Name: Federal Reserve Issues DIRE WARNING For America
Uploaded: 2025-07-27T18:09:55.000Z
Duration: 8 min 24 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Basic passive voice

So the chairman of the fed was questioned by the house for at least 3 hours and the senate for another 2 hours today whether he is planning to lower down the interest rates.

Adverbs of manner

Everyone is just waiting for him to finally lower down interest rates.

So here in this video, let me break down everything for you and you don't have to watch 5 hours of the chairman of the fed being questioned.

Let me make a disclaimer, there were some really dumb questions and it's very difficult to literally pass through them.

So she is kind of referring to statistics to ask a question but she doesn't even know what statistics she is referring to.

This is the kind of questions that we are actually getting.

But anyways, there were some really good questions actually.

One of the questions he was asked is that whether the fed's decision making is being impacted by Trump's bullying.

And he replied that the job of the fed is to deliver a good economy for the benefit of the American people.

And anything else, and he means literally here the Trump's tweets, is that anything else is kind of a distraction.

So Donald Trump is splashing his anger on social media and tweeting literally calling him different names and he is simply, I don't care about that, call me whatever you want.

I hope congress really works this very dumb hard-headed person over.

This is literally how angry Donald Trump is.

If you literally just go to truth social to Donald Trump's page, you will find probably at least a few dozen of posts by Donald Trump criticizing the chairman of the fed.

If it was to the will of the president, I guess he would actually remove him.

But removing him is so difficult, he would rather wait for him to literally just go away next year when this term is going to be over.

But he was also asked whether he is going to lower down interest rates.

He is going to wait for clearer economic data.

And he is also supported by Ray Dalio, one of the most important investors in the country, or I would say in the world.

The fed is in a very difficult position and it tries to balance the benefits of cutting interest rates with maintaining the value of the money.

When you lower down interest rates, you benefit everybody from one side, because everybody now has cheap access to the capital.

But on the other side, you're devaluing the value of the money, the savers, the people who keep their money in safe deposits, the people who buy treasurables, especially when we talk about largest institutions or foreign governments, the value of their dollars are going to go down.

But if you don't have any kind of savings, you're not going to suffer.

So it's very difficult to balance between the two.

Now, another thing that he was asked about the tariffs and its effect on inflation, tariffs are likely to push up inflation, whether this will be a one time price increase or a persistent issue.

We really don't know how much of that is going to be passed through the consumers.

It's not yet clear for the fed whether it's going to be like a one time increase or prices will continue increasing.

And I want you to take a look at this chart because we haven't had this kind of increase in tariffs in the last 70 to 80 years.

Last time the United States had this kind of high tariffs was during the Great Depression.

Before World War II, the world was a completely different place.

The United States did not have the global reserve currency and the United States was not the largest and the major economy of the world.

However, the situation is very different right now.

Increasing tariffs to this level is literally one of the biggest risks on gamble that America is taking and you actually need time to see how is that going to impact the economy.

Imagine you are raising tariffs so high that you never had this kind of high tariffs in the last 80 years.

So I think the Fed is doing a good job over here.

There is also a theoretical study by the Fed that every 10% point increase in tariffs will result in a direct increase in prices by at least anything between 1 and 1.5%.

However, we don't know the final outcome of the tariffs, whether they will be 20%, 30% or maybe even 50%.

Other peak tariffs were probably as high as 255% in China.

And as for now, we don't have trade agreements with multiple countries.

Another thing that he mentioned is that the economy remains solid, with a low unemployment rate and a labor market near maximum employment.

United States continues to add hundreds of thousands of jobs every year.

And in May, it added almost 140,000 jobs, prior to that it was 145,000.

And there isn't a clear sign that it's going to slow down any time soon.

I mean, if it slows down, maybe there is a good reason to lower down the interest rate.

But if the economy is growing and interest rates are more than 4%, maybe you want to keep it like that in order to maintain the value of the dollar.

Because again, remember, the first priority of the Fed is to maintain the value of the dollar and then boost the economy.

And he said that inflation is still above the Fed's target of 2%.

On some things such as food, for example, it's almost 3%.

Energy has gone down because oil prices have gone dramatically over the last 6 months.

Everybody is thinking that oil prices could surge because of the conflict in Middle East.

However, it seems like that's not happening because Donald Trump somehow struck a deal between the two countries.

But the goal at the end of the day is 2%.

United States continues to pursue the policy of inflation of 2%.

Otherwise, those countries will not keep the dollar as the reserve currency, since the value will be shrinking so much that it makes no sense.

Of course, there was a period of high inflation during 2020 and 2022, but that should not be repeated.

And that is the responsibility of the Fed.

For the time being, we're all well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy.

But the problem is that with Trump, you never know and you have to wait until he's out of office.

Like how are you supposed to know what Trump is going to do?

It's literally every single day a new adventure.

What Trump is going to take his policies in China, on European Union, on Canada.

Today it could be one thing, tomorrow it could be a completely different thing.

And that's a very different approach from the Fed's approach.

He wants to be unpredictable because politics is brutally hard.

And when no one knows what exactly you want to do, you can take whatever you want and everybody will be surprised.

And everybody will take your word very seriously because you could change your opinion at any moment.

However, when you're managing the Fed, people trust you because you are predictable.

So maybe either it's going to be until Trump is out of the office before they lower down the interest rates, or maybe he will be replaced next year and the next chairman of the Fed will instantly lower down interest rates.

He was also asked whether he's going to lower down the interest rates in July.

He did not comment on that because he doesn't want to drive any kind of speculation.

However, there are other governors of the Fed who hinted that there could be, or maybe it's time for the Fed to actually lower down the interest rates.

Yes, but that's what we have been saying literally since the end of the last year, or even probably like the summer of the last year.

But the Fed continues to remain with their policy of keeping the rates at the same level because of so many unpredictabilities.

And everything that happened over the last few months only indicates the fact that there is going to be more unpredictability, which I assume that the Fed most likely is not going to lower down the interest rates in July of this year.

And he made it clear that the bond market is very stable.

Because remember, the bond market is the foundation of the US economy and the foundation of the global economy.

And it's part of his responsibility to ensure that the bond market works the way it works, that it's functional, it's smooth, and nobody has any doubts on it, even if it's against the will of the president.