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President Trump and Jerome Powell (Photo by Drew Angerer/Getty Images) Getty Images Business leaders may think that President Trump’s possible decision to fire Jerome Powell as chair of the Federal Reserve System is just a sideshow, but the resolution of control over the Fed has very large implications for business. Our future level of inflation and frequency of recessions—as well as the overall business climate—will be highly influenced by how the contest plays out. President Trump appointed Powell to lead the Fed in 2018. The president recently criticized the Fed chair, writing on Truth Social, “Powell’s termination cannot come fast enough!” Trump asserts that he has the authority to fire the Fed chair, while Powell has stated that he would contest such an action in the courts. Two economic issues arise from this power play. First, the constitutional structure of separation of powers, checks and balances, has served the country well economically and also politically. America’s founders envisioned that the three branches of government—executive, legislative and judicial—would each have limited powers, held in check by the other branches. That structure, along with other constitutional restraints, has enabled the United States to avoid many of the economic disasters that befell other countries. Presidential control of business and taxation has been limited, though not perfectly. Congressional overreach has sometimes been vetoed by the president, sometimes overruled by the Supreme Court. In short, the system served the economy and business community well. Fed independence, though, is crucial to low inflation and stable economic growth. On the constitutional issue, Congress clearly has authority granted by Article I, Section 8, “… to coin Money, regulate the Value thereof ….” Under this authority, Congress established the Federal Reserve System. That law states that the chair may only be dismissed “for cause.” Attorneys are probably running through…

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Filed under: News - @ April 21, 2025 12:29 pm