President Donald Trump is calling for Federal Reserve Chairman Jerome Powell to be fired. In a Thursday, April 17 post on his Truth Social platform, Trump wrote, “Powell’s termination cannot come fast enough!”Many economists, in response, are saying that it is crucial for the U.S. Federal Reserve to maintain its independence from the White House — and not be subject to the whims of Trump or any other president.One of the economists who is sounding the alarm is Chris Hughes, who chairs the Economic Security Project.READ MORE: ‘Bullied into submission’: Trump’s ‘naked economic incompetence’ is now GOP’s greatest liabilityIn an op-ed/guest essay published by the New York Times on April 18, Hughes warns that anyone with a bank account or a retirement account should be worried about Trump’s attacks on the Fed.”Since returning to the White House,” Hughes explains, “Mr. Trump has been laying the groundwork to fire Mr. Powell, discussing the idea repeatedly with close advisers. This latest escalation brings us even closer to a full-blown crisis over Fed independence. Mr. Trump’s dislike for Mr. Powell is more than a personal spat. It’s a direct challenge to the economic foundation that has helped make America prosperous for generations.”Hughes adds, “The Federal Reserve, established in 1913 and reconstituted in 1935, manages interest rates to ensure credit doesn’t become too expensive, stifling investment and employment, or too cheap, spurring inflation. The Fed also regulates and supervises financial institutions to ensure they are financially sound.”According to Hughes, financial “markets understand Mr. Trump’s threat intuitively” —which is why “investors are already dumping Treasury debt in anticipation of potential Fed politicization.”READ MORE: Trump wants to fire Fed chair — but may need ‘assist from’ SCOTUS”If Mr. Trump were to gain direct control of monetary policy,” Hughes warns, “global financial markets would enter a state of shock as investors lost confidence in the central bank’s commitment to price stability. The U.S. government would face significantly higher borrowing costs on the trillions it needs in coming years. Household budgets would be hit by higher borrowing costs, too, and by rising inflation.”Hughes is hoping that the U.S. Supreme Court will, at some point, rule in favor of the Fed’s independence.”This constitutional showdown is about whether America can maintain the economic stability that has underpinned its prosperity,” Hughes argues. “Insulated central banking isn’t just an American tradition — it’s a global standard for good governance…. If Mr. Trump succeeds in subjugating the Federal Reserve, the consequences would extend far beyond his term in office.”Hughes adds, “Interest rates would fluctuate with election cycles rather than economic conditions. Inflation expectations would become unanchored, creating the potential for prices to spiral out of control. The dollar’s status as the world’s reserve currency — which gives America enormous economic advantages — would be jeopardized.”READ MORE: ‘MAGA Mean Girls’: Conservative writer spotlights women mirroring Trump’s ‘bullying leadership style’Chris Hughes’ full New York Times op-ed is available at this link (subscription required).
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