"Sign up for the Slatest to get the most insightful analysis, criticism, and advice out there, delivered to your inbox daily. Donald Trump's Justice Department is exploring a prosecution of Federal Reserve Chair Jerome Powell. The nominal reason is Powell's oversight of an excessively expensive construction project on a new Fed building in Washington. That's not the real reason, though."
"Why is Donald Trump obsessed with Jerome Powell? During COVID-19, the economy was bad. To make the economy less bad, the Federal Reserve slashed the federal funds rate to just north of zero. The economy got less bad after that, but a good economy's cousin, inflation, showed up at the party. So the Fed fulfilled the other part of its duty as seesaw master of the economy and raised interest rates, seeking to curb inflation."
The Justice Department is considering prosecuting Federal Reserve Chair Jerome Powell, citing oversight of an expensive Fed building project as the nominal cause. The underlying motive appears tied to political pressure from Donald Trump, who wants lower interest rates to boost the economy. The Fed cut rates during COVID-19 to mitigate economic damage, but later raised rates to combat resulting inflation. Inflation has remained stubborn despite some rate cuts, and the Fed has reduced rates only slowly. Political interference in monetary policy could undermine central-bank independence and create significant economic risks.
Read at Slate Magazine
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