outrage from Democrats and Republi- cans, and academics, market experts, and media. Here’s Sen. Elizabeth Warren say-
ing on CNBC, “This is a president who has shown himself willing to violate the Constitution. Understand this, if Chairman Powell can be fired by the president of the United States, it will crash the markets in the Unit- ed States.” As if she knows? Gimme a break. This, from the ultra-liberal, bank-
bashing Harvard professor who cast the lone committee vote against Powell’s nomination in late 2017. And who engaged in Fed-bashing
herself, first on CNBC in May 2023 (“He’s aiming to put people out of work”) and then on Fox Business in September 2024 (“He needs a bigger cut, so that he shows that he finally gets it, and that he is not making a deliberate effort to crash this economy”). So much for Fed independence:
It is threatened only when Donald Trump is doing the jawboning. U.S. presidents have always joust-
ed with U.S. central bankers, from President Harry Truman vs. Thomas B. McCabe in the ’40s to Lyndon B. Johnson vs. William McChesney Mar- tin in the ’60s and Ronald Reagan vs. Paul Volcker in the ’80s. Trump’s strategy combines equal
parts J.P. Morgan, Milton Friedman, and World Wrestling Entertainment. We have seen this movie before.
Trump in his first term dared to press Powell and the Fed for lower rates, sparking a conflagration of criticism and catastrophizing.
in stimulus spending. This had an obvious result
— a new spike in prices — but the Fed was caught clueless and startled. It suddenly reversed course in March 2022, embarking on the fastest pace of increases in 40 years. Thus began a string of 11 rate hikes in 17 months, including four
“ This is a president who has shown himself willing to violate the Constitution. Understand this, if Chairman Powell can be fired by the president of the United States, it will crash the markets in the
United States.” — Sen. Elizabeth Warren
Lou Dobbs, the venerable cable
anchor who died last year, described this in his 2020 book, The Trump Century, which I helped him write: “In mid-2018, [Trump] embarked
on a pitched and protracted cam- paign aimed at jawboning the Fed into halting its relentless rate hikes and start lowering. It was the first time in thirty years that any presi- dent had called out the independent institution with a stranglehold on the American economy.” Various reports foretold immi-
nent doom: “Trump’s Fed-bashing and interest-rate panic will cause a recession” (CNBC, December 2018), he was “following the playbook of other authoritarian populists” by “undercutting the independence of
the Central Bank” (CNN, July 2019), and posing “an economic menace to the United States” (Politico, Sep- tember 2019). None of this came true. None of
it happened; it was all worry, and worry is wasted. A life lesson lurks somewhere therein. In January 2020 there was this
in Forbes, where I was the manag- ing editor up until 2007: “Trump’s Simmering Ire at Federal Reserve Chair Jerome Powell Defies Eco- nomic Logic.” Yet his case was entirely logical,
then and now: The U.S. is the safest issuer of debt in the world, so, why should our bonds pay higher interest rates than bonds of wobbly govern- ments in Europe that are at a higher risk of default? It is hard to argue against this,
and it illustrates the clash between Trump’s experience-based views and the Fed’s policy wonk world. Trump arrived in Washington,
D.C., after 40 years as a developer in New York, steeped in the animal spirits of capitalism and navigat- ing the credit markets and the Fed’s interest rate policies. Most of the people at the Fed lack experience in a real-world business setting; they are academics, econo- mists, and former bankers, awash in statistics and forecasting models and Big Data.
Dennis Kneale, a former managing editor of Forbes magazine, is host of What’s Bugging Me on Ricochet and author of The Leadership Genius of Elon Musk, published by HarperCollins.
Then Donald Trump took office — and the rate cuts ceased.
consecutive jumps of 75 basis points, triple the usual Fed move. In July 2023 came the 11th hike, up 25 basis points to a high of 5.5% — 11 times as high as in early 2022. Devastating.
Just two months later, the
Fed U-turned again and cut rates by 50 basis points, a clear sign it had gone too far. It was the first of three cuts in the next three months. Then Trump took ofice
— and the rate cuts ceased. But of course!
This wild seesawing in
Fed policy is bad for business, growth, and the markets. Yet Powell, clad in the emperor’s new clothes, supposedly is above reproach. And the harder Trump pushes him to cut rates, the less likely Powell is to do so.
JUNE 2025 | NEWSMAX 11
TRUMP/OFFICIAL WHITE HOUSE PHOTO BY DANIEL TOROK / YELLEN/CHIP SOMODEVILLA/GETTY IMAGES
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