Late Sunday evening, Federal Reserve Chair Jerome Powell rang the alarm for the men who run America’s largest corporations, banks and consultancies and are convinced that Donald Trump’s authoritarianism is just another variable to be modeled, hedged or arbitraged. In a video statement, the Republican Powell hit back against the Justice Department’s political weaponization against the Federal Reserve’s independence.
On Friday evening, the Justice Department served the Fed with grand jury subpoenas, threatening criminal indictment against Powell for his June testimony before the Senate Banking Committee about the bank’s building renovation project. The official pretext for the subpoenas is whether Powell accurately characterized details about a $2.5 billion renovation of the Fed’s Washington headquarters. The real reason, which the chair stated plainly in his extraordinary message, is that he refused to lower interest rates as quickly as Trump demanded.
Let’s be absolutely clear about what’s happening here. Powell is being punished for refusing to bend monetary policy to the whims of an authoritarian president who believes the entire machinery of government exists to serve his personal interests and ambitions.
Even by Trump’s standards, the brazenness of this assault is staggering. The Federal Reserve was deliberately designed to be independent to avoid exactly this scenario. The Banking Act of 1935 created the modern structure of the Fed and explicitly placed monetary...
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