Trump’s dangerous designs on the Fed
There are many items on President Trump’s agenda that are hurting the U.S. economy: the pointless trade wars, the socialization of the private sector, the mass deportations, and much more.
But in the long run, the most damaging policy of all might be one that’s gotten scant attention, at least from non-finance-nerds: Trump’s quest to crush the Federal Reserve. If Trump succeeds, he may doom the United States to high inflation for years, if not decades, to come.
Bullying the Fed has long been one of Trump’s favorite pastimes. Way back in 2019, he called Jerome Powell, the Fed chair whom he had appointed the year before, an “enemy.” He’s continued the broadsides during his second term, repeatedly musing about firing Powell—including earlier this year. It got press coverage at the time, due to the resulting market wobbles—and a truly awkward visit Trump made to the Fed headquarters as some sort of intimidation tactic. But the firing never came. And when the threats stopped, most of the media moved on.
They shouldn’t have.
The threats to Fed independence have continued, and got darker this week. We may now be at an inflection point, as the Trump administration tacitly threatens to purge not Powell but other officials who set interest-rate policy. If he’s successful, Trump could seize direct control of the money supply and turn America into Venezuela. [Continue reading…]
President Donald Trump said Friday that Kevin Warsh has moved to the top of his list as the next Federal Reserve chair, though others remain in contention, according to the Wall Street Journal.
Previously considered on Trump’s short list but not the favorite, Warsh, a former Fed governor himself, apparently ingratiated himself further following an interview Wednesday with the president.
“Yes, I think he is,” Trump told the paper when asked if Warsh was at the top, according to an account posted Friday afternoon.
Referring to National Economic Council Director Kevin Hassett, whom prediction markets previously had projected as the favorite, Trump said, “I think you have Kevin and Kevin. They’re both — I think the two Kevins are great.”
“I think there are a couple of other people that are great,” the president added.
Hassett emerged as the lead candidate following a Bloomberg News report. Publicly, he has been demure when asked about the prospect of taking the job, saying only he would serve if asked. Sen. Elizabeth Warren (D-Mass.), said Thursday on CNBC that she worried Trump would appoint a “sock puppet” as Fed chair to do his bidding.
In addition to putting heavier weight on Warsh getting the job, Trump repeated an assertion he has made in the past that the Fed chair ought to consult the president about interest rate decisions.
“Typically, that’s not done anymore. It used to be done routinely. It should be done,” he said. “I’m a smart voice and should be listened to.” [Continue reading…]