Wall Street Week Rocking The Boat | Trump vs. Powell, 50 Years of Vanguard, Trade Economics
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May 2, 2025 Susan Schwab, former U.S. Trade Representative under George W. Bush, discusses the long-term effects of Trump's tariffs on trade and economic inequality. Salim Ramji, CEO of Vanguard, reflects on 50 years of passive investing and the firm’s journey from $100 billion to over $10 trillion in assets. They explore the critical relationship between trade policy and monetary strategy, emphasizing the need for equitable trade practices. Additionally, they stress the importance of diversification and sensible investment strategies amid market volatility.
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Avoid Premature Fed Rate Cuts
- The Fed should avoid cutting interest rates prematurely to maintain confidence in its anti-inflation stance.
- Easing too soon risks longer-term economic weakness and increased mortgage rates.
Fed's Crucial Independence
- The Federal Reserve gained significant independence after its 1935 restructuring, reinforced by 14-year appointed terms for governors.
- This independence helped maintain economic stability despite political pressures and was revitalized under Paul Volcker's leadership.
Trade Policy Grows The Pie
- Trade policy ideally grows the economic pie rather than acting as a zero-sum game.
- Careless tariffs on inputs risk making domestic industries uncompetitive internationally.