I Still Think Trump Will Fire Jerome Powell

The quickie ruling raised the question: What about the Fed, whose independence is also protected by Humphrey’s Executor? The majority, in effect, promised to cobble together some legal rationale to keep the Fed independent because, you know, the Fed matters, for Christ’s sake—the global economy depends on it, unlike the Federal Trade Commission and all those other regulatory agencies where deep-state armchair socialists thwart private enterprise for their own amusement. (That’s a loose paraphrase, but it captures the subtext.) The high court was in effect telling the stock and bond markets: Not to worry. We got this.

I have my doubts, not only because drawing a legal distinction between the Fed and other independent agencies will be difficult (since none really exists) but also because, if the court’s sole interest is to calm markets, then the quickest solution, if Trump calls its bluff, is abject surrender. Should Trump precipitate a financial crisis by firing Powell in defiance of the Supreme Court, the Supreme Court can’t calm the waters by giving Trump a fight. It can only do that by telling Trump: OK, fine, fire the Fed chair, it’s not like we ever ruled that you couldn’t in an honest-to-God nonemergency decision. How thoughtful of you, Mr. President, to select a replacement in advance.

If Trump is holding all the cards here, he’s also holding a lot of anger at Powell (who Trump himself made Fed chair eight years ago). It isn’t just that Trump is expressing ever-greater hostility toward Powell on social media (e.g., “He is truly one of the dumbest, and most destructive, people in Government”). It’s that Powell is having an increasingly hard time disguising that the real reason he won’t bring interest rates down is the president’s own unpredictability in mismanaging the economy.

“Changes to trade, immigration, fiscal, and regulatory policies continue to evolve,” Powell said at last week’s press conference, “and their effects on the economy remain uncertain.”

Translation: Trump keeps imposing arbitrary tariffs, sometimes removing them, sometimes not, and although the United States Court of International Trade has ruled this sociopath’s invocation of emergency powers plainly illegal, an appeals court can’t decide whether to let him get away with it. The tariffs are obviously inflationary. So is that Big Beautiful Bill of his, because it will double the budget deficit, and his immigration policies may be inflationary too, if they become extreme enough to create a labor shortage.