Milton Friedman Speaks: Tariffs and Free Trade - Capitalism and Freedom with his "classical liberal" stance that government should stay out of matters that do not need it and should only involve itself when absolutely necessary for the survival of its people and the country. He recounts how the best of a country's abilities come from its free markets while its failures come from government intervention.
President Trump turned up the pressure on Federal Reserve Jerome Powell again on Thursday, saying in a social media post that he should lower interest rates and that Powell’s "termination cannot come fast enough!"
The president's comments posted to Truth Social came one day after Powell said the central bank will "wait for greater clarity" before considering any rate adjustments as he warned Trump’s tariffs would likely generate "higher inflation and slower growth."
He predicted those twin developments could create a major dilemma for the Fed — which is obligated to keep prices stable while also maximizing employment.
"We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension," Powell said.
Trump certainly made Powell's job more difficult this month as he unveiled the steepest tariffs in more than 100 years, before pausing some of them for 90 days.
The tariffs roiled markets and stoked new uncertainties about the direction of the US economy, putting pressure on the Fed to consider a rate cut as a way of preventing a downturn.
Trump on Thursday said Powell is "always TOO LATE AND WRONG" and "should have lowered Interest Rates, like the ECB, long ago," referencing recent monetary policy easing on the part of the European Central Bank.
"He should certainly lower them now. Powell’s termination cannot come fast enough!”
Powell’s time as chair expires in May 2026, and he has said he intends to serve out the entirety of his term. Treasury Secretary Scott Bessent said earlier this week he expects to start interviewing Fed chair candidates in the fall of this year.
The Fed chair on Wednesday again reiterated the independence of his institution and his own job, saying it’s "a matter of law," and pledged not to act in response to any political pressure.
He did discuss a case now before the Supreme Court that is testing Trump’s ability to remove board members at other independent agencies in Washington, D.C., a case that some Fed watchers worry could threaten Powell if the administration wins.
But Powell said, "I don’t think that’s a case that will apply to the Fed." Nonetheless, the central bank is "monitoring it carefully."
Trump started his second term in office by softening his criticisms of the Fed's monetary policy decisions and even made it clear he didn't intend to fire Powell, someone he criticized repeatedly during his first term.
Bessent and other Trump aides repeatedly stressed that the president was not focused on the Fed and was instead trying to bring down 10-year Treasury yields.
President Trump on Thursday argued he would be able to remove Federal Reserve Chair Jerome Powell if he wanted to, ratcheting up his criticism of the leader of the central bank.
“Oh, he’ll leave. If I ask him to, he’ll be out of there,” Trump told reporters in the Oval Office. “I don’t think he’s doing the job. He’s too late. Always too late. A little slow. And I’m not happy with him. I let him know it.”
“If I want him out, he’ll be out of there real fast, believe me,” Trump said, despite Powell’s repeated insistence that he cannot be fired and will not leave before the end of his term.
The president went on to accuse Powell, a fellow Republican, of “playing politics.”
Trump earlier Thursday bashed Powell in a social media post, bemoaning that the Fed chair has been “too late” to cut interest rates. Trump said Powell’s “termination cannot come fast enough.”
Powell’s term ends in 2026. He said last November he would not step down if Trump asked, and that it is “not permitted under the law” for the president to fire or demote him or any of the other Fed governors with leadership positions.
Trump’s comments set up the possibility of a standoff with the central bank, which could further rattle already anxious financial markets amid the president’s expanding trade war.
https://finance.yahoo.com/news/trump-powells-termination-cannot-come-fast-enough-113417649.html
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Powell’s chutzpah may be the antidote to economic chaos - Bloomberg
In Powell We Trust |
Here’s a loaded question. Who would you rather have at the helm of the US economy: President Donald Trump, or Federal Reserve Chair Jerome Powell? For me at least, the answer is easy — it’s the headline to this item.
Amid the tariffs that Trump has unleashed on the world, it’s comforting to know that the anchor for the US financial system (and in many ways the economy as a whole) is a dispassionate former investment banker who steered the country through the whiplash of a global pandemic.
Trump doesn’t see him that way, of course. He wants the Fed to follow the lead of the European Central Bank, which just reduced rates for a seventh time since June, so the president is bashing Powell for not cutting interest rates. He has taken to his favorite platform, Truth Social, to engage in one of his favorite pastimes, Fed-bashing. “Powell’s termination cannot come fast enough!” wrote the man who nominated Powell as Fed chair in 2017.
Trump’s ire at Powell goes beyond impatience with the Fed’s desire for more clarity on the fallout from abrupt US tariffs. As Jonathan Levin writes, what offended the president is that Powell dared speak his mind about tariffs, the Fed’s independence and other things that affect the economy at a question-and-answer session during an appearance at the Economic Club of Chicago.
“Powell portrayed chaotically implemented tariffs as plainly bad for the economy; slammed the approach taken by the Department of Government Efficiency; and issued a legal defense for why he thinks he can withstand any attempt by Trump to fire him,” Jon writes.
Presidents like low interest rates because they spur economic activity. As James Carville observed
more than three decades ago, elections are won and lost on how people
feel about the economy. Trump knows that his agenda will stall and he
will face an avalanche of congressional investigations if Republicans
lose either the House or the Senate in next year’s midterms. Expect
Trump’s vitriol toward Powell to heat up.
None of this is Powell’s concern, nor should it be. President Joe Biden wasn’t thrilled with
the Fed raising rates 11 times in 2022 and 2023 to fight inflation —
but it worked. Inflation, which peaked at 9.1% in June 2022, has settled
back down to 2.4%. Now Trump is upset because the uncertainty swirling
around his ever-changing tariff policy has made it impossible to know
whether inflation will roar back and the economy will enter a recession.
It
would be irresponsible to continue lowering rates in the face of such
uncertainty. That’s why the market demands an apolitical central bank.
As Jon writes: “Investors need to know that America’s central bank
remains committed to its goals of maximum employment and stable
prices, even if it needs to fight for its ability to carry out its
work.” In the end, Jon says, “I suspect that Powell’s chutzpah will
prove an asset for the economy and markets.”