As just one example, Senator Elizabeth Warren recently rang alarm bells about the stability of U.S. financial markets. She began by calling out President Donald Trump’s efforts to fire Fed Chairman Jerome Powell. Warren, the Senate Banking Committee’s ranking member, delivered her admonition in comments made while appearing on CNBC’s “Squawk on the Street.” She shared her story powerfully and poetically. She cautioned that if Trump were to successfully oust Powell from his post that the markets would probably experience a catastrophic crash.
Warren hasn’t hidden her contempt for Powell, frequently criticizing him for regulatory rollbacks and interest rate hikes. Her warning came shortly after Trump expressed dissatisfaction with Powell’s performance and reiterated his wish for the Fed chairman’s dismissal. The senator emphasized that the integrity of the financial system relies on key economic levers operating independently from political influence.
Warren went on to claim that if the president of the United States were to fire Chairman Powell, it would result in a market crash. The impact on America’s economy would be catastrophic. She elaborated on her point by stating that “the idea that the big pieces move independent of the politics” is essential for maintaining market stability.
The dangers from the kind of political interference that Warren fears would be brought to bear on economic management are serious. She warned that if a president could manipulate such critical positions at will, it would undermine the United States’ economic standing and likened it to “any other two-bit dictatorship around the world.”
Warren’s comments betray a deeper fear—fear of what backroom political deals might do to the economy. That is because the infrastructure that undergirds our stock market is essential to ensuring domestic tranquility. On the one hand, it is hugely damaging to the global economy. Once the Federal Reserve Chairman’s role is subject to capricious presidential whims, the market will panic and could panic in ways that are unimaginable. This alternative would be devastating, likely turning investor confidence against the administration entirely.
Trump’s wishful thinking with Powell envy, Warren explained that the existing norms and processes have not been set up to allow for this kind of firing. This protects against the politically driven expansion and constriction of fiscal oversight, fostering a more predictable economy.