Choose one:
- Economy is doing great and interest rates need to remain high.
- Economy is not doing great or is in danger of doing worse and interest rates need to drop.
this post was submitted on 28 Aug 2025
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There is a third option!
Economy isn't doing great and facing inflationary pressure due to tariffs and trade wars, force rates to lower for a short boost only to cause more inflation and weakening dollar!
Isn't that a subset of bullet 2?
Sorta, typically we think of raising/lowering interest rates to combat macroeconomic issues. Raising rates cools an overzealous economy, lowering rates fires up a slow economy.
However, we have a slowing economy with hot/rising prices. Either way you move rates you'll likely end up exacerbating one of those issues. So the knee jerk reaction to lower rates could backfire.
IMO the difference is that it's blatently self-serving and doesn't even pretend to be concerned with the long-term health of the economy.
Make no mistake, this is a dress rehearsal for firing Powell. Trump is testing what he can do with the "for cause" language. If the Supreme Court is deferential, and willing to accept a broad definition of "for cause" and defer to the president to determine exactly what "cause" is sufficient to justify firing a Fed governor, you can 100% assume that firing Powell for "cause" relating to his remodel of the Fed buildings. In addition, if this firing sticks, Trump will end up with 4 of 7 Board of Governors appointees.
If this firing sticks there is no need to fire Powell, he'll likely not be reappointed next May.
His term as Fed Chair ends in May 2026. He'll still be a voting governor when his chairmanship ends.
Yes, but if this firing sticks and another fed governor is appointed, the administration will have a majority (4/7) to oust Powell next term.
TRUMP SHOULD BE ARRESTED