He then turns to President Trump's proposal of a $5,000 "dividend" to Americans funded by tariff revenue, calling out the plan as both economically illiterate and dangerous for America's already fragile credibility with its creditors.

Peter starts by walking through how the inflation report shaped market expectations for a Fed rate hike. He explains that a softer number would have given the Fed an easy excuse to sit on its hands:

And the odds of a rate hike next week were better than 50-50. They were a little over 60% coming into the report. But if this report had come out better than expected, meaning a lower number, I think the odds of a rate hike might have dropped precipitously because it would have given the Fed an excuse, some cover, not to raise rates by saying, aha, you see, inflation is coming down, we don't really have to do anything. We just could hold tight.

He then shifts to the credibility problem facing whoever is running the Fed, noting that endless talk about hiking rates without any action is starting to wear thin with markets:

But I think if he doesn't hike rates, that's going to be a big problem now. Because I think one of the reasons that the markets expect to hike at this point is that Warsh has been talking about hiking rates for so long and he hasn't done it. And I'm not the only one now that has pointed this out. I mean, I pointed it out early on, but now other people are saying the same thing that, wait a minute, talk is cheap. You know, why didn't you hike rates last time? Why didn't you hike them before? What's going on here? You know, you just talked. There's no action. You're not doing anything to back up this rhetoric.