Technically Powell doesn’t unilaterally set the federal funds rate. There is a committee and they have a vote on whether to raise or lower the rates. If he fires Powell and puts in someone who wants to cut rates, the rest of the governors would have to agree. Most people would say this wouldn’t happen because the Fed is sort of a sacred technocratic and institutional cow. It shan’t be tainted by petty Presidential whims and even if it was, the adults in the room wouldn’t go along with it. But then I ask, what if they did?
If the biggest fish don’t panic and want to let Trump cook, then “the market” won’t crash. I feel like this is how it’s been playing out with tariffs. There’s some big importer/exporter capitalists out there who will suffer, but all the other big capitalists seem kinda okay with that. And they all share the idea with Trump of power projection. They think we should bully other countries into paying us more and letting us pay less. Even if they lose their shirts in the short term on coffee beans or whatever, if it works, it will pay dividends in the long run. Then the capitalists in other countries, even the ones being tariffed more, are kinda going along with it too, probably more out of thinking this is just a short-term problem. They think that when Trump leaves, everything will go back to normal. It won’t.
So if Trump bullies the Fed, that’s a major breach of the liberal technocratic firewall. Once again Trump shits on the gentleman’s agreement to be a good steward of neoliberalism. That’s bad only if the big fish capitalists react as if it’s a problem. My bet is that they’re kinda curious because it’s an opportunity that their kind hasn’t had since the 1910s. It’s been in place so long that they don’t really understand why it’s there and the libertarian (abolish the fed) element is stronger than most think. So compromising it might be cool? Let’s try it. Rockefeller did okay without a fed, after all.
Technically Powell doesn’t unilaterally set the federal funds rate. There is a committee and they have a vote on whether to raise or lower the rates. If he fires Powell and puts in someone who wants to cut rates, the rest of the governors would have to agree. Most people would say this wouldn’t happen because the Fed is sort of a sacred technocratic and institutional cow. It shan’t be tainted by petty Presidential whims and even if it was, the adults in the room wouldn’t go along with it. But then I ask, what if they did?
If the biggest fish don’t panic and want to let Trump cook, then “the market” won’t crash. I feel like this is how it’s been playing out with tariffs. There’s some big importer/exporter capitalists out there who will suffer, but all the other big capitalists seem kinda okay with that. And they all share the idea with Trump of power projection. They think we should bully other countries into paying us more and letting us pay less. Even if they lose their shirts in the short term on coffee beans or whatever, if it works, it will pay dividends in the long run. Then the capitalists in other countries, even the ones being tariffed more, are kinda going along with it too, probably more out of thinking this is just a short-term problem. They think that when Trump leaves, everything will go back to normal. It won’t.
So if Trump bullies the Fed, that’s a major breach of the liberal technocratic firewall. Once again Trump shits on the gentleman’s agreement to be a good steward of neoliberalism. That’s bad only if the big fish capitalists react as if it’s a problem. My bet is that they’re kinda curious because it’s an opportunity that their kind hasn’t had since the 1910s. It’s been in place so long that they don’t really understand why it’s there and the libertarian (abolish the fed) element is stronger than most think. So compromising it might be cool? Let’s try it. Rockefeller did okay without a fed, after all.