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Jerome Powell should be safe for now

I keep reading that Donald Trump might try to fire Fed chair Jerome Powell, whose term runs through 2026. But what is this based on? Trump himself hasn't said anything, and Powell is steadily lowering interest rates, which is what Trump wants. Nor has Powell put himself on Trump's enemies list by saying something critical about him.

So where is this all coming from? I'm confused.

30 thoughts on “Jerome Powell should be safe for now

  1. Doctor Jay

    It's coming from a desire to signal to voters "I hate inflation and I'm gonna do something about it".

    It really is that simple. Drama, unsupported by fact or ability.

        1. Jerry O'Brien

          Yes, that is how Trump will play it. Powell is slated as scapegoat for the inflation or recession Trump policies may bring.

    1. somebody123

      Given recent supreme court rulings, the answer is likely yes, he can. in fact, the structure and powers of the Fed may now be unconstitutional.

    2. Austin

      Maybe he can’t fire him. But it’s pretty clear that the president can just vanish people to Gitmo, and scotus just blessed any “official” crimes. So maybe Trump will say he fired Powell when Powell vanishes?

      More realistically, the president could also just order OPM or Treasury or whomever issues paychecks for federal employees to stop paying Powell. (Similar to how in Office Space, the Bobs recommend cutting off paychecks to Stapler Guy so he’ll leave on his own.)

      There are plenty of ways a criminal can get rid of someone without actually firing them.

      1. Ken Rhodes

        You say, "more realistically ... stop paying Powell," but how realistic is that?

        Powell was a partner in The Carlyle Group, and subsequently was a founder of Severn Capital Partners, a private investment firm. Do you suppose Jerome Powell really needs that $16K monthly paycheck from Uncle Sam?

        1. aldoushickman

          Trump could try to Play Now/Costanza him. Move Powell into a run-down office, barricade the door, etc.

          Likely as not, Trump will "fire" Powell via a tweet, and then nobody will ever follow up with the paperwork, so the legal question won't even be tested as Trump's attention wanders to whatever awful blood-and-soil thing his staff of weirdos puts in front of him next.

    3. Srho

      The reason to fire the Fed chair is to assert maximum unitary executive power. If Congress creates an entity, the Constitution grants the POTUS full authority to do whatever he wants. In theory.

  2. Joseph Harbin

    "Powell is steadily lowering interest rates."

    The Fed lowered its rates. But rates everywhere else are going up. The markets turned almost exactly when the Fed made its first cut in September.

    Weird but true: you could have gotten a better rate on a mortgage in August than today.

    Maybe the Fed should start raising rates instead?

    1. cmayo

      That's because they're pricing in the chaos of Trump at the moment.

      I have faith that the bankers will come to their senses soon enough and realize that even if somebody with an R next to their name is insane, they still have an R next to their name and will pursue policies that lead to conditions that lead to low interest rates.

        1. cmayo

          Yes, I know that - I was only commenting on the rates. Those setting the rates don't care about the price of whatever is being purchased with the credit.

      1. Joseph Harbin

        When Trumponomics sends inflation higher, the Fed will want to raise rates.

        But when Trumponomics slows the economy, the Fed will want to lower rates.

        When both happen together ... well.

        There's a name for that. I'm sure someone will remember what it is.

        Meanwhile, Jay Powell will wish that he'd gotten fired earlier.

      2. FrankM

        Policies leading to low interest rates? You mean like:

        1. Deporting millions of workers?
        2. Imposing high tariffs?

        Both of which will cause more inflation than we ever saw in the last four years. The Fed will be forced to raise rates, at which point Trump will have a hissy fit and try to fire Powell and the entire board of governors. The only question is, how long will this take to play out? My bet is less than a year.

        1. cmayo

          It's not clear to me how tariff-caused inflation would necessitate a raising of rates, because the tariffs themselves are functionally the same as a rate increase: they suck money out of the economy. Same as raising taxes. Tax increases are anti-inflationary, and tariffs are taxes even if they're paid indirectly.

          Deportation I can see cutting both ways...

  3. ah_clem

    I don't have the quotes in front of me, but my recollection is that Trump criticized Powell when he didn't cut interest rates and also criticized him when he did cut interest rates. The difference being that cutting rates would have helped Trump in the first instance and would have helped Biden/Harris in the second.

    So, there is some basis, plus the fact that Trump wants everybody in the government to rubber-stamp whatever he wants and if Powell doesn't do that Trump will try to get rid of him. But that's applicable to everyone, not just Powell.

  4. illilillili

    > Trump himself hasn't said anything

    Trump has both asserted he can fire Powell and that he doesn't like the decisions that Powell is making. Drawing an inference from those two statements isn't that much of a leap.

    1. dausuul

      At least, he always tries to.

      I don't think anyone is expecting Trump to just fire Powell on day one. But presumably there will come a time in the next four years when Powell stops cutting rates, and maybe even raises them.

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