Trump allies draft plans to seize control over Federal Reserve amid election campaign

Emerging reports reveal a secretive push by Trump supporters to curtail the Federal Reserve's autonomy, threatening the independence of U.S. monetary policy.

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A controversial plan is unfolding within former President Donald Trump’s circle as his allies reportedly devise strategies that could place the U.S. Federal Reserve under the sway of the executive branch. This initiative, uncovered by The Wall Street Journal, marks a profound shift in the historical separation between U.S. monetary policy and presidential influence, raising alarms about the potential for political interference in what has long been a bastion of economic stability.

Donald Trump’s presidency was frequently punctuated by public conflicts with the Federal Reserve, particularly with Jerome Powell, whom Trump appointed as Fed Chair in 2017. Despite appointing him, Trump later lambasted Powell’s decisions on interest rates and even mooted the possibility of ousting him before his term concluded. His relentless critique stemmed from a belief that the Fed’s policies were detrimental to his economic agenda, often arguing that lower interest rates would better serve the economic growth he promised to deliver.

As Trump gears up for the 2024 Presidential Election amidst facing numerous legal challenges, his supporters are reportedly refining a strategy that could significantly undermine the Federal Reserve’s operational independence. This plan, described in a document that The Wall Street Journal has referenced, suggests radical shifts including the President’s direct involvement in setting interest rates and subjecting the Fed’s regulatory powers to executive review.

The document, crafted by a small secretive group including former Trump administration officials, proposes several changes to the Federal Reserve’s governance:

  • The President could have a say in interest rate decisions, effectively making him an ex officio member of the Fed’s rate-setting committee.
  • The Fed’s regulatory frameworks could be subject to White House review, thus bringing them under direct political influence.
  • The Treasury Department might be used as a tool to exert more control over the central bank’s functions.

These recommendations have not only surprised many economic observers but have also not been widely disclosed even among prominent Republican economists. The intent, as outlined, is to reshape the Fed to align more closely with the executive branch, reversing decades of careful policy designed to insulate economic decisions from political pressures.

The potential legal ramifications of such proposals are immense. Experts argue that any move to politicize the Fed’s decision-making could face significant constitutional challenges, particularly regarding the separation of powers doctrine. Economically, the independence of the Federal Reserve is seen as crucial to maintaining investor confidence and economic stability. Interference from the executive could lead to volatile financial markets and undermine the United States’ credibility in global economic arenas.

The revelation of these plans has sparked a broad spectrum of reactions. Economists and policymakers have expressed concern over the dangers of undermining the Federal Reserve’s independence. Political figures from both sides of the aisle have cautioned against such unprecedented overreach, which could set a dangerous precedent for future administrations.

Should Trump succeed in the 2024 election, these plans could potentially come to fruition, radically altering the landscape of U.S. economic policy. This would not only affect domestic economic stability but also alter global perceptions of American economic governance. The Fed, long viewed as a model of independence, could become a tool for broader executive agendas, with far-reaching consequences for global economic leadership.

As economist Paul Krugman warns, “MAGA attacks on the Fed are coming; they should be treated as the bad-faith bullying they are.”

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Alexis Sterling is a seasoned War and Human Rights Reporter with a passion for reporting the truth in some of the world's most tumultuous regions. With a background in journalism and a keen interest in international affairs, Alexis's reporting is grounded in a commitment to human rights and a deep understanding of the complexities of global conflicts. Her work seeks to give voice to the voiceless and bring to light the human stories behind the headlines. Alexis is dedicated to responsible and engaged journalism, constantly striving to inform and educate the public on critical issues of war and human rights across the globe.

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