“So will Trump’s attempt to bully the Fed succeed? …given how quickly Trump has been able to subvert or destroy many other government institutions, it’s hard to feel confident that he can’t do the same to the Fed. …taking over the Fed would cause the dollar to plunge while long-term interest rates soar as investors expect higher inflation.”
—Paul Krugman, Why You Should Fear a Trumpified Fed
#trump #bullying #fed #dollar #usd #inflation

“As a consequence of Trump’s destructive tariff regime, the Fed will soon face a dilemma. Should it raise interest rates to fight inflation, or should it cut rates to fight recession? It’s a really hard call… Trump has made Powell’s dilemma even worse with his attempted bullying…”
—Paul Krugman, Why You Should Fear a Trumpified Fed
#trump #bullying #fed #inflation #recession

”What makes Trump’s attempt to bully the Fed especially ominous is the fact that the Fed will soon have to cope with the stagflationary crisis Trump has created. Trump’s massive tariff increase will lead to a major inflationary shock…”
—Paul Krugman, Why You Should Fear a Trumpified Fed
#trump #fed #tariffs #inflation

”Basically the Fed can create an economic boom with a phone call. It's obvious that this kind of power could be abused by an irresponsible leader who wants to preside over an economic boom and doesn’t want to hear about the risks.”
—Paul Krugman, Why You Should Fear a Trumpified Fed
#trump #fed

…#Trump does not have the authority to fire #JeromePowell, except for "cause," meaning some kind of bad behavior. #SCOTUS precedent supports that view. But the White House has signaled a willingness to test that standard, firing board members of other #independent #FederalAgencies.

Powell said on Wednesday that lawmakers from both parties have generally defended the #Fed's ability to set interest rate policy without interference.

#Trump's post came a day after #JeromePowell warned that the #tariffs from the Trump admin are likely to cause both higher prices & slower economic growth.

"Tariffs are highly likely to generate at least a temporary rise in #inflation," Powell told the Economic Club of Chicago, noting that Trump's import #taxes were higher than most forecasters had expected. "The inflationary effects could also be more persistent."

#Trump was evidently frustrated that the European Central Bank was preparing to lower interest rates for the 7th time, while the #FederalReserve is in a holding pattern. Of course, European leaders have not imposed triple-digit #tariffs which threaten to rekindle #inflation.

The 3 major #US #stock indexes extended declines in afternoon trading on Wednesday while #JeromePowell spoke.

"Powell’s saying what the market has been fearing all along. And it’s coming from the Fed chief, confirming all these things," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

#US #economy #Trump #policy #Fed #US #law #regulation #currency #inflation #tariffs #recession

#JeromePowell said #Fed independence is a matter of #law! [tyvm]

His remarks on Fed independence drew a round of audience applause in Chicago.

He said:

We are protected in the law

Fed independence has broad support across political parties

I don't think the case before #SCOTUS on independent agencies will apply to the Fed

Fed is not going to be influenced by political pressure

#US #economy #Trump #policy #US #law #regulation #currency #inflation #tariffs #recession

#AI likely to bring dramatic change, #JeromePowell says

Powell also said:
AI is more than a better version of Google, and it's like a better version of a person [at least he doesn’t confuse it with a steak sauce]

AI is one of the two or three things likely to bring dramatic change to the economy

It's hard to know how it will shakeout

#US #economy #Trump #policy #Fed #US #law #regulation #currency #inflation #tariffs #recession

#JeromePowell on #cryptocurrency

#Crypto is becoming more mainstream, & a #legal framework for #stablecoins is a good idea

Stablecoins could have wide appeal, & *should* have #ConsumerProtections!

There will be some loosening of rules to allow innovation, but it needs to be done in ways that does not make banks less safe & sound

#US #economy #Trump #policy #Fed #US #law #regulation #currency #inflation #tariffs #recession

#JeromePowell on #US #debt

Federal debt is on an unsustainable path, though not at an unsustainable level.

Running large deficits w/full employment is a situation the country has to address

Domestic discretionary spending is small & declining as a share of federal spending; that is not the problem

So much of the dialogue from politicians is about discretionary spending, which is not the issue.

#US #economy #Trump #policy #Fed #US #inflation #tariffs #recession

#JeromePowell said #markets are processing the #policy changes, but they are functioning.

"What I think is going on in markets is markets are processing what's going on, markets are struggling with a lot of #uncertainty & that means #volatility.”

He also said that volatility is likely to continue given the high uncertainty.

#US #economy #Trump #Fed #US #inflation #tariffs

#JeromePowell says #Fed could have to make a difficult decision.

The Fed's 2 goals are not yet in tension, but the potential is leading to simultaneous higher #unemployment & higher #inflation.

The tension between employment & inflation goals would be a difficult position for the Fed to lower rates.

#US #economy #Trump #policy #JeromePowell #Fed #US #inflation #tariffs

#JeromePowell on federal #funding cuts:

With cutbacks in federal funding for #science, the #Fed is hearing of significant #employment impacts.

Cutbacks to #university & #research funding are causing significant impacts in some cities; it could have longer-term effects on productivity.

#US #economy #Trump #policy