Bloomberg Audio Studios, podcasts, radio news. I'm David gera host of The Big Take, and today I'm sharing an episode from my series of Exit interviews. I spoke with senior officials in the Biden administration ahead of Donald Trump's inauguration
as they prepared to wind down their work. These conversations were wide ranging, and in this one, taped on December eleventh, Treasury Secretary Janet Yellen discusses her decades long career in public service and the challenges she expects her successor will face. Treasury Secretary Janet Yellen is in a reflective mood as her decades long career in public service comes to an end.
I just could not feel more positively about the contributions that good economic policy making can contribute to American welfare.
Yellen's path to the Treasury Department has been paved with some of the biggest and highest profile jobs in government. She was President Clinton's chief economic advisor, a Federal Reserve governor, and the head of the Federal Reserve Bank of San Francisco. President Obama picked her to be the Fed's Vice chair then chair. She is the first and only woman to have had that job and the first and only woman to be Treasury Secretary, where she oversees a very broad portfolio.
This week I traveled to Washington to interview Yellen live on Bloomberg Television and Radio and now.
Our exclusive interview with Bloomberg's David Gerr.
He sat down with the Treasury Secretary Janet Yellen as her post nears NN. Let's take a listen here in the Treasure Department with Secretary Janet Yellen. Great to be with you, and there's a lot I hope to cover. We talked about the economic warfare the US is waging in support of Ukraine, about Yellen's work on US China policy. Then when that live interview ended, we kept talking. Okay, we can continue now if we have for a fewer moments.
Thank you, about what she's accomplished and hasn't about threats to the Fed's independent and many of the economic policies President elect Trump has put forward. This is the big take from Bloomberg News. I'm David Gerra, and today on the show, an exit interview with the seventy eighth Secretary of the Treasury, Jennet Yellen. Treasury Secretary Janet Yellen and I talked just a couple hours after we got the latest inflation report. The consumer price index for the month
of November was in line with what economists expected. Prices ticked higher from October and on an annual basis. The last time we spoke, back in September, Yellen told me she was optimistic the Federal Reserve would be able to pull off a soft landing that policymakers could get inflation under control without triggering a deep downturn. I asked her if she's still confident that'll happen.
Well, Look, I think inflation has come down very substantially from the peaks it reached in twenty twenty one. In twenty twenty two, we're still a bit above but getting pretty close to the Fed's two percent objectives. And I believe that the FED will continue to focus on inflation and take whatever her actions prove to be necessary to
keep inflation hitting toward their two percent target. We've been very fortunate so far that it hasn't been necessary to weaken the economy or create higher unemployment to accomplish that, and I hope that continues to be the case.
Jenny Allen led the Federal Reserve from twenty fourteen to twenty eighteen, and given that I wanted to get her thoughts on FED independence. President elect Trump has openly criticized the current FED Chair, Jerome Powell, and Trump says a president should be able to weigh in on FEDD policies. Are you confident that the FED will be able to withstand a more actively involved administration or other kinds of political pressures.
Well, independence is absolutely central to the Fed's effectiveness, and I believe it's important that it remains an independent institution, that politics don't enter its decision making, and it remains accountable to Congress to explain how it's pursuing the goals that Congress is assigned to it. And in the area
of monetary policy, it's price stability and maximum employment. And I've spent many years of my career at the FED, and I can tell you that the FED is not a political institution and politics don't matter to its decision making.
It's a highly professional organzation with a very strong staff and a diverse group of policymakers who are trying their lowful best to figure out, given all the uncertainties afflicting the economy, what is the best path to achieve these goals and manage trade offs that they may face, and I think they've done a good job. And what general research shows is that independent central banks end up delivering better macroeconomic results, and not only on inflation, which you
would expect, but also on real economic performance. And so you know, over the last oh i would say, thirty or forty years, the trend all around the globe has been toward sharing up the independence of central banks, and there's been a payoff, and I don't think that that's going to change.
Own. Powell's term as FED chair isn't up until twenty twenty six, and in a recent interview, President elect Trump says he has no plans to try to replace Powell before then. But a proposal that's gotten some attention by Scott Besson Trump's pick to succeed Yell in a treasury is for Trump to appoint a shadow fedchair. Do you see that as being just a potential nuisance or is there a real risk of having somebody who's opining with some sense of authority about issues of monetary policy.
I think that this would create a great deal of confusion and the aformc that makes monetary Policy is a very capable and non political body, and I believe that they would go on and make the best possible decisions then they can and would not be influenced by somebody outside the FID who was trying to play such a role. I think it could disrupt financial markets and have an adverse on economic performance in the end. I don't think it would influence the FED.
There's been a lot of talk about the dollar, the safety of the dollar as the global reserve currency, and I wonder if that's something that you think American should be preoccupied with. It's something that we hear about from the President elect and his team. Something else they've floated as it's been put a mar Lago accord where you could get the US together with Europe and China and Japan. Maybe you talk about domestic production, how narrow trade deficits.
Is there an appetite or an opportunity for that.
The use of the dollar in global transactions and financial markets and in trade is underpinned by a very strong US economy with deep and liquid capital markets, the role of treasuries as the safest asset in the world, the role of law, a well managed economy with low inflation and solid macroeconomic policy. And when you think about what other currency could possibly replace the dollar, the list is short. Possibly there is no currency that at this point could
possibly rival the dollar. And in terms of an agreement that could affect the value of the dollar, you know, the policy that our administration has articulated is that major countries should have the value of their currencies determined in world markets. So intervention might be appropriate on occasion to counter extreme volatility, but we believe that it's best for markets to determine the value of the dollar.
Coming up, as Jennet Yellen's tenure as Treasury Secretary comes to an end, how she's trying to protect some of the policies she's put in place, Trump proofing at the Treasury Department. Plus yeah Ellen's thoughts on tariffs, the future of the relationship between the US and China, and her legacy. That's after the break. As Treasury Secretary, Jenny Yellen has
played a big role on the world stage. After Russia launched its full scale invasion of Ukraine in twenty twenty two, she worked with allies to impose a spate of sanctions. Right before my interview, Bloomberg reported the Biden administration is considering more sanctions targeting Russia's oil exports and its shadow fleet of oil tankers, which have been an economic lifeline. I asked the secretary if she could confirm that those discussions are underway.
Well, let me say, we never preview sanctions, and we've constantly been tightening our sanctions on Russia. Our overall aim is to impair Russia's ability to continue conducting this brutal war, to try to deny it the military equipment it needs to be able to do that, and we've taken a variety of steps to do it. But we have been focused since the outset on Russian oil revenue. It's a
critical component of the Russian budget. Now, what's unusual about this moment is that the oil market seems to be well supplied.
Prices are relatively cheap.
Prices are relatively low. Global demand is down, and there really has been an increase in supply. American firms have stepped up, We have vastly expanded oil production. OPEC countries like Saudi Arabia have excess capacity at this time. So the global oil market is softer, and that creates possibly an opportunity.
Let me pivot to China, and this has been a relationship. I think you've invested a lot of time and energy and rebuilding a conduitive communication between Washington and Beijing. How much does that concern if the efforts that you've put in to rehabilitate that relationship go to the wayside.
So I do think it's important to have ongoing communications at all levels, from the President and she talking to senior US officials to staff that need to communicate. Just having open channels of communication, I believe it will be seen as continuing to offer value. These are channels by which we can make clear what we're unhappy about, where our concerns are, and why we have them. We have significant concerns about Russia's economic policies that we discuss in
these channels. We're also using these channels to build trust, in channels for cooperation so that we can work together where our interests coincide. So there's no question that we have serious concerns both from a national security point of view and a broader economic view with China's behavior. But nevertheless, is the two largest economies in the world. It's critical to have open channels of communication. It helps avoid misunderstandings.
Given the relationship she's developed with Chinese policymakers, I asked Yellen what insights she has into how they may respond in the face of President Elect Trump's recent threats to impose broad putitive tariffs on the US's biggest trading partners, including China.
Well, I really don't want to make a forecast. Many countries, when they're faced with unilateral actions of that sort look for ways to retaliate, and my guess would be that they would do that. We have in areas of concern where I've expressed repeatedly concerns with over capacity that is developed in Chinese advanced manufacturing industries and clean energy, semiconductors
and the like. We think it reflects active large subsidies that are flooding the world with exports and threaten to drive our firms out of business, and areas that we think are critical to our own future. We have put in place tariffs now they're strategic. They affected eighteen billion dollars worth of trade, certainly not all of our trade
with China, but broad based tariffs. Almost all economists agree that what they will do is hurt us by raising prices, possibly substantially and making it more expensive for firms that need inputs from China to be able to acquire them, and harmark competitiveness of firms that rely on those imports.
The person that Donald Trump is named is your presumptive successor. Scott doesn't have suggested that he wants to cut the deficit in half by twenty twenty eight. Is that necessary? Is that even possible? I guess what I'm asking more broadly is how worried are you about the fiscal outlook at this point in time?
Well, I am concerned about the fiscal outlook, and I believe the deficit reduction is necessary to keep us on a sustainable fiscal course. Now, Congress hasn't really done anything to improve the fiscal outlook, and I think that's a shame. I'm disappointed in that, and I think Congress needs to work hard on that. We proposed a lot of pay for us that we think would fairly ask corporations, wealthy
individuals to pay their fair share. We've negotiated an international tax agreement that would create a level play field worldwide for multinationals, and that would be a revenue raising measure that I think would be very valuable, and there is certainly more.
Jimmy Allen has had a path breaking career. I closed out our conversation by asking her what she's reflecting on as she wraps up decades in public service.
I feel terrific about the opportunities that I've had over the last four years to serve at Treasury and before that at the Federal Reserve in the Council of Economic Advisors during the Clinton years, And I just could not feel more positively about first of all, the contributions that good economic policy making can contribute to American welfare. But beyond that, we have an excellent group of senior officials
that we brought in. But what we found at Treasury and have built is a civil servants who have deep expertise, knowledge, commitment, operate with integrity, and are able to do the kind of analysis and operational management that really serves our economy, will and financial markets. And this is a core asset of America that we have a devoted civil service that has great expertise and contributes to good performance. So as I look back on my career, that's really been important to me.
It's not in Secretary. Thank you very much, Thank you This is the Big Take from Bloomberg News. I'm David Gera. This episode is produced by Alex Segura, who also mixed and sound designed it. It was edited by Chris Antsy and Naomi Shave, who's our senior producer. He was fact check by Adriana Tapia. Our senior editor is Elizabeth Ponso, Our executive producer is na Cool Beemster Boorr, and Sage
Bauman is Bloomberg's head of podcasts. If you liked this episode, make sure to subscribe and review The Big Take wherever you listen to podcasts that helps people find the show. Thanks for listening. We'll be back next week th