Uncertainties surrounding the independence of the U.S. central bank have grown following remarks made by President Trump recently that took aim at Fed Chair Jerome Powell. The continued tension between the two has driven global investors to distance themselves from American assets, which caused the U.S. dollar to decline further, nearing a three-year low.
The recent downward push was reflected in the ICE U.S. Dollar Index, a benchmark that measures the value of the dollar relative to a basket of major foreign currencies, showing it had dropped to 97.92, a low not seen since 2022.
What specific criticisms did Trump direct at Powell that contributed to the dollar’s decline, as well as created volatility in financial markets? Here’s one example, “…there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW. Europe has already “lowered” seven times. Powell has always been “To Late,” except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?”
Related Article: Year-End Fed Rate Cut Sets Incoming Presidency Up for High Inflation
Could these comments of frustration stem from the fact that the Fed seems to be acting as if the economy is doing fine when, in reality, Americans are over their head in credit card debt, and others struggle with steep mortgage rates?
Hints of Removing Fed Chair Put Pressure on the American Dollar
Kevin Hassett, Director of the National Economic Council, having stated that the Administration is looking into the possibility of ousting the Fed’s poster boy, Powell, didn’t help the situation. In fact, it further weakened the dollar’s standing by being the catalyst that led hedge funds to sell the dollar against practically any currency.
Krishna Guha, vice chairman at Evercore ISI, comments on the situation, “We’re seeing a clear signal from the market that it doesn’t like even the idea that the President might try to remove the Fed Chair. There has been some loss of confidence in U.S. economic policymaking in recent weeks. We’ve seen that in this very odd combination of upward pressure at times on longer-term bond yields combined with a weaker dollar. That suggests global investors pulling capital out of the U.S.”
Would the economy even benefit from Powell’s removal? Maybe not, and that’s one of the concerns. The next Fed Chair could be propped up with the sole purpose of aligning with Trump’s demands.
“There is no way you can denigrate a person like that and then turn around and expect the market will assume that the person you pick as his replacement will have amazing credibility,” notes John Silvia, a former chief economist to the Senate Banking Committee.
Revisiting the Interplay of Past Presidents and Fed Chairs
Looking back, we see the implications of past presidents intertwining with a sitting Fed Chair. Take Nixon, for example, who introduced Arthur Burns as his pick for Fed Chairman in 1970 with the following statement, “I respect his independence. However, I hope that independently he will conclude that my views are the ones that should be followed.”
As heard in Oval Office recordings, Nixon proceeded to put pressure on Burns, requesting that he ease policy before the 1972 election, and Burns complied. This ultimately led to the Fed dealing with a decade of high inflation.
Where do we stand at this point in time? Only one day after Trump’s remarks were aimed at Powell, and subsequently witnessing the market repercussions, Trump backed away from any implications of firing Powell, announcing from the Oval Office, “I have no intention of firing him.” But of course, also adding, “This is a perfect time to lower interest rates.”
Cartel of Unelected Bankers Experienced at Destroying the Value of the Dollar
So, it seems Trump is merely voicing his complaints with no real plans to look into ousting Powell, which has resulted in the U.S. Dollar, as well as Wall Street calming down a bit. Even so, many argue that the Federal Reserve should be dismantled altogether, describing it as a cartel of unelected bankers manipulating our economy and destroying the value of the dollar.
Related Article: U.S. Consumer Sentiment Tanks Over Inflation Fears According to Survey
Along these lines, President-elect Trump had, at one point, hinted at ending the Federal Reserve. However, that’s not such an easy task, and may not even be possible. Why is this the case? Well, the Fed has been labeled by many, who have done their research, as a criminal organization that’s more powerful than the U.S. government, one that’s connected to all the central banks around the world.
No organization, no matter how powerful, is bulletproof, though. The Fed’s future actions, possibly continued excessive money printing, or the mishandling of inflationary pressures could potentially sow the seeds of its own destruction someday.
Keep Your Wealth Disconnected from the U.S. Dollar and the Government
It’s clear that a multitude of elements can degrade the U.S. dollar or cause Wall Street to spiral out of control – from an unfavorable comment posted on Truth Social written by our President to the fear of a tariff war, and more. What’s also clear is that it would be unwise to subject your wealth and life savings to this economic roller coaster that is placed before us.
Keeping funds in a savings account connected to the U.S. dollar that’s losing its value will only cause your balance to decline, which defeats the purpose. Also, investing money into the stock market through a 401(k), the largest retirement scheme in history, is an even bigger mistake. Just think back to how much the American people lost during the pandemic when the economy crashed and their 401(k)s took the same path.
Related Article: Big Spenders in Washington Tank U.S. Citizen’s Retirement Accounts
Keeping your funds away from any avenue related to the Federal Reserve system, the government itself, and the U.S. dollar is not only a smart move, but also an easy one to accomplish. It can be done by simply investing in secure hard assets such as gold and other precious metals, as well as real estate.
If you’ve been following the market, you saw that gold and real estate have not only remained stable throughout all the chaos, but have increased in value as well.
If you’re interested in protecting your wealth through rental real estate, feel free to schedule a call with Morris Invest, a full-service investment company specializing in new construction rental real estate.
In the meantime, dive into the following video that details the war between President Donald Trump and the Fed Chair Jerome Powell.
