Trump administration would make the Fed less independent

[ChpBstrd]

https://www.cnbc.com/2024/04/26/trump-advisors-are-considering-plans-to-dramatically-revamp-the-fed-wsj-report-says.html

Former President Donald Trump’s political operatives are putting together a plan that would give him unprecedented influence over the Federal Reserve, including a plan that could make him an “acting” central bank board member...

The plans, which the Journal report described as highly secretive, are part of a 10-page document that suggests Trump — if elected — would be consulted on interest rate decisions. In addition, the Treasury Department would be used as an added check and balance to oversee the Fed’s bond-buying activities.

These "highly secretive" plans were leaked by the Trump campaign as a trial balloon.

I suspect the outcome of such a change would be "lower for longer" and monetary policy manipulation around elections. I also think such a change opens the door to out of control inflation (see Turkyie for an example of the fun an autocratic leader can have with interest rates). I hate gold as an investment, but there's a good chance it goes up as the election approaches, and especially if Trump wins.

[bacchi]

Let's put a narcissist who think he's good at everything in control of macro economic decisions for the world's largest economy. What could go wrong?

[SpaceCow]

I hope this never happens as I think it would have horrible economic and political ramifications. That being said, a tax on unrealized capital gains is pretty whack too.

Clowns on the left, jokers to the right...

[reeshau]

He can't stand someone he can't lean on to do whatever he wants, in the moment.  That's why the cabinet was such a revolving door.

I guess the Fed wasn't responding to name-calling, either.  Quite the feature, if you ask me.

[MustacheAndaHalf]

Turkey is running a miserable experiment where President Erdogan keeps replacing the person in charge of Turkey's central bank.  For the past two years, their inflation rate only dropped below 40% for a couple months, since the central bank is not allowed to fight inflation by raising rates.  Their current inflation rate is about 68%.

[chasesfish]

I hope this never happens as I think it would have horrible economic and political ramifications. That being said, a tax on unrealized capital gains is pretty whack too.

Clowns on the left, jokers to the right...

We've reached the unserious political proproganda stage.   How exactly would this "leaked" proposal even happen through executive order?   Have we gotten so far away from congress approving anything that we have a defacto dictator?   (Today it's open immigration and student loan forgiveness, tommorrow the fed?)

Collecting $0.70 for every dollar the government spends isn't sustainable.  I'd like to see that corrected, but politicians are afraid to put forth any serious proposals, only stuff that doesn't raise meaningful revenue.

[maizefolk]

We already have a very viable way to raise tax revenue. Increase the rates of our existing taxes: income, capital gains, estate, payroll.

I really wish I understood the psychological, sociological, or political science concepts behind why US politicians prefer to propose complicated new taxes as a way to raise small amounts of revenue (while making both compliance and enforcement more complicated and creating unanticipated side effects and loopholes), instead of simply adjusting the dials on existing ones.

How exactly would this "leaked" proposal even happen through executive order?   Have we gotten so far away from congress approving anything that we have a defacto dictator?   (Today it's open immigration and student loan forgiveness, tommorrow the fed?)

I tried and failed to find the relevant language of the law about the president appointing the director of the federal reserve, but my random guess is that it is something like "the president shall appoint the chair of the fed for a term of four years" and these folks are going to argue that nothing in the legal text explicitly prohibits the president from appointing a new fed chair in less than four years. And if the president can replace the fed chair, he'd probably be able to find someone willing to agree to consult the president about interest rate decisions and appoint them.

[tooqk4u22]

I hope this never happens as I think it would have horrible economic and political ramifications. That being said, a tax on unrealized capital gains is pretty whack too.

Clowns on the left, jokers to the right...

We've reached the unserious political proproganda stage.   How exactly would this "leaked" proposal even happen through executive order?   Have we gotten so far away from congress approving anything that we have a defacto dictator?   (Today it's open immigration and student loan forgiveness, tommorrow the fed?)

Collecting $0.70 for every dollar the government spends isn't sustainable.  I'd like to see that corrected, but politicians are afraid to put forth any serious proposals, only stuff that doesn't raise meaningful revenue.

Bipartisan politics doesn't exist today and there is no will to step out.   We need broad based thoughtful tax reform/increases as well as spending cuts - both are sure ways to not being re-elected.    Some of the personal tax rates revert back next year but that is already factored into CBO estimates.  The Trump corporate tax cuts were an immediate 16% increase in earnings so if dems had control and wanted to reverse those then just expect your portfolio to be worth less.

Executive orders are nothing new but they do seem to be more material in nature over the last 10-15 years but could be recency bias on my part as I haven't studied it. 

A lot of hard decisions  need to be made by a bunch of people who have no accountability or repercussions and only really act in their self-interest. 

[chasesfish]

Nobody wants to admit the existing medicare payroll tax needs to be nearly tripled just to cover healthcare costs for those 65+

It's much easier for politicians to claim we can have medicare for all that someone else can pay for.

Agree with both @tooqk4u22 and @maizefolk - There's existing ways to pay for this stuff and everyone will have to pay.

Executive orders?   They've definitely become more popular over the last 20 years.   Each party has gotten a taste of a full majority on budget issues and the left enjoyed a a little over a year of filibuster proof control until Ted Kennedey passed away and even Massachusettes found it appaling enough to fix that in the Senate.

We now have a generation that's seen no comprimise in the legislative bodies and virtually no policy/legislative leadership from the White House. 

That's frustrating when you have real problems like only bringing in $0.70 for every dollar spent.