Republican Megadonor Ken Griffin on Trump's Economy

Ken Griffin is the CEO of one of the world's most successful hedge funds, Citadel. Griffin is a billionaire and among the largest Republican donors. But during this administration, he's been outspokenly critical of some of President Trump's policies, especially around the Fed, tax cuts, and tariffs. This week, Griffin sat down with Wall Street Journal Editor-in-Chief Emma Tucker in West Palm Beach, Florida. They were at the Wall Street Journal's Invest Live event, and they discussed the weakening of the dollar, the growing national debt, and the role of government in corporate affairs. Welcome to The Journal, our show about money, business, and power. I'm Ryan Knutson. It's Thursday, February 5th.

Coming up on the show, a conversation with Ken Griffin.

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Good morning, everyone. And a big thank you to Ken for joining us today for a discussion about—who knows where it's going to take us, Ken. We'll see. But it's almost impossible to know where to start. There's so much going on in the markets, in the world, certainly in the news cycle. So I thought I'd start with a very simple question. Somebody's just handed you a suitcase of freshly minted dollars. What are you going to do with those dollars?

This sounds like a trick KYC, a Know Your Customer, AML question. Sounds like I need to call the FBI and go, 'I've got a suitcase full of cash here.'

Okay, after you've done that and they've said it's fine, you can keep them.

So we've got clean money.

Clean money.

Clean money, great. So first of all, thank you for being here in South Florida.

It's my pleasure, the weather notwithstanding.

It's still about 40 degrees warmer than New York. So yes, 55's freezing, but it's not truly freezing. So if I was handed a suitcase of money today, this is like such a strange way to frame a question. Look, what investors need to focus on is what is the purpose of their portfolio. And so if you're in your early 20s, your investment objective is very different than if you're in your mid-70s. And you need to always invest your money from the vantage point of what you need to achieve with your investment portfolio. So if you're in your 20s, even though the equity market is somewhat frothy right now, you're still going to be investing the preponderance of that money in equity markets around the world.

And if you're in your mid-70s, obviously, you worry about inflation. You worry about downside risk. You worry about the fact that you don't have 20 or 30 years, potentially, as your investment horizon. You're going to have much more of that money invested in TIPS or in commercial real estate or in other assets that have greater protection from the potential damaging influence of inflation.

Good. What he hasn't said is what he said to me backstage, which is he'd put it under his mattress. Sorry.

She had way too much fun with that.

Right. OK. On to more serious matters. Debt. Now, you've always made it very clear that you think debt levels in this country have got too high. The national debt is now running at exceeding $38 trillion. And off the back of that, there's some evidence of a sort of sell-America trade going on. So my question to you is, do you think we're witnessing the early stages of a genuine challenge to dollar primacy?

Look, the U.S. dollar has lost some of its luster over the last 12 months. There's no doubt about that. And I do believe that the United States is unquestionably still one of the great safe harbors in the world. And at the same time, policies relating to tariffs, some of the rhetoric from the administration has taken some of the shine off the dollar. And at the end of the day, I do believe that when it's all said and done, if you are the strongest nation in the world, you are going to be predisposed to having a strong currency. And that strong currency, that reserve currency status, reduces your cost of capital, brings down interest rates, all else being equal, increases the quality of living for those citizens of that nation, and allows us to engage in the global economy on a much stronger footing.

Yes, it makes exports a bit more challenging, but the fact that we can amass so much capital and deploy it across corporate America is stunning. I mean, the juxtaposition between the strength of America's capital markets and virtually every other country in the world is breathtaking. And we want to protect that, that ability for American firms to raise tens of billions or hundreds of billions of dollars whether it's to build hyperscale data centers, whether it's to pursue pharmaceutical R&D, leaves us in an envied position by the rest of the world.

So what do you think the administration needs to do to sort of make sure that that supremacy is maintained? Is it on the right fiscal track to do that?

So we need to increase fiscal discipline in the United States. We're late in an economic cycle. We don't know if we're in the sixth inning or seventh inning or eighth inning, but very few cycles run as long as this cycle has run. And we're still running a significant deficit. At this point in the economic cycle, we should be running close to a breakeven. I mean, if you're not paying down your national debt at moments like this, when will you pay it down? And the fact that we're still running a very large annual deficit does tell you that too much of the economy is being supported by the sugar high of fiscal spending. We need to dial that back. We need to have more discipline in both spending and thoughtfulness in how we generate revenues.

We need to put our fiscal house in order. And I do worry that that's lost attention and focus in Washington. And I know the president has to be frustrated. His first term, his tax cuts were about reigniting growth in America. And to get Americans to, in essence, be bolder again. How do we increase investment? How do we increase productivity? And he's trying to play the same playbook again. But what I think is being missed in this analysis is the incredible amount of spending during the pandemic. That three-year era of profligate spending, just out of control spending. We need to deal with the reality that we need to pay that debt down. And America did this after World War II, and America should be doing that again here today.

And how, I mean, politically, though, it's a difficult needle to thread, that one. How would you, if you had the presidency, what would you say to him? What should he do to bring that deficit down?

You need, and I know this sounds very almost fanciful, you need to get bipartisan agreement on the steps we're going to take to put our fiscal house in order. And here's the big issue: politicians deferring some of these decisions means that the impact of future decisions will be so much more painful for the American people. Like, that's what we're really doing is we're not deferring some fixed amount of pain; we're gonna cause far more pain 20 years down the road. I mean, could you imagine today being in your 20s and you see Social Security come out of your paycheck each and every year? Okay, will the government safety net be there for you when it's your turn to retire? That's a legitimate question, given the level of deficit spending we have today.

So another area of pain, certainly one that you've highlighted a lot, is that of tariffs, which for the last year has been this sort of flip-flopping story. One minute they're up, one minute they're down, one country's up one minute. Only yesterday we learned that tariffs on India are going to be cut to 18%. How difficult is it to sort of come up with an investment strategy thesis when this backdrop keeps changing all the time?

I see my colleagues firsthand have to grapple with this problem over the last year. I mean, all of us do in the money management business. How do you create a portfolio when every single company that you invest in can have the terms of engagement changed by the stroke of a pen in Washington? And this goes to, you often hear business people say, "Just don't change the rules, all right?" And you sit there and go like, "Are they that inflexible? Are they that unwilling to change? Can't they go with the flow?" But the problem is that when you're running a business and you're trying to grow that business, you're making decisions that have horizons often of three years, five years, 10 years, 20 years. I mean, we're building a new office building in New York for Citadel.

That's a 50- to 100-year horizon decision. If you tell me the rules of the road are gonna change every couple of years, you make that decision a far more difficult choice. If you tell me the rules of the road are gonna change every couple of months, I'm best off making no decision. Right? And that's where Washington needs to think about what is the pace of change it's trying to create in the economy, and having certainty or having a higher degree of confidence in what the rules of the road will be will actually help the president achieve his goal, in my opinion, of creating more capital investment in the United States and strengthening America's manufacturing base.

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I wanted to ask you about sort of the dangers of crony capitalism. You are a big free-market champion. You always have been. But there is, there has been sort of, you know, you were very clear that you didn't like the regulation, regulatory burden of the previous administration, very outspoken on that. But now you've got a situation where, you know, the government is taking stakes in companies. You've got sort of talk about a credit card, a cap on interest on credit cards. You've got all the interference with tariffs and the attempt to reshore manufacturing. Do you think there's a role for that sort of interference given that America has to sort of take a stand against the biggest crony capitalist of all, China?

Or does that sort of behavior make you shudder?

Well, let's take a huge step back.

Government has a really important role to play in the economy. It has an important role in the economy to ensure that consumers have fair and reasonable disclosure. Like, when you're a consumer that picks a credit card, you should be able to get through the fine print pretty quickly and understand the cost and interest rates you're going to pay. Government has a really important role in the economy in preventing externalities, the archetype of that being pollution. You can't just build a factory and dump your waste into the river in the backyard. You just can't do that. So I think it's important to appreciate that no one, when they argue for less regulation, is arguing for a reversal of these very important policies that protect the safety and health, welfare of the American people.

When the U.S. government starts to engage in corporate America in a way that tastes of favoritism, I know for most CEOs that I'm friends with, they find it incredibly distasteful. Like, we want to go run our businesses and win on the merits of providing a better product to our customers at a lower price. Like, that's how we win. And when you start to say that you're going to win or lose because you get a regulatory favor out of Washington, do you know what you say? 'God, I mean, I'm close to this administration, but does that mean the next administration is going to grant a favor to one of my competitors or take a favor away from me because I don't support them publicly?' Most CEOs just don't want to find themselves in the business of having to, in some sense, suck up to one administration after another to succeed in running their business.

They want to focus—better products, better marketing, better distribution, more value created for their customers, some of which is shared with their shareholders.

So these are all great points. And we live in a world, in a country where people really look up to corporate leaders. Why is it so difficult for the corporate world to voice publicly the sort of thing you're saying now?

So I think there's a couple of challenges that corporate executives face on this front. What we saw over the last—we go back over the last 10 years—companies that found themselves in the middle of the whole woke movement would find their products either embraced or ostracized by tens of millions of Americans overnight. And that's created a level of fear and apprehension amongst the corporate CEO class to insert themselves in any publicly facing issues these days. Like, the power of social media to persuade millions or tens of millions of consumers to make a product choice is really terrifying to corporate executives. And I think it's put them in a very, just intrinsically, like, withdrawn position.

I wanted to ask you as well specifically about there has been a trend of people in the administration using their positions to enrich themselves personally. I don't know if you saw that The Journal, we did a story a couple of days ago about a half-a-billion donation that was made from a—it was an Abu Dhabi royal to the Trump crypto vehicle days before the inauguration. Does that sort of behavior matter to you? Does it bother you?

I mean, of course it bothers me. Of course it does, right? One of the things that you want to believe is that those who serve the public interest have the public interest at heart in everything they do. And I think that this administration has definitely made missteps in choosing decisions or courses that have been very enriching to the families of those in the administration. And that calls into question: Is the public interest being served? And I think that there's just a necessity for us as a society to re-embrace some of the critical concepts of ethics in public service. We saw the same problem with the Supreme Court several years ago. Wherever you see the signs of conflicts of interest, you give rise to concerns about: Are the interests of the public being put first and foremost by those in public service?

And are you optimistic that we're on a trajectory to get back to a world where these sort of ethics take center stage?

No.

You're not?

No, I'm not.

Well, that's very depressing.

I think it's more important to be just objective about it because that will then create the dialogue that maybe will permit us to effectuate change. But if we just say, 'Oh, of course it'll get better,' that actually sort of misses the big picture, which is, I think, for example, I think the work that you did at The Journal in exposing this story is the very work that we need to see done day in and day out to keep the American public informed about the behaviors of our politicians on both sides of the aisle. And to help to create—the press has always been a very important part of the checks and balances in American society. It's a very important check on curtailing these types of conflicts of interest.

Great. Well, I definitely second that. Now, we haven't got much time, and there's so much I want to ask you. So very quickly, so that we get to everything, just quickly on AI. Do you think—there's obviously so much excitement around AI. All this incredible, innovative new technology, it's going to change everything. It's going to lead to these huge productivity gains. Quite possibly already is. But there is also a creeping sense that I've picked up, certainly at Davos, that people are beginning to think, 'Oh my God, have we really thought hard enough about the impact it's going to have on society?' Do you think AI is going to come more to the fore this year as a sort of potentially political issue?

That's a great question. And I don't think it's going to be—I will dread these words in nine months—I don't think this is gonna be a major election issue in this cycle. And you've caught me thinking through a problem here, right? One of the challenges that exists is during the pandemic, the labor markets were very tight. It was very hard to hire people. And across corporate America, companies hoarded labor. A number of friends who are in the tech space, they would tell you openly that their workforces were 20% bigger, they were 30% bigger than need be. But they didn't wanna let anybody go because no one knew what work from home was gonna mean in terms of productivity. Clearly, most of the country's gone back to work in the office, but in that transition, there was a lot of turnover of people.

Citadel put in place a 'thou must' come back to the office very early, and we lost a few percent of our workforce over that. For us, it was worth it for the collaboration that goes with that, but these were the kinds of issues that corporate America was navigating. Okay, the employment market today is still reasonably robust, but it's not as tight as it was two years ago. And companies are now saying, 'Do you know what? I can trim some of my workforce in areas that are not strategic. I can tighten my belt a little bit here at this moment in time.' What a great headline: 'I'm sorry I'm letting you go because we've introduced AI in our business.' It's just much more kinder and gentler than saying, 'I've kind of employed you for the last three years, but I don't really need you.'

So I think AI has gotten a lot of very negative headlines in terms of being the excuse that companies have used to trim their workforces down. But objectively, I think very few businesses are actually seeing productivity gains that come anywhere close to the headline of job losses that we have seen. I haven't seen it.

Good. Okay, I have got time for one more question. Last night, I went around asking people what question—I was soliciting them, saying, 'What question would you like me to ask Ken?' And it was remarkably consistent, what they said. Can you—and I'm gonna ask you—can you, do you know what that question is that they want me to ask you?

I mean, I always get asked, 'Is the market going up or down over the next three months?'

Nope, it's not that. Wanna know? They want to know if you've ever considered throwing your hat into the ring for public office, even for the presidency.

That's a bold question.

Indeed. They asked me to ask you.

So I studied economics and government at Harvard and have always had deep interest in public policy issues. I'd like to believe that at a future point in my life, I will be involved in public service. I'm very grateful for the opportunities that this nation has afforded me. But over the next few years, I love my job, I love the colleagues I work with, and I'm very fortunate to have a number of ties to friends and to acquaintances in Washington on both sides of the aisle. And I think that I... I've been able to have my voice heard on important issues. And I'd like to think that I've nudged the country in small ways in good directions. I mean, the president and I worked on Operation Warp Speed together in the first administration.

The flights out of Wuhan, Mike Pompeo and I made most of that happen together. So, you know, I've found that this administration and with, for that matter, the Obama administration were administrations that you could make meaningful things happen that benefited the American people. You know, in the Biden administration, we were able to take an idea that we funded in Chicago, a small group of us funded providing every child in Chicago in the pandemic with internet access. I mean, it's like incomprehensible to believe that there are kids in America that did not have access to the internet. And there were tens of thousands of such kids in Chicago. That concept was rolled into one of the national infrastructure bills in the Biden administration.

So I'd like to believe that I can continue to pursue philanthropic efforts and efforts that do help to improve, let me use different words, to ensure that every single child in America can still get on that on-ramp to the American dream.

Great. Well, that's a very positive answer to the bold question. Thank you very much, Ken Griffin. Thank you so much.

We reached out to the Trump administration for comment about some of the things Griffin said in this interview. A spokesman said the president is committed to the strength of the U.S. dollar, but his tax cuts will eventually start reducing the deficit. And, quote, 'the only special interest guiding the Trump administration's decision-making is the best interest of the American people.' That's all for today, Thursday, February 5th. The Journal is a co-production of Spotify and The Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.

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