Pretty much everything Trump does is so stupid I can barely stand to write about it. But his dustup with Fed Chair Jerome Powell over Powell’s refusal to cut rates to kinda sorta bail Trump out of his tariff and DOGE disasters merits comment. In case you were busy making Easter eggs when this row started, a short recap from CNN:
President Donald Trump on Thursday ratcheted up his criticism against Federal Reserve Chair Jerome Powell, calling for his “termination” for not cutting interest rates quickly enough. His comments come one day after the central bank chief delivered a stark warning about the effect of Trump’s sweeping tariffs on the economy.
Trump’s first comments on Powell came early in the day, in a social media post. But the president continued ripping into the Fed chief later Thursday, in an Oval Office meeting, piling on political pressure for Powell to lower interest rates.
Ahead of an expected rate decision Thursday by the European Central Bank, Trump lashed out at the Fed leader, saying the US central bank is lagging behind. The ECB later announced it is cutting interest rates for the seventh time in the past year.
“Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete ‘mess!’ Trump wrote. “Powell’s termination cannot come fast enough!”
His comments come after Powell on Wednesday said at an event in Chicago that the Trump administration has brought “very fundamental policy changes,” including sweeping tariffs that are “significantly larger than anticipated.” He said such changes are unlike anything seen in modern history, putting the Fed in uncharted waters and on a path to confront a challenge it hasn’t seen in decades.
The Trump rant on Truth Social:
Mind you, the real economy damage from Trump’s bizarro wold policies has only started kicking in. Interest rate cuts won’t provide any relief. Trump has set the economy on a stagflationary course. Shortages and business failures are baked in unless Trump reverses course on tariffs in very short order, which his massive need to be seen as the driver of events makes impossible.
A Powell rate reduction now or comments indicating the Fed would cut soon might have given a bit of lift in the stock market. But investors could just as easily (after the predictable bounce) read it as the Fed seeing the economy as weaker than Mr. Market does, or worse, that as the central bank is worried about the safety and soundness of the financial system.
As we have said often over the years, the over-reliance on the central bank to regulate the economy is the result of Congress and the Administration shirking that responsibility. The Fed can curtail an overly-hot economy by raising rates. Former Fed Chair William McChesney Martin famously depicted the Fed as “in the position of the chaperone who has ordered the punchbowl removed just when the party was really warming up.”
But the impact of interest rate actions is not symmetrical. We saw during the era of super-low interest rates how they increased existing economic distortions and did not stimulate economic activity. For the most part, businesses do not expand their operations just because money has been put on sale. They decide to take the risk of betting on growth when they see favorable conditions in their market. The big exception is businesses where the cost of money is their biggest cost, such as financial institutions and leveraged speculators. So the result was a decade plus of increased income inequality and so-called secular stagnation.
Perhaps Trump believes a Fed cut would lower Treasury borrowing rates. But the Fed, in normal times, controls only the very short end of the curve. Unless inflation expectations abate (and that seems impossible in light of tariff-induced price increases, ex a collapse in demand eventually generating deflation, which is highly destructive) intermediate and longer maturity Treasury yields will remain high. The way for the Fed to lower them is QE. Since Trump is all about escalation, would he demand that when whatever sugar high a rate cut induced wore off?
As to the Trump threat, while commentators seem highly confident that the current Supreme Court would reject Trump’s Powell dislodgment effort if he were to litigate, that does not mean that it would not impose costs. Investors who are already justifiably worried about the combo plate of Trump’s terrible judgment and his gaping yaw of need for more power would be rattled by more evidence of Trump’s insistence on flattening any obstacles to his rule by whim.
These clips show how Powell is not having any of Trump’s nonsense.
That buffoon trump thinks he can fire Fed Chair Jerome Powell, but he doesn't have the fucking cards.
Powell seems like one of the few trump appointees who isn't afraid of that jackass. pic.twitter.com/lVzBtlKVFT
— BrooklynDad_Defiant!☮️ (@mmpadellan) April 17, 2025
Jerome Powell to Donald Trump: Fuck off you can’t fire me, it’s illegal.
That won’t matter to Trump but if he takes out Powell, the economy will literally explode and he’ll end to dragged out of the WH like Mussolini.
Finally someone with both balls and leverage. pic.twitter.com/Zl2vzqLA01
— Rachel Bitecofer 🗽🦆 (@RachelBitecofer) April 17, 2025
The short version on the legal front is that there is already a well-established Supreme Court precedent that determined that the President cannot remove the heads of independent agencies over policy differences. The second impediment to Trump is that current conservative Supreme Court jurists in other cases have made clear that they back the importance of the Fed independence.
The Wall Street Journal oddly punts on providing any information about the legal issues, despite making this battle its lead story. From the Financial Times:
Trump’s offensive has left investors and economists focused on a case now winding its way through the US courts, which involves his earlier firing of board members at another two independent agencies.
The two officials are far lower profile than Powell, but they were protected by the same 1935 Supreme Court precedent known as Humphrey’s Executor….
After Humphrey died, his executor pursued the case to recoup the wages due to his estate, with the Supreme Court deciding that Roosevelt had acted illegally by firing the commissioner without “cause” — a term widely interpreted to cover illegal activities or gross incompetence.
Since then, the ruling has allowed independent agencies — including the Fed — to deflect political pressure when making policy decisions….
Wilcox and Harris, Biden administration appointees, were both fired after Trump became president in January. They brought cases against the government in federal courts, which ordered them reinstated.
The Trump administration later appealed to the US Court of Appeals for the District of Columbia, which on April 7 backed the lower courts’ decision to reinstate Wilcox and Harris. The DC Circuit specifically cited the Humphrey’s Executor precedent in its decision.
The US then appealed to the Supreme Court to reverse the lower courts’ order to reinstate Wilcox and Harris.
One worrisome sign with these cases is that Chief Justice Roberts is preventing Wilcox and Harris from returning to their posts while the Supreme Court is considering the case. That gives the Trump Administration the ability to take ground in their agencies in the meantime.
However, the Fed is better bunkered. Again from the pink paper:
Last year, the justices voted 7-2 in a decision that was seen as a measure of the legal support for the Fed’s independence, even though it was officially about the Consumer Financial Protection Bureau. Even Alito, who voted against the funding mechanism for the CFPB, noted in his dissent that the Fed was a “unique institution with a unique historical background” that made it special.
The scholars argue that even if the Supreme Court ends up siding with Trump in the cases of Wilcox and Harris, its judgment could include a carve-out that would insulate Fed governors from political pressure.
“The very first Congress, convening right after the Constitution was ratified, created the First Bank of the United States,” said Daniel Tarullo, a professor at Harvard Law School who was formerly a Fed governor.
“Although the charters of the First and Second Banks were eventually not renewed, their creation set a precedent for an early version of a central bank that was, if anything, more independent of the president than today’s Federal Reserve.”
But even if Trump seems very unlikely to prevail against Powell, the effort would cause more market tsuris. Again from the Financial Times:
David Wilcox, a former Fed economist now at the Peterson Institute for International Economics, said Humphrey’s Executor had become so important in shaping people’s perceptions of the Fed’s independence that any challenge to it would likely trigger panic.
Some concurring views:
If Trump were to effectively dismiss Jerome Powell, it would almost certainly trigger a financial crisis—signaling that no credible stewardship remains over the U.S. economy.
Such a rupture would force global markets, sovereign actors, and institutional investors to reassess…
— The Intellectualist (@highbrow_nobrow) April 17, 2025
If Trump fires Jerome Powell, the finance community will make Jan 6th look like a picnic
— litquidity (@litcapital) April 17, 2025
And in another Trump own goal (from his perspective, for a change) if he wins:
Beyond everything else it is really funny and bizarre that Kevin Warsh, one of the most instinctively and consistently hawkish Fed policymakers in modern history, is the top pick for a president whose main complaint about Powell is that he isn't cutting rates.
— Mike Bird (@Birdyword) April 17, 2025
Trump seems determined to extend his authority no matter how much carnage he leaves in his wake. How bad things get is anyone’s guess.
Trump made his mess, is in the wrong, and needlessly blowing up his own 2nd term/legacy. Powell is not a good Fed chair. both can be mutually correct.
That 50 basis point cut last fall (at defacto full employment and while the federal budget deficit was >6% of GDP) awfully looks politically motivated to help Biden—even if that was not Powell’s intent.
Shocker….50 basis point cut did not help tame the structure inflation pre-January 21 or pre-tariffs.
I don’t mean to sound as if I am defending Powell, but the 50 bp cut was far too late to help Biden, so it cannot be depicted as politically motivated. Bush the senior complained (with justification) that a Greenspan rate cut 6 months before his re-election was too late.
US employment metrics understate unemployment. U-6 is a better metric than U-3 but is still pretty bad. Being employed merely one hour in a week counts as employed. Long-term unemployed who are discouraged and have stopped looking for work (and most employers will never never consider someone who has not had a job in the last 6 months) are excluded. So if the Fed were honest with itself, it would recognize it is just guessing about the state of labor markets.
Powell was looking at his favorite measurement of employment, saw it dipping and tried to counteract it. That was his motivation.
The cut however drove mortgage rates up, and froze up the current housing market even more. If they cut more the same thing will happen.
“These clips show how Powell is not having any of Trump’s nonsense.” Danger, Will Robinson! There is now a possibility the Democrat Pink Hat PMC crowd may turn out in force as it decides it has a new hero – yet another old White Man far right Republican!
Regarding the Trump demand of the return to ZIRP, it’s hard to see where the opposition will come from given that our entire “elected” Congress and it’s supplicants benefit so greatly from their legal carveout of insider stock trading which is illegal for us peasants.
I remember seeing Fauci panties for sale in early 2020. Can we expect the same with Powell? The mere existence of these things is a sad commentary on the intellectual status of a lot of this country.
I finally got my wife to agree to talk about emigrating, likely to northern Portugal. Panama was on my list, but it’s uncertain future means it’s now much lower down…
Adlai Stevenson
> Pretty much everything Trump does is so stupid I can barely stand to write about it.
Thank you for doing so anyway!
Indeed. Maybe a bang of your head on the desk in honor to Lambert is due as well. But not too hard.
Please keep it up but keep your sanity.
Yes Trump reminds me of that old Ron Cobb cartoon from the 1970s – a man standing in front of two dolphins blowing his own head off with a plunger connected to explosives in his head.
The caption? “Man demonstrating his superiority over animals”.
Which reminds me – with all that media analysis of Biden’s cognitive decline before his withdrawal, why is there not the same for Trump? – nobody even commented when he called Musk Leon instead of Elon.
Trump sounds like classic angry old man dementia in many interviews.
Oh I forgot, Musk, Bezos and Zuckerberg were all on front row seats at Trump’s Inauguration, so that is the end of critical media analysis.
Seen in FT comments —
It is passed on! This USD is no more! It has ceased to be! It’s expired and gone to meet its maker! It is stiff! Bereft of life, it rests in peace! If you hadn’t nailed it to the market it’d be pushing up daisies! Its trading processes are now ‘history! ‘It is off the chart! It has kicked the bucket, it’s shuffled off its mortal coil, run down the curtain and joined the bleedin’ choir invisible!! THIS IS AN EX-USD
Well, I’d better replace it, then.
It may just be ‘resting’?
Timely book tip: When Money Dies
https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=4ac76b971cf67594de3627b14bb7f2244b973815
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Hyperinflation has always needed a prop be it coin or currency, and since we’ve been in the digital age there was nothing that allowed the instance-that is until Trump became the prop, bent on running the economy into the ditch, along with our vaunted hegemony.
When the wreck becomes complete, its gonna be something to behold, for you’ll see Capitalism in its death throes, with a housing bubble finale in that as the almighty buck is crashing hard, the proles holding long green will desperately look for a plan B, so imagine a 1964 3/2 SFH in LA fetching $148 million, its gonna get weird.
Seemed to be a fair bit of chatter yesterday about “The Event” .
Mix-a-metaphor- “the Straw that broke Rube Goldberg’s finest”
The invisible hands of capitalism are stacking the deck AND stuffing their pockets and gaping maws.
Probably time to go play golf, no?
Knock knock…
Who’s there?
Fore!
For whom?
Foreclosure, i’m doing a bust out!
The price of a barrel of crude going down is the one thing our Teetotalitarian Leader has been crowing about on social media as of late, but funny thing here in Cali the price of gas has gone up, I paid $4.49 a gallon the other day.
J M Keynes will tell you that the Weimar collapse was one of the Consequences of Peace, whereby Allied collective animosities designed such unrepayable amounts of debt to load down the Germans that they could only pay off the debt by debasing their currency to spite the greedy Allies. Another case of Bad Statesmanship sinking the Peace Process. Good Morning Vietnam, Hello Iran Hostage Crises, Goodby Iran Contras, So Long Cuba, Uncle Sam wants You to Invade Iran, take my intercontinental missiles, please. They all came to look for America.
In the latest issue of Catalyst, a New Left Review-like publication put out by Jacobin, there’s a good, timely article by Paul Heideman, “Trump’s Takeover of the Republicans.” He stresses the pre-Trump fragmentation of the Republicans, determined by the polyglot nature of their business base, which was heavily amplified by the overwhelming of party-controlled funding by Superpacs that allowed unmediated funneling of billionaire bucks into electoral battles. What makes the article pertinent is how this fits in with Trump’s decision-making style:
We’ve discussed this parallel with Hitler before, the struggle to gain his ear and be the “last man in the room” after a meeting. What Heideman brings out is how this level of party disorganization means that there are no backstopping regulatory guidelines for economic policy as there were during the Bush years. Trump’s mercurial personality meshes with a bubbling, media-based cognitive stew. A sense of confident certainty derived from following well-established policy guidelines linked to a consensus among big backers — e.g. the Business Roundtable — is replaced by a much more personal feeling of omnipotence that is transient, situational.
In this context our frequent references to Mr. Market are particularly apt, because the Republicans no longer serve to organize a business consensus and so becomes less of a source of significant policy feedback.
Your expertise and efforts are truly appreciated.
Typical of him, Trump has hubristically placed Chinese finger traps (Chinese handcuffs) on himself. As we know, it is unlikely he will realize what he’s wrought and then wisely relax and realize what he must do to undo his actions. Indeed, every action he takes will worsen his -and America’s- situation. He’s the perfect incarnation of the chaotic “stewardship” of an empire in decline.
(Copied from wikipedia)
“Caligula would be restrained only by his own sense of discretion, which became in lamentably short supply as his reign progressed” – Anthony A. Barrett
This scrum was covered without end on TV yesterday, mostly watching CNBC where Steve Leisman was likely pulling double time or consumed energy drinks and coffee all day…but that is what he does and he even showed for a time in the 5pm hour after the close.
The angle about a potential switch to a possible new Fed chief was how Kevin Warsh,,with a history in the Federal Reserve previously, is apparently employed by noted wealthy investor Stanley Druckenmiller. In short it sounds like Mr. Warsh is likely or seemingly could be at odds with the purpose to replace Powell. Sheesh and good grief Charlie Brown; talk about an own goal that things are screwy all around.
Added, that Leisman had commentary that Treasury secretary Scott Bessent was also advising against this potential move. To the extent that Trump accepts a wise piece of counsel, but this can’t be encouraging as overseas investors may continue to pivot or rotate out of US markets. It’s obvious that Trump is watching CNBC in the early hours as well. Investors just aren’t cheering wildly on all the rules and policy initiatives…
Thanks for the tweet from Rachel Bitecofer. Glad to know I’m not the only one who speculates about plots or other irregular kinds of succession.
On a brighter note and not necessarily off topic Robert Scheer released an in depth interview with Ben Norton, who is living in China, regarding why Trumpter’s trade war with China is doomed to failure. Mr Norton goes into great detail of how the Asian economy is evolving. It’s fascinating!
https://scheerpost.com/2025/04/18/trumps-trade-war-with-china-will-make-china-great-again-w-ben-norton/
I read the transcript. Was a good read and I think it reflects the reality as-is and is refreshingly not partisan.
Just not sure how to plan for an unpredictable stagflationary, immigrant/minority hostile world. How do we raise or protect the next generation of one is not Caucasian ?
TDS is taken over all commentary (both red & blue strain) – it’s infected the entire spectrum – what does that say ? nobody’s paying attention – to what ? one might ask – to the Deep State think tank policy papers – please listen (for just 30 min.) to Brian Berletic as he clearly cites paper after paper that lays out precisely what we’re seeing unfold – – from clip header: “The US is preparing to subject its own population as well as those of its supposed “allies” to immense long-term economic, social, and political pain. The cost-of-living crisis in the US will only grow worse. The US hopes that it can endure economic pain and disruption at home and abroad better than the emerging multipolar world can. Multipolarism’s survival will depend on proving otherwise.”
I don’t think all the global battles between various elite factions have been exposed.
What we don’t understand is WHO is really running The White House with regard to world finance? Who is Bissent? In his previous positions did he behave similarly to loud-mouthed Trump?
A couple weeks ago, Ray Dalio seemed to indicate that the US Foreign Debt to other nations is something like $30 TRILLON that the US owes. Is that the nexus behind much of this havoc?
We have already surmised the Trump Team is going to annihilate lower income, even middle income folks. The Poor will become even more impoverished. That’s a given. It’s as Dr. Hudson’s views in the return of The Robber Barons.
Will Netanyahu be sending Trump a bushel of eggs for the White House Easter Sunday hunt? This in thanks for taking the heat off of the IDF in Gaza. In the duopoly of Israel and USA ,, it takes some doing to rise to become #! most villified in the world. Respect, prestige, confidence, trust, in one fell swoop…poof!