'Scare Tactics': Internet divided as Trump’s potential plan to undermine Fed's independence raises alarms

WASHINGTON, DC: Experts and investors are alarmed by former President Donald Trump's possible attempt to increase his influence over the Federal Reserve.

The Wall Street Journal revealed on Thursday, April 25 that if Trump is reelected in November, a group of his allies is formulating plans to undermine the central bank's independence, which has long irritated him.

Additionally, they contend that even with legal safeguards against being fired without reason, Trump would have the authority to remove Fed Chair Jerome Powell, whom he selected in 2017 and then chastised throughout most of his tenure.

Donald Trump’s potential plan for Federal Reserve raises alarms

While the Trump campaign has distanced itself from the idea, such a plan would face significant challenges in Congress, where Trump's prior attempts to get the Fed in his favor have failed.

Three of Trump's Fed candidates were rejected by Senate Republicans during his first term due to issues with their qualifications and independence, and several senators informed The Wall Street Journal that they would not support the campaign's alleged strategy for a second term.

Moreover, analysts warn that Trump's actions might hurt the United States and its standing as the global financial hub.

Ian Katz, director at research consultancy Capital Alpha Partners said, "If it becomes clear that there’s going to be a Fed chair that answers to the president, I would expect a dramatic reaction in the markets and the White House would have to deal with that."

He added, "There are plenty of people in the markets who would like to see Trump be president again. I don’t think there are plenty of people in the markets who would like to see Trump be de facto Fed chair."

Notably, Trump campaign said in a statement, "Let us be very specific here: Unless a message is coming directly from President Trump or an authorized member of his campaign team, no aspect of future presidential staffing or policy announcements should be deemed official."

Run by a board of governors nominated by the president and confirmed by the Senate, the Fed is a politically autonomous agency. Additionally, the Senate must confirm the candidates nominated by the president to hold the positions of chair, vice chair, and vice chair of oversight. 

However, the Federal Open Market Committee (FOMC), which is composed of regional bank chiefs and members of the Federal Reserve Board, sets interest rates and the president has no legal authority over their choices.

Interestingly, former Fed chair Arthur Burns refrained from raising interest rates due to pressure from the White House, even in the face of severe inflation, during the Nixon administration. This experience has made Fed heads especially wary of presidential power.

Internet divided as Trump’s potential plan for Fed raises alarms

People on the internet had mixed reactions as experts and investors were alarmed by former president Donald Trump's possible attempt to increase his influence over the Federal Reserve.

A user wrote on X, "Liars Scare Tactics", while another added, "Abolish the federal reserve."

A person also wrote, "Omg I can't believe that we might have low-interest rates without laying off half the workforce."

A person stated, "Audit the Fed, publicly and unredacted. Then END THE FED!"

Whereas one mentioned, "Oh No! Getting rid of a fiat currency and changing it to a Gold standard."

Another person stated, "No it’s alarming the corrupt deep state around the world", while one added, "Blah, Blah, Blah same song and dance just like last time."

This article contains remarks made on the Internet by individual people and organizations. MEAWW cannot confirm them independently and does not support claims or opinions being made online.