The Fire Hose of Chaos: The Fed
Peter Zeihan
5 min
Gutting the independence of the Federal Reserve will only make a coming recession deeper and darker. Expect Trump to slam his head into the Fed and then go to Congress to change the charter.
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Donald Trump
Chapters
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0:00
Trump's Threats Against the Fed
Donald Trump indicated plans to fire Jerome Powell, causing market instability despite later calling it a joke.
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0:23
The Fed's Role in Interest Rates
The Federal Reserve controls monetary policy and interest rates, which directly impact borrowing costs for mortgages and cars.
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1:04
Tariffs, Supply Shortages, and Inflation
Trump tariffs cause product shortages that increase inflation, forcing the Fed to raise rates to suppress demand. The Fed must prioritize inflation control over growth, meaning it cannot bend to Trump's desire for lower rates.
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2:40
Legal Barriers to Firing Powell
The President can only fire the Fed Chair for cause, and doing a job well is not a valid reason. Firing Powell would lead to court losses and leave him on the board for two more years without changing policy.
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3:36
Changing the Fed Charter
Trump could achieve lower rates by changing the Fed Charter through Congress rather than firing Powell. Continuing tariffs will cause stagflation or a deep recession, which gutting Fed independence would worsen.
Key points
- 0:00
Donald Trump indicated plans to fire the Federal Reserve Chairman Jerome Powell.
- 0:23
The Federal Reserve controls monetary policy and sets interest rates affecting all credit costs.
- 1:04
Trump tariffs are causing product shortages that will intensify inflation significantly.
- 1:04
The Fed must prioritize controlling inflation over boosting economic growth when they clash.
- 2:40
The President can only fire the Fed Chair for cause, not for doing their job.
- 2:40
Firing Powell would result in legal losses and leave him on the board for two years.
- 3:36
Trump could lower rates by changing the Fed Charter through an act of Congress.
- 3:36
Continuing tariffs will likely cause stagflation or a deep recession soon.
Who and where
People · 1
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Donald Trump 13
President of the United States (2017–2021; since 2025)
Photo 1
1. Photo: Daniel Torok, Public domain, via Wikimedia Commons · Wikidata · redrawn in our house style (Donald Trump)
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