Trump Won’t Try To Illegally Fire Powell: He’ll Let The Fed Save The Economy Then Take Credit

I wonder how many times Donald Trump will say something that massively moves the stock market only to say the exact opposite thing a few days (or hours) later, spurring a massive market recovery. Perhaps traders will eventually figure out that, hey, the dude lies a lot.

On Monday, Trump called Federal Reserve Chair Jerome Powell a “major loser,” following up on his threat from last Thursday seeking Powell’s “termination” for not cutting interest rates quickly enough. The stock market tanked.

The Fed is an independent agency. Trump himself first appointed Powell in 2018. Then there is the little matter of the 90-year-old Supreme Court precedent that says the opposite of Trump’s claim that “if I want him out, he’ll be out of there real fast, believe me.” Certainly some obstacles stand in the way of Trump trying to fire Powell, like the fact that it would be illegal, though Trump has done crazier shit in the past and gotten away with it.

But whoa, slow down a minute there, hoss, because on Tuesday evening the same Trump said he had “no intention” of firing Powell. When pressed while speaking at the Oval Office on whether he had plans to remove Powell from his Federal Reserve position, Trump said, “None whatsoever.” Stock futures surged.

This tactic has become the monkey wrench of Trump’s political toolbox: say one thing, then say the exact opposite. One or the other, the first thing or its opposite, will obviously eventually take place, then Trump can point to whichever of his positions turned out to be accurate so he can bask in having been right all along. He’ll ignore the inaccurate statement, knowing that he’s flooded the airwaves with so much disinformation that it will never filter through to his dumbass base, and will call anyone who brings the inconsistency up a lunatic.

This time, I believe the second thing. I don’t think Trump has any intention of trying to fire Jerome Powell. For one thing, that would be hard and might cut into golf time. More importantly, Trump is just smart enough to realize that a politically captured Fed is as bad for him as for anyone.

The Fed can stem inflation by raising interest rates or can spur economic growth by lowering them. Trump’s tariffs are set to massively increase prices for consumers at the same time as his trade war is slowing global growth.

The Fed cannot simultaneously fight inflation and attempt to prop up growth. However, if the Fed really lowered interest rates more quickly, like Trump was yelling at them to last week, consumers very well could face a double-whammy price hike for everyday goods from both the tariffs (a tax increase) and an overheating economy. What do you think working class Americans are more likely to notice: a large increase in the cost of things they buy every day, or a 1% slowdown in quarterly GDP growth?

Trump can yell online about how the Fed should lower interest rates sooner all he wants, I don’t buy it. He’s an actor — you didn’t really think “The Apprentice” was actually anything remotely close to reality, did you?

Trump wants interest rates to stay up there for a while. That could absorb some of the inflationary blow he’s dealing the American working class with his trade war.

Meanwhile, if he loses too much support on the economy he can blame the Fed, knowing his hardcore base does not have an advanced enough understanding of what the Fed does to point out why that does not make sense, even if any of them had the spine to contradict him, which they don’t. Then, when the Fed does cut rates again — which almost everyone expects to happen at least once and probably multiple times before the end of the year — Trump can point to the crazy threats he made on Truth Social and take credit for the Fed bending under the toughness of his onslaught.

While I could be wrong, I don’t think Trump is actually going to try to fire Powell. Trump, like he always does, is going to try to have it both ways.

Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

The post Trump Won’t Try To Illegally Fire Powell: He’ll Let The Fed Save The Economy Then Take Credit appeared first on Above the Law.