- Donald Trump publicly stated that Jerome Powell should be removed and that “he should have been gone a long time ago”
- The Federal Reserve Act allows for the removal of Board members “for cause,” but it does not specify a separate procedure for dismissing the Chair apart from their Board membership
- No such removal has ever occurred, and doing so could establish a constitutional precedent
- Amid mounting pressure on the Fed, Paul S. Atkins — known for his deregulatory stance — has been confirmed as the new Chair of the SEC
- The agenda of expanding executive control over independent economic institutions is becoming increasingly systemic
Donald Trump, calling for the firing the Fed Chair, sharply criticized Jerome Powell — raising the broader issue of Federal Reserve independence and the extent of executive power in the US, not only in form but in practice.
Amid legal ambiguity, institutional risks, and DOGE-related initiatives, we are seeing the confirmation of Paul Atkins as SEC Chair, a known deregulation advocate — forming a unique and challenging moment in the political and economic architecture of the US.
More on Trump’s Pressure on the Fed and Jerome Powell
We already mentioned how Donald Trump spoke out in his post against Fed Chair Jerome Powell over the delays in interest rate cuts and one of the possible theories behind it — and now he has held a press conference in which he made even more attacks against Powell, citing reasons to remove him, saying:
“And if we had a Fed chairman that understood what he was doing, interest rates would be coming down, too.”
Adding:
“He should have been terminated a long time ago. Termination cannot come fast enough.”
All of this is quite harsh and adds weight to the fears of Trump’s opponents, who see in him a threat to freedom and democracy and the signs of an authoritarian regime in which decisions are made unilaterally and bypass all established procedures. Of course, such statements are also rather harsh and carry a significant degree of exaggeration, while also underestimating the system of checks and balances in the US government structure.
In particular, formally Donald Trump does not have the authority to fire the Fed Chair, as per the 1935 ruling of the Supreme Court which effectively limits the power of the White House to dismiss top federal officials. That 1935 Supreme Court ruling states that members of the Federal Reserve Board, including the chairman, can be removed by the president “for cause,” which courts have interpreted as misconduct, inefficiency, or malfeasance — but not political or personal disagreements.
It arose as a result of President Franklin D. Roosevelt’s attempts to overcome the effects of the Great Depression and launch the New Deal, which marked an official end to laissez-faire capitalism in the US Accordingly, he needed supporters of this course, but former Republican Congressman Humphrey — who had been appointed to the Federal Trade Commission in 1925 — was a strong proponent of free market principles, which created conflict.
As a result, we got the case Humphrey’s Executor v. United States, in which the high court blocked then-President Franklin D. Roosevelt from firing a commissioner from the Federal Trade Commission. That is precisely why “termination cannot come fast enough,” and even an attempt to implement such an initiative would likely lead to litigation and constitutional challenges, potentially reaching the Supreme Court — and could also result in significant collateral damage to the markets. However, as we’ve already discussed, that potential market damage may not concern Trump, or may even benefit him as a justification for accelerated rate cuts.
Turning from theory to facts, Trump’s pressure on Jerome Powell is clearly escalating, also becoming more aggressive, and is raising legitimate concerns. At the same time, we’re seeing Trump cancel a series of executive orders, and we cannot rule out the possibility that the 1935 Supreme Court ruling may become one of his targets.
Worth noting are the aggressive DOGE-related initiatives, which have likewise drawn recurring questions and criticism and appear to be part of the same systemic pressure on formally independent government agencies — and we’ve already seen this approach bring results. Also, Donald Trump is fundamentally reshaping previous agreements with international partners, from trade alliances such as those with Canada and Mexico to military ones, such as NATO.
It is also notable that the executive order to restructure the SEC and launch the SEC Crypto Task Force likewise came from Donald Trump — as did the appointment of Paul S. Atkins as the new SEC Chair. What’s particularly striking is that Paul Atkins is not only a pro-crypto advocate but also a supporter of deregulation — which stands in contrast to Trump’s current approach of overregulating nearly every area of government.
From the outside, it seems that while the US government system was originally built around a strict separation and independence of executive power, we are now witnessing a serious stress test of that principle.
Conclusion
Here is a truly significant confrontation between the established system and Trump’s attempts to fundamentally restructure it, along with complete uncertainty as to whether this is the right path.
Markets are reacting accordingly — indexes are swinging in ways we haven’t seen in a long time, and capital is flowing out of the dollar, partly into Bitcoin, as it is not tied to any specific economy, and, classically, into gold, which is once again showing all-time highs.
Perhaps the most important thing here is not what Trump is doing — although that could certainly become the most important factor if markets collapse as a result — but rather how he’s doing it, and whether in the process of testing and reshaping institutions, he sets dangerous precedents for bypassing and disassembling them.
We will be watching very closely, as far too much in the global economy now depends on the United States — and Trump simply cannot afford to make a mistake. Be aware and stay tuned for updates on the rapidly reshaping regulatory and crypto landscape
