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Trump's pettiness is now tanking the US economy



The stock market plunged on Monday, with the Dow Jones Industrial Average
falling 400 points at the opening bell, as economists and investors alike fear
that the Federal Reserve Bank's independence is in doubt.

The stock market slide came the day after Federal Reserve Board Chair Jerome
Powell issued a rare and forceful video statement accusing Trump of opening a
criminal investigation into him in order to pressure Powell into lowering
interest rates.



"This new threat is not about my testimony last June or about the renovation
of the Federal Reserve buildings. It is not about Congress's oversight role;
the Fed through testimony and other public disclosures made every effort to
keep Congress informed about the renovation project. Those are pretexts. The
threat of criminal charges is a consequence of the Federal Reserve setting
interest rates based on our best assessment of what will serve the public,
rather than following the preferences of the President," Powell said. "This is
about whether the Fed will be able to continue to set interest rates based on
evidence and economic conditions—or whether instead monetary policy will be
directed by political pressure or intimidation."

President Donald Trump has publicly chastised Powell numerous times for not
lowering interest rates, a move that would make borrowing money for Americans
cheaper but likely would spike inflation even further.




 



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Trump has even threatened Powell with removal, though he backed off those
threats after U.S. markets revolted.

Now, however, he is trying to coerce Powell to step down by opening a
criminal investigation into Powell's congressional testimony about renovations
to the Fed's buildings. Powell leaving early would allow Trump to install his
own chair, whom he would be able to direct to bend to his will on monetary
policy.

But the threats have clearly not worked on Powell, who instead of acquiescing
to Trump's demands instead forcefully criticized the president.

And even typically sycophantic GOP senators are revolting against Trump's
attempt to use lawfare to force Powell out.

Sen. Kevin Cramer (R-ND) said that while he thinks Powell is a bad Federal
Reserve chair, he is not a criminal. “I hope this criminal investigation can be
put to rest quickly along with the remainder of Jerome Powell’s term,” Cramer
said in a statement. “We need to restore confidence in the Fed.”

Sen. Thom Tillis (R-NC) went a step further, saying he would put a hold on
any future Federal Reserve nominees until the investigation ceases.

“If there were any remaining doubt whether advisers within the Trump
Administration are actively pushing to end the independence of the Federal
Reserve, there should now be none. It is now the independence and credibility
of the Department of Justice that are in question,” Tillis said in a statement.
“I will oppose the confirmation of any nominee for the Fed—including the
upcoming Fed Chair vacancy—until this legal matter is fully resolved,” he added.




 



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Economists and investors fear a politicized Federal Reserve because chaotic
monetary policy would hurt the economy and leave investors weary about putting
their money into U.S. assets, which according to the Council on Foreign
Relations would “cause long-term economic harm."

CFR also said that, "independence enhances the Fed’s credibility and fosters
market confidence in its decisions. Crucially, it also empowers the Federal
Reserve to take difficult but necessary actions, even when they are unpopular."

Indeed, countries with despotic leaders do not have independent banks like the
Federal Reserve, which has caused their countries economic harm.

“Some countries that have prosecuted or threatened to prosecute central
bankers for the purpose of political intimidation or punishment for monetary
policy decisions: Argentina, Russia, Turkey, Venezuela and Zimbabwe,” Harvard
economic professor Jason Furman wrote in a post on X. None of those countries
have sound economies, and are not a list of nations the United States should
want to be associated with.

Justin Wolfers, an economics professor at the University of Michigan, used
Turkey as an example of what can happen if a despotic leader influences
monetary policy. Wolfers posted a chart on X that showed after Turkish
President Recep Tayyip Erdoğan took control of his country’s central bank,
inflation spiked massively, peaking at a stomach churning 86% before falling to
38% currently.

Sounds like something voters, who are desperate to see inflation cool, would
be super jazzed about.



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