Firing Head of Federal Reserve Would Be Incredibly Stupid, So Look For Trump To Do It Soon

Always assume the dumbest-case scenario.

Photo by Elimende Inagella on Unsplash

A rift has developed between Donald Trump and Jerome Powell, chairman of the Federal Reserve. On one side, Powell is an experienced banker and well-respected financial mind, a Republican with a reputation for moderation, calm, and a willingness to listen to others. He is trying to steer the nation’s central bank through turbulent times while ignoring political ideology and the demands of partisan politics.

On the other side, Donald Trump is a fucking moron. He loves brute force, and it makes him nuts that he can’t seem to bully Powell into doing what he wants. Well, nuttier. Somehow we still keep finding new levels of nuts to ascribe to our big, wet-brained president.

Trump has been demanding Powell lower interest rates because he is sure that, in combination with the ridiculous tariffs he has slapped on imports from almost every other nation, lower rates will turn the economy into some sort of rocket ship zooming up towards the heavens. (Though presumably not one of his buddy Elon Musk’s rocket ships, because those things keep exploding.) He bases his surety on the tried-and-true economic principle of “I’m a genius and nobody knows markets like Donald Trump and I’m the president so you have to do what I say and wah wah wah, babby go boom-boom in his diap-diap!”

Powell, however, understands real economic principles like “trade wars aren’t really something anybody wins” and “tariffs are a tax on the American people, which will cause them to limit their spending, thus slowing down the economy.” His job is to manage as soft a landing of the economy as he can so that America and the rest of the world don’t slip into a deep recession, or even a depression.

In a speech on Wednesday, Powell warned that the tariffs could lead to a rise in inflation. It could be a short-term rise, but it could be longer depending on how the tariff chaos plays out. This in turn made investors nervous, and the stock market dropped 700 points.

By Thursday morning, President Mealworms was flipping out on his Nazi-curious social media site TruthSocial with an implicit threat to fire Powell, something he does not really have the power to do:

The ECB [European Central Bank] is expected to cut interest rates for the 7th time, and yet, “Too Late” Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete “mess!” Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS. Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!

The USA is not getting rich on tariffs, no matter how many times Trump says dumb crap about how many billions of dollars the country is raking in, in his mind, which is basically wet cat food cut with weed killer at this point.

The position of head of the Federal Reserve is an independent, Senate-confirmed position. There are many reasons this is an independent position, one of which is that it is better for the economy if it is not open to partisan manipulation at the whim of one of the subliterate mediocrities the United States — or at least the Republican Party — keeps electing to the presidency.

Now, a president does nominate someone to serve as the head of the Reserve for a four-year term, choosing that person from the Fed’s Board of Governors. Trump himself nominated someone in 2018, during his first term, a man by the name of ... Jerome Powell, with whom he almost immediately started feuding because he wanted to raise interest rates. Great hire! But by then, Trump’s advisors had concluded he couldn’t legally fire Powell.

Then Joe Biden renominated Powell in 2022, and his second term will end a year from now. Which is not soon enough for President Diap-Diap.

But! Federal courts recently gave Trump the okay to fire a couple of other independent commissioners he doesn’t like, so the waters are a bit muddier than they used to be:

Peter Conti-Brown, a financial regulation professor at the University of Pennsylvania’s Wharton School, said the court’s ruling is a significant development that makes Fed independence less clear.

“We had courts weigh in saying, ‘Yeah, the president does get to fire anybody he wants to,’” Conti-Brown said. “They didn’t address the Fed exactly … but the ambiguity now has increased dramatically relative to where we were six years ago.”

The Supreme Court is going to hear arguments on this issue sometime this spring, so maybe Trump will get the power to fire Powell. But for now, he is, you might say, powellerless. And you know he is flailing when a reporter tells him that Powell has said he won’t leave on his own, and Trump responds with:

“Oh, he’ll leave. If I ask him to, he’ll be out of there ... He’s a little slow. I’m not happy with him, I let him know it, and if I want him out, he’ll be out of there real fast, believe me.”

Translation: I can’t just by law fire him, so Mr. Powell will step down if he values his life, and the life of his pet cat, Mr. Tiddlywinks, who is currently home alone at Mr. Powell’s house with its easily circumvented alarm system.

Trump later accused Powell of “playing politics” and said he was “somebody I’ve never been too fond of,” which is what Trump always says when he hires someone who turns out to not be an automaton who, given a directive by Trump, will salute, holler Ja, mein Fuhrer, and then carry out the directive.

Of course, firing Powell would be incredibly dumb. It would roil the financial markets that Trump and the rich people who bankrolled his last campaign love so much. The rest of the world, seeing this new instability with the Federal Reserve, would pull even more money out of America. The American dollar would perhaps lose its standing as the world’s reserve currency. Basically, it would be a giant economic shit show.

At this point, the smartest course of action is probably for Trump to just grit his teeth and wait for Powell’s term to run out in a year, at which point he can nominate whatever lackey he can find on the Fed’s Board of Governors. And because this is the smartest course of action, Trump probably won’t do it. He’ll try to fire Powell and start a giant legal challenge that will tie up the courts long after the chairman’s term expires.

This latter course fits well with our rule of thumb on Trump, which is to always assume the worst-case scenario. Or the dumbest, which in his fat fingers is usually one and the same.

[WaPo / WaPo]

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