{"id":41446,"date":"2025-04-24T16:10:00","date_gmt":"2025-04-24T21:10:00","guid":{"rendered":"https:\/\/ustower.net\/?p=41446"},"modified":"2025-04-24T22:06:34","modified_gmt":"2025-04-25T03:06:34","slug":"trump-keeps-finding-new-ways-to-terrify-wall-street","status":"publish","type":"post","link":"https:\/\/ustower.net\/?p=41446","title":{"rendered":"Trump keeps finding new ways to terrify Wall Street"},"content":{"rendered":"\n

New YorkCNN\u00a0\u2014\u00a0<\/strong>If you thought President Donald Trump\u2019s trade war seemed chaotic, buckle up: His latest salvo poses an even greater threat to the economy.<\/p>\n\n\n\n

After months of swearing up and down<\/u><\/a> he wouldn\u2019t fire Federal Reserve Chair Jerome Powell, Trump on Thursday reversed course and said Powell\u2019s \u201ctermination\u201d couldn\u2019t come soon enough. Stocks fell sharply.<\/p>\n\n\n\n

Then US stock traders had a nice three-day weekend \u2014 the first sunny and warm spring weather New York City has seen this year \u2014 to ponder whether Trump was serious. Perhaps Thursday\u2019s threat was just a bit of bluster from a president prone to tantrums \u2014 a one-off social media post that his more stable advisers will surely try to rein in to avoid an all-out panic.<\/p>\n\n\n\n

Or\u2026not.<\/p>\n\n\n\n

Shortly after the US stock market opened Monday morning, Trump once again attacked Powell for ostensibly not cutting interest rates fast enough. Stocks immediately tumbled<\/u><\/a> and the US dollar fell to its lowest level in three years.<\/p>\n\n\n\n

While Trump\u2019s tariff plan has been disruptive, the uncertainty it created had, to an extent, become priced in. Markets famously hate uncertainty, but the 90-day pause on the administration\u2019s most aggressive tariffs offered a measure of reassurance that Trump may relent if there\u2019s enough of a negative reaction.<\/p>\n\n\n\n

Attacking the independence of the Federal Reserve is a new level of recklessness that few thought possible. But now even Kevin Hassett, the White House adviser who literally wrote a book<\/u><\/a> arguing against firing the Fed chair, is saying openly that the administration is discussing whether to do so before Powell\u2019s term ends a year from now.<\/p>\n\n\n\n

To be sure, these attacks on Powell could prove empty threats. Trump may be blowing off steam or teeing up Powell as a scapegoat for a future tariff-driven recession, said Krishna Guha, vice chairman of Evercore ISI, in a note.<\/p>\n\n\n\n

\u201cBut this is self-defeating,\u201d he writes. By publicly undermining Powell, Trump \u201crisks putting upward pressure on inflation expectations, making it harder for the Fed to cut rates.\u201d<\/p>\n\n\n\n

Putting aside the very real legal question of whether Trump can actually oust a sitting Fed chair (tl;dr: it\u2019s debatable), here\u2019s why Trump\u2019s renewed fixation on Powell, whom Trump himself appointed in 2017, is so concerning:<\/p>\n\n\n\n

The Fed, an independent body that sets US monetary policy, is the ultimate economic safety net. It has the power to absorb big shocks \u2014 like a pandemic, say, or a recession triggered by the upending of global trade \u2014 through interest rate policy-setting and the use of its virtually unlimited balance sheet.<\/p>\n\n\n\n

During the 2022-2023 inflation crisis, the Fed raised rates at a historic pace. Undoubtedly, former President Joe Biden wasn\u2019t pleased that mortgages, credit card rates and auto loans were suddenly surging, exacerbating America\u2019s affordability crisis. But the Fed accomplished its mission, bringing inflation down near normal levels without plunging the economy into a recession.<\/p>\n\n\n\n

Take away that independence, and you take away the Fed\u2019s ability to keep prices in check.<\/p>\n\n\n\n

\u201cFighting inflation requires being non-political and non-partisan,\u201d said Erasmus Kersting, an economics professor at the Villanova School of Business. \u201cOtherwise, the temptation to boost the economy for political gains is ever-present, and especially populist leaders have given in to that temptation all the time.\u201d<\/p>\n\n\n\n

Presidents like when the Fed cuts rates because it spurs economic growth, but it also leads to higher inflation. Once the public, including global investors, loses faith that there\u2019s any real will to stop it, \u201cthat inflation is almost impossible to dislodge,\u201d Kersting added.<\/p>\n\n\n\n

In other words, the Fed is a buffer against the worst effects of Trump\u2019s economic whims.<\/p>\n\n\n\n

Trump wants the Fed to cut rates faster, but a big part of the reason for the Fed\u2019s caution is Trump\u2019s own tariff agenda, which is \u201chighly likely to generate at least a temporary rise in inflation,\u201d as Powell noted in a speech last week.<\/p>\n\n\n\n

Putting in place a Fed chair willing to take orders from Trump would undermine the credibility of the world\u2019s most important central bank, further eroding America\u2019s unique position as the most trusted place to park money and investments. But it could also severely hurt the economy.<\/p>\n\n\n\n

Cutting rates fast and sharply could reignite inflation just as Trump\u2019s tariffs slow economic growth to a crawl \u2014 the Fed\u2019s GDPNow tool<\/u><\/a> currently predicts the economy went into reverse and contracted last quarter.<\/p>\n\n\n\n

Any actual attempt to fire Powell, which Evercore analysts said Friday was not likely, would lead to a surge in \u201cstagflation trades,\u201d Guha said, referring to the nasty combo of an economy suffering from slow growth and high prices<\/u><\/a> at the same time. (See also: American in the 1970s.) The resulting panic would cause bond yields to shoot higher (read: borrowing money to buy a home or car would become even more expensive), and, according to Guha, likely guarantee a recession.<\/p>\n\n\n\n

cnn<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

New YorkCNN\u00a0\u2014\u00a0If you thought President Donald Trump\u2019s trade war seemed chaotic, buckle up: His latest salvo poses an even greater threat to the economy. After months of swearing up and down he wouldn\u2019t fire Federal Reserve Chair Jerome Powell, Trump on Thursday reversed course and said Powell\u2019s \u201ctermination\u201d couldn\u2019t come soon enough. Stocks fell sharply. Then US […]<\/p>\n","protected":false},"author":6,"featured_media":41447,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1155],"tags":[2710,1230,3275],"class_list":["post-41446","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-threats","tag-trump","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/41446","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=41446"}],"version-history":[{"count":1,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/41446\/revisions"}],"predecessor-version":[{"id":41448,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/41446\/revisions\/41448"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/media\/41447"}],"wp:attachment":[{"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=41446"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=41446"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=41446"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}