Five Reasons Trump Should Fire Powell

It's right for the economy and for the presidency.

President Donald Trump teased the idea of firing Federal Reserve Chairman Jerome Powell on Thursday writing, “Powell’s termination cannot come fast enough!”

Of course there are only two people who can terminate Powell—the president and Powell himself—and some argue wrongly that not even Trump has that power. The statement led to speculation that Powell is close to a breaking point with Trump.

Trump is right to be disappointed and ought to fire Powell for five reasons.

First, there is the issue at hand: Having been burned by the inflation he helped to create during the Biden administration, Powell is being too tight with monetary policy. His refusal to cut interest rates or halt the monetary contraction the Fed continues by running off its balance sheet (see below) is stifling the economy and raising the costs of the things Americans usually use credit to buy, especially homes and cars.

Trump complains that Powell has been repeatedly “too late and wrong.” Trump is absolutely right.

Second, Powell is largely responsible for the biggest rip-off of the American middle class in history. The Democrats’ de facto mantra is “never let a crisis go to waste,” and the Biden administration took this sage advice to an extreme during the coronavirus pandemic. Even though a COVID vaccine was available before Biden took office and the blessing of the virus’s mild Delta variant would sweep the world and effectively end the pandemic in Biden’s first summer, the Democrats and Powell used the pandemic as an excuse to continue massive deficit spending for all four years of his administration.

Fed Chairman Powell colluded with Biden to have the Fed buy bonds issued by the Treasury Department to fund massive unnecessary government spending. Fed holdings increased from about $4 trillion to nearly $9 trillion under Powell. The dilution of the dollar led to inflation unseen in 40 years.

The Treasury Department issued trillions in new debt to pay for the spending, but the amount was too great for the bond market to absorb. Therefore Powell had the Fed create dollars out of thin air to buy the bonds. He also bought mortgages. This was the same as a banana republic firing up the peso printing press before an election to provide handouts to supporters with exactly the same result: mass inflation. Then Powell misled the public by saying the inflation would be mild and “transitory.” By the time Biden was gone, inflation had eliminated about 20% of Americans’ purchasing power—and more for essentials like food. That alone should have gotten Powell fired on day one of the Trump administration.

Third, Powell has a history of screwing Trump. In 2018, during Trump’s first term, when Trump had brought the economy roaring back to life after a lost decade of economic malaise that began in 2008 and continued through the entire Obama administration, Powell began raising interest rates despite the lack of any apparent inflation. Powell nearly succeeded in killing the Trump recovery, bringing growth that was near 3% annually down to just 1% annually in the fourth quarter of 2018. Now he’s hard at work trying to do this again to undermine Trump and because he doesn’t understand economics.

Fourth, Powell should be fired for the reason he took the previous step: he’s a committed Keynesian, as are most of the bureaucrats at the Fed he runs. That’s the school of economics that came from socialist England that holds a cherished role for big government: it argues that government should manage the demand side of the economy through government spending. It also holds that there will either be high unemployment or high inflation. The stagflation—high unemployment and high inflation—of the 1970s proved Keynesianism wrong with a profound real-world example. Then President Ronald Reagan proved it wrong again by achieving sustained low inflation and low unemployment during the boom he created.

Reagan knew and Trump knows that the key to a healthy economy is not government control but government getting out of the way of the supply side of the economy—the part that produces real goods and services and jobs that are not government or government-adjacent. Despite being disproved repeatedly, Keynesianism is alive and well among the Beltway and globalist elite like Powell. How else can they put themselves in charge of the economy?

Fire Powell and flush the Keynesians at the Fed.

Fifth, Trump should fire Powell because he can. Amusingly, Powell has said his termination is “not permitted under the law.” The Federal Reserve Act purports to limit a president’s ability to can a Fed chairman “for cause” as opposed to policy. This is a constitutional joke and the Supreme Court has held repeatedly in recent years that legislative restrictions on the president’s ability to remove officials violate the Constitution. Mere laws do not amend the Constitution, and the law and custom that hold a president cannot fire a Fed chairman are contrary to the constitutional authority of the president to supervise the unitary executive branch.

It is similar to the custom that presidents didn’t replace FBI directors upon taking office as they did with other agency leaders. The FBI director was supposed to be above politics. But he wasn’t, and Trump’s firing of the FBI politician he inherited was merely a recognition of reality. So too would be the firing of Powell.

A decision by Trump to fire Powell would almost certainly have the backing of the current Supreme Court and would be an important step to restoring the presidency, and therefore, restoring democracy.

The American people love decisive action, especially when it is taken against palace eunuchs who work for government and think they are untouchable. One of Reagan’s finest moments was firing illegally striking air traffic controllers early in his presidency.

Trump should also consider his opponents, who are good opponents to have. The raving fascist Massachusetts Senator Elizabeth Warren, whom Trump has called Pocahontas for fabricating her entire identity to get ahead at Harvard and get elected to the Senate, warned on Thursday: “But understand this: If Chairman Powell can be fired by the president of the United States, it will crash markets in the United States.”

In fact, after some turbulence, the market would love firing Powell and a change to a situation where the Fed’s monetary policy works hand-in-hand with the pro-growth fiscal policy of the man voters hold responsible for the economy, Donald Trump.