Son. I hate to break it to you but the Federal Reserve has never been independent ever. The fiction that the Fed has been Independent is repeated over and over again as if it’s a magical chant. If you say something over and over again you can make a lie Truth. Sort of like Vaccines are safe and Effective. Trump is a facist and Racist. Etc etc.
The Federal Reserve has been either the source or has made every financial depression or recession worse by their own policies. They have failed us in every way imaginable and they will continue to f it up.
"as well as former Treasury secretaries from both parties."
Thought when I read this that by including it Matt was essentially admitting that de facto the fed is just one more political institution.
Have always felt the same. Independence a known illusion that the elites try and sell to the public, and the lie works for the most part, as do the majority of their lies.
So well said. A shame that so few people understand this. Fed independence is a total myth which politicians use to appease taxpayers. The Fed is run by the banking elite. They create economic crises and then bail out their "buddies" with zillions of taxpayer dollars.
they answer to the political players and if you don't think so, I can get your a great deal on a bridge in Manhattan and their policy decision are always wrong and or ill timed.
They made a recission in the early 1930's into a worldwide depression by actually shrinking the money supply. They inflated the money supply in the 1970's 4 different years of 12% year over year growth causing stagflation and a lost decade of stock market returns. They made the 2008 great financial recission by picking and choosing which wall street bank got saved and which didn't. When they decided to destroy Lehmann's because they hated the CEO they didn't realize that Goldman Sachs would fail too because of their stupidity (have you not noticed that every Treasury Secretary or Fed Chair goes through Goldman Sachs) So they forced every bank to take a bail out so they could hide Goldman Sachs situation. Then the trillions of dollars generated in QE allowed Goldman to off load all of the Securities that if forced to market to market would make them insolvent, The Fed gets to ignore Mark to Market accounting.
In 2023 even though they knew the situation at SVB they did nothing to help it when they were faced with a Deposit run. Their primary function is to act as a lender of last resort to the commercial banks and SVB had the 30 t bills to pledge as collateral but the Fed couldn't act fast enough. So your house is on fire you call the fire Dept and they tell you it will take 2 weeks to do the paper work before they can come to help. That is what the Fed did, Now we have unlimited Deposit insurance for the big banks and a $250,000 limit at the community banks, Guess where all the large deposits are going to end up at? The FDIC was never designed to insure the deposits of mega entities and billionaires.
You can, though. The problem with independent agencies is that there can be no real independence in government. These people don"t live in airtight bubbles. If they aren’t instructed, they are led by people exquisitely sensitive to political winds.
I worked at Volcker’s Fed in my first job, and in the financial industry for much of my career. I remember well the 2007-2008 crisis when the Fed balance sheet ballooned in days.
Most economic crises and recessions have their origins in government action (remember the idea that EVERYONE should be a homeowner under Clinton’s 2nd term? This birthed the 2007-2008 crisis) So many other examples in my lifetime.
BTW, the investigation of Powell was prompted by his (arguably) perjurious testimony to Congress re. the “renovation” of the Fed building. Powell is incompetent. Some of the other governors (looking at you, Lisa Cook, of the multiple “primary residences” claimed on your mortgages) are equally suspect.
That's right! It should be noted that the Fed has never been anything more than reactionary. The Fed governors aren't paid for their balls. Or they would be broke.
True, all buildings are constructed and renovated on time and under budget. Sure they are. Powell was seen down at the site personally directing the workers. Sure he was. Every peccadillo of each Fed member should be selective prosecuted until they march to the President's tune because Presidents are always balanced and prudent about wanting lower interest rates. Sure they are. Massive inflation isn't really a problem, what's important is that the government get to borrow money at a low rate. Sure it isn't.
'Transitory' was the buzz word until 'affordability' suggested it wasn't so 'transitory'.
Andrew Cuomo HUD Secretary Jan. '97-'01 pushed for 'mortgages for everyone' and your credit rating is somehow racist. 2001/06 housing boomed and the first sign I saw as a problem was when a landlord I new was dumbfounded that a renter, that never paid by the first, bought a home. How do unelected people have such power over OUR economy? END THE FED and let the markets do their job. Privatizing profits and socializing looses is Un-American.
We watched the markets "do their job" by repackaging bad loans into "mortgage based" toxic assets that crashed the markets and paralyzed lending in 2008. During the 1990s, the U.S. Congress loosened financing rules, and in 1999, parts of the 1933 Banking Act (Glass–Steagall Act) were repealed which allowed banks to loan to unqualified buyers. That was the work of politicians and unelected bankers, not the Fed. The "too big to fail" corporation's losses were socialized by taxpayers through the $700 billion Troubled Asset Relief Program (TARP).
The Fed also bears no responsibility for Bernie Madoff's largest Ponzi scheme in history, which eluded the SEC since the 1970's. Again, investor losses were "socialized" in part by $1.5 legal fees paid by the SIPC, which is funded by insurance fees from broker-dealers.
Even though the Fed is perceived as the villain when the markets and politicians screw things up royally, their grubby paws should be kept off the independent Fed.
In all due respect, is the Fed actually independent from any outside influence, including the politicos? It seems to me they have control of the brakes, so as to not overheat the economy, and the gas to accelerate the economy and they seem to wait to long either way. Could it be put on cruise control with some AI algorithm? As an ignorant person on the big issue of the Fed, I can only tell you what I see at the street level, and their track record is not good with the boom/bust cycle. I saw the 2008 crash coming working in construction and wish I knew about the short selling business. I did not expand my business starting in 2005 and survived while I saw others lose a lot or go bankrupt.
Because the seven Fed members have 14-year staggered terms that overlap multiple Presidents and Senates, they have been fairly close to being independent. They disagree about predictions for the economy and inflation to justify raising or lowering rates to stimulate the economy versus cool down inflation. Their responsibilities are intended to respond to economic data, like employment and inflation, not politics.
There is unprecedented political pressure on the Fed from Trump. He fired Fed member Lisa Cook in a case now before the Supreme Court. He's having Jerome Powell investigated. Ironically, Trump nominated Powell to chair the Fed in 2017 when inflation was an acceptable 2%.
Of course, the Fed have only a gas pedal and a brake in the form of interest rates, they can't steer! Countries with or without the equivalent of the Fed and the entire global economy experience booms and busts.
Glad your business survived 2008, Patriot! My best friend when we were kids is in construction, which has its ups and downs.
I agree that Trump is the last thing the Fed needs. The issue comes down to whether or not, or to what degree, the Fed is useful at all. The Fed, staggered terms and all, is bound to reflect political trends, and political trends have all been a downward fall into the arms of big government.
The Fed has become part of the great social welfare state and imo that is not a good look.
As a 3 time DJT voter I'm not in favor of lowing rates now because things are starting to fire on all cylinders. From people I talk to in manufacturing 2026 looks very strong. Housing pricing in the Midwest, where I'm at, is still modestly rising but affordable. 6.3% 30 yr rates seem reasonable historically. Lisa Cook is in Trumps revenge tour and he should just stick with the people that, IMO, deserve a taste of their own medicine.
The expert management of the refunds for duped Madoff investors almost drained the SIPC coffers. That's right, the Fed had nothing to do with not noticing or cleaning it up.
Wake up!!!.The FED is far from independent. The banking system owns the shares of the 12 Fed regional banks. So they use their pollitical influence as they wish. Just look at the zillions of TAXPAYER dollars spent on FED bailouts of PRIVATE SECTOR BANKS and their shareholders. Start from 1998 LTCM bailout and sum may be around 20 trillion of which a third perhaps is never to be recovered.
I agree with you about cost overruns in government, but, to me, this drastically changes the equation here:
"The Federal Reserve does not receive funding through the congressional budgetary process. The Fed's income comes primarily from the interest on government securities that it has acquired through open market operations. After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury."
This isn't a situation where congress has appropriated money--this is the fed deciding that they deserve that money more than the American people. That is a completely different dynamic.
And in this context, Powell better be able to justify not only the original budget, but the cost overruns.
Cost overruns in construction aren't restricted to government contracts. They are a fact of life. Here's an interesting assignment if anyone is interested. How many of Trump's buildings were completed on time and on budget and how many came in at a higher cost? It's not that interesting to me because Trump's attempted intimidation of Powell have nothing to do with Powell's testimony to Congress or cost overruns.
"This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress's oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. 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." - Jerome Powell, Jan. 11 2026
Golly, that's NEVER happened on a government project. It's usually 4X. I'm sure that hedonist Powell changed the plans to include gold and marble. Wait, that would be Trump's brilliant sense of aesthetics for the White House gaudy bathrooms. Of course the oversize ballroom, already double the original $200 million, is being funded by donations and those people don't expect any influence in return for their generosity. Money for favors, with no oversight, planning input from the American people, or transparency on what donors get in return, is how government buildings should go up. Trump already fired the first architect.
Beg to differ - I worked in Risk Management at a top 10 world bank in 2000 - and we had NO CLUE how to accurately evaluate Credit Derivatives that were screaming down the pipe line. Left Finance for Tech - and found 10 years later that they never did figure out how to price these. Key point - lot of the Finance big wigs get paid Quarterly bonuses, and in tech you need to wait 4 years to get you stock options. Don't blame the home owners - blame the Wall St Crew - Matt documented this pretty well.
Weird that. I wrote the first derivatives policy for a major regional bank in the early 90’s. Had to restudy college stats and Black Scholes (among other topics to do so).
Your experience may point to weakness in the bank.
"Most economic crises and recessions have their origins in government action..."
I suppose that is true in some sense, but leaves out various private sector activities which lead up to it.
In the 1920's the government ran persistent surpluses, which forced the private sector to offset with debt, eventually leading to the crash of 1929 and three plus years of inaction.
The surpluses of the Clinton years had a similar effect, with a similar result.
It is not technically POSSIBLE to "end the Fed." The economy runs on dollars and all the dollars that actually exist are the liquid liabilities of the Federal Reserve. We can and should force the Fed to define and stabilize the real value of the dollar, however.
Those aren’t dollars which is .77 oz of Troy silver - The Fed has Federal Reserve Notes. Separating the weight of the commodity from the name of the currency was a crucial step in fleecing the masses.
The definition of "the dollar" is set by law. Right now, dollars are Federal Reserve Notes. Other forms of dollar payments will only be accepted if they can be converted at par to Federal Reserve Notes.
Yes, I think you missed the real point of my post. The names of currencies are derived from and represented a weight in gold/silver. The mark, pound, franc, dollar, etc. FRNs are fake and gay dollars.
A dollar is already defined and an FRN doesn’t meet that criteria. It’s tranny-loving applied to monetary units.
I'm not making a value judgment, just pointing out "what is." Silver has not been money in the U.S. since "The Crime of 1873." However, if you don't believe me, take a bar of silver to the nearest Walmart and try to buy something with it.
You’re maybe intentionally obtuse here - that’s not what we’re discussing. I’m talking about where the names of these currencies originated. I’m saying separating the name from the weight was a big moment in human history - as illustrated by your inability to acknowledge that historical fact - I’m not arguing with the truth of your replies.. you are right.
Besides, Gresham’s Law states an artificially overvalued currency will chase an artificially undervalued currency (actual money) silver quarters, dimes, etc out of circulation.
I am making a value judgment - if “what is” is out of sync with the laws of God and nature and demonstrably enriches the politically connected while robbing the common man - destroying the storage of value of the monetary unit - then it’s all fucked.
The Fed is a fake organization to allow bankers to control our economy. It is completely and totally anti-constitutional,and should have been shoveled into the dustbin of history a long time ago.
The FED is made up of expert economists who never make mistakes!
Just like the CDC experts who told us the Wuhan lab leak was an impossible conspiracy theory, and we needed just two weeks to flatten the curve.
And just like the 1200 medical professionals who told us we couldn't hold a funeral for Grandma, but that we should join mass protests against the greatest public health scourge, racism.
All these many Robert S. McNamaras, ever ready to tell us not to believe our lying eyes as they fail upward and expert us to death.
$600 Million over budget? And the budget estimate was $1.9 Billion. The $1.9B was obscene. Another $600 million overrun is beyond the pale. It's disgusting.
There's no such thing as an independent executive agency, and the government cannot outsource its functions in such a way that it loses oversight. The Fed is not and never has been independent, even though the federal government has done its best to abdicate its constitutionally mandated responsibilities.
"Independent" sounds better than "unaccountable." I'm old enough to be collecting Social Security and I think the Fed has been, all things considered, pretty good for most of my lifetime. But nothing lasts forever.
Perhaps Ron would be willing to go in just to end it. But the problem are those left on the federal reserve board. They are all reasons just to end the fed from the outside.
The real bad guys would kill him. Dr. Ron Paul has done enough by educating the next generation. I want him to die peacefully after a life served in service of others. I couldn’t refer another human being more than I do Dr. Ron Paul!
Jim Grant would be the perfect Fed Chair. Dr. Ron Paul would be amazing as well. Judy Shelton (who I don’t know much about) is at least a sound money advocate and would’ve provided some much needed intellectual diversity on The Fed Board - she was being eyed for a position maybe during Trump’s first term? Can’t remember… as is there’s a bunch of Keynesians and MMTs using economic fairy tales to lead us to ruin.
This article fails to note that "the reported criminal inquiry into Federal Reserve Chair" is specifically related to perjury came via Congress Oversight Committee who sent the referral. These would be Tillis' fellow representatives. Congress has oversight of the Federal Reserve and during oversight hearings, there were irreconcilable statements within Chairman's Powell's testimony. These irregularities were included in the referral. See below.
As a result of the referral, the DOJ sent numerous requests for information to Powell - who ignored them. As a result a subpoena was sent to Powell for information.
If sufficient evidence of perjury comes to light in the DOJ investigation, then Powell will be indicted and he can defend himself in a Court of Law. Should a jury determine that he committed perjury, then and only then do Tom Tillis' thoughts on the matter become important.
If there is not sufficient evidence of perjury, the Fed has been put on notice that Congressional testimony must be faithful.
Either determination is a win for the American public.
Tillis reminds me of the bitter John McCain as a RINO that has lost power in the 'Party' and as he 'retires' from office will tip the trash can over as he heads out the door.
Was Obama’s TreasSec nominee on the NY Fed, and he had unpaid taxes of $14,000.00? Because, “so what”for a Fed governor. Or how about transitory 9% inflation. Or the San Fran Fed not preventing the failure of Republic Bank. All this must have been someone else’s fault. Pay no attention to the quantitative easing behind the curtain.
Meanwhile, may we have someone tell us the money spent on The Taj Mapowell. Why these Importants need such a grandiose new structure that only THEY will ever have access to. Do you think you will have DC tourists getting a walk through Fed HQ? And, I can’t believe they have their own flag? Maybe each Fed Gov has their own flag. Wouldn’t be surprised.
Excellent comments from all; part of the wonderful TFP experience. That said, TFP and others need to focus more on the relationship with the big investment banking firms and private equity. These folks gamble with our money (Warren Buffet called this weapons of mass destruction), and when they win, they buy bigger jets, boats and beach homes while lecturing us about society and culture.
When they lose, WE PAY. The Feckless Fed is a bank window clerk who dishes out our money for their errors. And now they build palaces and take media victory laps!?
Absolutely. It’s the privatization of profits and socialization of losses. Do you remember when HFT (high-frequency trading) algorithms first got the scene? Making trades faster than any small investor possibly could… all good - EXCEPT when the algos would go haywire and buy high and sell low all trades would be repudiated! The game is rigged - and the dirty riggers and their enablers at The Fed have somehow convinced the masses that capitalism (the cure) is the problem!
There are those that believe that when Woodrow Wilson gave over the authority to issue the country’s money to a private bank, he made worrying about the nation’s sovereignty irrelevant, because it was lost at that moment. Wilson later stated he unwittingly destroyed his nation by signing the federal reserve act.
And now in this era where there is no memory of why the founding fathers opposed international reserve banking as well as Presidents like Andrew Jackson that managed to take the issuing of money back the federal reserve is very effective spinning any challenges to its dominance over the country’s money and by extension the economy the equivalent of an insurrection against the government, which they aren’t even a part of. They must just laugh how stupid we are.
The Fed is the head of the dragon that is the banking cartel. The dollar has lost 99% of its value since The Fed arrived in 1913. I wonder where it went?
Funny how Powell was lowering rates as Biden was campaigning for his second term but is refusing to now. The magical 2% inflation mark is a made up guideline especially when GDP is humming at 3% or higher. It’s nothing but game really because nobody has any idea what can happen quarter to quarter. Remember Powell said inflation was “transitory”? He was wrong and still kept his job. He should have been fired for that. If that’s not cause I don’t know what is. He’s a bag of shit and they all suck. Abolish the Fed.
Janet Yellen said recessions were a thing of the past when she was treasurer. These professional academics have zero fucking understanding of economics. It’s akin to a Star Trek fan with no education becoming an engineer for NASA. MMT is essentially economic fan-fiction.
By my lights, the Fed is an unconstitutional parasite upon our nation, exclusively serving the interests of bankers. They fail at every mandate.
Corruption rules the world, from central banks, to remora bankers (hello JP Morgan and B of A), private equity groups, lobbyists, and their political puppets. It has always been corrupt because human nature is immutable. WE DON’T WANT A FEDERAL BANK!
Politics is theater and Trump is all about theatrics. I watched his Davos speech today and I was floored and embarrassed. There must be some method to his madness that I wasn’t seeing. Why, in a world economic forum, would he be extemporaneously accentuating the stupidity of Somalians? I half expected him to take off his shoe and bang it on the podium like Nikita. It was hugely untoward, but in retrospect, I suspect that it was premeditated…in order to force the realignment of economic conditions.
The Europeans have zero leverage on us and Trump knows it. I have to believe that he was trying to shock and offend them into a new mode of thought where they will have to actually step up to independent economic competition. He lectured them about willing cultural suicide. Being seen as a rogue and capricious is a tool that he has exploited before. He is highly credible as a loose cannon and the opposing political party buttresses this inference daily.
Finland President Alexander Stubb said today that Europe can defend itself “unequivocally, without the Americans.” I laughed out loud. “Show me the money”! This might be the reaction that Trump is after.
All of my comments are hypothetical. I would have gone about these same goals in a different way, but maybe we ARE capable of 3-D chess and this isn’t just a clown show. The strategist in me is inclined to entertain all possibilities. The U.S. Federal Reserve is neither Federal nor a Reserve. It is a parasite designed to milk citizens of what little money that they have. END THIS CORRUPT, ANTI-AMERICAN, AND WASTEFUL INSTITUTION!
The Federal Reserve is a Ponzi scheme. It is legalized theft from citizens. It is wholly unconstitutional as our Constitution explicitly states that only gold and silver are money.
No federal agency has stockholders, but the Federal Reserve does! It pays them an annual dividend of 6%, and it keeps the names of all stockholders secret. These stockholders own, the Federal Reserve, our government does not! Why would this be so? It’s because the Fed is a criminal enterprise. Our entire monetary system is a form of legalized theft from citizens. Those at the top print and spend currency before the inflationary effects of ever increasing paper debt notes can affect them. It is evil and it is killing us.
Son. I hate to break it to you but the Federal Reserve has never been independent ever. The fiction that the Fed has been Independent is repeated over and over again as if it’s a magical chant. If you say something over and over again you can make a lie Truth. Sort of like Vaccines are safe and Effective. Trump is a facist and Racist. Etc etc.
The Federal Reserve has been either the source or has made every financial depression or recession worse by their own policies. They have failed us in every way imaginable and they will continue to f it up.
"as well as former Treasury secretaries from both parties."
Thought when I read this that by including it Matt was essentially admitting that de facto the fed is just one more political institution.
Have always felt the same. Independence a known illusion that the elites try and sell to the public, and the lie works for the most part, as do the majority of their lies.
Eric wrote this piece.
Oops. Sorry Eric
What is the Fed supposed to be independent of?
Sanity?
The consequences to the middle class is what theyre independent of.
The Constitution.
Mind you the entire thrust of 20th century Progressive government was Independent institutions.
The Fed in 1913.
The NRLB, FCC, CIA and others followed.
Why yes by statute the CIA is an Independent Agency.
So well said. A shame that so few people understand this. Fed independence is a total myth which politicians use to appease taxpayers. The Fed is run by the banking elite. They create economic crises and then bail out their "buddies" with zillions of taxpayer dollars.
“The fed has never been independent”, “The fed as made every … by their own policy.” Which one is it? You can’t have both.
they answer to the political players and if you don't think so, I can get your a great deal on a bridge in Manhattan and their policy decision are always wrong and or ill timed.
They made a recission in the early 1930's into a worldwide depression by actually shrinking the money supply. They inflated the money supply in the 1970's 4 different years of 12% year over year growth causing stagflation and a lost decade of stock market returns. They made the 2008 great financial recission by picking and choosing which wall street bank got saved and which didn't. When they decided to destroy Lehmann's because they hated the CEO they didn't realize that Goldman Sachs would fail too because of their stupidity (have you not noticed that every Treasury Secretary or Fed Chair goes through Goldman Sachs) So they forced every bank to take a bail out so they could hide Goldman Sachs situation. Then the trillions of dollars generated in QE allowed Goldman to off load all of the Securities that if forced to market to market would make them insolvent, The Fed gets to ignore Mark to Market accounting.
In 2023 even though they knew the situation at SVB they did nothing to help it when they were faced with a Deposit run. Their primary function is to act as a lender of last resort to the commercial banks and SVB had the 30 t bills to pledge as collateral but the Fed couldn't act fast enough. So your house is on fire you call the fire Dept and they tell you it will take 2 weeks to do the paper work before they can come to help. That is what the Fed did, Now we have unlimited Deposit insurance for the big banks and a $250,000 limit at the community banks, Guess where all the large deposits are going to end up at? The FDIC was never designed to insure the deposits of mega entities and billionaires.
But they DO and are Independent of You.
You can, though. The problem with independent agencies is that there can be no real independence in government. These people don"t live in airtight bubbles. If they aren’t instructed, they are led by people exquisitely sensitive to political winds.
I worked at Volcker’s Fed in my first job, and in the financial industry for much of my career. I remember well the 2007-2008 crisis when the Fed balance sheet ballooned in days.
Most economic crises and recessions have their origins in government action (remember the idea that EVERYONE should be a homeowner under Clinton’s 2nd term? This birthed the 2007-2008 crisis) So many other examples in my lifetime.
BTW, the investigation of Powell was prompted by his (arguably) perjurious testimony to Congress re. the “renovation” of the Fed building. Powell is incompetent. Some of the other governors (looking at you, Lisa Cook, of the multiple “primary residences” claimed on your mortgages) are equally suspect.
We deserve better. Thom Tillis should back off.
Or else the president should discuss Tillis and Powell during a short walk in the rose garden with the cia director.
ZING!
That's right! It should be noted that the Fed has never been anything more than reactionary. The Fed governors aren't paid for their balls. Or they would be broke.
I don't think they're paid for their brain power either. I think they are more akin to useful idiots or tools.
True, all buildings are constructed and renovated on time and under budget. Sure they are. Powell was seen down at the site personally directing the workers. Sure he was. Every peccadillo of each Fed member should be selective prosecuted until they march to the President's tune because Presidents are always balanced and prudent about wanting lower interest rates. Sure they are. Massive inflation isn't really a problem, what's important is that the government get to borrow money at a low rate. Sure it isn't.
'Transitory' was the buzz word until 'affordability' suggested it wasn't so 'transitory'.
Andrew Cuomo HUD Secretary Jan. '97-'01 pushed for 'mortgages for everyone' and your credit rating is somehow racist. 2001/06 housing boomed and the first sign I saw as a problem was when a landlord I new was dumbfounded that a renter, that never paid by the first, bought a home. How do unelected people have such power over OUR economy? END THE FED and let the markets do their job. Privatizing profits and socializing looses is Un-American.
We watched the markets "do their job" by repackaging bad loans into "mortgage based" toxic assets that crashed the markets and paralyzed lending in 2008. During the 1990s, the U.S. Congress loosened financing rules, and in 1999, parts of the 1933 Banking Act (Glass–Steagall Act) were repealed which allowed banks to loan to unqualified buyers. That was the work of politicians and unelected bankers, not the Fed. The "too big to fail" corporation's losses were socialized by taxpayers through the $700 billion Troubled Asset Relief Program (TARP).
The Fed also bears no responsibility for Bernie Madoff's largest Ponzi scheme in history, which eluded the SEC since the 1970's. Again, investor losses were "socialized" in part by $1.5 legal fees paid by the SIPC, which is funded by insurance fees from broker-dealers.
Even though the Fed is perceived as the villain when the markets and politicians screw things up royally, their grubby paws should be kept off the independent Fed.
In all due respect, is the Fed actually independent from any outside influence, including the politicos? It seems to me they have control of the brakes, so as to not overheat the economy, and the gas to accelerate the economy and they seem to wait to long either way. Could it be put on cruise control with some AI algorithm? As an ignorant person on the big issue of the Fed, I can only tell you what I see at the street level, and their track record is not good with the boom/bust cycle. I saw the 2008 crash coming working in construction and wish I knew about the short selling business. I did not expand my business starting in 2005 and survived while I saw others lose a lot or go bankrupt.
Stay warm this weekend Noam. Peace Out
Because the seven Fed members have 14-year staggered terms that overlap multiple Presidents and Senates, they have been fairly close to being independent. They disagree about predictions for the economy and inflation to justify raising or lowering rates to stimulate the economy versus cool down inflation. Their responsibilities are intended to respond to economic data, like employment and inflation, not politics.
There is unprecedented political pressure on the Fed from Trump. He fired Fed member Lisa Cook in a case now before the Supreme Court. He's having Jerome Powell investigated. Ironically, Trump nominated Powell to chair the Fed in 2017 when inflation was an acceptable 2%.
Of course, the Fed have only a gas pedal and a brake in the form of interest rates, they can't steer! Countries with or without the equivalent of the Fed and the entire global economy experience booms and busts.
Glad your business survived 2008, Patriot! My best friend when we were kids is in construction, which has its ups and downs.
I agree that Trump is the last thing the Fed needs. The issue comes down to whether or not, or to what degree, the Fed is useful at all. The Fed, staggered terms and all, is bound to reflect political trends, and political trends have all been a downward fall into the arms of big government.
The Fed has become part of the great social welfare state and imo that is not a good look.
As a 3 time DJT voter I'm not in favor of lowing rates now because things are starting to fire on all cylinders. From people I talk to in manufacturing 2026 looks very strong. Housing pricing in the Midwest, where I'm at, is still modestly rising but affordable. 6.3% 30 yr rates seem reasonable historically. Lisa Cook is in Trumps revenge tour and he should just stick with the people that, IMO, deserve a taste of their own medicine.
The creation of MBS was at times pernicious, you are correct, Deplume.
However, the Madoff bankruptcy was in fact judiciously managed with excellent results for creditors. Not a Fed issue.
The expert management of the refunds for duped Madoff investors almost drained the SIPC coffers. That's right, the Fed had nothing to do with not noticing or cleaning it up.
Wake up!!!.The FED is far from independent. The banking system owns the shares of the 12 Fed regional banks. So they use their pollitical influence as they wish. Just look at the zillions of TAXPAYER dollars spent on FED bailouts of PRIVATE SECTOR BANKS and their shareholders. Start from 1998 LTCM bailout and sum may be around 20 trillion of which a third perhaps is never to be recovered.
It's independent of Trump and that's what he wants to change.
I agree with you about cost overruns in government, but, to me, this drastically changes the equation here:
"The Federal Reserve does not receive funding through the congressional budgetary process. The Fed's income comes primarily from the interest on government securities that it has acquired through open market operations. After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury."
https://www.federalreserve.gov/faqs/about_12799.htm
This isn't a situation where congress has appropriated money--this is the fed deciding that they deserve that money more than the American people. That is a completely different dynamic.
And in this context, Powell better be able to justify not only the original budget, but the cost overruns.
They conveniently leave out the fact that the Fed creates out of thin air the money used to purchase the bonds.
The Fed is independent on paper, but Congress looks askance at them if they don’t return enough of their earnings to the Treasury.
Cost overruns in construction aren't restricted to government contracts. They are a fact of life. Here's an interesting assignment if anyone is interested. How many of Trump's buildings were completed on time and on budget and how many came in at a higher cost? It's not that interesting to me because Trump's attempted intimidation of Powell have nothing to do with Powell's testimony to Congress or cost overruns.
"This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress's oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. 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." - Jerome Powell, Jan. 11 2026
There are two separate issues here. Should the Fed be under the control of the Executive? Should the Fed as presently constituted exist at all?
Actually three separate issues. Should we have a Congress and Supreme Court? Trump doesn't think so.
I disagree..Congress doesn't want to do its job. Neither does the SCOTUS.
You think I want Trump to control the Fed?
Congress and the Court are necessary but in deep trouble. (Amy Coney Barrett was a great pick imo.)
We need age limits for sure, and probably term limits too.
This particular reno is now over 2X original cost, partly due to change orders for luxury features. As a taxpayer why should I pay for such opulence?
Golly, that's NEVER happened on a government project. It's usually 4X. I'm sure that hedonist Powell changed the plans to include gold and marble. Wait, that would be Trump's brilliant sense of aesthetics for the White House gaudy bathrooms. Of course the oversize ballroom, already double the original $200 million, is being funded by donations and those people don't expect any influence in return for their generosity. Money for favors, with no oversight, planning input from the American people, or transparency on what donors get in return, is how government buildings should go up. Trump already fired the first architect.
They're getting the "Favors" anyway; we may as well have something to show for it..
Meh.
Impressive. Hope that didn't wear you out.
Tu quoque fallacy persuades no one.
Lisa Cook has no credentials at all to be a Fed governor. A left wing political hack.
Agreed.
Beg to differ - I worked in Risk Management at a top 10 world bank in 2000 - and we had NO CLUE how to accurately evaluate Credit Derivatives that were screaming down the pipe line. Left Finance for Tech - and found 10 years later that they never did figure out how to price these. Key point - lot of the Finance big wigs get paid Quarterly bonuses, and in tech you need to wait 4 years to get you stock options. Don't blame the home owners - blame the Wall St Crew - Matt documented this pretty well.
Weird that. I wrote the first derivatives policy for a major regional bank in the early 90’s. Had to restudy college stats and Black Scholes (among other topics to do so).
Your experience may point to weakness in the bank.
"Most economic crises and recessions have their origins in government action..."
I suppose that is true in some sense, but leaves out various private sector activities which lead up to it.
In the 1920's the government ran persistent surpluses, which forced the private sector to offset with debt, eventually leading to the crash of 1929 and three plus years of inaction.
The surpluses of the Clinton years had a similar effect, with a similar result.
Have you ever asked yourself what exactly the FED is? It is essentially the Creature from Jekyll Island. I think it's way past time to END the FED.
It is not technically POSSIBLE to "end the Fed." The economy runs on dollars and all the dollars that actually exist are the liquid liabilities of the Federal Reserve. We can and should force the Fed to define and stabilize the real value of the dollar, however.
Those aren’t dollars which is .77 oz of Troy silver - The Fed has Federal Reserve Notes. Separating the weight of the commodity from the name of the currency was a crucial step in fleecing the masses.
These discussions are very interesting, even though i find monetary theory very difficult to understand.
Are you both not arguing for value of currency tied to a fixed point? Thanks for explaining.
The definition of "the dollar" is set by law. Right now, dollars are Federal Reserve Notes. Other forms of dollar payments will only be accepted if they can be converted at par to Federal Reserve Notes.
Yes, I think you missed the real point of my post. The names of currencies are derived from and represented a weight in gold/silver. The mark, pound, franc, dollar, etc. FRNs are fake and gay dollars.
A dollar is already defined and an FRN doesn’t meet that criteria. It’s tranny-loving applied to monetary units.
I'm not making a value judgment, just pointing out "what is." Silver has not been money in the U.S. since "The Crime of 1873." However, if you don't believe me, take a bar of silver to the nearest Walmart and try to buy something with it.
You’re maybe intentionally obtuse here - that’s not what we’re discussing. I’m talking about where the names of these currencies originated. I’m saying separating the name from the weight was a big moment in human history - as illustrated by your inability to acknowledge that historical fact - I’m not arguing with the truth of your replies.. you are right.
Besides, Gresham’s Law states an artificially overvalued currency will chase an artificially undervalued currency (actual money) silver quarters, dimes, etc out of circulation.
I am making a value judgment - if “what is” is out of sync with the laws of God and nature and demonstrably enriches the politically connected while robbing the common man - destroying the storage of value of the monetary unit - then it’s all fucked.
The Fed is a fake organization to allow bankers to control our economy. It is completely and totally anti-constitutional,and should have been shoveled into the dustbin of history a long time ago.
“Andy Jackson” it!!!
The FED is made up of expert economists who never make mistakes!
Just like the CDC experts who told us the Wuhan lab leak was an impossible conspiracy theory, and we needed just two weeks to flatten the curve.
And just like the 1200 medical professionals who told us we couldn't hold a funeral for Grandma, but that we should join mass protests against the greatest public health scourge, racism.
All these many Robert S. McNamaras, ever ready to tell us not to believe our lying eyes as they fail upward and expert us to death.
$600 Million over budget? And the budget estimate was $1.9 Billion. The $1.9B was obscene. Another $600 million overrun is beyond the pale. It's disgusting.
The IRS/credit card companies/our local lending institutions would NEVER grant any of us that grace.
There's no such thing as an independent executive agency, and the government cannot outsource its functions in such a way that it loses oversight. The Fed is not and never has been independent, even though the federal government has done its best to abdicate its constitutionally mandated responsibilities.
"Independent" sounds better than "unaccountable." I'm old enough to be collecting Social Security and I think the Fed has been, all things considered, pretty good for most of my lifetime. But nothing lasts forever.
Short of Ron Paul, I don't know who'd get in there that would make any damn difference.
There is absolutely no reason for them to exist.
They will keep on stealing from us no matter what.
Perhaps Ron would be willing to go in just to end it. But the problem are those left on the federal reserve board. They are all reasons just to end the fed from the outside.
The real bad guys would kill him. Dr. Ron Paul has done enough by educating the next generation. I want him to die peacefully after a life served in service of others. I couldn’t refer another human being more than I do Dr. Ron Paul!
Jim Grant would be the perfect Fed Chair. Dr. Ron Paul would be amazing as well. Judy Shelton (who I don’t know much about) is at least a sound money advocate and would’ve provided some much needed intellectual diversity on The Fed Board - she was being eyed for a position maybe during Trump’s first term? Can’t remember… as is there’s a bunch of Keynesians and MMTs using economic fairy tales to lead us to ruin.
Also the “financing” of the Covid spending binge was de facto fiscal policy. Incredibly inflationary!
"We at the Fed caused the problem, and we know the solution that will make it worse"
This article fails to note that "the reported criminal inquiry into Federal Reserve Chair" is specifically related to perjury came via Congress Oversight Committee who sent the referral. These would be Tillis' fellow representatives. Congress has oversight of the Federal Reserve and during oversight hearings, there were irreconcilable statements within Chairman's Powell's testimony. These irregularities were included in the referral. See below.
https://d12t4t5x3vyizu.cloudfront.net/luna.house.gov/uploads/2025/07/APL-Referral-Letter-on-Powell.pdf
As a result of the referral, the DOJ sent numerous requests for information to Powell - who ignored them. As a result a subpoena was sent to Powell for information.
If sufficient evidence of perjury comes to light in the DOJ investigation, then Powell will be indicted and he can defend himself in a Court of Law. Should a jury determine that he committed perjury, then and only then do Tom Tillis' thoughts on the matter become important.
If there is not sufficient evidence of perjury, the Fed has been put on notice that Congressional testimony must be faithful.
Either determination is a win for the American public.
Tillis reminds me of the bitter John McCain as a RINO that has lost power in the 'Party' and as he 'retires' from office will tip the trash can over as he heads out the door.
Was Obama’s TreasSec nominee on the NY Fed, and he had unpaid taxes of $14,000.00? Because, “so what”for a Fed governor. Or how about transitory 9% inflation. Or the San Fran Fed not preventing the failure of Republic Bank. All this must have been someone else’s fault. Pay no attention to the quantitative easing behind the curtain.
Meanwhile, may we have someone tell us the money spent on The Taj Mapowell. Why these Importants need such a grandiose new structure that only THEY will ever have access to. Do you think you will have DC tourists getting a walk through Fed HQ? And, I can’t believe they have their own flag? Maybe each Fed Gov has their own flag. Wouldn’t be surprised.
> Maybe each Fed Gov has their own flag. Wouldn’t be surprised.
Dukes have ducal flags, and are far less powerful than FED governors, so they probably do even if they don't fly them publicly.
Ducal flag is a great term, which I had never read before.
We need more great terms. And people to share them.
I think I learned about ducal flags from Lord Marchmain's flag flying at Brideshead signaling he had returned there to die.
Again. We need to learn more about flags. And, history.
Excellent comments from all; part of the wonderful TFP experience. That said, TFP and others need to focus more on the relationship with the big investment banking firms and private equity. These folks gamble with our money (Warren Buffet called this weapons of mass destruction), and when they win, they buy bigger jets, boats and beach homes while lecturing us about society and culture.
When they lose, WE PAY. The Feckless Fed is a bank window clerk who dishes out our money for their errors. And now they build palaces and take media victory laps!?
Absolutely. It’s the privatization of profits and socialization of losses. Do you remember when HFT (high-frequency trading) algorithms first got the scene? Making trades faster than any small investor possibly could… all good - EXCEPT when the algos would go haywire and buy high and sell low all trades would be repudiated! The game is rigged - and the dirty riggers and their enablers at The Fed have somehow convinced the masses that capitalism (the cure) is the problem!
TFP?
There are those that believe that when Woodrow Wilson gave over the authority to issue the country’s money to a private bank, he made worrying about the nation’s sovereignty irrelevant, because it was lost at that moment. Wilson later stated he unwittingly destroyed his nation by signing the federal reserve act.
And now in this era where there is no memory of why the founding fathers opposed international reserve banking as well as Presidents like Andrew Jackson that managed to take the issuing of money back the federal reserve is very effective spinning any challenges to its dominance over the country’s money and by extension the economy the equivalent of an insurrection against the government, which they aren’t even a part of. They must just laugh how stupid we are.
The Fed is the head of the dragon that is the banking cartel. The dollar has lost 99% of its value since The Fed arrived in 1913. I wonder where it went?
Funny how Powell was lowering rates as Biden was campaigning for his second term but is refusing to now. The magical 2% inflation mark is a made up guideline especially when GDP is humming at 3% or higher. It’s nothing but game really because nobody has any idea what can happen quarter to quarter. Remember Powell said inflation was “transitory”? He was wrong and still kept his job. He should have been fired for that. If that’s not cause I don’t know what is. He’s a bag of shit and they all suck. Abolish the Fed.
Under 2% inflation historically requires a great recession at best.
By marking 2% as the goal, he is admitting a political agenda to force the conversation around 2 terrible choices as if they are the only ones:
Force a recession on the American people or force high interest rates on them.
Being fired shouldn't be in the 5 worst possibilities for Powell.
Janet Yellen said recessions were a thing of the past when she was treasurer. These professional academics have zero fucking understanding of economics. It’s akin to a Star Trek fan with no education becoming an engineer for NASA. MMT is essentially economic fan-fiction.
By my lights, the Fed is an unconstitutional parasite upon our nation, exclusively serving the interests of bankers. They fail at every mandate.
Corruption rules the world, from central banks, to remora bankers (hello JP Morgan and B of A), private equity groups, lobbyists, and their political puppets. It has always been corrupt because human nature is immutable. WE DON’T WANT A FEDERAL BANK!
Politics is theater and Trump is all about theatrics. I watched his Davos speech today and I was floored and embarrassed. There must be some method to his madness that I wasn’t seeing. Why, in a world economic forum, would he be extemporaneously accentuating the stupidity of Somalians? I half expected him to take off his shoe and bang it on the podium like Nikita. It was hugely untoward, but in retrospect, I suspect that it was premeditated…in order to force the realignment of economic conditions.
The Europeans have zero leverage on us and Trump knows it. I have to believe that he was trying to shock and offend them into a new mode of thought where they will have to actually step up to independent economic competition. He lectured them about willing cultural suicide. Being seen as a rogue and capricious is a tool that he has exploited before. He is highly credible as a loose cannon and the opposing political party buttresses this inference daily.
Finland President Alexander Stubb said today that Europe can defend itself “unequivocally, without the Americans.” I laughed out loud. “Show me the money”! This might be the reaction that Trump is after.
All of my comments are hypothetical. I would have gone about these same goals in a different way, but maybe we ARE capable of 3-D chess and this isn’t just a clown show. The strategist in me is inclined to entertain all possibilities. The U.S. Federal Reserve is neither Federal nor a Reserve. It is a parasite designed to milk citizens of what little money that they have. END THIS CORRUPT, ANTI-AMERICAN, AND WASTEFUL INSTITUTION!
The Federal Reserve is a Ponzi scheme. It is legalized theft from citizens. It is wholly unconstitutional as our Constitution explicitly states that only gold and silver are money.
No federal agency has stockholders, but the Federal Reserve does! It pays them an annual dividend of 6%, and it keeps the names of all stockholders secret. These stockholders own, the Federal Reserve, our government does not! Why would this be so? It’s because the Fed is a criminal enterprise. Our entire monetary system is a form of legalized theft from citizens. Those at the top print and spend currency before the inflationary effects of ever increasing paper debt notes can affect them. It is evil and it is killing us.