And so having what is and, and should be completely obvious to everyone. A yes man for Trump, be the new Fed chair. Like we have to go back to again, what a, what a complete ignoramus this man is when it comes to economic law.
Right? The hubris of man. Right. We think that we can control, you know, the curious task of economics is to, you know. Pretend that we can is to educate men on that. They cannot control what they imagine that they can design. I just butchered that quote. I butchered it, but, you know, it's, it.
The Price of Money Across Time [10:00]
Luke Tatum: We don't get to control economics. You and I don't get to control economics. It's a, it's a natural process. It is the culmination of the individual actions of all of the people in really the world. But like, even if you wanna just say the US for the purposes of this conversation for a second, you cannot, no one can.
Understand and make a meaningful decision for 330 million people, 350 million people, whatever, it's, nobody can do that. AI can't do that, right? Because everyone has competing interests, and so the. The free exchange of information in the form of the buying and selling of goods and the negotiation of prices and all these things, that is what an economy is, and to have political intervention into that wonderful, amazing, coordinated natural process is necessarily a distortion.
It is messing up a communication of information. And so what is an interest rate? It is the price of money across time, right? It is how willing people are to save versus spend, to wait versus consume. That's what it is. The Federal Reserve chair doesn't know what that's supposed to be. They can't know.
This talk of data driven decision making and all this, it just makes me groan, you know?
Simple Money Works Best [12:00]
Rob Brayton: Well, it's one of those things where. You surprisingly enough, the more simplistic you keep things, the better off it runs from an economic perspective. So if everyone operates from a single, a singular stable money supply, everyone will decide naturally when the right time to borrow is, when the right time to save is, and it will naturally occur.
We don't need. Governments, we don't need people intervening into that process to try to control it. That's, I mean, our, a lot of our nations, like, let's take the United States for an example. You had intercom, you know, intertribal trade before the white man showed up on this, on the shores of this country, and it worked like they were, they were trading back and forth, had an economic system that worked just fine.
For their, for what they did. And we don't like that. That wasn't complicated. It wasn't hard. It was, oh, you have this item and it's equal to this item. Okay, we can do trade. And that's how it was.
Luke Tatum: Intuitive. You know, do I value this more than my thing I'm giving up? You know, do I value this animal hide more than my, you know, whatever it is, you know, fish that I caught.
Rob Brayton: Yeah, I mean, economy is the flow of goods and services back and forth between parties, and they've agreed upon what that differentiation should be, and instead of trying to. Manipulate it all, which is done on purpose for a reason. So other people, you know, make money from it. Sadly we could do without it and, and we did do without it for quite a long time, up until 1913.
Sadly,
Commerce Comes Naturally [14:00]
Luke Tatum: You know, as an interesting aside, this has really very little to do with our stated topic for this episode. But no, like the, you know. There's this idea, you know, that it's just business and like that, that commerce is this wicked evil thing, right? And. So you imagine, oh, all these evil people came in from Europe and other countries, you know, other places across the world.
And they came to the North American continent and they started to, you know, steal all this land and all these resources from Native Americans. And, you know. If you actually study some of that stuff, like courts, colonists, courts sided with Native Americans in disputes about property and stuff. In almost every case it's like an overwhelming majority of every case that was ever brought, on something like that.
It's like, you know, the government certainly. Mistreated and abused these people and you know, forced them onto reservations and all these things. But private parties were not doing that. Like people were trying to find ways to engage in commerce. It's a natural, like commercial activity is social activity, you know, it's natural and good to exchange and say, you know, Hey, I've got a abundance of chicken eggs.
What would you like? To trade with me, you know, that it's as natural as can be. And it's this, all this weird abstraction that we've come up with as complicated beings that like to just make things hard. That that just removes all of that. And I'm not talking about going to a moneyless society, by the way we're talking in those terms.
Will AI Be Deflationary? [16:00]
Luke Tatum: But it's just so funny to me like how everything. Natural and normal is like vilified in some of these conversations anyway, like I say, that's a total aside, this Warsh guy. Right? So other than being a yes man, another thing I kind of wanted to talk about is that he believes that AI will be deflationary.
And it's gonna have a downward pressure on all of these things in the economy. It's gonna make everything better. The US is gonna win big and all this, I even pulled some quotes and stuff. We don't have to get into 'em, but it's just so silly again to say, oh, productivity is gonna go up. Well, yeah, but has anyone noticed how much like.
The cost of PC components are going up. Has anyone noticed the cost of like electricity? Has any, is anyone paying any attention at all? No. We're just gonna look at this one thing and say, number, go up. Good job. Pat each other on the back. Like, it's so unbelievable.
Rob Brayton: Well, it's the classic blunder of only looking at one thing in one p of the economy and.
Now. Well, yeah. Oh, it's great, right? Because this happened. So it's framing people's minds already to say, here, only look at this. It means that things are going well. When in reality it, that's just not how it works. There's other, it, like we were just talking about, it's very complex and there's a lot of pieces.
So
Luke Tatum: It's like the S&P 500, right? I mean, people will go, you think the economy's doing bad. The S&P 500 is up, we're at all time highs, baby. You know, and it's. I don't know.
The S&P 500 Priced in Gold [17:00]
Rob Brayton: Well, you know, our, one of our favorite sites that we like to look at, periodically PricedInGold.com, the S&P five hundred's at a 12 year low, according to if you price it in gold.
So what is that really saying? You know, it's all about your context and all about what your reference point is, and we know gold to be one that's continued over years and years and years, and we can see what's really going on there. And you know, I, especially when you think about how much of the S&P 500 is made up of AI and AI based stocks like Nvidia and Microsoft and some of these others that are heavily, invested in those areas.
I, you know, there's a potentially negative consequence that's brewing in that, in that area.
A Morgan Stanley Man [18:00]
Luke Tatum: Right, right. You know, is there anything else that you wanna get into with this Warsh guy? I mean, to me, he's like, he's Morgan Stanley. He's as conventional and as you know. As typical of the big banks and institutions as he could really be.
I don't, you know, I, that's what I got from it anyway. But is there anything you wanted to dive into?
Focus on What You Control [19:00]
Rob Brayton: I would, I would just say like, let's see what happens. You know, let's let you know. Maybe he proves us wrong. Maybe. Turns out he's very good and actually wants to strengthen the dollar and do a lot of these things.
We could be surprised. We can be optimistic for the upside. But in the interim, I think we have to continue to plan and. Focus in on ourselves of what do we control? We can't control this decision, so what can we do with our own money? Where can we put our money in a way that's gonna benefit us for the long run and create a stable system that no matter what happens and who the Fed chair is, it goes up every day.
And, and that's a lot of what we do. So I don't know if you wanna touch on that anymore as well.
The Most Boring Financial Instrument [19:00]
Luke Tatum: Yeah, yeah. I mean, just right. Do a lot with the infinite banking concept, right? That's our focus, that's our passion here at Perfect Spiral Capital. And so we're dealing with, you know, whole life contracts.
A lot of what we're talking about, dividend paying whole life is the most boring financial instrument that you can imagine, right? Because it just does what it's supposed to do. It's not the ups and downs. It's not the, oh my gosh, the stock market's crashing. What do I do? It's just consistent, reliable compounding growth all the time, and it.
It's not having a permission slip Anytime you wanna access money, you know, I don't have to go beg for a loan. I just say, Hey, can you send me some money? And that, that's how we manage our affairs. Right? And that is the kind of thing where we can just have this armchair philosophize and conversation about the Fed chair because it doesn't really affect me that much.
You know, it affects me, you know, in some downwind ways, but it's not like. I'm buying US treasuries or something like that, where I have to worry what those direct immediate impacts of a lowered interest rate are. And, this, if anything, is gonna make some other activities that we're doing a little bit easier.
So, you know, I just love it. I just love it and, I love having that freedom.
Rob Brayton: It positions us to be able to have. Have the powder ready when it's necessary. Right? And that's the big thing, is it gives you time to really understand what's going on, really understand a particular segment that you feel you could invest in and go all in on it if you want to.
You don't have to, but you have downside protection even when you do, right? So it allows you to do, you know, have everything in a safe place, but still go do all the other things and. I think that's a great, great piece and we have that level of easy access to be able to go make it happen.
Luke Tatum: Yeah. I mean, and so just to everyone listening, you know.
We love to educate on this topic. You know, the positive spin to have on this story. You know, it don't worry about who the Fed chair pick is gonna be. Like if they cut interest rates to 0%. Is that gonna have some negative impact? Yeah, it is, but. There's also ways that you can navigate these things and there's a, there's a much more grounded position that you can be in.
So that's, I think, the message of hope that comes outta that. And, you know, I'm here for it one way or the other. Right. I guess it remains to be seen if Warsh is going to be confirmed, but I would be shocked if he was not. So, I'm gonna take it as a given and just kind of keep on rolling with what I'm already doing.
But. You know, I think that's about it for me. I mean, are you good if we wrap up?
Rob Brayton: Yeah, sounds good to me. Why don't you take us out?
Outro and Free Toolkit [22:00]
Luke Tatum: Okay. Well, yeah. So, thanks so much for joining us again on this week's episode of the Between The Lies Podcast. If you watch the full episode, I know you are interested in the world of money, if you would like some.
Assistance navigating the world of your money. We do not manage other people's money. At Perfect Spiral Capital, we teach you to manage your own money. So if you would like some, free toolkit items that may assist with that, we've got two free full video courses to teach you the Infinite Banking concept and the copy of my Amazon bestselling book Between The Lies.
All that's for free. All we ask in exchange is your email address. So go to perfectspiralcapital.com/podcast and check that out. We'll see you on the next episode.
