VideoBenjamin CowenBenjamin Cowen

Jerome Powell's Last FOMC as Chair

The discussion links last cycle's aggressive tightening—from roughly 0.25% to 5.5%—with recent energy shocks to explain why Fed easing has been delayed and long-term and mortgage rates have stayed high. Political pressure on the Fed and the long-run effects of 2020–21 QE complicate policy choices, while a softening labor market leaves recession as the baseline outlook. Markets are rotating into perceived safe stores of value—capital moving from altcoins into Bitcoin and then into gold—as the crypto ecosystem weakens from memecoin issuance and developer flight, leaving Bitcoin flat versus gold.

Monetary PolicyInterest RatesEnergy SecurityRecession RiskLabor MarketGeopolitical Risk

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Key Takeaways

The Fed’s recent regime shift—from policy rates around 0.25% to roughly 5.5%—followed by early easing attempts has produced perverse outcomes: the Fed controls the short end while 30‑year yields and mortgage rates have risen even after cuts, meaning rate cuts do not reliably translate into lower long‑term borrowing costs.

Geopolitical energy shocks tied to Middle East conflict and oil spikes have materially delayed expected Fed easing (market pricing moved cuts from 2026 into late‑2027), and those same energy-driven inflation pressures make benign, timely easing harder and keep mortgage rates elevated.

Political pressure from the administration for lower rates risks eroding the Fed’s institutional independence, and the speaker expects that, in hindsight, markets may conclude Powell’s stewardship was preferable to politically influenced successors amid this fraught policy tradeoff.

Macro downside is rising: the labor market is already softening with essentially no net new job creation, and current low initial claims could quickly reverse—an uptick in layoffs would both steepen recession risk and alter the Fed’s policy calculus.

CRYPTO-SENTIMENT

Gensler Effect — Gary Gensler's January 2025 resignation failed to spark a sustained crypto rally—prices declined afterward, indicating regulatory change alone didn't revive market momentum.

“Gary Gensler steps down on January 20th of 2025 and everyone celebrates and everyone celebrates when he steps down. Bitcoin was at 109K.”—

Memecoin Wave — A flood of influencer- and celebrity-led memecoins diverted capital into low-quality launches, undermining retail confidence and doing little to strengthen protocol fundamentals.

“Gendler left. It then opened the floodgates to meme coins, to presidents launching memecoins, to influencers launching memecoins, to basically everyone launching memecoins without fear of any repercussions.”—

Fading Interest — Social engagement and retail faith in crypto have steadily declined after repeated rug pulls and poor memecoin outcomes, shrinking the sector's retail base despite occasional price spikes.

“Bitcoin had a top at 126K, but it was never truly a euphoric moment for the cryptoverse. social interest only ever trended down.”—

FED

Political Pressure — The administration has publicly criticized the Fed and pushed for lower rates, actions the speaker views as politically motivated attempts to influence monetary policy.

“It's also hard because even Powell himself said that this is completely unprecedented that you basically have the administration going after, you know, people at the Fed.”—

Institutional Risk — Sustained attacks risk eroding the Fed's independence and credibility; the speaker expects markets may later view Powell's stewardship more favorably than politically pressured successors.

“You could argue that ever since the Fed made that mistake with inflation is transitory, they've done a pretty good job of bringing inflation back down and trying to engineer…”—

INTEREST-RATES

Rate Tightening — The Fed raised policy rates from about 0.25% to roughly 5.5%, a sharp tightening whose effects continue to shape today's monetary and market backdrop.

“Now, before we get into that, I just want to say something that is objectively true, and you know, you can go verify it if you don't believe me, but…”—

LABOR-MARKET

Labor Weakness — The labor market is softening with essentially no net new job creation, signaling growing slack that heightens recession risk and influences policy timing.

“By the time they actually do cut, it'll be too late. The labor market is already somewhat weak. There's no net new job creation essentially.”—

MONETARY-POLICY-CRYPTO

Mortgage Stagnation — Mortgage rates remained elevated because premature Fed easing and recurring energy-driven inflation concerns prevented a sustained decline in long-term borrowing costs.

“The mortgage rates could be lower had the Fed maintained their interest had maintained the Fed funds rate at 5 a.5% for a lot longer…”—

Political Disappointment — January's politically optimistic moment failed to produce lasting Bitcoin gains; prices briefly rose then fell below prior levels, showing policy shifts alone didn't sustain appreciation.

“On January 20th when people were celebrating the pro crypto administration and Gins are leaving, imagine telling them that Bitcoin would barely go higher after that and then would drop…”—

RISK-ASSET-FLOWS

Risk-Off Rotation — Capital has rotated from altcoins into Bitcoin and from Bitcoin and equities into gold, reflecting a sustained move toward perceived safer stores of value.

“Because you know the markets when they do turn and interest rates drop too late because of an inflationary artificial inflationary spike.”—

YIELD-CURVE-MORTGAGES

Curve Disconnect — The Fed controls short-term rates but not long-term yields; the 30‑year Treasury rose even after the Fed began cutting, showing that easing doesn't automatically lower long-term or mortgage rates.

“The Fed directly controls the short end of the yield curve, but it does not control the long end of the yield curve…”—

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Important Disclaimers

Not Investment Advice: For education only — not financial, tax or legal advice.

AI-Generated: Made by AI from source transcripts and may contain errors.

No Guarantees: Past performance does not predict future results; investing carries risk.

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