WASHINGTON, DC – JULY 24: U.S. President Donald Trump and Federal Reserve Chair Jerome Powell tour the Federal Reserve’s $2.5 billion headquarters renovation project on July 24, 2025 in Washington, DC. The Trump administration has been critical of the cost of the renovation and Federal Reserve Chairman Jerome Powell. (Photo by Chip Somodevilla/Getty Images)
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Before Donald Trump was re-elected president in 2024, it was leaked from his camp that he would like a seat at the FOMC table once back in the White House. Trump’s expressed desires to explicitly influence rate setting at the central bank unsurprisingly elicited all sorts of ridicule of the low-rate loving former and future president, but for one problem: Trump centrally planning the cost of credit would be no more ridiculous than individuals with names like Greenspan, Bernanke, Yellen, and Powell presuming to do what logic dictates they couldn’t, or can’t.
Seemingly forgotten by PhD types all too eager to elevate their economic intelligence by denigrating Trump’s is that frequently they reveal their own limitations while explaining Trump’s. The former and soon-to-be president presuming to set a price that is an effect of infinite decisions taking place every millisecond of every day around the world is surely foolish, only for “macroeconomists” to magnify the foolishness by ascribing to themselves a skill that they mock Trump for pretending to have. In truth, central planning always fails.
It’s hopefully a useful way to address the Trump administration’s nakedly political criminal investigation of Fed Chair Jerome Powell. Powell was cheered for responding to Trump that “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”
Thomas Friedman was in particular taken by Powell’s response. He wrote at the New York Times that “I am rarely rendered speechless, but it is hard for me to find the words to express my respect for and gratitude to the Federal Reserve chair, Jerome Powell, for doing something so few Republicans have been ready to do: Stand up to the lying and bullying of President Trump…”
The Independent Institute’s Phillip Magness wrote at RealClearMarkets (which I edit) about Trump’s worrisome politicization of the Fed as something “That typically means pressuring the central bank to juice growth through easy money.” Where to begin? Why is Trump the only individual being criticized?
Implicit in Magness’s commentary is that money is in fact wealth, that a government lacking resources can somehow inject resources into the economy through the Fed, and for intervening with rates and money, the Fed can somehow trick the world’s most dynamic economy into growth mode…until briefly blinded markets belatedly discover that government intervention is bad and correct things. For a free-market type, Magness implies here that markets are quite stupid. The very idea that forward looking markets would be fooled for even for a second by something Magness seems to think he sees clearly…
As for Friedman, in cheering Powell now he’s ignoring that Powell wanted the job in the first place, and wanted it knowing full well who Trump was. About this, does anyone seriously believe that Trump didn’t convey to Powell well before his 2017 nomination what he expected from a Fed Chair?
Yet Powell accepted Trump’s nomination despite. Where was Friedman’s outrage then, and where’s the outrage now among economists as individuals with names like Hassett, Warsh, and Cochrane openly politic for Federal Reserve roles? Without defending Trump, he rates a little bit of defense for at least being honest about his intentions.
The good news is that none of it matters. See the recent commentary about Trump’s call for a max 10% rate on credit cards. Left and right “elevated” their genius once again by showing how Trump’s price controls would fail. Why yes, they will.
What’s true about credit card price controls is similarly true about the Fed’s price controls; as in the Fed at zero won’t coincide with lending rates of zero. Markets always have their say. Translated, don’t worry.
Source: https://www.forbes.com/sites/johntamny/2026/01/18/why-is-donald-trump-the-only-villain-in-jerome-powell-investigation/
