Former US Federal Reserve Chairs Unite in Defense of Central Bank's Independence Amid Trump's Latest Power Play
In a scathing rebuke, every living former head of the Federal Reserve has condemned President Donald Trump's unprecedented attempt to weaken the central bank's independence by opening a criminal investigation into its chairman, Jerome Powell. The Department of Justice served Powell with grand jury subpoenas on Friday, threatening a potential indictment related to his testimony before the Senate banking committee last year regarding renovations to the Fed's historic office buildings in Washington DC.
The move marks a significant escalation in Trump's extraordinary attack on the Fed's independence, which he has repeatedly blasted for declining to bow to his demands for rapid interest rate cuts. The US president has launched an aggressive campaign to exert greater control over the central bank's decisions, and has even moved to distance himself from the investigation.
However, former Fed officials and policymakers are sounding the alarm, warning that this action could damage the US economy. A statement signed by 13 former senior officials, including Alan Greenspan, Ben Bernanke, and Janet Yellen, warned that similar prosecutorial attacks in other countries had led to "highly negative consequences" for inflation and the functioning of economies.
"The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence," the statement read. "This has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success."
Economists are also cautioning that Trump's attempts to influence the Fed risk plunging the US into a period of 1970s-style inflation and triggering a global backlash in financial markets. Analysts are drawing parallels between this situation and when President Richard Nixon put pressure on the Fed chair, Arthur Burns, to ease monetary policy to help smooth his 1972 election campaign.
Despite the gravity of the situation, Wall Street remains calm, with the benchmark S&P 500 flat at lunchtime in New York, while the tech-focused Nasdaq Composite was up 0.3%. The investigation is seen as a test of Trump's power and control over the central bank, and his own leadership on economic policy.
As the investigation unfolds, former Fed officials are urging policymakers to remain steadfast in defending the central bank's independence. "I think that it's really important to understand where the taxpayer money goes, and understand why it goes this way or that," said Kevin Hassett, a senior White House official and director of the National Economic Council.
The investigation raises concerns about Trump's commitment to upholding the rule of law and his willingness to use executive power to influence monetary policy. As the Fed's chair term is set to expire in May, with Powell's chosen successor potentially being Kevin Hassett, the situation highlights the delicate balance between politics and economics in US governance.
The former Fed chairs' unified defense of the central bank's independence serves as a stark reminder that the separation of powers is essential to maintaining economic stability and preventing abuses of executive authority. As the situation continues to unfold, policymakers will be watching closely to see how this crisis plays out and what implications it may have for US economic policy and global markets.
In a scathing rebuke, every living former head of the Federal Reserve has condemned President Donald Trump's unprecedented attempt to weaken the central bank's independence by opening a criminal investigation into its chairman, Jerome Powell. The Department of Justice served Powell with grand jury subpoenas on Friday, threatening a potential indictment related to his testimony before the Senate banking committee last year regarding renovations to the Fed's historic office buildings in Washington DC.
The move marks a significant escalation in Trump's extraordinary attack on the Fed's independence, which he has repeatedly blasted for declining to bow to his demands for rapid interest rate cuts. The US president has launched an aggressive campaign to exert greater control over the central bank's decisions, and has even moved to distance himself from the investigation.
However, former Fed officials and policymakers are sounding the alarm, warning that this action could damage the US economy. A statement signed by 13 former senior officials, including Alan Greenspan, Ben Bernanke, and Janet Yellen, warned that similar prosecutorial attacks in other countries had led to "highly negative consequences" for inflation and the functioning of economies.
"The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence," the statement read. "This has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success."
Economists are also cautioning that Trump's attempts to influence the Fed risk plunging the US into a period of 1970s-style inflation and triggering a global backlash in financial markets. Analysts are drawing parallels between this situation and when President Richard Nixon put pressure on the Fed chair, Arthur Burns, to ease monetary policy to help smooth his 1972 election campaign.
Despite the gravity of the situation, Wall Street remains calm, with the benchmark S&P 500 flat at lunchtime in New York, while the tech-focused Nasdaq Composite was up 0.3%. The investigation is seen as a test of Trump's power and control over the central bank, and his own leadership on economic policy.
As the investigation unfolds, former Fed officials are urging policymakers to remain steadfast in defending the central bank's independence. "I think that it's really important to understand where the taxpayer money goes, and understand why it goes this way or that," said Kevin Hassett, a senior White House official and director of the National Economic Council.
The investigation raises concerns about Trump's commitment to upholding the rule of law and his willingness to use executive power to influence monetary policy. As the Fed's chair term is set to expire in May, with Powell's chosen successor potentially being Kevin Hassett, the situation highlights the delicate balance between politics and economics in US governance.
The former Fed chairs' unified defense of the central bank's independence serves as a stark reminder that the separation of powers is essential to maintaining economic stability and preventing abuses of executive authority. As the situation continues to unfold, policymakers will be watching closely to see how this crisis plays out and what implications it may have for US economic policy and global markets.
Trump's power play against the Fed is a huge deal. I mean, can you imagine if he succeeded in getting Jerome Powell indicted? 
It's not just about the economic stability of the US, it's about the rule of law and checks on executive power. The fact that all these former Fed chairs are speaking out together is really powerful. It shows that even some of the most influential voices in finance and economics aren't afraid to speak truth to power 
.
. I was thinking about how much I love guitar music, but then I started wondering if the Fed's independence is like a musical instrument that needs to be tuned perfectly or it'll be all out of whack? And then I thought, have you guys ever noticed how some songs just make you want to move your body to the beat, while others are more mellow and relaxing? Like, some days when I'm feeling stressed about work, I put on this chill electronic music that helps me unwind 
. But then I started thinking, what if Trump's attempts to influence the Fed are like trying to play a guitar solo out of tune? It just wouldn't sound right 
.
The whole thing is like a Venn diagram with two overlapping circles - politics & economy 
. If Trump thinks he can control the Fed, it's gonna backfire big time 
. Just imagine all those grand jury subpoenas as a bunch of lines crossing each other, creating a big mess! 
I think economists are onto something when they say this could lead to 1970s-style inflation 
. It's like drawing a line on a graph - you can't just erase it and expect everything to be fine again 
We need more of this kind of thing when it comes to checking powers. Maybe it's time to draw a flowchart illustrating how the rule of law works? 
i mean, i get that he wants control over interest rates and all that but attacking the fed chair directly? that's just not cool 
it's like, they're supposed to be independent for a reason, you know? 
having 13 former heads of the federal reserve come together to defend powell is pretty wild tho 
we don't need any more economic drama right now 
. Trump trying to weaken it by investigating Powell is a huge deal. I mean, come on, who tries to open a criminal investigation into the head of a central bank? 
. Anyways, I'm curious to see how this all plays out and what the consequences will be for US economic policy 
anyway i think its wild that all these former heads are coming together to defend the fed's independence. it just goes to show how serious this is and how much trump is messing with the fundamental rules of governance 
- the central bank's independence is crucial for keeping inflation in check and preventing economic instability 
. The separation of powers is what keeps us safe from abuses of executive authority 
. The former Fed chairs coming together like a united front is super impressive 
. Newsflash: economics isn't that simple 
.
. Is he secretly trying to take over as Fed chair? 
Maybe we'll have to wait until the investigation wraps up to find out 
.
. Can't wait to see how it all plays out! 
So Trump's trying to play hardball with the Fed again... like he didn't already try to do that once before? 
Inflation's been low for years, buddy! Maybe instead of trying to control interest rates like a puppet master, Trump should focus on addressing the real issues. Like, have you seen his tax cuts? 
They're basically just more money for big corporations and the rich. 
It's like they're saying "Hey, we can disregard all these rules and institutions because we're the boss?" 
Give me a break!
. And yeah, the 1970s inflation scenario is definitely a possibility if Trump keeps pushing this agenda.
The US economy tanked and everyone was all like "what did we do wrong?" 
.