Jamie Dimon speaks at Reagan economic forum

You know, you can do all these various things. That's not true in a lot of countries. So, you're not going to take a reserve currency where the government decides what you can do with it, which is with China. You know, China has capital controls. That's basically what that is. And they need them for a whole bunch of different reasons. So, as long as we maintain that strength, and I think it does relate to free trade. So, China will become more of a reserve currency. Other countries might, but we will still be the predominant one as long as we maintain the predominant economic position in the world. And that is predicated also on the predominant military position. I was in a country I don't want to mention the name of it, and they were complaining about America and said, 'You know, we're so insecure about America. We've taken our gold out of America. We've put it in our vaults here.' I looked at them and said, 'You do realize your vault here could be taken by three armies who aren't that far away.' And you know, that's realpolitik, folks. That's the world. So, the notion that you're secure like that, this nation is secure. And so, I think people have to think a little bit differently when we talk about foreign economic relations, and you know, realpolitik is the only way to do it. And anything short of that, you're making a mistake.

It's been fabulous. And you know, I look, I owe you if you read what I write and talk. I complain about government a lot, and we should. But I also ask the question, what can we do to help? You know, and we're not unique. We're not the only one. A lot of other people do this kind of thing, but we said, 'We already finance all these companies that do security resiliency.' We defined it very specifically. It's military equipment. It's productive capability. It's APIs, active pharmaceutical ingredients. It's rare earths. It's semiconductors. They could be friend sourced. They don't have to be here as long as they are in a safe environment. It's some of the advanced manufacturing where not having here is a strategic mistake. I go on and on. And so we said, 'What can we do?' And that's this initiative. And it has two big components. One is the 1.5 trillion over 10 years. Well, I think we'll far exceed that. We've had kind of... and we're doing it not just the United States, by the way, with a lot of allied nations. And that's drones, military, missiles, companies, spin-offs, investments. We hired Todd Combs, who is an exceptional investor, to make direct investments where people need money to do things which we think are important for resiliency. Resiliency is different to every nation. You know, for Europe, resiliency includes LNG. They do not have their own LNG supply. They got to get it from us or North Africa. And so, but for us it's, you know, LNG here is not the case. So we look at... we try to be very specific about it. The output has been great. We've hired a lot of dedicated people. We're doing special research. So you know, which we didn't really have, like the rare earth ecosystem, the shipbuilding ecosystem, the API ecosystem. So you can identify where in this very complex chain of stuff that we need intervention to do the right thing. And we're probably going to recommend what I call smart industrial policy. You know, I'm reluctant. A lot of my conservative friends, 'How can you recommend industrial policy?' Yes, I don't think government should get involved in a lot of things. It's the only way to solve rare earths, APIs, some of the semiconductor stuff. It could be done where it's not corporations feeding the trough of government. It's got to be consortiums who are doing this to bring stuff back. Rare earths, here's an amazing number. You know how much rare earth we import to the United States of America? Only 200 million. You know, if you quadruple the cost, and there's other stuff we buy which has rare earths in it, so that's not really the only relevant number. You know, if you quadruple the cost, it would be nothing to the American economy. But we'd be 100% resilient. So if you have to pay more, you know, your car cost might go up 100 bucks. You know, and so I go on and on and on. But to have a company succeed here, we got to give them the... to have economies of scale and build the business. We need competitors in those businesses. And we think there are ways to do it where it's the free market is there, and over time it's 100% the free market. And you know, basically you would have a tariff high enough on rare earths that they cannot come from certain countries, or just a barrier that we will not import rare earths from China. Just it's plain and simple. It's a unilateral decision to do something like that. And we have to do it quick. It is also true, if you look back, when people ask like what were we doing? We, all of us, we were asleep at the switch, folks. You know, 10 or 15 years ago, the military, the government, business issues said, 'We can't rely on potential adversaries for things critical for our security.' And so, I'll admit it. And but if you don't admit mistakes, it's hard to fix them. So, I don't like to cry over spilled milk. My rule is to roll up your sleeves, get it done. We don't have much time. Suck it up. Move quickly. And we need a lot of government proper policy to do this right, including what you all hear about permitting and all this stuff you all know about already.

There is truth to that, but not in every one. I mean, we should have policy we know works. And I can give you a million examples where I think they shouldn't have done it that way, or they could have done it another way. I like the fact they're moving quick. I like the fact they're being creative in the Department of War, and the Commerce Department, the Treasury Department. That I like. And they'll morph over time. So, I'm not terrified over that, but there's a right way to do it. And the right way to do it is to set up a system that's conducive to getting the right stuff done, and probably not picking winners and losers. I can give you examples how it could be done. I just don't want to waste your time with that right now.

Guys, it's everything. It's bridges and roads and homes and affordable housing. It's bureaucracy. It's woke. It's permitting. It's sewer and hookups. It's grids. It is a disgrace. Everyone knows it. Everyone complains about it. Usually when you bring it up, you know, people laugh. Haha, that's funny. We have Baltimore bridge that got knocked down 2 years ago. Haven't even started yet. You know, a bridge, we haven't really begun it yet. I say make America's grids great again. But it's really embarrassing. Oh, I have a great suggestion for the politicians in the room. Ready? I may write an op-ed on this one or you can write it yourselves. Like good policy is free. Take 6 months in Congress. Do not raise revenues or cut expenses. Don't do any of that. Don't get involved in that debate. Just change policy that makes things better. Housing policy, which I know French Hill is here. Permitting policy, which you all know about. Local affordable housing policy. Education policy. I think it'll drive growth 1% higher just by doing that. Just by doing it. And we simply don't do it anymore. We're like Europe. We just layer bureaucratic stupid on top of other bureaucratic stupid stuff. And it doesn't work. And it's demoralizing. If you actually analyze these policies, they hurt the lower income people the most. And so they're all done in the name of good, but they hurt the lower income people the most. And so I think we have to get our act together and hopefully we'll do it.

It's affordability again. It's not a... you know, it's affordability. That's the... of course it's affordability. That's a Democratic issue, Republican issue. The question is how do you get it effectively? You know, and you can have a lot of positives that you think it's making more affordable, you have less supply. And so, you know, obviously it's a key thing. Just all these other things, you know, you can do them right or you can do them wrong. And we end up in this binary debate about how you do them. But, you know, of course you make it affordable. It's not a case shape like one part going up and one part going down. What it really is is that the wealth in the top 70% are doing fine. The middle class has gotten bigger and richer. They have, you know, stocks have gone up, home prices have gone up. They feel good, they're traveling, their confidence is higher than lower income. It's the bottom 30% where if you look at it over time their incomes didn't go up for 25 years. Okay? And they're not literally really earning living wages anymore for a whole bunch of reasons that I won't go through here. And it used to be if you get up in America and you get even you go to 10th grade, you get out, you get in a factory or somewhere, earn a living wage and soon have a family, have a car, have a house. That's not true anymore. And it is incumbent upon all of us to fix that problem. Now, that problem by the way we've thrown trillions of dollars at it. Democrats and Republicans and it didn't work. And those people by the way when you talk and we all talk about problems, they have worse crime, worse schools, less affordable housing, worse food, and there are policies that can fix that. And it's not that their wages have stagnated. They still have jobs, you know, but they're not seeing the opportunity and they're angry about it. And then they see governments wasting tremendous sums of money, you know, picking winners or losers. Even my Democratic friends when I ask them if we gave a trillion dollars to federal government, anyone would be better off? It's just not possible. It would end up in all these special interest groups and it'd be a big party that they'd give to folks. It's policy. It's education policy. It's housing policy. It's infrastructure policy. It's crime policy. You know, and that stuff works done right. And there are a lot of examples, you know, if you read the Fallows wrote that book when he went to 50 cities none bigger than Columbus about, you know, how they're building river walks and bringing in businesses and improving their schools. Good policy works. And it's got nothing to do in the most part for Democrat and Republican. It's just good policy.

Yeah, and so we, you know, I met with the mayor Mondani the other day and I said everything I wanted to say, but you know, but one of the things I was saying to you like what do we do? Like what does a bank do? And so I walked in the front door. We have a big flag in there if you have in your headquarters. I salute that flag every morning. I told him, I salute that flag every morning and your parents came here for the same reason my grandparents came here, were Greek mostly Greek immigrants who never finished high school, for the freedom and justice that this country means. And that if you opened up America's borders, billions of people move here to be American. Life, liberty, and the pursuit of happiness. And so we... and so I told him we bank cities, schools, states, hospitals, countries, mortgages, small and we do the best we can. We make mistakes. We pay our people well. They all get medical, dental, Pilates, you know. And so we're good citizens. We pay a lot. We take care of people and you know, policy should be done well. So we announced this other thing called the American Dream initiative, which is mortgages, affordable housing, helping small businesses, financial education. You know, we have a lot of branches in lower income neighborhoods, teach people how to save money and how to open accounts, work skills, which we've already talked about, which should have to be done locally. And so we're just doubling down on what we already do and we just set targets for ourselves, can we do more? And so, take small business for example, you know, we bank 7 million, we're going to make it 10. I'm convinced we'll get there. You know, we have to gear up for it, we got to hire more people, more branches, get more, you know, small business bankers and things like that and out of that we get a lot of ideas that germinate that work, sometimes they don't always work and but I just want to point out because this is maybe the most important thing of all is to reignite the American dream type thing is I remind people that the Constitution is a legal document. It's the... but the principles on which it's based are the most important thing. Those principles and values are freedom of speech, freedom of religion, life, liberty, the pursuit of happiness. The pursuit of happiness to them did not mean are you happy? It meant have a purpose. You could be an artist, you could be a farmer, you could be a military officer, you could be a caregiver. It meant to make the world a better place, to try to create equal opportunity for people. And we don't teach those values anymore. And they are the foundation that made this country great. And we made... and all these schools, I mean I've looked at them now, you look at some of the colleges and even high schools, they don't teach a lot of American history. And you could say in America those values are still extraordinary. Why 4 billion people come here. Doesn't mean we didn't have flaws. I don't know, I've read a lot of history. I haven't read one country that didn't have flaws, not one. And of course you should acknowledge them and try to fix them if you can and that's part of the American dream. Fixing the bottom 30%, lifting up everybody, creating equal opportunity. I think that would dramatically reduce polarization and anger which you see all over the place and so we're doubling down on that, too. And we're quite unabashed about it.

Yeah. So, first I'm when I saw Jeff doing that, I'm saying, 'Thank Jeff. God bless you. Get involved in the debate.' You know, you might not agree with everything he's saying, but I like the fact he's saying stuff. He cares enough about our country to actually get on there because a lot of people just simply don't do it or even think about it very much. And tax is very complicated, okay? So, I generally agree and if you look at the bottom 100, they don't pay that much anyway. So, you got to be a little careful. Now, they're all different types of taxes. You know, you got your sales tax and you got real estate taxes and there's some drive bad behavior and all that. And it all should be kind of looked at. I'd like the earned income tax credit which today as it stands if you're a single parent making $14,000, the government gives you seven. At the end of the year in a check, you know, some people are entitled to it don't get it. If you have no children, they give you like 700 bucks. I would take that, the 14,000, I'd make it 12,000, I'd get rid of the child requirement. You're working, you'll go home with 26,000. If you're a two parents, you have $52,000. And the reason I like it is because first I think it would pay for itself. We know one thing about jobs, they create dignity. That first rung in the ladder, when I hear people making fun of, you know, burger flippers, a lot of those burger flippers end up owning and running McDonald's. They are proud of what they accomplished. You know, a lot of our forefathers came here and that's what they did when they got here. That first rung leads to a second rung. Jobs lead to... the money would go to the person so it's not big government decide whether you can buy potato chips and soda or not. They would spend it on their families and their homes. They'd spend it locally. It might foster local restaurants. They might buy more insurance or a tutor for the kids or something like that. And it would lift up those economies, but it also has the great virtue of bringing people into the workforce. Making work pay more. And if we know one thing about jobs, better social outcome, more household formation, less crime, less suicide, less recidivism. So if you actually do the full analysis, which is hard to do, and we really haven't, I guarantee you it more than pay for itself. And that would be cost like another 50 billion dollars. If they did that, yeah, I think people would be willing to pay as long as it went to them. If it's going to go to Congress to decide who to give it to, no one's going to want to pay extra money in taxes.

I don't know, I'm not sure that's true. So first of all, high-quality guy, experienced, knows markets, was at the central bank. He was at the New York Fed when we were going through the great financial crisis. It's a fresh look. I think it's good. I like his views. I mean, the Federal Reserve did in fact get involved in a lot of stuff that they should not have in my view. And they're independent on monetary policy, they're not independent on regulatory policy. And when they did regulatory policy, they violated the Constitution. There were no cost-benefit studies, no analysis, no stuff they're supposed to do. And you know, that was wrong. And I like Jay Powell, too. I'm not just saying that. When I look at my own institution, I would sometimes say the same thing. You know what? In hindsight, we shouldn't have done that. And so I think they should take a fresh look. They were the adults in the town, they still are, but they're better off looking at the financial system as a whole. Let the OCC do more regulating the banks, reduce all this, you know, they were getting into climate and DEI and stuff like that. We've been adding year after year after year, you wouldn't know this, rules and regulations on top of rules and regulations. I think you can make the system safer and let banks do what they're supposed to do, make more loans, create more liquidity, have more intervention in the markets by the people who should do it and the Fed put themselves in the position when you have any kerfuffle, they have to do something. I think that's a huge mistake. So, I think he's right about re-looking at that and I think he's right about reducing the size of their balance sheet. You know, we had too much QE and we still don't fully know the effect of $10 trillion of borrowing and $8 trillion of QE. And I'm not sure those things play out over a year or 12 months even a 5-year period. To reduce the size of the balance sheet, he's got to change some of his requirements. My view when we talk about regulations is we should have a better... I think you can let banks lend more, create more liquidity and make them safer. I'd be much tougher on certain rules and I think they'd be much easier on other ones. But, you know, the way it works out there is every rule is important as if it's the only rule that's going to save a bank from failing and so I think he'll do a good job. Now, I don't think it's in the market what he can do because remember he's one person, he's walking in a room probably right now. There are 12 people at the table. They're smart people, they're mostly economists and they're going to say, 'You know, Kevin, we'd like to hear your ideas and let's think about it. Let's review these things.' So, it's going to take study. They're going to take time. So, my view is there's almost no chance he can actually change anything in 6 months. And he needs the time. So, in the meantime, the environment changed he's entering into. You know, we have more inflation. So, we'll see and he's smart. He's got to figure out how he wants to navigate the environment and the new Fed governors.

You know, so when the Fed says data, you always... I think of course they're data dependent. And you know, in some ways they're a fast follower. When inflation went up, they raised rates. You know, sometimes they look at what they think future data might be and they can act anticipatory. Very hard to do. But, they have done that and they can also say if the government's going to spend another trillion dollars, they can act in anticipation of that that they think it's going to be another trillion or something like that. So, like I think there are inflationary forces out there are more than other people think. And I'm not saying it's going to go dramatically up. I don't know. It is ticking up. You can put Iran in there and food, health care is going up, for us it's going up 10% a year and we think it's going to happen this year and next year, by the way. But the re-militarization of the world is kind of inflationary. AI spending in the short run is inflationary. Restructuring of trade fundamentally has an inflationary component. Restriction of immigration has an inflationary component. $2 trillion of spending, you know, the economists tell me, 'Well, no, it's $2 trillion last year and $2 trillion this year. It's not inflationary.' I don't agree with that. I think that there's a cumulative effect of spending a lot of money, which may have the die may have been cast that will cause future inflation in a way we do not understand. So, the notion that somehow that we spent all this money and it's fine, I think we are too comfortable. That's true. So, I look at this long list of stuff and obviously oil prices and food prices. So, you know, I hope it doesn't go up much. But you know, talking about interest rates, the 10-year bond is set by the market. It's at 4.5%. That may be the right equilibrium rate today based on what people know. But remember, equilibrium prices and what happens are two different things. And if you had inflation at 2%, you know, the short rate should be 3.5%. So, the notion you could take the short rate down a lot when inflation is more like 3.5% or 4%. I think it could easily hit 4%, you know, later this year. So, you know, we'll see. Hopefully, it'll be okay and manageable, but if you read history books, that isn't always the case.