A MARTÍNEZ, HOST:
A lot of money changed hands this week minutes before President Trump talked about a possible peace deal with Iran. On Monday, Trump posted on social media that he was pausing plans to bomb Iran's energy infrastructure. Someone - or a group of someones - made trades in the oil market with an estimated value of more than half a billion dollars, according to Bloomberg. After that post, the price of oil fell dramatically. Anyone who bet on crude oil prices dropping made a ton of money. Our next guest thinks all of this adds up to insider trading and could be linked to members of the administration. Paul Krugman is a Nobel prize-winning economist at The City University of New York. He writes about economics on his Substack.
Paul, so what makes you think this is a case of insider trading?
PAUL KRUGMAN: It's not really ambiguous. I mean, there's a large spike in the amount of transactions just 15 minutes before the president announces that he's not going to bomb Iranian power plants after all. There's also a spike in the opposite direction on stock futures at the same time. And these are not little random events. It's $580 million worth of transactions in the crude oil market. It's probably bigger than that. In the stock futures market, there's, like, a minute when all of a sudden this happens.
MARTÍNEZ: Is there evidence, though, that proves that this is all linked to the Trump administration?
KRUGMAN: No. I mean, there wouldn't be. I mean, if we had a comprehensive investigation by the FBI or something like that, but what other explanation could there be? There was nothing else going on that would justify large transactions at that specific moment. We don't know that it was somebody linked to the Trump administration, though it would be pretty weird that someone else would have suddenly decided to make these big bets on the future. It really strains credulity to suggest that this wasn't somebody with inside information.
MARTÍNEZ: Let's explore that for a second, Paul, because I just want to try to bring up other options, other possibilities. Could it be that maybe in the Trump administration, there are a lot of loose lips, that there are leaks that maybe the Trump administration can't necessarily control. After all, before the Trump administration went into Venezuela to go get Nicolás Maduro, the president, he admitted that he spoke to oil companies about it...
KRUGMAN: Yeah.
MARTÍNEZ: ...Before it happened.
KRUGMAN: If we look at, you know, what the White House has been calling the Situation Room, it is actually just a curtained-off area in the ballroom at Mar-a-Lago. So there's a lot of very lax security at this White House. But this is 15 minutes before the big announcement. The price of crude oil plunged just 15 minutes later on Trump's announcement. So this is not something where maybe Trump or somebody around him said something to somebody the previous day. This looks as if someone had very specific knowledge just a few minutes before. Again, I guess you can come up with all kinds of crazy scenarios, but this doesn't look ambiguous.
MARTÍNEZ: Is there a possibility that the predictability of the Trump administration's actions could lead to this kind of action that you're talking about?
KRUGMAN: If we'd seen a gradual sale of oil futures over the course of a day or two, then that would've been a plausible explanation.
MARTÍNEZ: Now, your Substack post about this is headlined "Treason In The Futures Market." Why do you call it treason?
KRUGMAN: Think about, first of all, just the general proposition that people with access to national security information - sensitive national security information - would be exploiting that information for personal financial gain. That would ordinarily be considered treasonous. We can be certain that adversaries of the United States are tracking activities in the financial markets, that if they see large transactions suddenly happening, they will be using that to infer that somebody with insider knowledge is acting on the basis of that knowledge. So in a way, this is like foreign espionage. Just watching financial activities is revealing. And the strong possibility - no proof of this, but the strong possibility that somebody in the administration or close to the administration is making money out of insider knowledge of national security decisions, that's pretty - there's not a really hard line between that and being bribed to reveal information about national security decisions. It's not that different from being a foreign agent. So this is a very extreme thing. This would've been - should be a massive national scandal.
MARTÍNEZ: Paul Krugman is an economist at the City University of New York. Paul, thanks a lot.
KRUGMAN: Thanks a lot.
MARTÍNEZ: A White House spokesman told NPR in an email that all federal employees are prohibited from using nonpublic information for financial benefit. The statement went on to say that, quote, "any implication that administration officials are engaged in such activity without evidence is baseless and irresponsible." A White House lawyer added that the president, quote, "performs his constitutional duties in an ethically sound manner and to suggest otherwise is ill-informed or malicious." Transcript provided by NPR, Copyright NPR.
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