MAGA Comes for Jerome Powell

The Trump administration is so over this whole “Fed independence” thing.

Credit: Federal Reserve

One of the things that allows America to remain a global super power is the presence of a stable, fully independent Federal Reserve central bank. You can only serve as the backstop of the global economy if other countries trust that you’re making economic, fiscal, and monetary policy based on solid evidence—not partisan politics. For more than 80 years, that arrangement has served the United States remarkably well, and delivered us the most sustained period of economic growth the world has ever known.

Naturally, Donald Trump is now trying to undo all that.

This week Trump launched a criminal probe into Fed Chair Jerome Powell to investigate alleged corruption in how the bank is renovating its headquarters. If that sounds like the thinnest, most laughable of pretenses to you—that’s because it is. What Trump is trying to do is squeeze out Powell for his refusal to bow to political pressure and lower interest rates, and replace him with a lackey who will do Trump’s bidding.

Trump has said as much over and over again. He complains all the time about the fact that interest rates are still high, and muses publicly about throwing Powell out of office. Here he is in April: “Jerome Powell of the Fed, who is always TOO LATE AND WRONG … should have lowered Interest Rates, like the ECB [European Central Bank], long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!.”

Why does Trump want interest rates lowered so badly? Because it would juice the economy in the short term: goosing stock prices, making borrowing cheaper, and creating the appearance of prosperity that he can take credit for. But forcing rates down before inflation is under control risks reigniting price increases, inflating asset bubbles, and leaving the Fed without tools to respond when the next recession actually hits. It’s the economic equivalent of maxing out your credit cards to throw a party: great fun until the bill comes due.

Trump’s feigned concern about corruption at the Fed is belied by everything else he’s done in office so far. He’s pardoned serial fraudsters like David Gentile, who ran a $1.6 billion racket. Trump himself has grifted off of the presidency to a world-historic degree, personally enriching himself by $3 billion after less than a year in office. And if he’s worried about over-priced renovations, his administration need look no further than the wannabe-Versailles ballroom monstrosity he is appending to the White House—a project with a price tag that has already ballooned from $200 million to $400 million before a single brick has been laid.

Let’s call this “investigation” what it is: a targeted attack meant to smear Powell’s name, and force him to resign prior to the end of his term.

Powell is not the only person in Trump’s crosshairs. He is currently using the same tactic on former FBI Director James Comey, New York AG Letitia James, and California Sen. Adam Schiff. But these three cases have failed miserably so far. Courts threw out the cases against Comey and James, and so far there’s been no evidence to suggest wrongdoing on Schiff’s part. Undeterred, Trump has promised to press on, and no doubt he’ll do the same with Powell.

All of this has actual economic implications that touch every American household and pocketbook. If Trump succeeds in sidelining Powell and puts his own man into the Chairmanship, it’ll mean that—for the first time in modern history—the US central bank is making policy based on a president’s whims, rather than actual economic data. All of the relevant actors—US consumers, businesses, investors, banks, and other countries—will know that’s the case. Confidence in US leadership and the US economy will deteriorate instantly and irreparably.

Powell knows all of this. That’s why he released an unprecedented video statement this morning, calling out Trump’s probe for what it is: “political pressure” and “intimidation.” He said, “I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.” And he said that, “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.”

Let’s remember who we’re talking about here: This is Jerome Powell. Not exactly a firebrand anti-Trumper. Not antifa, or BLM, or the Democrat Party, or the neocons, or the Never Trumpers. Jerome Powell—a man who Trump himself appointed, and until today was no one’s idea of a Resistance hero.

Trump has said Powell is “not very good at the Fed, and he’s not very good at building buildings.” I would add that Trump is “not very good” at convincing anyone that this whole thing is anything other than a political con job, a disgrace to the office of the presidency, and another sad chapter in the unmaking of the republic that all of us are tasked with preserving.

Sarah Matthews was deputy White House press secretary, and resigned on January 6. She is an Advisory Board Member and Spokeswoman for Home of the Brave, an initiative dedicated to exposing this administration’s corruption, cruelty, and lawlessness.