Trump planning to fire FED chairman Powell ?

Donald Trump is assessing whether he can sack the head of the Federal Reserve, the White House has said.
Kevin Hassett, Trump’s economic adviser, said on Friday that the president and his team were looking at whether he had the authority to remove Jerome Powell.


“The president and his team will continue to study that matter,” Mr Hassett told reporters at the White House when asked if sacking the Fed chairman was an option.


Out of so many bad decisions, bad policies, and lies, this may be his worst idea yet.

He doesn't have the authority to do that.

Of course if the court confirms that, he'll just do whatever every dictator does. He'll fire the courts.

Didn't Powell say that inflation was transitional and short lived?

not possible with tariffs in place. inflation is the whole point.

Didn't Powell say that inflation was transitional and short lived? Originally Posted by Schwarzer Ritter

not possible with tariffs in place. inflation is the whole point. Originally Posted by pxmcc

you keep saying that. why exactly can't the Fed reduce the interest rate if inflation is high because of tariffs?


i'll wait

The FED Chairman has explained that very well. The topic is Trump considering if he can fire the FED Chairman.

He would fire him if he could, which would be another mistake and abuse of power.

ok first semantics. the Fed could do that, but it would be unwise.

the Fed has two mandates: keep employment high, and keep inflation low. the main tool they have to work with is they set the prime rate.

here's how it works. when inflation is too high, say anything above about 2.5%, the Fed's response is to raise the prime rate. this essentially cuts down the money supply. tightening the money supply slams the breaks on inflation.

let's take the opposite scenario. when the country goes into recession, like what happened in 2007 and 2008, nobody is buying anything, people are losing their jobs, no one is starting new businesses, etc.

the Fed's response here is the opposite of the above: they lower the prime rate. this raises the money supply, encouraging spending and investments to get the economy "unstuck." businesses start to hire, consumers start to spend $, and GDP goes up.

before Trump tried his "little experiment," we were doing pretty well. inflation finally stabilized at about 2.2%, the jobs' reports were robust, and everything was clicking.

in such an environment, it might not be a necessity, but at least it would be safe to lower the prime. such a move could be very helpful, for example, in getting the housing market "unstuck."

now Trump comes along with his tariffs. suddenly, all those container ships from China just go idle. that affects U.S. port workers, who get furloughed. cars with tariffs sit on dealer lots. salesmen get laid off, and suddenly you have the makings of a recession. so the Fed should lower the prime, right?

but, meanwhile, what effect do those tariffs have on prices? they go up. that's the point of the tariffs, to force people to buy American goods. but America doesn't make a lot of those goods. where's the American textile industry? there isn't one. where's the American steel industry? there isn't one. so people have no choice to pony up for foreign goods, or go without. when they pony up, that's inflation. so the Fed should raise the prime, right?

this disastrous scenario that Trump created is called stagflation. it's the worst of all worlds.

so now the Fed is between a rock and a hard place. so what do they do? stand pat and hope Trump comes to his senses.

this experiment is doomed to fail because Trump has no idea what he's doing. even if he had simply consulted with pro-tariff economists, he might have been able to figure out something workable.

Trump is right about China. but if you want to beat China, you gotta have a workable plan. instead, Trump is just trying different random actions and hoping for the best. no budding entrepeneur is going to build a steel factory or a textile factory in these uncertain conditions. instead, they'll just sit on the sidelines and wait for more certainty.

one more thing. where's the labor force for all these future American factories? Trump is deporting them. you think Americans are going to work in a textile factory? just naw..

see how all that works?

you keep saying that. why exactly can't the Fed reduce the interest rate if inflation is high because of tariffs?


i'll wait Originally Posted by The_Waco_Kid

you keep saying that. why exactly can't the Fed reduce the interest rate if inflation is high because of tariffs?


i'll wait Originally Posted by The_Waco_Kid

Inflation can be increased with lower interest rates. So if inflation from tariffs is expected, lowering interest rates can add to inflation.

^^exactly correct, sir..

ok first semantics. the Fed could do that, but it would be unwise.
Originally Posted by pxmcc

you lost your rather eloquent but false rebuttal with the first sentence.



show me an economist (not named Robert Reich Paul Krugman or Richard Wolfe) who would support not lowering interest rates to counter inflation and thus simulating the economy?

Paul Krugman won a Nobel prize in economics. he's been right way more than he's been wrong, and when he's wrong, he admits it. the supply siders are always wrong, but they keep repeating their little fantasy that tax cuts will pay for themselves, even after they've been proven wrong again and again.

if you think lowering interest rates will cool an overheated, inflationary economy, i might not be able to help you. (Trump calls lowering interest rates "priming the pump", which is a correct description.) i might suggest a course in macroeconomics to get a feel for cause and effect in the world of economics. (i'm not an economist by the way, i just took a basic economics class required for my undergrad in biochemistry.) has any reputable economist suggested that lowering interest rates could cool an inflationary, overheated economy? if so, i'd be happy to read their works. i'm always open to learning new things or getting new perspectives.

you lost your rather eloquent but false rebuttal with the first sentence.



show me an economist (not named Robert Reich Paul Krugman or Richard Wolfe) who would support not lowering interest rates to counter inflation and thus simulating the economy? Originally Posted by The_Waco_Kid

Thread Lost to Hijacking

Thread Closed