November 7, 2024
You heard him. Even if president elect Trump wanted him gone – the federal reserve chairman Jerome Powell said he’s not going anywhere and he says there’s nothing trump can do about it.
And he didn’t say it once. He said it twice.
Let me give you a little back story. As I have been telling you for years, while the federal reserve is technically part of the government… it is completely independent. And the Fed takes that independence extremely seriously. The federal reserve controls the central bank and the monetary policy which means it manages the money supply and interest rates. And congress is in control of the fiscal policy which means it’s up to congress how to tax and spend. The fed does not answer to any politician. And politicians don’t answer to the fed.
But on the campaign trail in the last year — now president elect Trump criticized the fed and Powell a lot saying at one point — interest rates were too high and then said interest rates were too low. He has been saying the president should have a say in these fed decisions. And some around the president elect have even suggested that Powell should step down. Even though it was trump who appointed Powell to the chairmanship during his first term.
Today we learned that’s not going to happen.
Why? Under the Federal Reserve act of 1913 which governs all of this…the fed chairman and each of the members of the fed who sit on the board of governors are appointed by the President and need to be confirmed by the Senate. They serve for a maximum of 14 years. Powell’s term is up in May of 2026. While it may be illegal for the new Trump administration to outright fire Powell – though that’s never really been tested – it is possible for Trump to shape the federal reserve by appointing new Fed members whose terms are expiring within his next four years in office.
But it’s also a fact that trump will have a chance to appoint a new fed chairman in 2026. And that person may not think the same way as Powell when it comes to the full independence of the fed. If you want me to do a whole video about what it looks like when a central bank is controlled by politicians let me know…the short short version is – it doesn’t go particularly well.
Watch the Fed Chairman’s press conference here.
