Ignoring Past Warnings on Fed Independence Risks Unleashing Economic Chaos on Your Family

The Federal Reserve, a bedrock of American economic stability, is under siege. Recent murmurs from allies of President Donald Trump, including financier Scott Bessent, suggest a chilling possibility: the president might claim the power to oust Fed Chair Jerome Powell at will. Bessent’s refusal to clarify whether Trump has the legal authority to fire Powell isn’t just a neutral sidestep. It’s a flare signaling a dangerous ambition to bend the Fed to the White House’s whims, threatening the delicate balance that keeps our economy afloat.

This isn’t a mere policy disagreement. It’s a direct challenge to the Fed’s independence, a principle painstakingly built over a century to shield monetary policy from the short-term impulses of politicians. The Fed’s autonomy allows it to make tough calls, like raising interest rates to curb inflation, even when those decisions sting. Handing that power to a president known for demanding loyalty over expertise risks plunging the economy into chaos, with everyday Americans—workers, retirees, small business owners—bearing the brunt.

The stakes couldn’t be higher. The Fed’s decisions ripple through mortgages, car loans, and grocery bills. If its credibility is undermined by political interference, markets could spiral, and inflation could surge, as seen in the 1970s when President Nixon leaned on the Fed to juice the economy for his re-election. That history isn’t a dusty footnote; it’s a warning. Yet, some of Trump’s supporters seem eager to ignore it, betting on a vision of unchecked executive power that could destabilize the very system they claim to champion.

Advocates for a strong, independent Fed aren’t naive idealists. They’re realists who understand that democracy thrives on checks and balances, not on the whims of one person. The push to control the Fed isn’t just an economic issue; it’s a test of whether our institutions can withstand a concerted effort to erode their autonomy. For those who value stability and fairness, this is a fight worth having.

The Federal Reserve Act, enacted in 1913, is clear: the Fed’s Board of Governors, including the Chair, can only be removed ‘for cause,’ meaning misconduct or incapacity, not policy disputes. This isn’t a loophole; it’s a deliberate safeguard. Legal scholars and economists agree that firing Powell over disagreements about interest rates or inflation targets would be unprecedented and likely illegal. Any attempt would spark a courtroom showdown, potentially landing before a Supreme Court already wrestling with questions of executive power.

The 1935 Supreme Court ruling in Humphrey’s Executor v. United States cemented the principle that Congress can protect independent agency leaders from arbitrary dismissal. That precedent has held for nearly a century, ensuring the Fed can operate without fear of presidential retribution. But recent signals from the Department of Justice, which has hinted at challenging these protections, suggest the ground is shifting. If the Court were to weaken Humphrey’s Executor, it could hand presidents a blank check to fire agency heads, from the Fed to the SEC, reshaping governance in ways that favor loyalty over expertise.

Supporters of Trump’s approach argue that the president, as the nation’s chief executive, should have ultimate control over federal agencies. They frame it as accountability, claiming the Fed’s independence shields unelected bureaucrats from the will of the people. But this argument crumbles under scrutiny. The Fed’s autonomy doesn’t insulate it from oversight—Congress can amend its mandate, and the Senate confirms its leaders. What independence does is protect the economy from the kind of political meddling that fueled runaway inflation in the past. The real accountability lies in preserving a system that works for all, not just for those in power.

The legal battle over the Fed’s independence is more than a courtroom drama. It’s a fight for the soul of our economic system. If the president can fire the Fed Chair at will, what’s to stop him from demanding lower interest rates to boost the stock market before an election? The answer is nothing, and the consequences would hit hardest those already struggling to make ends meet.

The Fed wasn’t always the independent powerhouse it is today. Created in response to the financial panics of the early 20th century, it was initially subject to greater political influence. The Banking Act of 1935, passed in the wake of the Great Depression, transformed it into a truly autonomous institution by removing Treasury officials from its Board and securing its funding outside congressional appropriations. This wasn’t a power grab by bureaucrats; it was a recognition that monetary policy works best when insulated from the pressures of election cycles.

History shows the dangers of politicizing the Fed. In the 1970s, President Nixon’s pressure on Fed Chair Arthur Burns to keep interest rates low contributed to stagflation—a toxic mix of high inflation and stagnant growth that battered the middle class. The Treasury-Fed Accord of 1951, which ended the practice of pegging interest rates to government borrowing needs, was another hard-won victory for independence. These moments underscore a truth: when politicians meddle in monetary policy, the economy suffers, and ordinary people pay the price.

Today’s push to control the Fed echoes these past mistakes but with higher stakes. Initiatives like Project 2025, which advocates for a ‘unitary executive’ with near-total control over federal agencies, threaten to unravel decades of progress. Supporters of this vision claim it restores democratic accountability, but their logic is backward. Centralizing power in the White House doesn’t empower the people; it empowers one person, at the expense of the checks and balances that keep democracy resilient.

For most Americans, the Fed isn’t a household name, but its decisions shape their lives. When it sets interest rates, it determines whether a family can afford a home or a small business can secure a loan. When it manages inflation, it affects the price of gas and groceries. If the Fed’s independence is compromised, those decisions could be driven by political expediency rather than economic reality, with devastating consequences for working people.

Public trust in government is already fragile, with only 22% of Americans expressing confidence in the federal government as of May 2024. Eroding the Fed’s credibility would deepen that distrust, signaling that even the institutions meant to protect economic stability are up for grabs. The ripple effects would be felt in higher borrowing costs, volatile markets, and eroded savings—hardships that hit low- and middle-income families hardest. Advocates for economic justice know that protecting the Fed’s autonomy isn’t an abstract principle; it’s a defense of the people who can least afford instability.

The fight to preserve the Fed’s independence is a fight for democracy itself. Congress, with its power to enact laws and control appropriations, must step up to reinforce the legal barriers protecting the Fed. Lawmakers who value economic stability over partisan loyalty have a duty to act, whether through legislation clarifying the Fed’s autonomy or through robust oversight of executive overreach. The Senate, in particular, must use its confirmation powers to ensure that only those committed to the Fed’s mission ascend to its Board.

Americans deserve a government that prioritizes their well-being over power plays. The Fed’s independence isn’t perfect, but it’s a proven bulwark against the kind of economic chaos that benefits the few at the expense of the many. As Trump’s allies flirt with dismantling that bulwark, the response must be clear: we won’t let our economy become a pawn in a game of executive ambition. The future of our democracy, and the livelihoods of millions, depend on it.