#363 Danielle DiMartino Booth: Powell's 'Patriotic' Stand Protecting Fed Independence, Fed Should Cut Despite Oil Prices, and Flirting With Liquidity Crisis as Non-Banks Too Big to Fail

In this episode, Danielle DiMartino Booth, CEO of QI Research and former Fed insider, explains why she's "less fed up" despite disagreeing with Fed policy - praising Jerome Powell's decision to stay on as governor to protect Fed independence, drawing parallels to Marriner Eccles' 1948 stand against President Truman. Danielle calls Powell's move "patriotic" while warning we're "flirting with a liquidity crisis" as non-banks have become "too big to fail." She discusses the challenges Kevin Warsh will face as incoming chair, argues the Fed has failed its employment mandate, and explains how the economy cannot withstand persistently high oil prices and interest rates simultaneously.Links: Danielle's Twitter/X: https://twitter.com/dimartinobooth Substack: https://dimartinobooth.substack.com/ YouTube: https://www.youtube.com/@DanielleDiMartinoBoothQIFed Up: https://www.amazon.com/Fed-Up-Insiders-Federal-Reserve/dp/0735211655Timestamps: 0:00 Introduction - Fed day with Danielle DiMartino Booth0:32 Powell's last time at the podium - Takeaways1:48 The Eccles parallel - Fed independence fight in 19482:39 Why Danielle is "less fed up" today2:57 The Powell move - Staying on as governor4:20 Risk of being perceived as shadow Fed chair?5:39 Triple hawkish dissent 6:16 Unprecedented dissent levels - Early resistance signs?7:57 Powell's legacy and how it changed today9:22 The Eccles legacy - Established as governor, not chair10:27 Powell's move was "patriotic" - Protecting Fed independence11:27 What is your read on Kevin Warsh?12:48 Liquidity crises take precedence - The Mike Tyson test13:40 0% chance of rate cut - Should they have cut?14:47 Fed has failed its employment mandate16:48 Oil prices and disinflationary demand destruction17:17 Bankruptcies accelerating, layoffs increasing18:01 Home prices falling - Thinking about inflation wrong19:16 The valley of death at $100k income level19:32 Higher for longer means more pain20:34 How does building consensus at the Fed work?22:04 Flirting with a liquidity crisis - How big is the risk?22:38 Pummeling the housing market23:26 More sellers than buyers - Biggest disconnect ever24:09 Investment boom or panic stockpiling ahead of tariffs?25:27 Economy can't withstand high oil and high rates28:07 Base case for rest of 2026 - Fed cuts30:43 If you could advise Kevin Warsh, what would you say?32:17 Bloomberg chat - hot takes with institutional investors33:34 What's keeping you up at night and making you hopeful?35:37 Non-banks now too big to fail37:06 Systemic risk from non-banking system37:25 Mother's Day tribute - Legacy and three graduating kids38:03 Closing thoughts