The Economics Show How the Fed fights back, with Don Kohn
64 snips
Jan 14, 2026 
Don Kohn, a former vice-chair of the Federal Reserve and now a senior fellow at the Brookings Institution, discusses the alarming criminal probe into current Fed chair Jay Powell, calling it an unprecedented attack on Fed independence. Kohn examines Powell's strong response and the potential political fallout. He explores the dynamics of new Fed leadership, warning against politicization. Kohn also talks about the implications of AI on productivity and inflation, emphasizing the need for data-driven leadership to preserve the integrity of the Fed.
AI Snips
Chapters
Transcript
Episode notes
Cuts Must Be Economically Justified
- A new chair claiming to cut rates for political reasons will face skepticism from FOMC colleagues.
- Any rate-cut case must be justified with conventional economic reasoning tied to the dual mandate.
Don't Use Rates To Finance Deficits
- Lowering rates to reduce government financing costs is not the Fed's mandate and would risk higher inflation.
- Using monetary policy to assist fiscal financing undermines price stability.
Candidates Differ On Institutional Loyalty
- Chris Waller is likely an institutionalist who values Fed independence and would probably reject the DOJ initiative.
- Kevin Hassett's public support for the probe raises independence concerns about his suitability.