You watched President Trump's speech, Ken? Is there a single word you might use to characterize his remarks?
I'm not good at this sort of like, guesswork games. Well, that's precisely why I... Let me tell you what will be maybe out of sync with many other people's views. He gave a speech where he unquestionably made it clear that the United States wants to see Europe economically prosper. And I think that was a really important message to be delivered. And I hope the Europeans heard it because over the course of the last 12 months, there's been a tremendous amount of friction between our two continents. And we are longstanding allies. But at the end of the day, the United States wants to see Europe prosper. And for the free world to prosper, Europe must grow faster.
Is the way to get Europe to prosper, to get Europe to grow faster, to get Europe to be more competitive, is the right way to do that to troll European leaders, to taunt Emmanuel Macron on stage? Is that the right way to inspire the desired response?
I think Trump likes to troll people of all backgrounds. It's not limited to just leaders. And will people of all backgrounds respond in the way that we or he might like them to as a result? No, of course not. But it's just part of his shtick, just who he is. It's who he is. You know, I have on my wall a copy of a tweet that he put out about me. And I've been trolled. It's okay. Like life goes on, badge of honor.
Besides the point he made about wanting Europe to be more competitive, which you clearly agree with, did you find yourself agreeing with the balance of everything else he said?
So let me be very clear. I think the president has an extraordinary instinct for the problems that both the United States and the free world faces. I often don't agree with his solutions, but I admire his ability and his willingness to forcefully talk about the problems that we face both in the United States and in the free world. His diagnostic acumen is really top notch.
Well, so, I mean, like, take a step back. Okay. The United States supported WTO, free trade, NATO, and a whole variety of other global institutions from World War Two onward to accelerate the economic growth of Europe post the war, because we believed that the strongest way to defend the free world again was for Europe to be prosperous. Now, over the course of that journey, we didn't update the terms of that deal, and the American worker in many respects got the short end of the stick around the world.
You just did. True. I mean, I think we can all agree that it wasn't just because of a lack of competitiveness, investment, burden sharing on the part of the Europeans. There were many American companies that went to China and gladly gave away their IP. That cost American jobs, too.
Exactly right. And so this, again, is where the president's done a good job and said, you know what, we need fair trade for the United States. We need a world hierarchy in which the American worker and American businesses have a fair level playing field around the world. And often that wasn't the case when he was president, and he's really trying to address it. I wouldn't use tariffs as my mechanism of action to do so, but I have to give him credit. He is fighting for the American worker and the American people.
Okay. So his motives, in your opinion, are constructive. Right ones. Constructive. Let's take it up to 10,000 feet. What are the reasons that this room is so full, Ken? Is because you have a quality that distinguishes you somewhat, obviously, from many other business leaders, and that is your willingness to speak out to champion what you believe is right and to challenge what you believe is wrong. And we saw you do that with the Biden administration. You were a vocal critic. You took issues publicly with his policies and the posture of his administration. But you're fair about it. As you put it, once upon a time, country before party, you've done it to President Trump as well. In April, some of you may recall not long after Liberation Day, you criticized President Trump for moving too fast, alienating allies, making Americans poorer and tarnishing the sterling reputation of U.S. assets. So here we are. Right. For those who aren't counting, this is the second day of the second year of Trump's second presidency. What do you think now? This is the 10,000 foot view. Is he doing what's right for America, not just diagnosing the problem? Policies and execution are just as important.
So let's be clear. He was elected into office because of two really material problems. Number one is our southern border was utter chaos. Millions of people streamed into our country from all kinds of backgrounds, some of which, frankly, backgrounds we wouldn't want. But they streamed into the United States illegally. That's what it is. It was illegal mass immigration. And the president secured the border. I mean, he brought that to an absolute halt. And I really hope that he makes it clear that the United States still embraces legal immigration. I think we need to reiterate that point quite a bit, because one of the great superpowers of America is that we've attracted so many brilliant people from around the world. But the chaos at the southern border, he ended. A big policy triumph. The second issue that he was elected around was that of inflation. The Biden administration, we had rampant inflation. The United States, combination of fiscal stimulus that was just beyond the appropriate levels and monetary policy that was slow to react to the fiscal stimulus that was occurring. We had a level of untenable inflation in the United States of America. And if you were a retiree and your savings were in fixed income assets, you were seeing your future demand every single day and you had enough. And the president is really trying to grapple with the issue of inflation. You know, it's really quite ironic to see the Democrats have changed the language to affordability to try to attack President Trump for the rise in prices that largely occurred under the Biden administration. But the president right now, I think, really does have the message that he has to address the high cost of living in the United States. How do we make sure that for the American retiree or the American worker, that every dollar they have goes further and their quality of life improves?
I might come back to immigration, but specifically on the point of inflation. You have said that, in fact, to a colleague of mine not long ago, Dani Burger, that Republicans are finding it hard to accept the reality that many of the policies that they've championed, including driving illegal immigrants out of the country, are, by their very nature, inflationary.
And that's exactly right. So here's where he is. He has a much more difficult dance. Shutting down the flow of illegal immigrants and pushing people out of our country constricts our labor market. It's classic economics. If you reduce supply, all else being equal, prices rise. And we've had real wage growth in a number of sectors of the economy where the illegal immigrants play a very critical role in performing difficult jobs that need to get done. And tariffs are also playing a role. Tariffs, you know, if we look at the most recent data, the vast majority of the tariffs, the tax of tariffs is being borne by either the American worker or the American citizen at the cash register or by corporate America reducing their profit margins. And the president did reduce tariffs on a number of goods that are in the day-to-day shopping basket of the American people. So he understands he has to address some of the negative implications of tariffs to help address the issue of affordability. Yes, he understands that affordability is a real issue and that it's political kryptonite in the midterms. But immigration and tariffs are big levers. Hard, you know, to counteract.
Not to get too weedy here, but is he taking, in your mind, the right approach with recent initiatives such as banning institutional investors from buying single-family homes, intervening in the mortgage bond market, seeking an interest rate cap for credit cards at 10%, allowing homebuyers to dip into their retirement savings? I can see why some of those measures might be welcome to American people. Is that really going to change the affordability outlook?
So I think this is where I might disagree with the president. The great power of the American economy is our embrace of capitalism. And when we let entrepreneurs, when we unleash our entrepreneurs, when we unleash competition, we are able to materially improve our quality of living. And the real issue in the housing market is the lack of supply. And why do we have a lack of supply? Permitting in much of the country takes months or years, years to get a permit to build a house. I mean, how absurd. And then the building code has become so unwieldy and so overreaching that the cost to build a house puts it out of the reach of the average family trying to buy their first home, the home in which they'll have their dreams made. So the real issue is we need to address the regulatory burdens on the housing market. And if I were the president, I would have used Fannie and Freddie to do that. I would have said, if you are in a county that does not have prompt permitting and that does not have a reasonable building code, we will either drop the mortgage caps or we simply won't write mortgages in that county after a date certain to get our politicians at the local level to move their feet and to address the chronic problem that we have in America, we have too few of houses.
I do think it's really important for people so that they know that you're willing to say that, yes, I make the difference. I do.
I do. Let the American entrepreneur get to work. And with competition and with the burden of government off their backs, they can solve the problems that we face in day-to-day life.
You know, this is your... this can I mean, at least I have to give you credit for being consistent. This has been your rallying cry for the better part of 15 years, if not longer. Economic freedom.
Well, I mean, maybe it's because I view... But we do it. Citadel is part of that story of unleashing entrepreneurs. You know, if you look at the U.S. equity market, for example, it's one of the most efficient markets in the world. And it's been driven by incredibly competitive dynamics between us and a handful of firms that have radically dropped the cost of trading for all over the course of the last two decades.
So since we're talking about the American economy for the moment, we will change our focus shortly. Let me ask you, because you said on those particular issues, you take issue with some of the things he's doing. It would be great if we had more housing supply or credit cards. How do we increase competition? Right. Like, what is it that gives a Wells Fargo or a JPMorgan or a Capital One such incredible commercial advantages that it forecloses in a material way, new entry? And are there steps that we can take that are equitable, that will increase competition amongst credit card issuers, that will bring down rates for all consumers on using their credit card?
The worst thing we can do if you regulate the maximum interest rate that you can charge. You actually reduce the stock of credit in society, particularly to younger people who have poor credit scores or to people who've had difficult times in life. And the younger people with poor credit scores in particular. Those are people that literally start their business with their Visa card. I want to go back, take those entrepreneurs out of the economy. You really meaningfully reduce new firm creation, new job growth and the innovation that makes America so special.
I would like to go back to the question I asked about whether the president is doing what's right for America. And you initially responded to me by saying he did what he said he was going to do. He tackled illegal immigration and he's doing something about tackling inflation. That's still a work in progress. Obviously, there are a number of other policies and positions that have a bearing on U.S. economic growth and U.S. economic competitiveness, particularly in the global arena. And I'd just like to understand, get a sense from you, channeling, I think, the interest here in the audience about whether you agree or disagree with where he is on the following and you can do whatever you like, thumbs up, thumbs down, you can say agree, disagree, you can give me a little bit more, you know, nuance, but redefining the focus of U.S. national security to the Western Hemisphere and seemingly opening the door for Presidents Xi and President Putin to operate with similar impunity in their own backyards, good or bad?
I hope so. That's... I hope that's not the endgame of our policy. Securing the national defense of the United States is of the utmost importance. Always has been. Always has been. And he's very focused on strengthening our military. And one of the things I really love is how he complements the military every chance he gets. You know, you look at what happened in Venezuela. He is effusive in his praise of a mission that was flawlessly executed. It's really good to see him bring pride back to our country for the men and women who serve our nation. So there's again, it's all these mixed bags. I love the fact that he stands for a strong military, a strong national defense, and frankly, an America that no longer hides in its own shadow. I think he might be right. There's a good chance if he'd been president, we would not have a war in the Ukraine.
Well. Hard to know and prove.
Hard to know and prove, but hard to argue.
