Anthony Pompliano: The Federal Reserve Should Not Raise Interest Rates Today, But Encourage Productivity and Growth
Investor Anthony Pompliano spoke on the day of the Federal Reserve's meeting, arguing that the Fed should not raise interest rates but should do everything possible to encourage productivity and growth, rewriting policy goals from suppressing demand to expanding supply.
He provided the fiscal premise that: cutting government spending and balancing the budget have been tried and have not worked. The only option derived from this is to accelerate, using growth to extend debt and deficits, rather than compressing economic activity through higher capital costs.
In the same timeframe, the Federal Open Market Committee voted 12 to 0 to raise the federal funds rate by 25 basis points to 3.75%–4.00%, stating that price stability is a priority, with the August CPI at 3.4% year-on-year. Christopher Phelan, chair of the White House Council of Economic Advisers, and former member Stephen Miran also publicly stated that raising interest rates is the wrong choice, aligning with Pompliano's direction and opposing the committee's vote.
In a recent podcast, Pompliano also lowered the transmission strength of interest rates to the real economy and discussed the Clarity Act, Bitcoin, and AI pricing, tying the growth narrative to technology and risk assets rather than short-term interest rates. This statement directly targets the FOMC meeting on that day.
From a market mechanism perspective, this is a collision of event-driven expectations: futures had priced in about a 90% probability of a rate hike before the meeting, and the statement itself is unlikely to change the day’s dot plot but reinforces the bullish narrative that "after fiscal constraints fail, only nominal growth can be relied upon." Beneficial directions include duration-sensitive assets, growth stocks, and Bitcoin; pressured directions include the short-end pricing that just received unanimous confirmation and anti-inflation trades. Whether funds flow back from cash to risk assets depends on whether the market interprets this statement as a policy forecast or as a minority opinion that was voted down.
Source: Public Information
ABAB AI Insight
Pompliano started with a podcast focused on Bitcoin and risk assets, long portraying the Federal Reserve as the opposite of growth, and explaining the failure to reduce deficits as a need to expand nominal GDP faster. This logic is rooted in supply-side tax cuts and the modern monetary discussion that "interest rates are not a fiscal constraint," and aligns with Trump's calls for rate cuts and using trade threats for easing administrative pressure. The difference is that he does not discuss embargoes, only productivity.
The capital path is: if interest rates are kept low, discount rates decrease, reopening long-term technology capital expenditures and crypto risk budgets; if the central bank insists on raising rates, the same capital must accept higher risk-free comparisons. His notion of "extending" essentially means spreading existing debt over a larger nominal output, benefiting sectors that can convert output into equity or contractual fees, rather than the Treasury that can turn budgets into surpluses.
This is analogous to the 1970s where initial stimulus was forced to end by Volcker, and also to the 2020-2021 fiscal and monetary policies that pushed asset prices higher and brought inflation to the table. The current industry position is a collision between the political growth coalition and the central bank's inflation coalition: one side wants acceleration, while the other has just unanimously written down price stability.
The structural judgment belongs to the transfer of pricing power. The mechanism is that after the bankruptcy of fiscal discipline narratives, the remaining policy tools are only monetary tightening and supply shocks; whoever controls short-term interest rates decides whether "extending" is real productivity or nominal inflation. If productivity does not keep up with debt rollover, acceleration will only shift friction from interest expenses to prices and exchange rates.
ABAB News · Law of Cognition
- After the failure to reduce deficits, the growth narrative will automatically rewrite into an easing narrative.
- Diluting debt with nominal output is equivalent to sending the bill to prices.
- On the day of unanimous rate hikes, the growth slogan is the loudest and also the cheapest.