Since then, allies of former President Donald Trump have launched various attacks on the Federal Reserve. They allege the nonprofit mismanaged multibillion-dollar renovations. According to multiple outlets, a criminal inquiry has already been initiated with regard to the actions of Fed Chair Jay Powell. Former President Donald Trump appointed Powell, and current President Joe Biden reappointed him.
The federal investigation is drawing more than its share of public attention. This increase follows the United States Department of Justice’s recent issuance of grand jury subpoenas to the Federal Reserve. These subpoenas relate to Powell’s testimony regarding the extensive renovations of the Fed’s historic office buildings. Critics of the Fed chair say this investigation could be what finally unseats Powell. He wants us to believe that it’s not about his testimony, or Congressional oversight of the Fed, and the Fed’s independence, … it’s truly about his decisions on setting interest rates!
Powell’s time as chair is set to expire this coming May. He will remain on the Fed’s Board of Governors until 2028. His position has been the cause of increasing outcry. This is especially the case due to Trump’s constant and pernicious politicization of the Fed’s interest rate policies. Just like Trump was disappointed by the Fed under Powell for not cutting rates fast enough. He argues that these decisions are greatly stifling economic growth.
Trump’s attempts to influence the Fed further have sent economists into a tizzy. They fear that his push to undermine independence in monetary policy will throw the United States into a crisis. That scenario would be more like the inflationary crisis of the 1970s. Their alarm was shared by a group of 13 former senior White House and cabinet officials, including ex-Fed chairs Alan Greenspan, Ben Bernanke and Janet Yellen. They cautioned that “this is how monetary policy is made in emerging markets with soft institutions,” with the appalling effect on inflation and general functioning of those economies.
This sequence of recent developments has not gone unchallenged by some prominent leading Republican voices. In particular, Senators Thom Tillis and Kevin Cramer have taken aim at the Department of Justice’s pursuit of Powell. They claim that these types of moves erode the independence of the world’s central bank.
Kevin Hassett, another prominent economist, and former chair of the Council of Economic Advisers under Trump has made this remarkable statement. He underscored the intense demand for transparency given the use of taxpayer dollars.
“I guess the question is, if you think the building cost $20bn, or $10bn, do you think at some point that it’s appropriate for the federal government to investigate? And seems like the justice department has decided that they want to see what’s going on over there.” – Kevin Hassett
Hassett went on to explain that if he were in Powell’s shoes, he would be eager to answer those type of questions.
“And if I were Fed chair, I would want them to do that. I think that it’s really important to understand where the taxpayer money goes, and understand why it goes this way or that.” – Kevin Hassett
Powell is still be actively shrouded in challenges and scrutiny despite big prevailing winds against him, forcing Powell to declare his independence though. He most recently made the case for avoiding the politicization of monetary policy. What worries him most is how this practice erodes the first principles of our democracy and self-governance here in America.
Just ask ex-Fed chairs Greenspan, Bernanke, and Yellen. They go on to caution how dangerous such civil-military relations undermining intromissions from Trump, or any future president, might be. They argued that these types of actions have “no place” in a country that is supposed to be defined by the rule of law.
“It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.” – Ex-Fed chairs Alan Greenspan, Ben Bernanke and Janet Yellen
While Powell grapples with this frightening political environment, betting on his future successor has already begun. Former CEA chair Kevin Hassett has become something of a favorite — or at least the favorite — to become chair, if Powell leaves.