- Trump finds an excuse to fire Powell…
- A nominee for Powell’s replacement…
- TRUMP’S CURSE: A $35 Trillion Meltdown Ahead? Robert Kiyosaki just issued his boldest warning yet — and he says the clock’s almost out of time.
Dear Reader,
Whispers circulated yesterday that the president has elected to relieve Mr. Powell of his duties — such as they are.
Bloomberg:
- President Donald Trump is likely to fire Federal Reserve Chair Jerome Powell soon, a White House official said, and discussed the possible move in a meeting with congressional Republicans on Tuesday night.
The president reportedly presented the assembled with a draft letter warranting the oustering.
It is further reported that the assembled were with the president.
The president himself lent validation to the reports:
“I talked to them about the concept of firing him. I said, ‘What do you think?’ Almost all of them said I should…”
Yet why now?
Trump Finds an Excuse to Can Powell
The president has had his cannons trained on “Too Late” Powell for some time.
He has hollered a lot about the tardy one’s refusal to reduce the federal funds rate.
Yet only now is he proposing to heave the fellow out. Again, why now?
Section 10 of the Federal Reserve Act dictates that a chairman of the Federal Reserve can be canned only “for cause.”
The president believes, evidently, that he has hooked onto that cause.
Reports The Associated Press:
- President Donald Trump says he has finally found a way to achieve his goal of removing Federal Reserve Chair Jerome Powell, accusing him of mismanaging the U.S. central bank’s $2.5 billion renovation project…
- Trump indicated Tuesday that Powell’s handling of an extensive renovation project on two Fed buildings in Washington could be grounds to take the unprecedented and possibly legally dubious step of firing him. “I think it sort of is,” Trump said.
- “When you spend $2.5 billion on, really, a renovation, I think it’s really disgraceful…”
The president added he believes Mr. Powell is “already under investigation.”
Trump Wanted to See How the Market Reacted
I hazard the president was inflating a trial balloon here. He let it go yesterday in the skies over Wall St.… to observe the market’s reaction.
Should the market shrug its shoulders, he would proceed with the canning.
Should the market quail, he would scotch the rumors.
What happened?
The market quailed.
Stocks fell backwards, as did longer-duration bonds of the United States government.
Why? Bloomberg gives its answer:
- To many, the initial moves reflected a deep-seated uneasiness that Trump will do what has long been unthinkable: That by firing Powell, he will end the Fed’s decades-long independence in setting monetary policy, and in the process risk stoking a surge in inflation…
- Many have expressed concern that even broaching the subject was potentially disruptive to the stability of US markets that have long relied on a central bank that is free from political influence.
I fall from my chair, in uproarious laughter, at the Federal Reserve’s supposed independence from politics.
Yet I let it pass for now.
Sure as sugar, the president immediately scotched the rumors.
Upon observing the market’s quailing, he claimed Too Late Powell’s termination was “highly unlikely”… and that “We are not planning on doing anything.”
My Nominee for Fed Chairman
Yet I am with the president. I am behind the canning proposal.
Of course a fellow cannot get behind a canning without nominating a replacement.
And after deep prayer and meditation, I have settled upon one.
I hereby nominate any corpse of fairly recent vintage.
Decomposition must not yet be entrenched — appearances are important.
In manner and disposition, the decedent would be indistinguishable from the Hon. Jerome H. Powell who presently occupies the chair.
Its silence would actually give greater clarity than the abovesaid Powell’s speech.
And the sheer novelty of the arrangement would lend the chairmanship a fascination the living Powell could never approach.
Yet you say my proposal is no proposal whatsoever — that it is pure jest.
You are in fact correct. It is pure jest. And I concede it at once: I have little expectation of its adoption.
A More Modest Proposal
Let me then propose a nominee far more reasonable. It is any man — or woman — exceeding 21 years who pledges to:
- Restore the Federal Reserve’s original purpose of providing liquidity to otherwise solvent banks in event of financial crisis.
- Strike from its statute the twin mandates of “price stability” and “full employment.”
There you have a reasonable restoration of the Federal Reserve’s original remit… to my liver and lights at least.
Consider the absurdity of its twin mandate alone.
By the Federal Reserve’s own “logic,” the thing wars with itself.
Its models inform it that full employment is an incubator of inflation.
Full employment is not an incubator of inflation — yet the Federal Reserve believes it is.
How then can it attain full employment… while angling for price stability?
A conundrum!
Let Mr. Market Figure It Out
Under my proposed reform, the Federal Reserve would work far less mischief in this world.
No more would it set, influence or in any way bully short-term interest rates, long-term interest rates, intermediate interest rates or any other interest rates.
It would let the United States economy find its own level — high, low, all grades between them.
It would turn the credit business over to borrowers and lenders on the free market… as the prices of automobiles, cellular devices, ice cream, shoes and baseball bats are turned over to the free market.
This reform, incidentally, is within the lawful power of the Congress of the United States.
Yet will even this modest reform be implemented?
Gleefully, the answer is yes. As I have maintained before:
You will have it come the third Wednesday of the 11th month following the 388th blue moon following Christ’s return to Earth.
On that high and glorious day — believe it — I shall rejoice.
Brian Maher
for Freedom Financial News
