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're out the Wall Street Journal's Invest Live event, and they discuss the weakening of the dollar, the growing national debt, and the role of government and 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. 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 his Ken Wilty. 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 asset. I know your customer ALM question. 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. True. So yes, 55 is freezing, but it's not truly freezing. So if I was handed a suitcase of money to you, 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 in your 20s, even though the equity market is so much frothy right now, you're still going to be investing the proponents 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 behind backstage, which is he put it under his mattress. Sorry. She had way too much fun with that. Right. OK. Onto 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 Salamaraqa 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 US dollar has lost some of its lustre 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 of 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 disposed to having a strong currency. And that strong currency that reserve currency's status reduces your cost to 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 hyper scale data centers, whether it's to pursue pharmaceutical R&D, leaves us in an envy 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? Like, is it on the right fiscal track to do that? So we need to increase fiscal displaying 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 the 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 break even. 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 and how we generate revenues. Like 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. In 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 error, a profit-like spending. It's 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, you know, needle to thread that one. How would you, if you had the president say, what would you say to him? What should he do to bring that deficit down? You need, and I know the sounds very almost fanciful. You need to get bipartisan agreement on the steps we're going to take to put our physical house to 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 going to cause far more pain 20 years down the road. I mean, could you imagine today being in your 20s and you see so scared to come out of your paycheck each and every year? Okay, well, 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, there are one minute, there are one countries, there's not. Whatever, 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? So I've seen my colleagues firsthand have to grapple this problem over the last year. I mean, all of us doing 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 of Washington? And this goes to, you know, 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? Like, 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, ten years, 20 years. I mean, we're building a new office building in New York for Siddhal. That's a 50 to 100 year horizon decision. Okay. If you tell me the rules of the road are going to change every couple of years, you make that decision a far more difficult choice. If you tell me the rules of the road are going to 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 of, in my opinion of creating more capital best in the United States and strengthening America's manufacturing base. Could AI help you do more of what you love? Workday is the next gen ERP powered by AI that actually knows your business. We help you handle the half to do so you can focus on the can't wait to do. That's a new work day. I wanted to ask you about the dangers of crony capitalism. You are a big free market champion you always have been. But there has been sort of, you know, you were very clear that you didn't like the regulatory burden of the previous administration, the other, I spoke on that. Now you've got a situation where 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 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 say 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 and preventing externalities, the archetype of that being pollution. You know, 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 safe and health welfare of the American people. When the US government starts to engage in corporate America in a way that tastes a 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 customer to our products 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 on a 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? Like 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. You know what we saw over the last, we go back over the last 10 years, companies that found themselves 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. 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 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 this and 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. You know, we saw the same problem with 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. 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 and exposing this story is the very work that we need to see done day and and day out to keep the American public informed about the behaviors of our politicians on both sides of the aisle. Right? And to help to create, you know, 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 in this. 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, you know, all this, you know, it's this incredible inverse of new technology. It's going to change everything. It's going to lead to the 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, how 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, I will dread these words in nine months. I don't think this is going to be a major election issue in this cycle. And I, you've caught me thinking through a problem here, right? One of the challenges that exists is that, I think, I think, I think, I think, I think is during the pandemic, the labor markets were very tight. It was very hard to hire people. And across corporate America, companies hoarded labor like, you know, I, 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 want to let anybody go because no one knew what work from home was going to mean in terms of productivity. Clearly, most of the countries gone back to work in the office. But in that transition, there was a lot of turnover of people. You know, Citadel put in place, say, that 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 like, 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, 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. Right? 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've seen. I just, 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 going to 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? No, it's not that. One, I 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, you know, I studied economics and government at Harvard and I've always had deep interest in public policy issues. You know, I 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 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'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, you know, the President and I worked on Operation War Speed together in the first administration. The flights out of Wuhan might Pompeo and I made most of that happen together. So, you know, I found that this administration, and for that matter, the Obama administration, for administration is 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 read, 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 Griffith. Thank you so much. We reached out to the Trump administration for comment about some of the things Griffith said in this interview. The spokesman said the president is committed to the strength of the US dollar, but his tax cuts will eventually start reducing the deficit, and the 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.
