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Multiple job-holding seems a habit of the Trump administration. Marco Rubio is secretary of state, national security adviser, and head of USAID. (All three entities suffer, but that seems to be the point.) Sean Duffy now runs the Department of Transportation and NASA. Russ Vought runs OMB and CFPB (into the ground). And Stephen Miller is said to be the de facto head of the Department of Homeland Security and ICE, as well as deputy White House chief of staff, his official title.
So Bessent could well go through the motions of vetting the other candidates for Fed chair. They include Kevin Hassett, director of the National Economic Council; former Fed governor Kevin Warsh of the Hoover Institution; and Christopher Waller, a current Fed governor loyal to Trump. But it would all be a charade, charades being another Trump signature.
The consequences of the White House controlling monetary policy would be all too real. Trump has made clear that he wants lower interest rates, whether or not economic conditions warrant it, because of the increased cost of financing the enlarged national debt that is the result of his budget bill.
However, the combination of increased tariffs and increased debt means that Powell is correct that inflation is likely to increase later this year and in 2026. Thus, any rate cut should be deferred.
If Trump does manage to get control of the Fed, and our central bank plows ahead with rate cuts in the face of rising inflation, that would only create more inflation. This in turn would spook the stock market and weaken the dollar. Sooner or later, the Fed would have to reverse course and tighten money, creating “stagflation”—simultaneous inflation and recession.
It would be better not to raise tariffs through the roof, better not to inflate the national debt to finance tax cuts for billionaires, better not to end the independence of the Fed. But reality has never stopped Donald Trump. |
